HomeMy WebLinkAbout04-06-20 City Commission Packet Materials - C5. Assignment Agreement with R Lazy J Ranch, LLC for Water Shares
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission FROM: Brian Heaston, Senior Engineer
Tim Cooper, Assistant City Attorney
Mitch Reister, Director of Public Works SUBJECT: Authorize the City Manager to execute an Assignment Agreement and its incorporated documents with R Lazy J Ranch, LLC, to assign ninety (90) acre-feet of contract
water from the Middle Creek Water Users Association and ninety (90) shares of capital stock in
such association into City of Bozeman ownership. MEETING DATE: April 6, 2020 AGENDA ITEM TYPE: Consent
RECOMMENDATION: Authorize the City Manager to execute an Assignment Agreement and its incorporated documents with R Lazy J Ranch, LLC, to assign ninety (90) acre-feet of contract water from the Middle Creek Water Users Association and ninety (90) shares of capital
stock in such association into City of Bozeman ownership.
BACKGROUND: In furtherance of implementation of the adopted Integrated Water Resources Plan (IWRP, 2013), we request and recommend that the City Commission authorize the City Manager to sign the attached assignment and incorporated documents to accept ninety (90) acre-
feet of contract water currently held by the R Lazy J Ranch in the Middle Creek Water Users
Association (MCWUA). MCWUA contract water is more commonly known as water stored in Hyalite Reservoir, or Hyalite shares. The adopted IWRP calls for the acquisition of an additional 650 acre-feet of Hyalite shares to meet the City’s identified 50-year water needs, along with aggressive water conservation, development of new groundwater supplies and non-potable
irrigation systems, and optimization of current water supplies.
Since 2013, 60 acre-feet of Hyalite shares have been acquired. The R Lazy J Ranch assignment of 90 acre-feet will provide for a total of 150 acre-feet of Hyalite shares acquired since the adoption of the IWRP and create a total City shareholding of 5,802 acre-feet in Hyalite
Reservoir. This ninety acre-feet assignment is sufficient to supply 384 single-family residential
homes on an annual basis. The City’s overall volume upon assignment is not legally available for use until a new Water Purchase Contract and Subscription and Pledge Agreement with MCWUA respectively representing 5,802 acre-feet and 5,802 shares of capital stock is fully executed by the City, MCWUA and Montana DNRC.
50
FISCAL EFFECTS: City Staff and R Lazy J Ranch have agreed to consideration of
$6,000/acre-foot assigned, producing a total assignment cost to the City of $540,000 for 90 acre-feet. The unit price agreed upon is identical to the $6,000/acre-foot fee required for the payment of cash-in-lieu of water rights pursuant to Commission Resolution 4095. The R Lazy J Ranch assignment thus validates the cash in lieu of water rights fee being consistent with the current
accepted value of Hyalite Reservoir water.
The $540,000 payment will be provided from the City’s cash-in-lieu of water rights special revenue fund. The current balance of this fund is adequate to cover the agreed cost. The payment will be provided to R Lazy J Ranch, LLC in one lump sum, but release of the payment
is contingent upon receiving a fully executed Water Purchase Contract and Subscription and
Pledge Agreement respectively representing 5,802 acre-feet of water and 5,802 shares in the Middle Creek Water Users Association. Full execution of these documents requires the duly authorized signatures of the City of Bozeman, MCWUA, and the Montana DNRC.
ALTERNATIVES: As suggested by the Commission.
ATTACHMENTS: Assignment Agreement Consideration Document
Report compiled on March 26, 2020
51
Page 1
ASSIGNMENT
IN CONSIDERATION OF the sum of money to be paid, the receipt and sufficiency
whereof is hereby acknowledged, R LAZY J RANCH, LLC, (“Assignor”), with mailing address
of 74 Granite Street, Libby, MT 59923, hereby transfers, assigns, and sets over to CITY OF
BOZEMAN, 121 N. Rouse Ave. Bozeman, MT 59715 (“Assignee”), all of its right, title, and
interest in and to:
(i) Twenty-Five (25) Acre-Feet of water under that certain Water Purchase Contract 47-A-1-A-1, dated November 19, 2018, and the Addendum
thereto of even date therewith, made between Assignor as “Water Purchaser” therein and Middle Creek Water Users’ Association, copies of which are attached hereto, subject to all the terms of said Contract and the rights, duties, obligations, and liabilities of Assignor as set forth in the Contract; and
(ii) Twenty-Five Shares of Capital Stock in the said Middle Creek Water Users’ Association, as per the terms of that certain Subscription and Pledge Agreement dated November 19, 2018 that Assignor has executed in relation to Water Purchase Contract 47-A-1-A-1, together with and subject to all of the terms of said Agreement and the rights, duties, obligations, and liabilities
of Assignor as set forth therein pertaining to said number of shares of stock. (iii) Fifty (50) Acre-Feet of water under that certain Water Purchase Contract 54-A-1-A, dated November 19, 2018, and the Addendum thereto of even date therewith, made between Assignor as “Water Purchaser” therein and
Middle Creek Water Users’ Association, copies of which are attached hereto, subject to all the terms of said Contract and the rights, duties, obligations, and liabilities of Assignor as set forth in the Contract; and (iv) Fifty Shares of Capital Stock in the said Middle Creek Water
Users’ Association, as per the terms of that certain Subscription and Pledge
Agreement dated November 19, 2018 that Assignor has executed in relation to Water Purchase Contract 54-A-1-A, together with and subject to all of the terms of said Agreement and the rights, duties, obligations, and liabilities of Assignor as set forth therein pertaining to said number of shares of stock.
(v) Fifteen (15) Acre-Feet of water under that certain Water Purchase Contract 59-A-1-A-1, dated November 19, 2018, and the Addendum thereto of even date therewith, made between Assignor as “Water Purchaser”
52
Page 2
therein and Middle Creek Water Users’ Association, copies of which are
attached hereto, subject to all the terms of said Contract and the rights, duties, obligations, and liabilities of Assignor as set forth in the Contract; and (vi) Fifteen Shares of Capital Stock in the said Middle Creek Water
Users’ Association, as per the terms of that certain Subscription and Pledge
Agreement dated November 19, 2018 that Assignor has executed in relation to Water Purchase Contract 59-A-1-A-1, together with and subject to all of the terms of said Agreement and the rights, duties, obligations, and liabilities of Assignor as set forth therein pertaining to said number of shares of stock.
Assignor represents and warrants to Assignee that it is the lawful owner and holder of the
described Water Purchase Contracts and of the shares of capital stock in the Association being
transferred to Assignee hereunder, and that the same are free and clear of any and all liens as
may have arisen or attached through the actions of Assignor, and the Assignor has the authority
to transfer their respective interests to the City under the terms of the Water Purchase Contract
and governing documents of Middle Creek Water Users’ Association. Assignor makes no other
representations or warranties to Assignee concerning the quality, quantity, or availability of such
water or the rights to water being conveyed hereunder.
Assignor further agrees and represents that delivery of the funds set forth in the parties’
Consideration Agreement, is contingent upon the City of Bozeman’s ability to register the
assignment of the Water Purchase Contracts and Subscription and Pledge Agreements with the
Middle Creek Water Users Association.
DATED this _____ day of ________, 2020.
53
Page 3
ASSIGNOR: R LAZY J RANCH, LLC
Charlotte J. Terry Member, R LAZY J RANCH, LLC STATE OF MONTANA )
)ss. County of Gallatin ) On this day of ,2020, before me, the undersigned, a Notary
Public for the State of Montana, personally appeared Charlotte J. Terry, known to me to be the
person whose name is subscribed to the within instrument, and acknowledged to me that he/she did execute the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written.
(SEAL)
Notary Public for the State of Montana
(Printed Name) Residing at
My Commission Expires / /20
54
Page 4
R LAZY J RANCH, LLC
Lynette A. Petrau
Member, R LAZY J RANCH, LLC STATE OF MONTANA ) )ss.
County of Gallatin )
On this day of ,2020, before me, the undersigned, a Notary Public for the State of Montana, personally appeared Lynette A. Petrau, known to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that he/she did execute the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. (SEAL)
Notary Public for the State of Montana
(Printed Name) Residing at My Commission Expires / /20
55
Page 5
R LAZY J RANCH, LLC
Jennifer K. Saunders
Member, R LAZY J RANCH, LLC STATE OF MONTANA ) )ss. County of Gallatin )
On this day of ,2020, before me, the undersigned, a Notary Public for the State of Montana, personally appeared Jennifer K. Saunders, known to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that he/she did execute the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. (SEAL)
Notary Public for the State of Montana
(Printed Name)
Residing at My Commission Expires / /20
56
Page 6
ACCEPTANCE OF ASSIGNMENT The undersigned, being the Assignee named above, hereby accepts this assignment of the above referenced ninety (90) acre feet of contract water from the Middle Creek Water User’s Association and ninety (90) shares of capital stock in such Association as evidenced by the
above instrument, and agrees to be bound by all the terms, conditions, obligations, and duties of
said Water Purchase Contracts and Addendums and the related Subscription and Pledge Agreements, as such instruments may be redrafted and reissued by the Association for execution by Assignee.
CITY OF BOZEMAN
DENNIS TAYLOR Interim City Manager
ATTEST: City Clerk
STATE OF MONTANA ) )ss. County of Gallatin )
On this ________ day of ___________________, 2020, before me, a Notary Public for the State of Montana, personally appeared DENNIS TAYLOR and MIKE MAAS, known to me to be the City Manager and City Clerk, respectively, of the City of Bozeman and the persons whose names are subscribed to the within instrument, and acknowledged to me that they
executed the same for and on behalf of the City of Bozeman.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written.
(SEAL) Notary Public for the State of Montana
(Printed Name) Residing at My Commission Expires / /20
57
CONSIDERATION FOR THE PURCHASE OF STOCK IN
MIDDLE CREEK WATER USER’S ASSOCIATION
This document, entered into this day of , 2020, by and
between the City of Bozeman (Purchaser) and R Lazy J Ranch, LLC (Seller) is intended to be incorporated into the Assignment Agreement entered into between the parties. The parties agree that the total purchase price for the stock of Seller shall be $540,000.00,
equating to a $/AF price of $6,000.00/AF of stock representing 90 acre feet of total volume, to be
paid in one installment upon execution of the Assignment Agreement and normal processing by the Middle Creek Water Users’ Association and the City of Bozeman. SELLER:
R LAZY J RANCH, LLC
Charlotte J. Terry Member, R LAZY J RANCH, LLC STATE OF MONTANA )
)ss.
County of Gallatin ) On this day of ,2020, before me, the undersigned, a Notary Public for the State of Montana, personally appeared Charlotte J. Terry, known to me to be the
person whose name is subscribed to the within instrument, and acknowledged to me that he/she
did execute the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written.
(SEAL) Notary Public for the State of Montana
(Printed Name) Residing at My Commission Expires / /20
58
R LAZY J RANCH, LLC
Lynette A. Petrau Member, R LAZY J RANCH, LLC STATE OF MONTANA ) )ss.
County of Gallatin ) On this day of ,2020, before me, the undersigned, a Notary Public for the State of Montana, personally appeared Lynette A. Petrau, known to me to be the
person whose name is subscribed to the within instrument, and acknowledged to me that he/she
did execute the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written.
(SEAL) Notary Public for the State of Montana
(Printed Name) Residing at My Commission Expires / /20
59
R LAZY J RANCH, LLC
Jennifer K. Saunders
Member, R LAZY J RANCH, LLC STATE OF MONTANA ) )ss. County of Gallatin )
On this day of ,2020, before me, the undersigned, a Notary Public for the State of Montana, personally appeared Jennifer K. Saunders, known to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that he/she did execute the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. (SEAL)
Notary Public for the State of Montana
(Printed Name)
Residing at My Commission Expires / /20
60
PURCHASER CITY OF BOZEMAN
Dennis Taylor Interim City Manager ATTEST:
City Clerk STATE OF MONTANA )
)ss. County of Gallatin ) On this ________ day of ___________________, 2020, before me, a Notary Public for the State of Montana, personally appeared DENNIS TAYLOR and MIKE MAAS, known to me
to be the City Manager and City Clerk, respectively, of the City of Bozeman and the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same for and on behalf of the City of Bozeman.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. (SEAL)
Notary Public for the State of Montana
(Printed Name) Residing at My Commission Expires / /20
61