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12-R-01 Authorizing a Memorandum of Understanding with the cities of Cibolo, Converse, Seguin, and Selma and the CVLGCRESOLUTION NO. 12-R-O1 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING A MEMORANDUM OF UNDERSTANDING WITH THE CITIES OF CIBOLO, CONVERSE,. 5EGUIN, AND SELMA, AND THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION, AUTHORIZING THE PAYMENT OF THE CITY'S INITIAL CONTRIBUTION OF $250,000 REQUIRED UNDER SUCH AGREEMENT, AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the City staff of the City of Schertz (the "City") has recommended that the City enter into a memorandum of understanding with the Cities of Cibolo, Converse, Seguin, and Selma, and the Cibolo Valley Local Government Corporation ("CVLGC") relating to operations of the CVLGC; and WHEREAS, the City Council has determined that it is in the best interest of the City to contract with the Cities of Cibolo, Converse, Seguin, and Selma, and the CVLGC pursuant to the Memorandum of Understanding Among the Cities of Cibolo, Converse, Schertz, Seguin, and Selma, and the Cibolo Valley Local Government Corporation attached hereto as Exhibit A (the "Agreement"); and WHEREAS, the City Council has determined that it is in the best interest of the City to authorize the payment of the City's initial contribution to the CVLGC of $250,000 required by the Agreement. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby authorizes the City Manager to execute and deliver the Agreement with the Cities of Cibolo, Converse, Seguin, and Selma, and the CVLGC in substantially the form set forth on Exhibit A. Section 2. The City Council further authorizes the City's initial contribution of $250,000 to the CVLGC, as required by the Agreement, and directs the City Manager, or his designee, to cause the payment of the City's initial contribution to the CVLGC in the following amounts and by the following dates: (a) $125,000 on or before January 15, 2012; (b) $62,500 on or before Apri12, 2012; and (c) $62,500 on or before July 2, 2012. Section 3. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. 50479886.1 Section 4. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 5. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 6. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 7. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 8. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. PASSED AND ADOPTED, this 3rd day of January, 2012. CITY OF SCHERTZ. TEXAS ATTEST: i y Secretary (CITY SEAL) 50479886.1 EXHIBIT A MEMORANDUM OF UNDERSTANDING AMONG THE CITIES OF CIBOLO, CONVERSE, SCHERTZ, SEGUIN, AND SELMA, AND THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION 50479886.1 A-I Ftl~COpy MEMORANDUM OF UNDERSTANDING AMONG THE CITIES OF CIBOLO, CONVERSE, SCHERTZ, SEGUIN, AND SELMA, AND THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION WHEREAS, in recognition of the fact that the acquisition of a dependable source of raw and potable water is essential for the maintenance of continued economic growth and the well being of its citizens, the cities of Cibolo, Converse, Schertz, Seguin, and Selma (collectively, "Member Cities") have approved the creation of the Cibolo Valley Local Government Corporation ("CVLGC") as their constituted authority and instrumentality to accomplish the specific purpose of acquiring, constructing, improving, enlarging, extending, repairing, maintaining and operating a water utility system; and WHEREAS, CVLGC recognizes that initiation of the permitting process is time sensitive, expensive, and of great importance; therefore, a number of contractual and operational details were not addressed in the initial corporate documents creating CVLGC; WHEREAS, Member Cities agree that the contractual and operational issues set forth in this Memorandum of Understanding are essential to the purposes of CVLGC; WHEREAS, each of the Member Cities and CVLGC have agreed that they will consider entering into a "Regional Water Supply Contract" that will address the issues set forth herein; WHEREAS, CVLGC desves to use certain water facilities that have been previously constructed and are presently operated by the Schertz/Seguin Local Government Corporation ("SSLGC"); and WHEREAS, Member Cities recognize that obtaining sufficient water resources for their respective citizens is an ongoing process such that CVLGC contemplates entering into other projects and endeavors not specifically set forth in this Memorandum of Understanding ("MOU"). NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, each of the Member Cities and CVLGC agree as follows: 1. While CVLGC may employ one or more sources of water, CVLGC initially intends to produce water from a well field located in Guadalupe County, Texas. The well field is adjacent to a transmission pipeline owned and operated by SSLGC. CVLGC will also investigate the development and permitting of a well field located in Wilson County, Texas. Preliminary testing indicates that water produced from either well field will be compatible with the SSLGC system. 2. CVLGC will design, acquire, construct, permit, license, and own certain Facilities in order to accomplish its purposes. For the purpose of this MOU, Facility or Facilities may include, and is defined as, water wells and related infrastructure, surface water rights and all diversionary infrastructure, and pipelines and related infrastructure to transport the water from its source to a water treatment facility and thence to the CVLGC water transmission and distribution facilities. 3. CVLGC will operate and maintain the Facilities and will from time to time enlarge, improve, repair, replace, and/or extend the Facilities as necessary to provide service to its Member Cities. CVLGC shall obtain and hold in its name all required permits, certificates, and licenses from the appropriate Federal, State, and local agencies with jurisdiction, and each Member City shall assist CVLGC in obtaining same, and shall, as required, assign or transfer, or cause to be assigned or transferred, to CVLGC any such permits acquired by it for CVLGC operation now or hereafter held by such Member City for Facilities owned or operated by CVLGC. CVLGC shall provide, manage, operate, and maintain the Facilities in such manner as it determines is necessary pursuant to prudent utility practice for providing adequate, efficient, and economical service to Member Cities, and shall have the right to use or discontinue the use of any part of the Facility as CVLGC deems necessary. CVLGC shall promptly reimburse any Member Ciry that purchases an interest in land on behalf of CVLGC for a project and said Member City shall transfer such interests in land to CVLGC. Title to any water delivered or transported to a Member City shall be vested in CVLGC up to the point of delivery. The point of de]ivery shall be determined in a separate agreement. 4. Member Cities agree that they will each own and be responsible for financing an equal shaze of the CVLGC and its Facilities, including, but not limited to, the acquisition of water leases, the infrastructure necessary to produce water and transport it to the treatment plant, and any treatment plant facilities constructed by CVLGC. Such ownership documents shall be drafted and agreed upon as the necessity for such documents arise. 5. Member Cities understand and agree that each Member City is required to fund an initial contribution to CVLGC that will be based on an equal share (currently one-fifth) of the estimated cost for obtaining the initial leases or well sites for the production of groundwater, including administrative expenses. Member Cities further understand that an additional contribution will be required during the permitting process to fund permit application preparation, submission and prosecution, including but not limited to a contested case Bearing. The initial contribution for each Member City shall be $250,000.00 payable to CVLGC at the following time periods and amounts: (a) $125,000.00 on January 15, 2012 (b) $62, 500 on Apri12, 2012; and (c) $62,500 by July 2, 2012 MOU AMONG THE CITIES OF CIBOLO, CONVERSE, SCHERTZ, SEGUIN, AND SELMA, Page 2 of 5 AND THE CB3OLO VALLEY LOCAL GOVERNMENT CORPORATION If payment is not made by the 15`s day following its due date, the non-paying Member City's rights, title, and interest provided herein maybe forfeited to the remaining Member Cities who have made all payments in a timely manner. The determination of rights for the Member City that does not make a timely payment to CVLGC shall be made by the Board of Directors of the CVLGC, but the sole remedy of CVLGC or any of the Member Cities against anon-paying Member Ciry shall be to declare said non-paying Member City's membership in CVLGC to be forfeited and said non-paying Member City will thereupon be treated as if it had withdrawn as a member of CVLGC. It is acknowledged and agreed that payments to be made under this MOU and similar obligations with Additional Member Cities, as defined below, will be a source available to CVLGC to continue operations of CVLGC until CVLGC can produce sufficient revenue that make CVLGC se]f-sustaining. 6. Member Cities agree that the use of water available to CVLGC will be determined based on the need of each Member City and the amount of water available to CVLGC at any particular time. The provision of water to each Member City and any take or pay provisions shall be determined by separate agreement. 7. Further, to the extent any of the following are not addressed prior to the initiation of discussion on the elements set forth above, the parties hereto agree that the following issues related to the internal functioning of CVLGC need to be resolved: (a) although each Member City has participated equally in the initial formation of CVLGC and in the obtaining of the initial permits, given the disparity in size and growth forecasts it is foreseeable that individual Member Cities will not want, or need, to participate equally in the receipt of potable water from CVLGC; therefore mechanisms for differential supply and funding need to be considered; (b) the division of proceeds from the sale of excess water, or water allocated to a Member City that is not used by that Member City including instituting an account and accounting procedures for tracking said proceeds; (c) delivery points for each participating water system, including metering, and the cost allocations for construction and transport to the points of interconnection; (d) conservation plans, drought contingency and distribution during periods when demand may exceed production. MOU AMONG THE CITIES OF CIBOLO, CONVERSE, SCHERTZ, SEGiJIN, AND $ELMA, Page 3 of 5 AND THE CIIiOLO VALLEY LOCAL GOVERNMENT CORPORATION 8. Member Cities agree that prior to the initiation of the process to issue bonds for construction of Facilities a Member City may withdraw from CVLGC. Upon withdrawal from CVLGC the withdrawing Member City shall be entitled to a refund of the funds contributed by that Member City only after the remaining Member Cities contribute (or a replacement member of CVLGC is agreed upon), in equal shares, the funds necessary for the refund, including any funds on deposit in an account established for the receipt of proceeds from the sale of excess water. 9. Prior to the issuance of any bonds by CVLGC and upon a majority vote of CVLGC Board of Directors, a new member ("Additional Member City") may be admitted to CVLGC. Such admission shall be predicated on the Additional Member City's and the Member Cities' full agreement to this MOU and all other agreements and obligations among Member Cities relating to CVLGC and CVLGC, as well as payment of an equal proportional share of the assessed costs to date, including a deposit, as set forth in the operating agreement, into any account established to receive the proceeds from the sale of excess water. The equal proportional share far Additional Member City shall be determined as if the Additional Member City was part of CVLGC from its initiation. The Member Cities' contributions will then be proportionately reduced (if the total number of Member Cities is increased) and the CVLGC Board of Directors shall decide whether or not to refund the differences or apply said refund to each Member Cities' proportionate share of future expenses. 10. This MOU shall continue in force from the effective date hereof at least until all Bonds, including any Bonds issued to refund same, and the interest thereon, shall have been paid in full; and shall also remain in force thereafter throughout the useful life of the Facilities, unless otherwise terminated by mutual agreement of the parties hereto. 11. This MOU may be assigned with prior written consent of the Board of Directors of the CVLGC and the City Councils of each Member City. This MOU may be signed as multiple originals and is approved by each of the Member Cities and CVLGC on the date indicated. City of Cibolo: - `17 I~L_ n___ oger Niemietz, Interim City Mana er Date: ~I Zo/2 City of Converse: '`~~- ~'C-~ Date: I'~LI1a- Shawna Dowell, City Manager MOU AMDNG THE CITIES Or CIBDLD, CONVERSE, SCHERTZ, SEGDIN, Arm 3ELMA, Page 4 of 5 AND THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION City of Schertz: John Kessel, City Manager Date: I (/ City of Seguin: Gn /1. Douglas G.' aseler, City Manager Date: ~ Date: / " ZO - / ~ Cibolo Valley Local Government Corporation: Shawna Dowell, President Date: 1 /~ ~/ "oZ MOUAMONGTHE CITIES OF CIHOLO, CONVERSE, SCHERTZ, SEGUIN, AND SELMA, Page 5 of 5 AND THE CHfOLO VALLEY LOCAL GOVERNMENT CORPORATION January 26, 2012 Mx. John Kessel City Manager City of Schextz 1400 Schertz Parkway Schertz, Texas 78154 bix. Kessel, ~~Q;~~e~d -b~~,r~u, ~la~l is ~~ Fox your records I have enclosed an original signed copy of the Memorandum of Understanding among the cities of Cibolo, Converse, Schextz, Seguin, Selma and the Cibolo Valley Local Government Corporation (CVLGC). If you have any questions ox concerns, please advise. Thank you. Kindestxegaxds, a R a C. Franke Administrative Assistant Schextz/Seguin Local Government Corporation Cibolo Valley Local Government Corporation Enclosure (1) /YCf Cc: File 60012I1~ER DR1VP 11~EST. SEQUIN TEXAS 79155 1'HONE:(930)407-2409 FAX: (930)401-24.91