AGENDA CAPTION:
Title
Consider approval of Resolution 2026-35R, approving Amendment No. 3 to the 2024 Regional Wastewater Treatment Plant Cost Sharing Agreement to add municipal utility districts to the agreement and adjust the required 2026-2027 payment and payment dates for some developers; authorizing the City Manager, or her designee, to execute the Amendment on behalf of the city; and declaring an effective date.
Body
Meeting date: March 3, 2026
Department: Utilities Director Tyler J. Hjorth
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Funds Required: n/a
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Fiscal Note:
Prior Council Action: 2024-078R Approving a Cost Sharing Agreement; 2025-056R approving Amendment No. 1; and 2025-226R approving Amendment No. 2
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Background Information:
The City entered into a Cost Sharing Agreement (“CSA”) in May 2024 for the construction of a new wastewater treatment and water reclamation facility near FM 1978. The agreement with multiple developers provides for the City building the initial water reclamation facility to serve the developers’ 6,000 living unit equivalent (a 2 million gallon a day plant), which the City can eventually expand up to 8 million gallon a day (almost the size of the existing City facility on River Road). The CSA was amended in January 2025 to, among other things, add three other developments to the CSA and then again in November 2025 to change the date the date was required to provide initial service to March 1, 2027.
In fall 2025, the CSA participating developers requested City staff to consider changing the CSA construction and payment schedules to account for slower than anticipation development in the area. In response to this request, the City required a change in service date and to adjust the new plant’s in-service date. The developers agreed to expedite the service date change, which was executed in Amendment No. 2 with Council approval in November 2025, so the City could eliminate costs associated with providing service by March 2026, while we worked out the details of the remaining changes to be incorporated in this Amendment No. 3.
Amendment No. 3 reduces 2026 and 2027 changes payment and construction schedules for some of the developers. The benefit to the City in accommodating these changes is cost avoidance associated with purchase of a temporary treatment facility and reduced pump and haul requirements. The savings to the City is over $5,000,000. Additionally, the developers agreed to adjust their individual LUE Fee payments so that the City recovered the same net present value of the initial payment plan even though the payments were changed or extended.
The 2025 revenues collected through the CSA were $1,917,000, and the anticipated 2026 is $3,410,800,
The water reclamation facility is currently on schedule to be on line in late 2028.
Council Committee, Board/Commission Action:
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Alternatives:
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Recommendation:
Staff recommends approval.