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HomeMy WebLinkAboutContract 39740CITY SECRETARY' ONTRACT NO c 3 i MEMORANDUM OF UNDERSTANDING This ITEMORANDUM OF UNDERSTANDING (this "Memorandum") is entered into and effective a p , by and between the City of Fort Worth, Texas, a home - rule municipal corporatio in Tarrant, Denton and Wise Counties, Texas ("Fort Worth") by and through its duly authorized Assistant City Manager, Fernando Costa, and the Dallas/Fort Worth International Airport Board, a joint board of the cities of Dallas and Fort Worth, Texas in Dallas and Tarrant Counties, Texas ("Customer") by and through its Chief Executive Officer, Jeffrey P. Fegan. WITNESSETH: WHEREAS, Fort Worth and Customer have entered into a� certain "Agreement for Reclaimed Water Service" (the "Agreement"), dated a, 2049, known as Fort Worth City Secretary Contract No. 397 39 and Dallas/Fort Worth International Airport Board Contract No. 7004124, whereby Fort Worth agreed to furnish and sell Reclaimed Water to Customer under the terms and conditions therein; and WHEREAS, the Customer agreed to purchase and pay Fort Worth for Reclaimed Water at the annual Rate set pursuant to the Agreement based on a System -wide cost -of -service rate study to be performed by an independent utility rate consultant as more fully described in Section 7 of the Agreement; WHEREAS, upon entering into the Agreement, Fort Worth forecasted the issuance of debt to construct the Reclaimed Water System used to deliver Reclaimed Water to Customer; WHEREAS, the Agreement provides for the debt service for the construction of the Reclaimed Water System to be used in detet-1nining the annual Rate set pursuant to the Agreement for payment for Reclaimed Water Service; WHEREAS, on February 17, 2009 the President of the United States signed into effect the American Recovery and Reinvestment Act of 2009 making available federal stimulus funds for qualified and accepted projects; and WHEREAS, Fort Worth has made application to receive federal stimulus funds to help with the cost of building its Reclaimed Water System infrastructure. NOW THEREFORE, for and in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto agree as follows: OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX 1. Definitions Unless otherwise specified herein, all terms shall have the same definition as described in the Agreement. 2. Purpose The purpose of the MOU is to memorialize certain agreements and understandings related to Fort Worth's application for federal stimulus funding under the American Recovery and Reinvestment Act of 2009 to aid in the cost of constructing its Reclaimed Water System and the Customer's payment for Reclaimed Water. If awarded such funding, in consideration of the original customers' support of such funding, it is Fort Worth's intention to reduce and/or not issue debt to the extent that it receives federal funding for the construction of the Reclaimed Water System infrastructure, as described below. If Fort Worth is not awarded federal stimulus funding, then this MOU shall have no effect. Furthermore, upon receipt of such funds, if awarded, both parties agree to negotiate in good faith an amendment to the Agreement with the terms and conditions contained herein. 3. Capital Recovery Fee If Fort Worth receives federal stimulus funding to fund any or all of the construction of the Reclaimed Water System, Fort Worth intends for the contract rate to include a Capital Recovery Fee amount that is based on the debt service avoided, and reserved for future capital expenditures on the Reclaimed Water System. That annual Capital Recovery Fee shall be calculated by multiplying that portion of the infrastructure costs for the Reclaimed Water System paid for with federal stimulus funding by two percent (2%). Other components of the rate include Fort Worth's franchise fee, and future capital recovery fees that may be included in the contract rates from time to time, consistent with the terms of Article VII of the Agreement. 4. Cost of Service Rates Fort Worth acknowledges that if federal stimulus funds are received, Fort Worth may not need to subsidize the system cost or may only be required to subsidize a portion thereof Therefore, the parties agree that the fixed rates per § 7.3.1 of the Agreement would not be applicable if the § 7.2 cost -of -service rates are less than the contractual fixed rates. 5. Debt Financed System Expansion If Fort Worth incurs debt to fund System capital costs within the first 10 years of the Agreement, and the resulting cost -of -service rates are more than $1.50 per thousand gallons, then the fixed rates under § 7.3.1 will apply, and will be extended to provide for a fixed rate of $1.50 for the years 2015 through 2019, and thereafter rates will be subject to the § 7.3.2 annual 5% increase, capped by the § 7.4 Maximum Rate. Further, when Fort Worth incurs debt to Memorandum of Understanding Reclaimed Water Agreement Payment 05.14.09v3 fund System capital costs, the Capital Recovery Fee in paragraph 3 above will no longer be included as a component of the cost -of -service contract rates. 6. Wholesale Water Rate If awarded the federal stimulus funding, Fort Worth agrees to normalize the Wholesale Water Rate over a three (3) year period. 7. Miscellaneous Nothing contained herein shall be deemed to amend or modify the Agreement. In the event of a conflict between the terms of this MOU and the Agreement, the terms of this Agreement shall control. IN WITNESS WHEREOF, this Memorandum has been executed on this"—� day of 200J o CITY OF FORT WORTH, TEXAS Fernando Costa Assistant City Manager TTEST: Marty Hendrix City Secretary APPROVED AS TO FORM AND LE ssistant City Attorne Authoxizatiou Data Memorandum df Undzrstanding Reclaimed Water Agreement Payment 05.14.09v3 /Fort Wth Inttional Airport B Dallasorernaoard By: Chi�'f Executive Officer aA`op`000 a)9, �iov�4�p� wr0 O O O p O AS TO FORM AND LEGALITY: Legal Counsel Dallas/Fort Worth International Airport Board OFFICIAL RECORD CITY SECRETARY T. WORTH, TX M&C Review Page 1 of 2 CITY COUNCIL AGENDA DATE: 12/8/2009 CODE: C COUNCIL ACTION: Approved on 12/8/2009 REFERENCE NO.. TYPE: C-23965 NON- CONSENT LOG NAME PUBLIC HEARING: Official site of the City of Fort Worth, Texas 60RECLAIMED WHOLESALE CONTRACTS NO FORT WURTH SUBJECT: Authorize the Execution of Wholesale Reclaimed Water Service Contracts with the City of Arlington, the City of Euless and DFW International Airport and Authorize Execution of Memorandum of Understanding for Federal Stimulus Funding with the City of Arlington, the City Euless and DFW International Airport RECOMMENDATION: It is recommended that the City Council: 1. Authorize the City Manager to execute individual contracts to provide Wholesale Reclaimed Water Service to the City of Arlington, the City of Euless and the DFW International Airport; and 2. Authorize the City Manager to execute Memorandum of Understanding (M OU) for Federal Stimulus funding with the City of Arlington, the City of Euless and the DFW International Airport. DISCUSSION: On May 10, 2005, the City Council approved City Secretary Contract No. 31841 (M&C C-20721) with Alan Plummer Associates, Inc., (APAI) to design the Eastside Reclaimed Water System and to assist with development of wholesale contracts for service to the Cities of Arlington and Euless and the DFW International Airport. To justify the City's cost in construction of the new reclaimed water distribution system needed large initial customers to justify the construction of the system. Staff does not initially anticipate being able to recover the capital and operational costs of the system through proposed wholesale rates as the full cost recovery rate for reclaimed water would not be economical. However, the new reclaimed water distribution system should be self-sufficient within five to 15 years depending on actual reclaim water usage. Three customers were identified with having large enough need and use f or the reclaimed water service: the City of Arlington, the City of Euless and the DFW International Airport. These customers have identified uses for reclaimed water including golf courses, large parks, large irrigated areas, along with industrial users (mainly gas well drillers) within their jurisdiction. The City of Euless has been trying for several years to receive reclaimed water for their Texas Star Golf Course and Athletic Complex. The City in working with the these three proposed customers for Wholesale Reclaimed Water Services developed economical wholesale reclaimed water rates that are based on reclaimed water rates charged by other cities. All three have approved and executed contracts through their appropriate governing bodies. The contracts include the following terms: Minimum monthly payments based on (50 percent) of monthly usage based on 1/12 of annual average usage; Rates for Fiscal Year 2011-Fiscal Year 2012 are set at $1.45/1,000 gallons; Rates for Fiscal Year 2013-Fiscal Year 2014 are set at $1.50/1,000 gallons; and Rates starting in Fiscal Year 2015 will increase by five percent annually until such time as the cumulative http://apps.cfwnet.org/council�acket/mc_review.asp?ID=12769&councildate=l2/8/2009 12/28/2009 M&C Review Page 2 of 2 amount of the annual system deficits has been recovered. 20 year term MOU for Federal Stimulus Funding (DWSRF/ARRA Funding) with the City of Arlington, the City of Euless and the DFW International Airport were also reached in anticipation of the City receiving such funding. The MOU provides that Fort Worth and the wholesale customers will amend the original contract to reduce any debt service avoided by stimulus funding, to incorporate a Capital Recovery Fee amount based on the debt service avoided to be reserved for future capital expenditures on the Reclaimed Water System and to normalize and/or average, the wholesale reclaimed water rate over a three-year period. FISCAL INFORMATION/CERTIFICATION: The Financial Management Services Director certifies that the Water Department is responsible for the collection and deposit of funds due to the City. TO Fund/Account/Centers Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: FROM Fund/Account/Centers Fernando Costa (6122) S. Frank Crumb (8207) David Townsend (8430) ATTACHMENTS Reclaim Water Memorandum of Understanding.pdf Wholesale Reclaim Water Contract.pdf http://apps.cfwnet.org/council�acket/mc_review. asp?ID=12769&councildate=l2/8/2009 12/2 8/2009