HomeMy WebLinkAbout61-07 RESOLUTIONRESOLUTION NO. 61-07
A RESOLUTION APPROVING A CONTRACT BETWEEN THE CITY OF
FAYE I I EVILLE, ARKANSAS AND THE CITY OF FARMINGTON,
ARKANSAS TO PROVIDE WASTEWATER COLLECTION AND
TREATMENT SYSTEM SERVICE AND OPERATIONS AND
MAINTENANCE SERVICE TO THE CITY OF FARMINGTON; AND
APPROVING A BUDGET ADJUSTMENT IN THE AMOUNT OF
$650,000.00 TO IMPLEMENT THE REFUND OF A PORTION OF RATE
PAYMENTS MADE FROM FEBRUARY 9, 2004 THROUGH APRIL 30,
2007
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 a contract between the City of Fayetteville, Arkansas and the City of
Farmington, Arkansas to provide Wastewater Collection and Treatment System Service
and Operations and Maintenance Service to the City of Farmington. A copy of the
contract, marked Exhibit "A" is attached hereto, and made a part hereof.
Section 2. That the City Council of the City of Fayetteville, Arkansas hereby
approves a Budget Adjustment in the amount of $650,000.00 to implement the refund of
a portion of rate payments made from February 9,2004 through April 30, 2007.
PASSED and APPROVED this 3rd day of April, 2007.
APPROVED:
By:
ATTEST:
By:
DAN COODY, Mayo4 SONDRA E. SMITH, City Clerk/Treasurer
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CONTRACT BETWEEN THE CITIES OF
FAYETTEVILLE AND FARMINGTON TO PROVIDE WASTEWATER
COLLECTION AND TREATMENT SYSTEM SERVICE AND
OPERATIONS AND MAINTENANCE SERVICE FOR
THE CITY OF FARMINGTON
THIS CONTRACT is entered into by and between the CITY OF
FAYETTEVILLE, a municipal corporation of the State of Arkansas (hereinafter
referred to as "Fayetteville"), and the CITY OF FARMINGTON, a municipal
corporation of the State of Arkansas (hereinafter referred to as "Farmington"), with both
municipal corporations hereinafter referred to collectively as the "Parties".
RECITALS
WHEREAS, Fayetteville owns and operates its sewage collection system and
treatment plants pursuant to A.C.A. §14-235-203 and is authorized to collect and treat
wastewater from its own inhabitants and also persons and customers outside the corporate
limits of Fayetteville; and
WHEREAS, Fayetteville recognizcs that its sewer collection system and
treatment plants are integral to the health and welfare of the greater Fayetteville area, as
well as Fayetteville, and intends to collect and treat wastewater to meet the current and
future needs of the greater Fayetteville area when such service is requested and the
provision of such service is in the best interests of the citizens of Fayetteville; and
WHEREAS, Fayetteville and Farmington have established a long-term
contractual relationship as evidenced by sewer maintenance and operations contracts
between the cities beginning in 1974. The present contract was executed in 1994
pursuant to A.C.A. §14-235-212. This well established working relationship is further
evidenced by the mediation agreement entered into in 2004 to clarify the 1994 agreement
concerning sanitary sewer rehabilitation. Each city has agreed to implement its
individual part of the mediation agreement, with the remaining construction programmed
for the year 2007. The total estimated cost of the sanitary sewer rehabilitation that was
agreed upon in the 2004 mediation is estimated at $1,420,640 with approximately
$942,657 to be incurred by Fayetteville and approximately $477,983 to be incurred by
Farmington; and
WHEREAS, Fayetteville operates Farmington's Wastewater Collection System,
receives wastewater from Farrnington customers, and transports and treats the wastewater
in Fayetteville's wastewater facilities under Fayetteville's NPDES permits; and
WHEREAS, Farmington desires to contract with Fayetteville in accordance with
A.C.A. §14-235-212 to continue providing operation and maintenance services for thc
Farmington Wastewater Collection System, and transportation and treatment of
wastewater produced by Farmington customers; and
WHEREAS, in meeting this service commitment, Fayetteville must ensure that
this role does not place a financial burden on Fayetteville's customers for which the
Fayetteville customers do not receive a corresponding benefit, and there should not be a
financial burden on Farmington's customers for which the Farmington customers do not
receive a corresponding benefit.
NOW, THEREFORE, in consideration of mutual covenants and conditions
contained herein, it is hereby agreed as follows:
SECTION 1.
DEFINITIONS
1.1 Arkansas Department of Environmental Quality (ADEQ) — The State of
Arkansas' Department whose mission is to protect and enhance the state's environment.
1.2 Arkansas Department of Health and Human Services (ADHHS) — State
agency whose mission is to protect the health of all of Arkansascitizens and visitors.
1.3 Arkansas Natural Resources Commission (ANRC) — State agency whose
mission is to manage and protect our water and land resources for the health, safety and
economic benefit of the State of Arkansas.
1.4 Collector Sewers — Pipes used to collect and can -y wastewater from
individual sources to an interceptor sewer that will carry it to a treatment facility.
(USEPA On -Line Glossary of Terms)
1.5 CMOM — CMOM stands for "Capacity, Management, Operations, and
Maintenance". It is a flexible, dynamic framework for municipalities to identify and
incorporate widely accepted wastewater industry practices to. (i) better manage, operate,
and maintain collection systems; (ii) investigate capacity constrained areas of the
collection system; (iii) respond to sanitary sewer overflow (SSO) events. (Water
Environment Federation CMOM Reference Manual)
1.6 Capacity Improvements — Any investment in facilities that cause or allow
the Fayetteville West Side Wastewater Treatment Plant, Farmington Lift Station #12, or
any other components of the sewer collection system to carry or process wastewater
which provide a benefit to Farmington by increasing the capacity of the West Side
Wastewater Treatment Plant or by extending or increasing the useful life or initial design
capacity of the West Side Wastewater Treatment Plant.
1.7 Facilities — Publicly owned components of the sewer collection system and
treatment plants including but not limited to sewer pipes, manholes, pump stations, odor
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control structures, power generators, electrical components, and attendant support
facilities thereto.
1.8 Farmington Customers — All sewer customers located within the City of
Farmington.
1.9 Farmington Wastewater Collection System — Farmington Publicly Owned
Treatment Works including any device or system used in the collection, transportation, or
treatment of municipal sewage or industrial wastes of a liquid nature that is owned by
Farmington. This definition shall include, but is not limited to, the gravity sewer pipes,
collector sewers, transmission mains, force mains, manholes, and all appurtances within
the corporate boundaries of Farmington, the Farmington Branch Interceptor, Lift Station
#12 and relocated Lift Station #12; Lift Station #12 Force Main located within the
corporate boundaries of Farmington and Fayetteville and all other appurtances which are
being financed and constructed. Service laterals are generally the responsibility and
ownership of the Retail Customer and are thus excluded from this definition.
1.10 Fayetteville Policies — Those policies, procedures, ordinances and
resolutions as adopted by the City of Fayetteville City Council, City of Fayetteville Water
and Sewer Committee, and/or the City of Fayetteville Water and Wastewater utility.
1.11 Force Main — A sanitary sewer main that operates under pressure,
transporting wastewater from one location to another. Taps cannot be made onto Force
Mains.
1.12 Infiltration and Inflow — Infiltration: The penetration of water through
the ground surface into sub -surface soil or the penetration of water from the soil into
sewer or other pipes through defective joints, connections, or manhole walls. (USEPA
On -Line Glossary of Terms) Inflow — Entry of extraneous rain water into a sewer system
from sources other than infiltration, such as open elements, roof drains, basement drains,
sump pumps, manholes, and storm drains. (USEPA On -Line Glossary of Terms)
1.13 Independent Consultant — A consultant who is not an employee of an
entity, but who has a contractual relationship with that entity to provide a professional
service.
1.14 Interceptor Sewers — Large sewer lines that collect the flows from main
and trunk sewers and carry them to treatment points. (USEPA On -Line Glossary of
Terms)
1.15 Lift Station #12 — The sanitary sewer lift station owned by Farmington and
located in the northwest portion of Farmington that pumps the majority of the wastewater
from the City of Farmington sanitary sewer collection system to the point of connection
to the City of Fayetteville sanitary sewer system.
1.16 Net Plant — Net Plant is the sum of the cumulative investments in the
Fayetteville sewer collection system and treatment plants' assets less accumulated
depreciation on those assets.
1.17 Operational Capacity — The firm wet weather capacity of a portion of the
sewer collection system and treatment plants. In the case of lift stations, firm capacity is
defined as the true pumping capacity when the largest pump is out of service. In all
cases, operational capacity must allow for wet weather flow, which is defined based on
the size of the watershed area. For the West Fayetteville — Farmington basin, operational
capacity is defined as a five year one hour storm in which 2.5" of rain falls within any
one hour period. For the West Side Wastewater Treatment Plant, operational capacity is
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defined as a two year one hour rainfall event embedded into a five year twenty four hour
rainfall event.
1.18 Sewer Collection System and Treatment Plants — Any municipally owned
device or system used in the collection, transmission, storage or treatmcnt (including
recycling and reclamation) of municipal sewage or industrial wastes of a liquid nature.
This definition includes lift stations, sewers, pipes, or other conveyances only if thcy
convey wastewater to a sewer treatment plant. A.C.A. §14-235-203
1.19 Pretreatment — Processes used to reduce, eliminate, or alter the nature of
wastewater pollutants from non-domestic sources before they are discharged into a
municipal sewer collection system.
1.20 Project — Sewer system improvements including the Farmington Branch
Interceptor, Relocated Lift Station #12 and the Lift Station #12 Force Main and
easements acquired to re-route the areas tributary to the City of Farmington Lift Station
(LS 1/12) to the City of Fayetteville West Side Wastewater Treatment Plant.
1.21 Pump (Lift) Station — Mechanical device installed in sewer or water
system or other liquid -carrying pipelines to move the liquids to a higher level. Pumping
stations can be either municipally owned components of the sewer collection system or
privately owned pumping units serving individual customers.
1.22 Retail Customer — The ultimate consumer of either water or wastewater
services who is individually connected to the water distribution or wastewater collection
system and receives periodic billing directly from Fayetteville for the services provided
irrespective of governmental jurisdictions.
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1.23 Sanitary Sewer Overflow — A sanitary sewer overflow (SSO) is any
overflow, spill, release, discharge or diversion of wastewater from a sanitary sewer
system. Sanitary sewer overflows include:
(i) overflows or releases of wastewater that reach waters of the United States;
(ii) overflows or releases of wastewater that do not reach waters of the United
States; and
(iii) wastewater backups into buildings and on private property that are caused by
blockages or flow conditions in a sanitary sewer, other than a building lateral.
Wastewater backups into buildings caused by a blockage or other malfunction of a
building lateral that is privately owned is a sanitary sewer overflow when sewage is
discharged off of private property into streets, storni drains, or waters of the State. (Water
Environment Federation CMOM Reference Manual)
1.24 Sanitary Sewer Rehabilitation — The work involved in studies, designs, or
construction projects with the objective of identifying and/or repairing an existing sewer
collection system with the intent of restoring the system to near its original capacity by
repairing and/or replacing system facilities with a focus on removing sources of
infiltration and inflow from the system.
1.25 Sanitary Sewer Collection System — Any municipally owned system of
pipes, pump stations, sewer lines, etc., used to collect and convey sewage to a sewer
treatment plant. Temporary storage and conveyance facilities (such as vaults, temporary
piping, construction trenches, wet wells, impoundments, tanks, highline, etc) are
considered to be part of the sanitary sewer collection system, and discharges of sewage to
these facilities are not sanitary sewer overflows.
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1.26 United States Environmental Protection Agency (USEPA) — The Agency
of the United States Government that is charged with the responsibility to develop and
enforce regulations that implement environmental laws enacted by Congress whose
mission is to protect huinan health and the environment
1.27 United States Army Corps of Engineers (USACE) — The Agency of the
United States Government that is charged with, among other tasks not germane to this
agreement, planning, approving, designing, building and operating water resources and
managing the nation's wetlands.
1.28 Utility Basis — The allocation of revenue requirements or total cost of
service to be derived from rates among the classes of customers served.
1.29 Wastewater System Impact Fee — The existing Fayetteville sewer impact
fee assessed upon new development for sewer connections and any other sewer impact
fee imposed by a municipality upon new development to generate funding or for
recouping expenditures of the municipality that are reasonably attributable to the
increased sewer capacity needs of the development. (A.C.A. §14-56-103)
1.30 West Side Wastewater Treatment Plant — The City of Fayetteville owned
Wastewater Treatment Plant located on Broyles Road in Fayetteville.
SECTION 2.
TERM OF CONTRACT
2.1 Term of Contract
Fayetteville agrees to provide capacity, management, operations and maintenance
services for the Farmington Wastewater Collection System and receive, transport and
treat the Farmington's wastewater for a term of fifteen (15) years from the date of
execution of this contract. Farmington agrees to provide all of its sewage received
through its sewer collection system to Fayetteville's sewer collection system and
treatment plants for a term of fifteen (15) years from the date of execution of this contract
and pay for or require its sewer customers to pay for Fayetteville's sewer collection and
treatment pursuant to this contract at the rates set by the Fayetteville City Council.
2.2 Farmington's Notice of Future intent
At the end of the tenth (1Oth) year of this contract, Farmington shall either provide
notice of intent to discontinue purchasing capacity, management, operations and
maintenance services from Fayetteville for Farmington's Wastewater Collection System
at the end of the term of this contract or provide notice of its intent to negotiate a
replacement contract with Fayetteville.
2.3 Farmington Right to Negotiate Capacity
Farmington shall have the right to request an increased percentage level of the
Operational Capacity as defined herein, upon mutual agreement of all parties for the
remaining five (5) years of the contract.
2.4 Fayetteville's Notice of Future Intent
At the end of the tenth (101) year of this contract, Fayetteville shall either
provide notice of intent to discontinue providing capacity, management, operations and
maintenance services for Farmington's Wastewater Collection System at the end of the
term of this contract or provide notice of its intent to negotiate a replacement contract
with Farmington.
2.5 Mutual Agreements
At the end of the tenth (10th) year of this contract, either Farmington or
Fayetteville may elect not to renew the contract for services upon the expiration of the
fifteen (15) year term herein. If a City elects not to renew, that city shall notify the other
City's Mayor, in writing, via certified mail, return receipt, post marked no later than
ninety days after the date of the tenth (10th) anniversary of the execution of this contract
at the City's address listed below. The parties further recognize the potential that, if
mutually agreed, the two wastewater systems may consolidate into one singly owned
wastewater system. Nothing in this agreement shall compel the merger of the systems.
SECTION 3.
COLLECTION AND TREATMENT OF WASTEWATER
3.1 Residential and Commercial Wastewater
Fayetteville agrees to accept, transport and treat all domestic and commercial
wastewater produced by Farmington Customers by utilizing Fayetteville's sewer
collection system and treatment plants.
3.2 Industrial Wastewater
Industrial wastewater containing toxic or other matter that may be incompatible or
harmful to the waste treatment process shall not be discharged into the Fayetteville sewer
collection system and treatment plants without the express written consent of
Fayetteville. Consent to the industrial wastewater discharge shall not be unreasonably
withheld.
As a condition to the consent being granted, Fayetteville may require that
concentration of such substances in waste discharge to its system be eliminated or
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reduced to limits acceptable to Fayetteville's sewer collection system and treatment
plants. Farmington agrees it shall adopt a sewer use ordinance for pretreatment of
industrial waste at least as stringent as Fayetteville's ordinances. This ordinance must be
revised as required to reflect changes in Fayetteville's ordinances. Fayetteville will
conduct all routine operational pretreatment activities. Implementation and enforcement
of the Farmington sewer use ordinance, above and beyond that required by Fayetteville's
ordinances, shall be at Farmington's cost.
3.3 Operational Capacity
Throughout the term of this contract, Farmington customers shall be granted 8.2%
of the Operational Capacity of the Fayetteville West Side Wastewater Treatment Plant.
Until such time as the construction of the West Side Wastewater Treatment Plant is
completed, Farmington retail and industrial customers shall continue to utilize the Noland
Wastewater Treatment Plant and present facilities.
SECTION 4.
CAPACITY, MANAGEMENT, OPERATIONS AND MAINTENANCE
4.1 Operations and Maintenance
Fayetteville agrees to operate and maintain the Farmington Wastewater Collection
System in compliance with all applicable federal and state laws, permits and regulations.
Fayetteville shall furnish all labor, equipment and materials to provide a predictive,
preventative, routine and corrective Capacity, Management, Operations and Maintenance
program and replacement schedule for the Farmington Wastewater Collection System,
which includes but is not limited to, the municipally owned gravity sewer pipes, force
mains, manholes, lift stations and all appurtenances within the corporate boundaries of
Farmington, the Farmington Branch Interceptor, Lift Station #12, and relocated Lift
Station #12, Lill Station #12 Force Main and all other appurtances which are being
financed and constructed. All costs associated with service laterals shall be bome by
Farmington customers.
4.2 Access and Inspection
Fayetteville shall have full access to inspect the Farmington Wastewater
Collection System, and all users' facilities for purposes of inspection, sampling, and any
other duties deemed necessary to enforce sewer use ordinance or ensure discharges being
made to the sewer system meet all requirements of the ordinance, and for purposes of
implementing and performing a Capacity, Management, Operations and Maintenance
program and replacement schedule; to monitor, maintain and repair the Farmington
Wastewater Collection System to minimize infiltration and inflow into the system and
prevent sanitary sewer overflow. Farmington agrees to fully and promptly implement
and enforce Farmington Wastewater Collection System ordinances and grants
Fayetteville the right to terminate sewer/water service to any Farmington customer who is
in violation of these ordinances.
4.3 Regulations and Ordinances
Farmington customers shall comply with wastewater rules, regulations and
ordinances enacted by the City of Fayetteville. Fayetteville agrees to provide copies of
all applicable wastewater usage ordinances enacted before and after the execution of this
contract to Farmington. Farmington grants Fayetteville the right to terminate sewer/water
service to any Farmington customer who is in violation with Fayetteville's ordinances.
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4.4 Adoption and Enforcement of Sanitary Sewer Ordinances
Farmington shall adopt and enforce ordinances that meet or exceed Fayetteville's
wastewater usage ordinances and shall adopt and enforce ordinances to effectuate the
terms and conditions of this contract.
SECTION 5.
COMPLIANCE WITH LAWS, PERMITS AND REGULATIONS
5.1 Wastewater Treatment
Fayetteville shall be responsible for complying with all federal and state laws and
regulations and reporting requirements pertaining to the treatment of wastewater.
5.2 Planning
Fayetteville shall be responsible for developing, implementing and maintaining a
Wastewater Master Planning document and a Capacity Management, Operations and
Maintenance (CMOM) Manual that complies with applicable published standards issued
by the following regulatory agencies: USEPA, USACE, ADEQ, ADHHS, ANRC and
any successor agencies. The plan will include regulatory compliance, Best Management
Practices and public health protection. All the aforementioned plans and documents shall
be made available to Farmington upon request.
5.3 Fines and Penalties
Fayetteville shall be liable for fines and penalties that may be imposed by any
regulatory agency for violations of permits, regulations or any other applicable laws
related to the operation of its sewer collection system and treatment plants. Farmington
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shall be liable for fines and penalties imposed for failure to enact or enforce its
ordinances or otherwise its failure to comply with the requirements of this contract.
SECTION 6.
CUSTOMER BILLING
6.1 Utility Service Charge
Fayetteville shall be responsible for preparing and issuing monthly utility bills to
Farmington customers for sewer service and shall be responsible for administration and
collection. Any service charges or surcharges imposed by Farmington shall be a part of
Fayetteville's combined water and sewer utilities billing and shall be detailed as "City of
Farmington Sewer Surcharge." Any service charges or surcharges imposed by
Farmington shall be properly recorded, accounted for separately and remitted as provided
herein. Fayetteville shall maintain municipal accounting records in accordance with
Arkansas law and shall have the authority to collect amounts owed in accordance with
Fayetteville Policies and Arkansas law.
The amount charged in monthly utility bills to Farmington customers shall be full
compensation for all services provided by Fayetteville under this contract (except as
noted below and for required sewer impact fees), which includes wastewater treatment
and disposal in accordance with Section 3; operation and maintenance of the Fannington
Wastewater Collection System in accordance with Section 4; and customer billing and
administration.
6.2 Delinquency
Fayetteville shall have the authority to collect delinquent accounts in accordance
with Fayetteville Policies and Arkansas law and shall assess late fees and disconnection
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charges to reimburse for actual cost of disconnection and reconnection of services.
Farmington shall not be liable for the cost of collecting delinquent accounts, and
disconnection and reconnection charges.
6.3 Sewer Tap Connections
Fayetteville is authorized to charge and collect for sewer tap connections to
Farmington's Wastewater Collection System in amounts established by the Fayetteville
City Council, subject to adjustments during the term of this contract to reflect change in
costs. The connection fee shall be based on the cost of providing the service.
6.4 Street Cut and Other Tapping Related Fees
Fayetteville is authorized to collect a street cut fee, state highway permit fee and
other specific required fees, if applicable, when a sewer tap fee is collected. Fayetteville
shall be authorized and responsible to make street cuts as needed for the execution of
sewer service improvements and repairs. Upon the completion of the sewer
improvements and repairs, Fayetteville shall repair all wastewater utility street cuts
within sixty (60) days, weather and asphalt availability permitting, in compliance with
Fayetteville ordinances, policies and procedures for street construction and repair.
6.5 Plumbing Permits
Farmington shall enact ordinances requiring all of its customers to obtain
plumbing permits from the City of Fayetteville and to install all residential, commercial
and industrial plumbing in accordance with Fayetteville plumbing code regulations and
ordinances.
6.6 Retail Rate Surcharges
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Farmington is authorized to add a surcharge to sewer rates imposed by
Fayetteville. Farmington shall comply with A.C.A. §14-235-223 for these sewer charges.
Surcharges shall be collected by Fayetteville and remitted to Farmington monthly.
Farmington shall have the right to designate the basis for computing the surcharge (billed
water volume, billed sewer volume, flat fee, etc.).
All rate surcharges shall be the property of Farmington. Fayetteville will
administer and collect the Farmington utility customer surcharge and collect the
Farmington Sewer Impact Fee for a fee of 4% annually of the amount collected for both
charges. Remittance shall be no more frequently than monthly on the amount collected.
The remittance will include documentation of the "Annual Percentage Yield Earned for
the month of collection as computed on Fayetteville's current monthly bank statement."
Fayetteville shall invest the moneys collected in a manner consistent with Fayetteville's
investment of cash and shall remit all investment earnings earned on Farmington's
Customer Surcharge. Fayetteville shall invoice Farmington for the 4% service fee on the
same frequency as the remittance. Fayetteville shall reflect Farmington's surcharge as a
separate line item on monthly utility billings to Farmington's customers. All surcharges
shall be properly recorded and accounted for separately. All records will be made
available to Farmington upon request.
6.7 Sewer Connections for Customers Receiving Alternate Water Service
Farmington customers who do not receive Fayetteville water services shall be
provided sewer service during the term of this contract upon the agreement of the Parties
to a mutually acceptable method of billing for sewer service which may include a service
charge or higher fee to offset increased meter reading or billing costs. Sewer service for
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Farmington customers receiving alternative sources of water shall receive the same sewer
services provided Farmington customers who receive Fayetteville water services as
provided hereinabove.
6.8 Taxes and Fees
Farmington shall not be authorized and agrees not to impose, levy or charge a
franchise tax, surcharge, fee or any other form of exaction upon Fayetteville for the
services provided during the term of this contract.
SECTION 7.
COST OF WASTEWATER COLLECTION AND TREATMENT
AND CMOM SERVICES
7.1 Principles and Policies
The Parties acknowledge that deterrnining rates based on costs is a wastewater
industry practice and historically accepted practice of Fayetteville and its outside city
customers. Principles, policies and methodologies to determine rates for wastewater
collection and treatment and Capacity, Management, Operations and Maintenance
services as described herein are intended to meet the objective of providing fair and
equitable cost -based rates.
The following general principles and policies are intended to provide guidance to
formulating rate studies and associated documentation during the term of this contract
and shall be utilized to the extent feasible in setting rates:
1. Adjusting rates upon abrupt changes in financial policies should be
avoided.
2. Prepare rate formulations that are easy to administer and
understand.
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3. Determine rates that are "fair and equitable" while balancing the
needs of all Parties.
7.2 Framework for Determining Rates
After taking into consideration the basic principles set forth above, retail
wastewater treatment and collection system rates shall be developed by Fayetteville for
Farmington customers based on the following framework:
1. Fayetteville and Farmington agree to collaborate on the criteria for
rate adjustments to be utilized by an independent rate consultant to develop rates which
are fair and equitable across all customer classes.
2. Utility rate studies require professional judgment. The Independent
Consultants shall be instructed to use their professional judgment to develop a rate study
that is fair and equitable and neither overly favorable nor burdensome to either Party.
3. The Independent Consultants shall possess a national reputation
with demonstrable expertise in water and wastewater utility rate making and employ
registered professional engineers and such other professionals as needed to develop the
necessary criteria for rate making purposes to ensure that wastewater utility rates are fair
and equitable across all customer classes computed on a cost of service basis.
Fayetteville will incur the cost of the Independent Consultants. The Fayetteville
Independent Consultant Selection Process shall include a Farmington representative
designated by the Farmington Mayor.
4. The rate study analysis shall conform to generally accepted rate
setting practices and be in compliance with the mutually agreed upon rate methodology
based in whole or part on published rate making standards adopted and published by the
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American Water Works Association (AWWA), Water Environment Federation (WEF)
and other rate setting methodologies of authoritative organizations and practice manuals.
5. The cost of services rate calculation shall be a Utility Basis
approach. It shall include all cost of service and the operations, maintenance and
replacement cost for facilities which provide capacity enhancement or extend utilization
of the existing capacity of Westside Treatment Plant and shall contain a rate of return
allocation on the Net Plant required to provide service to Farmington customers. The rate
of return percentage shall be computed by determining the average of interest rates for all
outstanding Fayetteville water and sewer revenue bond issues at the time of each rate
study and then adding to the average interest rate computation a premium of 1.5% to
arrive at a total rate of return. The rate of return percentage provides compensation to the
Fayetteville rate payers for Fayetteville's investment in the Fayetteville sewer collection
system and treatment plants, and recognizes Fayetteville's ownership, risk and
contributions. The determination of Net Plant shall exclude monies acquired and assets
purchased with USEPA Grants or other forms of contributed capital, assets purchased
utilizing loans supported in part or whole by USEPA Grants or other types of giants and
assets purchased with a sales and use tax enacted by either Fayetteville or Farmington.
7.3 Rate Adjustments
If the current wastewater rate study (estimated completion date in the second
quarter of 2007) recommends a system -wide rate change prior to 2009, the rate may be
adjusted accordingly in 2007 or 2008. Otherwise, the rate schedule established in Section
8 below is subject to adjustment by Fayetteville in 2009 and thereafter when Fayetteville
rates are adjusted on a system -wide basis. Fayetteville agrees to provide Farmington a
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written notice sixty days (60) days prior to commencement of the process to adjust rate
schedules.
SECTION 8.
ADJUSTMENT OF 2003 RATE STRUCTURE AND REFUND
Fayetteville recognizes that Farmington citizens have made and will continue to
make significant contributions to the sales and use taxes utilized by Fayetteville to fund
the Fayetteville Wastewater System Improvements Project. In consideration thereof,
Fayetteville agrees to adjust the wastewater usage rate for Farmington Customers from
the current rate of $7.16 per 1,000 gallons to $4.66 per 1,000 gallons plus any
Farmington surcharge, apply the adjusted rate retroactively to February 2004 and refund
69.5% of the overpayments made by Farmington customers from February 2004 to the
date of rate change.
Pursuant to Section 8 of this contract, Fayetteville shall compute the refund
amount due all current Fayetteville Water or Sewer customers who resided in Farmington
and paid the higher sewer rate during all or some of the period of February, 2004 to the
last day said higher rate is in effect, and send all current Fayetteville Water or Sewer
customers who resided in Farmington a check with the proper net amount. Bad debt, etc.,
if any, owed to the Fayetteville Water and Sewer Department will be subtracted from the
gross refund amount due any customer. An explanation of this refund pursuant to the
contract between Farmington and Fayetteville will be included in the bill.
Fayetteville shall also compute the amount of refund due previous customers who
are no longer current customers of the Fayetteville Water and Sewer Department and who
thus could not receive credits on existing bills. Fayetteville agrees to put forth a good
faith effort, up to and including advertising, to provide these funds to the previous
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customers. Any funds remaining shall either escheat to the State of Arkansas, in
compliance with § 18-28-201 of the Arkansas Code pertaining to the Unclaimed Property
Act, or be reinvested in the wastewater system, if allowed.
Fayetteville and Farmington agree that the negotiated rate ($4.66/1,000 gallons)
plus Fannington's surcharge shall be in effect until a rate analysis as prescribed in Section
7 above has been completed and adjusted rates are implemented unless the rate study
currently underway and anticipated to be completed during the 2"° quarter of 2007
recommends a per 1,000 gallon rate greater than $4.66 as part of a system wide rate
change.
SECTION 9.
WASTEWATER SYSTEM IMPACT FEES
Fayetteville and Farmington have jointly contributed funds to commission the
preparation of a development impact fee study in accordance with Arkansas Code
Annotated § 14-56-103. Upon the completion of the study, the Parties may assess,
collect, and expend development impact fees for the planning, design and construction of
new public facilities and for capital improvements to existing public facilities that expand
the capacity of the facilities.
9.1 Fayetteville Wastewater Impact Fee
As soon as this contract is approved by both parties, the existing Fayetteville
Wastewater Impact Fee enacted as § 159.02 of the Unified Development Code of the City
of Fayetteville shall be applicable and enforced for all new development within
Farmington just as it is to new development in Fayetteville.
-21-
Upon completion of any new wastewater development impact fee study and
adoption by Fayetteville of a new or amended wastewater impact fee ordinance, the new
or amended impact fee ordinance shall be applicable and enforced within Farmington
identically to its enforcement in Fayetteville. Farmington shall immediately enact
Fayetteville's wastewater impact fee ordinances (and any amendments thereto) after
Fayetteville provides notice of any such impact fee ordinance to ensure that Fayetteville's
wastewater impact fee shall apply to all new development in Farmington.
9.2 Farmington Wastewater Impact Fee
Upon completion of the study referred to in Section 9, Farmington shall adopt a
development impact fee ordinance and shall assess and collect impact fees from new
sewer connections within the corporate boundaries of Farmington. Farmington shall also
assess and collect impact fees from new sewer connections in areas of Fayetteville served
by the Farmington Wastewater Collection System. Fayetteville shall pass any necessary
ordinance to ensure Farmington may legally collect this wastewater impact fee in the part
of Fayetteville served by Farmington's sewer collection system.
Farmington anticipates annexing Basins 1-54 and 1-55 located south of
Farmington's corporate boundaries in Washington County. In the event this or any other
territory is annexed into Farmington, Farmington and Fayetteville may assess and collect
impact fees from new sewer connections, as determined by a development impact fee
study.
9.3 Collection of Impact Fees
Development impact fees shall be collected by methods authorized by Arkansas
law and approved by the Parties. The Parties agree to assess and collect the development
-22-
impact fees as provided herein, deposit the fees separately into special interest -bearing
accounts and remit the funds that each Party collects for the other on a semi-annual basis
unless a more frequent distribution is required by a debt instrument. Interest earned on
money in a separate account shall likewise be remitted to the Party receiving the
development impact fees from the account. Fayetteville shall invest the moneys collected
in a manner consistent with Fayetteville's investment of cash and shall remit all
investment earnings earned on Farmington's Impact Fee collections and shall invoice
Farmington the 4% service fee on the same frequency as the remittance of collections.
9.4 Developments and Property Owners
The Parties agree to provide each other on a monthly basis a listing of individual
property owners from which an impact fee was collected, The Partiesrespective
planning commissions, city councils and city representatives shall also provide each other
with copies of the applications of plats of subdivisions and large scale developments
within the RJN map dated January 1, 2007 as soon as they have been submitted to the
City.
9.5 Ownership of Facilities
The Parties acknowledge that Farmington owns the Farmington Wastewater
Collection System as defined in Section 1.9 above. The Parties further acknowledge that
Fayetteville does not claim ownership in the Farmington Wastewater Collection System
and that collecting development impact fees within the corporate boundaries of
Farmington does not confer ownership of facilities for which the development impact
fees are collected in Farmington.
23-
The Parties acknowledge that Fayetteville owns
Collection System and Treatment Plants. The Parties
Farmington does not claim ownership in the Fayetteville Sec
Treatment Plants and that collecting development impact
boundaries of Fayetteville or Farmington does not confer
which the development impact fees are collected.
the Fayetteville Sewage
further acknowledge that
;age Collection System and
fees within the corporate
ownership of facilities for
SECTION 10.
CONSTRUCTION AND EXPANSION OF THE
FARMINGTON WASTEWATER COLLECTION SYSTEM
10.1 Construction of Facilities
Farmington and Fayetteville agree to cost share the construction of the
Farmington Branch Interceptor, relocated Lift Station #12 and the Lift Station #12 Force
Main to the Head Works of the Westside Wastewater .Treatment Plant, hereinafter
referred to as the Project. The Parties acknowledge that the estimated construction cost
of the Project, as of January 1, 2007, is $5,586,930 based upon the service area plan
prepared by RJN and dated January 1, 2007. Estimated engineering fees as of November
21, 2006 are $1,095,291.
The Project consists of designing and replacing the Farmington Branch
Interceptor between Fayetteville's Lift Station #11 and Farmington's relocated Lift
Station #12, and the design and construction of the relocated Lift Station #12 and the
Force Main from relocated Lift Station #12 to a point of connection at the Westside
Wastewater Treatment Plant. The Farmington Branch Interceptor is being constructed to
increase the capacity for both Farmington customers and Fayetteville customers in the
surrounding drainage basins that will be utilizing the Fayetteville sewer collection system
-24-
and treatment plants. The relocated Lift Station #12 and the Lift Station #12 Force Main
to the Westside Wastewater Treatment Plant shall be designed and constructed to
increase wastewater flow capacity to no less than estimated requirements for the year
2030.
If Farmington chooses to include any land area beyond that served in the RJN
plan dated January 1, 2007 the capital, engineering and all other cost associated with that
service expansion shall be the responsibility of Farmington.
10.2 Cost of Construction
Farmington and Fayetteville agree to cost share the construction cost of the
Project for serving areas identified to be served by the RJN Plan dated January 1, 2007.
The construction cost estimated by RJN and based on the service area map dated January
1, 2007 is $5,586,930.00 and incorporates the annexations completed during 2006.
$4,221,779.00 of this construction cost is allocated to and shall be paid by Farmington
and includes the cost of providing capacity to serve Basins 1-54 and 1-55, in the
Farmington Wastewater System. Fayetteville is allocated $1,365,151.00 of the
construction cost of the improvements to the Farmington Wastewater System. If
Fayetteville annexes Basin 1-54 and/or Basin I-55 Fayetteville agrees to pay the cost of
providing capacity to serve these two areas in the Farmington Wastewater Collection
System. The cost to provide capacity in the Farmington Wastewater System for Basins
1-54 and 1-55 is estimated at $745,937.00.
Both Parties agree that each Party shall incur the construction, engineering and
right of way costs to provide wastewater facilities for the additional areas annexed by
each Party after the execution of this contract.
25-
The Parties further agree that Farmington shall not be required to pay more than
$480,000.00 in engineering fees and associated costs, unless there is a change in the cost
of engineering due to a scope of work change requested by Farmington. Farmington also
agrees to acquire the necessary right of ways and easements at an estimated cost of
$432,640.00 and pay value engineering fees of $39,844.00.
10.3 Adjustments in Farmington Service Area
In the event Farmington expands its corporate boundaries or acquires additional
service area that is not being served at the time this contract is executed, Fayetteville
agrees to accept and treat the wastewater from the additional service area, subject to
Farmington's customers paying wastewater treatment impact fees in the additional
service area and subject to the 8.2% limit of paragraph 3.3.
10.4 Extension of Lines to Serve Adjacent Areas of Fayetteville
Fayetteville shall have the right to make extensions from any part of the
Farmington Wastewater System to serve adjacent areas. Those customers inside the
corporate limits of Farmington shall be deemed to be Fannington customers and subject
to Farmington surcharges. Fayetteville shall bear the responsibility for the costs of any
extension to serve adjacent areas within Fayetteville and the cost of increasing the
capacity in Farmington's Wastewater Collection System to provide the necessary
capacity to serve the increased Fayetteville customer base of any extension to serve areas
not contemplated to be served as reflected in the RJN Map dated January 1, 2007.
10.5 Extension of Lines to Serve Adjacent Areas of Farmington
Farmington shall have the right to make extensions from Farmington's Interceptor
Line to serve adjacent areas as long as Farmington does not serve customers inside
-26-
Fayetteville's corporate boundaries. Farmington shall bear the cost of engineering,
easements and construction of any extension to serve areas not contemplated to be served
as reflected in the RJN map dated January 1, 2007.
10.6 Manhole Adjustments
Farmington shall be responsible for ensuring that wastewater manholes are re-
established to the proper elevation after Farmington city initiated street widening,
reconstruction or overlay projects are completed. This sewer work must meet the City of
Fayetteville's specification. Manholes must be raised/lowered to grade within sixty (60)
days of being covered. Farmington will be responsible for any claims or cost incurred by
emergencies that are worsened by manholes being covered by a City of Farmington street
project.
10.7 Approval of Plans and Specifications
Plans and specifications for additions and modifications to the Farmington
Wastewater Collection System must be reviewed and approved by the Fayetteville City
Engineer and the Arkansas Department of Health and Human Services for each
commercial, industrial and residential development prior to the approval of the final plat
or large scale development. Fayetteville's City Engineer shall provide, on request, copies
of technical reports which were prepared as a part of the City of Fayetteville review and
approval process to Farmington for each proposed development within Farmington's
corporate boundaries and Farmington's growth area for wastewater collection system
utilization.
10.8 Communication
-27-
Fayetteville shall notify Farmington in writing concurrent with notification to the
Fayetteville Sewer Committee and any other governmental entity of all proposed
significant changes to Fayetteville's management of Fayetteville's sewage collection
system and treatment plants, wastewater usage ordinances, rules and regulations,
including but not limited to, capacity management techniques, capacity improvements
and operational changes.
SECTION 11.
DISPUTE RESOLUTION
11.1 Written Statements
If a dispute arises, the Parties agree to provide written statements addressing the
dispute to resolve the matter. The Party receiving the written dispute shall have ten (10)
business days to acknowledge and respond. The Parties will attempt to resolve the matter
without formal discussions.
11.2 Meeting
If the Parties cannot resolve the dispute within thirty days, a meeting will be
scheduled between the Parties' respective sewer committees and representatives within
the next thirty (30) days to resolve the matter. If a resolution cannot be reached and
agreed upon by the Partiesrepresentatives, within sixty (60) days of the initial written
dispute, the matter shall be referred to the alternative dispute resolution process.
11.3 Alternative Dispute Resolution Process
The Parties agree that any and all claims alleging a breach of this contact, other
than claims requiring immediate relief to prevent irreparable harm to a Party, public
health or the environment, shall be submitted to an alternative dispute resolution process.
-28-
Such an alternative dispute resolution process may include non -binding mediation, non-
binding arbitration, or binding arbitration. The Parties shall agree upon the form and
procedures for the agreed upon alternative dispute resolution process. If the matter is not
resolved through an alternative dispute resolution process, or if the Parties cannot agree
upon the form and procedures for the alternative dispute resolution process, the parties
may seek legal recourse from a court of competent jurisdiction. For claims requiring
immediate relief to prevent irreparable harm, either Party may seek relief directly from a
court of competent jurisdiction without submitting the matter to the alternative dispute
resolution process or any notice or resolution process.
SECTION 12.
GENERAL PROVISIONS
12.1 Entire and Complete Agreement
This Agreement constitutes the entire and complete agreement and final
expression of the parties with respect to the subject matter it contains, and supersedes all
prior or contemporaneous agreements, understandings, arrangements, commitments and
representations, whether oral or written. In the event of any conflict between the
language set forth in this contract or any of the exhibits hereto, the language in the
contract shall prevail and this contract shall be interpreted as if that conflicting language
was not a part of the contract between the Parties. Both Parties to the contract shall
immediately bring to the attention of the other Party for mutual revision any observed
conflict between, or duplication of any contract provisions or any material omissions
from the contract.
12.2 Severability
-29-
If any contract provision is for any reason determined to be invalid, illegal or
unenforceable under any applicable law, the remaining provisions of the contract shall
remain if effect and bind the Pat -ties; however, the Parties shall negotiate in good faith to
amend the contract to effectuate the intent of any invalid, illegal or unenforceable
provision.
12.3 Access
Farmington shall have the right to inspect any or all of Fayetteville's operations,
facilities, financial or operational records as the records relate to this contract.
Fayetteville shall have the right to inspect any or all of Farmington's operations,
facilities, financial and operational records as they relate to this contract.
12.4 No Third Party Beneficiaries
The contract is entered into by the Cities of Fayetteville and Farmington, and is
not intended to, nor does it, create any third party beneficiaries or rights in any other
person or entity.
12.5 Notices
Except as may otherwise be expressly provided, all approvals, requests, reports,
notices, communications or other materials or information required or permitted to be
made or given by a party to the other party hereunder shall be deemed to have been given
or made only if the same is reduced to writing and delivered, either personally or by
means of the United States Postal Service or other delivery service, to the Fayetteville or
Farmington representative, as the case may be, at their respective addresses as set forth
below:
If to the City of Fayetteville:
-30-
Mayor of the City of Fayetteville
113 West Mountain Street
Fayetteville, Arkansas 72701
If to the City of Farmington:
Mayor of the City of Farmington
354 W. Main St. or P.O. Box 150
Farmington, Arkansas 72730
12.6 Amendment or Waiver
Neither this Agreement nor any provision hereof may be changed, modified,
amended or waived except by written instrument signed by the parties.
12.7 City as Public Utility
Fayetteville shall perform all work under this contract as a Public Utility. Neither
city shall be responsible for the acts or omissions of the other city's officers, agents,
employees, contractors and subcontractors. Nothing in the Agreement shall be construed
as creating a partnership or joint venture between the Cities of Fayetteville and
Farmington.
12.8 Governing Law and Venue
It is mutually understood and agreed that this contract shall be governed by the
laws of the State of Arkansas and that any cause of action for breach of this contract shall
be instituted and maintained in any court of competent jurisdiction in the County of
Washington, State of Arkansas.
12.9 Sovereign Immunity
Nothing in this contract shall be construed to waive or limit the sovereign
immunity enjoyed by both cities. Any provision that could be interpreted as a waiver or
-31-
ri
limitation of either city's sovereign immunity is expressly rejected and invalidated to the
extent of such waiver or limitation.
12.10 Exhibits
Two exhibits: (1) RJN map of 1-1-07; and (2) Fayetteville/Farmington
Population and Cost Breakdown of 1-1-07 are attached and made a part of this contract.
IN WITNESS WHEREOF, the Mayor and City Clerk of the City of Fayetteville,
Arkansas, by authority of a resolution adopted by the City Council of the City of
Fayetteville, Arkansas, and the Mayor and City Clerk of the City of Farmington,
Arkansas, by authority of a resolution adopted by the City Council of the City of
Farmington, Arkansas, have hereunto set their hand and caused the corporation seal to be
affixed and dated this 3'4 day of April 2007.
CITY OF FAYETTEVILLE CITY OF FARMINGTON
By:
DAN COODY,
By:
ERNIE PENN, Mayor
ATTE ( ATTEST:
By: �f By: �ildY►.ao
S ndra Sm;thr�t} S7% / Kelly Thoi s, City Clerk
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City of Fayetteville, Arkansas
Budget Adjustment Form
Budget Year Department: Operations Date Requested Adjustment Number
2007 Division: Water & Sewer Maintenance 3/15/2007
Program: Meter Capital
Project or Item Added/increased: Project or Item Deleted/Reduced:
Funds are required to refund of a portion of rate None; $650,000 is proposed to come from Fund Balance.
payments made from February 9, 2004 through April 30,
2007 for all outside City customers.
Justification of this Increase:
This refund is required by the negotiated Fayetteville -
Farmington Wastewater Services Agreement.
Account Name
istification of this Decrease:
Sufficient funds remain within Fund Balance to meet City
policies.
Increase mxpense suaget tecrease evenue nuagetg
Account Number Amount Project Number
Sewer Rate Refunding 5400 1840 5311 10
650,000 07022 1
Decrease Expense Budget (Increase Revenue Budget)
Account Name Account Number Amount Project Number
Use of fund balance 5400 0940 4999 99 650,000
Budget Office Use Only
(�jn Type: A B C D E
Req ed By Date
'
C
d D
Posted to General Ledger
rntect
brt Date
Posted to Project Accounting
4.5-07
Financervices Director Date
Entered in Category Log
Mayor Date
Initial
Date
Date
Initial
Date
Initial
David Jurgens
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
3 -Apr -07
City Council Meeting Date
Water/Wastewater
Division
Water/Wastewater
Department
x/3/07
"-"7
Service and Operations
and Maintenance Service for the City
of Farmington,
and approve the refund of a portion of rate
payments made from 9
February 2004 through 30 April 2007,
and approve a
budget adjustment of $650,000.00.
$ 650,000
Cost of this request
100-1840-5314.69
Account Number
07022
Project Number
Budgeted Item
n
LZL
Attorney I.
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Water and Wastewater
Program Category / Project Name
Water and Wastewater
Program / Project Category Name
Water/Sewer
Fund Name
Previous Ordinance or Resolution # 171-06
Date Original Contract Date: 10/17/2006
Original Contract Number: N/A
ZO 0
Date
CITY COUNCIL AGENDA MEMO City Council Meeting of April 3, 2007
To: Fayetteville City Council
Thru: Mayor Dan Coody
From: Fayetteville Sewer Committee
David Jurgens, Water & Wastewater Director
Date: March 13, 2007
Subject: Approval of Contract Between the Cities of Fayetteville and Farmington to Provide Wastewater
Collection and Treatment System Service and Operations and Maintenance Service for the City of Farmington,
and approve the refund of a portion of rate payments made from 9 February 2004 through 30 April 2007, and
approve a budget adjustment of $650,000.00.
Fayetteville City Administration recommends approval of the Contract Between the Cities of Fayetteville and
Farmington to Provide Wastewater Collection and Treatment System Service and Operations and Maintenance
Service for the City of Farmington and approve the refund of a portion of rate payments made from 9 February
2004 through 30 April 2007, and approval of a budget adjustment of $650,000.00.
The Cities of Fayetteville and Farmington have a 30 year partnership in wastewater collection and treatment, the
conditions for which have been agreed upon in two 15 year duration contracts. The current contract, adopted in
1993, expires in 2008 and has become obsolete due to the growth, system upgrade and rehabilitation needs, and
other circumstances. Over the last 1% years, negotiating teams from Farmington and Fayetteville have worked
to develop a comprehensive contract to meet current and anticipated future wastewater needs of both Cities.
The fundamental terms of this agreement were agreed to with Resolution 171-06 on October 17, 2006, by which
the Fayetteville City Council approved the terms of the Farmington Position Paper and directed this formal
Agreement be drafted to reflect the terms of said Position Paper.
This agreement addresses all aspects of the wastewater operations, including: (1) rate development; (2) the
refund of a percentage of payments made since the rates adopted on 9 February, 2004; (3) current Wastewater
System Improvement Project Upgrades; (4) future capital upgrades; (5) operations and maintenance; (6) sanitary
sewer rehabilitation; and (7) ultimate wastewater system ownership.
The time line relating to the short term actions required by this agreement is as follows:
February 27 Draft Contract delivered to Water/Sewer Committee (w City Attorney comments)
February 28 Draft Contract delivered to Farmington representative (w City Attorney comments)
March 13 Final Contract delivered to Water/Sewer Committee
March 20 Rate adjustment ordinance first reading, announcing public hearing
March 21 Advertise rate adjustment and public hearing
April 2 Receive final contract signed by Farmington
April 3 Public Hearing, Contract, and rate adjustment ordinance presented to City Council
April 30 Last date unadjusted rates will be in effect; Refund Date per the contract
May I New rates take effect
June Refunds processed for payments made from February 9, 2004, - April 30, 2007
BUDGET IMPACT
There is an estimated cost not to exceed $650,000.00 incumbent in the refund of a portion of rate payments
made from 9 February, 2004 through 30 April 2007. All future costs shall be incurred are incorporated into the
wastewater rate structure for outside City wastewater customers.
Fayetteville- Farmington Wastewater Service Contract 19Dec06 CC Memo
RESOLUTION NO.
A RESOLUTION APPROVING A CONTRACT BETWEEN THE
CITY OF FAYETTEVILLE, ARKANSAS AND THE CITY OF
FARMINGTON, ARKANSAS TO PROVIDE WASTEWATER
COLLECTION AND TREATMENT SYSTEM SERVICE AND
OPERATIONS AND MAINTENANCE SERVICE TO THE CITY OF
FARMINGTON; AND APPROVING A BUDGET ADJUSTMENT
IN THE AMOUNT OF $650,000.00 TO IMPLEMENT THE
REFUND OF A PORTION OF RATE PAYMENTS MADE FROM
FEBRUARY 9, 2004 THROUGH APRIL 30, 2007.
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 a contract between the City of Fayetteville, Arkansas and the
City of Farmington, Arkansas to provide Wastewater Collection and Treatment
System Service and Operations and Maintenance Service to the City of
Farmington. A copy of the contract, marked Exhibit "A" is attached her
made a part hereof. « -
Section 2. That the City Council of the Ci e . Ile, •kansas
hereby approves a Budget Adjustment in the mt of $650,1.00 to
implement the refund of a portion of rate yments m fro Februa 9, 2004
through April 30, 2007.
SONDRA E. SMITH, City Clerk/Treasurer
CONTRACT BETWEEN THE CITIES OF
FAYETTEVILLE AND FARMINGTON TO PROVIDE WASTEWATER
COLLECTION AND TREATMENT SYSTEM SERVICE AND
OPERATIONS AND MAINTENANCE SERVICE FOR
THE CITY OF FARMINGTON
THIS CONTRACT is entered into by and between the CITY OF
FAYETTEVILLE, a municipal corporation of the State of Arkansas (hereinafter
referred to as "Fayetteville"), and the CITY OF FARMINGTON, a municipal
corporation of the State of Arkansas (hereinafter referred to as "Farmington"), with both
municipal corporations hereinafter referred to collectively as the "Parties".
RECITALS
WHEREAS, Fayetteville owns and operates its sewage collection system and
treatment plants pursuant to A.C.A. §14-235-203 and is authorized to collect and treat
wastewater from its own inhabitants and also persons and customers outside the corporate
limits of Fayetteville; and
WHEREAS, Fayetteville recognizes that its sewer collection system and
treatment plants are integral to the health and welfare of the greater Fayetteville area, as
well as Fayetteville, and intends to collect and treat wastewater to meet the current and
future needs of the greater Fayetteville area when such service is requested and the
provision of such service is in the best interests of the citizens of Fayetteville; and
WHEREAS, Fayetteville and Farmington have established a long-term
contractual relationship as evidenced by sewer maintenance and operations contracts
between the cities beginning in 1974. The present contract was executed in 1994
pursuant to A.C.A. §14-235-212. This well established working relationship is further
evidenced by the mediation agreement entered into in 2004 to clarify the 1994 agreement
concerning sanitary sewer rehabilitation. Each city has agreed to implement its
individual part of the mediation agreement, with the remaining construction programmed
for the year 2007. The total estimated cost of the sanitary sewer rehabilitation that was
agreed upon in the 2004 mediation is estimated at $1,420,640 with approximately
$942,657 to be incurred by Fayetteville and approximately $477,983 to be incurred by
Farmington; and
WHEREAS, Fayetteville operates Farmington's Wastewater Collection System,
receives wastewater from Farmington customers, and transports and treats the wastewater
in Fayetteville's wastewater facilities under Fayetteville's NPDES permits; and
WHEREAS, Farmington desires to contract with Fayetteville in accordance with
A.C.A. §14-235-212 to continue providing operation and maintenance services for the
Farmington Wastewater Collection System, and transportation and treatment of
wastewater produced by Farmington customers; and
WHEREAS, in meeting this service commitment, Fayetteville must ensure that
this role does not place a financial burden on Fayetteville's customers for which the
Fayetteville customers do not receive a corresponding benefit, and there should not be a
financial burden on Farmington's customers for which the Farmington customers do not
receive a corresponding benefit.
NOW, THEREFORE, in consideration of mutual covenants and conditions
contained herein, it is hereby agreed as follows:
SECTION 1.
DEFINITIONS
l.1 Arkansas Department of Environmental Quality (ADEQ) — The State of
Arkansas' Department whose mission is to protect and enhance the state's environment.
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1.2 Arkansas Department of Health and Human Services (ADHHS) — State
agency whose mission is to protect the health of all of Arkansas' citizens and visitors.
1.3 Arkansas Natural Resources Commission (ANRC) — State agency whose
mission is to manage and protect our water and land resources for the health, safety and
economic benefit of the State of Arkansas.
1.4 Collector Sewers — Pipes used to collect and carry wastewater from
individual sources to an interceptor sewer that will carry it to a treatment facility.
(USEPA On -Line Glossary of Terms)
1.5 CMOM — CMOM stands for "Capacity, Management, Operations, and
Maintenance". It is a flexible, dynamic framework for municipalities to identify and
incorporate widely accepted wastewater industry practices to: (i) better manage, operate,
and maintain collection systems; (ii) investigate capacity constrained areas of the
collection system; (iii) respond to sanitary sewer overflow (SSO) events. (Water
Environment Federation CMOM Reference Manual)
1.6 Capacity Improvements — Any investment in facilities that cause or allow
the Fayetteville West Side Wastewater Treatment Plant, Farmington Lift Station #12, or
any other components of the sewer collection system to carry or process wastewater
which provide a benefit to Farmington by increasing the capacity of the West Side
Wastewater Treatment Plant or by extending or increasing the useful life or initial design
capacity of the West Side Wastewater Treatment Plant.
1.7 Facilities — Publicly owned components of the sewer collection system and
treatment plants including but not limited to sewer pipes, manholes, pump stations, odor
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control structures, power generators, electrical components, and attendant support
facilities thereto.
1.8 Farmington Customers — All sewer customers located within the City of
Farmington.
1.9 Farmington Wastewater Collection System — Farmington Publicly Owned
Treatment Works including any device or system used in the collection, transportation, or
treatment of municipal sewage or industrial wastes of a liquid nature that is owned by
Farmington. This definition shall include, but is not limited to, the gravity sewer pipes,
collector sewers, transmission mains, force mains, manholes, and all appurtances within
the corporate boundaries of Farmington, the Farmington Branch Interceptor, Lift Station
#12 and relocated Lift Station #12; Lift Station #12 Force Main located within the
corporate boundaries of Farmington and Fayetteville and all other appurtances which are
being financed and constructed. Service laterals are generally the responsibility and
ownership of the Retail Customer and are thus excluded from this definition.
1.10 Fayetteville Policies — Those policies, procedures, ordinances and
resolutions as adopted by the City of Fayetteville City Council, City of Fayetteville Water
and Sewer Committee, and/or the City of Fayetteville Water and Wastewater utility.
1.11 Force Main — A sanitary sewer main that operates under pressure,
transporting wastewater from one location to another. Taps cannot be made onto Force
Mains.
1.12 Infiltration and Inflow (1/I) — Infiltration: The penetration of water through
the ground surface into sub -surface soil or the penetration of water from the soil into
sewer or other pipes through defective joints, connections, or manhole walls. (USEPA
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On -Line Glossary of Terms) Inflow — Entry of extraneous rain water into a sewer system
from sources other than infiltration, such as open elements, roof drains, basement drains,
sump pumps, manholes, and storm drains. (USEPA On -Line Glossary of Terms)
1.13 Independent Consultant — A consultant who is not an employee of an
entity, but who has a contractual relationship with that entity to provide a professional
service.
1.14 Interceptor Sewers — Large sewer lines that collect the flows from main
and trunk sewers and carry them to treatment points. (USEPA On -Line Glossary of
Terms)
1.15 Lift Station #12 — The sanitary sewer lift station owned by Farmington and
located in the northwest portion of Farmington that pumps the majority of the wastewater
from the City of Farmington sanitary sewer collection system to the point of connection
to the City of Fayetteville sanitary sewer system.
1.16 Net Plant — Net Plant is the sum of the cumulative investments in the
Fayetteville sewer collection system and treatment plants' assets less accumulated
depreciation on those assets.
1.17 Operational Capacity — The firm wet weather capacity of a portion of the
sewer collection system and treatment plants. In the case of lift stations, firm capacity is
defined as the true pumping capacity when the largest pump is out of service. In all
cases, operational capacity must allow for wet weather flow, which is defined based on
the size of the watershed area. For the West Fayetteville — Farmington basin, operational
capacity is defined as a five year one hour storm in which 2.5" of rain falls within any
one hour period. For the West Side Wastewater Treatment Plant, operational capacity is
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defined as a two year one hour rainfall event embedded into a five year twenty four hour
rainfall event.
1.18 Sewer Collection System and Treatment Plants — Any municipally owned
device or system used in the collection, transmission, storage or treatment (including
recycling and reclamation) of municipal sewage or industrial wastes of a liquid nature.
This definition includes lift stations, sewers, pipes, or other conveyances only if they
convey wastewater to a sewer treatment plant. A.C.A. § 14-235-203
1.19 Pretreatment — Processes used to reduce, eliminate, or alter the nature of
wastewater pollutants from non -domestic sources before they are discharged into a
municipal sewer collection system.
1.20 Project — Sewer system improvements including the Farmington Branch
Interceptor, Relocated Lift Station #12 and the Lift Station #12 Force Main and
easements acquired to re-route the areas tributary to the City of Farmington Lift Station
(LS #12) to the City of Fayetteville West Side Wastewater Treatment Plant.
1.21 Pump (Lift) Station — Mechanical device installed in sewer or water
system or other liquid -carrying pipelines to move the liquids to a higher level. Pumping
stations can be either municipally owned components of the sewer collection system or
privately owned pumping units serving individual customers.
1.22 Retail Customer — The ultimate consumer of either water or wastewater
services who is individually connected to the water distribution or wastewater collection
system and receives periodic billing directly from Fayetteville for the services provided
irrespective of governmental jurisdictions.
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1.23 Sanitary Sewer Overflow — A sanitary sewer overflow (SSO) is any
overflow, spill, release, discharge or diversion of wastewater from a sanitary sewer
system. Sanitary sewer overflows include:
(i) overflows or releases of wastewater that reach waters of the United States;
(ii) overflows or releases of wastewater that do not reach waters of the United
States; and
(iii) wastewater backups into buildings and on private property that are caused by
blockages or flow conditions in a sanitary sewer, other than a building lateral.
Wastewater backups into buildings caused by a blockage or other malfunction of a
building lateral that is privately owned is a sanitary sewer overflow when sewage is
discharged off of private property into streets, storm drains, or waters of the State. (Water
Environment Federation CMOM Reference Manual)
1.24 Sanitary Sewer Rehabilitation — The work involved in studies, designs, or
construction projects with the objective of identifying and/or repairing an existing sewer
collection system with the intent of restoring the system to near its original capacity by
repairing and/or replacing system facilities with a focus on removing sources of
infiltration and inflow from the system.
1.25 Sanitary Sewer Collection System — Any municipally owned system of
pipes, pump stations, sewer lines, etc., used to collect and convey sewage to a sewer
treatment plant. Temporary storage and conveyance facilities (such as vaults, temporary
piping, construction trenches, wet wells, impoundments, tanks, highline, etc.) are
considered to be part of the sanitary sewer collection system, and discharges of sewage to
these facilities are not sanitary sewer overflows.
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1.26 United States Environmental Protection Agency (USEPA) — The Agency
of the United States Government that is charged with the responsibility to develop and
enforce regulations that implement environmental laws enacted by Congress whose
mission is to protect human health and the environment.
1.27 United States Army Corps of Engineers (USACE) — The Agency of the
United States Government that is charged with, among other tasks not germane to this
agreement, planning, approving, designing, building and operating water resources and
managing the nation's wetlands.
1.28 Utility Basis — The allocation of revenue requirements or total cost of
service to be derived from rates among the classes of customers served.
1.29 Wastewater System Impact Fee — The existing Fayetteville sewer impact
fee assessed upon new development for sewer connections and any other sewer impact
fee imposed by a municipality upon new development to generate funding or for
recouping expenditures of the municipality that are reasonably attributable to the
increased sewer capacity needs of the development. (A.C.A. § 14-56-103)
1.30 West Side Wastewater Treatment Plant — The City of Fayetteville owned
Wastewater Treatment Plant located on Broyles Road in Fayetteville.
SECTION 2.
TERM OF CONTRACT
2.1 Term of Contract
Fayetteville agrees to provide capacity, management, operations and maintenance
services for the Farmington Wastewater Collection System and receive, transport and
treat the Farmington's wastewater for a term of fifteen (15) years from the date of
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execution of this contract. Farmington agrees to provide all of its sewage received
through its sewer collection system to Fayetteville's sewer collection system and
treatment plants for a term of fifteen (15) years from the date of execution of this contract
and pay for or require its sewer customers to pay for Fayetteville's sewer collection and
treatment pursuant to this contract at the rates set by the Fayetteville City Council.
2.2 Farmington's Notice of Future Intent
At the end of the tenth (10"i) year of this contract, Farmington shall either provide
notice of intent to discontinue purchasing capacity, management, operations and
maintenance services from Fayetteville for Farmington's Wastewater Collection System
at the end of the term of this contract or provide notice of its intent to negotiate a
replacement contract with Fayetteville.
2.3 Farmington Right to Negotiate Capacity
Farmington shall have the right to request an increased percentage level of the
Operational Capacity as defined herein, upon mutual agreement of all parties for the
remaining five (5) years of the contract.
2.4 Fayetteville's Notice of Future Intent
At the end of the tenth (10`F') year of this contract, Fayetteville shall either
provide notice of intent to discontinue providing capacity, management, operations and
maintenance services for Farmington's Wastewater Collection System at the end of the
term of this contract or provide notice of its intent to negotiate a replacement contract
with Farmington.
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2.5 Mutual Agreements
At the end of the tenth (10`h) year of this contract, either Farmington or
Fayetteville may elect not to renew the contract for services upon the expiration of the
fifteen (15) year term herein. If a City elects not to renew, that city shall notify the other
City's Mayor, in writing, via certified mail, return receipt, post marked no later than
ninety days after the date of the tenth (I Qt) anniversary of the execution of this contract
at the City's address listed below. The parties further recognize the potential that, if
mutually agreed, the two wastewater systems may consolidate into one singly owned
wastewater system. Nothing in this agreement shall compel the merger of the systems.
SECTION 3.
COLLECTION AND TREATMENT OF WASTEWATER
3.1 Residential and Commercial Wastewater
Fayetteville agrees to accept, transport and treat all domestic and commercial
wastewater produced by Farmington Customers by utilizing Fayetteville's sewer
collection system and treatment plants.
3.2 Industrial Wastewater
Industrial wastewater containing toxic or other matter that may be incompatible or
harmful to the waste treatment process shall not be discharged into the Fayetteville sewer
collection system and treatment plants without the express written consent of
Fayetteville. Consent to the industrial wastewater discharge shall not be unreasonably
withheld.
As a condition to the consent being granted, Fayetteville may require that
concentration of such substances in waste discharge to its system be eliminated or
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reduced to limits acceptable to Fayetteville's sewer collection system and treatment
plants. Farmington agrees it shall adopt a sewer use ordinance for pretreatment of
industrial waste at least as stringent as Fayetteville's ordinances. This ordinance must be
revised as required to reflect changes in Fayetteville's ordinances. Fayetteville will
conduct all routine operational pretreatment activities. Implementation and enforcement
of the Farmington sewer use ordinance, above and beyond that required by Fayetteville's
ordinances, shall be at Farmington's cost.
3.3 Operational Capacity
Throughout the term of this contract, Farmington customers shall be granted 8.2%
of the Operational Capacity of the Fayetteville West Side Wastewater Treatment Plant.
Until such time as the construction of the West Side Wastewater Treatment Plant is
completed, Farmington retail and industrial customers shall continue to utilize the Noland
Wastewater Treatment Plant and present facilities.
SECTION 4.
CAPACITY, MANAGEMENT, OPERATIONS AND MAINTENANCE
4.1 Operations and Maintenance
Fayetteville agrees to operate and maintain the Farmington Wastewater Collection
System in compliance with all applicable federal and state laws, permits and regulations.
Fayetteville shall furnish all labor, equipment and materials to provide a predictive,
preventative, routine and corrective Capacity, Management, Operations and Maintenance
program and replacement schedule for the Farmington Wastewater Collection System,
which includes but is not limited to, the municipally owned gravity sewer pipes, force
mains, manholes, lift stations and all appurtenances within the corporate boundaries of
Farmington, the Farmington Branch Interceptor, Lift Station #12, and relocated Lift
Station #12, Lift Station #12 Force Main and all other appurtances which are being
financed and constructed. All costs associated with service laterals shall be borne by
Farmington customers.
4.2 Access and Inspection
Fayetteville shall have full access to inspect the Farmington Wastewater
Collection System, and all users' facilities for purposes of inspection, sampling, and any
other duties deemed necessary to enforce sewer use ordinance or ensure discharges being
made to the sewer system meet all requirements of the ordinance, and for purposes of
implementing and performing a Capacity, Management, Operations and Maintenance
program and replacement schedule; to monitor, maintain and repair the Farmington
Wastewater Collection System to minimize infiltration and inflow into the system and
prevent sanitary sewer overflow. Farmington agrees to fully and promptly implement
and enforce Farmington Wastewater Collection System ordinances and grants
Fayetteville the right to terminate sewer/water service to any Farmington customer who is
in violation of these ordinances.
4.3 Regulations and Ordinances
Farmington customers shall comply with wastewater rules, regulations and
ordinances enacted by the City of Fayetteville. Fayetteville agrees to provide copies of
all applicable wastewater usage ordinances enacted before and after the execution of this
contract to Farmington. Farmington grants Fayetteville the right to terminate sewer/water
service to any Farmington customer who is in violation with Fayetteville's ordinances.
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4.4 Adoption and Enforcement of Sanitary Sewer Ordinances
Farmington shall adopt and enforce ordinances that meet or exceed Fayetteville's
wastewater usage ordinances and shall adopt and enforce ordinances to effectuate the
terms and conditions of this contract.
SECTION 5.
COMPLIANCE WITH LAWS, PERMITS AND REGULATIONS
5.1 Wastewater Treatment
Fayetteville shall be responsible for complying with all federal and state laws and
regulations and reporting requirements pertaining to the treatment of wastewater.
5.2 Planning
Fayetteville shall be responsible for developing, implementing and maintaining a
Wastewater Master Planning document and a Capacity Management, Operations and
Maintenance (CMOM) Manual that complies with applicable published standards issued
by the following regulatory agencies: USEPA, USACE, ADEQ, ADHHS, ANRC and
any successor agencies. The plan will include regulatory compliance, Best Management
Practices and public health protection. All the aforementioned plans and documents shall
be made available to Farmington upon request.
5.3 Fines and Penalties
Fayetteville shall be liable for fines and penalties that may be imposed by any
regulatory agency for violations of permits, regulations or any other applicable laws
related to the operation of its sewer collection system and treatment plants. Farmington
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shall be liable for fines and penalties imposed for failure to enact or enforce its
ordinances or otherwise its failure to comply with the requirements of this contract.
SECTION 6.
CUSTOMER BILLING
6.1 Utility Service Charge
Fayetteville shall be responsible for preparing and issuing monthly utility bills to
Farmington customers for sewer service and shall be responsible for administration and
collection. Any service charges or surcharges imposed by Farmington shall be a part of
Fayetteville's combined water and sewer utilities billing and shall be detailed as "City of
Farmington Sewer Surcharge." Any service charges or surcharges imposed by
Farmington shall be properly recorded, accounted for separately and remitted as provided
herein. Fayetteville shall maintain municipal accounting records in accordance with
Arkansas law and shall have the authority to collect amounts owed in accordance with
Fayetteville Policies and Arkansas law.
The amount charged in monthly utility bills to Farmington customers shall be full
compensation for all services provided by Fayetteville under this contract (except as
noted below and for required sewer impact fees), which includes wastewater treatment
and disposal in accordance with Section 3; operation and maintenance of the Farmington
Wastewater Collection System in accordance with Section 4; and customer billing and
administration.
6.2 Delinquency
Fayetteville shall have the authority to collect delinquent accounts in accordance
with Fayetteville Policies and Arkansas law and shall assess late fees and disconnection
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charges to reimburse for actual cost of disconnection and reconnection of services.
Farmington shall not be liable for the cost of collecting delinquent accounts, and
disconnection and reconnection charges.
6.3 Sewer Tap Connections
Fayetteville is authorized to charge and collect for sewer tap connections to
Farmington's Wastewater Collection System in amounts established by the Fayetteville
City Council, subject to adjustments during the term of this contract to reflect change in
costs. The connection fee shall be based on the cost of providing the service.
6.4 Street Cut and Other Tapping Related Fees
Fayetteville is authorized to collect a street cut fee, state highway permit fee and
other specific required fees, if applicable, when a sewer tap fee is collected. Fayetteville
shall be authorized and responsible to make street cuts as needed for the execution of
sewer service improvements and repairs. Upon the completion of the sewer
improvements and repairs, Fayetteville shall repair all wastewater utility street cuts
within sixty (60) days, weather and asphalt availability permitting, in compliance with
Fayetteville ordinances, policies and procedures for street construction and repair.
6.5 Plumbing Permits
Farmington shall enact ordinances requiring all of its customers to obtain
plumbing permits from the City of Fayetteville and to install all residential, commercial
and industrial plumbing in accordance with Fayetteville plumbing code regulations and
ordinances.
6.6 Retail Rate Surcharges
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Farmington is authorized to add a surcharge to sewer rates imposed by
Fayetteville. Farmington shall comply with A.C.A. §14-235-223 for these sewer charges.
Surcharges shall be collected by Fayetteville and remitted to Farmington monthly.
Farmington shall have the right to designate the basis for computing the surcharge (billed
water volume, billed sewer volume, flat fee, etc.).
All rate surcharges shall be the property of Farmington. Fayetteville will
administer and collect the Farmington utility customer surcharge and collect the
Farmington Sewer Impact Fee for a fee of 4% annually of the amount collected for both
charges. Remittance shall be no more frequently than monthly on the amount collected.
The remittance will include documentation of the "Annual Percentage Yield Earned for
the month of collection as computed on Fayetteville's current monthly bank statement."
Fayetteville shall invest the moneys collected in a manner consistent with Fayetteville's
investment of cash and shall remit all investment earnings earned on Farmington's
Customer Surcharge. Fayetteville shall invoice Farmington for the 4% service fee on the
same frequency as the remittance. Fayetteville shall reflect Farmington's surcharge as a
separate line item on monthly utility billings to Farmington's customers. All surcharges
shall be properly recorded and accounted for separately. All records will be made
available to Farmington upon request.
6.7 Sewer Connections for Customers Receiving Alternate Water Service
Farmington customers who do not receive Fayetteville water services shall be
provided sewer service during the term of this contract upon the agreement of the Parties
to a mutually acceptable method of billing for sewer service which may include a service
charge or higher fee to offset increased meter reading or billing costs. Sewer service for
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Farmington customers receiving alternative sources of water shall receive the same sewer
services provided Farmington customers who receive Fayetteville water services as
provided hereinabove.
6.8 Taxes and Fees
Farmington shall not be authorized and agrees not to impose, levy or charge a
franchise tax, surcharge, fee or any other form of exaction upon Fayetteville for the
services provided during the term of this contract.
SECTION 7.
COST OF WASTEWATER COLLECTION AND TREATMENT
AND CMOM SERVICES
7.1 Principles and Policies
The Parties acknowledge that determining rates based on costs is a wastewater
industry practice and historically accepted practice of Fayetteville and its outside city
customers. Principles, policies and methodologies to determine rates for wastewater
collection and treatment and Capacity, Management, Operations and Maintenance
services as described herein are intended to meet the objective of providing fair and
equitable cost -based rates.
The following general principles and policies are intended to provide guidance to
formulating rate studies and associated documentation during the term of this contract
and shall be utilized to the extent feasible in setting rates:
Adjusting rates upon abrupt changes in financial policies should be
avoided.
2. Prepare rate formulations that are easy to administer and
understand.
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3. Determine rates that are "fair and equitable" while balancing the
needs of all Parties.
7.2 Framework for Determining Rates
After taking into consideration the basic principles set forth above, retail
wastewater treatment and collection system rates shall be developed by Fayetteville for
Farmington customers based on the following framework:
1. Fayetteville and Farmington agree to collaborate on the criteria for
rate adjustments to be utilized by an independent rate consultant to develop rates which
are fair and equitable across all customer classes.
2. Utility rate studies require professional judgment. The Independent
Consultants shall be instructed to use their professional judgment to develop a rate study
that is fair and equitable and neither overly favorable nor burdensome to either Party.
3. The Independent Consultants shall possess a national reputation
with demonstrable expertise in water and wastewater utility rate making and employ
registered professional engineers and such other professionals as needed to develop the
necessary criteria for rate making purposes to ensure that wastewater utility rates are fair
and equitable across all customer classes computed on a cost of service basis.
Fayetteville will incur the cost of the Independent Consultants. The Fayetteville
Independent Consultant Selection Process shall include a Farmington representative
designated by the Farmington Mayor.
4. The rate study analysis shall conform to generally accepted rate
setting practices and be in compliance with the mutually agreed upon rate methodology
based in whole or part on published rate making standards adopted and published by the
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American Water Works Association (AWWA), Water Environment Federation (WEF)
and other rate setting methodologies of authoritative organizations and practice manuals.
5. The cost of services rate calculation shall be a Utility Basis
approach. It shall include all cost of service and the operations, maintenance and
replacement cost for facilities which provide capacity enhancement or extend utilization
of the existing capacity of Westside Treatment Plant and shall contain a rate of return
allocation on the Net Plant required to provide service to Farmington customers. The rate
of return percentage shall be computed by determining the average of interest rates for all
outstanding Fayetteville water and sewer revenue bond issues at the time of each rate
study and then adding to the average interest rate computation a premium of 1.5% to
arrive at a total rate of return. The rate of return percentage provides compensation to the
Fayetteville rate payers for Fayetteville's investment in the Fayetteville sewer collection
system and treatment plants, and recognizes Fayetteville's ownership, risk and
contributions. The determination of Net Plant shall exclude monies acquired and assets
purchased with USEPA Grants or other forms of contributed capital, assets purchased
utilizing loans supported in part or whole by USEPA Grants or other types of grants and
assets purchased with a sales and use tax enacted by either Fayetteville or Farmington.
7.3 Rate Adjustments
If the current wastewater rate study (estimated completion date in the second
quarter of 2007) recommends a system -wide rate change prior to 2009, the rate may be
adjusted accordingly in 2007 or 2008. Otherwise, the rate schedule established in Section
8 below is subject to adjustment by Fayetteville in 2009 and thereafter when Fayetteville
rates are adjusted on a system -wide basis. Fayetteville agrees to provide Farmington a
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written notice sixty days (60) days prior to commencement of the process to adjust rate
schedules.
SECTION 8.
ADJUSTMENT OF 2003 RATE STRUCTURE AND REFUND
Fayetteville recognizes that Farmington citizens have made and will continue to
make significant contributions to the sales and use taxes utilized by Fayetteville to fund
the Fayetteville Wastewater System Improvements Project. In consideration thereof,
Fayetteville agrees to adjust the wastewater usage rate for Farmington Customers from
the current rate of $7.16 per 1,000 gallons to $4.66 per 1,000 gallons plus any
Farmington surcharge, apply the adjusted rate retroactively to February 2004 and refund
69.5% of the overpayments made by Farmington customers from February 2004 to the
date of rate change.
Pursuant to Section 8 of this contract, Fayetteville shall compute the refund
amount due all current Fayetteville Water or Sewer customers who resided in Farmington
and paid the higher sewer rate during all or some of the period of February, 2004 to the
last day said higher rate is in effect, and send all current Fayetteville Water or Sewer
customers who resided in Farmington a check with the proper net amount. Bad debt, etc.,
if any, owed to the Fayetteville Water and Sewer Department will be subtracted from the
gross refund amount due any customer. An explanation of this refund pursuant to the
contract between Farmington and Fayetteville will be included in the bill.
Fayetteville shall also compute the amount of refund due previous customers who
are no longer current customers of the Fayetteville Water and Sewer Department and who
thus could not receive credits on existing bills. Fayetteville agrees to put forth a good
faith effort, up to and including advertising, to provide these funds to the previous
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customers. Any funds remaining shall either escheat to the State of Arkansas, in
compliance with § 18-28-201 of the Arkansas Code pertaining to the Unclaimed Property
Act, or be reinvested in the wastewater system, if allowed.
Fayetteville and Farmington agree that the negotiated rate ($4.66/1,000 gallons)
plus Farmington's surcharge shall be in effect until a rate analysis as prescribed in Section
7 above has been completed and adjusted rates are implemented unless the rate study
currently underway and anticipated to be completed during the 2"d quarter of 2007
recommends a per 1,000 gallon rate greater than $4.66 as part of a system wide rate
change.
SECTION 9.
WASTEWATER SYSTEM IMPACT FEES
Fayetteville and Farmington have jointly contributed funds to commission the
preparation of a development impact fee study in accordance with Arkansas Code
Annotated § 14-56-103. Upon the completion of the study, the Parties may assess,
collect, and expend development impact fees for the planning, design and construction of
new public facilities and for capital improvements to existing public facilities that expand
the capacity of the facilities.
9.1 Fayetteville Wastewater Impact Fee
As soon as this contract is approved by both parties, the existing Fayetteville
Wastewater Impact Fee enacted as § 159.02 of the Unified Development Code of the City
of Fayetteville shall be applicable and enforced for all new development within
Farmington just as it is to new development in Fayetteville.
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Upon completion of any new wastewater development impact fee study and
adoption by Fayetteville of a new or amended wastewater impact fee ordinance, the new
or amended impact fee ordinance shall be applicable and enforced within Farmington
identically to its enforcement in Fayetteville. Farmington shall immediately enact
Fayetteville's wastewater impact fee ordinances (and any amendments thereto) after
Fayetteville provides notice of any such impact fee ordinance to ensure that Fayetteville's
wastewater impact fee shall apply to all new development in Farmington.
9.2 Farmington Wastewater Impact Fee
Upon completion of the study referred to in Section 9, Farmington shall adopt a
development impact fee ordinance and shall assess and collect impact fees from new
sewer connections within the corporate boundaries of Farmington. Farmington shall also
assess and collect impact fees from new sewer connections in areas of Fayetteville served
by the Farmington Wastewater Collection System. Fayetteville shall pass any necessary
ordinance to ensure Farmington may legally collect this wastewater impact fee in the part
of Fayetteville served by Farmington's sewer collection system.
Farmington anticipates annexing Basins I-54 and I-55 located south of
Farmington's corporate boundaries in Washington County. In the event this or any other
territory is annexed into Farmington, Farmington and Fayetteville may assess and collect
impact fees from new sewer connections, as determined by a development impact fee
study.
9.3 Collection of Impact Fees
Development impact fees shall be collected by methods authorized by Arkansas
law and approved by the Parties. The Parties agree to assess and collect the development
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impact fees as provided herein, deposit the fees separately into special interest -bearing
accounts and remit the funds that each Party collects for the other on a semi-annual basis
unless a more frequent distribution is required by a debt instrument. Interest earned on
money in a separate account shall likewise be remitted to the Party receiving the
development impact fees from the account. Fayetteville shall invest the moneys collected
in a manner consistent with Fayetteville's investment of cash and shall remit all
investment earnings earned on Farmington's Impact Fee collections and shall invoice
Farmington the 4% service fee on the same frequency as the remittance of collections.
9.4 Developments and Property Owners
The Parties agree to provide each other on a monthly basis a listing of individual
property owners from which an impact fee was collected. The Parties' respective
planning commissions, city councils and city representatives shall also provide each other
with copies of the applications of plats of subdivisions and large scale developments
within the RJN map dated January 1, 2007 as soon as they have been submitted to the
City.
9.5 Ownership of Facilities
The Parties acknowledge that Farmington owns the Farmington Wastewater
Collection System as defined in Section 1.9 above. The Parties further acknowledge that
Fayetteville does not claim ownership in the Farmington Wastewater Collection System
and that collecting development impact fees within the corporate boundaries of
Farmington does not confer ownership of facilities for which the development impact
fees are collected in Farmington.
-23-
The Parties acknowledge that Fayetteville owns the Fayetteville Sewage
Collection System and Treatment Plants. The Parties further acknowledge that
Farmington does not claim ownership in the Fayetteville Sewage Collection System and
Treatment Plants and that collecting development impact fees within the corporate
boundaries of Fayetteville or Farmington does not confer ownership of facilities for
which the development impact fees are collected.
SECTION 10.
CONSTRUCTION AND EXPANSION OF THE
FARMINGTON WASTEWATER COLLECTION SYSTEM
10.1 Construction of Facilities
Farmington and Fayetteville agree to cost share the construction of the
Farmington Branch Interceptor, relocated Lift Station #12 and the Lift Station #12 Force
Main to the Head Works of the Westside Wastewater Treatment Plant, hereinafter
referred to as the Project. The Parties acknowledge that the estimated construction cost
of the Project, as of January 1, 2007, is $5,586,930 based upon the service area plan
prepared by RJN and dated January 1, 2007. Estimated engineering fees as of November
21, 2006 are $1,095,291.
The Project consists of designing and replacing the Farmington Branch
Interceptor between Fayetteville's Lift Station #11 and Farmington's relocated Lift
Station #12, and the design and construction of the relocated Lift Station #12 and the
Force Main from relocated Lift Station #12 to a point of connection at the Westside
Wastewater Treatment Plant. The Farmington Branch Interceptor is being constructed to
increase the capacity for both Farmington customers and Fayetteville customers in the
surrounding drainage basins that will be utilizing the Fayetteville sewer collection system
-24-
and treatment plants. The relocated Lift Station #12 and the Lift Station #12 Force Main
to the Westside Wastewater Treatment Plant shall be designed and constructed to
increase wastewater flow capacity to no less than estimated requirements for the year
2030.
If Farmington chooses to include any land area beyond that served in the RJN
plan dated January 1, 2007 the capital, engineering and all other cost associated with that
service expansion shall be the responsibility of Farmington.
10.2 Cost of Construction
Farmington and Fayetteville agree to cost share the construction cost of the
Project for serving areas identified to be served by the RJN Plan dated January 1, 2007.
The construction cost estimated by RJN and based on the service area map dated January
1, 2007 is $5,586,930.00 and incorporates the annexations completed during 2006.
$4,221,779.00 of this construction cost is allocated to and shall be paid by Farmington
and includes the cost of providing capacity to serve Basins I-54 and 1-55, in the
Farmington Wastewater System. Fayetteville is allocated $1,365,151.00 of the
construction cost of the improvements to the Farmington Wastewater System. If
Fayetteville annexes Basin 1-54 and/or Basin I-55 Fayetteville agrees to pay the cost of
providing capacity to serve these two areas in the Farmington Wastewater Collection
System. The cost to provide capacity in the Farmington Wastewater System for Basins
1-54 and I-55 is estimated at $745,937.00.
Both Parties agree that each Party shall incur the construction, engineering and
right of way costs to provide wastewater facilities for the additional areas annexed by
each Party after the execution of this contract.
-25-
The Parties further agree that Farmington shall not be required to pay more than
$480,000.00 in engineering fees and associated costs, unless there is a change in the cost
of engineering due to a scope of work change requested by Farmington. Farmington also
agrees to acquire the necessary right of ways and easements at an estimated cost of
$432,640.00 and pay value engineering fees of $39,844.00.
10.3 Adjustments in Farmington Service Area
In the event Farmington expands its corporate boundaries or acquires additional
service area that is not being served at the time this contract is executed, Fayetteville
agrees to accept and treat the wastewater from the additional service area, subject to
Farmington's customers paying wastewater treatment impact fees in the additional
service area and subject to the 8.2% limit of paragraph 3.3.
10.4 Extension of Lines to Serve Adjacent Areas of Fayetteville
Fayetteville shall have the right to make extensions from any part of the
Farmington Wastewater System to serve adjacent areas. Those customers inside the
corporate limits of Farmington shall be deemed to be Farmington customers and subject
to Farmington surcharges. Fayetteville shall bear the responsibility for the costs of any
extension to serve adjacent areas within Fayetteville and the cost of increasing the
capacity in Farmington's Wastewater Collection System to provide the necessary
capacity to serve the increased Fayetteville customer base of any extension to serve areas
not contemplated to be served as reflected in the RJN Map dated January 1, 2007.
10.5 Extension of Lines to Serve Adjacent Areas of Farmington
Farmington shall have the right to make extensions from Farmington's Interceptor
Line to serve adjacent areas as long as Farmington does not serve customers inside
-26-
Fayetteville's corporate boundaries. Farmington shall bear the cost of engineering,
easements and construction of any extension to serve areas not contemplated to be served
as reflected in the RJN map dated January 1, 2007.
10.6 Manhole Adjustments
Farmington shall be responsible for ensuring that wastewater manholes are re-
established to the proper elevation after Farmington city initiated street widening,
reconstruction or overlay projects are completed. This sewer work must meet the City of
Fayetteville's specification. Manholes must be raised/lowered to grade within sixty (60)
days of being covered. Farmington will be responsible for any claims or cost incurred by
emergencies that are worsened by manholes being covered by a City of Farmington street
project.
10.7 Approval of Plans and Specifications
Plans and specifications for additions and modifications to the Farmington
Wastewater Collection System must be reviewed and approved by the Fayetteville City
Engineer and the Arkansas Department of Health and Human Services for each
commercial, industrial and residential development prior to the approval of the final plat
or large scale development. Fayetteville's City Engineer shall provide, on request, copies
of technical reports which were prepared as a part of the City of Fayetteville review and
approval process to Farmington for each proposed development within Farmington's
corporate boundaries and Farmington's growth area for wastewater collection system
utilization.
10.8 Communication
-27-
Fayetteville shall notify Farmington in writing concurrent with notification to the
Fayetteville Sewer Committee and any other governmental entity of all proposed
significant changes to Fayetteville's management of Fayetteville's sewage collection
system and treatment plants, wastewater usage ordinances, rules and regulations,
including but not limited to, capacity management techniques, capacity improvements
and operational changes.
SECTION 11.
DISPUTE RESOLUTION
11.1 Written Statements
If a dispute arises, the Parties agree to provide written statements addressing the
dispute to resolve the matter. The Party receiving the written dispute shall have ten (10)
business days to acknowledge and respond. The Parties will attempt to resolve the matter
without formal discussions.
11.2 Meeting
If the Parties cannot resolve the dispute within thirty days, a meeting will be
scheduled between the Parties' respective sewer committees and representatives within
the next thirty (30) days to resolve the matter. If a resolution cannot be reached and
agreed upon by the Parties' representatives, within sixty (60) days of the initial written
dispute, the matter shall be referred to the alternative dispute resolution process.
11.3 Alternative Dispute Resolution Process
The Parties agree that any and all claims alleging a breach of this contact, other
than claims requiring immediate relief to prevent irreparable harm to a Party, public
health or the environment, shall be submitted to an alternative dispute resolution process.
-28-
Such an alternative dispute resolution process may include non -binding mediation, non-
binding arbitration, or binding arbitration. The Parties shall agree upon the form and
procedures for the agreed upon alternative dispute resolution process. If the matter is not
resolved through an alternative dispute resolution process, or if the Parties cannot agree
upon the form and procedures for the alternative dispute resolution process, the parties
may seek legal recourse from a court of competent jurisdiction. For claims requiring
immediate relief to prevent irreparable harm, either Party may seek relief directly from a
court of competent jurisdiction without submitting the matter to the alternative dispute
resolution process or any notice or resolution process.
SECTION 12.
GENERAL PROVISIONS
12.1 Entire and Complete Agreement
This Agreement constitutes the entire and complete agreement and final
expression of the parties with respect to the subject matter it contains, and supersedes all
prior or contemporaneous agreements, understandings, arrangements, commitments and
representations, whether oral or written. In the event of any conflict between the
language set forth in this contract or any of the exhibits hereto, the language in the
contract shall prevail and this contract shall be interpreted as if that conflicting language
was not a part of the contract between the Parties. Both Parties to the contract shall
immediately bring to the attention of the other Party for mutual revision any observed
conflict between, or duplication of any contract provisions or any material omissions
from the contract.
12.2 Severability
-29-
If any contract provision is for any reason determined to be invalid, illegal or
unenforceable under any applicable law, the remaining provisions of the contract shall
remain if effect and bind the Parties; however, the Parties shall negotiate in good faith to
amend the contract to effectuate the intent of any invalid, illegal or unenforceable
provision.
12.3 Access
Farmington shall have the right to inspect any or all of Fayetteville's operations,
facilities, financial or operational records as the records relate to this contract.
Fayetteville shall have the right to inspect any or all of Farmington's operations,
facilities, financial and operational records as they relate to this contract.
12.4 No Third Party Beneficiaries
The contract is entered into by the Cities of Fayetteville and Farmington, and is
not intended to, nor does it, create any third party beneficiaries or rights in any other
person or entity.
12.5 Notices
Except as may otherwise be expressly provided, all approvals, requests, reports,
notices, communications or other materials or information required or permitted to be
made or given by a party to the other party hereunder shall be deemed to have been given
or made only if the same is reduced to writing and delivered, either personally or by
means of the United States Postal Service or other delivery service, to the Fayetteville or
Farmington representative, as the case may be, at their respective addresses as set forth
below:
If to the City of Fayetteville:
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Mayor of the City of Fayetteville
113 West Mountain Street
Fayetteville, Arkansas 72701
If to the City of Farmington:
Mayor of the City of Farmington
354 W. Main St. or P.O. Box 150
Farmington, Arkansas 72730
12.6 Amendment or Waiver
Neither this Agreement nor any provision hereof may be changed, modified,
amended or waived except by written instrument signed by the parties.
12.7 City as Public Utility
Fayetteville shall perform all work under this contract as a Public Utility. Neither
city shall be responsible for the acts or omissions of the other city's officers, agents,
employees, contractors and subcontractors. Nothing in the Agreement shall be construed
as creating a partnership or joint venture between the Cities of Fayetteville and
Farmington.
12.8 Governing Law and Venue
It is mutually understood and agreed that this contract shall be governed by the
laws of the State of Arkansas and that any cause of action for breach of this contract shall
be instituted and maintained in any court of competent jurisdiction in the County of
Washington, State of Arkansas.
12.9 Sovereign Immunity
Nothing in this contract shall be construed to waive or limit the sovereign
immunity enjoyed by both cities. Any provision that could be interpreted as a waiver or
-31-
limitation of either city's sovereign immunity is expressly rejected and invalidated to the
extent of such waiver or limitation.
12.10 Exhibits
Two exhibits: (1) RJN map of 1-1-07; and (2) Fayetteville/Farmington
Population and Cost Breakdown of 1-1-07 are attached and made a part of this contract.
IN WITNESS WHEREOF, the Mayor and City Clerk of the City of Fayetteville,
Arkansas, by authority of a resolution adopted by the City Council of the City of
Fayetteville, Arkansas, and the Mayor and City Clerk of the City of Farmington,
Arkansas, by authority of a resolution adopted by the City Council of the City of
Farmington, Arkansas, have hereunto set their hand and caused the corporation seal to be
affixed and dated this day of April 2007.
CITY OF FAYETTEVILLE
By:
DAN COODY, Mayor
ATTEST:
By:
Sondra Smith, City Clerk
By:
CITY OF FARMINGTON
ERNIE PENN, Mayor
ATTEST:
By:
Kelly Thomas, City Clerk
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(4/6/2007) Lisa Branson - Res. 61-07 Page 1
From: Lisa Branson
To: Jurgens, David
Date: 4/6/2007 9:35 AM
Subject: Res. 61-07
Attachments: 61-07 Fay -Farmington Wastewater Contract.pdf
CC: Audit; Fell, Barbara
David,
Attached is a copy of the above resolution passed by City Council, April 3, 2007. I will forward to you via interoffice mail
two of the three original agreements with Farmington and forward to Budget & Research the original budget adjustment. If
anything else is needed please let me know.
Have a good day.
Thanks.
Lisa