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HomeMy WebLinkAbout97-91 RESOLUTIONrrtiot 1.5 RESOLUTION NO. 97-91 A RESOLUTION AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A WATER PURCHASE CONTRACT WITH THE CITY OF ELKINS, ARKANSAS. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the Mayor and City Clerk are hereby authorized and directed to execute a contract between the City of Fayetteville and the City of Elkins for the purchase of water. A copy of the contract authorized for execution hereby is attached hereto marked Exhibit "A" and made a part hereof. PASSED AND APPROVED this 21st day of May , 1991. APPROVED: By: Fra ATTEST; City Cl rk r Ala 4. L f • R Erf WATER PURCHASE CONTRACT This Contract for the sale and purchase of water, made and entered into this 21sr day of Mav , 19 91, by and between the City of Fayetteville, Arkansas, a municipal corporation, hereinafter referred to as the "City", and the City of • Elkins, hereinafter referred to as the "Buyer". WITNESSETH: WHEREAS, the City owns and operates a water supply distribution system with a planned capacity capable of serving the present customers of the City system and the estimated number of water users to be served by the said Buyer, and, WHEREAS, the Buyer desires to purchase water from the City for ,+ $ distribution within the present service area of Buyer, and the City • desires to furnish and sell water to the Buyer for distribution as aforesaid. +• NOW, THEREFORE, in consideration of the foregoing and the mutual agreements.hereinafter set forth: • A. The City agrees: 1. To furnish the Buyer, at the point of delivery hereinafter specified, for distribution within its present service area, during the term of this contract or any renewal or extension thereof, potable treated water meeting applicable purity standards of the State Board of Health, and in such quantity as may be required by the Buyer, not to exceed 45 million gallons per year, and a maximum of 250 thousand gallons per day. The City shall not be obligated to provide water to the Buyer at a rate greater than the amount(s) aforesaid. Total usage exceeding the amount(s) aforesaid shall be cause for renegotiation of this contract. In the event the Buyer requires water at a rate greater than herein provided, the City agrees, upon 30 days written notice from the Buyer, to negotiate in good faith to provide for increased water volumes upon the Buyer showing increased growth sufficient to warrant such increase. In determining the terms and conditions upon which such increase may be granted, the City may take into consideration any reinforcement of the eight (8) inch main(s) hereinafter referred to made necessary by the increase in volume if the reinforcement has not been accomplished by the City prior to the time it is required by the Buyer. The Buyer shall bear only that portion of those costs which are incurred as a result of the Buyers increase in volume. If any maximum allowable rate of usage specified is exceeded, an excess demand charge of 10% may be added to the bill for each day during which the maximum allowable rate was exceeded. If any maximum allowable rate of usage is exceeded, the City may install automatic, variable rate -of -flow controllers and charge the cost of same to the Buyer. The City may install such rate of flow controllers at anytime at the City's expense. The excess demand charge shall not apply if the excess usage was beyond the control of the Buyer. However, all customer usage is considered as being within the control of the Buyer, as is system loss whichis not promptly corrected by the Buyer. • It is further understood and agreed that the City's responsibility for the water ends at the meter box outlet or vault and the Buyer agrees to indemnify and, hold harmless the City from any and all liability incurred past the meter box outlet or vault. 2. The water will be furnished at a reasonably constant pressure (due consideration being given to friction loss) from an existing eight (8) inch water main at a point located at the site described in Exhibit"A" attached hereto and made a part hereof. If a greater pressure than that normally available at the point of delivery is required by the Buyer, the cost of providing such greater pressure shall be borne by the Buyer. 3. City agrees to furnish, install, operate, and maintain at point of delivery the necessary metering equipment, including a meter house or pit, check valves, and required devices of standard type for properly measuring the quantity of water delivered to the Buyer, including a meter of proper size. The cost of maintenance and operation of the metering facility shall be borne by the City. The responsibility for testing and calibrating the meter rests solely with the City. A meter registering not more than two percent (2%) above or below the test result shall be deemed to be accurate. The previous reading of any meter disclosed by test to be inaccurate shall be corrected for the two (2) months previous to such test in accordance with the percentage of inaccuracy found by such tests. If any meter fails to register for any period, the amount of water furnished during such period shall be determined by average 3 r,! readings over a period of two previous months or a like month of a previous year, at the City's option. The metering equipment shall be read on a regular schedule each month. An appropriate official of the Buyer at all reasonable times shall have access to the meter for the purpose of verifying its reading. The size of the meter shall be in keeping with anticipated water usage and/or demand. The Buyer will provide a valve at the inlet side of the meter to shut off the supply and also to limit the flow of water to the rate permitted. A by-pass to the meter shall be installed for use during periods of meter maintenance. The cost for the by-pass valves, fittings, and pipe shall be borne by the Buyer. ' 4. The City's responsibility for maintenance shall end at the outlet side of the meter box or vault. 5. City agrees to furnish the Manager of the Buyer with an itemized monthly statement of the amounts of water furnished and other charges to the Buyer in accordance with the City billing policies and procedures. 6. When requested by the Buyer, the City will make available to the Buyer any and all records used in development of the water rates. The City further agrees to notify the Buyer at least one month prior to the beginning of a cost of service study, and will allow the Buyer to be a part of the Selection Committee that selects an engineering firm with a nationally recognized reputation in the design of water rates to perform the cost of service study. The Buyer will be allowed to vote as a part of the Selection ti Committee in proportion to the total amount of water used by the Buyer compared to the total amount of water used by the entire system. The criteria to be used in conducting a cost of service study will be set by the selected engineering firm but shall include the criteria of a fair rate of return on the City's capital investment for the water works necessary to provide water to wholesale customers. The selected engineering firm shall be instructed to develop rates which are fair and equitable to all customer classes. Water rates for all customer classes will be based upon a cost -of -service rate study performed by independent utility rate consultants. All cost of service studies shall be conducted utilizing the utility basis of determining revenue requirements and the base -extra capacity method of cost allocation in accordance with the methodology presented in the manual entitled Water Rates, published by the American Water Works Association. The parties recognize and acknowledge that the Board of Directors of the City of Fayetteville, Arkansas is the final determiner of water rates and nothing herein shall be construed as limiting their discretionary authority in establishing. water rates. B. The Buyer Agrees: 1. To purchase Water as required by the Buyer and the consumers within the presently defined service area of the Buyer, up to a maximum of 45 million gallons per year and 250 thousand gallons per day. Buyer shall purchase water from the City and not from any other source without the written consent of the City. 2. To pay the City not later than the due date given on the • bill (20 days following the billing date) for water delivered in the preceding reading period, in accordance with the rates as established by the City. If the Buyer does not remit payment on or before the specified due date each month, a penalty equal to ten percent (10%) of the total payment amount due shall be added to such payment, and if not paid within thirty (30) days following the due date in which the original billing is due or the aggrieved party has not submitted a claim for arbitration as specified in Section F., paragraph 1, the City may discontinue delivery of water to the Buyer as a last resort and may continue to deny delivery to the Buyer until the Buyer pays the total amount due. The rates for water and meter service charges presently in effect are illustrated by the attached schedule, marked Exhibit "B". It is mutually understood and agreed ,among the parties that the City may • • b It immediately pass along to the buyer any increases or decreases in rates imposed upon the Cityby the Beaver Water District, its • 4 . successors or assigns. The rates shall be adjusted to the Buyer in the same amount as the.increase .or decrease from said water district. 3. Buyer will receive the benefit of reduced demand factor water rates illustrated by the attached schedule marked as Exhibit "C" attached hereto if the buyer, in the judgment of the City, has done the following: (1) Provided water storage facilities that have a combined capacity of at least 2.5 times the buyers average daily usage, and; 6 • (2) Such water storage facilities have reduced the buyers maximum day demand usage to not exceed 2.0 times their average day usage. The buyer must request such reduced demand factor water rates from the City in writing and the City shall answer buyers request within 30 days. Daily usage demands will be periodically checked by authorized meter personnel of the City to be sure the demand factors are not exceeded. The buyer will be notified at least 4 hours in advance of when the meter will be read and examined for this purpose. The rates for reduced demand factor water rates presently in effect are illustrated by the attached schedule, marked Exhibit C. 4. The Buyer agrees to install, within a reasonable distance of the metering point, a backflow preventor approved by the State Health Department. 5. The Buyer agrees to restrict water connections to those customers having adequate on-site sewage disposal systems previously approved by the Arkansas State Health Department as having been deemed adequate. New,on-site systems shall be deemed adequate if the system is approved by the Arkansas State Health Department. C. It is further mutually agreed between the City and the Buyer as follows: 1. That this contract shall extend for a term of five (5) years from the initial date of this contract entered into by the City and Buyer or until completion of the next cost of service I t 1 • W • • study and its incorporation into a new rate structure adopted by the City, whichever comes first. 2. That themCity will, at all times, operate and maintain its system in an efficient manner and will take such action as may be necessary to furnish the quantities of water required by the Buyer, ,up to the maximum amount as specified in Paragraph A.1. hereof. Temporary or partial failures to deliver water caused by the failures or difficulties in the City's system shall be remedied with all possible dispatch. Provided, however, the City reserves the right, in the event of acute shortage of water, to limit or discontinue water sales and service to the Buyer in the same ratio or proportion as the supply to the City's consumers is reduced or diminished. Any reduction or discontinuance of water sales and service for this reason shall not render the City liable for damages of any kind, it being understood between the parties that the City's primary obligation is to furnish water and water services to the citizens of the City of Fayetteville, Arkansas. The City shall not be responsible for any damages to the Buyer or its consumers by reason of emergency failures of water supply due to water main breaks, power failure, flood, fire, earthquake and other acts of God, or catastrophe, acts of war, insurrection or rebellion, acts of a public enemy, acts of any unauthorized person, firm, or corporation, or acts of the Buyer, or during any periods of water reduction or discontinuance by reason of fire fighting or other emergency situation; nor shall such failures of water supply and/or discontinuance or reduction of water sales and service be 8 tfl a construed as a breach of this contract by the City. 3. That this contract is subject to such rules, regulations, or laws as may be applicable to similar agreements in the State of Arkansas and the City and Buyer will collaborate in obtaining such permits, certificates, or the like, as may be required to comply therewith. It is expressly understood and agreed that the sale of water herein provided for from the City to the Buyer, is a sale for resale, and the Buyer agrees to secure a sales tax permit as required by the Arkansas Stats. Ann. Section 84-1904 (i) 84-1913, (and any subsequent amendments thereto) and agrees that it will collect and pay over to the Commissioner of Revenues of the State of Arkansas, any and all sales tax now or hereafter imposed upon the resale of said water to the Buyer's consumers. 4. That in,the event of any occurrence rendering the Buyer incapable of performing under this contract, any successor of the Buyer whether the result of legal process, assignment, or otherwise, shall succeed to the rights of the Buyer hereunder. 5. It is understood and agreed that the water to be supplied by the City to the Buyer under this contract is to be furnished for distribution within the Buyer's specified service area. The Buyer shall not extend its water main outside its defined service area without the prior written consent of the City. 6. In the event a portion of the Buyer's water mains are constructed within the corporate limits of the City, the Buyer is not permitted to serve consumers within the corporate limits of the 9 City without prior written consent of the City. 7. Buyer agrees that it will not during the period of this contract or any renewal thereof levy any franchise tax, occupation tax, or any other tax of any form whatsoever, by whatever name it may be called, upon the City, the City water system and appurtenances thereto, or the operations called for by this contract. 8. No provision of this agreement shall be construed to create any type of joint or equity ownership of any property, or partnership or joint venture, nor shall same create any other rights or liabilities and Customer payments (whether past, present, or future) shall not be construed as granting Customer partial, ownership of, pre -paid capacity in, or equity in the City's system. 9. This agreement may be terminated by either Buyer or the City upon breach by the other of any of the covenants or agreements contained herein, and the failure ofthe party in breach to remedy such breach within thirty (30) days after receipt of written notice of the existence of such breach. Written notice shall be sufficient, if sent by.certified mail, return receipt requested, postage prepaid, to the respective mayor or chairman of the parties A • - i T _ i hereto. D. Buyer's option to vacate the system within two years. Buyers may exercise an option on or before July 1, 1991 to vacate and leave the City's water supply distribution system by notifying the City of such intent in writing prior to said date. Should the Buyer exercise such option the Buyer shall acquire all 10 funding for, start construction of, and substantially complete the Buyers own water supply distribution system independent of and separate from the City's on or before July 1, 1993. During the aforementioned two year period of financing and construction, the City agrees to apply an 8.0% rate of return retroactive to August 1, 1990 rather than the 8.8% rate of return calculated into the City's current water rates for wholesale water customers. Should the Buyer for any reason fail to acquire all funding for, start construction of, and substantially complete the Buyer's water supply system on or before July 1, 1993, the Buyer shall repay to the City the difference between the paid water rates calculated on an 8.0% rate of return and the water rate calculated on an 8.8% rate of return. Payment of said repayment may, at the election of the Buyer, be made to the City on a monthly basis over 1 a two year period E. Payment upon termination. 4 t - Should the•Buyer cease to purchase'water from the City for any reason, including but not limited to vacating the City's water system as set forth in paragraph D herein, or by terminating this contract without entering into a new water purchase agreement with the City, the Buyer will reimburse the City for the original cost less accumulated depreciation (OCLD) of the water facilities then utilized by the Buyer. The original cost less accumulated depreciation shall be determined as set forth in Exhibit D attached hereto. The Buyer may make such payment to the City on a monthly 1 11 • or yearly basis without interest over a one (1) year period. F. Arbitration. Any controversy or claim arising out of or relating to this contract, or to a breach or alleged breach thereof, shall be referred to a board of arbitration, the three members of which shall be appointed by the Arkansas Water and Wastewater Managers Association. Demand for arbitration may be made by either party on the other by written notice. The demand'shall state the controversy or claim. The board of arbitrators shall hold a hearing on the controversy or claim stated in the demand for arbitration, which hearing shall be within 30 days after appointment of all the arbitrators. The hearing may be adjourned from time to time. The board shall consider evidence offered by the parties relevant to the controversy or claim, and may swear witnesses. Testimony shall be taken and transcribed by a reporter. The record of the hearings, the decision of the board of arbitrators and the dissent of any one of them shall be filed with the city clerk. The decision of the board of arbitrators may be rendered by any two of them; and any one of them may render a dissent. The decision and dissent must be limited to the controversy or claim and based on findings of fact. The decision of any two of the arbitrators shall • be the decision of the board and shall be final and conclusive on both parties. . r 9 12' • • • .9 Expenses of arbitration, including, without limitation of generality, Costs of notices and service thereof, fees of arbitrators and of witnesses but not of counsel and the cost of taking and transcribing testimony shall be shared equally by the parties, charged against the party at fault or apportioned between the parties as the board may deem equitable and just. The award rendered by the board shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. G. Severability. The sections, paragraphs, sentences, phrases, and clauses of this contract are severable, and should any section, paragraph, sentence, phrase, or clause be declared invalid by the lawful decree of any court of competent jurisdiction, such invalidity shall not affect any other portion of this contract. IN WITNESS WHEREOF, the City and Buyer have executed these presents by their respective Mayors and President and have caused their seals to be hereto affixed and the same attested to by the City Clerk and chairman of the parties, having been authorized to do so by appropriate ordinances of their respective governing bodies. • AFATTEST: -- t' ✓ ' "�� y`. 'Ykli. Y CLERK ,.a 13 CITY OF FAYETTEVILLE, ARKANSAS, A Muni.ciPal Cerpprati�on BY:. MAYOR EXHIBIT "A" METERING POINT CITY OF ELKINS A. Located approximately 2,700 feet east section corner of Section 21, Range 29 North, along the south section line. • f • • w 15 • • of the southwest West, Township 16 (8 inch main) • Usage rate per 1,000 gallons Monthly meter charge EXHIBIT ^B" WATER RATES Effective dates: 08-01-90 01-01-91 01-01-92 01-01-93 01-01-94 1.67 35.84 4 • y 2.00 2.29 42.94 49.44 • 11' a .. 4 1 16 4 2.49 2.70 53.89 58.20 • • • • Usage rate per 1,000 gallons EXHIBIT "Cu REDUCED DEMAND FACTOR WATER RATES Effective dates: 08-01-90 01-01-91 01-01-92 01-01-93 01-01-94 1.54 1.85 2.12 2.31 2.49 Monthly meter charge 33.16 39.72 45.73 49.85 53.83 17 4 EXHIBIT °D" FORMULA TO CALCULATE DISENGAGEMENT FEE All allocations will be based on current records as shown in the most recent Cost of Service Study. Formula: divided by multiplied by equals WHOLESALE CUSTOMER ALLOCATION TOTAL SYSTEM TOTAL PLANT INVESTMENT ALLOCATION OF NET PLANT INVESTMENT FOR WHOLESALE CUSTOMERS Each of the allocations listed below must be processed through this formula, and their sums added together to get the total disengagement fee for the wholesale customers. Allocations: 1. BASE ANNUAL USE 2. MAX DAY/EXTRA CAPACITY 3. BILLING UNITS 4. METERED UNITS 5. DIRECT TO OUTSIDE To figure a disengagement fee for an individual wholesale customer, calculate the percentage/volume used compared to the entire wholesale class. This volume will be based on the most recent 12 month period. 18 • • BASE MAX DAY BILLING UNITS METERED UNITS DIRECT/OUTSIDE SAMPLE CALCULATION OF DISENGAGEMENT FEES 1992 Test Year 296,397 -- 3,267,900 x 12,347,000 = 1,119,867 1,218 • 264 1,680 296,397 TOTAL. DISENGAGEMENT FEE WASH. WATER MT. OLIVE ELKINS WEST FORK (1990) USAGE 127,275,000 84,037,000 34,183,700 15,876,000 14,136 x 8,580,000 = 226,260 x 234,108 x 538,991 x PERCENT OF WHOLESALE CLASS 19 809,600 = i 1,345,100 = 809,600 = 739,278 945 9,653 445,208 $ 2,314,951 TOTAL DISENGAGEMENT FEE $ 1,127,381 $ 743,099 $ 303,259 $ 141,212 r.. }1AYETTEVILL ; THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: ICET 194,14 c 6�F-uf RECEDED MAY 2 0 19 MICROFTLMD Jim Beavers, City Engineer Don Bunn, Assistant Public Works Director Dave Jurgens, Water and Sewer Maintenance Superintendent Don Osbum, Water and Sewer Services Supervisor Brian Swain, Special Project Analyst FROM: Jim Smith, Water and Sewer Services Supenntendent %5 DATE: May 20, 1999 SUBJECT: City of Elkins Water and Sewer Contracts Attached are copies of the water and sewer contracts with the City of Elkins. The water contract has been expired since May 21, 1996. 'The following table shows water consumption for the City of Elkins for the previous six years: Year 1998 1997 1996 1995 1994 1993 Annual Consumption 39,043,200 34,522,000 35,377,500 33,040,200 36,897,400 37,382,700 Daily Average 106,968 94,581 96,925 90,521 101,089 102,418 The sewer contract does not have an expiration date. However, it has been in existence since July 23, 1981 and needs to be updated. The following table shows billed sewer usage for the City of Elkins for the previous six years: Year 1998 1997 1996 1995 1994 1993 Annual Consumption 18,601,300 17,487,700 16,806,700 14,484,600 15,654,100 25,216,000 Daily Average 50,962 47,911 46,045 39,683 42,887 69,084 Please review the attached contracts and make any necessary changes or recommendations. Changes and comments should be returned by Fnday, June 18, 1999. Please contact me at 575- 8244 if you have any questions. Thank you for your help. • GG KKN 5 (t�'6'. WATER PURCHASE CONTRACT This Contract for the sale andpurchase of water, made and entered into this iigf day of May , 19 91, by and between the City of Fayetteville, Arkansas, a municipal corporation, hereinafter referred to as the "City", and the City of Elkins, hereinafter referred to as the "Buyer". WITNESSETH: WHEREAS, the City owns and operates a water supply distribution system with a planned capacity capable of serving the present customers of the City system and the estimated number of water users to be served by the said Buyer, and, WHEREAS, the Buyer desires to purchase water from the City for distribution within the present service area of Buyer, and the City desires to furnish and sell water to the Buyer for distribution as aforesaid. NOW, THEREFORE, in consideration of the foregoing and the mutual agreements hereinafter set forth: A. The City agrees: 1. To furnish the Buyer, at the point of delivery hereinafter specified, for distribution within its present service area, during the term of this contract or any renewal or extension thereof, potable treated water meeting applicable purity standards of the State. Board 'of Health, and in such quantity as may be required by the Buyer, not to exceed 45 million gallons per year, and a maximum of 250 thousand gallons per day. The City shall not be obligated to provide water to the Buyer at a rate greater than the amount(s) aforesaid. Total usage exceeding the amount(s) aforesaid shall be cause for renegotiation of this contract. In the event the Buyer requires water at a rate greater than herein provided, the City agrees, upon 30 days written notice from the Buyer, to negotiate in good faith to provide for increased water volumes upon the Buyer showing increased growth sufficientto warrant such increase. In determining the terms and conditions upon which such increase may be granted, the City may take into consideration any reinforcement of the eight (8) inch -main(s) hereinafter referred to made necessary by the increase in volume if the reinforcement has not been accomplished by the City prior to the time it is required by the Buyer. The Buyer shall bear only that portion of those costs which are incurred.as.a result of the Buyers increase in volume. If any maximum allowable rate of usage specified is exceeded, an excess demand charge of 10% may be added to the bill for each day during which the maximum allowable rate was exceeded. If any maximum allowable rate of usage is exceeded, the City may install automatic, variable rate -of -flow controllers and charge the cost of same to the Buyer. The City may install such rate of flow controllers at anytime at the City's expense. The excess demand charge shall not apply if the excess usage was beyond the control of the Buyer. However, all customer usage is considered as being within the control of the Buyer, as is system loss which is not promptly corrected by the Buyer. E It is further understood and agreed that the City's responsibility for the water ends at the meter box outlet or vault and the Buyer agrees to indemnify and hold harmless the City from any and all liability incurred past the meter box outlet or vault. 2. The water will be. furnished at a reasonably constant pressure (due consideration being given to friction loss) from an existing eight (8) inch water main at a point located at the site described in Exhibit "A" attached hereto and made a part hereof. If a greater pressure than that normally available at the point of delivery is required by the Buyer, the cost of providing such greater pressure shall be borne by the Buyer. 3. City agrees to furnish, install, operate, and maintain at point of delivery the necessary metering equipment, including a meter house or pit, check valves, and required devices of standard type for properly measuring the quantity of water delivered to the Buyer, including a meter of proper size. The cost of maintenance and operation of the metering facility shall be borne by the City. The responsibility for testing and calibrating the meter rests solely with the City. A meter registering not more than two percent (2%) above or below the test result shall be deemed to be accurate. The previous reading of any meter disclosed by test to be inaccurate shall be corrected for the two (2) months previous to such test in accordance with the percentage of inaccuracy found by such tests. If any meter fails to register for any period, the amount of water furnished during such period shall be determined by average 3 rt �� readings over a period of two previous months or a like month of a previous year, at the City's option. The metering equipment shall be read on a regular schedule each month. An appropriate official of the Buyer at all reasonable times shall have access to the meter for the purpose of verifying its reading. The size of the meter shall be• in keeping with anticipated water usage and/or demand. The Buyer will provide'a valve at the inlet side of the meter to shut off the supply and also to limit the flow of water to the rate permitted. A by-pass to the meter shall be installed for use during periods of. meter maintenance. The cost for the by-pass valves, fittings, and pipe shall be borne by the Buyer. 4. The City's responsibility for maintenance shall end at the outlet side of the meter box or vault. 5. City agrees to furnish the Manager of the Buyer with an itemized monthly statement of the amount of water furnished and other charges to the Buyer in accordance with the City billing policies and procedures. 6. When requested by the Buyer, the City will make available to the Buyer any and all records used in development of the water rates. The City further agrees to notify the Buyer at least one month prior to the beginning of a cost of service study, and will allow the Buyer to be a part of the Selection Committee that selects an engineering firm with a nationally recognized reputation in the design of water rates to perform the cost of service study. The Buyer. will be allowed to vote as a part of the Selection .1 1 4 Committee in proportion to the total amount of water used by the Buyer compared. to the total amount of water used by the entire system. The criteria.to be used in conducting a cost of service study will be set by the selected engineering firm but shall include the criteria of a fair rate of return on the City's capital investment for the water works necessary to provide water to wholesale customers. The selected engineering firm shall be instructed to develop rates which are fair and equitable to, all customer classes. Water rates for all customer classes will be based upon a cost -of -service rate study performed by independent utility rate consultants. All cost of service studies shall be conducted utilizing the utility basis of determining revenue requirements and the base -extra capacity method of cost allocation in accordance with the methodology presented in the manual entitled Water Rates, published by the American Water Works Association. The parties recognize and acknowledge that the Board of Directors of the City of Fayetteville, Arkansas is the final determiner of water rates and nothing herein shall be construed as limiting their discretionary authority in establishing water rates. B. The Buyer•.Agrees: 1. To purchase water as required by the Buyer and the consumers within the presently defined service area of the Buyer, up to a maximum of 45, million gallons per year and 250 thousand gallons per day. Buyer shall purchase water from the City and not from any other source without the written consent of the City. 2. To pay the City not later than the due date given on the 5 s a. bill (20 days following the billing date) for water delivered in the preceding reading period, in accordance with the rates as established by the City. If the Buyer does not remit. payment on or before the specified due date each month, a penalty equal to ten percent (10%) of the total payment amount due shall be added to such payment, and if not paid within thirty (30) days following the due date in which the original billing is due or the aggrieved party has not submitted a claim for arbitration as specified in Section F., paragraph 1, the City may discontinue delivery of water to the Buyer as a last resort and may continue to deny delivery to the Buyer until the Buyer pays the total amount due. The rates for water and meter service charges presently in effect are illustrated by the attached schedule, marked Exhibit "B". It is mutually understood and agreed among the parties that the city may immediately pass along to the buyer any increases or decreases in rates imposed upon the city by the Beaver Water District, its successors or assigns. The rates shall be adjusted to the Buyer in the same amount as the, increase or decrease from said water district. 3. Buyer will receive the benefit of reduced demand factor water rates illustrated by the attached schedule marked as Exhibit "C" attached hereto if the buyer, in the judgment of the City, has done the following: (1) Provided water storage facilities that have a combined capacity of at least 2.5 times the buyers average daily usage, and; ri (2) Such water storage facilities have reduced the buyers maximum day demand usage to not exceed 2.0 times their average day usage. The buyer must request such reduced demand factor water rates from the City in writing and the City shall answer buyers request within 30 days. Daily usage demands will be periodically checked by authorized meter personnel of the City to be sure the demand factors are not exceeded. The buyer will be notified at least 4 hours in advance of when the meter will be read and examined for this purpose. The rates for reduced demand factor water rates presently in effect are illustrated by the attached schedule, marked Exhibit C. 4. The Buyer agrees to install; within a reasonable distance of the metering point, a backflow preventor approvedby the State Health Department. 5. The Buyer agrees to restrict water connections to those customers having adequate on -site sewage disposal systems previously approved by the Arkansas State Health Department as having been deemed adequate. New on -site -systems shall be deemed adequate if the system is approved by the Arkansas State Health Department. C. It is further mutually agreed between the City and the Buyer as follows: 1. that this contract shall extend for a term of five (5) years from the initial date of this contract entered into by the City and Buyer or until completion of the next cost of service 7 I r study and its incorporation into a new rate structure adopted by ` the City, whichever comes first. 2. That the City will, at all times, operate and maintain its system in an efficient manner and will take such action as may be necessary to furnish the quantities of water required by the Buyer, up to the maximum amount as specified in Paragraph A.1. hereof. Temporary or partial failures to deliver water caused by the failures or difficulties in the City's system shall be remedied with all possible dispatch. Provided, however, the City reserves the right, in the event of acute shortage of water, to limit or discontinue water sales and service to the Buyer in the same ratio or proportion as the supply to the city's consumers is reduced or diminished. Any reduction or discontinuance of water sales and service for this reason shall not render the City liable for damages of any kind, it being understood between the parties that the City's primary obligation is to furnish water and water services to the citizens of the City of Fayetteville, Arkansas. The City shall not be responsible for any damages to the Buyer or its consumers by reason of emergency failures of water supply due to water main breaks, power failure, flood, fire, earthquake and other acts of God, or catastrophe, acts of war, insurrection or rebellion, acts of a public enemy, acts of any unauthorized person, firm, or corporation, or acts of.the Buyer, or during any periods of water reduction or discontinuance by reason of fire fighting or other emergency situation; nor shall such failures of water supply and/or discontinuance or reduction of water sales and service be 8 n construed as a breach of this contract by the City. 3. That this contract is subject to such rules, regulations, or laws as may be applicable to similar agreements in the State of Arkansas and the City and Buyer will collaborate in obtaining such permits, certificates, or the like, as may be required to comply therewith. It is expressly understood and agreed that the sale of water herein provided for from the City, to the Buyer, is a sale for resale, and the Buyer agrees to secure a sales tax permit as required by the Arkansas Stats. Ann. Section 84-1904 (i) 84-1913, (and any subsequent amendments thereto) and agrees that it will collect and pay over to the Commissioner of Revenues. of the State of Arkansas, any and all sales tax now or hereafter imposed upon the resale of said water to the Buyer's consumers. 4. That in the event of any occurrence rendering the Buyer incapable of performing under this contract, any successor of the Buyer whether the result of legal process, assignment, or otherwise, shall succeed to the rights of the Buyer hereunder. 5. It is understood and agreed that the water to be supplied by the City to the Buyer under this contract is to be furnished for distribution within the Buyer's specified service area. The Buyer shall not extend its water main outside its defined service area without the prior written consent of the City. 6. In the event a portion of the Buyer's water mains are constructed within the corporate limits of the City, the Buyer is not permitted to serve consumers within the corporate limits of the 9 City without prior written consent of the City. 7. Buyer agrees that it will not during the period of this contract or any renewal thereof levy any franchise tax, occupation tax, or any other tax of any form whatsoever, by whatever name it may be called, upon the City, the City water system and appurtenances thereto, or the operations called for by this contract. 8: No provision of this agreement shall be construed to create any type of joint or equity ownership of any property, or partnership or joint venture, nor shall same create any other rights or liabilities and Customer payments (whether past, present, or future) shall not be construed as granting Customer partial ownership of, pre-paid.capacity in, or equity in the City's system. 9. This agreement may be terminated by either Buyer or the City upon breach by the other of any of the covenants or agreements contained herein, and the failure of the party in breach to remedy such breach within thirty (30) days after receipt of written notice of the existence of such breach. Written notice shall be sufficient,, if sent by certified mail, return receipt requested, postage prepaid, to the respective mayor or chairman of the parties hereto. D. Buyer's option to vacate the system within two years. Buyers may exercise an option on or before July 1, 1991 to vacate and leave the City's water supply distribution system by notifying the City of such intent in writing prior to said date. Should the Buyer exercise such option the Buyer shall acquire all 10 . funding for, start construction of, and substantially complete the Buyers own water supply distribution system independent of and separate from the City's•on or before July 1, 1993. During the aforementioned two year period of financing and construction, the City agrees to apply an 8.0% rate of return retroactive to August 1, 1990 rather than the 8.8% rate of return calculated into the City's current water rates for wholesale water customers. Should the Buyer for any reason fail to acquire all funding for, start construction of, and substantially complete the Buyer's water supply system on or before July 1, 1993, the Buyer shall repay to the City the difference between the paid water rates calculated on an 8.0% rate of return and the water rate calculated on an 8.8% rate of return. Payment of said repayment may, at the election of the Buyer, be made to the City on a monthly basis over a two year period. E. Payment upon termination. Should the Buyer cease to purchase water from the City for any reason, including but not limited to vacating the City's water system as set forth in paragraph D herein, or by terminating this contract without entering into a new water purchase agreement with the City, the Buyer will reimburse the City for the original cost less accumulated depreciation (OCLD) of the water facilities then utilized by the Buyer. The original cost less accumulated depreciation shall be determined as set forth in Exhibit D attached hereto. The Buyer may make such payment to the city on a monthly 11 J or yearly basis without interest over a one (1) year period. F. Arbitration. Any controversy or claim arising out of or relating to this contract, or to a breach or alleged breach thereof, shall be referred to a board of arbitration, the three members of which shall be appointed by the Arkansas Water and Wastewater Managers Association. Demand for arbitration may be made by either party on the other by writtennotice. The demand shall state the controversy or claim. The board of arbitrators shall hold a hearing on the controversy or claim stated in the demand for arbitration, which hearing shall be within 30 days after appointment of all the arbitrators.- The hearing may be adjourned from time to time. The board shall. consider evidence offered by the parties relevant to the controversy or claim, and may swear witnesses. Testimony shall be taken and transcribed by a reporter. The record of the hearings, the decision of the board of arbitrators and the dissent of any one of them shall be filed with the city clerk. The decision of the board of arbitrators may be rendered by any two of them; and any one of them may render a dissent. The decision and dissent must be limited to the controversy or claim and based on findings of fact. The decision of any two of the arbitrators shall be the decision of the board and shall be final and conclusive on both parties. 12 Expenses of arbitration, including, without limitation of generality, costs of notices and service thereof, fees of arbitrators and of witnesses but not of counsel and the cost of taking and transcribing testimony shall be shared equally by the parties, charged against the party at fault or apportioned between the parties as the board may deem equitable and just. The award rendered by the board shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. G. Severability. The sections, paragraphs, sentences, phrases, and clauses of this contract are severable, and should any section, paragraph, sentence, phrase, or clause be declared invalid by the lawful decree of any court of competent jurisdiction, such invalidity shall not affect any other portion of this contract. IN WITNESS WHEREOF, the City and Buyer have executed these presents by their respective Mayors and President and have caused their seals to be hereto affixed and the same attested to by the City Clerk and chairman of the parties, having been authorized to do so by appropriate ordinances of their respective governing bodies. CITY OF FAYETTEVILLE, ARKANSAS, A Mun al or ra 'on BY:,�/'/�v� MAYOR ATTEST:,, IrY CLERK 13 • L CITY OF ELKINS, Buyer. BY: MAYOR/PRESIDENT I EXHIBIT "A" METERING POINT CITY OF ELKINS A. Located approximately 2,700 feet east of the southwest section corner of Section 21, Range 29 West, Township 16 North, along the south section line. (8 inch main) 99 EXHIBIT "B" WATER RATES Effective dates: 08-01-90 01-01-91 01-01-92 01-01-93 01-01-94 Usage rate per 1,000 gallons 1.67 2.00 2.29 2.49 2.70 Monthly meter charge 35.84 42.94 49.44 5348.9 58.20 16 f - 1 EXHIBIT "C" REDUCED DEMAND FACTOR WATER RATES Effective dates: 08-01-90 01-01-91 .01-01-92 01-01-93. 01-01-94 Usage rate per 1,000 gallons 1.54 1.85 2.12 2.31 2.49 Monthly meter charge 33.16 39.72 45.73 49.85 53.83 I 17 i- 1l- 1.� 4 EXHIBIT "D° FORMULA TO CALCULATE DISENGAGEMENT FEE All allocations will be based on current records as shown in the most recent Cost of Service Study. Formula: WHOLESALE CUSTOMER ALLOCATION divided by TOTAL SYSTEM multiplied by TOTAL PLANT INVESTMENT equals ALLOCATION OF NET PLANT INVESTMENT FOR WHOLESALE CUSTOMERS Each of the allocations listed below must. be processed through this formula, and their sums added together to get the total disengagement fee for the wholesale customers. Allocations: 1. BASE ANNUAL USE 2. MAX DAY/EXTRA CAPACITY 3. BILLING UNITS 4. METERED UNITS 5. DIRECT TO OUTSIDE To figure a disengagement fee for an individual wholesale customer, calculate the percentage/volume used compared to the entire wholesale class. This volume will be based on the most recent 12 month period. I SAMPLE CALCULATIONOF DISENGAGEMENT FEES 1992 Test Year BASE 296,397 -- 3,267,900 X 12,347,000 = 1,119,867 MAX DAY 1,218 -- 14,136 x 8,580,000 = 739,278 BILLING UNITS 264 -- 226,260 x 809,600 = 945 METERED UNITS 1,680--- 234,108 x 1,345,100 = 9,653 DIRECT/OUTSIDE 296,397 -- 538,991 x 809,600 = 445,208 TOTAL DISENGAGEMENT FEE $ 2,314,951 PERCENT OF TOTAL (1990) WHOLESALE DISENGAGEMENT USAGE CLASS FEE WASH. WATER 127,275,000 48.7% $ 1,127,381 MT. OLIVE. 84,037,000 32.1% $ 743,099 ELKINS 1 34,183,700 13.1% $ 303,259 WEST FORK 15,876,000 6.1% $ 141,212 p •19 L