Item Coversheet

CITY OF OAKLAND PARK, FLORIDA
CITY COMMISSION AGENDA ITEM REPORT


A
GENDA ITEM NO. 12

MEETING DATE: 8/3/2022
PREPARED BY: 

Albert J Carbon III, P. E., Public Works Director

DEPARTMENT HEAD APPROVAL:  PUBLIC WORKS
SUBJECT:

Approval of New Long Term Water Purchase Agreement with the City of Fort Lauderdale

1.BACKGROUND/HISTORY
    
 

Issue Statement:  The City of Oakland Park (COP) purchases water from the City of Fort Lauderdale (CFL) for transmission and distribution to our residents and businesses within the COP Water Service Area (See Map Exhibit A). The current 30 year water agreement is due to expire in October 2024.  In 2019, CFL implemented the results of their Water and Wastewater Comprehensive Rate Study.  As part of this implementation, CFL began charging a 25% surcharge on water sales to Oakland Park.  Although the surcharge is allowable under State law, COP did not agree that the surcharge was allowable under the existing contract between the two cities and objected.   As part of efforts to resolve the dispute, a new long-term water agreement was negotiated that addresses the surcharge and other issues.

 

Recommended ActionIt is recommended City Commission adopt a resolution authorizing the proper City officials to enter into a new long-term Agreement for Sale of Potable Water with Fort Lauderdale.

 

Background:

The City of Oakland Park (COP) provides water to approximately two-thirds of its residents and businesses.  The remaining third of the City is serviced by Broward County or Fort Lauderdale directly. The attached map shows the three water service providers in COP. Currently and under this new proposed water agreement, COP purchases water from City of Fort Lauderdale (CFL) at large user or Master Meter rates.  The water purchased from CFL is then distributed and sold by COP to residents and businesses.  

 

Oakland Park and other bulk customers, such as Wilton Manors, had expressed concerns over CFL's rate structure, long-term infrastructure investment, and regular system maintenance.  CFL completed a Water and Wastewater Comprehensive Rate Study (Rate Study) in June 2019 that addressed many of these concerns. COP staff provided comments on rate study draft materials that were provided for review. 

 

Not all recommendations were supported by Oakland Park.  The CFL Rate Study recommended and CFL implemented a 25% surcharge to water customers outsides its municipal boundaries citing State Statutes (180.191.(1)(a) and (b). COP staff objected to the surcharge and deducted this amount from payments.  The City Managers of CFL and COP agreed to allow the surcharge balances to remain unpaid without penalty until a resolution was reached at which time the new agreement would address the issue.

 

In late 2021, the cities agreed to hire CSA Group to assist in reaching a resolution. CSA reviewed all materials and submitted a report with recommendations in early 2022, which included a defined surcharge that would be phased in over time, with a maximum rate of 12.5% instead of the maximum 25% allowed for under State law. 

 

2.CURRENT ACTIVITY
    
 

The final draft of the long-term Water Agreement has been prepared and is ready for COP and CFL City Commissions to approve. Below are some highlights of the new agreement:

 

  • COP will pay a surcharge of varying surcharge rates (percentage) over the CFL published Master Meter rates starting October 1, 2022.  The varying rate is:

 

Effective Date Surcharge Percentage
October 1, 2022 3.13%
October 1, 2023 6.25%
October 1, 2024 9.38%

October 1, 2025, and until the end of the agreement

12.50%

 

 

  • The new Agreement is a term of 25 years with two (2) possible five (5) year extensions. 
  • A new update COP service area map and legal description have been included.
  • Water and wastewater rate studies will be conducted at least every five years.
  • Water shortage provisions are included to be consistent with Chapter 40E-21 of the Florida Administrative Code and South Florida Water Management District (SFWMD) draught condition regulations.

 

All previous surcharge amounts will be credited to the COP water meter accounts.

3.FINANCIAL IMPACT
    
 

There is no direct fiscal or budgetary impact by this action. Bulk water purchases are budgeted and approved annually as part of the budget adoption; the budget contemplated for FY 2023 includes a provision for the initial 3.13% surcharge.

 

 With the adoption of this new Water Agreement and the April 2022 approval of the new Wastewater Large User Agreement, the City is now able to conduct Water & Sewer Master Plan and rate study.  The proposed FY 2023 budget includes funding for this activity as a Business Plan Initiative.  

 

 
4.RECOMMENDATION
    
 

It is recommended City Commission adopt a resolution authorizing the proper City officials to enter into a new long-term Agreement for Sale of Potable Water with Fort Lauderdale.

ATTACHMENTS:
Description
Resolution
Draft Water Agreement
COP Water Service Area
Water Distribution System Map
Summary of Agreement Memorandum