SUBJECT
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Discussion with possible action to approve the Wholesale Water Purchase Agreement (WWPA) between the City of Laredo and Legacy Water Supply Corporation establishing the commercial framework governing the future purchase and delivery of supplemental wholesale water, and authorizing the City Manager to execute the agreement, subject to final legal review, with any final financing commitments, rate impacts, take-or-pay obligations, and long-term purchase commitments remaining subject to subsequent City Council approval.
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VIVA LAREDO PLAN ALIGNMENT
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PREVIOUS COUNCIL ACTION
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BACKGROUND
The proposed Wholesale Water Purchase Agreement establishes the commercial framework governing the future purchase and delivery of supplemental wholesale water between the City of Laredo and Legacy Water Supply Corporation.
Unlike REDICA and the MPA, which establish policy and governance, the WWPA governs the future commercial relationship between the parties.
Management's review focused on ensuring that the agreement appropriately protects the City's long-term operational, financial, and utility interests while allowing continued advancement of the regional project.
Recommended revisions include provisions intended to:
• preserve the City's ability to complete all engineering, operational, legal, financial, regulatory, and technical due diligence before final financial commitments become effective;
• recognize that the City is purchasing a beneficial supplemental water supply that can be economically integrated into the City's existing treatment and distribution system while maintaining finished water quality consistent with the City's operational standards;
• provide that if future engineering or operational evaluations demonstrate materially greater blending, treatment, chemical usage, energy consumption, capital improvements, or other operational requirements than reasonably anticipated, those additional costs should be appropriately reflected within the commercial relationship;
• require the ongoing disclosure of material engineering, hydrogeologic, hydraulic, blending, water quality, treatment, operational, financial, and regulatory information necessary for the City to independently evaluate and operate the project throughout its term;
• preserve the City's reserved production capacity while delaying any long-term take-or-pay obligations until all conditions precedent have been satisfied and future City Council approval has been obtained.
Management recognizes that additional engineering and technical information, including blending, hydraulic, hydrogeologic, and operational evaluations, continues to be developed and reviewed. Accordingly, approval of the WWPA establishes the commercial framework for the proposed project but does not authorize project financing, bond issuance, construction, or irrevocable long-term financial commitments.
Any future financing package, capital participation, rate impacts, take-or-pay obligations, or long-term purchase commitments will return to the City Council for separate consideration following completion of all required engineering, operational, financial, legal, and regulatory due diligence.
COMMITTEE RECOMMENDATION
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STAFF RECOMMENDATION
recommendation
Approval
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Fiscal Impact
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Change Order: Exceeds 25% Y/N: Click or tap here to enter text.
FINANCIAL IMPACT:
None at this time. Future financing, capital participation, water rates, and long-term purchase obligations remain subject to subsequent City Council approval.