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HomeMy WebLinkAboutRes 2019-02-545 Water InterlocalCITY OF ANNA, TEXAS RESOLUTION NO. ,-10! y -Q.? ^ 545" A RESOLUTION OF THE CITY OF ANNA, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE AND ADMINISTRATE TWO INTER -LOCAL AGREEMENTS BETWEEN THE CITIES OF ANNA AND VAN ALSTYNE, AND THE CITIES OF ANNA AND HOWE IN WHICH VAN ALSTYNE AND HOWE AGREE TO TRANSFER A PORTION OF THEIR RESPECTIVE 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 WHEREAS, the Cities of Melissa, Anna, Van Alstyne, and Howe have previously authorized and executed agreements with the Greater Texoma Utility Authority (GTUA) for a 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 Cities Van Alstyne and Howe have chosen to not accept delivery of some or all of the required water through the end of the 2018 water year (ended July 31, 2018) and each of said Cities desire to transfer a portion of its respective and obligated minimum take or pay for said 2018 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 minimum take or pay from the Cities of Van Alstyne and Howe for the water year ended July 31, 2018 as explained in a report memorandum to the City Managers / Administrators of the Cities of Melissa, Anna, Van Alstyne, and Howe dated October 18, 2018 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, WHEREAS, it is acknowledged that a companion or similar agreement is contemplated between the CGMA-GTUA Purchasing Cities of Melissa and Anna and the CGMA-GTUA Selling Cities of Van Alstyne and Howe; and, WHEREAS, the City Council desires to authorize the City Manager to execute and administrate said interlocal agreements; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS, THAT: Section 1. Recitals Incorporated. The recitals above are incorporated herein as if set forth in full for all purposes. Section 2. Authorization. RESOLUTION NO.�2K PAGE 1 OF 2 Inter -local Agreements - Van Alstyne & Howe The City Council of the City of Anna authorizes the City Manager to execute inter -local agreements with the Cities of Van Alstyne and Howe under the terms detailed in said inter- local agreements, each of which provides for the following: A. Receiving the transfer of a portion of said selling City's GTUA required minimum take or pay to Anna as provided for in the respective Inter -local Agreement. B. Paying the invoice submitted by the respective selling City for the agreed portion of the 2018 water year minimum take or pay specified in the Inter -local Agreement as provided for in said Inter -local Agreement. Section 2. Verification 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. PASSED AND APPROVED by the City Council of the City of Anna, Texas, on this 26th day of February 2019. /J ATTEST: APPROVED: ��/?A d, �2�2�Z41 City Secretary Carrie L. Smith Mayor KatefPike ``�autnnuuiu,,,� RESOLUTION NO. PAGE 2 OF 2 Inter -local Agreements - Van Alstyne & Howe INTERLOCAL 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 CITIES 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 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 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 2017-2018 ended July 31, 2018 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 Melissa and 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 Van Alstyne and Howe are desirous of selling to Melissa and Anna a portion of their unused MT -P and Melissa / Anna are willing to purchase a portion of the MT -P Transfer agreement for 2018 water year — Anna / Van Alstyne - Page I unused minimum MT -P as defined in this agreement and detailed in "Exhibit A" thus allowing Van Alstyne and Howe 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 18, 2018 memorandum 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 below, agree as follows: NYU This Agreement shall apply to the NTMWD water year ended July 31, 2018 and shall be executed and consummated in full between October 1, 2018 and January 31, 2019 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 12,637,000 gallons (12,637.0 one thousand gallon increments) of MT -P water to ANNA for the water year ended July 31, 2018 and ANNA shall remit to VAN ALSTYNE a payment for said transfer of MT -P at the rate of $1.62 per thousand gallons totaling in the sum of $20,471.94 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 fifteen (15) days of receipt of said invoice, it being the intent that this transaction shall be completed on or before January 31, 2019, 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 fifteen (15) 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 MT -P Transfer agreement for 2018 water year — Anna / Van Alstyne - 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. MT -P Transfer agreement for 2018 water year — Anna / Van Alstyne - 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. MT -P Transfer agreement for 2018 water year— Anna / Van Alstyne - Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement by signing below. CITY OF A2PN A, TEXAS n Date: By: i Proce City Manager APPROVED AS TO FORM: ATTORNEY CITY OF VAN ALSTYNE, TEXAS Date: Lane Jones City Manager APPROVED AS TO FORM CITY ATTORNEY MT -P Transfer agreement for 2018 water year — Anna / Van Alstyne - Page 5 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF COLLIN § This instrument was acknowledged before me on the G day of Jd�2 2018, by Qew le2> of the City of Anna, Texas, a Texas Home -Rule Municipal Corporation, on behalf of said municipality. i0b6tti«#cn��w Kim 113{?lm *:.f "IN?; STATE OF TEXAS COUNTY OF GRAYSON e c Notary Public, State of Texas This instrument was acknowledged before me on the day of , 2018, by , of the City of Van Alstyne, Texas, a Texas General Law City, on behalf of said municipality. Notary Public, State of Texas Exhibit A Attach copy of October 18, 2018 memorandum from Donald E. Paschal, Jr. to CGMA City Managers regarding the subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City MT -P Transfer agreement for 2018 water year— Anna / Van Alstyne - Page 6 INTERLOCAL AGREEMENT BY AND BETWEEN THE CITY OF ANNA, TEXAS AND THE CITY OF HOWE, TEXAS FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF THE SELLING CITIES 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 HOWE, TEXAS, a Texas General Law City hereinafter referred to as "Howe", collectively referred to herein as the "Cities", as follows: WITNESSETH: WHEREAS, both Anna and Howe 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 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 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 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 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 2017-2018 ended July 31, 2018 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 Melissa and 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 Van Alstyne and Howe are desirous of selling to Melissa and Anna a portion of their unused MT -P and Melissa / Anna are willing to purchase a portion of the unused minimum MT -P as defined in this agreement and detailed in "Exhibit A" thus allowing MT -P Transfer agreement for 2018 water year — Melissa / Van Alstyne - Page 1 Van Alstyne and Howe 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 18, 2018 memorandum attached hereto for reference and labeled "Exhibit A". NOW, THEREFORE, ANNA and HOWE, for and in consideration of the recitals set forth above and terms and conditions below, agree as follows: This Agreement shall apply to the NTMWD water year ended July 31, 2018 and shall be executed and consummated in full between October 1, 2018 and January 31, 2019 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 HOWE shall transfer 26,151,600 gallons (26,151.60 one thousand gallon increments) of MT -P water to ANNA for the water year ended July 31, 2018 and ANNA shall remit to HOWE a payment for said transfer of MT -P at the rate of $1.62 per thousand gallons totaling in the sum of $42,365.59 as payment in full for said portion of HOWE's MT -P. Following execution of this agreement, HOWE 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 fifteen (15) days of receipt of said invoice, it being the intent that this transaction shall be completed on or before January 31, 2019, 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 HOWE 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. HOWE, 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 HOWE the above stated payment for the transferred MT -P within fifteen (15) 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 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 MT -P Transfer agreement for 2018 water year — Melissa / Van Alstyne - Page 2 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 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. 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 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. X. VENUE MT -P Transfer agreement for 2018 water year — Melissa / Van Alstyne - Page 3 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. MT -P Transfer agreement for 2018 water year — Melissa / Van Alstyne - Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement by signing below. Date: APPROVED AS TO FORM: CITY ATTORNEY Date: CITY ATTORNEY CITY OF HOWE, TEXAS Joe Shepherd City Administrator MT -P Transfer agreement for 2018 water year— Melissa / Van Alstyne - Page 5 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF COLLIN § This instrument was acknowledged before me on the day of 2018, by K CSP- f the City of Anna, Texas, a Texas Home -Rule Municipal Corporation, on behalf of said municipality. CABBIE L. SMITH My Notary ID # 11419404 ., a. Eom February 4, 2023 STATE OF TEXAS § COUNTY OF GRAYSON § Notary Public, State of Texas This instrument was acknowledged before me on the day of , 2018, 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 October 18, 2018 memorandum from Donald E. Paschal, Jr. to CGMA City Managers regarding the subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City MT -P Transfer agreement for 2018 water year — Melissa / Van Alstyne - 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: October18, 2018 Both Melissa and 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 for the water year ended July 31, 2018. Based on prior year precedents, a member City may acquire a portion of the MT/P from other CGMA member Cities at an agreed price. If there were no other source of water, the price would be the standard CGMA-GTUA price based on the MT/P, unless the purchasing city had exceeded its MT/P. In the case of both Melissa and Anna, however, both have significantly exceeded their MT/P. Once a city exceeds their MT/P for any year, they have the right by contract to acquire additional water under the NTMWD excess rate for the applicable water year. Or, in the case of Melissa, they could intentionally choose to shift the use to either the GTUA / CGMA meter or to their previously existing supply meter with NTMWD (hereinafter referenced as the original NTMWD meter) which would be at a lesser cost per 1000 gallons or they (Melissa) could choose to shift consumption to the GTUA-CGMA meter to use some of the other cities Minimum Take or Pay (MT -P) if the cost were attractive. Since the 2015 water year, Melissa and Anna both exceeded their MT/P thus affording them the option of buying NTMWD water at the excess water rate. The excess water rate is the easiest cost option to understand and to calculate; additionally, it has generally been the methodology used in the buy -sell agreements since the 2015 water year. This buy -sell action has allowed other 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. For the recently completed 2018 water year (ended July 31, 2018) both Melissa and Anna exceeded their MT/P sufficiently to purchase 100% of the other two cities (Van Alstyne and Howe) MT/P (as was the case in 2016 and 2017 water years). 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 two CGMA Cities (Van Alstyne and Howe) sell the unused portion of their MT/P to user Cities exceeding their 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. This program is not regulated or controlled by GTUA, but is purely an agreement among CGMA participating cities for the benefit of the participants. 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 in August of each year. Participation in this program is not a requirement, but a choice that each participant determines independently. However, the purpose is: 2 1. To allow selling Cities to recoup a portion of the funds already spent for their required MT/P; and 2. To provide a mechanism for 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 2018 water year (minimum contract provision that the GTUA-CGMA system has with NTMWD for water) was a total of 557,465,000 gallons of water annually (MT/P amount) which represents 557,465 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 exceed the total CGMA MT/P volume for the subject water year, the excess water is charged to that respective City or Cities at the cost then in effect for excess volumes (plus proportionate pumping and related costs) over the 59,312 K gallon volume which is the responsibility of each City. A blend of the base rate and the District excess water rate would allow the cities to acquire water at an rate that exceeds the excess water rate for users exceeding the MT -P but less than the base rate while the cities using less than their MT/P would recoup a portion of the MT/P base rate that they paid during the fiscal year. It is noted that when the MT/P is exceeded by any individual City, a new MT/P is established for the subsequent year. By acquiring unused MT/P, the purchasing cities are allowing the selling cities to recoup a portion of the cost they paid during the water year for their obligated MT/P. Additionally, this intra CGMA buy -sell arrangement helps to reduce the total buying City MT/P. It is also noted that the entire CGMA MT/P is kept at the lowest possible level. This concept will cease to provide such benefits when all CGMA participants are using their MT/P or when any other water cost component ceases to be a benefit for either a selling or buying City.. 2017-2018 water year take - For the recently ended water year, only Melissa and Anna have taken their respective full MT -P water. For the water year ended July 31, 2018, Melissa and Anna took water through all of the year and with continued growth both are expected to continue to take volumes equaling or exceeding their MT/P for future years. Van Alstyne took water for eleven (11) months of the water year although VA dis not take sufficient water to use the full MT/P. Van Alstyne is expected to continue to take water throughout future years. Howe did not take any water year during the 2018 water year for use; some water is allocated to each city for overall system maintenance. Van Alstyne is expected to begin taking water their full MT/P soon. Howe has indicated it is working on a plan to begin taking water, but no firm date has yet been set. During the 2018 water year, ground water sources continued to provide 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 2019 water year and beyond although it is expected that surface water will be used to accommodate growth with ground water providing a somewhat static base level of water. This will result in ground water declining as a percentage or water used in subsequent years; it is also noted that ground water availability may gradually decline as ground water aquafers are slowly depleted; however, 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 wells for decades. 3 0 Break out of Maintenance Water — For the first time since tracking, the total unaccounted for water in the 2018 water year was a negative value showing the system gained 15,307,000 gallons or 15,307 K gallons; this includes all water used for flushing the main, maintenance, and / or lost and unaccounted for water. This anomaly (a gain instead of loss) is apparently the result of timing in reading meters between NTMWD and GTUA (total system take versus each city being aggregated by GTUA in reading); it is also noted that the very heavy pumping during the end of the take year could account for the difference in only a few hours of reading discrepancy. The gain has been credited to the taking cities thus slightly reducing their water year take. There was no charge or credit to Howe. b It is noted that the volume of flushing / maintenance water, while gain instead of lost water does not vary greatly from year to year and is typically fairly constant in the range of 10,000 to 12,000 K Gallon units. Much of this lost water due to the necessity to flush the northern portion of the CGMA transmission main since the two north most cities have not used sufficient water to maintain chlorine levels. Therefore, line flushing is necessary to eliminate under chlorinated and potentially stagnating water. The 2018 reading anomaly has eliminated the charge for maintenance water for the 2018 water year. • Melissa background of separate NTMWD take point - Melissa actually takes / receives water from two points of delivery: one being the original Melissa connection with McKinney to receive water from NTMWD which dates back over 20 years. The second Melissa source is the being the GTUA — CGMA transmission system which began pumping in 2009. Each of these connections is separately metered and both the original meter and the CGMA-GTUA system each have MT/P requirements. • Historical Practice and Buy -Sell Rate Calculation — A blended rate methodology has been used to establish the buy -sell rate; this is the same methodology as was used for the 2016 and 2017 water years. The blended rate is based on the average of the base and excess rates. For the 2018 water year, the standard rate / K gallons was $and the excess water rate was $0. / K gallons. These water rates and the blended calculation are illustrated below. It is noted that the using cities have all been invoiced for the McKinney Pass- through Agreement charges and the GTUA pumping and administrative charges. In the future, once all cities are taking water at MT/P levels, it has been proposed that the system incorporate a portion of the GTUA administrative, maintenance cost, and operational cost to the charging methodology so that all water costs are paid in an equitable share of costs. • System Concept Objective of Buy -Sell - The principal issue to be determined is if the nonusers or under -users wish to recoup a portion of the water cost they have already paid during the water year. Thus, at this time, the buy -sell agreements only address the price of the bought or sold potable water. It is noted that either Melissa or Anna would have paid a lesser rate under the excess water calculation than through the blended rate methodology, however, the blended rate has helped keep both the Anna and Melissa MT/P somewhat lower, thus providing something of a future benefit. Further, Melissa could also have purchased more excess water from their original meter at significant discount by avoiding the McKinney pass through fees, but the original meter MT/P would also have increased. • Continuation of Historical Calculation Methodology - It is proposed that the same rate methodology be applied to the buy -sell agreements as was used in the 2016 and 2017 water year buy -sell agreements. 4 Cost Calculations for 2016-17 water year - The cost calculations for the above described MT/P transaction that was agreed to in prior years was $1.52 / K gallons for the 2017 water year. For 2018 the blended rate was $1.62 / K gal as determined by averaging the MT/P excess water rate 0.46/ K gal) with the NTMWD customer city base rate ($2.78 / K gal). The rate is an average of the normal CGMA Customer City rate and the NTMWD Customer City Excess Water Rate for 2018 as illustrated below: 2018 data Entities CGMA MT/P water 11000 GPD Melissa Excess Water Blended Average rates $2.78 $0.46 $1.62 In the last several years, including 2018, both Melissa and Anna took significantly more water than in prior years and it appears their growth will continue the additional water take trend. In fact, in 2017 and 2018 the Melissa — Anna take fulfilled both their individual City MT/P volumes and even a fulfilled 100% of the Van Alstyne and Howe MT/P volumes (with VA take increasing as well). It should be noted that the total water take in the 2017 and 2018 water years set new MT/P for both full- take cities and for the CGMA as a whole. 2018 Water Compared to MT -P —Since the volume of excess water to be purchased for the recently completed 2018 water year exceeded the full MT/P of both selling cities, the proration is technically a moot point for 2017, but as a technical matter, the proration amount for buy -sell agreements is 100% of the collective unused MT/P. In summary, the purchasing cities are 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 the other MT/P lower, at least up to the time that all the CGMA Cities are using their MT/P. 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 2018 water year: MT -P Melissa Anna Van Alstyne Howe MT -P water (all in K gallons) 267,955 170,885 59,312.5 59,312.5 Used 453,033 277,871 35,754 0 Unused (after maintenance Adjust NA NA 28,661 59,312.5 Excess water use over MT/P (after adj) 185,078 106,986 NA NA Excess water to be purchased by excess MT -P cities 49,185 38789 NA NA Unused water to be offered for sale to excess MT/P cities al NA NA 28,661 59,312.5 5 Note: One adjustment is being recommended for the 2018 water year buy -sell agreements: In 2017, the total unused from selling cities was simply divided between the two purchasing cities irrespective of the volume of water used proportionate to the buying City total purchase. For 2018, it is recommended that the purchase amount be apportioned based on a formula that is based 50% on equal purchase and 50% based on proportionality to the total use of the two buying cities, thus the cost savings is apportioned somewhat equally between the two buying cities with the two selling cities selling 100% of the unused water. The blended totals results in Melissa purchasing 55.91 % of the un -used from each city and Anna purchasing 44.09% from each city. • Applying this concept to the 2018 water year results in the following calculation: 2018 Proposed MT -P Sale Amt apportioned as noted above to each buyer City Item Van Alstyne Howe K gallons offered for sale / purchase 28,661 59,312.5 Total amount of sale by / purchase @ $1.62 / K gal from $ 46,430.82 $ 96,086.25 2017 Proposed MT -P Purchase Amt (divided by 2) to each seller Citv Item From Van Alstyne From Howe Melissa: Purchase K Gallons 16,024 33,160.90 Purchase $ amount $ 25,958.88 $ 530720.66 Anna: Purchase K Gallons 12,637 26,151.6 Purchase $ amount $ 20,471.94 $ 42,365.59 Thus, the total sale by Van Alstyne is $46,430.82 and by Howe is $ 96,086.25 and, the total purchase by both Melissa is $79,679.54 and by Anna is: $ 62,837.53 for a grand total of un -used MT/P purchase is $142,517.10 Implementation of Sale / Purchase: Buying City Actions - Melissa and Anna may purchase from each of the other two CGMA Cities (Van Alstyne, and Howe) the above calculated portion of the Van Alstyne and Howe unused CGMA MT/P for the 2018 water year. In actuality, both Melissa and Anna used in excess of the additional other cities MT/P as shown in the proportionate share use chart above. Selling City Actions - Van Alstyne may agree to sell 28,661 K gallons of MT/P as shown above to Melissa and Anna and Howe may agree to sell 59,312.5 K gallons of MT/P to Melissa and Anna at the agreed rate of $1.62 / K gallons as illustrated in the above table. Under this scenario, Melissa and Anna would pay the totals shown above equaling an aggregate of $142,517.10 assuming both Cities choose to buy said unused MT/P and both Van Alstyne and Howe choose to sell their respective volumes of unused MT/P divided between the selling Cities as indicated in the above chart. M Process / Steps: 1. GTUA has verified the volumes from NTMWD billings; the above is believed to be the final calculations or near final calculations of water purchased from NTMWD. 2. Each of the two selling Cities may adopt a Resolution authorizing an inter -local agreement to sell the above noted MT/P to Melissa and Anna at the agreed rate. 3. Melissa and Anna may adopt a Resolution authorizing an inter -local agreement to purchase the above noted MT/P from the two respective Cities 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 (Van Alstyne and Howe) and the purchasing Cities (Melissa and Anna). 5. Following approval of Resolutions and execution of the inter -local agreements, Melissa and Anna will be able to pay the respective city for the agreed purchase. This can be completed by late 2018 or early 2019 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 2017 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.