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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 03/19/2019 - SECOND READING OF ORDINANCE NO, 038, 2019, AUTHORIAgenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY March 19, 2019 City Council STAFF Lance Smith, Utilities Strategic Finance Director Eric Potyondy, Legal SUBJECT Second Reading of Ordinance No, 038, 2019, Authorizing the Mayor to Execute the First Amendment to the Intergovernmental Agreement for Water Treatment Service Capacity Between the City of Fort Collins, Colorado, and the Fort Collins-Loveland Water District. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on March 5, 2019, amends the existing agreement signed in 2013 between the City and the Fort Collins–Loveland Water District (FCLWD) concerning FCLWD’s acquisition of 5 million gallons per day of water treatment capacity at the City’s Water Treatment Facility. The proposed amendment to the 2013 Agreement will allow for FCLWD to make an early payment of the entire outstanding principal associated with the financing of the Plant Investment Fee. The City, FCLWD, and their respective enterprises were all parties to the 2013 Agreement. The amendment thus likewise must be approved by both City Council and the City of Fort Collins Water Utility Enterprise Board. The FCLWD Board and the FCLWD Enterprise Board approved the proposed amendment on Tuesday, February 19, 2019. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, March 5, 2019(PDF) 2. Ordinance No. 038, 2019 (PDF) Agenda Item 10 Item # 10 Page 1 AGENDA ITEM SUMMARY March 5, 2019 City Council STAFF Lance Smith, Utilities Strategic Finance Director Eric Potyondy, Legal SUBJECT First Reading of Ordinance No, 038, 2019, Authorizing the Mayor to Execute the First Amendment to the Intergovernmental Agreement for Water Treatment Service Capacity Between the City of Fort Collins, Colorado, and the Fort Collins-Loveland Water District. EXECUTIVE SUMMARY The purpose of this item is to amend the existing agreement signed in 2013 (the “2013 Agreement”) between the City and the Fort Collins–Loveland Water District (FCLWD) concerning FCLWD’s acquisition of 5 million gallons per day (MGD) of water treatment capacity at the City’s Water Treatment Facility. The proposed amendment to the 2013 Agreement will allow for FCLWD to make an early payment of the entire outstanding principal associated with the financing of the Plant Investment Fee (PIF). The City, FCLWD, and their respective enterprises were all parties to the 2013 Agreement. The amendment thus likewise must be approved by both City Council and the City of Fort Collins Water Utility Enterprise Board. The FCLWD Board and the FCLWD Enterprise Board approved the proposed amendment on Tuesday, February 19, 2019. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION In 2013, after reviewing and negotiating new terms to the existing intergovernmental agreements (IGAs) in effect with FCLWD, the City and FCLWD were able to amend the two existing IGAs and to enter into the 2013 Agreement associated with FCLWD’s purchase of 5 MGD of treatment capacity at the City’s Water Treatment Facility. The purchase of this excess treatment capacity by the neighboring water district allowed the City to recoup some of the costs associated with the 1999 plant expansion which resulted in the excess capacity. It also allowed FCLWD to meet the growing demands for treated water within their service territory in the most cost-effective manner. At that time, FCLWD wanted the City to consider financing the associated $12,600,000 PIF. The 2013 Agreement outlined the adopted financing plan which involved an initial payment of $2,520,000 and then monthly payments of $66,524 for the next 20 years. FCLWD has met the payment terms of the 2013 Agreement to date. FCLWD reached out to City staff in late 2018 to request an amendment to the 2013 Agreement to allow FCLWD to pay the entire remaining principal in one lump sum. The amendment attached to the Ordinance was thus negotiated. Under the amendment, FCLWD would make the payment within 28 days of the amendment being effective. ATTACHMENT 1 Agenda Item 10 Item # 10 Page 2 In addition to the PIF payment, per the agreement FCLWD pays for the treatment costs associated with the actual demand on a monthly basis. The cost of this treatment is subject to adjustment associated with any rate adjustment adopted by City Council to the Water Enterprises customers. The City and FCLWD each have an enterprise that were made parties to the 2013 Agreement solely for the purposes of entering into multi-year fiscal obligations imposed under the 2013 Agreement. The 2013 Agreement was thus approved by both City Council by ordinance and the Board of the Fort Collins Water Utility Enterprise by resolution. The proposed amendment to the 2013 Agreement is consequently proposed to be approved by City Council and the Board of the Fort Collins Water Utility Enterprise in the same manner. CITY FINANCIAL IMPACTS The proposed amendment will eliminate the steady annual PIF revenue through 2033 of $800,000 associated with the 2013 Agreement and instead result in a one-time PIF revenue of over $8,000,000 in 2019. This unanticipated one-time revenue may allow for the delay in the need to issue debt in the Water Enterprise for near term capital needs. -1- ORDINANCE NO. 038, 2019 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE MAYOR TO EXECUTE THE FIRST AMENDMENT TO THE INTERGOVERNMENTAL AGREEMENT FOR WATER TREATMENT SERVICE CAPACITY BETWEEN THE CITY OF FORT COLLINS, COLORADO AND THE FORT COLLINS-LOVELAND WATER DISTRICT WHEREAS, the City is a home rule municipality that owns and operates a water utility and has a water enterprise; and WHEREAS, the Fort Collins-Loveland Water District (“District”) is a special district organized under Colorado law that also owns and operates a water utility that provides treated water service in portions of south Fort Collins and has a water enterprise; and WHEREAS, pursuant to Resolution No. 009 of the Board of the City of Fort Collins Water Utility Enterprise Authorizing the President of the Board to Execute an Intergovernmental Agreement for Water Treatment Services with the Fort Collins-Loveland Water District, the Fort Collins-Loveland Water District Enterprise, and the City of Fort Collins, dated October 1, 2013, and Ordinance No. 136, 2013 of the Council of the City of Fort Collins Authorizing the Mayor to Execute an Intergovernmental Agreement for Water Treatment Services with the Fort Collins- Loveland Water District, the Fort Collins-Loveland Water District Enterprise, and the City of Fort Collins, dated October 15, 2013, the City, the District, and their respective enterprises entered into the Intergovernmental Agreement for Water Treatment Service Capacity Between the City of Fort Collins, Colorado and the Fort Collins-Loveland Water District, dated November 1, 2013 (“Agreement”), pursuant to which the City treats water for the District subject to the District making certain payments to the City; and WHEREAS, Paragraph 7.B of the Agreement concerns payments by the District to the City for the Water Plant Investment Fee, which are due monthly and include both principal and interest; and WHEREAS, the District has been making all payments required under Paragraph 7.B of the Agreement; and WHEREAS, the District now desires to pre-pay the outstanding principal of the remaining balance and thereby no longer be obligated to make further payments of the interest and principal under Paragraph 7.B of the Agreement; and WHEREAS, City staff and District staff have negotiated the First Amendment to the Intergovernmental Agreement for Water Treatment Service Capacity Between the City of Fort Collins, Colorado and the Fort Collins-Loveland Water District, attached hereto as Exhibit “A” (“First Amendment”), which would authorize such prepayment. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: -2- Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the Mayor is hereby authorized to execute the First Amendment substantially in the form of Exhibit “A”, with such modifications and additional terms and conditions as the Mayor, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City or effectuate the purposes of this ordinance. Introduced, considered favorably on first reading, and ordered published this 5th day of March, A.D. 2019, and to be presented for final passage on the 19th day of March, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 19th day of March, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk EXHIBIT A