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HomeMy WebLinkAboutItem B - MWMC AgreementEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Modifications to the Metropolitan Wastewater Management Commission Intergovernmental Agreement Meeting Date: February 9, 2005 Agenda Item Number: B Department: Public Works Staff Contact: Peter Ruffler www. cl. eugene, or. us Contact Telephone Number: 8606 ISSUE STATEMENT The regional wastewater program is managed under an intergovernmental agreement (IGA) between Eugene, Springfield, and Lane County. Changes to this IGA are being proposed to align it with operational conditions and public policies that have evolved in the wastewater program over the past 25 years of the agreement, and to incorporate recommendations that will facilitate the issuance of revenue bonds by the Metropolitan Wastewater Management Commission (MWMC) in support of the regional wastewater 2004 Facilities Plan and related capital projects. BACKGROUND Council Action History_ The Metropolitan Wastewater Management Commission was established in 1977 by intergovernmental agreement between Springfield, Eugene, and Lane County. The IGA outlined the roles and responsibilities of the three partner agencies and the MWMC in providing for regional wastewater services, and included two appendices. Appendix A defined the regional sewerage facilities necessary to serve the wastewater treatment and disposal needs of the Eugene-Springfield area, and Appendix B set forth the regional program's financing criteria. A related Operations, Maintenance, and Administrative Services Agreement was established that defined the scope and responsibilities of Eugene and Springfield for operating and maintaining the regional sewerage facilities, and providing administrative services to the MWMC (including financing and capital program management). The IGA has been amended in 1978, 1982, and 1991. The last amendment to the agreement was in March 1998, as approved by the city managers for Eugene and Springfield and by the Lane County Administrator. The Operations, Maintenance, and Administrative Services Agreement was last amended in April of 2001. Financial and/or Resource Considerations The regional wastewater program is supported by user fees, which are established annually by the MWMC and reviewed and ratified by the city councils of Eugene and Springfield, and the Lane County Board of Commissioners. Capital projects are also supported by revenue from systems development L:\CMO\2005 Council Agendas\M050209\S050209B.doc charges (SDCs). The proposed changes to the IGA do not directly affect these rates, but they improve and strengthen the agreement for the bond market and give the MWMC the ability to offer revenue bonds that will be competitive in the market. The most cost-effective financing for the regional wastewater projects is a combination of user fees, SDCs, and bond proceeds. Without the ability to obtain competitive bond rates, the commission would have to raise user rates by about 65% in the next fiscal year to generate the necessary revenues. Timing The 2004 Facilities Plan outlines a schedule for the capital improvements necessary to continue to maintain the needed wastewater treatment capacity and capability. This schedule is based upon the anticipated future needs of the community, and the need to comply with a deadline of 2010 set by the State Department of Environmental Quality to prevent wastewater overflows during specified storm events. The Capital Improvement Program (CIP) schedule starts in 2005, and includes an extensive list of projects and activities that must be undertaken to meet the objectives. The changes proposed to the IGA are needed now to enable the MWMC to issue revenue bonds in the summer of 2005, to ensure that sufficient revenues are available to support the CIP. Council Goals The proposed amendments to the regional wastewater IGA are supported by, and promote progress towards achievement of, several of the Council's goals. HEALTHYNATURAL AND BUILTENVIRONMENT: The regional wastewater program protects public health and the environment through the efficient collection and treatment ofwastewater generated by the community. Changes are proposed that are necessary to enable the issuance of revenue bonds that are needed to support the 2004 Facilities Plan capital improvement projects. The Facilities Plan identified the capital needs necessary to maintain protection of public health and the environment, to prevent wastewater overflows, and to provide adequate treatment to comply with Federal and State pollution control limitations. An inability to raise revenues necessary to implement the 2004 Facilities Plan, as approved by the Eugene City Council as well as the elected officials of Springfield and Lane County, will result in a high likelihood of environmental impacts and threats to public health. SUSTAINABLE COMMUNITY DEVELOPMENT: Wastewater collection and treatment are essential community services, and the ability of a community to grow and prosper depends upon adequate treatment capacity and capability. The projects contained in the approved Facilities Plan are necessary to ensure that there continues to be adequate capacity to handle the wastewater flows, and sufficient capability to control pollutants, for the anticipated future growth and development needs of the community. EFFECTIVE, ACCOUNTABLE MUNICIPAL GOVERNMENT; and FAIR, STABLE AND ADEQUATE FINANCIAL RESOURCES: The intergovernmental agreement for the regional wastewater program has operated effectively for over 25 years, and the proposed amendments will help the program continue to be a model of effective, cooperative efforts among the local governments for provision of this essential service. The changes also give the MWMC the ability to cost-effectively generate the revenues necessary to provide wastewater services that meet the needs of regional sewer users. (MWMC's only customers, however, are the governing bodies.) L:\CMO\2005 Council Agendas\M050209\S050209B.doc RELATED CITY POLICIES The majority of the changes proposed in the IGA are related to the need for periodic updates to reflect current operational practices, adopted plans, and metro-wide policy documents. These modifications do not reflect or implement any changes in the relationship or authorities between the governing bodies and the MWMC. The modifications will result in an agreement that is aligned with administrative and operational practices and that is consistent with current regional planning policies and terminologies. Proposed modifications to this end include: · Update the language to reflect adopted Metro Plan terms and policies. · Update the financing guidance by deleting Exhibit B (which refers to the 1992 Financial Plan, the County Service District and General Obligation bonding) and replace it with MWMC's 2003 Financial Plan (including the financial policies and revenue bonding strategy). Move relevant financial management guidance from Exhibit B into the main body of the IGA. · Change the directive from "compensating" the cities for the regional facilities to "facilitating timely transfer of ownership," with the same consideration of funding equity among all sewer users that currently exists. · Eliminate provisions referencing triggers for planning to expand capacity (Section 9 of the IGA), because the 2004 Facilities Plan and its updates replace the need for this provision. As recommended, the changes continue the requirement of obtaining Governing Body approval for the partial and comprehensive facility plan updates that are scheduled at five-year intervals during the planning period. Also as recommended, the changes allow MWMC to make other relatively minor revisions to the facility plan, such as the annual updates to the regional CIP, without Governing Body approval. Notwithstanding these recommended changes to the IGA, however, the governing bodies will continue their existing role in reviewing such revisions through the annual MWMC budget adoption process. · Delete the outdated provisions for compensation from the three jurisdictions for "initial expenses." · Move some sections of text for better organization, without modifying intent. Additional modifications to the IGA are being proposed that reflect the recommendations of MWMC's Financial Advisor. One of the recommended changes, described in the last bullet point below, limits the individual governing bodies' right to adopt regional user rates and systems development charges less than those recommended by the commission in certain situations. The language was recommended by the Financial Advisor to strengthen the assurance that adequate rates and fees will be established to cover long-term borrowing by the commission, and that revenues will be collected and forwarded to MWMC. Adoption of the recommendations is necessary to satisfy the concerns of the bond market and position the MWMC to attract bidders and sell revenue bonds at the lowest cost to the regional sewer customers. Proposed modifications to the IGA in this respect include: · Incorporate the regional wastewater 2004 Facilities Plan as basis for planning and improving facilities, and specify that updates that will be submitted for review and approval by the governing bodies. · Delete the user charge reference to federal regulations (40 CFR 35.929), because previous federal restrictions under the grants no longer apply, and replace it with language ensuring that sufficient user charges will be established to meet debt service requirements in addition to operations, maintenance, etc. L:\CMO\2005 Council Agendas\M050209\S050209B.doc · Strengthen language about collection and remittance of revenues, in response to Financial Advisor concerns and the need to satisfy bond rating agencies. · Remove 30-day notice of termination; leave one year notice requirement; and further restrict Eugene and Springfield from terminating when there is outstanding debt requiring long-term commitment of revenues, unless a provision is made for debt repayment. · Modify the MWMC dispute resolution process to include only representatives of partner agencies rather than the Metropolitan Policy Committee (MPC). · Modify the dispute resolution process to provide that, after the Mediation Committee makes its recommendation, the commission's action takes effect only after all the governing bodies agree, except that the objecting Governing Body's recourse is limited to submitting the matter to the Commission for reconsideration when: 1) the objection is to the commission's adoption of sewer user charges and "such charges are needed to pay the expenses of the operation, maintenance, rehabilitation and capital improvements for the regional sewerage facilities and to meet the principal, interest, coverage requirements of all notes, bonds or other evidence of indebtedness issued by the Commission;" and 2) the objection is to the "commission's adoption of systems development charges to provide funding for the commission' s CIP and associated eligible expenses consistent with state law." Changes also are proposed to Appendix A of the intergovernmental agreement to reflect a revised definition of"regional" wastewater facility. This revision shifts the current definition from an arbitrary pipe size, to a consistently applied concept of"shared flows." The new language establishes a logical ownership pattern whereby components of the overall wastewater collection and conveyance system that serve only Eugene or Springfield are owned and maintained by the appropriate agency. Components that transport or treat wastewater from both Eugene and Springfield are defined as part of the regional MWMC system. This revision reflects the actual practices used by the cities' local sewer programs and the Regional Wastewater Program for many years. COUNCIL OPTIONS 1) Approve the recommended changes to the intergovernmental agreement between Eugene, Springfield, and Lane County for the regional wastewater program. 2) Direct staff to modify the proposed changes to the IGA and return with a modified proposal for City Council approval. 3) Take no action on the proposed changes to the IGA. CITY MANAGER'S RECOMMENDATION Staff recommends adoption of the proposed changes to the regional wastewater IGA. The IGA revisions proposed in Attachment A are the culmination of several years of work reviewing the agreement and determining appropriate changes needed to align it with operational conditions and public policies that have evolved over the past 25 years. The proposed changes have been developed by the Regional Wastewater Program staff, MWMC legal counsel, and the MWMC and Lane County Financial Advisors, and have been reviewed by legal counsel for all three partner jurisdictions. The revisions have been reviewed and endorsed by the Eugene and Springfield Public Works Directors, and L:\CMO\2005 Council Agendas\M050209\S050209B.doc the Executive Officers of all three partner agencies. MWMC received the proposed changes in its December 16, 2004, Commission Agenda Packet. SUGGESTED MOTION ! move to authorize the City Manager to sign the amended intergovernmental agreement between Lane County and the cities of Eugene and Springfield concerning the regional wastewater program and the Metropolitan Wastewater Management Commission. ATTACHMENTS FOR MORE INFORMATION Staff Contact: Peter Ruffler Telephone: 682-8606 Staff E-Mail: peter.j.ruffler~ci.eugene.or.us L:\CMO\2005 Council Agendas\M050209\S050209B.doc