TO: Honorable Mayor & Members of the North Port Commission
FROM: Peter D. Lear, CPA, CGMA, City Manager
TITLE: 2019 Amended and Restated Utilities Agreement between the City of North Port, West Villages, LLLP and the West Villages Improvement District.
Recommended Action
Approve the 2019 Amended and Restated Utilities Agreement between the City of North Port, West Villages, LLLP and the West Villages Improvement District (WVID).
Background Information
On March 29, 2005, Fourth Quarter Properties, XXXII, L.L.C. entered into an Interim Utilities Agreement to reserve initial capacity for development of the Thomas Ranch Project. The interim agreement provided for a total of 2,000 ERCs over the first three years of development and required the Owner to be responsible for all infrastructure necessary to supply water and wastewater service to all potential development on the property. Development ensued based on the City’s commitment to serve 5,600 ERCs of water permanently and 3,600 ERCs of wastewater on a temporary basis until the WVID wastewater treatment plant could be built. On February 27, 2007, the Interim Utilities Agreement was replaced by the Amended and Restated Utility Agreement and contemplated a new wastewater treatment plant and water treatment plant to be constructed by the WVID and dedicated at no cost to the City. Several amendments to the agreement were approved between May 29, 2007 and September 13, 2010 to reflect the economic conditions of the time.
With the downturn in the economy, the majority of the Thomas Ranch Project, with the exception of Gran Paradiso and IslandWalk, went largely undeveloped until 2014 when Mattamy Sarasota, LLC purchased the property under the name Thomas Ranch Land Partners North Port, LLLP, subsequently becoming Manasota Beach Ranchlands, LLLP. Since 2014, the number of customers in the WVID has increased ten-fold, from 380 to 3,800.
To recognize the significant changes that have taken place and bring all terms current, the WVID, West Villages, LLLP and the City have negotiated the terms of a new agreement. In addition to the standard terms, this agreement clarifies the WVID’s commitment to construct a water treatment plant and to expand the wastewater treatment plant, currently under construction, when necessary to serve further development. In addition, the agreement allows the City to purchase a limited amount of the WVID’s treatment plant capacity to serve properties located west of the Myakka River that are not located within the WVID. The agreement also requires the WVID to construct a reclaimed water system, which shall be connected to the reclaimed water system at the edge of property at the wastewater treatment plant site. The reclaimed water provided to the WVID will be sold to the WVID at the new bulk rate of $.21/1,000 gallons. Finally, this agreement requires payment by WVID to the City in the amount of $50,000 for reimbursement of legal fees and up to $300,000 for reimbursement per plant or plant expansion for the City’s third-party engineering fees associated with the construction of the water or wastewater infrastructure.
The agreement is legally correct as to form.
Strategic Plan
This agreement supports the following goals of the Strategic Plan:
Health & Public Safety
Create and sustain a safe and healthy environment for residents and visitors of North Port
Infrastructure
Develop and maintain the City’s roads, bridges, storm water drainage, and water ways with creative infrastructure funding mechanisms; promote multimodal transportation opportunities throughout the City
Economic Development & Job Creation
Support a vibrant and diversified economy to create local jobs and attract private investments
Historical, Cultural, and Environmental Preservation
Protect and promote our natural, cultural, and historical heritage that help define the City’s identity, contribute to the economy, maintain balance, and improve quality of life
Efficient & Effective Government
Develop and promote City governance that fosters trust and utilizes departmental strengths and innovative philosophies to facilitate effective and efficient provision of all City services
Financial Impact
This agreement requires Thomas Ranch Intangibles, LLLP (TRI, LLLP) as beneficiary and assignee of West Villages, LLLP (WV, LLLP) to pay 1,223 water capacity fees totaling $2,289,456 and guaranteed revenues for each previously reserved ERC on a pro-rated basis, up to $588 per year which will vary by connection date per ERC depending on when connection occurs within the development. In addition to capacity and guaranteed revenues, WVID is required to construct a wastewater treatment plant, a water supply source and treatment plant, and deep injection well and dedicate them to the City along with other utility infrastructure. The agreement provides for declaration of an event of default should TRI, LLLP or WV, LLLP fail to pay for capacity fees or guaranteed revenues as required.
To date, the City has collected $10,919,702 in wastewater capacity fees. As in the existing agreement, the wastewater capacity fees collected over the years from the WVID, estimated to be approximately $10,900,000-$11,200,000 by the time the plant is operational, will be returned to the WVID in a phased approach over a five-year period once the new wastewater treatment plant is online and dedicated to the City. Since it appears the plant is definitely going to come online during FY19/20, staff will be budgeting the first installment payment of $8,900,000 this coming fiscal year in accordance with Section 7.1 (c) 1. of the agreement which requires the first payment within 120 days of the City’s acceptance of the Wastewater Treatment Plant. Once the City has accepted the Wastewater Treatment Plant, a budget amendment will be requested to adjust to actual funds on hand. In addition, the FY20-24 Capital Improvement Plan will be amended between first and second readings to include future payments of $480,000, $450,000 and $150,000 in the next three fiscal years with the final payment of approximately $920,000 in FY23/24 and move the planned Master Pumping Station and Forcemain to the Utility Construction Fund which would be debt funded. This, in addition to the increased revenues realized in the current fiscal year of approximately $3,000,000 will accommodate the repayment to WVID. As usual, the CIP will be updated annually based on actuals collected and available funding.
Procurement
N/A
Attachments:
1. 2019 Amended and Restated Utilities Agreement
2. 2005-03-29 Interim Agreement
3. 2007-02-23 Amended Restated Agreement
4. 2008-05-29 First Amendment
5. 2009-06-23 Second Amendment
6. 2010-08-10 Third Amendment
7. 2010-09-13 Fourth Amendment
Prepared by: Jennifer Desrosiers, Assistant Utilities Director
Department Director: Richard Newkirk, Utilities Director