2012 2:00:00 PM

Monday, January 9, 2012 2:00 PM
Sparks Council Chambers, 745 4th Street, Sparks, NV 89431

General Business: 6.3

Title: Consideration and possible approval of termination of the Agreement for the Sale of Treated Effluent with D’Andrea Nevada Golf Club, LLC for service at D’andrea Golf Course service as allowed under Agreement A-2798, Section M.3, for failure to pay amount due within sixty (60) days.

Petitioner/Presenter: Neil C. Krutz, P.E., Community Services Director/Neil C. Krutz, P.E., Community Services Director

Recommendation: Staff recommends the approval of the termination of the Agreement for the Sale of Treated Effluent with D’Andrea Nevada Golf Club, LLC for service at D’andrea Golf Course service as allowed under Agreement A-2798, Section M.3, for failure to pay amount due within sixty (60) days.

Financial Impact: Cancellation of the Agreement for Sale of Treated Effluent will result in the termination of the following revenues: Effluent metering fee of $5366 annually, effluent connection fee of $40,626 annually (remaining balance of $370,000), and average (5-year) effluent usage fee of $136,000.

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

Agenda Item Brief: On July 23, 2001, the City entered into contract (Agreement A-2798) with D’Andrea Nevada Golf Club, LLC for treated effluent service at D’Andrea Golf Course. D’Andrea has had ongoing payment issues since 2008, and is currently over 6 months in arrears. Per section M of the agreement, the City may terminate the Agreement upon 30 days notice for failure to pay within 60 days. Staff recommends approval of this item.

Background: On July 23, 2001, the City entered into contract with D’Andrea Nevada Golf Club, LLC for the treated effluent service at D’Andrea Golf Course. In September of 2008, D’Andrea fell behind on their monthly payments. A payment plan was negotiated in December of 2008 for the outstanding balance of $82,573. One payment of $35,104 was received in January of 2009, with the second and third payments agreed to in the payment plan not being submitted. A second payment plan was negotiated in September of 2009 for the outstanding balance of $78,270. This payment plan was completed, with D’Andrea staying current until March of 2010. Staff worked with D’Andrea to re-finance the connection fee and serve D’Andrea under current Municipal Code (13.85), which was rejected by Council at the May 9, 2011 meeting. This item was reconsidered at the May 23, 2011 meeting, however it was rejected a second time. Pursuant to Section I.M.3. of the Agreement with the City, failure to pay any amount within sixty days of its due date gives the City right to terminate service. City staff has diligently worked with D’Andrea to accommodate payment plans to prevent termination of service at the golf course, to varying degrees of success. Since March of 2010, D’Andrea has again fallen behind on the account, making only partial payments. The last two partial payments were received in May and August of 2011. D’Andrea is currently 180 days in arrears on their account for a balance of $145,991.03. On August 4, 2011, D’Andrea Golf Course was notified in writing (certified mail delivery, hand delivery, and email) that the account was past 60 days and that the City was providing 30 days notice of termination pursuant to Section M of the agreement. On August 11, payment was made on only the portion 60 days outstanding. Again, on September 13, 2011, D’Andrea Golf Course was notified (certified mail) that the account was beyond 60 days. No payment has been made beyond the August 11, 2011 receipt. Section M.3 of the Effluent Service Agreement states that the City may terminate the obligations of the agreement upon 30 days written notice under the following circumstances : D’Andrea’s failure to pay any amount within sixty (60) days of its due date. D’Andrea has been notified on two occasions of this intent; a third notification was made on December 12, 2011 concerning the placement of this cancellation on the City Council agenda. On December 20, 2011, staff was contacted by telephone and email concerning the outstanding balance, with D’Andrea staff requesting a minimum payment amount to maintain the contract. D’Andrea staff was informed of the outstanding balance, previous correspondence concerning the issue, and of Staff’s intent to place this issue before City Council at the January 9, 2012 meeting.

Analysis: Cancellation of the Effluent Service Agreement with D’Andrea Golf Course will result in an annual reduction of $181,992 in revenues to the City of Sparks. This includes the remaining connection fee principal of $370,000. D’Andrea is under an old agreement; as such their usage fee (currently $0.66/1000 gallons) and meter fees (currently $447.17) are substantially lower than current rates prescribed by Sparks Municipal Code 13.85. By continuing to provide service to D’Andrea Golf Course without payment per the terms of the service agreement, the City of Sparks is creating an inequity in service between end users.

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

Recommended Motion: “I move to the termination of the Agreement for the Sale of Treated Effluent with D’Andrea Nevada Golf Club, LLC for service at D’andrea Golf Course service as allowed under Agreement A-2798, Section M.3, for failure to pay amount due within sixty (60) days.”

Attached Files:

D'Andrea History.pdf

Previous Item

Next Item

Return To Meeting