Loading...
HomeMy WebLinkAboutRes 2021-01-850 Van Alstyne Take or Pay WaterCITY OF ANNA, TEXAS RESOLUTION NOz hoc j - DI 44 IbO A RESOLUTION OF THE CITY OF ANNA, TEXAS REACTED TOTHE ANINTER-LOCAL AGREEMENT BETWEEN THE CITIES OF ANNA AND VAN ALSTYNE UNDER WHICH THE CITY OF VAN ALSTYNE 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 Van Alstyne, 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 Van Alstyne 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 Alstyne'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 Van Alstyne for the terms detailed therein providing for the following: A. Receiving a portion of Van Alstyne's GTUA required minimum take or pay from Howe 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 Van Alstyne. Section 2\ Verification. RES, 5?,93C� 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. phis Resolution shall be effective immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Anna, Texas on this 26th day of January, 2021. ATTESTED: APPROVED: \0a� .SSO OF Ali 0 00lye� CI Carrie L. Land, City Secretary aft VIM, Mayor 1/IIIINII, 0\\ RES. PAGE 2 OF 2 INTERLOCAU AGREEMENT BY AND BETWEEN THE CITY OF ANNA, TEXAS AND THE CITY OF VAN ALSTYNE, TEXAS FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF THE SELLING CITY'S MINIMUM TAKE OR PAY 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 ANNA, TEXAS, a Texas Home -Rule Municipal Corporation, hereinafter referred to as "Anna", and CITY OF VAN ALSTYNE, TEXAS, a Texas General Law City hereinafter referred to as "Van Alstyne", collectively referred to herein as the "Cities", as follows: WITNESSETH: WHEREAS, both Anna and Van Alstyne are political subdivisions within the meaning of Interlocal Cooperation Act, Texas Government Code, Chapter 791, as amended (the "Act"); and WHEREAS, the Act provides authority for entities such as Anna and Van Alstyne 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 has 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 provng 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 take -or -pay amount (MT-P) under the Potable Water Supply Contract made and entered between such Participating City and GTUA; and WHEREAS, for the water year 2019-2020 ended July 31, 2020 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 City of Anna received delivery of water which equaled or exceeded the individual City required MT-P; and WHEREAS, the Contract Cities of Melissa, Anna, Van Alstyne, and Howe have a multi- year precedent of the referenced Minimum Take or Pay 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; and WHEREAS, the Cities of Van Alstyne, Howe, and Melissa are desirous of selling to Anna a portion of their unused MT-P and Anna is willing to purchase said unused portion of the minimum MT-P as defined in this agreement and detailed in "Exhibit A" thus allowing Van ILA for MT-P Transfer Agreement for 2020 Water Year -Page 1 Alstyne, Howe, and Melissa to recover a portion of the purchased but unused MT-P for the stated water year; and WHEREAS, the background of the above noted agreements, volumes, rates, and circumstances are further detailed in the October 5, 2020 memorandum titled "Sale of GTUA- CGMA Minimum Take or Pay to Participant City" attached hereto for reference and labeled "Exhibit A". NOW, THEREFORE, ANNA and VAN ALSTYNE, for and in consideration of the recitals set forth above and terms and conditions belowagree as foll ,ows: M Ili ��ul This Agreement shall apply to the NTMWD water year ended July 31, 2020 and shall be executed and consummated in full between November 1, 2020 and January 31, 2021 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 VAN ALSTYNE shall transfer 15,546,000 gallons (15,546.0) one thousand gallon increments) of MT-P water to ANNA for the water year ended July 31, 2020 and ANNA shall remit to VAN ALSTYNE a payment for said transfer of MT-P at the rate of $1.765 per thousand gallons totaling in the sum of $27,438.25 as payment in full for said portion of VAN ALSTYNE's MT-P. Following execution of this agreement, VAN ALSTYNE shall submit to ANNA an invoice for the transfer of the described MT-P for the above stated sum and ANNA shall remit payment for said transfer within twenty (20) days of receipt of said invoice, it being the intent that this transaction shall be completed on or before January 31, 2021, 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 by the stipulated date. III. RESPONSIBILITIES OF THE PARTIES 1. The respective City Councils of ANNA and VAN ALSTYNE shall each approve an interlocal agreement authorizing the sale /purchase of MT-P as described herein and further detailed in the attached Exhibit A. 2. VAN ALSTYNE, following approval of the interlocal agreement by each party thereto shall submit to ANNA an invoice for the referenced gallons of MT-P water detailed above in Section II and in the stipulated amount. 3. ANNA shall remit to VAN ALSTYNE the above stated payment for the transferred MT-P within twenty (20) working days of the receipt of referenced invoice. 4. Any party hereto wishing to verify the metered quantities of water or the portion of the minimum take or pay to which this agreement refers shall be entitled to verification subject to ILA for MT-P Transfer Agreement for 2020 Water Year - Page 2 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 take or pay than referenced herein, the parties hereto shall modify said quantity and the resultant payment for said quantity of minimum take or pay prior to the invoicing and payment phase (item III — 2 & 3 above). IV. TERMINATION C. 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 VAN ALSTYNE 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. V. RELEASE AND HOLD HARMLESS Anna and Van Alstyne, 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 Van Alstyne 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 as 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 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. However, upon the occurrence of such event, either party may terminate this Agreement by giving the other party thirty (30) days written notice. ILA for MT-P Transfer Agreement for 2020 Water Year -Page 3 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. XIII. 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. ILA for MT-P Transfer Agreement for 2020 Water Year -Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement by signing below. Date: a �C APPROVED AS TO FORM: CITY ATTORNEY APPl�P1C�ED CITY ATTO k) TO FORM 3Y CITY OF NNA, '. By4Cy ce anager CITY OF VAN ALSTYNE, TEXAS Lane Jones City Manager ILA for MT-P Transfer Agreement for 2020 Water Year -Page S ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF COLLIN § This instrument was acknowledged before me on the day of , 2020, by Al&UC .a/y1ay.0 of the City of Anna, Texas, a Texas Home-Ru e Municipal Corporation, on behalf of said municipality. LAURETTA KAY BLACKETER My Notary ID # 129369379 Expires April 1, 2021 STATE OF TEXAS § COUNTY OF GRAYSON § W This instrument was acknowledged before me on Lane Jones, City Manager, of the City of Van Alstyne, behalf of said municipality. Y PUe � JENNIFER GO'JLD i,'s Notary Public, State of isxas +Q Comm. Expires 03-28-2022 Notary ID 12822085--1 N Exhibit A Public, State of the I ?��" day of January, 2021, Texas, a Texas General Law City, PuliYic, State of Texas Attach copy of October 5, 2020 memorandum from Donald E. Paschal, Jr. to CGMA Mayors and City Managers regarding the subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City by ILA for MT-P Transfer Agreement for 2020 Water 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 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 establisjed 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 2021-22, it is expected that all cities will be taking water at MAV levels allowing the Original System Debt Service to transition from equal'/e 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 rate data 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 1111643 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 403,845 269,756 59,312.5 59,31245 gallons) Total water Used 385,520.75 442,631.75 43,766.75 31,949.75 0 All charged equal maintenance & flushing Unused (after 18,324 0 15,546 27,363 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 271363 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 100% 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 (aanortioned as noted above► 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 @ $321342.30 $27,438,25 $48,295.25 $1.765 / K gal from 2019-20 Proposed MT-P Purchase Amt Item From Melissa From Van Als ne From Howe Anna: Purchase in K Gallons 18,324 15,546 27,363 Anna Purchase $ amt: $108,075.80 $32,342.30 $27,438.25 $481295.25 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. Implementation of Sale / Purchase,• • Buying City Actions - Anna may purchase from each of the other three CGMA Cities (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 un- 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.