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HomeMy WebLinkAbout2006 05 15 Regular 302 Reclaimed Water Agreement CITY OF WINTER SPRINGS COMMISSION MEETING 051506_SpeciaCMeetin~Regular_302_ Gole Courses_Reclaimed_ WatecAgreements Page I of 2 COMMISSION AGENDA ITEM 302 Consent Informational Public Hearing Regular X May 15, 2006 Special Meeting Mgr./Dept. Authorization REQUEST: City Manager requesting the Commission to approve a Reclaimed Water Services Agreement with the Winter Springs Golf Course, and authorize the City Manager to execute the agreement on behalf of the City. PURPOSE: This agenda item is needed for the Commission to authorize a new Reclaimed Water Services Agreement with the Winter Springs Golf Course. CONSIDERATIONS: On April 26, 1979 Dayron Corporation purchased the Sheoah Golf Course, which is known today as the Winter Springs Golf Course from Florida Land Company owners of what was known as North Orlando Water and Sewer Corporation. As part of the agreement Dayron Corporation agreed to allow Florida Land Company to discharge sewer effluent on the golf course. On July 13, 1981 Florida Land Company and Big Cypress Associates Limited, known as Big Cypress Golf Club entered in an agreement with North Orlando Water and Sewer Corporation extending the terms of the April 26, 1979 agreement, and clarifying the cost sharing arrangements between the two parties for irrigation of the golf course. In October 1984 the City purchased the North Orlando Water and Sewer Corporation from Florida Land Company and assumed the effluent disposal agreement contained in the April 26, 1979 Purchase and Sale Agreement between Dayron Corporation (Winter Springs Golf Club) and Florida Land Company. On December 24, 1984 the City entered into an agreement with Big Cypress Associates Limited (Winter Springs Golf Club) in which Big Cypress Associates Limited granted a perpetual conservation easement over the golf course to the City for the purpose of protecting in perpetuity the golf course land from development. On May 9, 1995 the City and the Winter Springs Golf Course now owned by Winter Springs Partners Limited entered into a new agreement in which the City agreed to provide daily, up to 350,000 gallons of sewer effluent to the golf course at no cost. The City also agreed to pay the electrical utility bill associated with the operation pumps supplying the effluent to the golf course through the golf course irrigation system. In 2005 the City advised Winter Springs Partners Limited that it could no longer provide the golf course with free effluent and that it was terminating the payment of electrical utility bills for the irrigation pumps effective with the May 8, 2005 termination date of the May 9, 1995 agreement. Since that time the City terminated the utility payments but has continued to provide the golf club with effluent water the cost of which would be subject to a new agreement. On June 16,2005 the golf club was foreclosed by Bank of America Strategic Solutions, LTD and Bank of America Strategic Solutions, LTD has requested through a letter of May 4, 2006 from Robert J. Benson that the City expedite a new agreement. Subject to the rate structure and discussions contained in the May 15, 2006 Winter Springs agenda item Number 301 attached hereto in Attachment "B" the staff is recommending the adoption of a new agreement contained in Attachment "A" of this agenda item for a period of three years. FUNDING: It is estimated that the new agreement will generate approximately $14,800 in additional reclaimed water revenues for the City Utility Fund. RECOMMENDATIONS: It is recommended that the Commission take the following action: 1. Adopt the attached new Reclaimed Water Agreement with Bank of America Strategic Solutions, LTD as provided in Attachment "A" of this agenda item. 2. Authorize the City Manager to execute the Agreement on behalf of the City and to forward the Agreement to Bank of America. ATT ACHl\fENTS: A. New Agreement B. Commission Agenda Item 301 C. Robert J. Benson Letter of May 4, 2006 D. May 9,1995 Effluent Agreement COMMISSION ACTION: AGREEMENT THIS AGREEMENT is made this day of , 20_, between The City of Winter Springs, 1126 East State Road 434, Winter Springs, Florida 32708, hereinafter referred to as "City", and Bank of America Strategic Solutions, LTD, hereinafter referred to as "Bank." WHEREAS, there previously existed an Effluent Disposal Agreement ("Agreement") dated the 9th day of May 1995 between the City of Winter Springs and Winter Springs Partners, LTD to provide effluent water to the Winter Springs Golf Course; and WHEREAS, the City purchased the North Orlando Water and Sewer Corporation from Florida Land Company in October 1984 and assumed the effluent disposal agreements; included in the above referenced Agreement to provide effluent to the Winter Springs Golf Course; and WHEREAS, the Golf Course dedicated a Conservation Easement over the golf course lands to the City on December 26, 1984; and WHEREAS, the Bank has indicated the need for a new Effluent Disposal Agreement at the earliest possible time; NOW, THEREFORE, for and in consideration of the consideration described herein and of other good and valuable consideration, the sufficiency of which is hereby acknowledged, the City and the Golf Course agree as follows: 1. The parties agree that the Golf Course has a need for a certain supply of effluent reclaimed water for irrigation of the Golf Course. 2. The parties agree that the Golf Course is currently permitted by the Department of Environmental Protection for three hundred fifty thousand gallons (350,000) per day for effluent disposal. 3. Reclaimed Water is permitted for. residential irrigation and has an economic value to the City. 4. The City agrees to supply to the Golf Course, up to three hundred fifty thousand gallons (350,000) of reclaimed water on a daily basis at a base rate of $284.00 per month plus a volume rate of $0.25 cents per thousand gallons up to 1.6 million gallons per month, and $0.50 per thousand gallons for all usage over 1.6 million gallons per month. 5. At the discretion of the City, the City may provide additional quantities of reclaimed water if available consistent with the aforementioned rates. 6. The Golf Course shall be billed on the 5th of each month for the preceding monthly usage. Payment shall be received no later than the 15th of each month, after which late fees equal to 5% of the original bill shall be assessed. If the bill and late fees are not paid by the 25th of the month the City may at its discretion terminate service until the bill and late fees are paid. 7. All personnel, permitting, operations, electricity and maintenance costs of the Golf Course pumping and irrigation system are the responsibility of the Golf Course. 8. Utility personnel will assist the Golf Course personnel in trouble shooting the maintenance of the irrigation pumps when assistance is requested and in solving effluent and drainage problems to the mutual benefit of both parties. 9. This agreement shall be effective for a period of three years from the date of execution. 10. At the end of this Agreement both parties shall negotiate a new agreement with the City. This agreement will automatically renew for ten year periods unless notification is provided by either party thirty (30) days prior to the expiration date of the current agreement. 11. If either party should have to retain legal counsel to enforce this Agreement, the prevailing party is such dispute shall be entitled to recover its costs, including a reasonable fee for legal services rendered through appeal. Upon entering into this agreement the covenants herein contained shall bind, and advantages shall inure to the benefit of the respective heirs, executors, administrators, trustees and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have set their hands and seals this _ day of ,20_. CITY OF WINTER SPRINGS Attest: By: BANK OF AMERICA STRATEGIC SOLUTIONS, LTD Attest By: CITY OF WINTER SPRINGS COMMISSION MEETING 051506_Special_Meetin~Regular_30 1_ Gole Courses_Reclaimed_ WatecAgreement Page 1 of 3 COMMISSION AGENDA ITEM 301 Consent Informational Public Hearing Regular X May 15, 2006 Special Meeting Mgr. / Dept. Authorization REQUEST: City Manager requesting the Commission to apply existing reclaimed water rates to the Winter Springs Golf Course. PURPOSE: This agenda item is needed for the Commission to apply the existing water rates to the Winter Springs Golf Courses. CONSIDERATIONS: This agenda item is needed to apply the existing reclaimed water rates to the Winter Springs Golf Course. Initially, the City acquired effluent disposal agreements with the Tuscawilla Country Club (TCC) and Winter Springs Golf Course (WSGC) during the acquisition of two private utilities in 1990 and 1984, respectively. Both agreements provided for free reclaimed water as well as operational subsidies such as pump station repair costs and electric bill payment in order to have a place to dispose of sewer effluent. Since that time, the City has constructed the first phase of a reclaimed water distribution system in the city for the purpose of conserving potable water through the use of reclaimed water to replace potable water for landscape irrigation. This program has been very successful resulting in Winter Springs' reducing its per capita potable water withdrawals from the aquifer during a period of rapid growth. In 1995, a new agreement was negotiated with WSGC that included free reclaimed water and City payment of the golf course pump station electric bill but eliminated the City's obligation for repairs and labor costs. In 1996, the City began charging residential customers for reclaimed water and in 2002 began metering reclaimed customers. The Winter Springs Golf Course contract terminated on May 2005. The golf course was advised in 2005 that staff would be recommending that it would have to begin paying for reclaimed water when their contract was renewed. Since installation of the city's reclaimed water system the city has not needed golf courses to dispose of effluent. In fact, the city cannot add paying customers to meet the current demand for reclaimed water. The current system serves only about 15% of the residents of Winter Springs. Yet, golf courses which have been receiving reclaimed water free of charge consume 45% of the current peak demand of the reclaimed water system. The 45% of reclaimed water capacity consumed by non paying golf courses would supply reclaimed water to approximately 1,000 to 1,500 additional paying residences. The revenue currently generated from paying customers is approximately $165,000 annually. The revenue generated by the additional paying residents would amount to approximately $150,000 in additional revenues, or almost doubling current revenue, to help fund the estimated $12,000,000 required to build the new Lake Jesup reclamation water facility and extension of distribution lines to additional reclaimed users, further reducing the City's withdrawal of potable water from the aquifers. Therefore the continuation of providing golf courses on what will probably be perceived by the paying customers as a free ride on the backs of paying residential customers doesn't appear to reflect good public policy, or economic sense. ALTERNATlVES: 1. Continue Providing Golf Courses Free Reclaimed Water. As stated above, the continuation of providing golf courses on what will probably be perceived by paying customers as a free ride on the backs of paying residential customers does not appear to reflect fair and prudent public policy, nor does it make economic sense. 2. Applying Current Rates To Golf Courses. In order to provide for a transition period for the golf courses to adjust to this new cost and at the same time being fair to the current paying customers, the City could impose current rates now and delay the new higher rates for a three to five year period of time. 3. Apply The Current Rates Now And Impose The New Rates When Adopted. This proposal would be fairest to the paying customers. It would however, represent a heavy burden on the golf courses. 4. Delay Imposition Of Rates Until the New Higher Rates Are Adopted Next Spring. As in Alternative 3, this alternative would represent a heavy burden on the golf courses. 5. Disconnect The Golf Courses From The Reclaimed System Altogether And Provide The Total City Capacity To Residents. This alternative would devastate the golf courses. Additionally, when the new reclaimed water system comes on line it will have the capacity to serve the residents and the golf courses. It appears that Alternative 2 is the most prudent course of action. Under this alternative the golf courses would pay as follows based on an 8" meter: $284.00 Monthly Base Fee $0.25 per 1,000 gallons up to 1.6 million gallons per month $0.50 per 1,000 gallons for usage over 1.6 million gallons per month This would cost the Winter Springs Golf Course approximately $14,800 per year based on an average usage of 90,000 gallons per day. This would cost the Tuscawilla Country Club approximately $27,400 per year based on an average usage of 160,000 gallons per day. However, the TCC has a well permitted at 30 million gallons per year that is used to augment the City's reclaimed system that would result in a potential credit of $7,500 (30,000,000 X $0.25/1,000 gallons) assuming maximum use. Therefore, the net cost to TCC would be $19,900. RECOMMENDATIONS: It is recommended that the Commission adopt Alternative 3. It is recommended that the Commission authorize those rates for a period of not less than three, nor more than five years, after which the rates in effect at that time would be incorporated into the revised agreement. ATTACHMENTS: COMMISSION ACTION: BANC OF AMERICA STRATEGIC SOLUTIONS, INC. CA9-193-11-09 333 SOUTH HOPE STREET, 11TH FLOOR LOS ANGELES, CALIFORNIA 90071 FACSIMILE (213) 621-7557 VIA FED EX 8525 9071 5460 May 4, 2006 Mayor John F. Bush City of Winter Springs City Hall 1126 East State Road 434 Winter Springs, Florida 32708 Tel (407) 327-1800 Re: Effluent Disposal Agreement dated May 9, 1995 Winter Springs Golf Club Winter Springs, Florida Dear Mayor Bush: I'm following up on our April 25, 2006 telephone conference with you, John McLemore, Sally McGinnis, and Eddie Martinez regarding the Effluent Disposal Agreement dated May 9, 1995 (Agreement). The Agreement expired on its own terms May 8, 2005 (10 years after May 9, 1995 agreement date). The terms of the Agreement included the water being distributed to golf course at no charge and the City paying for the electricity to run the corresponding irrigation pumps. The Agreement contains a provision for a 10-year extension; however the City of Winter Springs elected not to renew the Agreement when it sent a non-renewal letter dated April 7, 2005. The City's new effluent disposal agreement proposal includes a charge of $0.25 per 1,000 gallons to be assessed and no provision for irrigation electricity. As I mentioned in our teleconference, we had fully negotiated a Purchase and Sale Agreement for Winter Springs Golf Club with a buyer entity that currently owns and operates golf courses. However, this party refused to sign the Purchase and Sale Agreement and cited a lack of a water agreement as a reason for not moving forward on the purchase. At this time, we have a pending sale for Winter Springs Golf Club with different buyer. Based on our prior experience, I'm concerned that this buyer will not move forward on the purchase without a water agreement in place. Ifwe lose a second buyer due to a lack of a water agreement, the value of the golf course will be negatively impacted and the use of the property as a golf course will be jeopardized. We left our call with the understanding that the City of Winter Springs would be forwarding a proposed effluent disposal agreement - I had the impression that we would receive a new proposal within a week. Now nine days later, I have not received any correspondence from the City of Winter Springs. My preference is to renew the Agreement - an action that would facilitate a sale of the property as a golf course. Renewal of the Agreement would also renew the golf course's obligation to spray effluent water - a fair amI just compensation for obtaining the effluent water at no cost. As I mentioned in our call, the City acted inqonsistently by 1) not renewing the Agreement, 2) trying to negotiate payment for effluent disposal, and 3) passing Resolution No. 2005-48 in which the City declared the Winter Springs Golf Club conservation easement to be "of significant importance to the City of Winter Springs." If the City's proposed effluent disposal agreement were executed, the property would unjustly be burdened with an obligation to dispose effluent water via the conservation easement and would be required to pay for the disposal burden via the new effluent water agreement. On the other hand, without an effluent disposal agreement, I do not understand the City's justification for passing Resolution No. 2005-48 and the stated "significant public importance" of maintaining the conservation easement. I'm writing this letter in an effort to follow up on our teleconference and expedite executing an effluent disposal agreement. Please contact me to discuss further, forward correspondence indicating the City would like to renew the Agreement, or forward a new proposal to me as was mentioned in our teleconference. Time is of the essence as our buyer's review period ends May 15, 2006. Sincerely, Robert Benson Vice President Cc: Ron McLemore, via Fed Ex #85259071 5470 ;2(J Peter Latham, via email Greg Christovich, via email AGREEMENT THIS AGREEMENT is made this 9 day of May 19995 between The City of Winter Springs, 1126 East State Road 434, Winter Springs, Florida 32708, hereinafter referred to as "City", and Winter Springs Partners, Ltd., 900 West State Road 434, Winter Springs, Florida 32708, hereinafter referred to as "Golf Course. " WHEREAS, there previously existed an Eftluent Disposal Agreement ("Agreement") dated the 26th day of April 1979 between Florida Land Company and Dayron Corporation and the Agreement was modified the 13th day of July 1981; and. WHEREAS, the City did purchase the water and sewer company from Florida Land Company in October 1984 and assumed the effluent disposal agreements; including the Agreement; and WHEREAS, the Golf Course was dedicated as a Conservation Easement on December 26, 1984;alld WHEREAS, the owners of the Golf Course and the City have indicated the need for a revised Effiuent Disposal Agreement that can be assigned to any future buyer of the Golf Course; NOW, THEREFORE, for and in consideration of the consideration descnoed herein and of other good and vah.1able consideration, the sufficiency of which is hereby acknowledged, the City aud the Golf Course agree as follows: 1. The parties agree that the Golf Course has a need for a certain supply of water for irrigation of the Golf Course and the Golf Course is willing to use the reclaimed water fromthe City's West Reclaimed Water Facility to provide for such irrigation. 2. The palties agree that the Golf Course is currently permitted by the Department of Environmental Protection for three hundred fifty thousand gallons (350,000) per day for effiuent disposal as part of the Reclaimed Water Facility operation permit 3. The water produced by the Reclaimed Water Facility is permitted for residential irrigation and has an economic value to the City. 4. The City agrees to supply at no cost to the Golf Course, up to three hundred fifty thousand gallous (350,000) of reclaimed water on a daily basis and the Golf Course owners agree to accept at their discretion up to three hundred fifty thousand gallons (350,000) ofreclaimed water on a daily basis. 5. The City cannot guarantee the Golf Course more than three hundred fifty thousand gallons (350,000) o'n a daily basis. If exceSS reclaimed water is available and needed by the Golf Course and can legally be supplied to the Golf Course, there will be no charge for the extra reclaimed water. 6. The City agrees to be responsible for one hundred percent (100%) of the electric bill for irrigation by the Golf Course pump station. 7. All personnel, permitting a,nd maintenance costs of the Golf Course pumping and irrigation system are the responsibility of the Golf Course. 8. Utility personnel will assist the Golf Course personnel in trouble shooting the maintenance of the irrigation pumps when assistance is requested and in solving eftluent and drainage problems to the mutual benefit of both parties. 9. This agreement shall be effective for a period often years, from the date of execution. 10. At the end of this Agreement both parties shall negotiate a new agreement with the City guaranteeing the permitted quantity of eftluent for Golf Course irrigation for an additional 10 (ten) years. This agreement will automatically renew for ten year periods unless notification is provided by either party thirty (30) days prior to the expiration date of the current agreement. 11. If either party should have to retain legal counsel to enforce this Agreement, the prevailing party is such dispute shall be entitled to recover its costs, including a reasonable fee for legal services rendered through appeal Upon entering into this agreement the covenants herein contained shall bind, and advantages shall inure to the benefit of the respective heirs, executors, administrators, tmstees and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have set their hands and seals this 9 day of May, 1995. day of CITY OF WINTER SPRINGS Attest WINTER SPRINGS PARTNERS, LTD. Attest By: Daniel P. Wood, General Partner in Deutschmark Golf Properties, the General Partner in Winter Springs Partners, Ltd.