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HomeMy WebLinkAbout~Master - Approving Agreement for Water Service Operations and Territory Transfer with Xenia Rural Water District RESOLUTION NO. 21-554 RESOLUTION APPROVING THE AGREEMENT FOR WATER SERVICE OPERATIONS AND TERRITORY TRANSFER WITH XENIA RURAL WATER DISTRICT FOR THE CITY OF AMES,IOWA WHEREAS,the City of Ames is bordered by two rural water providers: areas to the east are served by Central Iowa Rural Water Association, and the areas to the north,west, and south of the Ames corporate limits are served by Xenia Rural Water District; and, WHEREAS, rural water providers have the right under law to be the exclusive provider of potable water to customers within their established territory;however,rural water providers are not obligated to provide water at the pressures and flows that would adequately serve future residents and businesses with fire protection; and, WHEREAS, since the early 1990s, Ames and Xenia have made several Agreements to transfer water service territory from entity to the other, and these territory transactions involved property owners in the unincorporated fringe outside Ames who wished to receive water from Xenia; and, WHEREAS, at the time the request was made, state law provided that the City could grant the territory to Xenia or commit to servicing the property with City water within four years(the law changed later to a three-year timeframe to serve); and, WHEREAS,requests for Xenia water service are often outside of the City Council's planned growth areas reflected in the Land Use Policy Plan, the City's response to these situations was to frequently release the service territory to Xenia; and, WHEREAS,there is little guidance in the law regarding how to arrive at a price to transfer water service territory; therefore, it is up to the parties to determine a mutually agreeable purchase price; and, WHEREAS, in situations where rural water providers adjacent to Ames have been willing to transfer their territory, the purchase price for territory has typically been influenced by the potential lost future revenue and the value of abandoned infrastructure; and, WHEREAS, there is no obligation for a rural water provider to transfer its water service territory if it is capable of serving that property and does not wish to release the property; and, WHEREAS, in addition to areas that Ames and Xenia may disagree about whether to potentially transfer, there exists different perspectives about where the territory boundary actually lies; and, WHEREAS, several of the transfers of service territory from Ames to Xenia in the 1990s were requests for Xenia to serve certain homes(as opposed to acreages), and in these instances,the request documentation to Ames and the approval documentation to Xenia was not as precise as it could have been,nor was it accompanied by legal descriptions or clear maps regarding what territory was to be transferred; and, WHEREAS,there exist certain areas outside the Ames corporate limits that Xenia believes it has a right to serve, which Ames contends the City never released to Xenia; and, WHEREAS,the City is in the process of determining its direction for future growth through the adoption of Ames Plan 2040; these future growth areas are divided into four Tiers,with Tier 1 being the areas with the least costly infrastructure investment(most readily developable areas)and Tier 4 being the highest cost infrastructure investment to develop; and, WHEREAS, as the City expands through annexation,nearly all of the logical growth areas lie within territory already claimed by a rural water provider; and, WHEREAS, City staff determined that if the City hoped to grow as outlined in the Ames Plan 2040 growth scenarios, the most feasible path would be to develop an agreement with Xenia to allow it to serve residents within newly annexed portions of Ames; and, WHEREAS, the Agreement allows Xenia to operate a water distribution system within the corporate limits of Ames,but standards would be in place to assure acceptable fire protection using Xenia's infrastructure is provided; and, WHEREAS,the proposed Agreement is divided into two key sections: 1)Infrastructure and firefighting, and 2) Customer billing; and, WHEREAS, another key section of the Agreement (Article III) settles which areas surrounding and within Ames are Ames' territory, which are Xenia's territory, and which could potentially be transferred from Ames to Xenia through the Agreement; and, WHEREAS,the maps included in the Agreement supersede all other maps and prior grants of service rights between Ames and Xenia, thereby putting to rest any differing interpretations regarding some of the prior territory transfers between the two parties; and, WHEREAS,there are ten individual properties that are listed in the Agreement where if the customers on these properties wish to cancel their contracts with Xenia and become Ames customers, they may do so upon paying the $3,000 per net acre buyout cost indicated in the Agreement; and, WHEREAS,the Agreement acknowledges that there are certain areas adjacent to Ames that Xenia does not have infrastructure readily available to serve,and it would be more desirable for the parties to allow developers to buy out that territory and be served by Ames; and, WHEREAS,one year prior to the conclusion of the five-and ten-year periods,if neither party objects, the guarantee from Xenia to allow the property to be bought out would extend for another five years,and these areas could continue to be eligible for an unopposed buyout and inclusion into Ames territory for a maximum of 35 years; and, WHEREAS,if an upcoming renewal is canceled(or if 35 years is reached),Xenia and Ames would be required to confer about the possibility of Ames selling water to Xenia for the purpose of serving those areas that would remain in Xenia's control;however,there would be no obligation to agree to a proposal for water sales. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the Agreement for Water Service Operations and Territory Transfer with Xenia Rural Water District is hereby approved. ADOPTED THIS 26`h day of October, 2021. �uxa& Diane R. Voss, City Clerk John A. Haila, Mayor Introduced by: Betcher Seconded by: Junck Voting aye: Beatty-Hansen, Betcher, Corrieri, Gartin, Junck, Martin Voting nay: None Absent: None Resolution declared adopted and signed by the Mayor this 26t' day of October, 2021.