San Angelo City Council 5-12-20

[0:00:00] good morning everyone we are going to call this meeting to order it's a special meeting the audio/video broadcast it is conveying the 12th 2020 and we will start by making sure that we have a corn for today's meeting we have everyone available here and then what we have is Tom Thompson who will be joining us by some so at this point we have every single City Council member here so in fact we have a quorum our special instructions are that all members of the council and staff should begin speaking by stating their full name and their SMD position or role within the city we do not have any public comment none was received prior to today's meeting so at this point we will move into the regular agenda the regular agenda item a says the following consider approving an interlocal agreement between the city of San Angelo the city of Abilene and the city of Midland and authorizing the city manager to negotiate and execute all related documents for a long-term water supply and Alison Subang will be making a presentation but at this point we are going to adjourn from the regular agenda and move into the closed session our executive session under the provision of government code title 5 open government ethics subtitle a open government chapter 5 5 1 open meetings such after D exceptions to requirement that means the opening of the fine sections a section 5 5 1.07 1 consultation with attorney regarding the West Texas Water partnership so at this point in time we will no longer be available for the public and we will move into executive session we are back from my executive session let me ask if we want do I need to make a motion first and then have

[0:02:03] Jason Hill make the presentation or will Jason Hill make the presentation first Jason should make his presentation first Jason you're on you will start with your presentation please we can't hear you yes morning everybody [Music] all right we everybody can see the full screen now thanks mayor I'm Jason Hill I am an attorney that has worked with the city of San Angelo for many years on water rights and water supply related issues and particularly I've been working with the city of San Angelo the city of Midland and the city of Abilene and what we've called informally the West Texas water partnership and if you'll recall the partnership really has been working in unison for at least 10 years and the the goal of the partnership among three cities was to find a regional source of supply that was met certain reliability and quality to characteristics we saw a lot of different options over the years

[0:04:07] we considered many different projects that were presented to the cities and ultimately and finally we found a water supply that we think meets all of the requirements of each of the three cities and that that that that deal has manifested in the form of a contract that I want to be able to walk the three of the council through today but I have served as the attorney for the three cities along with Scott Hibbs a intro EHT in Abilene to do the consulting work and we think that we've got a an agreement here that could be very beneficial for all three states let me first describe the the structure of the agreement the the contract is not a lease it's not a purchase of groundwater rights it is a groundwater supply agreement where we are actually buying water from the the seller in this case the seller is Fort Stockton holdings which is a a they owe insignificant water rights in the fourth Lockton area for West Texas so one component of the contract is for the groundwater purchase agreement another form of the contract is for the development of the well field that will be required to produce the groundwater get it to the surface and get it to the each of the three city service areas and there's another component to the contract that is a permit licensing authorization the the water that gets produced and we'll go through this a little bit detail here in just a second but the water that's produced is subject to a ground water production permit that authorizes sporks document holdings to produce groundwater transported outside of a groundwater Conservation District and use it for municipal water supply purposes and in the contract we were authorized to essentially step into the shoes of Fort Stockton and

[0:06:10] operate under the terms of their of their authorization but first let me talk about what the volumes and the characteristics of the water that's involved here the the entire contractual agreement that the three cities will be able to take take part in provides for the sale of twenty eight thousand four hundred acre feet of water each year each of the three cities have different needs and so the Understanding between the three cities I think Teresa will probably talk about this a little bit more to tell maybe here in a few minutes about the agreement between through city the three cities on how to manage this contract but the distribution of water should follow fifteen thousand acre feet for Midland eight thousand four hundred acre feet for Abilene and the remainder five thousand acre feet for San Angelo those are annual water supplies and that ground water comes out of the average Trinity aquifer Trinity is a it's a large formation it covers a large part of the state but in that particular portion of the state the Far West Texas area and particularly the Fort Stockton area the overage Trinity is a it's known to be a fairly prolific source of supply that does have annual recharge and so it does provide a source of good quality water on a reliable and firm basis the just minute mentioned a second ago those volumes be split between the three cities through an interlocal agreement and I think that's what Teresa may be discussing here in just a few minutes the resource is regulated by a groundwater Conservation District which is what leads to the creation and the requirement of that production permit I just talked about just a second ago that would be the middle Pecos grand motor Conservation District and and the permanent authorizes the production of groundwater and the transport of it outside of the boundaries of the district which is

[0:08:12] obviously is an important component of the agreement the contract is designed to be a taker pay agreement the essentially what that means is you're making annual payments for the water and you have that water available to you you're in and you're out and so it creates a an exclusive ride exclusive ability to produce that groundwater on an annual basis the payment structure has been negotiated as as you can see here on the screen for years 1 through 5 the water will be the rata rate for the water will be thirty point six to five cents per thousand gallons those are her thousand gallon units that you see on the screen for years six through ten the rate is thirty four and a quarter cents per thousand and then from year eleven through the end of the contract the rate is 55 cents per thousand and I've got to call your attention out to that half a percent adjustment that that one-half of 1% adjustment will apply after the fifty-five cents per thousand rate is triggered and it applies to the rate and the preview it's not tied to a CPI adjustment it's not tied to any other embassies it is a flat 1/2 of 1% adjustment over the life of the contract which I'll tell you is a just tremendous value for the three cities and and and it provides a lot of protection on predictability on rates in the future so years 11 through the end is 55 cents per thousand the contract is a 50-year Tom with the opportunity for two additional extensions of 20 years each and those extensions will rest exclusively in the discretion of the cities so there won't be a new negotiation required in order to extend the life of the contract that that decision rests fully and the controller is fully in the city's laps

[0:10:14] so if you're doing the math and you exercise both extensions throughout the life of the contract when the triggers are are up and ready to be decided on it's a contract that will extend to the year 2110 which is a different different difficult year to articulate but with the 50 year term at least the 50 year term alone the city is getting a long term source of water supply with predictable rates and and it gives the city's the opportunity to recoup their investment in what will be the development of the well field and and the operation and maintenance efforts to get the water into the city systems so now we come to the well field development part of the contract you're purchasing water but it was important to the cities to not rely on a third-party entity to develop and operate a well field that that we are required to deal with and be able to get our water so the contract allows the cities to develop and operate their own well field to produce this groundwater and which is very very important I think very powerful component of the agreement the city's control the development of the system the design and development of the well-filled system so think of the way the Hickory well field has been designed and laid out the cities get the ability to to develop a system out here that will maximize the efficiency of the of the well field the will field development part of the agreement gives the cities access to the surface so we have the ability to obtain the easements that are required to drill the wells and install the infrastructure and it contains a component of design coordination where we get to work with Fort Stockton Holdings to make sure that we've got a well-filled design that takes advantage of the best points of availability in the in the contract area

[0:12:19] and the and the on the surface acreage and still allows you know allows us to coordinate with Fort Stockton to make sure that they still have the opportunity to make use of the surface as well the third part of the contract as I mentioned is the permanent licensing component the the permit that Fort Stockton has obtained for mill Pecos Criminal Conservation District authorizes not just the production of groundwater but also the transport of that water outside the district under a traditional groundwater regulation in Texas you required to have those two separate authorizations if your intent is to move water outside the district this is generally speaking and so the the permit that Fort Stockton has obtained allows them to do just that the contract would allow us to coordinate together with Fort Stockton on any modifications that not might be necessary in the future modifications to the permit that would accommodate maybe changes in design or additional Wells that are required we have obligations to to each other to make sure we coordinate to get that done um it also assigns the regulatory fees that are that are attributable to you know to this per minute most permits in the state many of them at least under different jurisdictions require the payment of different types of fees and so we have distributed responsibility for payment of those fees accordingly under this under this licensing under the contract when we started out as a as a partnership I mentioned at the first of my presentation here that we had certain goals that we were trying to achieve we needed water for the three cities that was going to be affordable and it had to have good reliability and it had to obviously meet the the quantities that we needed to meet our future water supply demands and it had to be a good quality with this contract as it's designed and as it's been

[0:14:25] negotiated and after 10 years of work and looking at various options we have developed we think a resource or potential resource for the city that meets every one of these goals and let me just wrap up by saying that with this source of supply I think San Angelo has truly obtained long term water security not only for the citizens of San Angelo before the West Texas region as well it adds to what is already a truly diverse water supply portfolio I think that rivals any any water supply portfolio as far as diversity is concerned in the state just think of all the resources that you would have available to you from water supplies to the east of the city you're on water supplies to the west of the city and then obviously Twin Buttes now is where the official water supplies as well as well as the Contra River Project your indirect reuse project you have an affordable source of water supply that I think is going to be a regional asset for the city so obviously I'm here to answer any questions that anybody has but let me just say that your your city staff has done an excellent job and helping develop an agreement that should the City Council decide to move forward on I think will serve San Angelo Sur Sur San Angelo well well into the future thank you Jason do I have comments from Council following Jason's presentation mayor this Tommy Hebert single-member district 1 I did have a question I is Allison on the line yes hi Allison does this have any impact to our right structure at this point in time Allison's true be direct our utilities

[0:16:30] for the city of San Angelo Tommy so the water annual payment a Jason just discussed with the thirty point six to five cents per thousand gallons we have worked closely with Tina and her department regarding the financing of that payment and we have identified a funding source with cosa DC that has restricted funds strictly dedicated to water supply projects and so I can let Tino talk about that but it is a source that we feel can make these payments that will start this year statement yes ma'am we have projected sales tax and of course we think it will be down after doing that and considering a decrease of sales tax revenue or type B sales tax in this specific case we are looking at a ten year cash flow or she and it looks like we definitely have the capacity to make the half or in the neighborhood of a half a million dollar payment per year for the water supply we don't have any concerns with that we feel very comfortable as far as future infrastructure debt service is concerned we do have the district is falling off of the Development Corporation starting in 2026 that will begin to decline pretty rapidly of about 1.2 million dollars additional capacity per year and also of course we know that we hope to sell off let's board Ranch at some point and be able to use that capacity as well if it's needed yes yes it sounds like there won't be any any immediate impact to our water rate structure Thank You council mayor if I may yes so I want to clarify what council is actually going to be voting on today is not the contract that Jason

[0:18:32] described that contract is going to be executed by Midland what you're going to be voting on is an interlocal agreement that's going to provide for the assignment of 5,000 acre feet of Midlands contract to the city of st. Angelo and the way that that's going to work is that we're going to execute and negotiate this document with Midland and Abilene that's going to assign rights and accept assignment from all of the cities it's also we're going to agree as the contract requires and as the partnership is always required that will participate in the development of the well field paying our pro rata share maintenance and operation costs however something that's going to be discussed at a later date so if one party benefits by a certain configuration of the well field differently than the others we can discuss how one three two five four five zero eight six three eight is now exiting okay must be Tom so it's if there's a benefit to somebody operationally we will be able in the future to share in that benefit for the well field there's also going to be this interlocal is also going to be assignable so we'll retain the right to assign our portion of the water to somebody else if in the future we decide we don't want to have this contract anymore and there's but there's a right of first refusal amongst the other cities so for instance of Abilene besides they don't want to keep their share of the water and we're interested in purchasing more of the share of the water we would have the ability to do that before they can sell it to anybody else and the same with our sheriff we decide to sell they would have a right to purchase our portion of that water before somebody else does and then there's going to be several liability that's built into the inter local as well as into the contract with Midland itself when it deals with assignment and what that means is that if there's any liability or responsibility that the other two parties fail to manage under their assignment of the water or the portion of the water they retain we won't be responsible or idle for any of those responsibilities essentially what we're doing through this interlocal is we're taking the big

[0:20:34] contract that Midler is executing and we're breaking it into three little identical contracts that each one of us holds okay so all right was that then I'm going to make a motion to authorize the city manager to negotiate and execute an interlocal agreement with Abilene and Midland that provides for the assignment of water under Midlands untreated groundwater supply contract with Sports Stockton Holdings and authorization to execute all related documents Tommy single-member district one now second your motion Thank You Tommy we have passed this motion 7-0 Tom Thompson is on the phone and if you could not hear so question mayor before we get off this is Harry Thomas single-member district three do we need to do this individually I asked Teresa or Julia on this we don't need a road map a guy yes I could comment I don't think it can we can leave this meeting without stating that what a effort this was on the behalf of Jason and Scot Hibbs who is the engineer who also participated on this I mean this has been in the process for ten years that's multiple different versions of councils for all three cities and to be able to keep a project going see that kind of change and you know just working three cities in West Texas who are very independent and want to do things their own way being able to keep this train on the track for that period of time I think is a part of remarkable thing I've worked with Jason both in Abilene and in San Angelo on this project and he's been a steady source of you know guidance and

[0:22:37] judgment for us and thank you Jason for helping us keep this train going I would with you on that Teresa so thank you for those comments and I also want to say thank you to each of the council members who have asked multiple questions challenge that commented on it but in the big picture understood the long term vision that we had for securing the water for the city of San Angelo so thank you everyone and the support that has made this move forward and the vision to take care of the city of the very long-term so no other City Council will have to deal with water issues and security of water for the city of San Angelo so thank you each and every one of you okay with that we will move into the follow-up and we just discussed it closed session issues so I would need a motion for adjournment if I may I'm Hebert single member district 1 Midway germ mayor Thank You Decker a second by Lucy Gonzales and all in favor say aye yes has been completed and you are all adjourned we will see you next Tuesday for a regular City Councilman

Captured 2026-07-26 · source: youtube.com/watch?v=Khv3hdbyr64