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HomeMy WebLinkAboutResolution No. 2010-051CITY OF THE COLONY, TEXAS RESOLUTION NO. 2010- A RESOLUTION OF THE CITY OF THE COLONY, TEXAS, AUTHORIZING THE MAYOR TO EXECUTE THE MEMORANDUM OF AGREEMENT (MOA) FOR WHOLESALE TREATED WATER BETWEEN THE CITY OF DALLAS AND THE CITY OF THE COLONY FOR THE PURPOSE OF ESTABLISHING RATE-SETTING METHODOLOGY FOR THE PURCHASE OF WHOLESALE WATER; THAT THE MEMORANDUM OF AGREEMENT IS ATTACHED HERETO AS EXHIBIT "A"; PROVIDING AN EFFECTIVE DATE NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS: Section 1. That the City Council of the City of The Colony, Texas hereby approves the Memorandum of Agreement (MOA) between the City of Dallas and the City of The Colony for the purpose of establishing rate-setting methodology for the purchase of wholesale water through the year 2039. Section 2. That the City Manager is authorized to execute the Memorandum of Agreement, which is attached hereto and incorporated herein as Exhibit "A". Section 3. That this resolution shall take effect immediately from and after its passage. PASSED AND APPROVED by the City Council of the City of The Colony, Texas, this 15th day of June, 2010. ATTES / f' OF istie Wilson, TRMC, ity Secretary APPROVED AS TO FORM: TAX P J f Moo , City Attorney J e McCourt Mayor ity of The olony, Te: s Memorandum of Agreement (MOA) for Wholesale Treated Water Preamble: The 1979 MOA settled a rate dispute lawsuit between Dallas and its Wholesale Treated Water Customers regarding the wholesale treated water rate-setting methodology ("rate-setting methodology"), and as such has served the rate-setting methodology process well over the past 30 years. This amended agreement recognizes that changes to the rate-setting methodology have occurred over this timeframe, and incorporates consensus changes between Dallas and its Wholesale Treated Water Customers, and as such will serve to govern the rate-setting methodology for the next 30 years. Purpose: Dallas is a regional water provider currently providing treated water service to Wholesale Treated Water Customers located within Dallas' established service area in North Central Texas. The purpose of this agreement is to establish the rate-setting methodology and formalize the mutual expectations of Dallas and its Wholesale Treated Water Customers with respect to rate-setting methodology. This rate-setting methodology will provide the basis for determining wholesale treated water rates after its effective date. 2. Applicability: This agreement is subject to all applicable orders, laws and regulations of the City of Dallas, State of Texas and the United States. If any state or federal governmental agency having jurisdiction disapproves any material part of this agreement during the term, the agreement is subject to cancellation by any party and renegotiation by Dallas and its Wholesale Treated Water Customers. 3. Water System Policy: Dallas operates a water system to provide a regulatory compliant, safe and reliable water supply, adequate for the current water use and future growth of Dallas and its Wholesale Treated Water Customers, and to avoid subsidization of any class of customers. 4. Definitions: A glossary which defines applicable cost of service terms is located in Appendix A of this MOA. Cost of service terms may be added, or the definition of an existing term amended, from time to time, without the necessity of amending this MOA. Additions and amendments will be reflected in the appendices attached to the annual cost of service studies. 5. Responsibilities: a. Dallas is responsible for planning, financing, constructing, operating and maintaining the water supply system to the extent permitted by available water revenues, for developing cost of service information to support wholesale rate changes, and for informing Wholesale Treated Water Customers of wholesale rate changes and other pertinent utility information. Page 1 of 31 b. Wholesale Treated Water Customers are responsible for keeping Dallas informed concerning their projected water supply needs and operating requirements for planning, managing and maintaining their retail systems to promote water conservation and efficient system operation, and for paying adequate rates to Dallas to cover the costs incurred by Dallas in providing service to them. 6. Rate-Setting Methodology for Wholesale Treated Water: a. Revenue requirements are to be determined on a utility basis, at original cost, including construction work in progress. b. Dallas is to receive a rate of return on rate base equal to embedded interest rate on water revenue bonds, commercial paper and other debt instruments plus 1.5 percent, which is agreed to be an adequate return to cover its costs and risks and as compensation for ownership and management responsibilities. c. All existing and future water supplies and associated facilities are to be included in a common water rate base. Wholesale Treated Water Customers, as a class, shall pay their proportionate share of costs for water supply, including that portion held for future use. For the 2010 cost of service study, wholesale treated water customers shall be allocated a percentage of total reservoir costs based on a 10-year future use percentage calculated using a 24-year linear regression. This percentage shall be increased or decreased in direct proportion to future changes in actual usage in conjunction with the cost of service studies. (Dallas will pay the balance of water supply costs which are not allocated to Wholesale Treated Water Customers under the cost of service allocation.) Allocation of costs other than water supply costs, including but not limited to operations and maintenance costs, shall be based on current use. d. Direct reuse of treated wastewater effluent is an Inside Dallas only cost and will be allocated to Inside Dallas customers only. Indirect reuse of treated wastewater effluent for lake augmentation will be included as a cost and as a benefit common-to-all. e. There will be a two part wholesale treated water rate (volume and demand), with allocation of costs in rate design so as to encourage conservation and efficient operation of the water systems of Dallas and its Wholesale Treated Water Customers. f. At the end of ten years from the Effective Date of the MOA, and each ten years thereafter, the City of Dallas or a majority of the Wholesale Treated Water Customers who are parties to this agreement may request a review of the above rate-setting methodology; and if so, the methodology shall be subject to renegotiation. Page 2 of 31 7. Wholesale Treated Water Rates: After the effective date of this MOA, Dallas will prepare a cost of service study to support wholesale treated water rates and allocations, and will submit it to the Wholesale Treated Water Customers to review and accept prior to submission to the Dallas City Council. Except as noted herein, the cost of service rate-setting principles will adhere to the 2009 cost of service study, including changes that have been identified and implemented since that date. 8. Effective Date: This MOA is effective as of December 17, 2009. 9. Term: The term of this MOA is thirty (30) years from its effective date, or until December 16, 2039, and for such additional periods as the parties may mutually agree upon. 10. Approved changes: Changes in the rate-setting methodology or other conditions may be made by mutual agreement of all parties at any time. 11. Individual contracts: This MOA is considered a replacement of and supersedes the 1979 MOA and shall automatically be incorporated and become a part of all existing wholesale treated water contracts without any further action or approval on the part of the City or of the Wholesale Treated Water Customers. Rate-setting methodology for individual contracts for wholesale treated water service between Dallas and its Wholesale Treated Water Customers will be consistent with this MOA. Dallas and its Wholesale Treated Water Customers will honor their existing water service contracts until such time as the contracts are amended or superseded by a new contract. Contracts for new Wholesale Treated Water Customers will be consistent with this MOA. 12. Recognition of MOA Participants: The MOA renegotiation process took place over many months during 2009 and 2010 and involved a number of meetings to discuss possible changes, revisions, and alternatives to the existing MOA. To that end, the City of Dallas would like to thank the individuals listed below for their outstanding input and contributions in the MOA update and renegotiation process, without whose help this revised document would not have been possible. Participants are listed in attached Appendix B. 13. Authorization to Act: By their signatures below, the representatives of Dallas and the Wholesale Treated Water Customers state that they are authorized to enter into this MOA. Dallas and the Wholesale Treated Water Customers will each provide documentation that this MOA has been authorized by its respective governing body. 14. Counterparts: This MOA may be executed in any number of counterparts, each of which shall be deemed an original and constitute one and the same instrument. Page 3 of 31 EXECUTED as of the 16--l' day of , 2010, on behalf of Dallas by its City Manager, duly authorized by Resolution No. adopted on the Z&) day of 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF DALLAS THOMAS P. PERKINS, JR. MARY K. SUHM City Attorney City Manager B BY a--- f - Assistant City Attorn ey fitted A istant City Manager +tody AttomeY Page 4 of 31 EXECUTED as of the day of , 2010, on behalf of the Town of Addison by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010, and approved as to form by its City Attorney. TOWN OF ADDISON By: Ron Whitehead, City Manager ATTEST: By: Lea Dunn, City Secretary APPROVED AS TO FORM: By: John Hill, City Attorney Page 5 of 31 r EXECUTED as of the day of , 2010, on behalf of the City of Carrollton, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF CARROLLTON, TEXAS BY City Attorney ATTEST: BY City Secretary BY City Manager Page 6 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Cedar Hill, Texas, by its Mayor, duly authorized by Resolution or Ordinance No. , adopted on the day of , 2010 and approved as to form by its City Attorney and City Manager. CITY OF CEDAR HILL, TEXAS ROB FRANKE, MAYOR BY Rob Franke, Mayor ATTEST: Ron McFarland, Attorney BY Attorney Lyn Hill, Secretary BY Secretary Page 7 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Cockrell Hill, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: Robert F. Brown, City Attorney CITY OF COCKRELL HILL, TEXAS BY Luis D. Carrera, Mayor BY ATTEST: BY Hector M. Saenz, City Administrator Page 8 of 31 EXECUTED as of the day of - Supply Corporation by its , adopted on the day of ATTEST: BY Printed Name: Title: , 2010, duly COMBINE WATER SUPPLY CORPORATION BY Printed Name: Title: President on behalf of the Combine Water authorized by Resolution No. 2010. Page 9 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Coppell, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its Attorney. AGREED AS TO FORM: CITY OF COPPELL, TEXAS BY BY Clay Phillips, City Manager City Attorney ATTEST: BY Libby Ball, City Secretary Page 10 of 31 EXECUTED as of the day of , 2010, on behalf of the D/FW International Airport Board by its , duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its Board Attorney. APPROVED AS TO FORM: DALLAS-FT WORTH INTERNATIONAL AIRPORT BY BY Board Attorney ATTEST: BY Secretary Printed Name: Title: Page 11 of 31 EXECUTED as of the day of , 2010, on behalf of the Dallas County Water Control and Improvement District No. 6 by its General Manager, duly authorized by Resolution No. , adopted on the day of , 2010. DALLAS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO.6 BY Printed Name: Title: General Manager Page 12 of 31 EXECUTED as of the day of , 2010, on behalf of the City of DeSoto, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: BY City Attorney ATTEST: BY City Secretary CITY OF DESOTO, TEXAS BY Carl Shannon, Mayor Page 13 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Duncanville, Texas, by its City Manager, Kent Cagle, duly authorized by Resolution or Ordinance No. , adopted on the day of 2010 and approved as to form by its Attorney. APPROVED AS TO FORM: CITY OF DUNCANVILLE, TEXAS BY BY Robert Hager, Attorney Kent Cagle, City Manager ATTEST: BY Dara Crabtree, City Secretary Page 14 of 31 EXECUTED as of the day of , 2010, on behalf of the Ellis County Water Control and Improvement District No. 1, by its Administrator, duly authorized by Resolution No. , adopted on the day of , 2010. ATTEST: ELLIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 BY Printed Name: BY Printed Name: Title: Title: Page 15 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Farmers Branch, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: BY Kevin Laughlin, City Attorney ATTEST: BY Cindee Peters, City Secretary CITY OF FARMERS BRANCH, TEXAS BY Gary D. Greer, City Manager Page 16 of 31 EXECUTED as of the day of , 2010, on behalf of the Town of Flower Mound, Texas, as duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by the Town Attorney. TOWN OF FLOWER MOUND, TEXAS APPROVED: BY Melissa D. Northern, Mayor ATTEST: Paula J. Paschal, Town Secretary APPROVED AS TO FORM AND LEGALITY: Terrence S. Welch, Town Attorney Page 17 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Glenn Heights, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and attested to by its City Secretary. ATTESTED: BY CITY OF GLENN HEIGHTS, TEXAS BY City Secretary Jacqueline L. Lee, City Manager Printed Name: Page 18 of 31 EXECUTED as Prairie, Texas, adopted on the Attorney. of the day of , 2010, on behalf of the City of Grand by its City Manager, duly authorized by Resolution No. , day of , 2010 and approved as to form by its APPROVED AS TO FORM: BY Don Postell, City Attorney ATTEST: BY Cathy DiMaggio, City Secretary CITY OF GRAND PRAIRIE, TEXAS BY Tom Hart, City Manager Page 19 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Hutchins, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF HUTCHINS, TEXAS BY BY Artis Johnson, Mayor City Attorney ATTEST: BY City Secretary Page 20 of 31 PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF IRVING, TEXAS, on .2010. HERBERT A. GEARS MAYOR ATTEST: Shanae Jennings Acting City Secretary APPROVED AS TO FORM: Charles R. Anderson City Attorney Page 21 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Lancaster, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: BY Robert E. Hagar, City Attorney ATTEST: BY Dolle K. Downe, City Secretary CITY OF LANCASTER, TEXAS BY Rickey C. Childers, City Manager Page 22 of 31 EXECUTED as of the day of , 2010, on behalf of The City of Lewisville, Texas, by its City Manager as authorized by Resolution adopted on the day of , 2010 by a vote of to CITY OF LEWISVILLE, TEXAS BY Claude King, City Manager ATTEST: Julie Heinze, City Secretary APPROVED AS TO FORM: Ronald J. Neiman, City Attorney Page 23 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Ovilla, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF OVILLA, TEXAS BY City Attorney BY Mayor ATTEST: BY City Secretary Page 24 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Red Oak, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF RED OAK, TEXAS BY City Attorney BY Mayor ATTEST: BY City Secretary Page 25 of 31 EXECUTED as of the day of , 2010, on behalf of the City of Seagoville, Texas, by its City Manager, duly authorized by Resolution No. , adopted on the day of , 2010 and approved as to form by its City Attorney. APPROVED AS TO FORM: CITY OF SEAGOVILLE, TEXAS BY City Attorney BY City Manager ATTEST: BY City Secretary Page 26 of 31 EXECUTED as of the 15day of , 2010, on behalf of The Colony, Texas, by it Mayor, duly authorized by Re tion No.. k71Q -OSI , adopted on the day of 2010 and approved as to form by its City Attorney. ATTEST: 4 BY Christie Wilson, City Secretary CITY OF THE COLONY, TEXAS APPROVED AS TO FORM: BY Jeff Wore, City Attorney Page 27 of 31 APPENDIX A GLOSSARY OF TERMS Allocation - The apportioning of the common-to-all cost of service. Common-To-All - Facilities, and their associated cost, that are dedicated to providing treated water service to both Dallas and Wholesale Treated Water Customers. Construction Work in Progress (CWIP) - The utility's investment in facilities under construction but not yet dedicated to service. Demand Costs - Costs associated with providing facilities to meet peak rates of use, or demand, placed on the system by the customers. Depreciation - The wearing out or loss in service value of property used in utility operations. Depreciation Rate - The rate of loss in service value, based on the expected service life of property. Depreciation Reserve - The accumulated amount of the loss in service value of property. Direct Reuse - The use of treated wastewater effluent from Dallas' wastewater treatment plants for non-drinking water purposes within the boundaries of the City of Dallas. Embedded Interest Rate - Annual interest expense expressed as a percentage of average debt. Indirect Reuse - The use of treated wastewater effluent from Dallas' wastewater treatment plants for raw water supply augmentation purposes. Inside Dallas - The group of retail treated water service customers, comprised of residential, commercial and industrial customers served by Dallas Water Utilities. Interest Expense - Payment made for the use of borrowed funds. Materials & Supplies - Assets in inventory which are required to meet current obligations and service responsibilities of the utility. Maximum Day Demand - The maximum demand placed on the system over a 24-hour period. Maximum Hour Demand - The maximum demand placed on the system over a 60-minute period on the system's maximum day. MGD - Million gallons per day flow rate. Operating Expenses - Operation and maintenance charges incurred in operating a utility. Page 28 of 31 r APPENDIX A GLOSSARY OF TERMS (PAGE 2 OF 2) Original Cost - The amount of investment in facilities when first put into service. Rate Base - Total investment dedicated to providing utility service. Rate of Return - The percentage of return authorized to be earned on an investment (e.g. a rate base). Reservoir Capacity - The amount of water available from a reservoir. Reservoir Costs - Costs incurred in acquiring and maintaining an untreated water supply system. ROFC - Rate of flow controller. A device limiting instantaneous flow rate to a specific amount. Instantaneous flow rate for rate setting purposes is a per day setting. Standby Service - Connection to wholesale treated water customer which is not normally used, excluding bypass lines which are required by Dallas Water Utilities as a part of an active metering facility. Test Period (or Test Year) - Selected to be representative of the period of time over which the new rates are expected to be in effect. Treated Water - Raw water that has passed the purification process. Unaccounted for Water - Water produced but not billed to customers that result from metering inaccuracies, system leakage, and miscellaneous unmetered uses. Volume Costs - Costs that tend to vary directly with the amount of water produced and sold. Water Supplies and Associated Facilities - Dallas' water supply system, including, but not limited to, all reservoirs, indirect reuse water, and all system infrastructure. Wholesale Cost of Service - The sum total of: (1) operating expense, (2) depreciation expense, and (3) return on investment. Depreciation expense and rate of return are on the original cost of investment less accumulated depreciation, capitalized interest and contributed capital. Wholesale Treated Water Customers - The group of water customers of the City of Dallas which currently have a wholesale treated water contract with Dallas. Working Capital - Assets (funds) which are required to meet current obligations and service responsibilities of the utility. Page 29 of 31 .t APPENDIX B MOA WORKING GROUP Addison: Randy Moravec Lauren Clark Carrollton: Bob Scott Lori Iwanicki David Gaines Cedar Hill: Ruth Antebi-Guten The Colony: Tod Maurina Coppell: Chad Beach Kim Tiehen Dallas Fort Worth Airport: Jerry Dennis Dallas County W.C.&I.D. #6: Robert Rodriquez Red Taylor William Freeman Denton: Tim Fisher DeSoto: Isom Cameron Tom Johnson Duncanville: Frank Trando Richard Summerlin Dennis Schwartz Farmers Branch: Charles Cox Mark Pavageaux Flower Mound: Chuck Springer Kenneth Parr Glenn Heights: Judy Bell Grand Prairie: Ron McCuller Doug Cuny Grapevine: Ramana Chinnakotla Kent Conkle Irving: Aimee Kaslik David Cardenas Lewisville: Carole Bassinger Page 30 of 31 Red Oak: Richardson: University Park: Upper Trinity Regional Water District: Dallas: Page 31 of 31 Charles Brewer Kent Pfeil Keith Dagen Kent Austin Tom Taylor Larry Patterson Jo M. (Jody) Puckett Bobby Praytor Charles Stringer Terry Lowery Denis Qualls Jacqueline Culton Tonia Barrix Melissa Paschall-Thompson Erica Robinson Maria Salazar