HomeMy WebLinkAboutO-2001-2383-A
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ORDIRAHCE NO. 2000-23.g-A
All ORDINANCE APPROVING AND AU'J.'JIORIZING AIIDDHEN'l'S TO A COST SHARING
AGREEHEHT ON TBE SOUTHEAST WATER PURIPlCATION PLANT BETWBD THE LA
PORTE AREA WATER AUTHORITY AIm THB CITY 01' BOUSTON; MAKING VARIOUS
PINDINGS AND PROVISIONS RELATING TO THE SUBJECT; PINDING COXPLIANCE
WITH TBE OPEN MEETINGS LAW; AND PROVIDING All EPPECTIVE DATE BEREOP.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council hereby approves and authorizes
the contract, agreement, or other undertaking described in the
title of this ordinance, in substantially the form as shown in the
document which is attached hereto and incorporated herein by this
reference. The City Manager is hereby authorized to execute such
document and all related documents on behalf of the City of La
Porte. The City Secretary is hereby authorized to attest to all
such signatures and to affix the seal of the City to all such
documents.
Section 2 .
The City Council officially finds,
determines, recites, and declares that a sufficient written notice
of the date, hour, place and subject of this meeting of the City
Council was posted at a place convenient to the public at the City
Hall of the ci ty for the time required by law preceding this
meeting, as required by the Open Meetings Law, Chapter 551, Texas
Government Code; and that this meeting has been open to the public
as required by law at all times during which this ordinance and the
subject matter thereof has been discussed, considered and formally
acted upon.
The City Council further ratifies, approves and
confirms such written notice and the contents and posting thereof.
Section 3. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
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ORDINANCE NO. 2000-23Sa-A
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PASSED AND APPROVED, this 22nd day of January, 2001.
ATTEST:
~ll~
Mart a A. Gil ett
City Secretary
AP~d~
Knox W. Askins
City Attorney
~ LA PORTE
By: ' _~~
N rman L. Malone
Mayor
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ARTICLE 3
OPERATION AND i\IAINTENANCE OF THE PLANT
3.1 In General
3.1.1 The Participants, as co-owners of the Plant, understand that, except as otherwise
specified herein, the Managing Participant will serve as managing owner for construction at the Plant
I.
as well as for the maintenance and operation of the Plant and shall have charge of its business and
general conduct. (The equity ownership for each Participant is set forth in Participant's Exhibit
II.)
3.1.2 The Participants shall have an interest in the conduct, affairs and decisions of the
Plant in proportion to the Panicipant's capital contribution. The Participants shall have the authority
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to enter the Plant premises upon proper identification provided to Plant security personnel.
3.1.3 The Participants are willing to make capital contributions and 'payment of O&M
Expenses as specified herein on the basis that the Managing Participant as managing owner agrees
to use its best efforts to assure proper. construction, operation and maintenance of the Plant and its
structures, equipment and facilities, and proper conduct of all employees, agents or contractors, to
pay debts when due and to obey all applicable federal, state or local regulations.
3.2 Relationship of Participants
3.2.1 The relationship of the Participants is of a fiduciary character. The Managing
Participant is trustee with respect to the Participants, with respect to the operation of the Plant and
care of all joint property specified herein. Each Participant shall act in the highest good faith toward
the other in conducting the operation of the Plant as well as their respective duties under this
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If the Managing Participant undenakes additional expansions of the Plant ("Other Projects").
any Participant shall have the right to purchase additional Demand, Pumping and/or Distribution
Allocations as such Participant desires out of such expansion by paying Managing PilIticipanr its pro-
rata share of the cost for such expansion as well as unreimbursed original capital costs (if any) as
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shown in Exhibits "C-2," "C-3" and "D-2,"\and executing an amendment to this Agreement affirming
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Participant's obligation to make payment for construction of the Other Project and the Managing
Participant's obligation to construct the expansion and operate the same generally as provided herein
for the PI.ant. Provided, however, in the event the totaladditiona' Demand, Pumping andlor Distribution
Allocations requested by the Participants is greater than the proposed expansion, then each Participant
shall have the option to tak~ a percentage share of the Demand, Pumping andlor Distribution Allocation
in the expansion at least equal to its then existing Demand, Pumping andlor Distribution Allocation
Factor. This option must be exercised by notice to the Managing Participant during the 150 day notice
period described below.
The Managing Participant shall give 150 days' advance written notice to Participants of any
proposed expansion of the Plant. At any time during the 150-day notice period, any Participant
desiring to purchase capacity in the expansion must give the Managing Participant written notice of
intent to purchase additional Demand, Pumping and/or Distribution Capacity in such expansion.
The Managing Participant and Participants agree, in making any such amendment, to act timely
and in good faith in order to permit an orderly enlargement or ~.xpansion of the Plant for the lowest
cost reasonably obtainable without causing undue delay.
The Managing PilIticipant reserves the right to charge its standard rates for untre:lted water for
water produced by Other Projects in lieu of the raw water component of the O&M Expense.
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Participant shall engage its then-current independent certified public accounting firm to audit the
accounting of costs. As soon as the firm has completed the audit, the Managing Participant shall
submit the audited accounting to the Participants. The Managing Participant and Participants
agree to "true-up" the previo,:!s payments made for services during the fiscal year such that each
Participant who has underpaid will make iimely payment of all O&M Expenses owed in the next
monthly billing following the audit, and the Managing Participant agrees to give credit to each
Participant who has overpaid O&M Expense for the fiscal year, such credit to be given in the
monthly billing following the audit.
4.2.4 The Managing Participant agrees to provide the independent auditor all expense,
meter readings and cost data required for the audit, including any documents or records available
to Participants under this Agreement.
4.2.5 The audit must include an itemization for each Participant of all costs and meter
recordings used to compute the O&M Expenses.
4.3 O&M Exoense Calculations
For the purposes of this Agreement the yearly O&M Expense for each Participant, except
the City of Pasadena and the LaPorte Area Water Authority, is computed according to the
following formula below. (Pasadena's O&M Expense is the same as below. except replace
Exhibit "E" with Exhibit "E Pasadena" and eliminate factor "G" in the formula; LaPorte's
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O&M Expense is the same as below except replace Exhibit "E" with Exhibit "E LaPorte Area
\Vater Authority" and eliminate factor "G" in the formula.)
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other evidences of indebtedness issued to finance the capital cost of the transmission
lines.
"H" is .025 or such smaner number as necessary to fund the Contingency Reserve.
"f' is the Participant's Demand Allocation Factor.
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4.4 Contin2encv Reserve
The Managing Participant will maintain a separate interest-bearing account to include all
funds generated from O&M Expense billings to the Participants for a Contingency Reserve,
which shall not exceed $1,000,000. The Managing Participant may use funds from the
Contingency Reserve to r~imburse itself for (1) emergency repairs, (2) Major Replacements
costing in excess of $500,000 for which the Managing Participant has not been reimbursed
within 270 days, or (3) difference between actual O&M Expenses incurred and O&M ~xpenses
paid on basis of Annual Budget. The Managing Participant shall provide an accounting for all
expenditures from the Contingency ~~serve with its monthly invoice to the Participants.
4.5 Failure to Pav When Due
Should a Participant fail to tender payment within thirty (30) days of invoice of any O&M
Expense (or any part thereof) or should the Managing Participant fail to refund any overpayment
to a Participant within thirty (30) days of the date due, interest thereon shall accrue at the rate of
ten percent (10%) per annum from the date due until paid.
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REQUEST FOR CITY COUNCIL AGENDA ITEM
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Department: Public Works
Appropriation
Source of Funds:
Account Number:
Report:
Resolution:
Ordinance: XX
Amount Budgeted:
Exhibits:
Ordinance No. 2000-2383 - A
Amount Requested:
Exhibits:
Letter from City of Houston Leeal Dept.
Budgeted Item: YES NO
Exhibits:
SUMMARY & RECOMMENDATION
The Cost Sharing Agreement Southeast Water Purification Plant (Restated and Amended) was
approved by the La Porte Area Water Authority and the La Porte City Council on February 21,
2000 Goint meeting). All Participants, with the exception of Pasadena, approved the Agreement
during that time. Pasadena did not have representatives present during the contract negotiations,
and refused to approve the Agreement until they had a chance to review and understand.
Recently, the City of Pasadena approved the Agreement, with changes. The City of Houston has
requested that the Participants amend their Agreements to reflect the changes made by Pasadena.
The changes are attached to the ordinance, and highlighted in bold. The proposed changes are
minor, and do not materially alter the basic Agreement. The new agreement does not change any
costs associated with the Agreement. Also attached is a letter from the City of Houston's Legal
Department explaining the changes.
The La Porte Area Water Authority met on January 16,2001 and approved the amended
Agreement. The Authority's enabling legislation requires the La Porte City Council to approve
all contracts entered into by the Authority.
Action Required bv Council: Approve Ordinance No. 2000-2383-A authorizing the City Manager to
execute the Cost Sharing Agreement Southeast Water Purification Plant (Restated and Amended).
Approved for City Council A2enda
(;?J~ T. \--\~
Robert T. Herrera, City Manager
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DUE TO THE VOLUME OF THIS CONTRACT
ONLY THE AMENDED PAGES ARE INCLUDED.
YOU CAN REVIEW THE ENTIRE DOCUMENT IN THE
CITY SECRETARY'S OFFICE
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CITY OF HOUSTON
Legal Department
Post Office Box 1562 Houston, Texas 77251-1562 713/247-2000
Lee P. Brown, Mayor
CRY COUNCIL MEMBERS: Bruce Tatro Carol M. Galloway Mark Goldberg Jew Don Boney. Jr. Rob Todd Mark A Ellis Bert Keller Gobriel Vasquez
John E. Castillo Annlse D. Porker Gordon Quan Orlando Sanchez Chris Bell Carroll G. Robinson CRY CONTROLLER: Sylvia R Gorcla
Anthony W. Hall, Jr.
City Attorney
November 1, 2000
Steve Gillett
Public Works Director
City Of La Porte
P.O. Box 1115
Laporte, Texas 77572
RE: Proposed Restated Cost Sharing Agr~ement
Dear Mr. Gillett:
The Department of Public Works has requested that I give some additional explanation for
the proposed changes in the Southeast Plant Restated Cost Sharing Agreement, which
representatives of Houston and the other participants agreed to in February of this year.
An inherent problem with a negotiation process that it involves only representatives of the
parties and that the parties themselves may fail to approve the agreement reached by the
representatives. In the case of Southeast Plant negotiations, apparently the results of the
negotiations and workshops held in the winter of 1999-2000 were not conveyed to decision makers
of City of Pasadena.
During the Summer of 2000, representatives of Houston and Pasadena met on several .
occasions and agreed to four minimal changes to the contract. These changes are either favorable
to all participants or relate to the location of Pasadena's Point or Delivery. They are as follows:
Page 15: Pasadena had requested the addition of a statement at Paragraph 3.1.1
setting out the equity ownership of each Participant. This has been done by adding
a reference in the Paragraph to each Exhibit II, which specifies the percentage of
equity ownership.
Sf!IWia 7~ ~tUQ.
@ PrIn'8d on Ilecy_ Pap.
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Page 21: Pasadena requested language guaranteeing each Participant a pro-rata
share of capacity in a Plant expansion equal to its Demand Allocation Factor for
the Plant. Representatives of the cities arrived at language that gives each
Participant the option to participate pro-rata in the expansion if the Plant cannot be
expanded enough to meet all Participants I requirements. This new option is in
addition to the right of each Participant to purchase whatever it needs out of any
expansion that is unlimited, i.e., as large as the Participants as a group are willing
to finance.
Page 28, Exhibits B, F, E Pasadena, I Pasadena, IT Pasadena, and IT Houston:
Changes at these locations of the Contract relate to the decision by Pasadena to take
water only from the head works of the Southeast Plant. Therefore, Pasadena will
not be paying for added capacity in the Treated Water Transmission Facilities or
for maintenance of the Treated Water Transmission Facilities.
Page 30: This change was not requested by Pasadena. However, we noticed that
the definition of "H" needed to be modified to fit the formulation page 29. The
intent of the Participants is that the periodic payments for operation and
maintenance include an amount not to exceed 2 1h % for the Reserve Fund.
We believe these revisions are beneficial to all Participants, and in keeping with our mutual
decision to have all Participants sign the same agreement, we are asking all parties to approve this
revised document. If you have any questions, please contact me at 713-247-1465.
P.S. After the Participant meeting of October 18, a Friendswood representative contracted me
and stated that page two of its Exhibit I map was missing from the exhibit package that was
distributed at the meeting. I have attached hereto both pages of Friendswood Exhibit I.
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E. W. Beauchamp
Sr. Assistant City Attol1ley
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Ben Simmons
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