HomeMy WebLinkAboutResolution 96-080 memorandum of understanding with CMID to purchase water systemsMARANA RESOLUTION NO. 96-80
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF MARANA, ARIZONA
AUTHORIZING THE TOWN TO ENTER INTO A MEMORANDUM OF UNDERSTANDING
WITH THE CORTARO WATER USERS' ASSOCIATION AND THE CORTARO MARANA
IRRIGATION DISTRICT FOR THE TOWN'S PURCHASE OF THE DOMESTIC WATER
SYSTEM OWNED BY THE CORTARO MARANA IRRIGATION DISTRICT.
WHEREAS, the Town of Marana, Arizona is desirous of purchasing local water systems
in an effort to create a consolidated publicly owned water system for the Town;
WHEREAS, the Cortaro Water Users' Association and the Cortaro Marana Irrigation
District own a domestic water system which is available for purchase by the Town; and
WHEREAS, a Memorandum of Understanding has been drafted outlining the arrangements
for such a purchase.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Marana
that the Mayor is authorized to enter into the Memorandum of Understanding with the Cortaro Water
Users' Association and the Cortaro Marana Irrigation District outlining the general arrangements for
the purchase ora domestic water system by the Town; and
BE IT FURTHER RESOLVED by the Mayor and Council of the Town of Marana that Town
staff is directed to attempt development of an Intergovernmental Agreement to be brought before the
Council for approval that substantially complies with the Memorandum of Understanding.
PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona, this
1st day of October, 1996.
Mayor ED HONEA
Daniel J. Hochuli
Town Attorney
Marara~ Arizona R~olution No. 96-80 Page I of 1
MARANA RESOLUTION NO. 96-80
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF MARANA, ARIZONA
AUTHORIZENG THE TOWN TO ENTER INTO A MEMORANDUM OF UNDERSTANDING
WITH THE CORTARO WATER USER'S ASSOCIATION AND THE CORTARO MARANA
IRRIGATION DISTRICT FOR ~['HE TOWN'S PURCHASE OF THE DOMESTIC WATER
SYSTEM OWNED BY TI-IE COR~ARO MARANA IRRIGATION DISTRICT.
WHEREAS he " ~
, t Town of Maria, Arizona is desirous of purchasing local water systems in
effort to create a consohdated pubh61~ owned water system for ~he Town; and
WHEREAS, the Cortaro Water Users' Assoc~ataon and the Cortaro Marana Irrigation District
own a domestic water system which is avm~ble for purchas~b:y the Town; and
WHEREAS Mem d\del/
· a oran um of Un e~standing has'been drafted outlining the arrangements
for such a purchase.
NOW, THEREFORE, BE
that the Mayor is authorized to enter into
for the purchase cfa domestic water
~. Town; and
of the Town of Marana
with the Cortaro Water
outlining the general arrangements
BE 1T
staff is directed to attempt development
the Council for approval that
and Council of the Town of Marana that town
Agreement to be brought before
of Understanding.
PASSED AND ADOPTED
17th day of September, 1996.
ATTEST:
Sandy Groseclose
Town Clerk
of Marana, Arizona, this
Mayor ED HONEA
APPROVED AS TO FORM:
Daniel J. Hochuli
Town Attorney
Marana, Adzona Resolution No. 96-80 Page 1 of 1
.-/
SMARA
TOWN OF MARANA
ATTN: TOWN CLERK
13251 N LON ADAMS RD
MARANA AZ 85653
DOCKET:
PAGE:
NO. OF PAGES:
SEQUENCE:
i1Et10
10434
274
10
96202966
12 /OL~ /96
10:32:00
F. ANN RODRIGUEZ. RECORDER
RECORDED BY: DDA
DEPUTY RECORDER
1969 ROOE
t'1A I L
AI"1OUNT PA I D
$ 10 .50
MEMORANDUM OF UNDERSTANDING
October 31, 1996
This Memorandum of Understanding ("Memorandum") between the
Town of Marana, a municipal corporation of the State of Arizona ("Town") and
the Cortaro Water Users' Association, an Arizona corporation and the Cortaro-
Marana Irrigation District, an Irrigation Dis1:!is!'pf the State ?~ Arizona
(collectively "District") is entered into this 6'r} day of Nt) u.emhRl.A- ,
1996 to establish basic principles (concepts) of agreement between the Town and
District which will serve as the foundation for the drafting of a final document
("IGA") by staff, counsel and consultants of both the Town and District which
remains true to the agreed upon principles. This Memorandum constitutes a
Letter of Intent by which, inter alia, Town agrees to purchase and District agrees
to sell District's domestic water customers and domestic water distribution
systems and enter into a long term wholesale water agreement, all as more fully
set forth herein and hereinafter in the IGA.
NOW, THEREFORE, TOWN AND DISTRICT DO HEREBY MUTUALLY
AGREE TO THE FOLLOWING PRINCIPLES OF AGREEl\tIENT:
A. PURCHASE OF DISTRIBUTION SYSTEMS - District (combined
boundaries of CMID and CWUA) will sell and transfer its domestic water
customers and domestic water distribution systems, domestic water service area,
designation of assured water supply, franchise, domestic operating business,
domestic inventory and supplies related to domestic water service, all as listed in
Exhibit A, to Town in "AS IS" condition for $600,000 in cash. The price is
established for six (6) months from the effective date of this Memorandum.
Town then owns and operates these systems (as herein described), takes control
of the District domestic service area and has rate-making authority. The transfer
includes a District 1990 1-ton service truck but no other District vehicles.
1. CAP M&I ALLOCATION - The District CAP M&I allocation (47 acre
feet (or AF) annually) is included in the purchase price and Town is responsible
to pay all associated costs and expenses related to this allocation after December
31, 1996, assuming an IGA has been finalized, plus any transitional costs.
2. RECHARGE - Town may execute an additional contract with District
for (i) the recharge of the 47 acre feet CAP M&I allocation, and (ii) recharge of or
use of other Town resources, provided Town receives all recharge credits.
Contracts, permitting, scheduling and other details would need to be negotiated
at the appropriate time.
1
10434
274
3. STANDPIPE - Within a reasonable period of time, not to exceed twelve
(12) months, Town will relocate the standpipe from in front of the District offices
and shopyard to another location to be selected by Town.
B. TRUST - District transfers to Trust five (5) District M&I wells where
District, as Trustee, holds and operates the wells in the Trust for the benefit of
Town as beneficiary. Town receives beneficial ownership of the wells under the
Trust and agrees Trust wells will be operated by District for Town consistent
with good management of the aquifer. The purpose of the Trust is to eliminate
any legal conflict between Town and District arising from the Deed Restrictions
in favor of District which restrict the right of landowners within the District,
including Town, from drilling, owning or utilizing non-District wells larger than
50 gpm, and the IGA shall contain mutually agreeable provisions to eliminate
such conflict. The Trust mechanism must be designed to the maximum extent
possible eliminating limitations on Town's ability to utilize the wells transferred
to the Trust as security for raising capital for water system improvements. The
Trust shall automatically terminate at the end of the contractual term of the IGA,
including any extensions thereof and title to all Trust wells will vest in Town
without any further limitations or restrictions imposed by the Trust. In the event
the IGA is declared void or unenforceable, or there is a breach of the IGA
resulting in a termination of the IGA or other material violation as defined in the
IGA: a) legal title to the Trust wells transferred by District to the Trust shall
revert to District; provided, however, the wells so transferred to District shall
continue to provide water to Town upon mutually agreed upon terms and
conditions for a reasonable period of time thereafter so as to avoid a disruption
of service to Town's customers; and b) Title to all wells transferred by Town to
Trust, whether paid for by Town or another party other than District, shall
become the sole and separate property of Town.
1. TRANSFER OF DOMESTIC WELLS - After consultation with the
District, in the future under the IGA, the Town will convey to the Trust any
currently existing Town domestic M&I wells such as the Honea wells and any
future District M& I wells acquired or controlled by the Town within the District
(whether from the District, developers or otherwise) until the termination of the
IGA, including any extensions thereof. In consideration of the transfer of such
wells to the Trust, District agrees to utilize the lowest cost electrical power
supplies (as described in E, below) available to the District after providing water
to its primary uses, and to operate the wells as Trust wells and as defined in a
separate O&M agreement (Exhibit A to the IGA). Town will provide District an
option to act as Town's agent to manage and operate wells outside of District.
2. IRRIGATION WELLS - District irrigation wells, if District determines
they have become surplus to irrigation, may transfer to M&I use when this
10434
275
2
benefits new development. Upon approval of the well by Town for
interconnection with Town's domestic system, any such well and wellsite shall
be transferred into the Trust. District will be compensated by Town for the value
of any such irrigation wells and wellsite transferred to the Trust at a formula to
be determined in Exhibit B to the IGA. The formula to be developed may include
independent appraisals of the particular well and wellsite by Town and District
with a negotiated settlement of any difference between appraisals or may include
any other method to determine the level of compensation mutually agreeable to
the parties. Town will have the freedom and authority to determine the pricing
to a developer for any such well and any proceeds received by Town from a
developer belong to Town. Town shall have the right of first refusal to purchase
District wells at the time they are determined by District to have become surplus
to irrigation requirements, realizing that it is not possible for District to forecast a
time line on the availability of particular wells or the sequence in which they
might become available. Wells which are paid in full for by Town and
transferred to the Trust shall be deemed Town wells and shall not be subject to
reversion to District upon termination of the IGA or the Trust.
3. DEFINITION OF OM&R - OM&R expense of District will include
maintenance and replacement of Trust owned wells and equipment, including
mechanical parts (bowls, column, tube, shafting, bearings, discharge meter, etc.),
electrical controls, electricity to run the pumps owned by the Trust, well
picturing (television scanning) and scrubbing as necessary. Town pays for all
expenses for water treatment, disinfection and modifications or upgrades due to
water quality or other reasons, well failure, and all facilities beyond the well
discharge (or meter). Some items that overlap, such as an electrical main breaker
or meter base, would be shared costs. General wellsite maintenance would be
the Town's responsibility. Where electrical service is measured by the electric
provider for service rendered to multiple facilities, some of which are owned by
the Trust and/ or District and some of which are owned by Town, District shall
pay the electric bills and invoice Town for its appropriate share. Town pays for
any direct electrical purchases it may make and for any electric service provided
to Town-owned or operated facilities.
4. WELL REPLACEMENT - Replacement of a Trust well due to failure
will be at Town's expense, but at the request of the Town, District will have an
option to finance. Reimbursement (if District does finance) by Town to District
would be over a four-year period at the then current prime interest rate plus
three (3) percent. Any additions or upgrades to Trust wells or District irrigation
wells that may transfer to the Town would be at the option of the Town and paid
by the Town. Amounts paid by Town for repairs, replacement or upgrades to a
Trust well which reverts to District in accordance with Paragraph B hereof, shall
be credited against the acquisition price of the well and wellsite in the event
10434
276
"
.)
Town later acquires the well from District, less an appropriate depreciation or
amortization factor.
C. PIPELINES. (Specifically a 30" CRP under 1-10 near Cortaro Road).
Included in the purchase price and the acre foot water price, Town shall have the
right to enter into a license with District to place a twelve (12) inch sleeve in the
thirty (30) inch CRr under 1-10, consistent with the District's agreements with the
Arizona Department of Transportation.
D. NON-POTABLE WATER SERVICE. Defined as non-potable water
service for construction, dust control, road maintenance, fire protection, large
industrial users, sand & gravel, and golf courses from District irrigation wells,
and ditches. District will have the option to continue to serve new non-potable
customers where the use of District irrigation facilities can meet new demand
most effectively and efficiently. Having the District serve large non-potable
(non-effluent) water users may benefit Town in complying with its GPCD
requirements. District agrees Town should maximize effluent use on large new
turf areas such as golf courses. District wants to work with Town on effluent
reuse and to attempt to maximize the use of this resource where appropriate to
meet requirements for use of renewable supplies, for recharge and replenishment
(See, A.2, above). The District does have a question about its obligation to
continue to serve a shareholder who pays assessments but converts from farming
to some M&I non-potable use. To address this concern, under the IGA Town
will become District's agent for delivery of potable water and some non-potable
water within the District. This provision shall not compel Town to provide non-
potable water service as agent for District in violation of any Department of
Water Resources Management Plan.
1. RETIRED LG.R.'SjTYPE I RIGHTS - The District agrees as lands within
the District are retired, the Town, to the extent permitted by law, is permitted to
obtain LG.R.'s for transfer to Type I Rights. The Town shall develop its water
system in a manner so as to retain the right to convert to Type I Rights to the
maximum extent possible. This provision will not be construed to prohibit Town
from extending its system in a manner consistent with the best engineering
practices. Town is entitled to all water rights on lands it owns, but wants to use
those rights to gain the most benefit under conservation rules and regulations of
Arizona law.
E. ELECTRICITY /ELECTRICAL SUPPLY - It is a common objective of
District and Town to find and secure low-cost electrical power for the use of the
inhabitants of both the District and Town when and where available. If the
Town can make less expensive electric power available to the District to operate
Trust wells, the District, consistent with its contracts, will use the power made
10434
277
4
available and flow through the savings in the form of lower costs to the Town, to
the extent the facilities in the Trust receive and are capable of utilizing such
power. If the District, without prejudice to its primary beneficiaries, can secure
electric supplies for the benefit of Town, it, with Town's approval, will do so.
Exhibit C to the IGA would be used to describe the method of computing any
such credit to the Town. District and Town agree that to the extent possible, the
District Hoover allocation should remain in the District (Marana) area, and as
agricultural irrigation demand decreases over time, this resource should
transition from irrigation to urban (Town) uses within the same area.
1. METERING AND BILLING - Where District and Town operate
facilities on the same wellsite, one master meter would normally be utilized with
kwh meter(s) installed to determine the division of electric power use between
District and Town facilities. District would bill Town for its share of power use.
Town and District may mutually agree to install, at Town's sole cost and
expense, separate electric meters to measure the electricity provided to Town's
facilities.
2. COOPERATION - Town and District will cooperate in pursuing power
and wheeling arrangements which will permit them to share in lower cost
electrical power savings, including pursuing wheeling energy, the District deems
to surplus its needs through AEPCO and! or TRICO to wells in the TRICO
service area. Any discussions or negotiations the Town may have which could
potentially involve or impact existing District contracts with T.E.P. or the
Arizona Power Authority will be conducted only in unison with and by mutual
agreement with District. This is not intended to restrict the Town from
investigating options it may have to purchase electrical energy resources or
services, only the requirement to work with the District where this may involve
existing District contracts or a District obligation to accept power under the
Agreement. Town shall provide District with written notice of any attempt by
Town to obtain alternative electrical supplies.
F. WHOLESALE WATER RATE - The IGA agreement is a production
agreement and! or a requirements contract. The price schedule below is to be
tied to an inflation! escalation factor (details to be in IGA). Annually, the Town
will purchase from District and! or pay District for the first 20,000 acre feet of
Town water system demand for potable water service provided by Town or its
agent within District. Purchase of water in excess of 20,000 acre feet is subject to
negotiation with District, with Town having the option to purchase amounts in
excess of 20,000 acre feet annually from alternative sources located outside
District. Nothing herein shall limit Town's right to obtain water from any source
for potable water service to Town customers located outside of District.
10434
278
5
1. AFTER-ACQUIRED SYSTEMS - With respect to any system
acquired by Town subsequent to the effective date of the IGA and through which
Town or its agent is making potable water deliveries within the District,
including Continental Ranch, the IGA shall establish a method of transitioning
such system so that, within a reasonable period of time, Trust wells are
providing the water thereto. Unless otherwise mutually agreed, Town will
purchase from District all potable water deliveries made by Town within the
District, including any potable water water delivery systems acquired by Town
from the City of Tucson or other municipalities or other entities. Payment to
District for potable water deliveries to existing service areas acquired from the
City of Tucson and made by non-Trust wells will not start until commitments to
the City of Tucson are fulfilled. No later than eighteen (18) months after the
Town fulfills the other obligation to provide potable water service or receives
any non-tax compensation related to the provision of potable water service, all
such water deliveries shall be deemed water deliveries by Town pursuant to this
Paragraph F and District shall be paid therefore at the price specified herein.
2. RATE - The District offers a tiered rate structure with a discount for
volume purchases based on the following formula:
o
2,001
5,001
2,000 AF
5,000 AF
10,000 AF
10,000 AF
=
$200/ AF
$190/ AF
$180/ AF
$175/ AF
=
=
>
=
Water produced for Town which is exported outside District boundaries,
as an impact fee upon the District supplies, shall be priced at an additional cost
of fifty dollars ($50) per acre foot in addition to the foregoing rate schedule,
unless Town provides exchange water on a one for one basis and in a manner
acceptable to District for District lands. Town belongs to the CAGRD and will
use its best efforts to obtain cooperation from the CAGRD to use CAGRD or
other approved recharge facilities within District to fulfill Town's (and any other
CAGRD members') recharge obligation within District to the fullest degree
desired by District.
In the IGA, a formula will be created to determine and adjust as necessary
on an annual basis, those amounts of water produced within the District and
delivered outside the District within the prior year.
a. Town would pay any applicable sales or other taxes.
b. Concerning the financial obligations of the Town in its acquisition of
the District water system, at the beginning of each year there will be a calculation
6
IO~34
279
of all taxes, fees and assessments upon District agricultural landowners where
the taxes, fees and assessments on agricultural lands are in any portion used to
repay Town or amortize the acquisition price of the capital component of
operation of Town's water system in District, then the same shall be divided over
the acre feet of water sold to Town in the previous year and added to the next
year's fee for water to be paid by Town. Nothing herein shall prevent Town
from charging water development or similar fees to new customers or
developers to fund the cost of installation of water facilities or purchase of water
supplies, and such water development or similar fees shall not be added to the
wholesale rate charged by District hereunder. Neither shall any CAGRD charge
or assessment levied by the CAGRD on Town be included in any District
wholesale rate.
G. DISTRICT SURFACE WATER CERTIFICATE - Town and District
agree that it may be time to begin the process of converting some of District's
surface water right from agricultural to M&I use, provided it is mutually agreed
this would help to preserve andf or protect the right. District's Santa Cruz
surface water rights surplus to the irrigation requirements of District are
intended to transfer to the Town consistent with applicable laws and regulations
and as conveyance can be accomplished.
1. District is including benefits derived from District's Santa Cruz River
appropriation in the purchase price at no extra cost. In return, Town agrees to
make this renewable resource available for new domestic service on District
lands. If ADWR honors any portion of the 29,190 acre feet of District
appropriative water right for Assured Water Supply, Town agrees to provide no
less than the amount of water recognized by ADWR for proof of assured water
supply for new development within the District.
2. District and Town shall mutually agree on a method for transferring
surface water rights and claims from agricultural to municipal use, and the
ownership thereof for lands that are retired from irrigation use and converted to
urban land use.
H. GUARANTEE OF SERVICE - As a portion of the consideration paid
to the District, the Town, since it will have the delivery system, agrees to make
available and provide M&I water service to all lands in the District
(CMIDfCWUA) on non-discriminatory terms and conditions when they convert
for development. All lands in the District are not currently within the
boundaries of the Town, but will have as equal an opportunity as any other lands
within the Town service area to benefit from new development served by the
Town water system (See also G, above).
10434
280
7
1. RIGHT OF WAY ACCESS - The Town shall have the right to cross
District irrigation facilities subject to the standard permitting process of the
District but will not be allowed to parallel District facilities within District rights-
of-way and easements without the approval of District, which approval is
generally not granted by District. Domestic system facilities that transfer from
District to Town in the IGA, which are located within District rights-of-way and
easements at the time of transfer, shall be granted the right to remain therein and
the Town shall be granted access thereto at any time for maintenance and repair.
Town agrees to restore District's rights-of-way and easements to their original
condition upon completion of any maintenance or repairs by Town therein.
Town may upgrade its domestic system facilities within District rights-of-way
and easements, but must first obtain the approval of the District before placing
any additional facilities within these same rights-of-way or easements. Said
grants to Town shall be evidenced in a form mutually acceptable to District and
Town.
J. LEASE OF PROPERTY - The District will lease for a term a portion of
the District-owned property on the Frontage Road in Marana for agreed upon
Town functions, recognizing the District has a continued need to use a portion of
the property as a service and storage yard. During the term of any such lease,
the Town would retain first right of refusal to match any offer the District may
receive in consideration for purchase of the property, should the property
become surplus to the needs of the District.
K. FIBER OPTICS - The Town and District recognize the value to the
community of fiber optics communication and would negotiate to jointly share in
ownership, costs and revenues or license or franchise fees on a pro rata basis
determined by the number of feet of right-of-way owned by District and the
number of feet of right-of-way owned by Town for fiber optics cable laid in
water line trenches and along District right-of-way.
L. TERM OF IGA - The IGA shall run until the year 2020; provided,
however, the term shall automatically be extended an amount of time equal to
the period, if any, Town, or its agent, receives potable water deliveries within the
District from a source other than Trust wells, and pursuant to Paragraph F.l. is
not required to pay District therefore. Five (5) years prior to expiration, the
Town and District will commence meetings to renegotiate the IGA. If an IGA or
extension of the existing IGA cannot be renegotiated, all domestic wells held in
trust for the benefit of Town will become the sole and separate property of Town
at the end of the IGA. Additionally, if at some future point the District should
determine to dissolve and thereafter allow the Town to provide the need for
irrigation water to remaining agricultural lands in the District, the Town agrees
to negotiate with the District to meet the needs of the District.
10434
281
8
M. OPERATING COMMITTEE - An Operating Committee to implement
the IGA and deal with on-going communication and operating and other issues
shall be established with equal representation from both the Town and District.
The Town and District shall mutually agree on the location and frequency of
Committee meetings. This Committee shall, in addition, be responsible to
maintain a working relationship between the Town and the District. The District
and Town shall work to support each other in water matters involving other
water agencies, such as CA WCD (CAP), ADWR, ADEQ and any others.
N. WATER QUALITY - The Town is responsible for water quality.
O. LEGAL AUTHORITY - The parties agree each is relying on the legal
and lawful authority of Town and District to perform their respective obligations
under the IGA. If subsequently either party is prevented or unable to perform a
material provision (to be specifically listed in the IGA), the Parties will be
released (except for the payment of the purchase price and the requirement
purchase provisions) from the executory portions (those actions yet to be
performed by any of the Parties) of the IGA. It is intended the Bill of Sale and
documents of transfer will protect Town in its acquisition of assets and the
District in its receipt of monies.
P. RATIFICATION - The IGA will be subject to voter ratification by the
District's landowners and the Town Council unless such vote is not required by
law.
This Memorandum of Understanding shall be effective and binding upon
Town and District upon approval by the Town Council and the District's Board
of Directors and upon due execution.
Cortaro Water Users' Association
Town of Marana
~~; <:i:f:xLf!dA ~
~IIJ OF#ft::-t ,,'
By: !<f~~
Its:: /Jj'a/I)r.:
"'ilJ,
.:' ,.-"'
\0434
282
9
Attest: ;4.; I? &.d
By:
Its: IJ1A#l/tf~R
IGll34
285
Approved At~
~~
Town Attorney
10