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Item 7JCity of Southlake, Texas MEMORANDUM March 4, 2003 To: Billy Campbell, City Manager From: Pedram Farahnak, P.E., Director of Public Works, 481 -2308 Subject: Ordinance No. 841, 2nd reading, approval of wholesale system access fees required by the contract for water service between the City of Southlake and the City of Fort Worth dated September 4, 2002. Action Requested: Ordinance No. 841, 2nd reading, approval of wholesale system access fees required by the contract for water service between the City of Southlake and the City of Fort Worth dated September 4, 2002. Background Information: On August 6, 2002 the Southlake City Council authorized the Mayor to execute a contract for water service between the City of Fort Worth and the City of Southlake for wholesale purchase of water. Subsequently, the Fort Worth City Council authorized and executed the contract on September 4', 2002. In accordance with section 16. 1, "System Access Fees ", on a quarterly basis, Southlake agreed to pay Fort Worth a wholesale system access fee for each new or enlarged connection for water service made within the quarter within Southlake's service area served by the General Benefit Facilities of the Fort Worth Water System. The wholesale system access fee to Southlake for each such connection shall be based upon the size of water meter. Sections 16.1 through 16.9 of the water service contract between Southlake and Fort Worth has been included for your review with this memorandum. Attached to this memorandum is also the "System Access Fees" (Impact Fee Collection Schedule) ranging from $372.05 for a 3 /4" to $28,525.07 for a 10" meter. Council approved Ordinance 841, 1st reading, on February 18, 2003. Financial Consideration: Not applicable. Citizen Input/ Board Review: Not applicable. Legal Review: The City Attorney has prepared Ordinance No. 841. Alternatives: Not applicable. Supporting Documents: • Ordinance No. 841 • System Access Fee or Impact Fee Collection Schedule • Section 16.1 through 16.9 of Water Service Contract with Fort Worth Staff Recommendation: Approval of wholesale System Access Fees required by the contract for water service between the City of Southlake and the City of Fort Worth dated September 4, 2002. Staff Contact: Pedram Farahnak, P.E., Director of Public Works, 481 -2308 CC: Sharen Elam, CPA, Director of Finance WHEREAS, the City of Southlake, Texas, is a home rule city acting under its charter adopted by the electorate pursuant to Article X1, Section 5 of the Texas Constitution and Chapter 9 of the Local Government Code; and WHEREAS, on September 4, 2002, the City of Southlake entered into an agreement with the City of Fort Worth, City Secretary Contract No. 27958 (the "Wholesale Water Contract "), to provide water service to citizens of the City of Southlake; and WHEREAS, Section 16 of the Wholesale Water Contract provides that the City of Southlake shall pay to Fort Worth a Wholesale System Access Fee for each new or enlarged connection for water service made within the City's service area and served by the City of Fort Worth; and WHEREAS, the City of Fort Worth has adopted and imposed a new schedule of Wholesale System Access Fees effective June 5, 1999 as shown in the attached Exhibit "A "; and WHEREAS, the city council of the City of Southlake desires to provide for the collection of Wholesale System Access Fees for each new or enlarged connection for water service in accordance with Exhibit "A ". NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1. WHOLESALE SYSTEM ACCESS FEES The City of Southlake hereby adopts the Wholesale System Access Fees set forth in the attached Exhibit "A" and authorizes the collection of such Wholesale System Access Fees for each new or enlarged connection for water service made within the City's water service area after the effective date of this ordinance. The Wholesale System Access Fees shall be in addition to any other applicable fees for water improvements and service adopted by the City. SECTION 2. PAYMENT OF FEES No water tap shall be issued until payment of such Wholesale System Access Fee is received by the City, except as provided otherwise by contract. ORDINANCE NO. 841 SECTION 3. CUMULATIVE CLAUSE This ordinance shall be cumulative of all provisions of ordinances of the City of Southlake, Texas, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances, in which event the conflicting provisions of such ordinances are hereby repealed. SECTION 4. SEVERABILITY CLAUSE It is hereby declared to be the intention of the city council that the phrases, clauses, sentences, paragraphs and sections of this ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same would have been enacted by the city council without the incorporation in this ordinance of any such unconstitutional phrase, clause, sentence, paragraph or section. SECTION 5. SAVINGS CLAUSE All rights and remedies of the City of Southlake are expressly saved as to any and all violations of the Code of Ordinances of the City of Southlake, as amended, or any other ordinances affecting fees which have accrued at the time of the effective date of this ordinance; and, as to such accrued violations and all pending litigation, both civil and criminal, whether pending in court or not, under such ordinances, same shall not be affected by this ordinance but may be prosecuted until final disposition by the courts. SECTION 6. EFFECTIVE DATE This ordinance shall be in full force and effect from and after its passage and publication as required by law, and it is so ordained. 2002. PASSED AND APPROVED ON FIRST READING ON THIS DAY OF MAYOR ATTEST: CITY SECRETARY PASSED AND APPROVED ON SECOND READING ON THIS DAY OF , 2003. MAYOR ATTEST: CITY SECRETARY EXHIBIT A Wholesale System Access Fees Collection Schedule Meter Size Equivalent Factor Fees 3 /4 " 1.00 $ 372.05 1 1.67 $ 621.32 1 -1/2" 3.33 $ 1,238.93 2 5.33 $ 1,983.03 3" 10.00 $ 3,720.50 4" 16.67 $ 6,202.07 6" 33.33 $ 12,400.43 8 53.33 $ 19,841.43 10" 76.67 $ 28,525.07 13. Sanitary Sewer Facilities 13..1 The Customer agrees that it will require all of its customers, who are provided water from the Fort Worth system, to have adequate sanitary sewage facilities meeting state health department requirements. 14. Additional Parties 14.1 Fort Worth will use its best efforts to provide an adequate water supply for all of its customers. Prior to the approval of additional wholesale customers, Fort Worth will provide reasonable assurances that the projected five -year water demands of the then- existing wholesale customers so served and the proposed additional customer can be adequately fulfilled. Fort Worth will consult with the Water System Advisory Committee prior to contracting with additional parties. 15. Water System Advisory Committee 15.1 Customer's governing body shall annually appoint a representative to be a voting member of the Water System Advisory Committee, whose purpose shall be to consult with and advise Fort Worth, through the Director, on matters pertaining to conservation, wholesale planning, improvements, grants, wholesale rate studies, administration, budgets, and additional wholesale customers, whether same be wholesale customers of Customer or fort Worth. The Committee may establish bylaws governing. the election of officers, meeting dates and other matters pertinent to its functioning. 16. System Access Fees 16.1 On a quarterly basis, Customer agrees to pay to Fort Worth a Wholesale System Access Fee for each new or enlarged connection for water service made within the quarter within Customer's service area served by the General Benefit Facilities of the Fort Worth Water System. The Wholesale System Access Fee to the Customer for each such connection shall be based SOUTHLAKE WHOLESALE WATER CONTRACT Page 19 of 32 upon the size of water meter and shall be equal to the Wholesale System. Access Fee collected for the same size water meter made within the jurisdiction of Fort Worth. The calculation of said Wholesale System Access Fee shall be consistent With all applicable state and federal regulations, including Chapter 395, Texas Local Government Code, or any amendment or successor statute thereto, and shall include only those costs associated with General Benefit Facilities expansions and capital improvements necessary to provide service to new development. Nothing within this contract shall be deemed to prevent either Fort Worth or Customer from charging their own retail customers impact fees in excess of the Wholesale System Access Fee provided for herein. 16.2 Fort Worth agrees that all monies remitted to it pursuant to this Section will be placed in a separate interest bearing account to pay only for the cost of constructing capital improvements or facility expansions as permitted by Chapter 395, Texas Local Government Code, or any amendment thereto, or by any successor statute thereto, and will not be used for operation and maintenance expenses. Once expended, such funds and all interest earned thereon will be considered a "contribution" for rate setting purposes only. 16.3 Customer shall provide to Fort Worth such information that relates to the making of new and /or enlarged connections within its jurisdiction as may be requested by the Director, including but not limited to building permits, with each quarterly payment required in this section. 16.4 Neither Fort Worth nor Customer shall waive any impact fee due from new or enlarged connections to its respective system within its jurisdiction. However, either Fort Worth or Customer may pay such impact fee into the fund required for paying for the capital improvements. 16.5 The Water System Advisory Committee created pursuant to Section 15 hereof shall select five (5) of its members to a subcommittee to be known as the Customer Impact Fee Committee (CIFC). Every three years, beginning June, 1992, Fort Worth will update the land use assumptions and capital improvements plan upon which the Wholesale System Access Fees are based. In June 1992 and every three years thereafter, the CIFC shall submit a list of five qualified SOUTHLAKE WHOLESALE WATER CONTRACT Page 20 of 32 engineers or planning consultants to the Director. The Director shall select a consultant from such list to assist Fort Worth in developing land use assumptions, identifying capital improvements, and formulating capital improvement plans and access fees. The consultant shall be responsibler to Fort Worth and its citizen's advisory committee, but shall also report to the CIFC. The cost of the consultant shall be deemed a System Cost. In the event the CIFC fails to submit a _list of five consultants to Fort Worth, Fort Worth shall select a consultant to perform in the manner described herein. 16.6 Fort Worth agrees that only those capital improvements as defined in section 1.18 hereof shall be included in the capital improvements plan - for the purpose of determining Wholesale System Access Fees; provided however, Fort Worth may include other capital improvements for the purpose of determining impact fees to its own retail customers. Fort Worth shall not be required to include all capital improvements in any capital improvements plan. The CIFC shall be responsible for working with Fort Worth and its consultant to determine the capital improvements to be included in the calculation of any Wholesale System Access Fees. The CIFC shall recommend to the Water System Advisory Committee which capital improvements should be included in the calculation of any Wholesale System Access Fees. The CIFC shall also meet with Fort Worth's citizen advisory committee as such citizen's advisory committee reviews and considers land use assumptions, the capital improvements plan and impact fees. 16.7 Prior to the adoption of any land use assumptions, capital improvements, or access fees by Fort Worth, the CIFC shall be furnished a copy of the proposed land use assumptions, capital improvement plan or access fees at least 30 days prior to any scheduled hearing thereon. Any revised access fee adopted pursuant to such updated capital improvements plan shall not take effect for a period of at least ninety (90) days after adoption by Fort Worth. 16.8 Each year Fort Worth shall provide to the Wholesale Water Advisory Committee an audited financial statement of the Fort Worth Water Department's records. SOUTHLAKE WHOLESALE WATER CONTRACT Page 21 of 32 16.9 Fort Worth and Customer agree that the methodology for the calculation of Wholesale System Access Fees required herein shall be consistent with the methodology prescribed by Chapter 395, Texas Local Government Code, or any amendment or successor statute thereto. In the event that such statutory methodology is amended or replaced by a new statute, the Wholesale Water Advisory Committee may engage legal counsel to work with Fort Worth to propose amendments to this contract to conform it to such amendment or new statute. The reasonable cost of such legal counsel shall be a System Cost. 17. Termination 17.1 This agreement may be terminated in whole or in part by the mutual consent of Customer and Fort Worth. Notwithstanding anything contained herein to the contrary, any material breach by either parry hereto to perform any of the duties or the obligations assumed by such party hereunder or to faithfully keep and perform any of the terms,' conditions and provisions hereof shall be cause for termination of this agreement by either party in the manner set forth in this paragraph. Fort Worth shall deliver to Customer ninety (90) days prior written notice of its intention to so terminate this agreement if Customer fails to cure or adjust such material breach, including in such notice a reasonable description of the breach. If within said ninety (90) days Customer shall fail or refuse to cure such material breach to the satisfaction of Fort Worth, then and in such event, Fort Worth shall have the right, with six months additional advance written notice to Customer and without any liability whatsoever on the part of Fort Worth, to declare this agreement terminated. In the event of termination of this agreement, all rights, powers, and privileges of Customer hereunder shall cease and terminate and Customer shall make no claim of any kind whatsoever against Fort Worth, its agents or representatives, by reason of such termination or any act incident thereto, provided Fort Worth acted reasonably and such termination was not unreasonable, arbitrary and capricious. Fort Worth shall advise Customer in writing immediately upon acceptance of the cure of any breach. SOLJTHLAKE WHOLESALE WATER CONTRACT Page 22 of 32 Major Differences between Current and Proposed Contract A Customer Water Advisory Committee will develop a Uniform Water Conservation Policy for adoption by customer cities to reduce consumption. Fort Worth has agreed to Southlake's second point of connection for water supply at Fort Worth's Caylor Road tank. (see map) Fort Worth has agreed to construct an additional 48" diameter supply pipe to the Caylor tank at a cost of $9,000,000. Southlake's share of cost is $2,970,000 which must be paid over 60 months starting in FY 2004 -2005. Southlake will be required to collect " "System Access Fees" or impact fees for all new and enlarged water connections.