R2022-127 Resolution Authorizing Second Amendment City of Decatur - Archer Daniels Midland Company - Raw Water Agreement

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Legal Department DATE: 8/11/2022 MEMO: TO: Mayor Julie Moore Wolfe&Decatur City Council Members FROM: Scot Wrighton,City Manager SUBJECT: Resolution Authorizing Second Amendment City of Decatur-Archer Daniels Midland Company-Raw Water Agreement SUMMARY RECOMMENDATION: It is recommended that the resolution and the agreement amendment referenced in the resolution be adopted by the City Council. BACKGROUND: For more than 2 years the city has been engaging with ADM to amend the raw water agreement between ADM and the city of Decatur. The proposed amendment resolves all outstanding issues with ADM concerning the company's withdrawal of raw water from Lake Decatur. The substantive subjects discussed and resolved with ADM and addressed in this amendment are explained below. 1. The language of the previous raw water agreement left some degree of uncertainty as to whether ADM's obligation to pay their fair share of the dredging project ended with the close-out of the dredging contract,or ended when the city retired its bonded debt incurred from the dredging project. The revision makes it clear that the obligation runs through the end of the current bond amortization schedule in 2038. This means that annual payments from ADM to the city(in addition to all other treated water charges)will resume immediately,including back charges. 2. The new version of the raw water agreement pen-nits ADM to supply non-potable water to other businesses(those that may be synergistic with ADM or acting in partnership with ADM,and others)at ADM's cost,so long as they withdraw no more than 24 MGD. This is a significant economic development asset enhancement for Decatur because it means that the city and the EDC can market the availability of non-potable water to prospective industrial employers and manufacturers.Any company that receives non-potable water from ADM will be required to be in the city,or annex into the city. 3.ADM will pay more for raw water than they did in the past(whether it is used by their company or supplied to others)because the agreement eliminates the previous credit the company received for their construction of wells,and because the raw water rate will,going forward,be subject to the same 2.5%per annum multiplier that applies to other yearly water and sewer rate adjustments paid by other customers(no annual multiplier was included in the 2014 raw water agreement). PRIOR COUNCIL ACTION: The ADM raw water agreement was last amended in 2014. BUDGET/TIME IMPLICATIONS: The agreement resumes payments from ADM for a portion of the dredging project (approximately$1 million annually),and will increase ADM's cost of raw water whether it is used for their industrial purposes or supplied to others. ATTACHMENTS: Description Type Resolution Authorizing Second Amendment City of