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HomeMy WebLinkAboutCC Reso 2018-08 - Authorizing Water Resources to Pay for Golf Course Enterprise RESOLUTION NO. 2018-08 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH AUTHORIZING THE WATER RESOURCES DEPARTMENT TO PAY FOR CERTAIN USES OF REAL PROPERTY COMPRISING THE UKIAH VALLEY GOLF COURSE ENTERPRISE WITHIN THE COMMUNITY SERVICES DEPARTMENT WHEREAS, 1. The City of Ukiah ("City") provides certain municipal services as general fund services funded primarily from tax revenue, such as sales and use tax, locally adopted transaction and use taxes, ad valorem real property taxes, transient occupancy taxes, and business license fees; and 2. The City provides other municipal services through enterprise funds which are funded by user fees charged for the municipal service provided by the enterprise fund; and 3. Enterprise funds are self-supporting and do not depend on tax revenues to provide their services; and 4. The Water Service Enterprise ("WSE") within the Water Resources Department ("WRD") is an enterprise fund that provides water service using monthly fees and connection fees; and 5. The Sewer Service Enterprise ("SSE") within the WRD is an enterprise fund that provides sewer service in the City and in the Ukiah Valley Sanitation District using monthly fees and connection fees: and 6. The Ukiah Valley Golf Course Enterprise ("GCE") within the Community Services Department ("CSD") is an enterprise fund that provides a municipal golf course and related municipal services through a lease agreement ("Lease") between the City and the Tayman Park Golf Group, Inc. ("TPGG"), which leases the Golf Course, including the club house and other improvements ("Golf Course Property" ("GCP°) or "Leased Premises"); and 7. Under the Lease terms. TPGG pays the City rent and must operate, maintain, repair and improve the Golf Course relying exclusively on green and cart path fees, golf cart rental fees and the proceeds from the retail sale of goods and services from a pro shop and food and beverage service and fees from golf lessons, facility rentals and any other revenues derived from the operations of the Golf Course; and 8. The Water Service Enterprise uses certain portions of the Front Nine holes of the Golf Course Property for facilities used to provide potable water service for domestic consumption in the City, including a two million (2,000,000), one point five million (1,500,000), three hundred thousand (300,000) and one hundred thousand (100,000) gallon water storage tanks, service roads, water mains, valves, pumps and access for the operation, maintenance and repair of these facilities; and Page 1 of 4 9. The Water Service Enterprise has received funding from the California Water Board and has awarded a construction contract for the first three phases of a four phase project("Purple Pipe Project") to construct a recycled water system ("Purple Pipe System") that will transport and deliver for irrigation purposes treated wastewater from the City's Wastewater Treatment Plant ("WWTP") to vineyards and public facilities, such as the Men's Softball Complex, Ukiah Cemetery District, City parks, school district facilities and the Todd Grove Recreational Area which includes the Ukiah Valley Golf Course; and 10. Phase Four of the Purple Pipe Project will require the installation of additional facilities on the Back Nine holes of the GCP, including control equipment, water mains, valves, holding ponds to facilitate the disposal of the reclaimed recycled water and related facilities; and 11. Upon completion of Phase Four of the Purple Pipe Project ("Purple Pipe Date") recycled water will be available to irrigate the GCP; and 12. The WRD will require access to and across the Leased Premises to that portion of the Back Nine holes of the golf course that TPGG has ceded back to CSD in Addendum 3 of the TPGG Lease Agreement for the planning, design and implementation of Phase Four of the Purple Pipe Project; and 13. Under Section 2.7 of the Lease, the City retained the right to use the Leased Premises for municipal purposes as long as its use does not unduly interfere with the Lessee's use of the Leased Premises. The retained use includes City property or facilities located on the Leased Premises or adjacent thereto, such as all roads leading to the two million (2,000,000), one point five million (1,500,000), three hundred thousand (300,000) and one hundred thousand (100,000) gallon water tanks located on the unleased portion of CSD land. Under the Lease, Lessor and Lessee share the cost to maintain all roads leading to the large water tanks based on their relative use of the roads; and 14. The retained use of the GCP represents a burden on the GCE and a financial benefit to the WSE; and 15. The design and construction of the Purple Pipe Project within the Back Nine holes of the GCP will unduly interfere with the Lessee's use of the Leased Premises; and 16. The capitalized terms in this resolution shall have the meanings provided in Section 1 of Addendum 3 to Municipal Golf Course Lease Agreement, unless a different meaning is expressly stated or clearly indicated by its usage herein; NOW, THEREFORE, BE IT RESOLVED as follows: 1. Retroactive to July 1, 2017, WRD is directed to compensate CSD for the acquisition of the property, described in Exhibit R1, in one hundred fifty-six (156) monthly principal and interest payments of seven thousand seven hundred forty-four dollars and thirty-five cents ($7,744.35) per month which includes an imputed interest rate of three point five percent (3.5%) per annum. Payments shall be made in monthly transfers from the WSE to the GCE. Transfers shall be treated as expenditures of the WRD from the WSE and revenue of the CSD to the GCE in the City's budgets and financial statements. 2. Retroactive to July 1, 2017, WRD is directed to compensate the CSD at the rate of ninety thousand ($90,000) dollars per year for each year, or ratably for any partial year, prior to the Purple Pipe Date as full payment for the perpetual right to access the Purple Pipe System on the Golf Course Property. Such right allows WRD to demonstrate that it has legal access to complete Phase Four of Page 2 of 4 the Purple Pipe Project, including storage capacity to be located on the unleased portion of CSD land located on the Back Nine of the golf course. Payments shall be made in periodic transfers from the WSE to the GCE not less often than annually at the discretion of the City Manager. Transfers shall be treated as expenditures of the WRD from the WSE and revenue of the CSD to the GCE in the City's budgets and financial statements. 3. On a month by month basis during the Business Interruption Period and until the Golf Course Normalcy Date. WRD is directed to compensate the CSD with a revenue make-up payment as described under Section 3B of Addendum 3 to the Lease for any month when the total Gross Revenue, as reported to City by TPGG on the prescribed forms, is less than that same month's adjusted revenue for FY 2017 (July 1, 2016 to June 30, 2017) as shown on Exhibit 1. 4. Effective on the Purple Pipe Date, WRD is directed to compensate the CSD for the WRD's use of the Back Nine holes of the GCP at the rate of three and three-quarter cents ($0.0375) per square foot per month. This amount shall be adjusted annually on July 1 based on the percentage change in the CPI for the twelve (12) month period ending on April 30. The square footage of the area used by the Purple Pipe Project shall be determined during the final design of those facilities to be recorded on Amended Exhibit A of the TPGG Lease Agreement and be recorded in the City's budget documents and financial statements. Payments shall be made in periodic transfers from the WSE to the GCE not less often than annually at the discretion of the City Manager. Transfers shall be treated as expenditures of the WRD from the WSE and revenue of the CSD to the GCE in the City's budgets and financial statements. In addition to the use of the Back Nine holes of the golf course by the Purple Pipe project facilities, the use shall include the discharge throughout the entire Ukiah Valley Golf Course irrigation system of all amounts of recycled water reasonably requested by the WRD to provide needed storage capacity in the Purple Pipe System storage ponds. 5. CPI means the Consumer Price Index for All Urban Consumers (1982-1984 = 100), San Francisco-Oakland-San Jose, CA, All Items, published by the United States Department of Labor, Bureau of Labor Statistics. In the event the CPI is discontinued or otherwise not available. "CPI" shall mean such comparable statistics on the purchasing power of the consumer dollar as is determined by the City Council. 6. Commencing on July 1, 2017, the CSD shall compensate the WRD for the difference between the billable charge for Potable Water used by TPGG to irrigate the golf course prior to the Purple Pipe Date and the amount TPGG pays for that use under Section 4 of Addendum 3 to the Lease. Such payments shall be made monthly as transfers from the GCE to the WSE and shall be treated as expenditures of the GCE and revenue of the WSE in the City's budgets and financial statements. 7. Because the City is providing recycled water to all other users at no cost. the WRD shall provide recycled water from the Purple Pipe System to the CSD without charge for all of its properties for a period of ten (10) years. commencing when recycled water is available to serve the Todd Grove Recreation Area and other City owned and operated parks and recreation facilities, including the Ukiah Valley Golf Course. 8. Notwithstanding any other provision of this Resolution to the contrary, after the Extended Term, WRD, in perpetuity, shall deliver Purple Pipe Water to CSD at the lowest price and most favorable terms offered to any other user receiving Purple Pipe Water ("Best Rate"). 9. The SSE shall compensate the WSE for the diversion of treated wastewater from discharge to the Russian River through the Purple Pipe System as determined by the City Council. Payments by the Page 3 of 4 SSE to the Water Service Fund shall be recorded in the City's budgets and financial statements as an expense of the SSE and revenue of the WSE. PASSED AND ADOPTED this 7th day of March 2018, by the following roll call vote. AYES: Councilmembers Brown, Scalmanini, Crane, Mulheren, and Mayor Doble NOES: None ABSENT: None ABSTAIN: None Kevin Doble, Mayor ATTEST: Kristine Lawler, City Clerk Page 4 of 4