RE 2010-0713.1RESOLUTION f,011) - a 713.1
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COPPELL,
TEXAS, APPROVING A MEMORANDUM OF AGREEMENT AND
AMENDING THE CONTRACT BETWEEN THE CITY OF DALLAS AND
THE CITY OF COPPELL FOR THE PURCHASE OF WHOLESALE
TREATED WATER; AUTHORIZING THE CITY MANAGER TO
EXECUTE SAID AGREEMENT; PROVIDING FOR THE REPEAL OF
ANY AND ALL RESOLUTIONS IN CONFLICT; PROVIDING A
SEVERABILITY CLAUSE; AND PROVIDING FOR AN EFFECTIVE
DATE.
WHEREAS, for over fifty years the City of Dallas ( "Dallas ") has been a regional
provider of drinking water to both the citizens of Dallas and wholesale customers located within
Dallas' established service area in North Central Texas; and,
WHEREAS, Dallas, acting through its Water Utilities Department ( "DWU "), provides
wholesale treated water service to Coppell; and,
WHEREAS, Dallas' wholesale treated water rates are calculated and adopted in
accordance with the terms and conditions of the 1979 Memorandum of Agreement ("1979
MOA "), which agreement settled a rate dispute lawsuit between Dallas and its Wholesale
Treated Water Customers regarding the wholesale treated water rate - setting methodology; and,
WHEREAS, the 1979 MOA is attached to all of Dallas' wholesale treated water
contracts; and,
WHEREAS, although both Dallas and the City of Coppell agree that the 1979 MOA has
served the rate - setting methodology process well over the past 30 years, the 1979 MOA expired
on December 17, 2009, and a new agreement should be adopted; and,
WHEREAS, the MOA renegotiation process took place over many months during 2009
and 2010 and involved a number of meetings between Dallas and its wholesale customers to
discuss possible changes, revisions, and alternatives to the 1979 MOA; and,
WHEREAS, Dallas and its Wholesale Treated Water Customers have reached consensus
on a new 30 -year memorandum of agreement ( "New MOA ") for wholesale treated water rate -
setting methodology; and,
WHEREAS, the City Council of the City of Dallas has considered and approved the
New MOA on May 12, 2010, and Dallas has requested that the governing bodies of its
Wholesale Treated Water Customers also approve the New MOA; and,
WHEREAS, approval of the New MOA would be in the best interest of the City of
Coppell and its citizens;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF COPPELL, TEXAS:
Page 1
TM 43875.2.6810
SECTION 1. That the Wholesale Treated Water Contract, MOA, for rate - setting
methodology as reflected in Exhibit "1" hereof, attached hereto and incorporated herein by
reference for all purposes, is hereby in all things approved, and that the City Manager is hereby
authorized to execute this agreement as provided herein.
SECTION 2. All resolutions of the City of Coppell heretofore adopted which are in
conflict with the provisions of this resolution be, and the same are hereby repealed, and all
resolutions of the City of Coppell not in conflict with the provisions hereof shall remain in full
force and effect.
SECTION 3. If any article, paragraph, subdivision, clause or provision of this
resolution, as hereby amended, be adjudged invalid or held unconstitutional for any reason, such
judgment or holding shall not affect the validity of this resolution as a whole or any part or
provision thereof, as amended hereby, other than the part so declared to be invalid or
unconstitutional.
SECTION 4. This resolution shall take effect immediately from and after its passage,
and it is accordingly so resolved.
DULY PASSED by the City Council of the City of Coppell, Texas, this the ZJ 'A&y of
010.
APPROVED:
BOB MAHALIK, MAYOR PRO TEM
ATTEST:
SECRETARY
APPROVE S O FORM:
ROBERT E. HAGER, CIT ATTORNEY
Page 2
TM 43875.2.6810
Memorandum of Agreement (MOA)
for
Wholesale Treated Water
Preamble: The 1979 MOA settled a rate dispute lawsuit between Dallas and its
Wholesale Treated Water Customers regarding the wholesale treated water rate - setting
methodology ( "rate- setting methodology'), and as such has served the rate - setting
methodology process well over the past 30 years. This amended agreement recognizes
that changes to the rate- setting methodology have occurred over this timeframe, and
incorporates consensus changes between Dallas and its Wholesale Treated Water
Customers, and as such will serve to govern the rate - setting methodology for the next 30
years.
Purpose Dallas is a regional water provider currently providing treated water service
to Wholesale Treated Water Customers located within Dallas' established service area
in North Central Texas. The purpose of this agreement is to establish the rate - setting
methodology and formalize the mutual expectations of Dallas and its Wholesale
Treated Water Customers with respect to rate - setting methodology. This rate - setting
methodology will provide the basis for determining wholesale treated water rates after
its effective date.
2. Applicability This agreement is subject to all applicable orders, laws and regulations
of the City of Dallas, State of Texas and the United States. If any state or federal
governmental agency having jurisdiction disapproves any material part of this
agreement during the term, the agreement is subject to cancellation by any party and
renegotiation by Dallas and its Wholesale Treated Water Customers.
3. Water System Policy Dallas operates a water system to provide a regulatory
compliant, safe and reliable water supply, adequate for the current water use and
future growth of Dallas and its Wholesale Treated Water Customers, and to avoid
subsidization of any class of customers.
4. Definitions A glossary which defines applicable cost of service terms is located in
Appendix A of this MOA. Cost of service terms may be added, or the definition of an
existing term amended, from time to time, without the necessity of amending this
MOA. Additions and amendments will be reflected in the appendices attached to the
annual cost of service studies.
5. Responsibilities
a. Dallas is responsible for planning, financing, constructing, operating and
maintaining the water supply system to the extent permitted by available water
revenues, for developing cost of service information to support wholesale rate
changes, and for informing Wholesale Treated Water Customers of wholesale
rate changes and other pertinent utility information.
Page 1 of 31
b. Wholesale Treated Water Customers are responsible for keeping Dallas
informed concerning their projected water supply needs and operating
requirements for planning, managing and maintaining their retail systems to
promote water conservation and efficient system operation, and for paying
adequate rates to Dallas to cover the costs incurred by Dallas in providing
service to them.
6. Rate - Setting Methodoloqv for Wholesale Treated Water
a. Revenue requirements are to be determined on a utility basis, at original cost,
including construction work in progress.
b. Dallas is to receive a rate of return on rate base equal to embedded interest
rate on water revenue bonds, commercial paper and other debt instruments
plus 1.5 percent, which is agreed to be an adequate return to cover its costs
and risks and as compensation for ownership and management responsibilities.
c. All existing and future water supplies and associated facilities are to be
included in a common water rate base. Wholesale Treated Water Customers,
as a class, shall pay their proportionate share of costs for water supply,
including that portion held for future use. For the 2010 cost of service study,
wholesale treated water customers shall be allocated a percentage of total
reservoir costs based on a 10 -year future use percentage calculated using a
24 -year linear regression. This percentage shall be increased or decreased in
direct proportion to future changes in actual usage in conjunction with the cost
of service studies. (Dallas will pay the balance of water supply costs which are
not allocated to Wholesale Treated Water Customers under the cost of service
allocation.) Allocation of costs other than water supply costs, including but not
limited to operations and maintenance costs, shall be based on current use.
d. Direct reuse of treated wastewater effluent is an Inside Dallas only cost and will
be allocated to Inside Dallas customers only. Indirect reuse of treated
wastewater effluent for lake augmentation will be included as a cost and as a
benefit common -to -all.
e. There will be a two part wholesale treated water rate (volume and demand),
with allocation of costs in rate design so as to encourage conservation and
efficient operation of the water systems of Dallas and its Wholesale Treated
Water Customers.
f. At the end of ten years from the Effective Date of the MOA, and each ten years
thereafter, the City of Dallas or a majority of the Wholesale Treated Water
Customers who are parties to this agreement may request a review of the
above rate - setting methodology; and if so, the methodology shall be subject to
renegotiation.
Page 2 of 31
7. Wholesale Treated Water Rates After the effective date of this MOA, Dallas will
prepare a cost of service study to support wholesale treated water rates and
allocations, and will submit it to the Wholesale Treated Water Customers to review
and accept prior to submission to the Dallas City Council. Except as noted herein, the
cost of service rate - setting principles will adhere to the 2009 cost of service study,
including changes that have been identified and implemented since that date.
8. Effective Date This MOA is effective as of December 17, 2009.
9. Term The term of this MOA is thirty (30) years from its effective date, or until
December 16, 2039, and for such additional periods as the parties may mutually agree
upon.
10. Approved changes Changes in the rate - setting methodology or other conditions may
be made by mutual agreement of all parties at any time.
11. Individual contracts This MOA is considered a replacement of and supersedes the
1979 MOA and shall automatically be incorporated and become a part of all existing
wholesale treated water contracts without any further action or approval on the part of
the City or of the Wholesale Treated Water Customers. Rate - setting methodology for
individual contracts for wholesale treated water service between Dallas and its
Wholesale Treated Water Customers will be consistent with this MOA. Dallas and its
Wholesale Treated Water Customers will honor their existing water service contracts
until such time as the contracts are amended or superseded by a new contract.
Contracts for new Wholesale Treated Water Customers will be consistent with this
MOA.
12. Recognition of MOA Participants The MOA renegotiation process took place over
many months during 2009 and 2010 and involved a number of meetings to discuss
possible changes, revisions, and alternatives to the existing MOA. To that end, the
City of Dallas would like to thank the individuals listed below for their outstanding input
and contributions in the MOA update and renegotiation process, without whose help
this revised document would not have been possible. Participants are listed in
attached Appendix B.
13. Authorization to Act: By their signatures below, the representatives of Dallas and the
Wholesale Treated Water Customers state that they are authorized to enter into this
MOA. Dallas and the Wholesale Treated Water Customers will each provide
documentation that this MOA has been authorized by its respective governing body.
14. Counterparts This MOA may be executed in any number of counterparts, each of
which shall be deemed an original and constitute one and the same instrument.
Page 3 of 31
EXECUTED as of the / day of �_ , 2010, on behalf of Dallas by its City
Manager, duly authorized by Resolution No. /0•/23 adopted on the Z2�D day of
maad , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF DALLAS
THOMAS P. PERKINS, JR. MARY K. SUHM
City Attorney City Manager
g BY +Aistant � L.._
Assistant City Attorney ed +to dyAttorney City Manager
Page 4 of 31
EXECUTED as of the day of , 2010, on behalf of the Town of
Addison by its City Manager, duly authorized by Resolution No. , adopted
on the day of , 2010, and approved as to form by its City
Attorney.
TOWN OF ADDISON
0
Ron Whitehead, City Manager
ATTEST:
APPROVED AS TO FORM:
By: By:
Lea Dunn, City Secretary John Hill, City Attorney
Page 5 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Carrollton,
Texas, by its City Manager, duly authorized by Resolution No. adopted on
the day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF CARROLLTON, TEXAS
M.
City Manager
City Attorney
ATTEST:
M
City Secretary
Page 6 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Cedar Hill,
Texas, by its Mayor, duly authorized by Resolution or Ordinance No. ,
adopted on the day of , 2010 and approved as to form by its City
Attorney and City Manager.
CITY OF CEDAR HILL, TEXAS
ROB FRANKE, MAYOR
:1
Rob Franke, Mayor
ATTEST:
Ron McFarland, Attorney
Attorney
Lyn Hill, Secretary
fflo
Secretary
Page 7of31
EXECUTED as of the day of , 2010, on behalf of the City of Cockrell
Hill, Texas, by its Mayor, duly authorized by Resolution No. , adopted on the
day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM:
[37
Robert F. Brown, City Attorney
ATTEST:
BY
Hector M. Saenz, City Administrator
CITY OF COCKRELL HILL, TEXAS
BY
Luis D. Carrera, Mayor
Page 8 of 31
EXECUTED as of the
Supply Corporation by its
, adopted on the
ATTEST:
BY
Printed Name:
Title:
day of
day of
2010, on behalf of the Combine Water
duly authorized by Resolution No.
, 2010.
COMBINE WATER SUPPLY
CORPORATION
ru
Printed Name:
Title: President
Page 9of31
EXECUTED as of the /•31% day o 2010, on behalf of the City of Coppell,
Texas, by its City M nager, duly au zed Resolution No. W adopted on
the 1�day of , 2 and roved as to form by its Attorney.
AGREED AS,XA FORM: CITY OF COPPELL, TEXAS
.
ATTEST:
•• -
Page 10 of 31
EXECUTED as of the day of , 2010, on behalf of the D /FW
International Airport Board by its , duly authorized by Resolution No.
adopted on the day of , 2010 and approved as to form
by its Board Attorney.
APPROVED AS TO FORM: DALLAS -FT WORTH INTERNATIONAL
AIRPORT
ma
Board Attorney
ATTEST:
IM
Secretary
AM
Printed Name:
Title:
Page 11 of 31
EXECUTED as of the day of , 2010, on behalf of the Dallas County
Water Control and Improvement District No. 6 by its General Manager, duly authorized by
Resolution No. , adopted on the day of , 2010.
DALLAS COUNTY WATER CONTROL
AND IMPROVEMENT DISTRICT NO. 6
Printed Name:
Title: General Manager
Page 12 of 31
EXECUTED as of the day of , 2010, on behalf of the City of DeSoto,
Texas, by its Mayor, duly authorized by Resolution No. , adopted on the
day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF DESOTO, TEXAS
L1
ATTEST:
M
BY
City Attorney Carl Shannon, Mayor
City Secretary
Page 13 of 31
EXECUTED as of the day of , 2010, on behalf of the City of
Duncanville, Texas, by its City Manager, Kent Cagle, duly authorized by Resolution or
Ordinance No. , adopted on the day of 2010 and
approved as to form by its Attorney.
APPROVED AS TO FORM: CITY OF DUNCANVILLE, TEXAS
Robert HagepAttomey
ATTEST:
in
Dara Crabtree, City Secretary
Kent Cagle, City Manager
Page 14 of 31
EXECUTED as of the day of , 2010, on behalf of the Ellis County
Water Control and Improvement District No. 1, by its Administrator, duly authorized by
Resolution No. , adopted on the day of , 2010.
ATTEST:
BY
Printed Name:
Title:
ELLIS COUNTY WATER CONTROL
AND IMPROVEMENT DISTRICT NO.1
y
Printed Name:
Title:
Page 15 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Farmers
Branch, Texas, by its City Manager, duly authorized by Resolution No.
adopted on the day of , 2010 and approved as to form by its City
Attorney.
APPROVED AS TO FORM: CITY OF FARMERS BRANCH, TEXAS
Kevin Laughlin, City Attorney
Gary D. Greer, City Manager
ATTEST:
M
Cindee Peters, City Secretary
Page 16 of 31
EXECUTED as of the day of , 2010, on behalf of the Town of
Flower Mound, Texas, as duly authorized by Resolution No. , adopted
on the day of 2010 and approved as to form by the Town
Attorney.
TOWN OF FLOWER MOUND, TEXAS
APPROVED:
BY
Melissa D. Northern, Mayor
ATTEST:
Paula J. Paschal, Town Secretary
APPROVED AS TO FORM AND LEGALITY:
Terrence S. Welch, Town Attorney
Page 17 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Glenn
Heights, Texas, by its City Manager, duly authorized by Resolution No. ,
adopted on the day of , 2010 and attested to by its City Secretary.
ATTESTED: CITY OF GLENN HEIGHTS, TEXAS
BY BY
City Secretary Jacqueline L. Lee, City Manager
Printed Name:
Page 18 of 31
EXECUTED as of the
Prairie, Texas, by its
adopted on the
Attorney.
day of , 2010, on behalf of the City of Grand
City Manager, duly authorized by Resolution No. ,
day of , 2010 and approved as to form by its
APPROVED AS TO FORM:
Don Postell, City Attorney
ATTEST:
BY
Cathy DiMaggio, City Secretary
CITY OF GRAND PRAIRIE, TEXAS
M
Tom Hart, City Manager
Page 19 of 31
EXECUTED as of the day of _ , 2010, on behalf of the City of Hutchins,
Texas, by its Mayor, duly authorized by Resolution No. , adopted on the
day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF HUTCHINS, TEXAS
L-.'/
City Attorney
BY
Artis Johnson, Mayor
ATTEST:
BY
City Secretary
Page 20 of 31
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF IRVING, TEXAS,
on , 2010.
HERBERT A. GEARS
MAYOR
ATTEST:
Shanae Jennings
Acting City Secretary
APPROVED AS TO FORM:
Charles R. Anderson
City Attorney
Page 21 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Lancaster,
Texas, by its City Manager, duly authorized by Resolution No. , adopted on
the day of , 2010 and approved as to form by its City Attomey.
APPROVED AS TO FORM:
Robert E. Hagar, City Attorney
ATTEST:
M
Dolle K. Downe, City Secretary
CITY OF LANCASTER, TEXAS
go
Rickey C. Childers, City Manager
Page 22 of 31
EXECUTED as of the day of , 2010, on behalf of The City of
Lewisville, Texas, by its City Manager as authorized by Resolution adopted on the
day of , 2010 by a vote of to
CITY OF LEWISVILLE, TEXAS
CM
Claude King, City Manager
ATTEST:
Julie Heinze, City Secretary
APPROVED AS TO FORM:
Ronald J. Neiman, City Attorney
Page 23 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Ovilla,
Texas, by its Mayor, duly authorized by Resolution No. , adopted on the
day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF OVILLA, TEXAS
City Attorney
Im
Mayor
ATTEST:
City Secretary
Page 24 of 31
EXECUTED as of the day of , 2010, on behalf of the City of Red Oak,
Texas, by its Mayor, duly authorized by Resolution No. , adopted on the
day of , 2010 and approved as to form by its City Attorney.
APPROVED AS TO FORM: CITY OF RED OAK, TEXAS
City Attorney
M-
Mayor
ATTEST:
City Secretary
Page 25 of 31
EXECUTED as of the day of , 2010, on behalf of the City of
Seagoville, Texas, by its City Manager, duly authorized by Resolution No. ,
adopted on the day of , 2010 and approved as to form by its City
Attorney.
APPROVED AS TO FORM: CITY OF SEAGOVILLE, TEXAS
14
City Attorney
I yA
City Manager
ATTEST:
BY
City Secretary
Page 26 of 31
EXECUTED as of the day of , 2010, on behalf of The Colony, Texas,
by its Mayor, duly authorized by Resolution No. , adopted on the day of
, 2010 and approved as to form by its City Attorney.
ATTEST:
rfla
CITY OF THE COLONY, TEXAS
Christie Wilson, City Secretary Joeseph McCourry, Mayor
APPROVED AS TO FORM:
Jeff Moore, City Attorney
Page 27 of 31
APPENDIX A
GLOSSARY OF TERMS
Allocation - The apportioning of the common -to -all cost of service
Common-To-All - Facilities, and their associated cost, that are dedicated to providing
treated water service to both Dallas and Wholesale Treated Water Customers.
Construction Work in Progress (CWIP) - The utility's investment in facilities under
construction but not yet dedicated to service.
Demand Costs - Costs associated with providing facilities to meet peak rates of use, or
demand, placed on the system by the customers.
Depreciation - The wearing out or loss in service value of property used in utility
operations.
Depreciation Rate - The rate of loss in service value, based on the expected service life
of property.
Depreciation Reserve - The accumulated amount of the loss in service value of property.
Direct Reuse — The use of treated wastewater effluent from Dallas' wastewater treatment
plants for non - drinking water purposes within the boundaries of the City of Dallas.
Embedded Interest Rate - Annual interest expense expressed as a percentage of
average debt.
Indirect Reuse — The use of treated wastewater effluent from Dallas' wastewater
treatment plants for raw water supply augmentation purposes.
Inside Dallas - The group of retail treated water service customers, comprised of
residential, commercial and industrial customers served by Dallas Water Utilities.
Interest Expense - Payment made for the use of borrowed funds.
Materials & Supplies — Assets in inventory which are required to meet current
obligations and service responsibilities of the utility.
Maximum Day Demand - The maximum demand placed on the system over a 24 -hour
period.
Maximum Hour Demand - The maximum demand placed on the system over a
60- minute period on the system's maximum day.
MGD - Million gallons per day flow rate.
Operating Expenses - Operation and maintenance charges incurred in operating a
utility.
Page 28 of 31
APPENDIX A
GLOSSARY OF TERMS
(PAGE 2 OF 2)
Original Cost - The amount of investment in facilities when first put into service.
Rate Base - Total investment dedicated to providing utility service.
Rate of Return - The percentage of return authorized to be earned on an investment
(e.g. a rate base).
Reservoir Capacity - The amount of water available from a reservoir.
Reservoir Costs - Costs incurred in acquiring and maintaining an untreated water supply
system.
ROFC - Rate of flow controller. A device limiting instantaneous flow rate to a specific
amount. Instantaneous flow rate for rate setting purposes is a per day setting.
Standby Service - Connection to wholesale treated water customer which is not normally
used, excluding bypass lines which are required by Dallas Water Utilities as a part of an
active metering facility.
Test Period (or Test Year) - Selected to be representative of the period of time over
which the new rates are expected to be in effect.
Treated Water - Raw water that has passed the purification process.
Unaccounted for Water - Water produced but not billed to customers that result from
metering inaccuracies, system leakage, and miscellaneous unmetered uses.
Volume Costs - Costs that tend to vary directly with the amount of water produced and
sold.
Water Supplies and Associated Facilities — Dallas' water supply system, including, but
not limited to, all reservoirs, indirect reuse water, and all system infrastructure.
Wholesale Cost of Service - The sum total of: (1) operating expense, (2) depreciation
expense, and (3) return on investment. Depreciation expense and rate of return are on
the original cost of investment less accumulated depreciation, capitalized interest and
contributed capital.
Wholesale Treated Water Customers — The group of water customers of the City of
Dallas which currently have a wholesale treated water contract with Dallas.
Working Capital - Assets (funds) which are required to meet current obligations and
service responsibilities of the utility.
Page 29 of 31
Page 30 of 31
APPENDIX B
MOA WORKING GROUP
Addison:
Randy Moravec
Lauren Clark
Carrollton:
Bob Scott
Lori Iwanicki
David Gaines
Cedar Hill:
Ruth Antebi -Guten
The Colony:
Tod Maurina
Coppell:
Chad Beach
Kim Tiehen
Dallas Fort Worth Airport:
Jerry Dennis
Dallas County W.C. &I.D. #6:
Robert Rodriquez
Red Taylor
William Freeman
Denton:
Tim Fisher
DeSoto:
Isom Cameron
Tom Johnson
Duncanville:
Frank Trando
Richard Summerlin
Dennis Schwartz
Farmers Branch:
Charles Cox
Mark Pavageaux
Flower Mound:
Chuck Springer
Kenneth Parr
Glenn Heights:
Judy Bell
Grand Pralrie:
Ron McCuller
Doug Cuny
Grapevine:
Ramana Chinnakotla
Kent Conkle
Irving:
Aimee Kaslik
David Cardenas
Lewisville:
Carole Bassinger
Page 30 of 31
Red Oak:
Richardson:
University Park:
Upper Trinity Regional Water District:
Dallas:
Charles Brewer
Kent Pfeil
Keith Dagen
Kent Austin
Tom Taylor
Larry Patterson
Jo M. (Jody) Puckett
Bobby Praytor
Charles Stringer
Terry Lowery
Denis Qualls
Jacqueline Culton
Tonia Barrix
Melissa Paschall- Thompson
Erica Robinson
Maria Salazar
Page 31 of 31