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. At that point, the allocation of principal will be updated for 2020 and future annual principal payments will be adjusted based on the final costs.
3. WDMWW Repayment Considerations. WDMWW shall dedicate the first $115,000 of South Area connection fee district revenue for repayment, with the first calendar year payment occurring in December 2022. a. Repayment shall be made in the month of December of each calendar year, upon
verification by WDMWW that a minimum debt service ratio of 1.25 has been met. b. The Water Works Board of Trustees has the discretion to pre-pay for the following year’s repayment or make additional principal payments to the City. There shall be no penalty for early pay-off of the principal balance.
4. Water Quality If the developer fails to complete construction so that water can be properly flushed and charged to the developer/property owner to maintain water quality in the new water main, the City of West Des Moines agrees to reimburse West Des Moines Water Works for flushing expenses, including water costs, labor and materials.
Part IV – General Provisions
1. Notices and Invoices. All notices, project documents, payment requests, and revisions to payment schedule shall be in writing and may be personally delivered or sent US Post to the addresses hereafter provided. Mailed notices and payment requests shall be deemed received by the party to whom directed when they are postmarked. Such notices and payment requests shall be delivered or mailed to the following persons at the addresses listed:
Notices to City: Notices to WDMWW: City Manager General Manager City of West Des Moines West Des Moines Water Works 4200 Mills Civic Parkway 1505 Railroad Avenue West Des Moines, IA 50265 West Des Moines, IA 50265
2. Payment. Annual repayment to the City shall be made after approval by the WDMWW Board of Trustees at the regularly scheduled meeting held in December. Payment shall be made by check or electronic funds transfer and personally delivered to the City Manager or designated alternate within seven (7) calendar days of the approval.
IN WITNESS THEREOF, the parties have caused this Agreement to be executed in counterparts, each of which shall be considered an original.
BOARD OF TRUSTEES OF THE WEST DES CITY OF WEST DES MOINES, IOWA MOINES WATER WORKS, WEST DES MOINES, IOWA
By: ______By: ______Brian Rickert, Chair Steven K. Gaer, Mayor
Attest: ______Attest: ______Christina Murphy, General Manager Tom Hadden, City Manager
6900 Westown Parkway West Des Moines, IA 50266 www.hubbellrealty.com 515-323-3102 FAX 515-280-2000
May 5, 2020
Christina Murphy, William Mabuce & Board Trustees West Des Moines Water Works 1505 Railroad Avenue West Des Moines, IA 50265
Linda Schemmel, Tom Hadden & West Des Moines City Council City of West Des Moines Development Services 4200 Mills Civic Parkway Suite 1D PO Box 65320 West Des Moines, IA 50265-0320
RE: Meridian Distribution Center
Dear City of West Des Moines and West Des Moines Water Works,
As you are aware, Hubbell Realty Company has worked with Silverado Farms LLC (Ryan Wiederstein) to develop an industrial business park called Meridian Distribution Center (see the attached marketing flyer). To date, the primary issue with moving forward has been the lack of water service to the site. Since existing water taps exist at the site from a Des Moines Water Works line, it has been our hope that West Des Moines Water Works and the City of West Des Moines could work with Des Moines Water Works to allow a connection to this water line which would allow the industrial development to move forward.
We understand there are complexities in making this connection possible. Since the hydrants to the Des Moines water line are already existing, and also because there are other users in the area who are provided water in a similar manner (water coming from the Des Moines line, but service being billed through West Des Moines Water Works), we were hopeful that a similar allowance could be made for this project which would help make the development possible.
Since the extension of West Des Moines water lines is onerous, it seems clear that the above scenario represents the best possible near-term solution for all parties to see new development occur without excessive up-front infrastructure expenses.
We know there has been some communication between the various parties; however, we don’t currently have direction on how to move this forward. If there are things that you would like us to be doing on our end to help facilitate the process, we’d appreciate the feedback. If there is something we are failing to do, we want to correct that and help get to a solution. Our request to West Des Moines Water Works and to the City of West Des Moines is to be specific in a written response as to whether there is a path to make this possible. Who do we need to talk to? Is there a chance that this can be approved? Are there engineering obstacles that we are unaware of? Are there items that you need from the developer to advance this process? Who needs to approve a connection like this and what steps are remaining in that process? Etc.
It is our impression that the approval and communication primarily need to be completed between West Des Moines Water Works and Des Moines Water Works, but your feedback would be greatly appreciated.
Please let us know how we can help. We appreciate your efforts in trying to make further commercial development in the area possible.
Sincerely,
Chris Trosper
Chris Trosper Vice President Hubbell Realty Company 6900 Westown Parkway West Des Moines, Iowa 50266
February 20, 2020
Brad Kuehl, Project Manager Bishop Engineering 3501 104th Street
www.wdmww.com Urbandale, Iowa 50322
MUNICIPAL WATER UTILITY – Mr Kuehl: BOARD OF TRUSTEES
GENERAL OFFICE Thank you for your letter of February 5, 2020, requesting that the Board of 515.222.3510 Trustees of the West Des Moines Water Works (WDMWW) add the extension of CUSTOMER SERVICE fee district water main to serve your proposed development at the Southwest 515.222.3460 nd 515.222.3378 – FAX corner of SE 42 Street and Army Post Road.
WATER TREATMENT AND DISTRIBUTION WDMWW staff and the Planning and Regionalization Committee of the Board of 515.222.3465 Trustees have reviewed your request. Staff and the committee are not 515.222.3469 – FAX recommending revising the Capital Improvements Plan of the West Des Moines
1505 Railroad Avenue Water Works to accelerate construction of this segment of fee district water main West Des Moines, Iowa 50265 at the present time.
TTD/TTY 515-222-3334 This decision is primarily due to the large initial cost of service and the ongoing
EMAIL: operational challenges with maintaining water quality in the proposed pipe. The [email protected] Water Works would need to dedicate more than one million dollars (after deducting the site’s fee district fees) to extend water main to this site. This expense would require diversion of planned funds from other areas of the distribution system. The low water flow anticipated for this speculative development, combined with the lengthy service pipe, presents an operational challenge to maintaining necessary water quality in the distribution system. Staff time and potable water will likely be required to routinely flush water from this pipe to maintain water quality until additional development occurs. To our knowledge, there are none planned at this time.
An alternative connection was considered with the nearby Des Moines Water Works (DMWW) core network water main. While the initial anticipated cost of this alternative connection is much closer to the anticipated fee district fee for this site, this connection has its own operational challenges. These include the seasonally varying water pressure in the DMWW core network main, the reluctance of DMWW to have another connection to this transmission main, and the construction and operation cost of a wholesale water meter pit. WDMWW staff also assumes that DMWW would require near term construction of the permanent distribution pipe in the near future – requiring the expenditure of the million dollars referenced above.
We are aware that this response is not your desired result but, in order to meet the needs of our entire customer base, we believe that it is prudent to utilize utility funds elsewhere in the system at the present time.
If you would like to further discuss this issue, please contact me at 515-222-3510.
Sincerely,
______William Mabuce, PE, PO Engineering Project Manager
cc: C. Murphy – WDMWW General Manager file
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FLOOR PLAN
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60 ft Speed Bays All bays are 60 ft Speed Bays
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SUITE 101 SUITE 102 SUITE 103 SUITE 104 SUITE 105 SUITE 106 SUITE 107 SUITE 108 SUITE 109 SUITE 110 SUITE 111 10,000 SF 10,000 SF 10,000 SF 10,000 SF 9,784 SF 10,000 SF 10,000 SF 10,000 SF 10,000 SF 10,000 SF 10,000 SF
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FUTURE CAMPUS
FUTURE GRAND AVENUE
RACCOON RIVER DRIVE
Meridian Distribution Center FFUTURE GRAND PRAIRE PARKWAY
CONTACT US
MOREY KNUTSEN, SIOR TOM GAYMAN CBRE]Hubbell Commercial Performance Realty, LLC Vice President Broker +1 515 221 6673 +1 515 707-6635 [email protected] [email protected]
Licensed in the State of Iowa.
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