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HomeMy WebLinkAboutAgenda - 08-23-1994 - VIII-D e r A i 1 OR AN G E C 0 U N T Y BOARD OF COMMIISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 23, 1994 Action Agenda Item # �[uz SUBJECT: Orange County's Jordan Lake water allocation DEPARTMENT: County Manager PUBLIC HEARING: Yes _X No ATTACHMENT(S) : INFORMATION CONTACT: County Engineer Ext. 2300 Draft contract prepared by Division of Water Resources TELEPHONE NUMBERS: staff Hillsborough - 732-8181 Durham - 688-7331 Mebane - 227-2031 Chapel Hill - 967-9251/968-4501 PURPOSE: To present to the BOCC, for its review, comment, revision and approval, a draft contract (as prepared by Division of Water Resources staff) between the State of North Carolina and Orange County outlining the conditions, costs and payment schedules whereby the County will pay its share of the costs for a drinking water allocation from Jordan Lake. BACKGROUND: At its 29 June 1993 meeting, staff presented a report to the BOCC outlining the history of the process by which the County and other local jurisdictions acquired Level II allocations of raw water from Jordan Lake. The material reviewed by the Board also included the State' s request for payment for the first two years of interest - but not principle - and maintenance costs for the County' s share (as represented by the pro rata relationship between the County' s allocation and the total water supply available for allocation) of the total cost of developing and operating Jordan Lake. The Board approved payment of that bill, and directed that funds be set aside to make the requested payment, in conjunction with its approval "in principal" of a future allocation contract between the State and County. The State had implied that the contract would outline the terms and conditions of the allocation and payment schedule and stated that a draft contract would soon be submitted for BOCC review and approval. On 27 June 1994, County staff received a draft contract (see attachmented) for the County's Jordan Lake allocation from the NC Division of Water Resources (DWR) . According to DWR staff, the draft contract is intended to follow a format similar to that of the contract between the Corps of i e n 2 Engineers (the owner and operator of Jordan Lake) and the State. The draft contract also generally adheres to provisions contained within the rules adopted by the NC Environmental Management Commission (Section .0500 of the NC Administrative Code) to govern allocations of Jordan Lake's water supplies. One exception is that the Administrative Code provides for refund of payments made by holders of allocations in the event that the EMC decides to reassign or reapportion allocations. The draft contract provided by the state makes no such provision. RECOMMENDATION: The Manager recommends that the Board: a) review the draft contract provided by the state; b) authorize the Chair, the County Manager and the County Attorney to devise modifications - including a provision for reimbursement of payments of interest and/or principal in the event that the EMC reapportions or reassigns the County's allocation - to the contract as required to secure accord among the parties to the contract, insofar as all modifications are consistent with the intent of the approved contract; c) authorize the Chair to sign and execute the contract; and d) authorize staff to remit payment for the allocation from the funds that have been set aside for that purpose. AJLC0823.doc DRAFT 3 CONTRACT BETWEEN THE STATE OF NORTH CAROLINA AND Co vNTY OF FOR WATER SUPPLY STORAGE IN B. EVERETT JORDAN LAKE This contract, entered into this day of , by and between the STATE OF NORTH CAROLINA (hereinafter called the "State" ) andc Cea�t4 0 ! 6rj-t . 0 (hereinafter called the "Allocation Holder" ) ; WITNESSETH THAT: WHEREAS, the Flood Control Act of 1963 (Public Law 88-253 , 88th Congress) , authorized the construction, operation, and " maintenance of the B. Everett Jordan Dam and Lake project on Haw River and New Hope River, North Carolina, (hereinafter called the "Project" ) ; and WHEREAS, the State has contracted with the United States of America (hereinafter called the "Government" ) for the use of storage included in the Project for municipal and industrial water supply, and for payment of the cost thereof in accordance with the provisions of the Water Supply Act of 1958 , as amended; and WHEREAS, the State through the Environmental Management Commission (hereinafter called the "Commission" ) is authorized by ( 2 ) 4 General Statute 143-354( 11 ) to assign to any county or municipality or any other local government having a need for water supply storage in federal projects any interest held by the State in such storage, upon assumption of repayment obligation therefore, or compensation to the State, by such local government; and WHEREAS, the Commission has allocated percent of the water supply storage held by the State to the Allocation Holder for its use; NOW, THEREFORE, the State and the Allocation Holder agree as follows: ARTICLE 1 - Definitions. (a) Annual Operation and Maintenance (O&M Expense) - Annual expense funded under the O&M, General account. These expenses include the daily project O&M costs which. are capitalized. (b) Fiscal Year - Refers to the State' s fiscal year. The year begins on 1 July and ends on 30 June. (c) Initial Project Investment Costs - The initial cost of the Project, including: land acquisition; construction; interest during construction on the value of land, labor, and materials used for planning and construction of the Project. (d) Interest During Construction - An amount of interest which accrues on expenditures for the establishment of Project 5 ( 3 ) services during the period between the actual outlay and the time the Project is first made available to the State for water storage. . (e) Level I Allocation - An asignment of water supply storage that is made to an applicant which has an immediate need for water and plans to commence withdrawals within five years . ( f) Level II Allocation - An assignment of water supply storage that is made to an applicant who has a long range need for water five to thirty years into the future. (g) Life of the Project - This is the physical life of the Project. (h) Major Rehabilitation - This program is to facilitate accomplishment of significant, costly infrequent rehabilitation work at the Project without unduly distorting the Operation and Maintenance General budget. ARTICLE 2 - Relationship to Other Agreements. This contract between the State and the Allocation Holder is governed by all the terms and conditions of the water supply contract between the State and the Government, dated April 10, 1988 . ARTICLE 3 - Water Storage Space. (a) Total Storage Available. The State, as provided by its contract with the Government for water supply storage in the r 6 ( 4 ) Project, has the right to utilize an undivided 32. 62 percent of the storage space at the Project between elevation 202 feet above mean sea level and 216 feet above mean sea level. The storage space held by the State is estimated to equal 45 , 800 acre-feet before adjustment for sediment deposits . (b) Rights of the Allocation Holder. ( 1) Storage Amount. The Allocation Holder, subject to this contract with the State, has the right to make use of / 0 percent of the water supply storage capacity of the project, estimated to be 1" acre-feet. As long as the Allocation Holder ' s storage space is not depleted, the Allocation Holder may withdraw water at a rate not to exceed / G MGD, based on weekly average withdrawals. When the Allocation Holder ' s storage space becomes depleted, the Allocation Holder will have the right to withdraw /, 0 percent of inflow to the project. The Government and the State will maintain records on the amount of water supply available in the water supply storage pool, and will inform each Allocation Holder of the amount of available water. ( 2 ) Withdrawal and Construction. Subject to the making of payments under Article 6 , the Allocation Holder shall have the right to withdraw water from the lake, or to order releases to be made by the Government through the outlet works in the Dam, subject to the extent the aforesaid storage space will provide; and shall have the right to construct all such works, plants, pipelines, and appurtenances as may be necessary and } 7 ( 5 ) convenient for the purpose of diversion or withdrawals , subject to the approval of the Government and to the State as to design and location. The grant of an easement for. right-of-way, across, in and upon land of the Government at the Project shall be by a separate instrument in a form satisfactory to the Secretary of the Army, without additional cost to the Allocation Holder under the authority of and in accordance with the provisions of 10 U.S.C. 2669 and as may be necessary. Subject to the conditions of such easement, the Allocation Holder shall have the right to use as much of the Project land as may reasonably be required in the exercise of the rights and privileges granted under this contract. (c) Sediment Adjustments. From time to time, the Government will survey the amount of sediment accumulated in Jordan Lake. When necessary, the Government will re-allocate the storage remaining in the lake among project purposes, maintaining the same percentage storage for each purpose. This adjustment of storage may reduce the amount of space available to each Allocation Holder. ARTICLE 4 - Operation and Maintenance. The Government shall operate and maintain the Project and the Allocation Holder shall pay to the State such share of the costs of such operation and maintenance as provided in Article 6. The Allocation Holder shall be responsible for operation and maintenance of all installations and facilities which it may r 8 ( 6 ) construct for the diversion or withdrawal of water, and shall bear all costs of construction, operation and maintenance of such installations and facilities . ARTICLE 5 - Measurement of Withdrawals and Releases . The Allocation Holder agrees to furnish and install, without cost to the State, suitable meters or measuring devices satisfactory to the Government and to the State for the measurement of water which is withdrawn from the Project by any means other than through the Project outlet works. Such devices shall be available for inspection by Government representatives at all reasonable times. The Allocation Holder shall furnish to the State monthly statements of all such withdrawals , showing the amount withdrawn each day. Water supply releases through the Project outlet works shall be made in accordance with written schedules furnished by the Allocation Holder and approved by the Government. The measure of all such releases shall be by means of a rating curve of the outlet works , or by such other suitable means as may be agreed upon prior to use of the water supply storage space. ARTICLE 6 - Payments. In consideration of the right to utilize the aforesaid storage space in the Project for municipal and industrial water supply purposes, the Allocation Holder shall pay the following sums to the State. (a) Initial Project Investment Costs. 9 ( 7 ) ( 1) The Allocation Holder shall repay to the State, at the times and with interest on the unpaid balance as hereinafter specified, the amount stated below which constitute the entire estimated amount of the costs allocated to the water storage right acquired by the Allocation Holder under this contract. The interest rate to be used for the purpose of computing interest on the unpaid balance will be 3 . 225 percent. The Allocation Holder shall pay: / I percent of the total amount of Project investment cost allocated to water supply (currently estimated at $4 , 388 , 000 ) or $ ( 2 ) The Allocation Holder must pay its proportional share of the interest on the project investment cost for the period from February 4, 1992 through December 31 , 1993 . This /.s interest must be paid on or by June ID , 199`-. ( 3 ) For the Level I portion of the allocation, the Allocation Holder must pay either ( 1 ) principal and interest beginning on January 1, 1995 and ending on January 1, 2012 ( 18 payments) in equal consecutive annual installments, ( 2 ) pay the entire principal on January 1, 1995 with no interest from January 1, 199f until January 1 , 199,6; or ( 3 ) pay one-half of the principal on January 1, 1994; the other half of the principal on January 1 , 1996, and only one-half of the interest due on January 1, 1996 for the January 1 , 1994 - January 1, 1996 period. 10 ( 8) ( 4 ) For the Level II portion of the allocation, the Allocation Holder must pay its proportional share of the interest on January 1 , 1993, and continuing yearly until the Level II allocation is changed to a Level I allocation. At that point the Allocation Holder must pay the investment cost of this new Level I allocation either ( 1 ) in one installment with no interest charged from the date of the last installment or ( 2 ) in equal annual installments from the next January 1 until January 1, 2012. ( 5) An estimated schedule of payment options is shown in Exhibit A. ( 6 ) If the Allocation Holder decides to make annual payments under ( 3 ) and/or ( 4 ) above and then fails to make payments under this contract, the State may terminate this contract and rights of the Allocation Holder to make withdrawals . (b) Major Replacement Costs. ( 1 ) Amount. The Allocation Holder shall pay /. ° percent of the State' s share of major replacement costs, which is equal to 2. 8 percent of the total cost to the Government. ( 2) Payment. Payment of major replacement costs, including interest during construction, shall be made in a lump sum upon completion of construction. -a 11 ( 9) (c) Annual Operation and Maintenance (O & M) Expenses. ( 1 ) Amount. The Allocation Holder shall pay / 0 percent of the State ' s share of annual operation and maintenance expenses, which is equal to 5 . 4 percent of the total cost to the Government. ( 2 ) Payment. The amount of each annual payment will be based on the actual experienced O & M expense for the preceding fiscal year or an estimate thereof when actual expense information is not available. The first annual payment of these O & M costs is due on or before June 30 , 1993 . Subsequent annual payments shall be made on January 1 of each year. (d) Major Rehabilitation Program Costs. For costs associated with major rehabilitation programs, the percentages of specific costs which the Allocation Holder is required to pay will be in accordance with Article 6 (c) . Payments for the costs associated with rehabilitation programs shall be in accordance with Article 6 (b) ( 2) . (e) Administrative Costs. The Allocation Holder shall pay 2XO the State $.5Q-T per year to cover the State' s administrative costs associated with this contract. ARTICLE 7 - Duration of Contract. This contract shall be effective when signed by both parties and shall continue in full force and effect for the life of the Project; provided that the parties may mutually agree to s 12 ( 10) amendments and additions to the contract. ARTICLE 8 - Release of Claims. The Allocation Holder shall hold and save the State, including its officers , agents. and employees harmless from liability of any nature or kind for or on account of any claim for damages which may be filed or asserted as a result of the storage in the Project, or withdrawal or release of water from the Project, made or ordered by the Allocation Holder or as a result of the construction, operation, or maintenance of the water supply facilities and appurtenances thereto owned and operated by the Allocation Holder except for damages due to the sole fault or negligence of the United States or its contractors . ARTICLE 9 - Assignment . The Allocation Holder shall not transfer or assign this contract or any rights acquired thereunder, nor suballot said water supply storage space or any part thereof, nor grant any interest, privilege or license whatsoever in connection with this contract, without the approval of the Commission, or its duly authorized representative provided that, unless contrary to the public interest, this restriction shall not be construed to apply to any water that may be obtained from the water supply storage space by the Allocation Holder and furnished to any third party or parties . 4 - 13 ARTICLE 10 - Environmental Quality. During any construction, operation, and maintenance by the Allocation Holder of any facilities, specific actions will be taken to control environmental pollution which could result from such activity and to comply with applicable Federal, State, and local laws and regulations concerning environmental pollution. 14 IN WITNESS WHEREOF, the parties have executed this contract as of the day and year first above written. APPROVED: THE BY DATE: STATE OF NORTH CAROLINA BY Jonathan B. Howes , Secretary Department of Environnment, Health, and Natural Resources DATE: 1 1 15 EXHIBIT A ESTIMATED PAYMENTS FOR ORANGE COUNTY JORDAN LAKE WATER SUPPLY ALLOCATION Level II Allocation Cost Orange County has been allocated 1.0 percent of the total allocation. Orange County will pay only its share of the annual interest until all or part of this allocation is changed to Level I,* at which time it would begin to pay the capital cost as well. Orange County Annual Interest Cost: $4,388,000 x .03225 x .01 = $1,415.13 Other Costs Orange County will also have to pay 1.0 percent of major replacement costs, annual operation and maintenance costs, and major rehabilitation costs. It will also have to pay an administrative cost of $250. Using 1993 as an example, these costs would have been as follows: O & M $445.64 Rehabilitation 4.24 Administrative 250.00 $699.88 *Level I Allocation Cost For example, if Orange County decided to change its Level II allocation to Level I during 1994, the following payment options would be available (numbers are approximate) : Option I: equal annual payments until 2012: Principal amount: $4,388,000 x .01 = $43,880.00 Annual payment = $43 ,880 x Capital Recovery Factor** _ $43,880 x .0740988 _ $3,251.46 Total over period of 18 years: $3,251.46 x 18 _ $58,526.28 Option II: payment of entire principal on January 1, 1995 and no interest during 1994: Total for Option II: $4,388,000 x .01 = $43,880.00 16 Option III: payment of one half principal on January 1, 1995 and the other half on January 1, 1996 plus one-half the interest due for the January 1, 1994 through January 1, 1996 time period on January 1, 1996: Two principal payments of $21,940 plus one-half the interest. Total interest = 1994 interest + 1995 interest _ $43,880 x .03225 + $21,940 x .03225 _ $1,415.13 + $707.56 = $2,122.69 One-half interest = $1,061.35 Total for Option III: $21,940 + $21,940 + $1,061.35 _ $44,941. 35 **Capital Recovery Factor equals i(l+i) /(l+i) -1, where i = interest rate of .03225 and n = number of time periods, which is set at 18 in this example.