Title
Authorize the City Manager to finalize and execute an Amended and Restated Wholesale Treated Water Agreement with Kaufman County Municipal Utility District No. 12.
Body
In 2004, the City of Mesquite entered into a wholesale treated water agreement with 2219 Kaufman Partners, L.P. (the developers of the Heartland Community) and Kingsborough Municipal Utility Districts Nos. 1,2,3,4 and 5. This agreement was subsequently amended in 2005 to allow the City of Mesquite to directly provide a maximum of 3.6 million gallons per day of treated water to the Municipal Utility Districts by way of a 24-inch water line constructed by the Developer. In 2006 and 2020, the Texas Commission on Environmental Quality issued several orders renaming the Kingsborough Municipal Utility Districts to the current Kaufman County Municipal Utility Districts Nos. 9, 10, 11, 12 and 14. Kaufman County Municipal Utility District No. 12 is the retail water provider for the other four Utility Districts, the recently created Kaufman County Fresh Water Supply Districts Nos. 4A and 4B, and the Trailwinds Development.
Due to obsolete language in both the original and amended agreements and requests from Kaufman County Municipal District No. 12 for changes to both the rate and maximum quantity of treated water outlined in the agreements, it was determined that a new agreement would be beneficial to both parties. As part of this process, the City of Mesquite contracted with WillDan Financial Services to conduct a comprehensive rate analysis to determine the costs to the City in providing treated water to Heartland and to determine the necessary water markup to cover those costs. The main points of the proposed agreement are:
1. Simplifies the agreement by deleting confusing and obsolete language.
2. Updates the area in which the Municipal Utility District provides service.
3. Outlines a procedure for the Municipal Utility District to request additional water. This process includes a requirement to pay a proportional share of water distribution upgrades.
4. Decreases the wholesale markup that the Municipal Utility District pays from 40 percent to 25 percent.
5. Allows the City of Mesquite to transport water through the Municipal Utility District’s system to an area of the City located on the southwest corner of FM-741 and IH-20 for a period of 10 years.
The North Texas Municipal Water District approved this proposed wholesale water agreement on September 22, 2022, at their regularly scheduled Board meeting.
Recommended/Desired Action
Staff recommends that the City Manager be authorized to finalize and execute the agreement.
Attachment(s)
Wholesale Treated Water Agreement
Heartland Wholesale Water Rate Study
Drafter
Mark Kerby
Head of Department
Cliff Keheley