HomeMy WebLinkAboutRes 2021-01-843 Melissa Take or PayCITY OF ANNA, TEXAS
RESOLUTION NO. ,- a i -01 � Y 4 aj
A RESOLUTION OF THE CITY OF ANNA, TEXAS REALTED TO THE AN INTER -LOCAL
AGREEMENT BETWEEN THE CITIES OF ANNA AND MELISSA UNDER WHICH THE CITY
OF MELISSA AGREES TO TRANSFER A PORTION OF ITS CONTRACTUAL MINIMUM
TAKE OR PAY WATER OBLIGATIONS WITH THE GREATER . TEXOMA UTILITY
AUTHORITY (GTUA) TO THE CITY OF ANNA IN EXCHANGE FOR AN AGREED PAYMENT
FROM ANNA AND AUTHORIZING THE CITY MANAGER TO SIGN THE INTER -LOCAL
AGREEMENT
WHEREAS, the City of Melissa Texas has previously authorized and executed agreements
with the Greater Texoma Utility Authority for surface water supply system to be planned,
funded, constructed, and operated by GTUA, including the payment of monthly minimum take
or pay water purchase provisions necessary to fund said water transmission system and
purchase of potable water; and
WHEREAS, the City of Melissa has chosen to not accept delivery of a portion of the agreed
minimum take or pay water through the end of the 2020 water year (ended July 31, 2020) and
desires to transfer a portion of its obligated minimum take or pay for said 2020 water year to
the City of Anna for consideration detailed in an inter -local agreement; and;
WHEREAS, the City of Anna has indicated interest in purchasing a portion of the City of
Melissa's minimum take or pay for the water year ended July 31, 2020 as explained in a report
memorandum to the City Managers,/Administrators of the Cities of Melissa, Anna, Van Alstyne
and Howe, dated October 5, 2020 by Donald E. Paschal, Jr., consultant to said cities, which
report memorandum is attached to said inter -local agreement as "Exhibit A"; and
WHEREAS, it is acknowledged that a companion or similar agreement is contemplated
between CGMA-GTUA City of Anna and the selling CGMA-GTUA Cities of Melissa, Howe and
Van Alstyne.; and
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA,
TEXAS THAT:
Section 1. Recitals Incorporated.
The City Council of the City of Anna authorizes the execution by the City Manager of the
attached Inter -local Agreement with the City of Melissa for the terms detailed therein providing
for the following:
A. Receiving a portion of Melissa's GTUA required minimum take or pay from Melissa as
provided for in the attached Inter -local Agreement.
B. Agreeing to pay for the agreed portion of the 2020 water year minimum take or pay to
the City of Melissa.
Section 2. Verification.
RES. C�l(��1 � ,_ �' ,, C� t l •2� PAGE 1 OF 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.
Section 3. Approval of Resolution.
This Resolution shall be effective immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Anna, Texas on this 12th day of
January, 2021.
ATTESTED:
J
arrie L. Land, City Secretary
APPROVED
Pike, Mayor
PAGE20F2
CITY OF MELISSA, TEXAS RESOLUTION NO. 21-11 (R)
A RESOLUTION RELATED TO AN INTER -LOCAL AGREEMENT
BETWEEN THE CITIES OF MELISSA AND ANNA UNDER WHICH
THE CITY OF MELISSA AGREES TO TRANSFER A PORTION OF ITS
CONTRACTUAL MINIMUM TAKE OR PAY WATER OBLIGATION
WITH THE GREATER TEXOMA UTILITY AUTHORITY TO THE CITY
OF ANNA IN EXCHANGE FOR AN AGREED PAYMENT FROM ANNA
AND AUTHORIZING THE EXECUTION AND ADMINISTRATION OF
SAID INTER -LOCAL AGREEMENT
WHEREAS, the City of MELISSA has previously authorized and executed agreements
with the Greater Texoma Utility Authority for a surface water supply system to be planned,
winded, constructed, and operated by GTUA, including the payment of monthly minimum take
or pay water purchase provisions necessary to fund said water transmission system and purchase
of potable water; and
WHEREAS, the City of MELISSA has chosen to not accept delivery of a portion of the
agreed minimum take or pay water through the end of the 2020 water year (ended July 31, 2020)
and desires to transfer a portion of its obligated minimum take or pay for said 2020 water year to
the City of Anna for consideration detailed in an inter -local agreement; and
WHEREAS, the City of Anna has indicated interest in purchasing a portion of the City of
MELISSA's minimum take or pay for the water year ended July 31, 2020 as explained in a
report memorandum to the City Managers / Administrators of the Cities of Melissa, Anna, Van
Alstyne and Howe dated October 5, 2020 by Donald E. Paschal, Jr., consultant to said cities,
which report memorandum is attached to said Inter -local agreement as "Exhibit A"; and
WHEREAS, it is acknowledged that a companion or similar agreement is contemplated
between the Purchasing CGMA-GTUA City of Anna and the Selling CGMA-GTUA Cities of
Melissa, Howe and Van Alstyne.
NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of MELISSA
that:
SECTION l: The City Council of the City of MELISSA authorizes the execution by the City
Manager or Mayor of the attached Inter -local agreement with the City of Anna for the terms
detailed therein providing for the following:
A. Transferring a portion of MELISSA's GTUA required minimum take or pay to Anna
as provided for in the attached Inter -local Agreement.
B. Invoicing Anna for the agreed portion of the 2020 water year minimum take or pay.
C. Accepting Payment from Anna as provided for in the attached 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 Jay Northcut seconded by Shannon Sweat, the above resolution was
approved by the City Council of the City of Melissa at its meeting held this 81h day of December,
2020, by the following vote:
7 AYE
acie Galyon, CIV ecretary
City of Melissa, Texas
0 NAY
Reed Greer, Mayor
City of Melissa, Texas
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MELISsq Fji
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DONALD E. PASCHAL, J R.
904 Parkwood Court McKinney, TX 75070 Tel. & FAX 972.529.1325
email: don@paschal consulting.com
To: CGMA City Managers
Subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City
Date: October 5, 2020
The Buy -Sale Concept Report followed by agreements between the CGMA City Participants began in
October 2011 making this 2020 Report / Proposal the tenth year of using this concept. Therefore, this
report draft is shortened considerably with so much history which can be traced should more
background or detail be needed.
The Concept can be summarized as follows:
• Based on prior year precedents, a member City which took water beyond its MT/P may acquire
a portion of the unused MT/P from other CGMA member City or Cities.
• Such sale allows the selling City to recoup some of the cost of the MT/P paid during the water
year for an established discounted price (rate varies by year).
• Acquisition at the established price / K gallons allows the acquiring City to reduce the increase
in the subsequent water year MT/P (in 2021 will be refereed to as MAV or Minimum Annual
Volume).
• Absent this program (purchasing at a reduced cost and simultaneously keeping the MT/P lower
lessening the following year MT/P while allowing the Selling City to recoup some of its paid in
cost) would result in City exceeding the MT/P purchasing a portion of the additional water at
the then established price. Such established price could be considerably higher and up to the
price for the MAV / K gallons in the future. Is it noted that the 2020 Water Year is likely to the
last year that the NTMWD Excess Water Rate is likely to be available since the District has
announced the rate will no longer be available.
• The methodology has been to calculate a blended average of the MT/P and the Excess Water
Rate (and could include other expenses to assure all cost are covered).
• A quick summary is that this buy -sell action has allowed CGMA Cities using less than the MT/P
the opportunity to recoup a portion of the MT/P water cost paid during the water year and
allowed the buying City to keep a lower MT/P.
In the recently completed water year (ended July 31, 2020) only Anna used water in excess of their
required GTUA-CGMA minimum take or pay (MT/P) through the North Texas Municipal Water District
(NTMWD) agreement. The other three city's (Van Alstyne, Melissa, and Howe) did not use all their
MT/P. Over the last ten years, Melissa was the only buyer for the first seven years. Both Anna and
Melissa were purchasing Cities one year and this will be the second year in which Anna is the sole
buying City. Thus, the program has benefited all the Cites to varying extents. The details of the
proposed transaction are provided below; the explanation and process are intended to be as simple
as possible. The basic concept is that three CGMA Cities (Van Alstyne, Melissa, and Howe) sell their
unused portion of their MT/P to another user Cities exceeding its respective MT/P at an agreed price
that provides benefits to both seller and buyer. The following summary is an update of the similar /
same document / transaction from last year with minor tweaks as noted.
2
This program is not regulated or controlled by GTUA but is purely an agreement among CGMA
participating cities for the benefit of the participants; GTUA recognizes the cooperative arrangement
between the Cities implemented through annual Interlocal Agreements between Buyer and Seller
Cities. MT/P obligations are paid by all cities in equal monthly payments beginning in October and
concluding in September of each budget year for the MT/P as set for the water year beginning August
1 of each year. Participation in this program is not a requirement, but a choice that each participant
determines independently. It is again noted that the Buying City would have to pay the established
water rate plus delivery cost if this option were not available. However, the program allows:
1. Selling Cities to recoup a portion of the funds already spent for their required MT/P; and
2. Purchasing Cities to pay for water actually used which then allows them to keep their
respective MT/P at a lower level.
Background:
• Minimum Take or Pay / City - CGMA City MT/P: The base MT/P water purchase for the 2020
water year (minimum contract provision that the GTUA-CGMA system has with NTMWD for water)
was a total of 792,226,000 gallons of water as MT/P which represents 792,226 one -thousand
gallon increments (K gals). Each CGMA City is responsible for the lesser of 59,312.5 K gals or
the previously set higher MT/P based on use plus pumping and related cost). Once all four CGMA
Cities reach the MT/P, or when any combination of cities exceeds the total CGMA MT/P volume
for the subject water year, an additional water charge is incurred by the Entities exceeding their
MT/P.
• 2019-2020 water year take -For the recently ended water year, total use was significantly
impacted by much larger allocations for flushing, which is an operational issue being addressed
by separate documentation from GTUA. City water charged (take) the 2019-20 water year was:
Only Anna took all of their respective full MT-P water, that being Anna which took 442,631,750
Gallons (442,632.75 K Gallons), well above their MT/P.
Melissa took all but 18,324 K gallons which was 95.5% of their MT/P.
Van Alstyne took 43,766.75 K gallons representing 73.8% of their MT/P.
Howe's take was limited to flushing of 31,949.75 K gallons or 53.9% of their MT/P.
• Maintenance, Flushing and Unaccounted for Water - It is noted that TCEQ regulations imposed
on GTUA in January 2020 necessitated extensive flushing to maintain water quality even to the
Howe tank even though no water is taken north of Anna. Actions have been initiated to help lower
flushing, but only actual use by both Van Alstyne and Howe will resolve the matter. Thus, an equal
amount of flushing is allocated to each city for overall system maintenance, meter discrepancy,
and lost or unaccounted for water.
• Continued Ground Water Use -During the 2019-20 water year, ground water sources continued
to provide a minor amount of Melissa water, a significant portion of the water used by
Anna, most of the water used by Van Alstyne, and all of Howe's water. Ground water will
continue to be used by these cities in the 2020 water year, but as a decreasing % over
several years. It is expected that surface water will be used to accommodate growth and
gradually replace small, but increasing percentages of ground water in subsequent years
as ground water is slowly depleted (note: careful management of the aquafers may
stabilize supplies and allow the use of some base level of ground water for many years
thus, extending the useful and economic life of many CGMA Cities' wells for decades for
some potable water as well as for irrigation purposes.
3
• Historical Practice and Buy -Sell Rate Calculation — A blended rate methodology has been used
to establish the buy -sell rate for several years. The blended rate is based on the average of the
base and excess rates. For the recently completed 2020 water year, the standard rate / K gallons
was $3.04 and the excess water rate was $0.49 / K gallons. These water rates and the blended
calculation are illustrated below. 2020 is the last year the concept of an Excess Water Rate will
be available being replaced by an Additional Water Used charge as set by the NTMWD Board. A
blend of the base rate and the District excess water rate has allowed all cities to acquire water at
an attractive rate which has been less than the base rate while the Selling Cities recoup a portion
of the MT/P base rate that they paid during the fiscal year. It is noted that all MT/P water has been
invoiced for the McKinney Pass -through Agreement charges, GTUA pumping and administrative
charges, and reserves which will transition to a cost / K gallons in 2020-21. By 2021-221 it is
expected that all cities will be taking water at MAV levels allowing the Original System Debt Service
to transition from equal '/ shares to proportional of system MAV.
• Cost Calculations for 2019-20 Water Year - It is proposed that the same rate methodology be
applied to the 2019-20 buy -sell agreements as was used in the prior years. The cost calculations
for the above described Buy -Sell of MT/P is being based on prior years practice. For 2020 Water
Year, the base NTMWD Customer City rate and excess water rate are illustrated below resulting
in the blended are shown:
2019-20 customer rate data
Entities CGMA MT/P water / 1000 GPD Melissa Excess Water Blended Average
rates $3.04 $0A9 $1.76.5
It is noted that even though only one city (Anna) exceeded its MT/P, the total CGMA MT/P again
set a new high at 903,869 K gallons, thus raising the aggregate MT/P for the subsequent year
(2019-20) by 111,643 K gallons (which is based on final, reconciled adjustments by NTMWD and
/ or GTUA).
• 2019-20 Water Compared to MT-P —Since the volume of excess water to be purchased for the
recently completed 2019-20 water year exceeded the full MT/P of all three selling cities, the
proration is technically a moot point for 2019, but as a technical matter, the proration amount for
buy -sell agreements is 100% of the collective unused MT/P. In summary, the purchasing city
(Anna) will be acquiring the full amount of the selling cities un-used MT/Ps. Additionally, this
practice actually encourages a City with other options (could be separate surface source like
Melissa or available well capacity like Anna) to use a portion of the CGMA Cities MT/P by allowing
that City to preserve other sources of water or to keep their MT/P lower Calculation of the
proportionate share of unused MT-P to be sold is as follows:
Proportionate Share Use: MT-P available to be sold to Excess use City for 2019 water year:
MT-P
Melissa
Anna
Van
Howe
Alstyne
MT-P water (all in K
4031845
2691756
59,31205
59,312.5
gallons)
Total water Used
385,520675
4421631475
43,766,75
311949.75
C�
All charged equal
maintenance &
flushing
Unused (after
18,324
0
15,546
273363
maintenance Adjust)
Excess water use
NA
172,876
NA
NA
over MT/P (after adj)
Excess water to be
NA
611233
NA
NA
purchased by excess
MT-P cities
Unused water to be
18,324
NA
15,546
27,363
offered for sale to
excess MT/P cities
Note in various years the un-used MT/P water has been more than Buyers excess use could
absorb, in other years the full un-used can be absorbed. Recognizing this reality:
A. It is expected the amount that can be sold in future years is likely to decline, at least in %.
B. if the total unused volume should be less than the excess use by buying city(s), the amount for
each seller should be prorated based on ratio of user MAV to total MAV, however,
1. If only one purchasing city, the amount to be sold -purchased would be 1000/n of the amount
available.
2. If there were multiple purchasing cities, the amount to be sold, per seller would be
proportioned using purchaser MAV to total MAV, and likewise,
3. If amount to be sold is less than total purchasing need, the Seller City(s) proportion of sale
would be prorated by each seller MAV to Total MAV.
• Applying concept to the 2019-20 water year results in the following calculation:
2019 Proposed MT-P Sale Amt (aaaortioned as noted abovel to buyer Citv
Item
Melissa
Van Alstyne
Howe
K gallons offered for sale /
18,324
15,546
27,363
purchase
Total amount of sale
by / purchase @
$32,342.30
$27,438.25
$48,295.25
$1.765 / K gal from
2019-20 Proposed MT-P Purchase Amt
Item
From
Melissa
From Van
Alst ne
From Howe
Anna, Purchase in K Gallons
181324
15,546
271363
Anna Purchase $ amt: $108,075.80
$321342.30
$275438.25
$48,295.25
Thus, the purchase of unused MT/P from each Seller City by Anna is shown above resulting
in a total purchase of unused MT/P of $108,075.80.
5
Implementation of Sale /Purchase:
• Buying City Actions -Anna may purchase from each of the other three CGMA es (Melissa,
Van Alstyne, and Howe) the above calculated portion of the Melissa, Van Alstyne, and Howe
unused CGMA MT/P for the 2019-20 water year. Should Anna not purchase the unused MT/P,
it will then be billed by GTUA for excess water used and will have a larger subsequent year
MT/P.
• Selling City Actions —Melissa, Van Alstyne and Howe may agree to sell their respective used MT/P volume to Anna at the agreed rate of $1.765 per K gallons as illustrated in the
above table. Under this scenario, Anna would pay the totals shown above equaling an
aggregate of $108,075.80 assuming each selling City chooses to sell their unused MT/P to the
purchasing City).
Process /Steps:
1. GTUA has verified the volumes from NTMWD billings; the above is believed to be the final,
reconciled calculations as of October 31, 2019.
2. Each selling City should adopt a Resolution authorizing an inter -local agreement to sell the above
noted MT/P to the buying City(s) at the agreed rate.
3. Each Buying City should adopt a Resolution authorizing an inter -local agreement to purchase the
above noted MT/P from the respective Selling City(s) at the agreed rate.
4. An inter -local agreement will be attached to each of the Resolutions noted in items 2 & 3 detailing
the provisions of the sale / purchase between the selling CGMA Cities and the purchasing Cities.
5. Following approval of Resolutions and execution of the inter -local agreements, the selling Cities
will forward an invoice to the buying City(s); the Buying City(s) should then pay to the respective
Selling City for the agreed purchase. This can should be completed by late 2020 as the respective
Cities complete authorization of the stipulated Resolutions and Inter -local Agreements.
6. Consultant will draft the respective Resolutions and inter -local agreements similar to the
documents used in 2019 for use by the Cities.
7. It is suggested that this document be attached as a reference document to the inter -local
agreement to help clarify the concept and to serve as a future reference.
8. Additionally, GTUA will invoice Anna for any volume taken their 2019 MT/P plus the unused MT/P
purchased from the cities not using their MT/P at the excess water rate plus pumping fees,
operating expenses, and other expenses including reserves; this charge will be calculated and
submitted separately to Anna.
1Z-b-zu20
To
City of Anna
312 North Powell
Pkwy
Anna, Texas 75409
Ship To
N/A
Instructions
N/A
Invoice — 20201208-1
Quantity
Description
Unit Price
Total
18,3251000
gallons
Per Interlocal Agreement between Cities
of Anna and Melissa For Purchase and
Corresponding Sale of a Portion of
Melissa's Minimum Take or Pay
Obligation under the GTUA-Cities of
Melissa, Anna, Van Alstyne, and Howe
Potable Water Supply Contract
2019-20 MT-P Water to Anna
$1.765/thousand
$32,343063
Subtotal
$321343.63
Sales Tax
Shipping & Handling
Total Due
$32,34163
City of Melissa
Tel 972-838-2031 3411 Barker Ave Cityofinelissa.com
Fax 972-837-2452 Melissa, Tx 75454 gdansby@cityofinelissa.com