TITLE
The Mayor and Council shall hear and discuss authorizing the City Manager to execute a “238 Water Line Main Extension Agreement” with Private Motorsports Group, LLC, an Arizona limited liability company, with the significant deal points outlined in this Staff Report, and as approved by the City Attorney. Discussion and Action.
AGENDA ITEM DESCRIPTION
As you are aware, Global Water’s main line does not currently extend that far west of John Wayne Parkway on SR 238 / Smith Enke Road. To facilitate further development in the western portion of the City, the City believes it would be best to work with Global Water (“GWR”) and Private Motorsports Group, LLC (“APEX”) to extend the water line main approximately 4 miles west of its current location. The construction of this water line extension will benefit the City in trying to encourage development in the western portion of the City. And it will benefit APEX and other landowners in the area by enabling development in the area.
GWR agreed, at their sole cost, to extend their existing 16-inch water main from their closest current point of connection west along SR 238 approximately 4,000 feet. GWR also agreed, at their sole cost, to extend the 12-inch water main along the West Edison Road alignment approximately 1,400 feet north to the intersection of Smith Enke and Edison Road. This will create a looped system that provides better system utility operation for the Estrella Gin Business Park.
APEX will enter into a Line Extension Agreement (Agreement) with Global Water to extend a 16-inch line (upsized from the required 12-inch line) an additional 17,700 feet to its property. This Agreement will require APEX to design and build the line and dedicate the improvements to Global Water upon acceptance. The Agreement will also provide that, beginning in the fourth calendar year after the line extension is accepted, GWR will reimburse an amount equal to 7% of the gross annual revenues received by GWR from the provision of water service to each customer who connects to the extended line for each succeeding year for a total of 22 years. Overall, GWR will invest approximately $700,000 in the upsizing cost and the extensions referenced above and APEX will invest $1 million.
APEX and the City will enter into a separate agreement whereby the City will agree to contribute $1.45 million plus 10% contingency for the line extension once APEX has expended its $1 million. Such payments will be made by the City upon receipt of an invoice from the contractor constructing the line. APEX will agree to follow the City’s procurement code for the construction of this line extension. APEX will agree that the City will be repaid first for its contribution to this line extension. APEX will further agree that the City will receive the 7% reimbursement referenced above directly from GWR until paid in full. Thereafter, any reimbursement will be paid directly to APEX.
While the details remain to be worked out, it is the opinion of staff that the City should consider participating in this project for the following reasons: • To enable development of the western portion of the City at a quicker pace including, but not limited to, the full development of APEX. • Per the soon to be adopted, Strategic Plan, the City will be working to locate, design and establish a minimum 500 acre “industrial park / in-land rail port” to support job creation and economic development. Such is not possible without water. The proposed extension project would facilitate this Strategic Planning goal. • There remain huge tracts of land to be developed within the City limits along this corridor that cannot be developed without having access to water. • No one developer can handle the cost of this extension without the benefit of other projects sharing in the cost. This pipeline will open up approximately 3,000 plus acres for future development. • This plan construct will meet all regulatory, contracting, and design standard conditions that GWR is required to meet and provides flexibility between the other parties without such decisions becoming unnecessarily intertwined with GWR’s regulated utility. • The City should eventually be repaid its investment in this line extension.
STAFF RECOMMENDATION
Staff recommends the Mayor and Council authorize the City Manager to execute a 238 Water Line Main Extension Agreement with Private Motorsports Group, LLC, an Arizona limited liability company, with the significant deal points outlined in this Staff Report, and as approved by the City Attorney.