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HomeMy WebLinkAboutResolution 2023-071 Approving and Authorizing the Mayor to Sign the Third Amendment to Saguaro Bloom Water Facilities Agreement MARANA RESOLUTION NO. 2023-071 RELATING TO WATER; APPROVING AND AUTHORIZING THE MAYOR TO SIGN THE THIRD AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT WHEREAS The Town and D.R. Horton s predecessor in interest entered into an instrument entitled, "Amended and Restated Agreement for Construction of Water Facilities and Provision of Water Utility Service for the Saguaro Bloom Development Project," recorded in the office of the Pima County Recorder on June 29,2012 at Sequence No. 20121810303, as amended by the "First Amendment to Amended and Restated Agreement for Construction of Water Facilities and Provision of Water Utility Service for the Saguaro Bloom Development Project," recorded in the office of the Pima County Recorder on April 10, 2015 at Sequence 20151000319, and as further amended by the "Second Amendment to Amended and Restated Agreement for Construction of Water Facilities and Provision of Water Utility Service for the Saguaro Bloom Development Project," recorded in the office of the Pima County Recorder on May 11,2020 at Sequence 20201320064; and WHEREAS Town staff has negotiated a Third Amendment to Amended and Restated Agreement for Construction of Water Facilities and Provision of Water Utility Service for the Saguaro Bloom Development Project(the"Third WSA Amendment");and WHEREAS the Town Council finds that entering into the Third WSA Amendment is in the best interests of the Town and its citizens. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, AS FOLLOWS: The Third WSA Amendment between the Town of Marana and D.R. Horton, Inc., substantially in the same form attached to and incorporated by this reference in this resolution as Exhibit A, is hereby approved, the Mayor is hereby authorized and directed to sign it for and on behalf of the Town of Marana, and the Town's Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to carry out the terms, obligations, and objectives of the amendment. - 1 - Resolution No.2023-071 PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona, this 20th day of June, 2023. Mayor Ed Honea ATTEST: APPROVED AS TO FORM: / David L. Ud own Clerk Ja e Fairall, Town Attorney MARANA AZ ESTABLISHED 1977 - 2- Resolution No.2023-071 Exhibit A to Marana Resolution No. 2023-071 THIRD AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT Town of Marana, Arizona THIS THIRD AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT (this "Third WSA Amendment") is entered into by and between the TOWN OF MARANA,an Arizona municipal corporation (the "Town"), and D.R. HORTON, INC., a Delaware corporation (the "Developer"). The Town and the Developer are sometimes referred to collectively as the"Parties," either of which is some- times individually referred to as a "Party." RECITALS A. The Town and the Developer's predecessor in interest entered into an instrument entitled, "AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT" (the "Restated WSA"), recorded in the office of the Pima County Recorder on June 29, 2012 at Sequence No. 20121810303, as amended by the "FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT," recorded in the office of the Pima County Recorder on April 10, 2015 at Sequence 20151000319, and as further amended by the "SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR CONSTRUCTION OF WATER FACILITIES AND PROVISION OF WATER UTILITY SERVICE FOR THE SAGUARO BLOOM DEVELOPMENT PROJECT," recorded in the office of the Pima County Recorder on May 11, 2020 at Sequence 20201320064. B. As relevant here, paragraph 3.6 of the Restated WSA requires the Developer to "meet the Town's source water capacity and redundancy requirements by either provid- ing a second potable water well" or "by providing capacity improvements to an existing well in the Town's existing Airline/Lambert/Saguaro Springs/La Puerta del Norte water system as necessary to provide production well capacity sufficient to convey and deliver peak daily demand within the Project [as that term is defined in subparagraph 2.6 of the Restated WSA]." C. Subparagraph 3.6.1 requires the Developer, prior to issuance of the 1,000th resi- dential building permit within the Project, to pay for a Town-conducted "well capacity and redundancy evaluation of the then-existing" Water System to determine the number of additional residential units that can be served within the Project"before the system no 00088933.DOC/3 Exhibit A to Marana Resolution No. 2023-071 longer has the capacity to serve peak daily demand within the Project with the largest well out of service." D. When the Town evaluation concludes the system no longer has such capacity, subparagraph 3.6.1.2 of the Restated WSA requires the number of residential units to"be capped at the number that, in the Town's reasonable opinion, the system has the peak daily demand capacity to serve." The cap shall remain in place until the Developer in- stalls the second well or provides capacity improvements to an existing well. E. Pursuant to subparagraph 3.6.1.1 of the Restated WSA, "when a Developer- funded Town evaluation concludes that, with the largest then-existing Airline/Lam- bert/Saguaro Springs/La Puerta del Norte water system well [the Saguaro Bloom Well No. 11 out of service, the system has capacity to serve the Project as fully built out," the Developer"shall be relieved of any further obligation to provide capacity improvements to the system." F. The Parties agree that the 1,000th residential building permit was issued for the Saguaro Bloom development some time ago. G. In December of 2022, the Marana Water Department conducted a well capacity and redundancy evaluation and concluded that the Town's existing Airline/Lam- bert/Saguaro Springs/La Puerta del Norte water system no longer has the capacity to serve peak daily demand with Saguaro Bloom Well No. 1 out of service. H. The Town sent the Developer a letter dated April 17, 2023, entitled, "Notice of Residential Unit Cap and Potential Alternative," a copy of which is on file with the Ma- rana Water Department(the"Letter"),which, among other things,set the residential unit cap pursuant to subparagraph 3.6.1.2 of the Restated WSA at the 19 additional residential units that, as of January 31, 2023,were under contract to be sold. Under the imposed cap, no further residential units may be constructed until the requirements of paragraph 3.6 of the Restated WSA are fully satisfied. I. Pursuant to the provisions of subparagraph 3.6.2 of the Restated WSA, the Devel- oper has procured a contractor to equip a second well and connect it to the Town's exist- ing Airline/Lambert/Saguaro Springs/La Puerta del Norte water system. The contractor has an estimated project completion date of August 2023. J. Given that timeline, and in light of unforeseen circumstances related to PFAS/1,4 Dioxane contamination requiring adjustments to the water system, as explained more fully in the Letter, the Parties now desire to amend the Restated WSA, as previously amended, as set forth in this Third WSA Amendment. AGREEMENT Now, THEREFORE, in consideration of the foregoing premises and the mutual cove- nants set forth in this Third WSA Amendment, the Parties hereby agree as follows: 00088933.DOC/3 - 2 - Exhibit A to Marana Resolution No. 2023-071 1. The Developer's representation of ownership. By entering into this Third WSA Amend- ment, D.R. HORTON, INC., the "Developer" under this Third WSA Amendment, repre- sents that it is the sole beneficiary of TITLE SECURITY 201434-T and is entitled to enter into this Third WSA Amendment. 2. Additional Developer-Installed Water Facilities Requirements. Paragraph 3.6 of the Lease is hereby amended by adding the following (with additions denoted by double underlining): 3.6 Additional Developer-Installed Water Facilities Requirements. The Developer shall meet the Town's source water capacity and redundancy requirements by either providing a second potable water well (well #2) within the Project or by providing capacity im- provements to an existing well in the Town's existing Airline/Lambert/Saguaro Springs/La Puerta del Norte water system as necessary to provide production well ca- pacity sufficient to convey and deliver peak daily demand within the Project. 3.6.1. Prior to the issuance of the 1,000th residential building permit within the Project, the Developer shall pay the reasonable costs for and the Town shall per- form a well capacity and redundancy evaluation of the then-existing Airline/Lam- bert/ Saguaro Springs/La Puerta del Norte water system,for the purpose of eval- uating the number of additional residential units can be served within the Project before the system no longer has the capacity to serve peak daily demand within the Project with the largest well out of service. If the Town's evaluation determines that the then-existing system has capacity to serve more than 100 more homes in the Project, no further action is required until an additional 100 residential units (or such additional number of units as the Parties agree by a letter signed by rep- resentatives of the Parties) are constructed within the Project. At that time, the De- veloper shall pay the reasonable costs for and the Town shall perform another well capacity and redundancy evaluation. This process shall continue until one of the following occurs: [No changes to subparagraph 3.6.1.1.] 3.6.1.2. A Developer-funded Town evaluation concludes that, with the largest then-existing Airline/Lambert/Saguaro Springs/La Puerta del Norte water system well out of service, system capacity improvements will be required to serve the next 100 residential units. At that point,the number of residential units to be served within the Project shall be capped at the number that, in the Town's reasonable opinion, the system has the peak daily demand capacity to serve unless and until the Developer installs well #2 in accordance with paragraph 3.6.2 below or the Developer provides Town-approved capacity improvements to an existing well in the Town's existing Airline/Lambert/Saguaro Springs/La Puerta del Norte water sys- tem as necessary to provide production well capacity sufficient to convey and deliver peak daily demand to the Project at its then-projected total max- imum development potential. 00088933.DOC/3 - 3 - Exhibit A to Marana Resolution No. 2023-071 3.6.1.2.1 Notwithstanding subparagraph 3.6.1.2, the Developer may construct, and the system will serve, 81 additional units over and above the residential unit cap imposed on April 17, 2023 by the Town as set forth in the Letter until the time that the requirements of subparagraph 3.6.2 of the Restated WSA have been met and well #2 is fully functional. Until the requirements of subparagraph 3.6.2 of the Restated WSA have been met and well #2 is fully functional, the Developer shall fund any emergency measures deemed necessary by the Town to continue the uninterrupted flow of water to the affected development(s) in the event the largest then-existing Airline/Lam- bert/Saguaro Springs/La Puerta del Norte water system well actu- ally goes out of service until it is fully functional again, including, but not limited to: hauling water to the affected development(s); in- stalling temporary, above-ground (jumper) water lines and associ- ated temporary facilities; and/or any other emergency measure deemed necessary by the Town for continued water service. Within 30 days after this Third WSA Amendment becomes effective, he De- veloper shall install an engineer-designed quick connection/discon- nection coupling of adequate size, which would allow for a quick connection to the existing reservoir to expedite any filling activities in the event the largest then-existing Airline/Lambert/Saguaro Springs/La Puerta del Norte water system well actually goes out of service. The Developer shall also prepare an emergency manage- ment plan for the Town's review and approval within 30 days after this Third WSA Amendment becomes effective. [The remainder of paragraph 3.6 remains unchanged.] 3. Other terms and provisions. All other terms and provisions of the Restated WSA and its exhibits, as previously amended, not specifically changed by this Third WSA Amendment, shall remain in effect and be binding upon the Parties as provided for in the Restated WSA,as previously amended.Words and phrases having a defined meaning in the Restated WSA have the same respective meanings when used in this Third WSA Amendment unless otherwise expressly stated. 4. Recitals. The recitals set forth at the beginning of this Third WSA Amendment are hereby acknowledged, confirmed to be accurate, and incorporated herein by this reference. 5. Entire agreement. This Third WSA Amendment constitutes the entire agreement between the Parties pertaining to the subject matter of this Third WSA Amendment. All prior and contemporaneous agreements, representation and understanding of the Parties, oral or written, are hereby superseded and merged in this Third WSA Amendment. 00088933.DOC/3 - 4 - Exhibit A to Marana Resolution No. 2023-071 6. Governing law. This Third WSA Amendment is entered into in Arizona and shall be construed and interpreted under the laws of Arizona, and any actions to enforce or interpret the terms and provisions of this Third WSA Amendment shall be brought and maintained in Pima County, Arizona. 7. Counterparts. Third WSA Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The signature pages from one or more counterparts may be removed from such counterparts and such signature pages all attached to a single instrument so that the signatures of all Parties may be physically attached to a single document. 8. Good standing. The Developer represents and warrants to the Town that it is duly formed and validly existing and authorized to do business in the state of Arizona. The Town represents and warrants to the Developer that it is an Arizona municipal corporation with authority to enter into this Third WSA Amendment under applicable state laws. 9. Authority. Each Party represents and warrants that the individual executing this Third WSA Amendment on its behalf is authorized and empowered to bind the Party on whose behalf each such individual is signing. 10. Interpretation. This Third WSA Amendment has been negotiated bythe Parties, rp g and no Party shall be deemed to have drafted this Third WSA Amendment for purposes of construing any portion of this Third WSA Amendment for or against any Party. 11. Binding effect. This Third WSA Amendment shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of the Parties. 12. Assignment. The Developer may not assign this Third WSA Amendment without the prior written consent of the Town. 13. Cancellation for conflict of interest. This Third WSA Amendment is subject to A.R.S. §38-511,which provides for cancellation in certain instances involving conflict of interest. 14. Recording. This Third WSA Amendment shall be recorded in the office of the Recorder of Pima County, Arizona. 15. Effective date. This Third WSA Amendment shall be effective as of the signature date of the last Party to sign this Third WSA Amendment. 16. Term. This Third WSA Amendment shall terminate upon the termination of the Restated WSA. [SIGNATURE PAGE FOLLOWS.] 00088933.DOC/3 - 5 - Exhibit A to Marana Resolution No. 2023-071 IN WITNESS WHEREOF,the Parties have duly executed this instrument below. The"TOWN": The "DEVELOPER": an Arizona municipal corporation D.R. HORTON,INC.,a Delaware corpora- tion By: Ed Honea, Mayor By: Date: Title: ATTEST: Date: David L. Udall, Town Clerk APPROVED AS TO FORM: Jane Fairall, Town Attorney STATE OF ARIZONA ) ss. County of ) The foregoing instrument was acknowledged before me this day of , 2023 by of D.R. HORTON, INC.,a Delaware corporation, on behalf of the corporation. (Seal) Notary Public 00088933.DOC/3 - 6 -