2011 2:00:00 PM

Monday, December 12, 2011 2:00 PM
745 4th Street, Sparks, NV 89431

Consent Items: 5.5

Title: Consideration and possible approval of modification and termination of the Agreement for Sale of Treated Effluent with Kiley Links, LLC for service at Kiley Links Golf Course and subsequently service Kiley Links Golf Course under the terms and conditions set forth in Sparks Municipal Code 13.85, Effluent Service.

Petitioner/Presenter: John Martini, Assistant Community Services Director/Andrew Hummel, P.E., Acting Utility Manager

Recommendation: Staff recommends the modification and termination of the Agreement for Sale of Treated Effluent with Kiley Links, LLC for service at Kiley Links Golf Course, and subsequently service Kiley Links Golf Course under the terms and conditions set forth in Sparks Municipal Code 13.85, Effluent Service

Financial Impact: Effluent meter fee revenues will be decreased annually by $5,111.40. In addition, connection fee revenue including principal and interest will be reduced by $192,954 from the original financing terms.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: In 2004, Sparks Development entered into an agreement with the City of Sparks for use of treated effluent at First Tee Golf Course. Site ownership has transferred twice, with the site being renamed to Kiley Links golf Course. The site has changed from daytime delivery to nighttime. Additionally, the original meter size has proven to be grossly oversized, and is proposed to be changed from a 6” to 3” to provide better service. This modification and transfer to service under Sparks Municipal Code will address the credit that should have previously been issued for the change in delivery time, will change the contractual meter size, and will re-amortize the remaining connection fee as allowed under current code. Staff recommends approval.

Background: Beginning in 1996, the City has been entering into agreements with customers to provide effluent or reclaimed water service. Since then, the customer base has grown and the City currently has about 40 user agreements. Unfortunately, there was a lack of consistency in the contract terms and conditions (i.e. term of agreement ranges from 50-20 years, renewal windows vary, some rate inconsistencies, etc.), which resulted in the burden of tracking and administering these contracts. To help ease this contract administration burden, City staff drafted an Ordinance to eliminate the need to enter into individual agreements with end users. In February 2008, City Council approved an Ordinance that provides for singular, consistent guidelines and rate structure for providing effluent service. The intent at that time was also to attract those who already have individual agreements to move to Ordinance. In this case, the site has changed ownership numerous times, and has modified the delivery period from the original daytime period to nighttime. At the time of modification of delivery period (2008), while meter fee rate was changed to represent the nighttime rate, the connection fee was not changed. The original connection fee (daytime delivery) was $273,553.28; nighttime connection fee would have been 50% of that, or $136,776.64. This was an error that is being corrected by this modification and transfer of service to Code. A credit of principal is being applied to the correct nighttime rate, and remaining balance is being re-amortized to a 4-year finance term as allowed under current code. Additionally, under the original agreement, a 6” meter (monthly fee of $611.14) was installed. This meter size is grossly oversized for the 364 gpm the site requires; a 3” is proposed for more consistent metering and also to reduce site fees. The 3” meter is capable of 450 gpm. Monthly fee for a 3” meter is $185.19.

Analysis: In 2004, Sparks Development entered into an agreement with the City of Sparks for use of treated effluent at First Tee Golf Course where effluent water is being used for irrigation. In 2006, Sparks Development assigned the agreement to Kiley Golf, LLC. In 2008, Kiley Golf, LLC amended the agreement by changing to Nighttime delivery. In 2011, Kiley Golf, LLC assigned the agreement to Kiley Links, LLC. Kiley Links, LLC has requested and approved the modification and termination of the agreement and the migration to Ordinance, which includes associated reduction in meter fee and re-amortization of revised connection fee. Effluent usage fee will remain the same. The net change of the move is approximately $8,575 savings to Kiley Links, LLC per year. The benefit to the City is reduced number of agreements it has to track and administer and reduce inequities in provisions of service between customers.

Alternatives: 1. City Council could approve the Modification and Termination as outlined by Staff. 2. City Council could reject the Modification and Termination and provide direction to the City Manager.

Recommended Motion: “I move to approve the of modification and termination of the Agreement for Sale of Treated Effluent with Kiley Links, LLC for service at Kiley Links Golf Course, and subsequently service Kiley Links Golf Course under the terms and conditions set forth in Sparks Municipal Code 13.85, Effluent Service.”

Attached Files:

Kiley attachment.PDF

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