HomeMy WebLinkAbout171-06 RESOLUTIONRESOLUTION NO. 171-06
A RESOLUTION TO EXPRESS THE CITY COUNCIL'S BASIC
AGREEMENT WITH THE TERMS OF THE FARMINGTON
POSITION PAPER
WHEREAS, Alderman Kyle Cook, Chair of the City Council's Sewer Committee and City
Staff have negotiated with representatives of the City of Farmington and arrived at a basic agreement
entitled "Farmington Position Paper" (attached hereto as Exhibit A); and
WHEREAS, the Fayetteville City Council Sewer Committee has carefully considered all
terms and aspects of the Farmington Position Paper and voted to approve it; and
WHEREAS, the full City Council has studied the Farmington Position Paper and found
themselves in complete agreement with all of its terms and conditions including:
(1) lowering the City of Farmington's rate per 1000 gallons for sewer
treatment from $7.18 to $4.66 (35% reduction);
(2) allocating 8.2% of the West Sewer Plant's capacity to Farmington;
(3) paying approximately $2.4 million (33% of the estimated $7.2
million costs to build the Farmington lift station, gravity and force
mains); and
(4) rebating of approximately $264,000.00 to Farmington sewer customers.
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 approves the
Farmington Position Paper attached as Exhibit A and all of its terms therein and requests a formal, 15
year sewer agreement between the cities of Farmington and Fayetteville be drafted incorporating all
such terms.
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SONDRA SMITH, City Clerk
PASSED and APPROVED this 17th day of October, 2006.
APPROVED:
By:
DA OODY, Mayor
ATTEST:
By:
FARMINGTON POSITION PAPER
Joint usage of a large, well-run Publicly Operated Wastewater Treatment Plant (POTW)
is a clear indicator of concern for the environmental issues facing Northwest Arkansas.
The economies of scale in this approach ensure the employment of highly skilled
technicians minimizing the nsk of permit violations. In addition, both state and federal
regulators have encouraged the consolidation of disposal operations.
Farmington's stated goal is to ensure the preservation of water quality in the Illinois
River Watershed. Farmington also has a desire to grow Just as Fayetteville has a desire to
grow. This growth for Farmington can be accomplished by entering into an agreement
with Fayetteville that is mutually beneficial or by implementing a publicly owned and
maintained decentralized treatment system. It is acknowledged that the preferred option
is for Farmington wastewater to be processed through a state-of-the-art POTW.
The only other short-term viable alternative to an agreement with Fayetteville is for
Farmington to explore the use of a large decentralized sewer system It is acknowledged
that decentralized treatment systems are a poor second option to a state-of-the-art POTW
for the preservation of the Illinois River Watershed.
Farmington acknowledges Fayetteville for using a broad-based sales & use tax to fund
these critical public investments and for taking the lead in managing this complex
improvement.
Farmineton Positions
1. Farmington agrees to fund the remaining cost of sewer rehabilitation identified in
the 2004 Mediation Agreement at a cost of approximately $400,000.
2. Farmington acknowledges that the Farmington cost is between $3.8 million and
$4.8 million based on which potential annexation basins come to Farmington.
Farmington agrees to pay 50% of the engineering cost for List Station 12 and
associated pipes not to exceed $480,000.
3. Farmington accepts Fayetteville's offer to provide 8.2% of the West Treatment
Plant operational capacity for Farmington. As capacity constraints limit the West
Treatment Plant Fayetteville commits to expand the capacity of the plant or
implement system improvements which will have the same effect. Farmington
may continue to benefit from the changes or improvements at the 8.2% ratio.
4. Farmington agrees to use its best efforts to assist Fayetteville in meeting
Fayetteville's discharge permit requirement. This offer to use Farmington's best
efforts is based, in large part, on Fayetteville recognizing sales taxes paid by
Farmington residents and Fayetteville agreeing to provide scalable capacity to
Farmington in the West Treatment Plant. Farmington and Fayetteville both
recognize that Fayetteville's growth will likely consume a much larger portion of
the available capacity than Farmington's growth over the next ten to fifteen years.
5. Farmington requests Fayetteville to recognize the sizable financial contribution
made by Farmington residents to the Fayetteville sales taxes that is used to fund
these necessary improvements. Fayetteville has a long history of recognizing
sales tax payments and giving credit so that the same customer is not asked to pay
twice for the same service This is especially true with utility rates and
development impact fees. Farmington acknowledges that Fayetteville has
recognized a portion of these sales taxes paid by elimination of the rate -of -return
in the rate calculations for 2009. Attached are the calculations showing the level
of support under various scenarios. (Spreadsheet distributed Sept 14)
6. Farmington supports the continued management of the Farmington system by
Fayetteville to include sewer service billing and collection service, sewer system
maintenance and operations services and capital re -investment programming and
implementation services to ensure the Farmington System is maintained at a level
consistent with the post -rehabilitation level. The proposed contract for
services/lease is for a fifteen year term and will include annual meetings between
Fayetteville and Farmington to ensure the quality of the Farmington system is
being maintained and to ensure that adequate future capacity is being
programmed for the Farmington sewer collection system. The future capacity
needs for Farmington are a Farmington expense. Fayetteville agrees that once the
Farmington system is rehabilitated to the same standard as the Fayetteville system
Fayetteville will ensure the Farmington system continues in a comparable
rehabilitation level as the Fayetteville system without any additional surcharges or
cost assessments outside of the periodic sewer rate studies conducted by an
independent rate consultant.
7. Farmington agrees that the cost of serving all new annexed areas coming to
Farmington will become a Farmington responsibility once the areas are within the
city limits of Farmington. The cost of providing sewer service has been estimated
by a Fayetteville consultant for the current annexation areas identified as Area B,
Basin's 154 and 155, Fayetteville Goose and Farmington Goose. Farmington can
support a separate side agreement detailing how cost will be identified and
allocated. This side agreement must be in-place immediately because costs can
vary significantly depending on which jurisdiction annexes each basin. The
allocation of the annexed areas may impact the design and respective funding
needs.
8. Farmington requests that Fayetteville amend the sewer rate charged to Farmington
residents to $4.66/1,000 gallons effective January 2004 and refund the difference
to the Farmington rate -payers that paid the higher rates from January 2004 to the
implementation date of the new rate. This new rate was computed by HDR/EES
and provided to Fayetteville in February/March 2006. It was based, in part, on
analysis used by Fayetteville to determine a new rate for Elkins and a recognition
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by Fayetteville of the special sales and use tax paid within Fayetteville by
Farmington citizens. Farmington accepts Fayetteville's formula for computing
the refund due Farmington rate -payers.
Fayetteville's Rebate Computation Formula
Because the actual sales taxes paid by Farmington citizens within Fayetteville is
very difficult to determine and a substitute determination method has been
proposed by Farmington Fayetteville suggests Farmington consider the following:
Average the calculated sales tax contribution between the Farmington CBER
amount and the Farmington low amount, compute a mathematical relationship to
the calculated total paid by Fayetteville citizens and multiply the computed ratio
by the total potential rebate to compute the rebate amount. The formula below
depicts the calculation:
Computed Overpayment = Actual $ Billed from January 2004 thru Current
Billing Penod - Actual Billed Volume * $4 66/1,000 gallons
$4,971,083/ $87,145,481 = % of Farmington Citizen Sales Tax in Fay WSIP
Divide the % of Farmington Citizen Sales Tax in Fay WSIP by the % of
Operational capacity (8.2%) Fayetteville is committing to provide. This quotient
equals the % of Computed Overpayment Eligible for Rebate.
Multiply the % of Computed Overpayment Eligible for Rebate times the
Computed Overpayment to obtain the Rebate for Each Farmington Sewer
Customer based on the individual customer payments.
9. Farmington has agreed to participate with Fayetteville in computing development
impact fees for the Farmington system. Farmington agrees that new Farmington
connections will be required to pay the Fayetteville sewer system impact fee and a
Farmington system impact fee. Farmington commits that impact fees paid by
Fayetteville citizens for the interceptor and LS 12 will be used to fund capacity
needs for Fayetteville citizens.
10. Farmington requests all future rate calculations be based on:
A. Facilities that is either used or usable and improvements planned within
the rate study period that adds capacity that becomes usable by
Farmington when the new facilities are on-line; and,
B. That Fayetteville will not compute a rate -of -return on assets purchased
using either EPA grants funding or city sales & use taxes.
11. Farmington agrees that future discharge permits may require future investments in
order to comply with new discharge hmits and is committed to do its -part to meet
the future increased investment in state -of -art -facilities.
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12. Farmington and Fayetteville agree that when the system improvements
contemplated by this agreement are in place or with funding secure that does not
negatively impact the City of Fayetteville or its Fayetteville rate payers that the
Farmington System may be transferred to the City of Fayetteville. Nothing in this
paragraph requires either Farmington or Fayetteville to transfer or accept
transference of the Farmington Sewer System to Fayetteville.
Finally, Farmington joins Fayetteville is its efforts to protect water resources and
sensitive environmental areas such as the Illinois River Watershed. With the two
cities reaching an agreement that is acceptable to both communities this shared goal
can be realized.
Sales Tax Credit Ranges
Per Capita Sales Tax Amounts
Fayetteville Farmington CBER Farmington -Low
Per Capita $ 81.29 $ 88.79 $ 40.29
Population 67,002 4,814 4,814
Probable 3/4% Paid By Jurisdiction - 2005 $ 5,446,593 $ 427,418 S 193,967
Years of Collection 2002-2018 16
Probable 3/4% Paid By Jurisdiction - Life of Debt $ 87,145,481 $ 6,838,692.25
16 16
3,103,474.46
Sum $6,838,692.25 +$3,103,474.46=$9,942,166.71
Average Farmington $4,971,083
$4,971,083 / $87,145,481=.057 or 5.7%
Farmington share of plant capacity = 8.2%
Farmington Rate Payment differential from $7.33 to $4.83 from January 2004
through July 2006 = approximately $380,000
(both $7.33 and $4.83 include Farmington $0.15 per 1,000 gallons)
Potential Farmington Rebate based upon Farmington Analysis
.057 = X
.082 = $380,000
X = $264,000.34
Potential rebate = approximately$264,000.34
For period January 2004 through July 2006
gary dumas
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
Or
Contracts
10/17/2006
City Council Meeting Date
Division
Action Required:
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Operations
Department
Motion Forwarding a Letter of Intent to the City of Farmington Conceming The Farmington/Fayetteville Sewer Service
Agreement and Authorizing the City Attomey to Coordinate with the Farmington City Attomey to Formalize into
Contract Form the Attached Document Entitled Farmington Position Paper"
Cost of this request
Amount Number
Project Number
Budgeted Item
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
Gary Dumas
Department Director(1
10/4/2006
Date
4a -y—o&
City Attorney Date
Finance and Internal Service Director
Mayor
to -S -
o�
Date
/0,1
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Received in Mayor's Office
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Comments:
afire .ear i le
ARKANSAS
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: City Council Members
From: Gary Dumas, Operations Direct
Date: October 4, 2006
Subject: Farmington/Fayetteville Sewer Service Agreement
Letter of Intent
Recommendation:
Direct the City Attomey to coordinate with the Farmington City Attorney to formalize into contract
form the document attached entitled the "Farmington Position Paper."
Backzround:
For the past several months the Chair of the Council Water and Sewer Committee and City Staff
have been meeting as a negotiatmg team with members of the Farmington City Council and recently
their technical advisors.
This has been a long and arduous process. Farmington had several issues, including:
• Their sewer rate
■ Credit for the Fayetteville Sales Taxes paid by Farmington residents relative to the
WSIP' cent
• Farmington future ability to continue sewage coverage for population growth
• Farmington share of a new Lift Station 12 and associated piping
• The ability to combine the Fayetteville and Farmington Sewer systems if appropriate
in the future
■ Farmington participation and contribution in the sewer rehabilitation as a part of the
2004 Mediation Agreement
After several negotiation meetings the two negotiating teams reached consensus on all points in the
attached "Position Paper." The Fayetteville Water and Sewer Committee concur with the
Negotiating Team recommendation.
Discussion:
There are four primary elements in the "Position Paper." These include: rates, rebate, growth, Lift
Station 12 and associated piping.
Rates
The teams have worked with the City's Rate Consultant, HDR, and concluded that the rate structure
relative to Farmington can not be replicated with the data and other information within the earlier
rate study by a separate consultant. HDR recommends a rate for $4.66 per 1000 gallons, a reduction
from the current $7.18 per 1000 gallons. This rate would be applicable until the HDR Rate Study is
completed in early 2007, when other rates may be proposed and implemented.
This rate adjustment is also the basis for consideration of the Farmington resident sales tax
contribution to Fayetteville and a potential Farmington Rebate.
Rebate
An analysis has been made whuch estimates the contnbution that Farmington residents have made to
the Fayetteville Sales Tax relative to the payment for the WSIP. That analysis is attached. The
negotiating team recommends the rebate based upon the analysis as fair to both Fayetteville and the
Farmington Rate Payer.
Growth
Farmington is limited to a fixed capacity in the Westside Sewer Plant. That capacity is 8.2% of the
plant capacity. This is based upon the initial "Master Facility Plan." The teams have agreed that
Farmington will be able to utilize 8.2% of the operational capacity of the Westside Plant. The actual
operating capacity in million gallons per day will not be known until the plant is operational. The
operating capacity will be in excess of the initial design capacity in the "Master Facility Plan." For
their financial contribution, Farmington will be permitted to utilize 8.2% of the operating capacity.
As a part of this sharing of operational capacity, Farmington has agreed that their rate structure will
include the cost of system improvements which will add operational capacity to the Westside Plant.
Lift Station 12
The cost of Lift Station 12 and associated piping is estimated to be $7.2 million. The Farmington
share based upon basin build out is estimated at $4.8 million plus any areas annexed that will be
within Farmington. Farmington has concurred with this.
Summary
Both negotiating teams and the Fayetteville Water and Sewer Committee concur with the findings in
the "Farmington Position Paper." The Fayetteville negotiating team and the Fayetteville Water and
Sewer Committee recommend that the Council direct the City Attorney to coordinate with the
Farmington City Attorney to formalize the attached "Farmington Position Paper" into a contract
which can be considered and acted upon by the Fayetteville and Farmington City Councils.
RESOLUTION NO.
A RESOLUTION TO EXPRESS THE CITY COUNCIL'S
BASIC AGREEMENT WITH THE TERMS OF THE
FARMINGTON POSITION PAPER
WHEREAS, Alderman Kyle Cook, Chair of the City Council's Sewer Committee and
City Staff have negotiated with representatives of the City of Farmington and arrived at a basic
agreement entitled "Farmington Position Paper" (attached hereto as Exhibit A); and
WHEREAS, the Fayetteville City Council Sewer Committee has carefully considered all
terms and aspects of the Farmington Position Paper and voted to approve it; and
WHEREAS, the full City Council has studied the Farmington Position Paper and found
themselves in complete agreement with all of its terms and conditions including:
(1) lowering the City of Farmington's rate per 1000 gallons for sewer treatment
from $7.18 to $4.66 (35% reduction);
(2) allocating 8.2% of the West Sewer Plant's capacity to Farmington;
(3) paying at least $2.4 million of the estimated $7.2 million costs to build the
Farmington lift station, gravity and force mains;
(4) rebating of approximately $264,000.00 to Farmington sewer customers.
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 approves
the Farmington Position Paper attached as Exhibit A and all of its terms therein and requests a
formal, 15 year sewer agreement bet -ween the cities of Farmington and Fayetteville be drafted
incorporating all such terms.
PASSED and APPROVED this 17th day of October, 2006.
By:
ATTEST:
By:
SONDRA SMITH, City Clerk
APPROVED:
11
DAN COY, Mayor
FAYETTEVILLE
TNN CITY OF FAYETTEVILLE. ARKANSAS
KIT WILLIAMS, CITY ATTORNEY
DAVID WHITAKER, ASST CITY ATTORNEY
DEPARTMENTAL CORRESPONDENCE
A I A
LEGAL DEPARTMENT
TO: Dan Coody, Mayor
City Council
CC: Gary Dumas, Director of Operations
Sondra Smith, City Clerk
FROM: Kit Williams, City Attorney
DATE: October 12, 2006
RE• Farmington Position Paper
Attached is the corrected Resolution relating to the Farmington Sewer
basic agreement Item #3 was amended to reflect Fayetteville's agreement
to pay 33% of the estimated costs of the Farmington lift station and sewer
mains (with Farmington paying 67%). Also attached is Gary Dumas' memo
explaining this.
Please move to amend this at your meeting.
1
Pttv1lle
ARKANSAS
OPERATIONS DIRECTOR
To: Kit Williams, City Attorney
From: Gary Dum4
Date: October 11, 2006
Re: Farmington Costs Ratio
During the Agenda Session of October 10, 2007, there was a short discussion of the
Letter of Intent concerning the Farmington share of Lift Station 12 and all associated
piping.
Farmington has committed to a cost share based upon current and future utilization. That
current cost share is 67% or approximately $4.8 million of the estimated costs of the
improvement. This cost and the ratio is based upon the current and future corporate
limits of both Farmington and Fayetteville As the design and engineering proceed the
exact cost and the ratio of expenses allocated to each City will become further refined,
but the final costs will not be known until the construction project is completed.
As the design proceeds consideration will be given to options which will allow the Lift
Station to be upgraded as demand warrants However, there are substantial upfront costs
which can not be deferred awaiting demand. This is generally related to the gravity
interceptor bisecting Farmington. The City of Fayetteville has a significant part of this
cost, as all Fayetteville flow currently being served by Lift Station 11 will flow through
Farmington in this new gravity interceptor. Current and future utilization has been
calculated but as future growth patterns change, some adjustment in these assumptions
will likely be necessary, modifying the cost allocation in future years after the
improvements are in place and in service.
Currently, Farmington is committing to a 67% share of the cost of the improvements.
The dollar value of that 67% will be determined by the final design and construction
costs.
113 West Mountain
Fayetteville, Arkansas 72701
Office phone - 479-575-8330
Fax - 479-575-8257
E-mail - gduntas@ci. faycttevillc-anus
a
RESOLUTION NO.
A RESOLUTION TO EXPRESS THE CITY COUNCIL'S
BASIC AGREEMENT WITH THE TERMS OF THE
FARMINGTON POSITION PAPER
WHEREAS, Alderman Kyle Cook, Chair of the City Council's Sewer Committee and City Staff
have negotiated with representatives of the City of Farmington and arrived at a basic agreement entitled
"Farmington Position Paper" (attached hereto as Exhibit A); and
WHEREAS, the Fayetteville City Council Sewer Committee has carefully considered all terms
and aspects of the Farmington Position Paper and voted to approve it; and
WHEREAS, the full City Council has studied the Farmington Position Paper and found
themselves in complete agreement with all of its terms and conditions including:
(1) lowering the City of Farmington's rate per 1000 gallons for sewer treatment from
$7.18 to $4.66 (35% reduction);
(2) allocating 8.2% of the West Sewer Plant's capacity to Farmington;
(3) paying approximately $2.4 million (33% of the estimated $7.2 million costs to build
the Farmington lift station, gravity and force mains); and
(4) rebating of approximately $264,000.00 to Farmington sewer customers.
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 approves the
Farmington Position Paper attached as Exhibit A and all of its terms therein and requests a formal, 15
year sewer agreement between the cities of Farmington and Fayetteville be drafted incorporating all such
terms.
PASSED and APPROVED this 17'" day of October, 2006.
ATTEST:
By:
SONDRA SMITH, City Clerk
APPROVED:
By:
DAN COODY, Mayor
1(10.24.06) Clarice Pearman - Res. 171-06 < u
From:
To:
Date:
Subject:
Attachments:
Clarice Pearman
Dumas, Gary
10.24.06 12:58 PM
Res. 171-06
171-06 Farmington Position Paper.pdf
CC: Audit
Gary,
Attached is a copy of the above resolution passed by City Council, October 17, 2006 regarding a basic agreement
Farmington water rates. If anything else is needed please let me know.
Thanks.
Clarice
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