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HomeMy WebLinkAbout7 Glenshire Agreement Agenda Item IF Memorandum To: Board of Directors From: Peter Holzmeister Date: October 15, 2001 Subject: Draft Glenshire Agreement Attached for your review is a draft agreement under the terms of which TDPUD would acquire the Glenshire water system. I prepared this draft by plagiarizing from similar documents given to me by Harold Morgan of Navigant Consulting. This draft needs to be reviewed by our counsel and modified accordingly. It is at a stage where the Board can, hopefully, give me an idea if I am heading in the right direction. This document is being shared with Glenshire staff and Board so they too can give early comments as we move toward an agreement we all like. I am not suggesting that the Board take final action on this document. In fact, we have not completed the CEQ A process, so we cannot yet take action on this Agreement. I would like the chance to present it and have a discussion with the Board. DRAFT AGREEMENT FOR THE ACQUISITION OF THE GLENSHIRE WATER SYSTEM BY THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT RECITALS 1, Glenshire Mutual Water Company (hereinafter referred to as Company) owns and operates a public utility domestic water system serving approximately 1350 service connections in the Glenshire/Devonshire subdivisions located in the eastern portion of the Town of Truckee. 2. Company is experiencing high levels of arsenic in its domestic water supply wells. In addition, its well capacity is not sufficient to serve the projected build-out of its service territory, and there is not an adequate supply of high quality water in its groundwater basin to allow development of additional source. 3. Truckee Donner Public Utility District(hereinafter referred to as District) owns and operates a public utility domestic water system serving approximately 8,500 service connection in the remainder of the Town of Truckee and portions of Placer County. District's service territory is immediately adjacent to that of Company. 4. Company has asked that District acquire the water system of Company and assume responsibility for serving domestic water in the territory of Company. NOW THEREFORE DISTRICT AGREES TO ACQUIRE THE WATER SYSTEM OF COMPANY, AND COMPANY AGREES TO CONVEY ITS WATER SYSTEM TO DISTRICT, TO THE EXTENT OF ITS INTERESTS IN THE PROPERTIES AND ASSETS OF THE WATER SYSTEM AS FURTHER DESCRIBED AS FOLLOWS: 1. Acquisition of water system and related lands and easements: A. District will acquire and Company will convey to District on the terms and subject to the conditions of this Agreement, all operative rights, water wells, storage tanks, pump stations, distribution and transmission pipelines, services, and connection lines and all appurtenances related thereto, and all land, rights-of-way, easements and other interests in land associated with the water system owned by Company and used and useful in the operation of the public utility water system. All cash. or bank balances in Company's possession or under his control, all accounts receivable, and any other assets owned by Company as of the closing as provided herein are specifically excluded from this transaction, except as defined elsewhere in this Agreement. It is expressly understood that the named assets which are to be conveyed hereunder are conveyed "as is", and Company makes no representation of any kind, whether express, implied or otherwise as to their condition or serviceability. B. It is expressly understood and agreed that District shall not be liable for any of the obligations or liabilities of Company of any nature or kind, including future refunds due customers of Company, and Company specifically agrees and covenants to pay any claims, obligations, or liabilities presently owing or which may come due (unless specifically excepted by the terms of the Agreement). 2. Responsibility of District: a) District will take possession of the water system, and own and maintain it and become responsible for providing potable water supply to Glenshire/Devonshire as described on the map attached as Exhibit A b) District will construct the facilities necessary to connect Glenshire water system to District system. c) District will abandon unused wells belonging to Glenshire using method approved by the California Department of Health Services and other regulatory bodies having proper jurisdiction over the District pertaining to well abandonment. 3. Payment: A. Company will pay to District an amount required to make the following improvements: 1. New 16-inch transmission line 1,300,000 2. Buy-in to well 334,000 3. Well upgrade (increase pump capacity) 200,000 4. Storage tanks 117,000 5. Chlorination for well#20 100.000 6. Truckee River Bridge crossing 51,000 7. Pump station at Featherstone 100,000 8. Pump station in Glenshire 100,000 9. Main line replacement at Cavalier Rise 100,000 10. Main line replacement at Regency Circle 100,000 11. Service line replacement 50,000 12, Well abandonment 90,000 13, SUBTOTAL 2,642,000 14, Contingency 264,200 15. Accrued employee benefits 19,000 16. TOTAL 2,925,200 B. Company will pay to District$1,300,000 in cash and the District will finance $1,625,200 at approximately 6% for 20 years. Principal and interest payments will total approximately$155,861 per year. The principal and interest will be applied to monthly customer bills as a surcharge to the normal monthly water charge at the rate of approximately $9.62 per month, and will remain as a surcharge until the principal and interest payments are fully paid. C. If other properties are annexed to the water system and benefit from the facilities constructed to serve Glenshire, said properties will be required to pay to District a contribution to the cost to construct those facilities. Contributions so received will be applied to principal and interest payments and will result in a reduction to the monthly surcharge. 4. What is excepted: Excepted from this Agreement are assets owned by Company that District will not acquire. Said excepted assets include the land and buildings that constitute the Company headquarters, and Company's vehicles, office equipment(others?) 5. Other assets: Is the District acquiring inventory, tools, spare parts, maps, records, customer names and addresses, maintenance records, correspondence, etc.? 6. Good and clear title: Company warrants that it will, at the close of escrow, convey and transfer good and clear title to the water system properties and assets herein described, free and clear of any and all liens, assessments and encumbrances; and that the rights and title to each parcel, site, lot, easement, right-of-way, license, permit or other contractual right shall include the whole thereof without encumbrance or restriction and shall be satisfactory to District. 7. Debts, liabilities and obligations of company: District's acquisition of the water system shall be free and clear of any and all obligations, debts, or liabilities of Company, and free and clear of any contracts, agreements or encumbrances against or affecting the water system properties, assets or supplies, and Company agrees that any such obligations or encumbrances that pertain or attach to any of the properties, assets or supplies being acquired hereunder shall be paid off, released or discharged prior to close of escrow to the satisfaction of District. 8. Deposits and credits: Company will transfer to District in or through escrow all customer deposits and the amount of all customer credits on either the Company's books or owing to any customer of the Company. 9. Accounting statements and inspection of company books: Within forty-five (45) days of the execution of this Agreement the Company will provide to District, if requested, a current trial balance statement satisfactory to District showing all customer funds and deposits held by Company, and Company shall also permit District's agents or representatives to review or audit, at any time prior to close of escrow, any of Company's books, records or accounts and to otherwise verify the status of Company's outstanding obligations, customer credits, accruals, and accounts 10. Conditions precedent to District's obligations to acquire: District's acquisition of the water system is subject to receiving appropriate approval of Nevada Local Agency Formation Commission, and approval from the California Department of Health Services of an amendment to District's water operator's permit. District's acquisition of water system is also subject to completion of the environmental review process set forth in the California Environmental Quality Act. District's acquisition of water system is contingent upon receipt of suitable funding to effectuate the improvements set forth in Paragraph 3 (A) and (B) above. 11. Opening of escrow: District will open an escrow with (name company) to effect the consummation of this Agreement. Escrow shall close following the completion and satisfaction of all conditions precedent to the purchase, including but not limited to approval of Nevada Local Agency Formation Commission, and on a date thereafter that logically meshes with District billing cycles and which is a logical date for District to take over and assume operation of the water system. District will strive to accomplish an escrow closing date that is on or about January 1, 2002, if the required conditions and performances under this Agreement are complied with and it is practical to do so. 12. Operating systems pending transfer: From and after execution of this Agreement and until transfer of system after close of escrow, Company warrants and agrees that they will continue to operate the system and provide utility service in good and satisfactory manner, and will maintain and repair the system and all components thereof in a good and responsible and workmanlike manner; and that they will not incur any debts, liabilities obligations or encumbrances against the water system properties, or make modifications or alterations thereto beyond normal operational practices without District's prior written approval. 13. Actions of parties to close escrow: A. Company will, not later than three days prior to close of escrow, deposit into escrow $1,300,000. B. District shall pay all closing costs and shall submit all needed instructions to close escrow in accordance with this agreement C. Company shall deposit an amount necessary to pay all taxes accrued as of the date of closing. 14. Customer accounts, billings and records: Company shall transfer to District the amounts of all customer advance payments or deposits, and all accounts receivable for services after close of escrow, but shall retain any amounts due for service prior to close of escrow. Company will supply to District forty (40) days before close of escrow complete and current lists of customers, to be used for billing purposes. At the close of escrow, company shall turn over and deliver to District as its property all of the Company's operating records, maps, plans, drawings, specifications, warranties and other files and papers pertaining to the water system. And at the time of transfer of billing responsibility to District, turn over all of Company's customer accounts and billling records. Service to any new or added connections by District after transfer will be on the terms and conditions applicable thereto under District's rules, regulations and policies. 15. Condition of water system: Company shall supply to District within thirty (30) days after the execution of this Agreement the following information on the water system, to enable District to ascertain the existing conditions of the system: A. All available as-built installation plans, drawings and specifications; B. Maps showing the location of all pipelines, pumps, and appurtenant facilities (valves, hydrants, etc.), and easement for off-street locations so far as known to or can be ascertained by the Company, C. Size, type, material, and date of installation of all pumps, pipeline, and other component parts and facilities so far as known to or can be ascertained by the Company. D. Types and locations of all hydrants, and air vacs, blow-offs and other valves so far as is known to or can be ascertained by the Company. E. Meter history cards. Such information shall also include descriptions of any sub-standard installations, deficiencies or facilities in the system known to the Company or its employees, that could impair or affect the District's ability to continue to provide adequate and reliable water service to the areas served by the water system. 16. Insurance: Company agrees to maintain in full force and effect all property damage, liability and other insurance it had if effect on January 1, 2001, and to transfer suck insurance to District if requested at close of escrow, provided that the insurance premiums on any such transferred coverage shall be pro-rated as of close of escrow. 17. Authorization: Company warrants that the execution of this Agreement and conveyance of said water system and properties has been duly and regularly authorized by the Board of Directors and the stockholders of Company in accordance with law. District warrants that the execution and acceptance of the water system and properties has been duly and regularly authorized by its Board of Directors at a meeting held in accordance with law. 18. Future rates and financing of improvements: After the close of escrow District will charge the customers of Company according to the customary rates, fees and charges as apply to all other customers of District, except that customers of Company shall also pay the monthly surcharge as described in Paragraph 3 (B) above. All existing improved lots shall be served by District without paying District's connection and facilities fees. All vacant lots that subsequently are built upon shall be required to pay District's connection and facilities fees. Lots currently improved which are further built upon or further improved shall be required to pay fees in effect throughout District's service territory at that time. 19. Litigation and undisclosed liabilities: Company warrants that it is neither presently engaged in any legal action to recover money due it or damages sustained by it nor is there, to the best of Company's knowledge, any action at law or equity, before or by any federal, state, municipal, or other governmental department, commission board, bureau, agency or instrumentality, or other person pending, or threatened against Company or relating to or affecting Company, its business, assets or properties or any basis for such action, suit proceeding, claim, investigation, audit, inquiry or hearing. Company warrants that, except as set forth in Company's financial statements, there are no debts, liabilities or obligations, fixed or contingent to which seller, its business or assets are subject, other than those incurred in the ordinary course of business consistent with past practices. Company further warrants that it is not a party to nor are its assets bound by any agreement not entered into in the ordinary course of business consistent with past practices, any indenture, mortgage, deed of trust, lease or any agreement that is unusual in nature, duration or amount, including, without limitation, any agreement requiring the performance by Company of any obligation, calling for consideration of more than $1.000. Company warrants that it is not a party to, nor is Company or any of its assets bound by, any agreement that is materially adverse to the business, assets, prospects or financial condition of Company. 20. Agreement shall not cause breach or violation: Neither the entry into this Agreement nor the consummation of the transactions contemplated hereby will result in or constitute any of the following: A. A breach of any term of this agreement, B. A default or any other event that would be a default, breach or violation of the Articles of Incorporation or By-Laws of either party or of any lease, franchise, trust, or other agreement, instrument, or arrangement to which the parties or their assets are bound, C. An event that would permit any party to terminate any agreement or policy of insurance or to accelerate the maturity of any indebtedness or other obligation of Company, D. The creation or imposition of any lien, charge or encumbrance on any of the assets of Company; or E. The violation of any law, regulation, ordinance, judgment, order or decree applicable to or affecting the parties in their business, assets or financial condition. 21. Licenses: 22. New transactions: Company shall not do, or agree to do, any of the following acts without the prior written consent of District: (a) enter into any contract, commitment or transaction not in the usual and ordinary course of its business, consistent with past practices; (b) enter into any contract, commitment or transaction in the usual and ordinary course of business involving an amount exceeding one thousand dollars ($1,000) individually or two thousand dollars ($2,000) in the aggregate, (c) make any capital expenditures in excess of five thousand Dollars ($5,000) for any single item or in the aggregate, or enter into any leases of capital equipment or property under which the annual lease charge is in excess of one thousand dolilars ($1,000); or(d) sell or dispose of any capital assets with a net book value in excess of one thousand dollars ($1,000) individually or two thousand dollars (2,000) in the aggregate. 23. Conduct of business in normal course: Company shall carry on its business and activities diligently and in substantially the same manner as they have been carried on through December 21, 2002, or until the close of escrow, whichever shall occur later, and shall not make or institute any change in management, accounting or operations that shall vary materially from the methods used by Company as of that date. 24. Coordination of billing: 25. Customer payments and deposits: 26. Payment of District connection and facilities fees: 27. Publicity: The parties agree that all notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned, coordinated, and issued between them, and neither party shall act unilaterally in this regard without the prior written approval of the other, such approval not to be unreasonably withheld or delayed. (what about calls from the Sierra Sun?) 28. Entire agreement: This agreement contains the entire agreement between the parties hereto, and supersedes all negotiations or prior agreements, and there are no representations or warranties except as expressly set forth or provided for in this Agreement. Time is of the essence of the Agreement. Y Each party agrees to execute all further documents necessary to implement and perform the terms and provisions of this Agreement. 29. Survival of warranties and representations: The representation and warranties made herein will be correct and accurate in all material respects as of the closing date, and shall survive the closing. 30. Notices: All notices, requests, demands and other communications under this agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is given, by first class mail registered or certified, postage prepaid, and properly addressed as follows: To District: Clerk of the Board Truckee Donner Public Utility District P.O. Box 309 Truckee, California 96160 To Company: 31. Governing law: 32. Dispute resolution: The parties agree that in any dispute or controversy that may arise after the effective date as a result of the terms and conditions of the Agreement or relationship between District and Company under this agreement, and if said dispute or controversy cannot be resolved by mutual agreement, then and in that event the dispute or controversy shall be settled by arbitration in accordance with the commercial arbitration rules of the American Arbitration Association, except that one arbitrator, who shall be approved by both parties to this Agreement, shall hear and decide such controversy or claim. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction. Any and all arbitration hearings shall be held in Nevada County. 33. Severability: If any term or provision of this Agreement, or the application thereof to any person or circumstances, shall to any extent be invalid or unenforceable, the remainder of the Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. The parties acknowledge that the provisions of this Agreement were negotiated by both parties hereto, and the language hereof shall not be interpreted for or against either party.