City Council

MANISTEE CITY COUNCIL WORK SESSION AGENDA Tuesday, January 12, 2016 - 7:00 p.m. - Council Chambers, City Hall I. Call to Order. II. Work Session Items. a.) PUBLIC COMMENTS ON WORK SESSION RELATED ITEMS. b.) DISCUSSION ON FILER TOWNSHIP UTILITY AGREEMENT. – R. Ben Bifoss and City Staff. c.) DISCUSSION ON STRATEGIC PLAN UPDATE PROCESS. – Alliance for Economic Success. d.) DISCUSSION ON CITY MANAGER / CITY COUNCIL EXPECTATIONS. – Facilitated by the Alliance for Economic Success. e.) DISCUSSION ON EDGEWATER BROWNFIELD DEVELOPMENT – City Manager Thad N. Taylor and City Staff. III. Adjourn. TNT:cl  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 AGREEMENT FOR THE COLLECTION AND TREATMENT OF WASTEWATER CHARTER TOWNSHIP OF FILER- CITY OF MANISTEE 1. Parties and authority. This agreement between the Charter Township of Filer (Township) and the City of Manistee (City) is made according to the Urban Cooperation Act of 1967, 1967 (Extra Session) PA 7, as amended MCL 124.501 et seq. 1.1. Term. The term of this Agreement is 40 years, beginning on the effective date. 1.2. Effective date. The effective date of this Agreement is ___________, 2015. 1.3. Purpose. The purpose of the Agreement is to provide the terms and conditions on which wastewater generated and collected in the Township will be transported to, and treated by, the wastewater treatment plant owned by the City and the terms and conditions pursuant to which the City will operate and maintain the Township’s sanitary sewer collection system. 1.4. Rates. The rates charged by the City to the Township under this Agreement shall be adopted and collected according to the methodology described in paragraph 3.0. The overall objective in application of the rate methodology is to make sure that Township customers are not paying rates that subsidize the rates charged to City customers and that City customers are not paying rates that subsidize the rates charged to Township customers. 1.4.1 Existing Customers. If any affected current user of the City system who is located in the Township so chooses by a written request to the City Manager of the City, the City shall phase- out the payment in lieu of taxes (“PILT”) for current City wastewater users in the Township over the next three (3) years and treat those users according to this bulk contract, with notice to the Township of each City customer that is phased out as a City Customer and switched to a Township customer. If an affected current user in the Township makes that written request of the City by December 1, 2016, that phase-out shall begin as of January 1, 2017 and shall continue as indicated below. If the request is made by December 1 of any subsequent year, the phase-out shall begin on January 1 of the following year: Beginning on January 1, 2017, the PILT to be paid for that calendar year pursuant to that pre-existing contract shall be 65% of the PILT that would otherwise be paid under that contract. Beginning on January 1, 2018, the PILT to be paid for that calendar year pursuant to that pre-existing contract shall be 35% of the PILT that would otherwise be paid under that contract. Beginning January 1, 2019, the PILT to be paid for that calendar year pursuant to that pre-existing contract shall be $0. 1  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 Notwithstanding the above, the amount of the PILT shall not be reduced or further reduced in any new calendar year if any PILT payments are overdue as of January 1. If any PILT payments are overdue as of January 1, the PILT payments to be paid in that calendar year shall be same as in the prior year. Additional phase-out reductions may commence or resume the following year if all PILT payments are current as of January 1. This section shall not apply to or affect any current agreement with an existing City sanitary wastewater service user in the Township that does not expressly provide for a PILT. 1.4.2. Bulk Customer. The Township will be a “bulk” wastewater treatment customer of the City, meaning that the City will issue one quarterly bill to the Township and the Township will be responsible for billing all retail customers situated in the Township. If the Township bills its customers on a monthly basis or requests monthly bills from the City, the City shall bill the Township on a monthly basis. All bills from the City to the Township are due and payable within 45 days. After that 45-day period, the Township shall be subject to the same late payment interest, fees and costs as are charged by the City to other users for late payments. 1.5. Wastewater treatment plant. The City owns and operates its wastewater treatment plant and is solely responsible for maintaining and upgrading the plant, along with required permits, licenses, and certifications. 1.6. City collection system. The City owns and operates its wastewater collection and transmission system and is solely responsible for maintaining and upgrading it. 1.7. Township collection system. The Township will construct, own and operate its wastewater collection system within the Township and is solely responsible for the cost to construct, maintain, operate and upgrade that collection system. Phase I of the Township collection system is described and depicted in Schedule A, which is approved by the City. The Township contracts with the City to maintain the Township’s wastewater collection system as described in paragraphs 2.8 and 2.81. 1.8. Connections to Township collection system. The Township shall authorize and administer all connections to the Township collection system, subject to the approval by the City of each connection on engineering terms (i.e., that the connection complies with the “10 State Standards” for wastewater of the Great Lakes – Upper Mississippi River Board; that it complies with applicable laws, ordinances, rules and regulations; and that it will not impair the City’s wastewater transmission or treatment facilities) which approval shall not be withheld unreasonably. In addition, the City shall have the right to inspect all connections to the Township collection system to ensure compliance with applicable sewer use ordinance requirements, applicable industrial pretreatment program requirements, and other federal, state or local laws, rules or regulations applicable to such connections or use of the Township collection system or the City’s wastewater treatment plant. 1.9. Expanded Township collection system. Any expansion to the Township collection system described in Schedule A must be submitted to the City for approval on engineering terms (i.e., that “10 State Standards” for wastewater of the Great Lakes – Upper Mississippi River Board; 2  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 that it complies with applicable laws, ordinances, rules and regulations; that it will not impair the City’s wastewater transmission or treatment facilities; that it will not result in wastewater volumes or characteristics that exceed capacities of any City facilities or that exceed applicable discharge limitations, etc.), which approval shall not be withheld unreasonably. 2.0 Franchise and permits to operate. 2.1. Guaranteed capacity . Subject to the other provisions of this Agreement, the City hereby guarantees that the City will accommodate and treat 125,000 gallons average daily flow of wastewater from the Township. However, nothing in this Agreement shall give the Township any right, title or other interest in any portion, or processes of the City’s wastewater collection, transmission or treatment lines, plants or other facilities, other than the guaranteed capacity of the 125,000 gallons average daily flow. The Township may not sell, lease, assign, or transfer any of the guaranteed capacity. 2.1.1. Connection fee. The Township will pay a specially-negotiated bulk connection fee of four hundred thousand dollars ($400,000) for this capacity regardless of the number of connections made to the Township’s collection system that use part of the guaranteed wastewater treatment capacity. This amount shall be paid in full prior to the physical connection of the Township collection system to the City system. 2.1.2. Installment payment option. If the Township wishes to pay this amount in installments, it may be paid in 10 annual equal installments of principal plus accrued interest on the unpaid balance at the rate of 4.0% per annum. The first installment shall be paid prior to the physical connection of the Township collection system to the City system, and each of the nine remaining installments shall be paid on or before the annual anniversary of the effective date of this Agreement. 2.2. Unavailable accommodated volume. If all or any part of the guaranteed accommodation and treatment of up to 125,000 gallons average daily flow becomes unavailable to the Township on a sustained basis for three consecutive months or more for any reason (including but not limited to loss of permit, loss of treatment capacity, change in regulatory standards from state or federal agencies) the Township may seek injunctive relief to compel the City to accommodate the average daily flows from the Township of up to 125,000 gallons per day. This shall not apply to conditions caused by extreme weather events such as tornados or excessive straight- line winds, floods, lightning strikes, or extended periods of excessive heat or cold; casualty such as a fire, earthquake, or other disaster; war, terrorism, or civil unrest resulting in damage to the City’s wastewater facilities; or shut-downs caused by the criminal or other illegal acts of others. In such extreme circumstances the accommodated volume available to the Township shall be limited in the same proportion and in the same manner as for customers in the City. 2.3. Exceeding accommodated capacity in plant. If the Township exceeds the accommodated capacity of 125,000 gallons average daily flow for three consecutive months or more, the City may seek injunctive relief to compel the Township to reduce the wastewater flow to the City treatment plant to the guaranteed capacity. This shall not apply to conditions caused by extreme 3  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 weather events such as tornados or excessive straight-line winds, floods, lightning strikes, or extended periods of excessive heat or cold; casualty such as a fire, earthquake, or other disaster; war, terrorism, or civil unrest or shut-downs caused by the criminal or other illegal acts of others. 2.4. Measuring wastewater volume. The wastewater volume flowing from the Township to the City shall be measured by a wastewater flow meter purchased, installed, owned, and located by the Township as approved by the City, with an access point for collecting samples and installing sampling equipment. At the Township’s expense, the meter shall be professionally and independently tested and re-calibrated in strict accordance with the manufacturer’s specifications, not less frequently than annually. The City may, at any time, contract for testing and recalibration of that meter. If any special testing of the meter (i.e., testing in addition to that conducted in accordance with the manufacturer’s specifications) shows the meter is off by more than 5%: the Township shall be billed for any needed recalibration. If the meter experiences a major malfunction, fails to measure flow or has to be taken out of service, the City shall estimate the flows for the time period that the meter was out of service or not functioning properly. The estimate will be based on the prior 30 days of flow, or if that data is not available, the most recent quarterly volumes. The City shall notify the Township when the meter has malfunctioned or is out of service and provide details of the event and the calculation of the estimate.. 2.5. Wastewater treatment. The City shall provide wastewater treatment service on and for all of the wastewater collected in the Township and transported to the City plant pursuant to this Agreement in accordance with standard City policies, practices and procedures, and State and Federal permits and regulations. 2.6. Entry points. Only one entry point to the City’s collection system is authorized and approved by this Agreement. Additional entry points can be requested and granted by written agreement of the parties. PILT customer connections and reconnections do not constitute an entry point under this agreement, and do not require additional approval from the City. 2.7. Ordinance adoption, discharge limitations, industrial pretreatment programs. The Township shall adopt a sewer use ordinance that is identical in all material respects to that adopted by the City and that is acceptable to the Michigan Department of Environmental Quality, and the Township shall, within 120 days of any City amendment to its sewer use ordinance, adopt a substantially identical amendment. The Township shall authorize the City to administer and enforce in the Township as an agent of the Township industrial pretreatment programs (IPP) and discharge limitations within the sewer use ordinance. The Township shall take all actions required to ensure enforcement of the IPP and discharge limitations comply with the sewer use ordinance and applicable state and federal laws, rules, regulations, permit requirements and orders of officials and agencies of competent jurisdiction. As the bulk customer of the City, the Township shall be responsible and subject to any consequences for any violations of IPP requirements or discharge limitations within the wastewater from the Township. However, the parties shall work cooperatively to ensure the source of any violation 4  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 is identified and held responsible as provided by the sewer use ordinance. The Township shall also be billed for any surcharges applicable to the strength of any discharge into the Township collection system or from the Township collection system into the City system after the City identifies the source of the violation. 2.8. Operation and Maintenance (O&M). The City will provide ordinary operation and maintenance of the Township collection system for the Township and the cost of that ordinary maintenance is included in the rates identified in the subsection on Rates. The cost for administering and enforcing the adopted IPP program is incorporated in the rates noted in paragraph 3, except to the extent permit fees, sampling costs, fines, penalties, surcharges or other amounts are to be paid under the IPP by users inside the City, in which case the Township and/or users in the Township shall pay them in the same amounts as they would if located within the City. Operation and maintenance of the Township’s municipal sanitary sewer system by the City of Manistee shall include, but will not be limited to:  Weekly review and inspection of all municipal lift stations.  Cleaning and grit removal of all municipal lift stations as needed but no less than on twice a year.  Maintenance as required/recommended by product manufacturer on all mechanical items associated with the Township sanitary sewer system.  Weekly inspection of the parshall flume between the City and Township, cleaning when needed and as recommended by manufacturer.  Daily flow readings from flow meter between City and Township via SCADA computer.  As-needed inspection of gravity sewers and associated manholes and cleaning as required.  Annual (once per year) inspection and maintenance of lift station generator(s) or as recommended by manufacturer. Generators to be programmed to test run weekly.  Notifying Township of issues or concerns with system and repairs completed.  Keeping a record of all operation and maintenance activities on Township sanitary sewer infrastructure, providing these reports to the Township on a monthly basis or as requested.  Perform and respond to emergency call-outs as needed.  Provide Miss-Dig marking.  Perform sanitary sewer service lead tap inspections.  Attend Township meetings when requested.  Complete and provide reporting to State and/or Federal agencies as requested or required. 2.8.1. Township contribution to extraordinary maintenance of Township collection system. If the City’s maintenance cost exceeds ten thousand dollars ($10,000) for a single event or equipment failure in a calendar year, the City shall bill the Township and the Township shall pay all amounts in excess of ten thousand dollars ($10,000). To help budget for and provide a fund to fully pay or offset such extraordinary maintenance costs, in addition to the O&M component of the rates, the Township will pay $5,000 per year to the City on or before July 1 st beginning July 1, 2017, which shall be held by the City in a designated account for the Filer 5  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 Charter Township Collection System Maintenance, and expended only when the ten thousand dollar ($10,000) extraordinary maintenance expense limit is exceeded. If the balance in that account reaches $50,000 the Township’s obligation to pay $5,000 per year shall be suspended until the account balance drops below $40,000 and the $5,000 annual payment shall resume. This balance shall be set aside in a separate, non-interest accruing fund and any unexpended amount in that fund will be returned to the Township at the expiration or other termination of this Agreement. The City shall bill the Township for the extraordinary maintenance expense and the Township may either pay the billed amount or direct the City to withdraw it from this fund. If the Township makes no payment and gives no direction within 30 days of the date of the City’s invoice to the Township, the City may withdraw the billed amount from this fund without further approval of the Township. The Township shall pay any amounts not covered by the balance in this fund with prompt notice from the City to the Township of maintenance expenses that exceed ten thousand dollars ($10,000) for a single event or equipment failure in a calendar year 2.8.2 Representations and warranties. The City represents and warrants to the Township that it does and shall operate and maintain the City System and the Township collection system in the same manner as it operates and maintains the City collection system and in substantial compliance with all applicable state and federal laws, rules, and regulations and all permits issued to or for the City System. The City shall indemnify, defend and hold harmless the Township from and against all fines, costs, penalties, and the Township’s reasonable attorney fees and costs arising from the City’s violation of any state or federal law, rule, regulation or permit governing the construction, operation and maintenance of the City System or the operation and maintenance of the Township Collection System. These City representations, warranties, and obligations to indemnify, defend and hold harmless shall not apply to any violation resulting from the Township’s acts or from those of any user in the Township or from the Township’s breach of any term or condition of this Agreement. 3.0. Rate methodology. The Township shall pay wastewater treatment rates according to the Bulk User Rate of $10.83 per 1,000 gallons of wastewater flowing from the Township to the City collection system until June 30, 2017, which will be measured at and by the flow meter referenced in paragraph 2.4. The Bulk Rate will increase 3% on July 1, 2017, and 3% on July 1, 2018. Thereafter, bulk rate increases by the City shall be restricted to the same rate increases imposed on the City Sewer Rate for the comparable class of City customers or users. The breakdown of the starting Bulk Rate is as follows: City Sewer Rate of $6.91 per 1,000 gallons x 117%: $ 8.08 Operation and Maintenance charge (per 1,000 gallons): $ 2.00 Ready To Serve charge (per 1,000 gallons): $ 0.75 Total (Bulk Rate per 1,000 Gallons): $10.83 3.1. Disputes. Should a dispute between the parties arise over the way in which rates for wastewater treatment are calculated, set, charge, billed, derived, determined or paid or for another breach of this Agreement other than a failure to comply with the IPP or a discharge 6  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 limitation, the parties shall inform each other in writing of the nature and basis of the dispute, and devote no fewer than two meetings of officials from the City and Township to discussion of the rate dispute. If no resolution is reached, the parties shall submit the rate dispute to nonbinding mediation before a mediator or mediation panel selected and paid for equally by the parties. The mediator or mediation panel shall be a person or persons who have backgrounds in sanitary sewer systems and treatment and may be attorneys, engineers, accountants, rate consultants or others who by training and/or experience have dealt with such issues. If mediation fails to resolve the matter, either party may seek relief in a state court of competent jurisdiction. 3.2. Retention and exchange of records. The parties shall retain and exchange those records associated with the construction, operation, and administration of the Township wastewater collection system, the treatment of the Township wastewater, and the development and setting of rates charged by the City to the Township. The particular records to be retained and exchanged shall be identified and exchanged freely by employees or officials of the parties, without filing or requiring Freedom of Information Act requests. 4.0. Extension of term. The 40 year term of this Agreement can be extended for any designated number of years by written agreement of the parties. Neither party can extend the term unilaterally. 4.1. Amendment. This Agreement can be amended only by the written agreement of both parties following the approval of their respective governing bodies. 4.2. Merger. All prior discussions and agreements, oral or written, pertaining to the subject of this Agreement are merged into this Agreement and superseded by these terms. 4.3. Breach. Any material breach of this Agreement shall be identified in writing and sent to the party committing the breach within 90 days of discovering the breach. A reasonable period of time shall be allowed to cure or otherwise resolve the breach. 4.4. Unanticipated regulatory changes. The parties acknowledge that the collection, pretreatment, and treatment of wastewater are highly regulated activities and that unanticipated regulatory changes may occur. If a regulatory change makes it impossible to comply with any provision of this Agreement or causes the costs of compliance to exceed those assumptions made in setting rates, that provision or rate shall be adjusted in a manner to accommodate that regulatory change. If the parties disagree about the appropriate adjustment, the matter shall be addressed as a dispute in accordance with section 3.1. 4.5. Notice and Addresses. Notice to and between the parties to this Agreement shall be given in writing by mail to the current Manistee City Hall and the current Township Hall of the Charter Township of Filer, which presently are: City of Manistee Charter Township of Filer 70 Maple Street 2505 Filer Road Manistee, MI 49660 Manistee, MI 49660 7  DW DRAFT: 10.16.15 EDW DRAFT 11/09/2015 EDW DRAFT 11/30/2015, 12/15/2015 EDW DRAFT 12/17/2015 4.6. Authority and signature. The City and Township warrant that each unit of local government approved this Agreement and authorized those designated officials whose names appear below to sign it. Dated: ___________________ Dated: ____________________ __________________________ ____________________________ for the City of Manistee for the Charter Township of Filer Drafted by: Eric D. Williams Attorney the Charter Township of Filer 524 N. State Street Big Rapids, MI 49307 (231) 796-8945 edw1@att.net 8