R2013-20 AUTHORIZING THE AMENDED AND RESTATED RAW WATER SUPPLY AGREEMENT WITH ARCHER DANIELS MIDLAND COMPANY

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DEPARTMENT OF WATER MANAGEMENT Memorandum No. 2013-03 February 27, 2013 TO: Mayor Michael T. McElroy and City Council FROM: Ryan P. McCrady, City Manager Keith D. Alexander, Director of Water Management SUBJECT: Amended and Restated Raw Water Supply Agreement with Archer- Daniels-Midland Company SUMMARY RECOMMENDATION: Council adopt the attached Resolution authorizing an Amended and Restated Raw Water Supply Agreement between the City and the Archer-Daniels-Midland Company (ADM). BACKGROUND: In 1999 the City and ADM entered into an agreement for the sale of the North Water Treatment Plant from the City to ADM. In 2001 the City and ADM entered into an agreement for the sale of raw water (Lake Decatur water) from the City to ADM to supply the North Water Treatment Plant. Due to our community's experience with the drought of 2011-2012, City and ADM staff recognized that the Raw Water Supply A needed to be amended and restated. The g pp y reement g City has worked with ADM as a community partner to help identify ways that we can protect our current water supply and move forward with securing critical new supplemental supplies to be accessed in times of drought. Key proposed changes include: Section 10 — Allows ADM to construct and operate additional wells, including two collector wells located 40 feet below Lake Decatur, which will greatly enhance the community's water supply. This well water will be drawn from a source other than Lake Decatur that is not currently being utilized, lessening the amount of water needed from Lake Decatur. City staff opinion—All ADM wells will be metered. The agreement clearly states "In no event shall ADM's current or future wells materially reduce the quantity of water in Lake Decatur". The City's groundwater consultant, Black & Veatch Corporation, has determined that while the shallow aquifer that the collector wells will draw water from may have a hydraulic connection to Lake Decatur, it is important to recognize that the wells will provide access to groundwater that would not otherwise be accessible during periods of drought. Section 9 —Provides a one-time $2,500,000 payment from ADM to the City for the development of alternative water supplies. Limits the amount of lake improvement pro rata share reimbursement by ADM to the City to a maximum of$1,0000,000 annually. City staff opinion — The one-time payment will assist greatly in the funding of the development of new alternative water supplies. The annual lake improvement reimbursement by ADM to the City averages $782,000 annually so the $1,000,000 annual cap is inconsequential.