16-R-69 - Interlocal Agreement Between Schertz, Seguin and the Scherts-Seguin Local Government Corporation outlining the cost allocation methodsWHEREAS, The City of Schertz (the "City ") population continues to grow and this
growth has created an increasing need for sustainable, clean, healthy drinking water; and
WHEREAS, The City acquires almost all of its drinking water through the Schertz
Seguin Local Government Corporation (SSLGC), a non -profit corporation developed as a result
of the partnership of Schertz and Seguin to acquire sustainable drinking water in 1999; and
WHEREAS, The SSLGC's pipeline from Seguin to Schertz has reached its maximum
capacity secondary to outside contracts that have provided benefits to the SSLGC and its owners
and the growth of Schertz is creating a demand for water that is approaching the maximum
capacity of the current well field in Gonzalez County; and
WHEREAS, SSLGC has an additional parallel pipeline from Seguin to Schertz and an
additional well field in Guadalupe County approved in the State Water Plan and has applied for
and received approval for funding from the Texas Water Development Board; and
WHEREAS, The Pipeline Project benefits SSLGC and all of its customers including both
owners and the Guadalupe Well Field will benefit the City of Schertz and other customers to a
greater degree than the City of Seguin; and
WHEREAS, SSLGC, the City of Schertz and the City of Seguin staff agree that an
additional written agreement that clearly outlines how the costs of both of these projects will be
allocated amongst both cities and other customers of SSLGC in accord with the current
perceived benefit to all parties.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
1118"Eu
Section 1. The City Council hereby authorizes the City Manager to enter into an
interlocal agreement in substantially the same form as the attached agreement in Exhibit A.
Section 2. 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.
Section 3. 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any provision of this Resolution are hereby repealed to the extent of such conflict, and the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 4. This Resolution shall be construed and enforced in accordance with the
laws of the State of Texas and the United States of America.
Section 5. 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 6. 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 7. This Resolution shall be in force and effect from and after its final
passage, and it is so resolved.
PASSED AND ADOPTED, this 30th day of August, 2016.
CITY OF SCHERTZ, TEXAS
or, Michael R. Carpenter
ATTEST:
r
ity Secretary, Brenda Dennis
(CITY SEAL)
50448599.1 A -1
STATE OF TEXAS §
COUNTY OF GUADALUPE §
Cost Allocation Agreement Relating to the Guadalupe Project
This Cost Allocation Agreement ( "Agreement ") is executed by and among the City of
Schertz, Texas ( "Schertz "), the City of Seguin, Texas ( "Seguin "), and the
Schertz/Seguin Local Government Corporation ( "SSLGC ") as of August 30, 2016 (the
"Effective Date "). Schertz and Seguin are both Texas home -rule cities and the SSLGC
is a Texas non - profit, public corporation created by and to act on behalf of Schertz and
Seguin pursuant to Subchapter D of Chapter 431 (Sections 431.101- 431.109) of the
Texas Transportation Code and other applicable law each of which is authorized to
enter into this Agreement pursuant to the authority as further described below. Schertz,
Seguin, and the SSLGC are jointly referred to as the "Parties," and individually, each a
"Party.,,
Recitals:
1. The Parties entered into an agreement captioned "Regional Water Supply
Contract" dated November 15, 1999 that addressed the financing, construction, and
operation of a regional water supply project benefitting Schertz and Seguin and their
utility system ratepayers (the "1999 Agreement ").
2. The 1999 Agreement provides the contractual authority for the SSLGC to
operate, maintain, and manage the SSLGC utility system on a regional basis for the
direct benefit of the residents and ratepayers of Schertz and Seguin and with respect to
their respective utility systems. In addition, the SSLGC, Seguin, Schertz, and the City of
San Antonio, Texas, acting by and through the San Antonio Water System ( "SAWS')
entered into an agreement captioned "Mutual Regional Water Supply Contract ",
effective as of January 1, 2011 (the "2011 Agreement ") that addressed the financing,
construction, and operation of a regional water supply project (the "2011 Project ")
benefiting SSLGC, Schertz, Seguin, and SAWS.
3. SSLGC has previously issued four separate series of contract revenue bonds
supported solely by the 1999 Agreement that were reviewed and approved by the
Texas Attorney General to finance the acquisition, construction, and equipment of
various regional water supply projects.
4. SSLGC has previously issued one series of contract revenue bonds supported
solely by the 2011 Agreement that was reviewed and approved by the Texas Attorney
General.
5. The 1999 Agreement and the 2011 Agreement have successfully permitted
Schertz and Seguin, acting through SSLGC, and SAWS with respect to the 2011
Agreement, to finance various water supply projects on a regional basis that have
permitted Schertz, Seguin, and SAWS to interconnect their water utility systems and to
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permit Schertz and Seguin to acquire, transport, and treat water for delivery into their
respective utility systems in an efficient and cost - effective manner.
6. The Parties have now determined that it is in their best interests for the . SSLGC
to proceed with a project to construct a second pipeline with a minimum diameter of 36
inches from the existing pump station located south of the Seguin to a point of delivery
in Schertz (the "Pipeline Project ") and to develop a well -field in Guadalupe County,
Texas, together with a new water treatment plant (the "Guadalupe Project ", collectively
with the Pipeline Project, the "Projects ") to treat water from the Guadalupe Project.
These new Projects will be funded using financial assistance from the Texas Water
Development Board (the "TWDB "). The Guadalupe Project is in accordance with and
compliance with the TWDB State Water Plan. The Pipeline Project and the Guadalupe
Project are more fully described in the application for financial assistance and
supporting documentation filed by the SSLGC with the TWDB and those descriptions
are incorporated by reference into this Agreement. The current financing estimates for
these 2016 Projects are:
Guadalupe Project Cost Estimate: $34,345,000
Pipeline Project Cost Estimate: $32,155,000
Total Cost Estimate: $66,500,000
SWIRFT Funding Breakdown:
Low Interest Loan: $43,670,000
TWDB Participation: $22,830,000
TWDB Loan Assistance Total: $66,500,000
7. This Agreement shall constitute an interlocal cooperative agreement as
authorized pursuant to the provisions of Chapter 791, as amended, Texas Government
Code, entered into by the Parties hereto for the purpose of delineating the financial
obligations undertaken pursuant to the Pipeline Project and the Guadalupe Project, the
term of which concludes when the Debt Service Payments (defined below) and any
other obligations due and owed in relation to both Projects are no longer outstanding,
and this Agreement is subject to the rights and duties of the Parties as further described
herein.
8. Schertz, Seguin, and the SSLGC have agreed that the SSLGC will promptly
proceed with the construction of the Pipeline Project. The Debt Service Payments (the
"Debt Service Payments ") and the Operations and Maintenance Expenses (the
"Operations and Maintenance Expenses ")of the Pipeline Project shall be governed by
the Parties' 1999 and 2011 Agreements and as prescribed below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, as
to the Guadalupe Project, the Parties hereto hereby agree as follows:
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1. This Agreement is not intended to amend and should not be construed to amend
the 1999 Agreement, its covenants or obligations entered into in connection therewith,
or any agreements with the TWDB, but is intended by the Parties to allocate, as
between Schertz and Seguin, the responsibility for payment of the Debt Service
Payments and Operation and Maintenance Expenses allocated to the Guadalupe
Project.
2. The SSLGC, Schertz and Seguin shall accept the financial assistance offered by
the TWDB prior to September 6, 2016 and proceed with closing of the transactions with
the TWDB.
3. As between Schertz and Seguin, and as long as this Agreement has not been
modified or amended, Schertz shall be responsible for timely payment to the SSLGC of
one hundred percent (100 %) of the Debt Service Payments relating to TWDB financing
of the Guadalupe Project. This Agreement is not intended to and shall not be construed
to prohibit or hinder the SSLGC from recovering any portion of Schertz' payment
obligations under this paragraph from sales of water produced from the Guadalupe
Project and sold to third parties. Until the Guadalupe Project is producing water for
entities other than Schertz, Schertz will make the Debt Service Payments.
4. The construction start date for the Guadalupe Project will be delayed at least a
year from the Effective Date of this Agreement and if permitted under the terms of the
SWIRFT Funding, potentially longer as the overall need and timing of that water is
better understood (although the Parties acknowledge that the proceeds of any
borrowing from the TWDB are reasonably expected to be spent within 5 years of
receipt). This need for water is a primary concern of Schertz, but is also contingent upon
a variety of factors within the overall regional water supply as of the Effective Date of
the Agreement. It is the Parties' belief that this temporary delay in starting the
Guadalupe Project will allow for a number of reviews to occur and reoccur regarding
water need, funding models and other potential customers. It is also anticipated that
these reviews will allow the Guadalupe Project to be better developed in accordance
with those needing the water it will produce. In the absence of mutual agreement
between Schertz and Seguin when the SSLGC should commence construction of the
Guadalupe Project after the one year agreed -upon delay in the start of construction,
Schertz will have the discretion to request or direct that the SSLGC start the
construction of the Guadalupe Project
5. At least annually Schertz and Seguin shall review the assumptions and
obligations under this Agreement, the 2011 Agreement and the 1999 Agreement. Upon
agreement of all Parties, this Agreement may be modified or amended to meet the then
current needs. Included in this review the Parties will annually review any alternative
water pricing strategies that would increase the financial well -being of the SSLGC, the
betterment of Schertz and Seguin, and benefit the water customers of both Schertz and
Seguin. The results of the annual review will be reported by SSLGC to the governing
body of each of the Parties.
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6. A Water Treatment Plant is to be constructed as part of the Guadalupe Project.
The Water Treatment Plant shall be constructed with a maximum design capacity for
the Guadalupe well field. If other entities desire to utilize the Guadalupe Water
Treatment Plant, or cause its capacity to be enlarged, then those entities shall pay, prior
to any use, the cost of increased capacity or their proportionate share of the present
capacity. This payment of capital costs shall be in addition to costs for treatment and
transportation of their water, including a proportionate share of the Operation and
Maintenance Expenses through the Pipeline Project.
7. The prices and rates for water produced by the Guadalupe Project will be a
separate rate and will include all Operation and Maintenance Expenses, as well as the
Debt Service Payments, allocated to the Guadalupe Project. The Parties intend for this
separate rate to ensure that the users of water produced from the wells in Gonzales
County do not pay for or subsidize the Guadalupe Project and that users of water
produced by the Guadalupe Project pay the Operation and Maintenance Expenses and
the Debt Service Payments, allocated to the Guadalupe Project, and a proportionate
share of the Operation and Maintenance expenses of the Pipeline Project.
8. Any and all future water sales to current customers, other than Schertz and
Seguin, would only be done if both of these conditions are satisfied: (i) a contractual
renegotiation on the original contract to supply water if the customer is not currently
paying for incurred debt on the water they are purchasing; and (ii) that all new water
sales negotiated will be water produced from the Guadalupe Project until the production
of water from the Guadalupe Project reaches capacity.
9. SSLGC presentations done for or at the request of the city council, or city council
committee or group of members of the city council, of Schertz or Seguin will be offered
to and presented to the city council (or council committee or group of members of the
city council) of the other city to help maintain openness and transparency unless said
city declines the presentation in writing.
10. Seguin, except as provided herein, shall not be liable for payment of any portion
of the Debt Service Payments on the Guadalupe Project, unless there is a default by
Schertz under this Agreement which in turn, causes a default under the 1999
Agreement. In the event of Schertz' default, Seguin's obligation is limited to fifty percent
of the Debt Service Payments under the 1999 Agreement. Schertz shall reimburse
Seguin for any and all Debt Service Payments actually paid by Seguin as required by
the bonds issued by SSLGC for the Guadalupe Project, regardless of whether the
amount of the payments exceeded the amount that Seguin may be required to pay
under the 1999 Agreement. Interest shall accrue on amounts paid by Seguin and not
timely reimbursed by Schertz at the then highest interest rate allowed by law for home
rule cities. As used in this section, payment is due within forty -five days after receipt of
an invoice or other written demand for payment.
11. In consideration of Schertz and Seguin's prior payments towards the
development of the Guadalupe Project, including the acquisition of water leases, land,
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and rights of way required for the well, well collection pipelines, and the Water
Treatment Plant and preliminary engineering design and Schertz and Seguin's
contingent liability under the 1999 Agreement for fifty percent of the Debt Service
Payments on the bonds that have been previously issued by the SSLGC for the
Guadalupe Project, Schertz and Seguin shall each have continuous rights to a fifty
percent (50 %) of the capacity of the Guadalupe well field.
12. When SSLGC has a bona fide contract for the purchase of Guadalupe Project
water, the Parties must both approve the contract in accordance with the 1999
Agreement. If approved, the purchased capacity shall be equally taken from both
Schertz and Seguin's share of the Guadalupe well field capacity if possible. If either
Party is using a percentage of the Guadalupe well field that prevents the equal division
of the newly purchased water, the other Party must agree to the usage of a greater
percentage of their rights for that particular customer. Before this request is made by
SSLGC, the Party whose share is preventing the equal division of a contracted amount
must be using their total allotment from the Gonzales well field. When a customer
seeks to purchase Guadalupe Project water, their rate shall also include a debt
repayment amount equal to the proportionate share of the water they are to purchase
from the Guadalupe well field.
13. If Seguin determines that it needs to take water from the Guadalupe well field
between year 1 and year 15 of the Guadalupe Project water production, Seguin shall be
responsible for repaying to SSLGC one -half of the Guadalupe Project well field debt
paid to date by Schertz. If Seguin determines it needs to take water from the
Guadalupe Project well field after year 15 of water production, Seguin shall pay the
proportion of the remaining debt as a function of the overall water rate for the water they
consume.
14. If either Party needs additional water that causes them to exceed their 50% of
the Guadalupe Project well field, including the percentage used by outside customers,
and have reached capacity of their Gonzales field share, the other Party shall allow
them to use shares of their unused capacity of the Gonzales well field or the Guadalupe
well field, at the other Party's choice. Such usage will offset any debt payments due
from that Party by the corresponding percentage of water granted.
15. Schertz and Seguin are obligated by this Agreement to make the payments only
from revenue from its combined utility system and not from ad valorem taxes (in
accordance with Section 791.011(d)(3), Texas Government Code, as amended). These
payments are deemed to be and shall be considered combined Operation and
Maintenance Expenses of Schertz' or Seguin's, as applicable, combined utility system
as required by the ordinance authorizing the issuance of any debt obligations issued by
Schertz or Seguin, as applicable, and currently outstanding and payable from the
revenues of Schertz' or Seguin's, as applicable, combined utility system.
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16. This Agreement shall remain in effect so long as any obligations issued by
SSLGC for the Guadalupe Project, and any refunding bonds of those obligations,
remain outstanding.
General Provisions:
(a) Subject to the terms and conditions herein {provided, each Party hereto will
use such Party's reasonable business efforts to take, or cause to be taken, such
actions, to execute and deliver, or cause to be executed and delivered, such additional
documents and instruments and to do, or cause to be done, all things necessary, proper
or advisable under the provisions of this Agreement and applicable law to consummate
and make effective all of the transactions contemplated by this Agreement (collectively,
the "Further Acts "), provided, however, no Party shall be required to undertake any
Further Acts if it would incur material or unreasonable out -of- pocket expenses or
liabilities (other than the pecuniary obligations and liabilities otherwise required
hereunder) in connection with or relating to such Further Acts or providing such
obligations under this Section and any requirement to so expend such funds shall
excuse that Party from performance under the terms of this Section if such Party so
elects.
(b) If one or more of the provisions hereof shall for any reason be held to be
invalid, illegal, or unenforceable in any respect under applicable law, such invalidity,
illegality, or unenforceability shall not affect any other provisions hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
(c) All the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors, assigns, heirs,
executors, and administrators. The terms of this Agreement are mutual and not mere
recitals. The Parties hereby affirmatively find, agree and determine that all of the
recitations, matters, and facts set out in the recitals of this Agreement are true and
correct and are incorporated in and are part of the entire Agreement between the
Parties.
(d) Each Party to this Agreement represents to the others that it is
empowered by law to execute this Agreement and other agreements and documents
as are or may hereafter be required to accomplish the same, and that its execution
of this Agreement has been duly authorized by action of its governing body.
(e) The pecuniary obligation by Seguin and Schertz to make the payments
required by this Agreement shall not be subject to Force Majeure. The term "Force
Majeure" as employed herein shall mean acts of God, strikes, lockouts or other
industrial disturbances, acts of public enemy, orders of any kind of the
government of the United States or the State of Texas ( "State "), or regulatory
restrictions by a groundwater district, any civil or military authority, insurrection,
riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, tornados,
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blue northers, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accidents
to machinery, pipelines or canals, partial or entire failure of water supply,
inability on the part of the SSLGC to deliver water for any reason, or on
account of any other causes not reasonably within the control of the Party
claiming such inability.
(f) No change, amendment, or modification of this Agreement shall be
made or be effective that will affect adversely the prompt payment when due
of all money required to be paid by a Party under the terms of this Agreement.
(g) Any notice, communication, request, reply, or advice (herein
severally and collectively, for convenience, called "Notice ") herein provided or
permitted to be given, made, or accepted by any Party to the other Parties must
be in writing and may be given or be served by depositing he same in the
United States mail postpaid and registered or certified and addressed to the
party to be notified, with return receipt requested, or by delivering the same to an
officer of such Party. Notice deposited in the mail in the manner hereinabove
described shall be conclusively deemed to be effective, unless otherwise stated
herein, from and after the expiration of three days after it is so deposited. Notice
given in any other manner shall be effective only if and when received by the
party to be notified. For the purposes of notice, the addresses of the Parties
shall, until changed as hereinafter provided, be as follows:
If to SSLGC:
General Manager
Schertz /Seguin Local Government Corporation
P.O. Box 833
Seguin, Texas 78156 -0833
If to Schertz:
City Manager
City of Schertz, Texas
1400 Schertz Parkway
Schertz, Texas 78154
If to Seguin:
City Manager
City of Seguin, Texas
210 East Gonzales
Seguin, Texas 78155
A Party shall have the right from time to time and at any time to change their
respective addresses and each shall have the right to specify as its address any
other address by at least five (5) days' written notice to the other Parties.
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(h) This Agreement is subject to all applicable federal and State laws and
any applicable permits, ordinances, rules, orders, and regulations of any local,
State, or federal governmental authority having or asserting jurisdiction but nothing
contained herein shall be construed as a waiver of any right to question or contest
any such law, ordinance, order, rule, or regulation in any forum having jurisdiction.
Each Party represents that, to the best of its knowledge, no provisions of any
applicable federal or State law, nor any permit, ordinance, rule, order, or regulation
of either party will limit or restrict the ability of either Party to carry out their
respective obligations under or contemplated by this Agreement.
(i) Notwithstanding anything to the contrary contained in this Agreement,
any right or remedy or any default hereunder, except the right of a Party to receive
the payments from another party, which shall never be determined to be waived,
shall be deemed to be conclusively waived unless asserted by a proper proceeding
at law or in equity within four (4) years after the occurrence of such default. No
waiver or waivers of any breach or default (or any breaches or defaults) by any
Party hereto or of the performance by any other Party of any duty or obligation
hereunder shall be deemed a waiver thereof in the future, nor shall any such waiver
or waivers be deemed or construed to be a waiver of subsequent breaches or
defaults of any kind, character or description, under any circumstances.
(j) All amounts due under this Agreement, including, but not limited to,
payments due, pursuant to the Pipeline Project and Guadalupe Project financings,
shall be paid and be due in Guadalupe County, Texas, which is the County in which
the principal administrative offices of each Party is located.
(k) This Agreement shall be governed by and construed in accordance with
the laws of the State, and the obligations, rights, and remedies of the Parties
hereunder shall be determined in accordance with such laws without reference to the
laws of any other state or jurisdiction, except for applicable federal laws, rules, and
regulations.
(1) This Agreement may be executed in counterparts, each of which shall
be an original and all of which together shall constitute but one and the same
instrument.
(m) No officer or agent of the Parties is authorized to waive or modify any
provision of the Agreement except by a written execution of such modification
documents signed by each Party's authorized representatives.
(n) The Parties agree that the recitals in this Agreement are true and
correct and are incorporated into the terms of this Agreement.
(o) The Parties agree that this is an Agreement by each Party for providing
goods and services to the other Parties, and that this Agreement is subject to
Chapter 271, Subchapter I, of the Texas Local Government Code, as amended. In
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addition, each Party agrees that the services provided by this Agreement are
governmental acts and not proprietary acts.
(p) This Agreement is not intended to confer any rights, privileges or
causes of action upon any third party other than the Parties. The relationship of the
Parties under this Agreement is not and shall not be construed or interpreted to be
a partnership, joint venture or agency. The relationship of the Parties shall be an
independent relationship, entered into at arms length for the purposes of effectuating
the Agreement. No Party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall be
binding on another Party.
IN WITNESS WHEREOF, the Parties hereto acting under authority of their
respective governing bodies have caused this Agreement to be duly executed as of
the Effective Date.
Attest:
Secretary, Board of Directors
Attest:
City Secretary
SCHERTZ/SEGUIN LOCAL GOVERNMENT
CORPORATION
in
President, Board of Directors
CITY OF S, H �, TEXAS
By:
r
CITY OF SEGUIN, TEXAS
in
Douglas G. Faseler, City Manager
Attest:
City Secretary
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