HomeMy WebLinkAboutRes 2025-01-1724 Agree to Transfer a Portion of GTUA Minimum Annual Volume to the City of HoweRESOLUTION NO. a0y2 5 -o 1 - I'7o?l
A RESOLUTION RELATED TO AN INTER -LOCAL AGREEMENT
BETWEEN THE CITIES OF HOWE AND ANNA IN WHICH ANNA AGREES
TO TRANSFER A PORTION OF IT'S RESPECTIVE CONTRACTUAL
MINIMUM ANNUAL VOLUME WATER OBLIGATION WITH THE
GREATER TEXOMA UTILITY AUTHORITY TO THE CITY OF HOWE IN
EXCHANGE FOR AN AGREED PAYMENT FROM HOWE AND
AUHORIZING THE EXECUTION AND ADMINISTRATION OF SAID
INTER -LOCAL AGREEMENTS
WHEREAS, the Cities of MELISSA, ANNA, HOWE, and HOWE have previously
authorized and executed agreements with the Greater Texoma Utility Authority for a surface
water supply system to be planned, funded, constructed, and operated by GTUA, including the
payment of monthly Minimum Annual Volume (MAV water) purchase provisions necessary to
fund said water transmission system and purchase of potable water; and
WHEREAS, the City of ANNA has chosen to not accept delivery of some or all of the
required water through the end of the 2024 water year (ended July 31, 2024) and said City
desires to transfer a portion of its respective and obligated Minimum Annual Volume for said
2024 water year to the City of HOWE for consideration detailed in an inter -local agreement; and
WHEREAS, the City of HOWE has indicated interest in purchasing the stated portion of
the Minimum Annual Volume from the Cities of ANNA for the water year ended July 31, 2024
as explained in a report memorandum to the City Managers / Administrators of the Cities of
Melissa, Anna, HOWE, and Howe dated September 21, 2024 and revised October 3, 2024 by
Donald E. Paschal, Jr., consultant to said cities, which memorandum is attached to the respective
Inter -local agreements for each specified City as "Exhibit A"; and
NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of HOWE
that:
SECTION l: The City Council of the City of HOWE authorizes the City Administrator to
execute inter -local agreements with the City of ANNA under the terms detailed in said inter -
local agreement, which provides for the following:
A. Receiving the transfer of a portion of said selling City of ANNA's GTUA required
2024 water year MAV to HOWE as provided for in the respective Inter -local
Agreement.
B. Paying the invoice submitted by the respective selling City of ANNA for the agreed
portion of the 2024 water year MAV specified in the inter -local agreement.
SECTION 2: It is specifically provided that the participating cities shall have the right to verify
quantities of water with the GTUA prior to final consummation of the attached agreement.
Upon motion of 'f OTt, n seconded by 14e r 11 d o r)
the above resolution was approved by the City Council of the City of Anna- at its
meeting held this o2k& day of ;5anuacy , 2025, by the following vote:
7 AYE NAY ABSTAIN
Mayot`, City of Anna
��� a,4.
City Secretary, City of Anna
(SEAL) -- -
INTERLOCAL AGREEMENT 13Y AND BETWEEN
THE CITY OF IIOWE, TEXAS AND THE CITY OF ANNA, TEXAS
FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF THE
SELLING CITY'S MINIMUM ANNUAL VOLUME OBLIGATION UNDER THE
GTUA-CITIES OF MELISSA, ANNA, VAN ALSTYNE, AND HOWE POTABLE
WATER SUPPLY CONTRACT
THIS AGREEMENT is made and entered by and between the CITY OF HOWE,
TEXAS, a "Texas General Law City, hereinafter referred to as "Howe", and the CITY OF
ANNA, TEXAS, a Texas Home Rule Municipal Corporation, liercinafter referred to as "Anna",
collectively referred to herein as the "Cities", as follows:
WI T NESSE T H:
WHEREAS, both Anna and Howe are political subdivisions within the meaning of
]nterlocal Cooperation Act, Texas Government Code, Chapter 791, as amended (the "Act"); and
WHEREAS, the Act provides authority for entities such as Anna and Howe to enter into
inter -local agreements with each other to perform governmental functions and services as set
forth in the Act; and
WHEREAS, each of the Cities have previously entered into an agreement with the
Greater Texoma Utility Authority, hereinafter referred to as "GTUA" for the planning,
construction, funding, and operations of a surface water supply system to serve the collective
Contract Cities of Melissa, Anna, Van Alstyne, and Howe, which agreement specifies the
obligations of each participant; and
WHEREAS, each of said Cities has entered an Amended and Restated Contract for
Water Supply providing that from the time water has been delivered to each Participating City
for one month and forward, on a monthly basis, each Participating City shall be charged for
water at the greater of its minimum annual volume amount (MAV) under the Potable Water
Supply Contract made and entered between such Participating Cities and GTUA; and
WHEREAS, for the water year 2023-2024 ended July 31, 2024, as provided for in said
water purchase agreements, including the North "Texas Municipal Water District, hereinafter
referred to as "NTMWD" standard water purchase agreement, only the Cities of Howe, Van
Alstyne, and Melissa received delivery of water which equaled or exceeded the individual City
required MAV; and
WHEREAS, the Contract Cities of Melissa, Anna, Van Alstyne, and Howe have a multi-
year precedent of the referenced Minimum Annual Volume (MAV) Buy -Sell concept as
referenced herein and as is further referenced and detailed in "Exhibit A" attached hereto for
reference in establishing the buy -sell rate, identifying the MAV water to be transferred, and
referencing the amount of purchase / transfer cost; and
WHEREAS, the City of Anna is desirous of selling to each llowe, Melissa, and Van
Alstyne a portion of their unused MAV and Howe, Melissa, and Van Alstyne are willing to
ILA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - Page 1
purchase said unused portion of the MAV as defined in this agreement and detailed in "Exhibit
A" thus allowing Anna to recover a portion of its purchased but unused MAV for the stated
water year; and
WHEREAS, the background of the above noted agreements, volumes, rates, and
circumstances are further detailed in the September 21, 2024, updated October 3, 2024,
memorandum titled "Sale of GTUA-CGMA Buy -Sell MAV to Participant City" attached hereto
for reference and labeled "Exhibit A".
NOW, THEREFORE, HOWE and ANNA, for and in consideration of the recitals set
forth above and terms and conditions below, agree as follows:
I.
TERM
This Agreement shall apply to the NTMWD water year ended July 31, 2024 and shall be
executed and consurrunated in full between October 31, 2024 and January 31, 2025 or as soon
thereafter as reasonably possible and shall not apply to subsequent water volumes or water years
unless said Cities so authorize by subsequent agreement.
II.
AGREEMENT
The Cities agree that ANNA shall transfer 5,050,100 gallons (5050.1 one -thousand -
gallon increments) of MAV water to HOWE for the water year ended July 31, 2024, and HOWE
shall remit to ANNA a payment for said transfer of MAV at the rate of $3.09 per thousand
gallons totaling in the sum of $15,604.80 as payment in full for said portion of Anna's unused
2024 MAV. Following execution of this agreement, ANNA shall submit to HOWE, an invoice
for the transfer of the described MAV for the above stated sum and HOWE shall remit payment
for said transfer within thirty (30) days of receipt of said invoice, it being the intent that this
transaction shall be completed as soon as reasonably possible, but on or before January 31,
2025, if possible, although it is specifically provided that completion of said invoicing and
payment after said date shall not invalidate any portion of this agreement, it being the intent
however to complete said transaction before or by the stipulated date.
III.
RESPONSIBILITIES OF THE PARTIES
1. The respective City Councils of HOWE and ANNA shall each approve an Interlocal
agreement authorizing the sale / purchase of the stipulated portion of MAV water as described
herein and further detailed in the attached Exhibit A.
2. ANNA, following approval of the interlocal agreement by each party thereto shall submit
to HOWE an invoice for the referenced volume of MAV water detailed above in Section II and
for the stipulated sell / purchase amount.
3. HOWE shall remit to ANNA the above stated payment for the transferred MAV water
within thirty (30) working days of the receipt of referenced invoice.
]LA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - Page 2
4. Any party hereto wishing to verify the metered quantities of water or the portion of the
minimum annual volume to which this agreement refers shall be entitled to verification subject to
said verification being completed prior to the submission of the invoice referenced in item III — 2
above. Should GTUA verification indicate a different volume of minimum annual volume than
referenced herein, the parties hereto shall modify said quantity and the resultant payment for said
quantity of minimum annual volume prior to the invoicing and payment phase (item III — 2 & 3
above).
IV.
TERMINATION
The Cities recognize that this Agreement shall commence upon the effective date herein
and continue in full force and effect until termination in accordance with its provisions. ANNA
and HOWE herein recognize that the continuation of any contract after the termination of this
agreement or impacting any future water year shall be subject to City Council approval for each
City, respectively. Following termination of this agreement, or should either City fail to execute
this agreement, there shall be no further commitment hereunder. However, upon the occurrence
of such event in which either party terminates this Agreement by giving the other party thirty
(30) days written notice, the selling party shall forward such notice to GTUA so that alternative
billing for the water volume specified in this agreement may be processed per the GTUA-CGMA
billing policy.
V.
RELEASE AND HOLD HARMLESS
ANNA and HOWE, to the extent authorized under the constitution and laws of the State
of Texas, agree to be responsible for their own acts of negligence which may arise in connection
with any and all claims for damages, cost, and expenses to person or persons and property that
may arise out of or be occasioned by this Agreement. In the event of joint and concurrent
negligence, ANNA and HOWE agree that responsibility shall be apportioned comparatively.
This obligation shall be construed for the benefit of the parties hereto, and not for the benefit of
any third parties, nor to create liability for the benefit of any third parties, nor to deprive the
parties hereto of any defenses each may have against third parties under the laws and court
decisions of the State of Texas.
VI.
AUTHORITY TO SIGN
The undersigned officer and/or agents of the parties hereto are the properly authorized
officials and have the necessary authority to execute this Agreement on behalf of the parties
hereto. The Cities have executed this Agreement pursuant to the authority granted by its
governing body.
IX.
SEVERABILITY
ILA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - rage
The provisions of this Agreement are severable. If any paragraph, section, subdivision,
sentence, clause, or phrase of this Agreement is for any reason held to be contrary to the law or
contrary to any rule or regulation having the force and effect of the law, such decisions shall not
affect the remaining portions of the Agreement.
X.
VENUE
This Agreement and any of its terms or provisions, as well as the rights and duties of the
parties hereto, shall be governed by the laws of the State of Texas. The parties agree that this
Agreement shall be enforceable in Collin County, Texas, and, if legal action is necessary,
exclusive venue shall lie in Collin County, Texas.
XI.
INTERPRETATION OF AGREEMENT
It is acknowledged that this is a negotiated document. Should any part of this Agreement
be in dispute, the Cities agree that the Agreement shall not be construed more favorably for
either City.
XII.
REMEDIES
No right or remedy granted herein or reserved to the parties is exclusive of any right or
remedy granted by law or equity; but each shall be cumulative of every right or remedy given
hereunder. No covenant or condition of this Agreement may be waived without the express
written consent of the parties. It is further agreed that one (1) or more instances of forbearance
by either party in the exercise of its respective rights under this Agreement shall in no way
constitute a waiver- thereof.
XI1I.
SUCCESSORS AND ASSIGNS
The parties each bind themselves, their respective successors, executors, administrators
and assigns to the other party to this contract. Neither party will assign, sublet, subcontract or
transfer any interest in this Agreement without the prior written consent of the other party. No
assignment, delegation of duties or subcontract under this Agreement will be effective without
the written consent of both parties.
1LA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - Page 4
IN WITNESS WHEREOF, the parties have executed this Agreement by signing below.
Date: las ['av
APPROVED AS TO FORM:
CITY TTORNEY
Date: / ` =4I'
APPROVED AS TO FORM
CITY ATTORNEY
CITY OF ANNA, TEXAS
Ryan Henderson
City Manager
CITY OF HOWE, TEXAS
By:
Monte Walker
City Administrator
ILA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - Page 5
ACKNOWLEDGMENTS
STATE OF TEXAS §
COUNTY OF COLLIN §
This instrument was acknowledged before me on the 19—AAday of �J�
N, by ?y ear)er of the City of Anna, Texas, a Texas
Home -Rule Municipal Corporation, on behalf of said municipality.
CARRIE L. LAND
PY P �i
Notary Public, State of Texas
?". 4 Comm. Expires 02-04-2027
Notary ID 11419404
STATE OF TEXAS §
§
COUNTY OF GRAYSON §
Notary Public, Sta e of 4Texas
This instrument was acknowledged before me on the day of ,
2024, by , , of the City of Howe, Texas, a
Texas General Law City, on behalf of said municipality.
Notary Public, State of Texas
Exhibit A
Attach copy of October3, 2024 memorandum from Donald E. Paschal, Jr. to CGMA Mayors
and City Managers regarding the subject: "Sale of GTUA-CGMA MAV to Participant City"
ILA for MAV Transfer Agreement from Anna to Howe for 2024Water Year - Page 6
DONALD E. PASCHAL, JR.
904 Parkwood Court McKinney, TX 75070 Tel. & FAX 972.529.1325
email: don@paschalconsulting.com
To: CGMA City Managers and Mayors
Subject: "Sale of GTUA-CGMA Buy -Sell MAV to Participant City Report"
with Buy -Sell Program Concept Changes / Revisions
Date: October 3, 2024
Buy -Sell Concept Overview:
GTUA-CGMA Cities have engaged the Minimum Annual Volume (MAV) Buy -Sale Concept
since October 2011. The process of the Buy -Sale process includes a detailed Concept Report
with recommendations from the CGMA Facilitator / Consultant (Don Paschal), a summary
report of the recently completed Water Year water take with data showing both unused and
overused MAV (Minimum Annual Volume) includes an annual report, a recommendation from
Consultant (Don Paschal), the MAV available for sell from under using Cites to overusing
Cities, and the projected MAV volume in K (1000) gal units proposed for sale to buying Cites.
Both Selling and Buying cities must execute an interlocal agreement documenting the sale in
MAV volume and the dollar amount of the buy / sell actions. The Concept plan and associated
MAV volumes are recommended to the Cities by the CGMA Board at the Fall Board meeting
and subsequently followed by City adoption of the authorizing Resolutions & ILAs. The
Consultant has traditionally prepared the Resolutions and ILA using a consistent format for all
Cities. Consultant typically distributes the documents to all Cities prior to the Fall Board
meeting to allow time for the respective City Staffs to review and provide comments to the
Mayors prior to the CGMA Board meeting and ultimately to their respective City Councils.
The purpose was and still is to allow Cities using more than their MAV (formerly MT/P) to
purchase unused MAV from Cities using less than their MAV (Minimum Annual Amount). The
selling City recoups a portion of their already purchased MAV and the purchasing City
purchases an amount of the selling city(s) unused water up to the amount of aggregate
underuse by the selling City(s). The purchased volume of untaken / unused MAV is prorated
as a ratio of the buying Cites overuse to the aggregate overuse by all CGMA cities. Overage
of water in excess of the MAV purchased by overusing Cities cannot exceed the unused MAV
volume of underusing Cities. .
All the water purchased from NTMWD by GTUA for the benefit of CGMA Cities goes through
GTUA as the contracting / managing entity based on the collective CGMA MAV for the subject
Water Year (August 1 through July 31). The MAV for each City is paid in full by all CGMA
Cities in monthly payments beginning the first month of the GTUA (and City) Fiscal Year
October 1 through September 30 following the Water Year completed on the prior July 31 WY
completion. Currently all CGMA Cities have the same FY as GTUA and NTMWD. Following
the end of the Water Year, final accounting is computed by NTMWD (usually the variance in
2
NTMWD and GTUA total take is negligible with final accounting of volumes based on the end
of WY "true up". Additionally, any rebates / refunds based on NTMWD system cost savings
are also reported and incorporated on any end of year "true up" by GTUA and either credited
to the last billing of the FY or first billing of the new FY or may be paid directly to the subject
City by GTUA.
The purchased MAV water between buying and selling City is then reduced from the final
calculated take of the buying Cities to arrive at the MAV for the subsequent Water Year (but
not less than the prior year MAV). The Selling City subsequently invoices the buying Cities
for the prior year MAV purchased at a reduced rate generally based on historical variable cost
reduction. Thus, both the selling and buying Cities received benefit with the selling Cities
recouping a material portion of the previously purchased but unused MAV and the buying Cities
paying for the additional water taken, but at the somewhat reduced rate and receiving credit
(reduction) for the subsequent WY MAV. The Buy -Sell of MAV water is accomplished through
an interlocal agreement as referenced above between the cities and thus is not a component
or process which GTUA either blesses or manages other than documenting the adjustment to
future MAV of the buying Cities (the selling Cities subsequent year MAV is not generally
impacted by the buy -sell process (but could be impacted by flushing water used).
The purpose of this Communication to the Cities is to advise all CGMA participants that the
Buy -Sell Program has been impacted by the Contract Entity agreement implemented in 2021
Water year by NTMWD. Prior to that date, NTMWD operated under a policy which provided
with entities using water volume in excess of the then Minimum Take or Pay which was the
term for minimum required water purchase for the water year; that term and concept were
replaced in 2021 by the new standard Member and Customer Contract which used the term
Minimum Annual Volume (MAV) referencing the base level of water obligation by each entity
during a given Water Year. The terminology change was mainly to provide awareness of two
major changes:
1. Prior to the change, water purchased more than the MT/P was charged as a significantly
reduced rate based on the calculation of production cost that were not incurred by
NTMWD due to the water not being produced and pumped to the users. Cost related
to debt service, maintenance, and System operational cost were all charged as
budgeted as the minimum revenue to keep the system solvent and operational.
2. Subsequent to the change in 2021, Member Cities which had experienced significant
reduction in water demand due to conservation programs could qualify through specific
criteria for a gradual reduction in MAV whereas there previously had been no way to
reduce annual water year contract water volume.
GTUA and the CGMA Cities had been practicing the buy -sell concept since 2011 using the
reality that the contract was with GTUA, an "aggregating entity" responsible for a single GTUA
MT/P or MAV. Each participant City had its own MT/P or MAV under their contracts with GTUA
(same basic contract as NTMWD has with others including GTUA, thus there is consistency in
terms, definitions, etc.). In 2011 we developed the mechanism for under MAV users to sell a
portion of the untaken MAV to other CGMA participants taking excess water over their MAV.
This allows users taking excess water over MAV to reduce a portion of the increase in their
MAV while allowing the under user to recoup a portion of the water charges paid during prior
Fiscal year for water year MAV. The GTUA group is the only group known by this consultant
9
to use this concept to reduce the sunk cost of underuse MAV while helping over users to
reduce their subsequent year MAV. Both entities receive benefits which is a significant offset
to the increased cost of excess water or reduction of cost of under MAV use to the respective
GTUA City customer participants.
This Concept Report also serves the purpose of advising each Participant City of any program
implementation changes for the current Water & Fiscal Year with summaries as needed of the
historical program interpretations and adjustments. The primary adjustments involve
interpretation of the credit to the water rate paid by buying Cities and similar reduction in
payment received by the selling City or Cities. Prior to 2021, the cost of excess water varied
but was generally as much as 35% or more of the base water cost per K gallons Beginning in
2021, the cost credit buyers received from sellers has been relatively moderate being generally
based on the cost of power and chemical cost that the District might have avoided under the
older program.... this was the best way to identify a cost that mimicked the old system. While
underuse does not occur every year, there are years where this program cannot be used, but
it was positive under the old definitions / program and has been worthwhile under the new MAV
program.
It appears to be a good opportunity for all CGMA cities for the recently completed water 2024
Water Year to either reduce otherwise lager 2025 MAVs, recoup a large portion of the untaken
MAV cost, and purchase another's unused MAV at an attractive cost; the program is therefore
recommended for 2024 and future years. Consultant will proceed with crafting the final
program for CGMA Board and Cities to act on which consists of Buy -Sale Interlocal
Agreements and Resolutions that will be forwarded to Participant Cities for review by City Staff
to allow review prior to approval of the enacting City Resolutions which authorize execution of
the Interlocal Agreements between buying and selling Cities. This process can be executed
as early as the end of September or in October with payments occurring in October or later. It
is noted as a reminder that the last MAV payment is made in September with October
beginning a new Fiscal Year of payment for Water Year water take based on the 12-month
water year ending July 31. It has been the practice for the CGMA Board to consider and act
on recommending the program for acceptance and approval at the fall, preferably October,
Board Meeting. CGMA Board endorsement at the noted fall Board Meeting (or by email review
and approval as may be necessary) is a historic precedent that serves the purpose of group
review and discussion followed by the CGMA policy advisory Board recommending the
program and having that action recorded in the Board Minutes. There could be adjustments
to the concept details as implementation alternatives are identified.
Concept Modifications Contemplated:
The following summarizes the concepts and proposed actions for Buy -Sell Program
modifications:
Historical 2011 thru 2024 Program & Summary of Proposed Program
Modifications
o Based on prior year precedents, a member City which took water beyond its MAV
may acquire a portion of the unused MT/P (now MAV) from other CGMA member
City or Cities. Such acquisition allows the selling City to recoup a major portion of
4
the cost of the MAV paid during the Fiscal Year for Water Year MAV (ending on
July 31 of a given year) for an established discounted price.
This practice is recommended for continuation for the benefit of all CGMA
Cities with adjustments as detailed below.
o The change (implemented in 2021) is that the established price no longer has a
NTMWD Excess Water Rate to use for adjusting the price of the buy -sell MAV
water. The NTMWD base contract provides for Additional Water vol over MAV, to
be purchased by Cities at the annual water rate set by NTMWD plus the GTUA-
CGMA cost components set by GTUA-CGMA Policy. The NTMWD Customer
Contract, implemented with the 2021 Water Year provides that Contract & member
Cities (entities) pay the full water rate for Additional Water (at least until such time
as The District reinstates some form of excess or discounted additional water take
policy. Therefore, based on the 2021 Customer contract, buying Cities shall pay
the established water year rate for Additional Water taken over the MAV. This
would require cities using more than the MAV to pay the annually established MAV
water rate for volumes over the MAV. Hence, the benefit of the CGMA-GTUA
(group) system, which NTMWD considers as a single MAV purchase by GTUA,
provides the opportunity for unused water by some participants to sell their unused
MAV to participants using more that its established MAV for a given water year at
a discounted rate (otherwise, all cities would simply pay the full rate resulting in
overpayment for the GTUA system.
o Basis for buy -sell rate calculation — GTUA and other Customer as well as Member
Cities were impacted starting in 2021 by an advisory notice of failure to reach the
MAV volume from NTMWD if a portion of the MAV was not used. The basis of
this concept was that entities using less than the Water Year MAV could share
proportionally in one-third of the unspent / unused NTMWD budget. This policy
of the District has not produced much savings or refunds for most entities except
larger entities which had allowed their MAV to get out of hand by not implementing
conservation policies aggressively resulting in high and unsustainable use.
Further, this policy is restrictive for CGMA Cities as the individual entities are
generally not contract entities of NTMWD. CGMA as a whole seldom has
significant untaken MAV and thus the policy is of little use. In reviewing the recent
history of CGMA Cites, the tendency has been to use excess water (above MAV
level) after hitting the established MAV. The growth of all CGMA Cities tends to
indicate that refunds from unuse are not likely to be significant. On the other hand,
the Buy -sell has projected positive benefits for under and over users of their MAV.
o For 2022 Water Year, the available NTMWD data showed a discount for Cities
selling unused MAV at a price of $0.60 / K gallons. No buy -sell was performed in
2023 water year as all cities used their full MAV
o For2024 Water year, it is suggested that the same rate as 2022 be used; thus a
$0.60 discounted purchase of unused MAV. As Water Rates rose, it is likely that
if available, similar data as used in 2022 would have generated an equal or higher
5
rate than the 2022 WY discount for the buy -sell agreement, therefore, using the
same discounted amount as 2022 is rational. If any adjustments were identified,
it is believed that a higher discounted amount than $0.60 / K gallons would result.
o Observations for buy -sell alternative discounting polities:
The Policy provision has been: the Selling Participants discounted price for the
water being sold under the Buy -Sell agreements shall be based on the cost
savings from NTMWD budget data using cost avoidance for electricity,
chemicals, and similar cost not incurred for untaken MAV. Unused group MAV
will be proportionately shared among Participant's individual under use of Entity
MAV allowing individual entity remaining unused MAV to be sold through the
Buy -Sell Program and discounted to the Buying Participant.
The GTUA-CGMA buy -sell cost calculations should be adjusted to apply the
discount methodology as the buy -sell cost calculation using the NTMWD data
if available, although it is likely difficult to secure all the same data in the future
since the District does not routinely produce that data as it is no longer part of
District operational contracts. GTUA should be able to secure enough
indicators of likely impact on the discount rate even if specific, detailed costs
are not available. Therefore, if the CGMA group wants to retain the practice of
using available District data there is likely still enough information to provide a
rational provision available to discount the buy -sell MAV water.
Alternatively, the cost discounted rate or rate concept could be one approved
by the CGMA Board with discussion from CGMA Cities Staff. As an example,
the process could be simplified to be a specified percentage such as a fixed
20%. Such a fixed rate could be adjusted annually or periodically as the CGMA
members agree is reasonable and could be independent from the concerns
over gathering appropriated cost reduction data from specific NTMWD.
Another alternative could be to take an average of the % of rate discount over
time. For example: in eleven of the last 12 years, a discounted rate was
calculated using either District data or the same as the prior year. The result
is an average or 21.43 % off the standard NTMWD rate (does not impact the
GTUA budget allocation or CGMA-GTUA debt / capital rate calculation). Based
on the 2024 Water Year rate after $0.05 adjustment recently granted resulted
in a $3.74 / K gallons rate times a 21.43% rate adjustment for purchased MAV
would result in a $0.8015 rate discount. Thus, the above referenced $0.60
discount may seem too low to some cities. If the group overall want toe raise
the discount amount, it is suggested that it be gradually phased in at the rate
of 2 to 3 cents per year in an effort to be as equitable to both buying and selling
Cities.
o It is important that:
W
a. There be a benefit that induces the Buying Participants to purchase unused
MAV from Selling Participants, and
b. it is rational that Participants not using all their allocated MAV bear some
cost exposure.
c. This concept proposed has provided the buyers that purchased amounts of
unused MAV a discount ranging from 13% to 16% (except for the 2011 &
2012 anomaly years with the Sellers having the similar, but moderately
increasing levels of reduction from the base cost of water.
d. Additionally, the buyer Participant(s) will continue to receive credit for the
purchase of unused MAV volume reducing their subsequent year MAV by
the purchase volume. This also allows the aggregate CGMA MAV to match
the calculated GTUA MAV as calculated by NTMWD.
e. The Policy provides that the Selling Participants discount the water under
the Buy -Sell agreements by calculation, if available, of rational cost savings
to the production of water from the source assuming adequate data is
available. Alternatively, the cost discounted rate or rate concept could be
one approved by the CGMA Board with consent of the CGMA Cities Staff.
As an example, the process could be simplified to be a specified percentage
such as a fixed 20%. Such a fixed rate could be adjusted annually or
periodically as the CGMA members agree is reasonable and could be
independent from the concern over gathering detailed cost reduction data
from specific annual cost factors. gallons.
f. For the 2024 water year buy -sell agreement, the $0.05 cost rebated to the
base price resulted in a base price for the year $0.05 less than the initial and
invoiced price for all the MAV water; this nickel system wide credit or
reduction in base price shall be used as the base price for calculating the
buy -sell price.
o It is possible (as occurred in the 2021 Water year and again in the recently
completed 2022 Water Year) that an overusing City may have used more water in
excess of its MAV than available from at the Selling Cities; in such case, said city
shall pay the GTUA-CGMA system the full rate for the Water Year based on billing
after all true up volume data is validated by NTMWD and GTUA. Such was not
the case for the 2021 WY.
Therefore, to assure clarity, the Buying City is responsible for:
1. Purchasing it's full share of MAV as billed for the WY by GTUA.
2. Purchasing available or agreed portion of unused MAV water from selling
City or Cities.
3. Purchasing any additional water taken beyond said Participant's MAV plus
any unused MAV purchased from Selling Participants; the cost for this
volume shall be the full established rate for the subject water year as a true
up at the end of the water year when volumes and any rebates are validated
by both GTUA and NTMWD.
4. Additionally, purchasing City will receive a credit applied to the subsequent
Water Year MAV thus reducing the subsequent year MAV by the volume
purchased from Selling Cities.
7
o Staff recommends the above methodology which provides:
1. Transparency in source of applicable rate and discount amount
2. Avoids conflicting accounting for short-term issues by charging the annually
charged rates, and
3. Maintaining the credit for subsequent year MAV volume. Back testing has
indicated consistency with audit validity with NTMWD volumes and the
collective GTUA MAV while maintaining full accounting audit capabilities.
The following tables illustrate the funding methodologies and the resulting buy — sell
amounts for the 2023-24 water year which started August 1, 2023 and ended July 31,
2024. The NTMWD beginning of year price / K gal was $3.79 / K gal. Subsequently,
last month, NTMWD granted a $0.05 / K gal credit (reduced price for the full 2023-24
water year. While no credit for underused water was granted in the 2023 WY,
Documentation from historical records indicated that if a credit for unused water had
been granted, the adopted Water credit for 2023 WY was would likely have been based
on $0.60 / K Gallons for that water year and that is the discounted rated included
in the data below. If the Cities want to increase the discount rate, Consultant
will be pleased to make the necessary revisions to this document. Therefore,
it is recommended that the 2024 WY credit for the buy -sell agreements be $0.60
/ K gallons as a reasonable and equitable discount rate for the 2024 Buy -Sell
program; unless a differing policy is desired. Several optional methodologies are
noted in the above paragraphs.
2023-24 WY (ended July 31. 2024) customer rate data
All
Entities
CGMA MAV water / K
gal 1000 gal units
Recommended Discount
Policy for unused MAV
Net sell rate for 2024
Water Year
Ne
Prc
rates
$3.69
$0.60
$3.09
Proportionate Share Use: MAV available to be sold to Excess use City for 2023-
24 water vear
MAV (in K Gal)
Melissa
Anna
Van
Howe
Alstyne
MAV water (all in K
571,761.6
859,848
126,469
75,505.6
gallons)
Flush, ratio City MAV
0.4453
0.3442
0.1135
0.0464
to tot MAV
Share Flush by Ctiy
37,565
29,032
9,571
3,911
Tot Adj Wtr Take incl
778,671.3
601788.5
198,396.0
81,071.3
share flushing, maint
Over / under used MAV
206,909.7
258,059
65,264.6
5,050.1
0
Buy -Sell Vol ratio to
total City overused
0.7275
NA
0.2529
0.0196
Buy Vol in K gal
187,744.2
NA
65,264.6
5,050.1
Tot Net take over
MAV
22,279.2
NA
7,717
622
K gal purchased
187,744.2
NA
65,264.6
5,050.1
K gal sold
NA
258,059
NA
NA
Total paid $
$580,129.70
NA
$201,667.80
$15,604.80
Total received $
NA
$797,402.30
NA
NA
Thus, the purchase of unused MT/P from Seller City to purchasing Cities of Melissa,
Van Alstyne and Howe is shown above resulting in a total purchase of unused MAV
from Anna of $ 810,305.3
Note that there was no refund from NTMWD for rebate program from usage under
MAV to GTUA 2024 water year.
Note that program responsibility is CGMA Cities:
This program is not regulated or controlled by GTUA but has been developed by the CGMA
Facilitator as an Interlocal-Agreement among CGMA participating cities for the benefit of the
participants with GTUA recognizing the cooperative arrangement between the Cities and
reducing the Buying Cities subsequent year MAV by the volume purchased through the
Interlocal Agreements between Buyer and Seller Cities. MAV obligations are paid by all cities
in equal monthly payments beginning in October and concluding in September of each fiscal /
budget year for the MAV as set for the water year beginning August 1 of each year based on
the adjusted consumption in the prior water year ending July 31. A true up of additional water
volumes over MAV is charged upon final determination of actual volumes based on both
NTMWD and GTUA records.
Participation in this program is not a requirement, but a choice that each participant
determines independently. It is noted that the Buying City would have to pay the established
water rate for the water year if this option were not available and no recovery would be
available to selling Cities absent this program. However, the program allows:
1. Selling Cities to recoup a portion of the funds already spent for their required 2024
MAV; and for
2. Purchasing Cities to pay for water actually used at a moderately discounted price
which allows said Purchasing City to reduce the increase in their respective MAV
for the subsequent year by up to the amount of purchased MAV from selling City(s).
level.
er
3. Cites should remember that regardless of where its consumption is for any year ....
either a buyer or seller of unused MAV, that position could be changed as growth
and water consumption impacts each Participant differently in future years.
It is anticipated that this program will be presented to the CGMA Board for review at a Board
Meeting in October 2024, CGMA Board meeting. A recommendation will be made by Staff at
that meeting; however, while this report is Staff prepared and recommended, no action is
anticipated or suggested until City Management and other staff have had time to review and
comment if desired.
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