HomeMy WebLinkAbout151-05 RESOLUTION•
RESOLUTION NO. 151-05
a
A RESOLUTION TO APPOINT A NEGO'T'IATION
TEAM TO WORK WITH FARMINGTON ON THE
ISSUE OF ACCEPTING FARMINGTON'S SEWER
SYSTEM INTO THE FAYETTEVILLE SEWER
SYSTEM AND ISSUES RELATED THERETO
WHEREAS, on June 13, 2005, a Memorandum of Understanding was signed by
Mayor John Harris of Farmington and Mayor Dan Coody of Fayetteville; and
WHEREAS, on July 14, 2005, the Fayetteville Sewer Committee agreed to
present a Resolution to the City Council for the appointment of a negotiating team for
Fayetteville consisting of Alderman Kyle Cook, Finance and Internal Services Director
Steve Davis and City Attorney Kit Williams; and
WHEREAS, on July 19, 2005, the City of Farmington agreed to begin
negotiating with the City of Fayetteville over this possible take over of the Farmington
Sewer System by the City of Fayetteville and appointed a negotiation team consisting of
an Alderman, the Business Manager and the City Attomey.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
appoints Alderman Kyle Cook, Finance and Internal Services Director Steve Davis and
City Attorney Kit Williams and as the negotiation team.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby
directs the negotiation team to consider all possible results and repercussions from the
possible take over of the Farmington sewer system by the City of Fayetteville including:
Whether the sewer rates will be identical within the City of
Farmington and City of Fayetteville or whether previous
investments by the citizens of Fayetteville will require
some differential in rates;
b. What the likely cost will be to the Fayetteville Sewer Fund
for the acceptance of the Farmington sewer system
including current major rehabilitation costs, new sewer
mains, new force mains, new or enlarged sewer lift
stations;
The advisability of providing sewer service to areas where
the City of Fayetteville is legally prevented from providing
• •
water service with possible solutions and costs of those
solutions;
d. Whether the take over of the Farmington sewer system will
result in required expenditures to substantially increase
sewer capacity of the City of Farmington paid for by the
City of Fayetteville Sewer Fund and whether any
limitations on such future capacity demand are feasible and
whether annexation growth restriction borders between the
cities can or should be part of any sewer take over
agreement;
e. Whether system wide sewer impact fees can be applied
throughout Farmington after any take over of its sewer
system;
f. Whether the power of condemnation for sewer main
construction enlargement, rehabilitation and maintenance
can be assured to the City of Fayetteville within the City of
Farmington's borders; and
g.
Any other possible current or long range issues created by
this potential take over of the City of Farmington sewer
system.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby
directs the negotiation team that any acceptable agreement with the City of Farmington
must ensure that Fayetteville resident, business, and industrial ratepayers will be held
harmless by ensuring that in town rates will not increase nor otherwise be adversely
affected because of any agreement with the City of Farmington.
PASSED and APPROVED this 2nd day of August, 2005.
ATTEST.
•%"(cpJTR ''�.,,
a. * G\S Y �O,c 'S...p
rV:
CIT'*TTORNEY AGENDA REQIOT
FOR: COUNCIL MEETING OF AUGUST 2, 2005
/ 6/
FROM:
KIT WILLIAMS, CITY ATTORNEY
ORDINANCE OR RESOLUTION TITLE AND SUBJECT:
A Resolution To Appoint A Negotiation Team To Work With Farmington On The Issue Of
Accepting Farmington's Sewer System Into The Fayetteville Sewer System And Issues
Related Thereto
APPROVED FOR AGENDA:
City Attorney
g - 2d -bc
Date
• •
RESOLUTION NO.
A RESOLUTION TO APPOINT A NEGOTIATION TEAM
TO WORK WITH FARMINGTON ON THE ISSUE OF
ACCEPTING FARMINGTON'S SEWER SYSTEM INTO
THE FAYETTEVILLE SEWER SYSTEM AND ISSUES
RELATED THERETO
WHEREAS, on June 13, 2005, a Memorandum of Understanding was signed by
Mayor John Harris of' Farmington and Mayor Dan Coody of Fayetteville; and
WHEREAS, on July 14, 2005, the Fayetteville Sewer Committee agreed to
present a Resolution to the City Council for the appointment of a negotiating team for
Fayetteville consisting of Alderman Kyle Cook, Finance and Internal Services Director
Steve Davis and City Attorney Kit Williams; and
WHEREAS, on July 19, 2005, the City of Farmington agreed to begin
negotiating with the City of Fayetteville over this possible take over of the Farmington
Sewer System by the City of Fayetteville and appointed a negotiation team consisting of
an Alderman, the Business Manager and the City Attorney.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
appoints Alderman Kyle Cook, Finance and Internal Services Director Steve Davis and
City Attorney Kit Williams and as the negotiation team.
Section 2. That the City Council of the City of Fayetteville, Arkansas hereby
directs the negotiation team to consider all possible results and repercussions from the
possible take over of the Farmington sewer system by the City of Fayetteville including:
a. Whether the sewer rates will be identical within the City of
Farmington and City of Fayetteville or whether previous
investments by the citizens of Fayetteville will require
some differential in rates;
b. What the likely cost will be to the Fayetteville Sewer Fund
for the acceptance of the Farmington sewer system including
current major rehabilitation costs, new sewer mains, new force
mains, new or enlarged sewer lift stations;
c. The advisability of providing sewer service to areas where the
City of Fayetteville is legally prevented from providing water
service with possible solutions and costs of those solutions;
• •
d. Whether the take over of the Farmington sewer system will
result in required expenditures to substantially increase sewer
capacity of the City of Farmington paid for by the City of
Fayetteville Sewer Fund and whether any limitations on such
future capacity demand are feasible and whether annexation
growth restriction borders between the cities can or should be
part of any sewer take over agreement;
e. Whether system wide sewer impact fees can be applied
throughout Farmington after any take over of its sewer system;
f. Whether the power of condemnation for sewer main
construction enlargement, rehabilitation and maintenance can be
assured to the City of Fayetteville within the City of Farmington's
borders; and
g. Any other possible current or long range issues created by this
potential take over of the City of Farmington sewer system.
PASSED and APPROVED this gnu day of August, 2005.
ATTEST.
By:
SONDRA SMITH, City Clerk
APPROVED:
DRAFT
By:
DAN COODY, Mayor
June 13, 2005
• •
CITY OF FARMINGTON
Memorandum of Understanding
The Mayor of Farmington, Arkansas and the Mayor of Fayetteville, Arkansas
enter into the following as their memorandum of understanding regarding the
future relationship of their respective cities in providing sewer service to the City
of Farmington.
1. The City of Farmington agrees to transfer ownership in what is
known as the Farmington Sewer System in Attachment A.
2. The City of Fayetteville agrees to accept ownership of said sewer
system.
3. The cities mutually agree that consideration in this transfer is the
City of Fayetteville undertaking to address capacity issues at the existing
point -of -connection of the City of Farmington sewer system to the City of
Fayetteville Sewer System and to address future City of Farmington sewer
capacity issues in a manner similar to addressing City of Fayetteville
capacity issues.
4. The City of Farmington understands and agrees that the existing
wastewater impact fee assessment, as amended from time to time, will
apply in the same manner as it applies within Fayetteville.
5. The cities agree that utility mains shall be extended at the
cost/expense of the developer and the City of Fayetteville shall not
unreasonably withhold concurrence for extension within the City of
Farmington.
6. The cities agree that from time to time additional wastewater
system enhancements (sewer main, trunk lines, etc.) may be needed
within the city limits of Farmington to properly maintain and operate the
wastewater collection system. When these improvements require City of
Farmington consent the City of Farmington agrees that it shall not
unreasonably withhold consent to the improvement.
7. The cities—aagree that all sizing, siting anuollection system
determinations shall be made in the most environmentally sensitive, cost-
effective manner utilizing state-of-the-art best management practices for
wastewater collection systems as defined by USEPA, Water Environment
Federation and/or Arkansas Department of Environmental Quality and
their successor organizations.
8. The cities agree to monitor capacity utilization to ensure adequate
capacity exists to address approved development plans and agree to pro-
rate (based on customer base) available capacity once bio -loading attains
75% of permitted capacity. Such pro -ration to be in-place until capacity.
additions are in-place and utilized to reduce bio -loading to less than 70%
of permitted capacity.
9. Infrastructure funding - it is agreed by the cities that utility system
revenues and impact fees will be used to fund utility system
enhancements. The City of Fayetteville prepares a biennial capital
improvement program that identifies, prioritizes and schedules
infrastructure improvements. Each city agrees to use best efforts to
identify all known infrastructure capacity related improvements that
impact/benefit both Farmington and Fayetteville for the wastewater
collection system. Infrastructure funding other than wastewater system
revenues or impact fees (grant, sales tax, property tax, etc.) must be
communicated to each city so that both cities may independently
determine the best method to fund their proportional cost of the
improvement.
10. The City of Fayetteville upon acceptance of the Farmington Sewer
System agrees to provide necessary repairs, replacements, and/or
rehabilitation to that system and agrees to treat it as an integral part of the
Fayetteville Sewer System and to give the acquired system no less of a
priority than is given to the remaining portion of the Fayetteville System.
11. Should Farmington desire to repair, replace,.and /or rehabilitate the
existing gravity flow interceptor line and/or Lift station 12 before the
Fayetteville West -side Wastewater Treatment Plant is completed and
functional, Farmington shall be financially responsible for that project in
an amount equal to the percentage of Farmington's flow within the
existing flow interceptor line.
12. Fayetteville agrees to provide rate parity to Farmington
expediently after the transfer agreement is approved by the respective
City Councils. Rate parity is defined as operations; maintenance and
replacement cost and excludes the repair, replacement, and/or
rehabilitation identified in Item 11.
• •
13. Each city commits to enact, implement, maintain and enforce
policies that limit inflow and infiltration from private service connection
lines to the public wastewater collection system.
14. The cities agree that a representative appointed by the City of
Farmington shall serve as an ex officio member of the Fayetteville Water
and Sewer Committee.
15. The City of Fayetteville agrees to provide, manage and maintain
sewer service to Farmington at no less capacity or service area that exists
at the time of transfer.
16. At the conclusion of this transfer the cities agree to faithfully
negotiate an exclusive wastewater utility franchise agreement.
The undersigned Mayor of Farmington and Fayetteville respectfully request the
City Attorneys of their respective cities to draft a contract containing the above
provisions to be presented to the City Council of Farmington and Fayetteville for
their consideration and approval.
ohn Harris, Mayor
Dan Coody, Mayor
City of Farmington City of Fayetteville
J fv at N,sfgof;seA. /day--
FAYETTEVILLE
THE CITY OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
TO: Fayetteville City Council
THROUGII: Dan Coody, Mayor g�
FROM: Stephen Davis, FIS Dirccto
DATE: July 27, 2005
SUBJECT: Fayetteville -Farmington Agreement and HDR Letter July 12, 2005
Recommendation
Staff recommends proceeding with negotiating with the City of Farmington to determine the future
ownership of that system. Staff requests Council authorization to conduct the negotiations for
Fayetteville to assume ownership of the Farmington Sewer System and if those negotiations fail
continue to negotiate a new wastewater service agreement.
Background
"the City of Fayetteville and the City of Farmington have an existing sewer service contract that
expires in early 2009. The contract has an automatic extension for an additional fifteen (15) years.
The City Attorney (Kit Williams) has stated the additional fifteen years contained in the automatic
extension feature may not be legal.
Overall this contract has provisions that appear to contradict each other leaving the interpretation of
those provisions to the perspective of the reader. The vagueness and contradictory contract clauses
led to the necessity for a mediated settlement in 2004.
The essential elements of this existing agreement are as follows:
1. Fayetteville will perform the same level of sanitary sewer rehabilitation for Farmington as is
provided for Fayetteville. Fayetteville will provide rehabilitation of pipes up to a length of
fifteen (15) feet.
2. Fayetteville will provide for all operations and maintenance of the Farmington sewer system.
3. New facilities serving Farmington customers shall he constructed without cost to
Fayetteville.
4. Fayetteville shall have the right to extend its service arca as long as the following provisions
are met: 1) it does not serve customers of Farmington, 2) Fayetteville bears all of the cost
J.\ wai et & Scwcr\Outside City Contracts\Fanni ng1 on\Faycacville City Cou nc il_Famtington nwnw. doc
• •
associated with the extension, and 3) Fayetteville hears all of the cost associated with the
extension including replacement and/or enlargement of Farmington's lines and pumping
facilities that are required by Fayetteville's loads.
5. The contract does not impose any volume limit on Farmington.
Discussion
A new contract with Farmington will provide the opportunity to remove and remedy the issues the
City dealt with during the 2003 Rate Study as well as the issues that precipitated the mediation in
2004. As the City of Fayetteville considers the contract points for an agreement with Farmington
there are a number of items that need to be communicated:
1. 1 he federal and state NPDES discharge permits are in Fayetteville's name and that may make
Fayetteville the responsible party for any sewer overflow that occurs within the Fayetteville,
Farmington, Greenland and Johnson sewer systems under ADEQ and NPDES reguations.
2.
Our existing contracts with Farmington and Greenland do not contain any flow limits. It
should be noted that once Farmington can addresses their overflow issues the Arkansas
Department of Health may lift the sewer system moratorium from Farmington and
Fayetteville will have to take any Flows from Farmington. The new agreement should
address some flow limit.
3. Constructing a new Iifl station at the confluence of Owl Creek and Goose Creek will provide
cost savings/avoidance opportunities for several years into the future that will he a direct
benefit to Fayetteville and Farmington rate payers. From Fayetteville's point of view it is
desirable to eliminate Owl Creek Lift Station and the associated force main and to better
consolidate wastewater Flows that originate in the Illinois River watershed into the West -side
Treatment Plant. An additional benefit, from Fayetteville and Farmington perspective would
be the reduction or elimination of Lift Station 11 (HWY 62) and Li fl station 12 (Double
Springs) and the associated force mains.
4. Fayetteville does not have a franchise right to operate in Farmington. The new contract
could provide this right.
5. Fayetteville does not have the right to assess and collect the City of Fayetteville wastewater
impact fee. If Fayetteville owns the Farmington sewer system Fayetteville wastewater
impact fees can he collected for new development in Farmington. Fayetteville cannot collect
wastewater impact fees if Fayetteville does not own the system. The potential wastewater
impact fee revenue, at current rates, will generate at least S8 million from Farmington growth
alone after build -out.
6. Owning the Farmington system and addressing Farmington concerns related to rates should
avoid the issues faced by City Council during the 2003 rate ordinance hearings.
Attachment: I IDR Letter July 12, 2005
1:\Water R Scv cr\Outside City Contracts\Fannington\Fayetteville City Council _Farmington mcmo.doc
KB
July 12, 2005
ONE COMPANY 1 Many Solutions"
Mr. Steve Davis
Finance and Internal Services Director
Fayetteville Public Works Department
113 W. Mountain Street
Fayetteville, Arkansas 72701
Subject: Recommendations for Follow -Up to Rate Audit Presentation
Dear Mr. Davis:
HDR Engineering, Inc. (HDR) recently completed our rate audit review of the 2003 rate
study conducted by Black & Veatch (B&V). The results of our rate audit have been
provided to the City in a written report and the findings and conclusions were presented
during a public meeting to the various outside City and wholesale customers.
While HDR did find that the wastewater rate study had met the contractual and
"generally accepted" rate methodology requirements, we did note a number of
areas/issues associated with the study that, in our opinion, warrant further discussion and
review by thc City in any future rate studies. At thc same time, even after the completion
of the rate audit, there still is a sense of perceived inequity with the City's wastewater
rates by the outside City and wholesale customers.
Undertaking a comprehensive rate study at this time would be very expensive and time
consuming. Recognizing that the City would like to resolve as many issues concerning
the equity of the rates, short of conducting a full comprehensive study, HDR has provided
a set of suggestions/recommendations toward that end. In making these
suggestions/rccommcndations, it is assumed that the City's inside City rates will remain
at current levels, and any revenue deficiencies that are a result of implementing these
suggestions/recommendations will be obtained from operating reserves, until such time
as the next comprehensive rate study is conducted.
HDR's suggestions/recommendations to achieve greater equity within the City's
wastewater rates are as follows:
• SALES TAX CREDIT - Provide a credit to outside City and wholesale customers for
sales tax revenues. The B&V study provided no credit to the outside City and
wholesale customers for sales tax. The amount of the sales tax credit within the rates
should be based upon the findings and conclusions of the University of Arkansas
Center for Business and Economic Research. In general, the sales tax credit should
be provided on the rate of return component within the B&V rate methodology, and
Mr. Steve Davis
Page 2
July 12, 2005
• •
the sales tax credit received by any outside City or wholesale customer shall be no
greater than the total allocated return component (i.e. sales tax credits shall create no
negative rates of return for outside City and wholesale customers. The minimum
allowable rate of return for outside City and wholesale customers shall be 0.0%).
• IMPACT FEE CREDIT — At the present time, the outside City and wholesale customers
do not pay impact fees to the City for growth related facilities. Impact fees are a
method of financing growth related facilities, while sheltering existing customers
from these projects. The City's existing contracts arc silent on the issue of regional
impact fees, and the City's ability to implement these charges. If the City were
allowed to implement a "regional impact fcc" then credits could be provided within
the outside City and wholesale rates for the amount of impact fees that were collected
and used to fund growth related capital projects or growth -related debt service
payments. This would be another method to help minimize rates over time for the
outside City and wholesale customers.
Should you have any questions about this letter and our suggestions/recommendations,
please do no hesitate to contact me. I hope that the above suggestions/recommendations
will help the City move towards wastewater rates that are perceived as being more
equitable for the City and their customers.
HDR Engineering, Inc.
Sincerely,
'Su Siso
Tom Gould
Vice President
Clarice Pearman - Res. 151-05
Page 1
From: Clarice Pearman
To: Williams, Kit
Date: 8/8/05 11:22AM
Subject: Res. 151-05
Kit,
Attached is a copy of the resolution passed by City Council August 2, 2005 regarding appoint a negotiation
team for the Farmington Sewer System.
Thanks.
Clarice