09-10-15 Regular Meeting of the La Porte Area Water Authority

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City of La Porte Puklic Wor6 Department rm Pstaklished 1892 Providing essential public services to the citizens of La Porte in the most efficient and cost effective manner possible. 'sex �a September 3, 2015 To. La Porte Area Water Authority Board Members From: David Mick, Public Works Director RE; Consideration of Fit" 2016.Southeast Water Purification Plant Budget Dispute On average the LPAWA purchases 1.3-billion gallons of water each year from the Southeast Houston Water Purification Plant (SEWPP). As the Managing Owner, the City of Houston prepares the annual budget for the SEWPP. The contract between the co -owners provides a process for disputing portions of the annual budget provided that. 1) niore than 50�'r'o of the plant. co -owners, with the vote weighted by the percentage of water consumed over a 12-month period, are in agreement with the dispute, and 2) the disputed line items are not necessary for the regulatory compliance, health, safety or security. Attached is summary of budget line items likely to be contested by a majority of the co -owners. The disputed amount may be as high as $0.1102/1000 gallons pending further: information from the City of .Houston. The FY 2016 LPAWA budget includes $10,000 for consulting and legal fees associated with this consideration. Staff requests that this allowance be increased to $25,000 at this time. Staff s best estimate of the worst -case cost exposure to the LPAWA in terms of legal and consulting fees is $75,000 in the event that the dispute might eventually involve litigation. Staff's recommendation is that the LPAWA Board authorize the City Manager to dispute the FY 2016 budget for the SEWPP. Mediation would be the next step provided that more than 50% of the co -owners, weighted by water consumption, all agree to the budget dispute. While unlikely, there is a potential for litigation if mediation proves to be unsuccessful. Staff also recommends that the FY 2016 LPAWA budget line item for Other Professional Services be increased by $15,000 for a revised budget of $25,000. 2963 N. 23rd St, m La Porte, Texas 77571 m (281)471-9650 rm www.laporietx.gov