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West Des Moines Water Works Board of Trustees Meeting Communication

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West Des Moines Water Works Board of Trustees Meeting Communication WEST DES MOINES WATER WORKS BOARD OF TRUSTEES MEETING COMMUNICATION DATE: May 20, 2020 ITEM: 5. Recommendations from Committees a. Planning and Regionalization 1. Motion – Approving the Funding Proposal with the City of West Des Moines for the Meridian Development FINANCIAL IMPACT: Total estimated project cost is $1.4 million. The agreement requires the developer to pay the South Area Water Connection Fee District Fee in the amount of $221,218.66 prior to the West Des Moines Water Works commencing any engineering. The agreement proposes the Water Works pay the initial $250,000 towards the project costs and the City will upfront the remaining amount. The Water Works will be committing to paying the remaining principal only over the course of 10 years to the City of West Des Moines. This project is a fee district main but was not planned for within our current 5-year Capital Improvements Plan (CIP). SUMMARY: On February 5, 2020, Hubbell Development Services along with the owner of the property and their engineer requested consideration for moving the water main extension up in our CIP to help with marketing of the distribution center. The planning and regionalization committee at the time concurred with staff’s recommendation that we not pursue amending our CIP and continue to direct funds on identified projects. This was relayed to the developer in a written letter. Since that time, the developer has continued to ask for other alternatives for getting water infrastructure to the site. Another letter was sent to the Board of Trustees and the City Council on May 5th asking how to move the project forward. The City has indicated a willingness to negotiate an option that may be amenable to the Water Works and the City for installing the water infrastructure. Both the City and the developer has asked about a connection to the Des Moines Water Works Core main, which runs adjacent to the property. WDMWW continued position has been that this is a core main and not a distribution main and should not be utilized unless the benefits outweigh the risks. Core mains serve water for our community and other communities and are not designed to serve individual customers. Our discussions with Des Moines Water Works indicate they do not consider this favorable and as a rule do not allow connections of this type in Des Moines or other suburbs. This site is also not served by city sewer service although the city has agreed to let the property owner utilize a septic system until city sewer is available. The Water Works drafted the funding proposal for consideration by the City. It was reviewed by the subcommittee with a split decision on moving the proposal forward. A summary of the proposal is as follows: -WDMWW pays $250,000 towards the project and initiates project once the developer has paid the South Area Water Connection Fee District Fee. The remainder of project costs will be fronted by the City. Construction of the water improvements will not begin until the developer’s site plan has been approved by the City. -The WDMWW will then make payments over 10 years in even increments for the principal only. If the area develops quickly and WDMWW have adequate fee district fee receipts, then WDMWW will have the ability to pay the remaining balance earlier. -The intent is that through a developer’s agreement with the City the developer will be responsible for all water charges associated with flushing until the area builds out more; however, there is a clause that states that if the developer falls through that it will be the responsibility of the City to pay for it. Since this development will be at the end of 7,510 feet of 16” water main with lower water usage (approximately 6,000 to 10,000 gallons per day) until more development occurs, it will be important to make sure the water turns over to maintain water quality. -The City is responsible to provide right of way or easements. Staff believe there is room within the right-of-way but cannot verify this until preliminary engineering has been completed. BACKGROUND: Fee district mains are carefully planned as development grows in an area. In this case the development required a significant extension of water main that was not planned in our current Capital Improvements Plan. Based on the risks versus benefits and discussions with the Des Moines Water Works, pursing a tap of the core main is not in the best interest of the utility long term. Previous correspondence to the developer, maps, and letters from the developer are attached for your reference. RECOMMENDED ACTION BY THE BOARD OF TRUSTEES: No single recommendation was given by the Planning and Regionalization Committee. Options for further action include: 1) Approving the funding proposal with the City of West Des Moines for the Meridian Development. 2) Do Not Approve the funding proposal with the City of West Des Moines for the Meridian Development at this time. 3) Pursue another action at this time. Prepared by: __________________________________________________________ Approved for Content by: ________________________________________________ FINANCE AGREEMENT BETWEEN THE CITY OF WEST DES MOINES AND THE WEST DES MOINES WATER WORKS FOR WORK ASSOCIATED WITH THE MERIDIAN WAREHOUSE WATER MAIN EXTENSION THIS AGREEMENT (hereinafter “Agreement”) made and entered into by and among the CITY OF WEST DES MOINES (“City”) and the BOARD OF TRUSTEES OF THE WEST DES MOINES WATER WORKS (“WDMWW”) as of the dates set forth below. PREAMBLE WITNESSETH: WHEREAS, City and WDMWW (collectively “Parties”) desire to enter into an Agreement to cause, undertake, and define responsibilities and financial obligations for water related projects as hereinafter described in order to upgrade the capacity of the potable water system and deliver said water at acceptable pressures and flows in support of a development project which requires delivery of potable water to allow for domestic and industrial uses and to prepare for similar future development; and WHEREAS, to meet the objectives stated above regarding water service, certain improvements including water main infrastructure (collectively “improvements”) must be designed and constructed; and WHEREAS, the City desires to provide economic incentives in support of water delivery to Project and similar future development; and WHEREAS, the parties desire to proceed with necessary design, bidding and construction as provided herein; NOW THEREFORE, in consideration of the mutual undertakings hereby provided, the parties do hereby agree as follows: Part I – Responsibility of Project Costs 1. Project Funding. City agrees to pay the entirety of costs associated with improvements and receive repayment by WDMWW for certain portions of improvements as outlined in Part I, Sections 3, and Part III of this Agreement. 2. City Responsibility. City shall provide, at no cost to WDMWW, right-of-way for construction of water infrastructure. Where the water infrastructure cannot be located within right-of-way, the City shall provide, at no cost to WDMWW, Permanent Water Main Easement for construction of the water infrastructure. 3. WDMWW Responsibility. WDMWW shall be responsible for repayment as outlined in Part III, herein, of 100% of the costs associated with design and construction of all water main, casing, valves, hydrants and other related appurtenances necessary for Project, generally aligned along SE Army Post Road and SE 42nd Street. Part II – Responsibilities of Improvement Construction, Ownership and Operation 1. Project Initiation. The Engineering Consultant for the project shall be selected by WDMWW. Project work for the water main shall be initiated by WDMWW upon payment by the Developer of the South Water District Connection fees for the parcel being developed (Polk County Parcel 2016-198 BK 16214 PG 28, Parcel size of 41.52 acres). Review and approval of project documents, and determination of acceptable bids for award of construction contracts shall by WDMWW. WDMWW shall consult with the City of water main alignment within the project corridor. Construction will not commence until a site plan has been approved. 2. Inspections. Inspection and approval of water main and appurtenances shall be the responsibility of WDMWW. 3. Operation and Maintenance. Upon completion of the water main improvements, WDMWW shall operate and maintain the infrastructure as part of the municipal water system. 4. Ownership of Improvements. WDMWW will be the sole owner of the water main upon completion of the water main improvements. Upon completion of the improvements, WDMWW will accept the improvements into the WDMWW system. Part III – Terms of Repayment 1. Initial Repayment. Upon final acceptance the improvements, WDMWW will provide to the City evidence of total cost of work, including a copy of the awarded construction contracts, individual pay requests and change orders. WDMWW will pay the initial two hundred fifty thousand dollars ($250,000) of engineering fees and progress payments. The City will pay the remainder of engineering fees and progress payments. WDMWW will repay the City for the remainder of the total cost of improvements will be repaid in installments as outlined in Part III, Sections 2-4. 2. Repayment Schedule. WDMWW shall include in their annual budget a repayment to City for the improvements as outlined in Part 1, Section 3. Repayment to the City shall be a maximum of 10 years, with equivalent payments per year for principal amount. Remaining principal balance at the end of the repayment schedule shall be paid in full at the time of the last scheduled payment. The total cost of principal repayment shall not exceed the final project cost. The Estimated Payment Schedule follows in Exhibit A. This schedule is based on total estimated construction costs. When final costs are determined in 2020, the Estimated Payment Schedule will be updated based on those final costs.
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