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HomeMy WebLinkAboutMemorandum of Understanding with Salar Properties.pdf1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Richard Hixson, City Engineer Debbie Arkell, Director of Public Services SUBJECT: Memorandum of Understanding with Salar Properties, LLC MEETING DATE: June 20, 2011 AGENDA ITEM TYPE: Action RECOMMENDATION: Authorize the City Manager to sign the revised Memorandum of Understanding, wherein the City agrees to use its best efforts to assist Salar Properties as it assesses the risks and benefits associated with their proposed water resource project by assigning a staff engineer to work with and answer questions from Salar Properties regarding the City’s current and future water supply demands, and to provide data and information to them regarding the City’s current and future water supply needs. The revised MOU has been reviewed by and is acceptable to Salar Properties, LLC RECOMMENDED MOTION: I move to authorize the City Manager to sign the revised Memorandum of Understanding with Salar Properties, LLC. BACKGROUND: A Commission/Staff work session and policy discussion was held on November 1, 2010 that covered several broad water-based topics. By the conclusion of the session it was apparent that a shift in approach was needed to address future water supply and that it was not sensible to focus on any single alternative at this time. The Commission directed staff to develop a process that objectively evaluates all available supply alternatives in an integrated fashion, to emphasize water conservation, and to procure the counsel of a water rights attorney. The Commission discussed the development of an Integrated Water Resources Plan (IWRP) at the May 2, 2011 Commission meeting. A request by Salar Properties, LLC for the city to enter into a Memorandum of Understanding (MOU) formalizing a relationship to participate in a joint feasibility analysis to assess the risks and benefits of the Salar Properties LLC water resources project was part of that discussion. The Commission acted to “decouple” the MOU from the IWRP discussion, and asked that the MOU be brought back for discussion separate from the IWRP. MEMORANDUM OF UNDERSTANDING (MOU) – Attachment “A”: The MOU submitted by Salar Properties, LLC, would commit the city to participate in a joint feasibility analysis process to assess the risks and benefits associated with constructing a 3,000 acre-foot 84 2 off-stream storage reservoir midway between Four Corners and Gallatin Gateway east of Highway 191. As explained by George Metcalfe, Salar Properties Project Manager, this storage reservoir would only be possible if canal companies agreed to participate in the project. Water would flow into the proposed reservoir through a controlled entry gate off the West Gallatin Canal. The reservoir would be filled with water held by members of the West Gallatin and/or Farmers Canal Companies, as well as other canal companies interest in participating in the project. The water would then be sold or leased to end users. The West Gallatin Canal Company signed a Letter of Intent to pursue negotiations with Salar Properties rather than enter into an MOU. To date, I am not aware that the Farmers Canal Company has signed either an MOU or Letter of Intent. As written, upon signing the MOU, the City would agree: · That the “feasibility analysis process will be initiated in accord with a Scope of Work (SOW) and illustrative Work Plan (WP), to be drafted by designated representatives of Salar and the City within 30 days of signing this MOU” (emphasis added). · Once completed, the draft SOW and WP would be submitted for the consideration of Salar and the City Commission, and “the parties [City Commission and Salar] agree to take action to approve the SOW and WP as presented, and/or as amended by mutual agreement between the parties, within 30 days” (emphasis added). · Based on the terms of the approved SOW and WP, a task force would be established and “empowered to commence the feasibility analysis process on behalf of the parties.” The current and projected engineering work load has staff stretched extremely thin for the next foreseeable future as they work on items from the Adopted 2011-2012 Work Plan; oversee the completion of construction and start-up of the Water Reclamation Facility; oversee the construction of the Water Treatment Plant; assume the duties of the Community Transportation Enhancement Program (CTEP); oversee deferred infrastructure maintenance; and complete daily projects. Signing the MOU as submitted will commit city staff resources to work with Salar Properties to develop a Scope of Work and Work Plan within 30 days of signing the MOU, present the developed Scope of Work and Work Plan to the City Commission for action within 30 days after completion of the Plan, and commence the feasibility analysis process on behalf of the city. We cannot, in confidence, assure this work could be committed within the timeframes proposed unless other scheduled work is delayed. PROPOSED REVISED MEMORANDUM OF UNDERSTANDING – Attachment “B”: Because of the direction Staff received to objectively evaluate all available supply alternatives in an integrated fashion, we feel the city should not be involved in drafting the Scope of Work and Work Plan for this one private project. The Salar Properties’ proposal would be one of the resources researched during the IWRP. A revised MOU has been drafted by staff that recognizes Salar Properties mission, and confirms the willingness of the city to engage in their analysis process. In the revised MOU, the City agrees to assist Salar Properties as it assesses the risks and benefits associated with their project by assigning a staff engineer to work with them and provide information regarding the city’s current and future water supply demands and to provide data and information regarding the City’s current and future water supply needs. 85 3 Staff worked with Mr. Metcalfe on the revisions to the MOU and he and Salar Properties’ attorney find the spirit and intent of a working relationship with the City is appropriately represented in the revised draft and concur with the proposed revision. ALTERNATIVES: 1. Sign the original MOU 2. Make revisions to either the original or revised MOU 3. Do not enter into an MOU for this project 4. As recommended by the Commission. FISCAL EFFECTS: No fiscal impacts from the consideration of this proposal have been identified. Staff time and city resources will be required to evaluate this as well as all other water supply alternatives as we move forward with the review of this proposal and the Integrated Water Resource Plan. Attachments: Attachment “A” – Salar Properties MOU Attachment “B” – Proposed MOU revised by Staff June 9, 2011 letter from Salar Properties, LLC. Report compiled on: June 9, 2011 86 87 88 ATTACHMENT “B” MEMORANDUM OF UNDERSTANDING SALAR PROPERTIES, LLC AND CITY OF BOZEMAN This Memorandum of Understanding (“MOU”) is entered into by and between Salar Properties, LLC (“Salar”) and the City of Bozeman (“the City”). WHEREAS, the mission of Salar, and its proposed Water Resource Project (“the Project”) is to solve water conservation, supply and conveyance problems in the greater Bozeman area, while enhancing the sustainability of the Gallatin River Basin on which local, rural and urban communities depend; and WHEREAS, the City has requested input from the public on potential ways and means to address the near and long term water needs of its growing population; and WHEREAS, a water storage and conveyance project such as the Salar Project constitutes an opportunity in principal theory, for the City to cost effectively meeting, in part, the future water supply and distribution needs of its citizens; and WHEREAS, the parties agree that enhancing the sustainability of the Gallatin River Basin and protecting the interests of water rights holders, including Salar and the City, is may be in their mutual interest; and WHEREAS, the purpose of this MOU is to confirm the willingness of the parties to engage in a joint feasibility analysis process to identify, define and evaluate specific issues and options relevant to achieving mutually beneficial water conservation, storage and conveyance objectives compatible with their common interests. NOW, THEREFORE, the parties agrees to participate in a joint feasibility analysis process to assess the risks and benefits associated with their mutual intent, in principle, to collaborate in the development of a economically viable and sustainable water resource project within the conceptual framework of a public-private sector partnership beneficial to the parties, as well as the rural and urban communities such a project would serve. Upon signing this MOU, the parties further agree that: · The feasibility analysis process will be initiated in accord with a Scope of Work (SOW) and illustrative Work Plan (WP), to be drafted by designated representatives of Salar and the City within 30 days of signing this MOU; 89 · Upon presentation of the draft SOW and WP for the consideration of Salar and the City, the parties agree to take action to approve the SOW and WP as presented, and/or as amended by mutual agreement between the parties, within 30 days; and · Based on the terms of a mutually approved SOW and WP, the parties will establish a joint Salar/City project task force empowered to commence the feasibility analysis process on behalf of the parties. NOW, THEREFORE, the City agrees to use its best efforts to assist Salar as it assesses the risks and benefits associated with the Project by assigning a staff engineer to work with Salar and answer questions from Salar regarding the City’s current and future water supply demands and also to provide data and information regarding the City’s current and future water supply needs. IN WITNESS WHEREOF, Salar and the City indicate their intent to proceed as set forth in this MOU, and hereby confirm that this MOU is not, and is not intended to be, a binding contractual agreement between Salar and the City. ACTING ON BEHALF OF THE PARTIES, THE TERMS AND INTENT OF THIS MEMORANDUM OF UNDERSTANDING ARE HEREBY ACCEPTED. FOR SALAR PROPERTIES, LLC By: __________________________________ Title: _________________________________ Date: _________________________________ FOR THE CITY OF BOZEMAN By: __________________________________ Chris A. Kukulski Title: City Manager Date: _________________________________ 90 Salar Properties, LLC C/O Montana Venture Law, P.C US Bank Building 104 Main Street, Suite 305 Bozeman, MT 59715 June 9, 2011 Ms. Debbie Arkell Director of Public Services City of Bozeman PO Box 1230 Bozeman, MT 59771 Dear Debbie, This letter confirms that Kent Brodie, Managing Member, Salar Properties, LLC accepts the proposed revisions to our draft Memorandum of Understanding (MOU) you forwarded to me on June 7, 2011 on behalf of the City of Bozeman. Mr. Brodie accepts the proposed revisions to the MOU because they do not compromise the spirit and intent of the draft MOU we submitted to City Attorney, Greg Sullivan, on March 2, 2011 for the consideration of City of Bozeman staff and the City Commission. I have enclosed a copy of the proposed revised version of the MOU in its entirety with this letter. I have initialed and dated each page of that MOU to confirm our acceptance of the proposed revisions as presented. We understand that the Commission may wish to further amend the revised MOU when it is considered at the Commission meeting on June 20, 2011. I will attend that meeting on behalf of Salar Properties, and am authorized by Mr. Brodie to respond to any additional amendments the Commission may wish to introduce at that time for our consideration. Our thanks to you and your colleagues for your thoughtful response to our draft MOU. We look forward to working with representatives of the City of Bozeman as set forth in the revised MOU. Yours sincerely, George L. Metcalfe Project Manager Salar Properties, LLC 11 Chinook Trail Bozeman, MT 59718 Tel: 406-586-3749 Fax: 406-582-0572 Email: glmetcalfe@montanadsl.net Enclosure: Proposed Salar Properties, LLC/City of Bozeman Memorandum of Understanding 06-09-2011 Cc: Kent Brodie, Managing Member, Salary Properties, LLC Greg Sullivan, Attorney, City of Bozeman Tom Wells, Attorney, Montana Venture Law, P.C. 91