Memorandum 14-169 Wastewater Agreement with Kachemak City

Memorandum 14-169

TO:              Mayor Wythe and Homer City Council

FROM:        Walt Wrede

DATE:         October 27, 2014

SUBJECT:  Resolution 14-008 / Wastewater Agreement between Homer and Kachemak City

Introduction

Resolution 14-008 approves an Intergovernmental Agreement for Wastewater Utility Facilities and Service between the cities of Homer and Kachemak City.  This resolution first appeared on the January 27, 2014 Council Agenda. It has been postponed several times. Its most recent appearance on the Agenda was August 18, 2014. The Agreement which was included in the August 18 Council packet was substantially rewritten in response to comments and suggestions from the Council. Memorandum 14-125 described and summarized the amendments.

At the August 18 meeting, the Council made a few, relatively minor amendments to the text. Resolution 14-008 was then postponed again until October 27 in order to provide the Kachemak City Council ample time to review and comment on the new amended agreement. The Council also wanted to provide sufficient time for additional negotiation if needed.

Kachemak City Response

The amended Agreement was provided to Mayor Morris a few days after the Council met on August 18. I informed the Mayor that Homer City Council was basically good with the current version of the Agreement as amended. The Kachemak City Council reviewed the amended agreement in early September and I met with Mayor Morris shortly after that meeting. No additional written comments or proposed amendments were submitted from Kachemak City. Mayor Morris transmitted his Council’s comments verbally and I told him I would summarize what he said in a Memorandum.

Mayor Morris stated that the Kachemak City Council was comfortable with the revised agreement for the most part but there were still some points of contention. He wanted Homer City Council to be aware of these and requested your consideration:

The 5th WHEREAS in the recitals: He was disappointed in the change to “one of”.  Kachemak City believes that the old agreement was in-fact central to joint funding for the sewer treatment plant and it is important to say that for the historical record and to demonstrate the spirit of partnership that prevailed at the time.
Section 2.3: There was disappointment with the removal of “less I&I”. Kachemak City believes inflow greatly inflates the amount of water it contributes to the collection system and this skews what Homer thinks they should be charged. We discussed that Homer had a similar  I&I issue .
Section 4.3: Kachemak City was uncomfortable with insertion of the word “periodically”. It requests that annually be inserted to provide some certainty.
Non-Metered Rate: Kachemak City still has real heartburn with using 3,500 gallons for the non-metered rate assumption.
General Comment: Kachemak City remains concerned about Homer’s perceived attitude and approach to these negotiations. They are concerned about the disconnect between the two Councils regarding their individual perceptions of the relationship. Kachemak City sees this as a partnership; two Cities working together to provide a vital service to the area. They see themselves as an equal partner who has contributed to the construction of the treatment plant and collection system upgrades that have benefitted both communities. Further, this agreement spells out how they will contribute to future upgrades. Homer, in their view, has acted as though it views Kachemak City as just another customer with no special status. This is very troubling to the Kachemak City Council.

Research Questions

Sales Taxes: The Council had questions about whether sales taxes are applicable. My understanding at present is that sales taxes would apply for those customers in Kachemak City who chose metered service. Whether Kachemak City should pay sales taxes when it remits payment for non-metered customers is still being reviewed. This is something that will be dealt with by the taxing authorities and does not need to be addressed in the Agreement.
Access to Infrastructure: Council wanted assurances that the City would have access to sewer infrastructure and equipment on private property and in the ROW outside the Homer City limits. It was suggested something guaranteeing that right should be inserted in the agreement. City Attorney Holly Wells looked at this and concluded that there are sufficient protections in place already in law to insure this and protect the City from liability. She did not recommend that we place additional language in the agreement.

RECOMMENDATION:

Approve Resolution   14-008