BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM. At the pleasure of the Board
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1 BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM Date of Meeting: March 7, 2017 # 7 SUBJECT: ELECTION DISTRICT: CRITICAL ACTION DATE: STAFF CONTACTS: Tall Oaks Water and Sewer Project Service Agreement Sterling At the pleasure of the Board Ernest N. Brown, General Services Alan Brewer, General Services Kiran Bawa, Finance and Procurement Janet Romanchyk, Finance and Procurement PURPOSE: To authorize the County Administrator to sign a service agreement (Attachment 1) between the County and the Loudoun County Sanitation Authority (d/b/a Loudoun Water ) for the Tall Oaks Water and Sewer Project. RECOMMENDATION: Staff recommends that the Board of Supervisors (Board) authorize the County Administrator to sign the service agreement between the Board and Loudoun Water. BACKGROUND: At the January 11, 2017, Public Hearing, the Board adopted the Ordinance Imposing Special Assessment for Tall Oaks Water and Sewer Project (Ordinance) and authorized the County Administrator or his duly appointed designee to sign the Agreement for Special Assessment to Construct Water and Sanitary Sewer Lines. In addition, the Board directed staff to establish the Tall Oaks Water and Sewer Special Revenue Fund for all revenues collected pursuant to the Ordinance. The Ordinance imposes a Special Assessment (pursuant to Virginia Code , et seq.) on the properties described below to pay for the extension of public water and sewer utilities. The Ordinance provides that the Special Assessment is contingent upon execution of a service agreement between the County and Loudoun Water. The properties affected by the Special Assessment are ten (10) parcels of property zoned Planned Development-Industrial Park (PD-IP) located along the west side of Cascades Parkway, between Maries Road and Woodland Road (Tall Oaks) in the Sterling Election District that are currently served by onsite water and sewage disposal systems. A vicinity map is provided as Attachment 2.
2 Item 7, Tall Oaks Water and Sewer Project Service Agreement Board of Supervisors Business Meeting March 7, 2017 Page 2 Tall Oaks is currently served by substandard sewage disposal systems. A memorandum dated August 27, 2015, from Dr. David Goodfriend, Director, Loudoun County Health Department outlines the public health concerns and the Health Department s support for extension of public sewer to the area (Attachment 3). Water and sewer infrastructure improvements in Tall Oaks will address public health concerns, increase economic development potential, and provide property owners with an option to pay for water and sewer improvements over time. ISSUES: A service agreement is the appropriate next step to allow the Tall Oaks Water and Sewer Project to proceed. The service agreement outlines the terms and conditions upon which Loudoun Water will fund, design and construct the project, and upon which the Board will reimburse Loudoun Water from the proceeds of the Special Assessment. FISCAL IMPACT: Loudoun Water s project estimate is $1,115,210. This is the maximum Special Assessment authorized by the Ordinance, plus interest on unpaid balances at the statutory rate of 0.82%. Thus, the total estimated cost to the property owners, including interest on unpaid balances, is $1,211,435. Upon completion of the project, and in accordance with the Code of Virginia, Loudoun Water will prepare an accounting of its actual costs to determine the final project cost. The Service Agreement provides that the accounting may include a financing charge equal to 1.68% of Loudoun Water s actual costs (amortized over a twenty-year period), which will be included in the final project cost as a flat fee. If the final project cost, including the financing charge, is lower than the original project estimate, the amount of the Special Assessment and the corresponding amount due from each property owner will be reduced accordingly. However, in no event shall the Special Assessment increase above the maximum amount authorized in the Ordinance i.e., $1,115,210 plus interest at 0.82%. Together the 1.68% financing charge (included in the Special Assessment as a flat fee) and the 0.82% interest rate (applied to unpaid balances) equal a total financing cost of 2.5%. Loudoun Water s project estimate and the Special Assessment do not include installing the water and sewer laterals from structures to the main water and sewer lines, abandonment of existing water or wastewater facilities, or payment of Loudoun Water availability fees. These costs are the responsibility of each individual property owner and are not a part of the Special Assessment. Property owners have been informed of all the estimated project costs. Loudoun Water will fund the water and sewer infrastructure improvements, and property owners will pay Loudoun Water back over a twenty year period through the Special Assessment. No county funds will be used for this project. ALTERNATIVES: 1. Authorize the County Administrator to sign the service agreement by and between the Board and Loudoun Water.
3 Item 7, Tall Oaks Water and Sewer Project Service Agreement Board of Supervisors Business Meeting March 7, 2017 Page 3 2. Do NOT authorize the County Administrator to sign the service agreement by and between the Board and Loudoun Water. Note: If a service agreement is not retained, the Special Assessment will not be imposed and it is likely that public water and sewer facilities will not be available to this area in the near term. DRAFT MOTIONS: 1. I move that the Board of Supervisors authorize the County Administrator to sign the Service Agreement between the Board and Loudoun Water, included as Attachment 1 to the March 7, 2017, Board of Supervisors Business Meeting Action Item. OR 2. I move that the Board of Supervisors NOT authorize the County Administrator to sign the service agreement between the Board and Loudoun Water. OR 3. I move an alternate motion. ATTACHMENTS: 1. Service Agreement (Tall Oaks Water and Sewer Project) 2. Vicinity Map 3. Health Department Memorandum Dated August 27, 2015
4 SERVICE AGREEMENT (Tall Oaks Water and Sewer Project) This Service Agreement ( Agreement ) is made and entered as of the day of, 2017, by and between the Board of Supervisors of Loudoun County, Virginia (the "Board"); and the Loudoun County Sanitation Authority (d/b/a Loudoun Water ). RECITALS R-1. Loudoun Water was created by the Board for the purposes set out in its Charter, including to provide water and sewer facilities within the unincorporated areas of Loudoun County (the County ) in accordance with the provisions of the Virginia Water and Waste Authorities Act, Virginia. Code , et seq., (the Act ), and the County s comprehensive plan. R-2. Tall Oaks consists of ten lots along Cascades Parkway (Route 637) in the Sterling District of the County, as identified in Attachment 1 (collectively, the Properties, or each, a Property ). The Properties are served by onsite water and sewage disposal facilities, many of which are on pump-and-haul operations. R-3. Whereas the owners of the Properties (the Abutting Landowners ) desire that public water and sanitary sewer lines be extended to serve the Properties, and that the Board impose a special assessment upon the Properties, pursuant to Title 15.2, Chapter 24, Article 2 of the Code of Virginia, to pay the costs of constructing such improvements ( Special Assessment ). To accomplish that objective, the Board and the Abutting Landowners have entered into an Agreement for Special Assessment to Construct Water and Sanitary Sewer Lines ( Special Assessment Agreement ), pursuant to which the Abutting Landowners agreed to the amount of the Special Assessment and to the share that would be apportioned to each of them. Attachment 1
5 R-4. In 2004, Loudoun Water designed the water and sanitary sewer main lines to serve the Properties, which are described in Attachment 2 (the Facilities ). The design will be updated to reflect current conditions. R-5. The Board has requested and Loudoun Water has agreed to fund and construct the Facilities conditioned upon repayment from the Special Assessment, in accordance with the terms and conditions of this Agreement. On January 11, 2017, the Board adopted an Ordinance Imposing Special Assessment for Tall Oaks Water and Sewer Project ( Ordinance ), a copy of which is provided as Attachment 1. Section 4 of the Ordinance provides that the Special Assessment is contingent upon execution of this Agreement. NOW, THEREFORE, the parties agree as follows: OBLIGATIONS OF LOUDOUN WATER 1. Funding and Construction of Facilities. Loudoun Water shall take all steps necessary to fund, design and construct the Facilities. The cost of the Facilities is estimated not to exceed $1,115,210.00, which includes a thirty percent (30%) contingency. The parties acknowledge and agree that the Facilities do not include water or sewer laterals from structures to the main line or abandonment of existing water or wastewater facilities, and that the estimated cost of the Facilities does not include payment of Loudoun Water Availability Charges. 2. Provision of Service. Upon completion of construction and Loudoun Water s acceptance of the Facilities and upon payment of applicable Loudoun Water Availability Charges by the Abutting Landowner, Loudoun Water, thereafter, shall provide service to the Properties by permitting customers to connect to the Facilities in accordance with Loudoun Water s then adopted Engineering Design Manual and Rates, Rules and Regulations, as the same may be in effect at the time of connection. 2
6 3. Accounting. Within a reasonable time following completion of construction and Loudoun Water s acceptance of the Facilities, Loudoun Water shall prepare a final accounting ( Accounting ) of its actual costs incurred and shall present the same to the Board. Costs eligible for reimbursement shall include the categories specified on Attachment 3. Loudoun Water shall provide to the Board any supporting documentation reasonably requested by the Board to confirm that all costs reflected in the Accounting are costs eligible for reimbursement as specified in Attachment 3. Loudoun Water acknowledges and agrees that, upon completion of the Accounting, the amount of the Special Assessment and, therefore, the amount of payments to be received by Loudoun Water, may be reduced in accordance with Section 6 of this Agreement and Virginia Code OBLIGATIONS OF THE BOARD 4. Imposition and Collection of Special Assessment. The Board will impose the Special Assessment on the Properties in a total amount of One Million One Hundred Fifteen Thousand Two Hundred Ten Dollars ($1,115,210.00), plus interest as authorized by Virginia Code Payments to Loudoun Water. In accordance with Virginia Code , the Special Assessment will be billed to the Abutting Landowners and collected by the Board in equal semi-annual installments over a term of twenty (20) years. Interest on the unpaid balances shall be applied at an annual rate of 0.82%. Subject to Section 7 of this Agreement, all Special Assessment payments received by the Board, including interest on unpaid balances, shall be paid to Loudoun Water within forty-five (45) days after each collection due date. 6. Adjustment of Special Assessment & Installment Payments. Upon the Board s receipt of the Accounting, if the actual cost of the Facilities is less than the estimated cost set forth herein, the Board shall reduce the amount of the Special Assessment and recalculate the 3
7 schedule of semi-annual installment payments accordingly. In no event shall the Special Assessment be increased above the amount identified in Section 4 of this Agreement. In no event shall the Board be required to make payments to Loudoun Water in excess of the Special Assessment, as it may be amended pursuant to this Section 6 and Virginia Code Appropriation of Payments by County. While recognizing that it is not empowered to make any binding commitment beyond the current fiscal year, the Board hereby states its current intention to make sufficient annual appropriations during the term of this Agreement to make the payments prescribed in Section 5. Notwithstanding anything in this Agreement to the contrary, the Board's financial obligations under this Agreement, including without limitation its obligation to make payments prescribed in Section 5, shall be subject to and dependent upon (i) the Special Assessment payments being received by the Board from or on behalf of the Abutting Landowners; and (ii) annual appropriations being made by the Board for payment of Special Assessment collections to Loudoun Water. The Board hereby directs the County Administrator or other officer charged with the responsibility for preparing the County's budget for each fiscal year during which this Agreement is in effect, to budget and seek appropriation to Loudoun Water of all Special Assessment collections during such fiscal year. If an Abutting Landowner fails to make payment of the Special Assessment when due, the Board agrees to exercise its lawful enforcement and collection methods as necessary to collect all amounts due. MISCELLANEOUS PROVISIONS 8. Termination of Agreement by Loudoun Water. While Loudoun Water has provided the estimated maximum cost of the Facilities as specified in Paragraphs 1 and 4, it reserves the right to terminate this Agreement in the event that it believes the actual cost will 4
8 exceed the estimate. Loudoun Water shall provide prompt written notice to the Board that it is terminating the Agreement. If Loudoun Water terminates the Agreement, Loudoun Water shall have no obligation to construct the Facilities, and the Board shall have no obligation to make payment to Loudoun Water or to continue the Special Assessment. Notwithstanding the foregoing, Loudoun Water may not terminate the Agreement after the Board has made any payments pursuant to the terms of the Agreement. 9. Suspension of Agreement by the Board. In the event a judicial action is filed challenging the validity or enforceability of this Agreement or the Special Assessment, including but not limited to an appeal pursuant to Virginia Code , the Board may suspend performance of this Agreement by the parties. The Board will promptly inform Loudoun Water of any such action and the suspension of the Agreement. During the period of suspension, Loudoun Water will not be required to incur any cost, enter any contract or otherwise undertake construction of the Facilities, and the Board will be under no obligation to make payments pursuant to the Agreement. If the Special Assessment is upheld by a final, unappealable order, the Board will notify Loudoun Water that the suspension of the Agreement is lifted, and the parties shall thereafter resume their respective obligations and undertakings under the Agreement. 10. Notices. Any notice required or permitted hereunder shall be valid when delivered to or mailed, postage prepaid, as follows: If to the County: Director, Department of General Services 801 Sycolin Road, SE PO Box 7100 Leesburg, Virginia
9 With a copy to: Office of Loudoun County Attorney One Harrison Street, S.E., 5 th Floor PO Box 7000 Leesburg, Virginia If to the Authority: General Manager Loudoun Water Loudoun Water Way PO Box 4000 Ashburn, VA With a copy to: Jonathan Rak McGuireWoods LLP 1750 Tysons Blvd. Suite 1800 Tysons, VA Entire Agreement. This Agreement, together with the Attachments, states the entire and only agreement between the parties regarding the subject matter hereof. No oral statements or representations or prior written matter not contained or referred to in this Agreement shall have any force or effect. No waiver of any provision of this Agreement shall be deemed to have been made, unless it be in writing and signed by the party against whom the waiver would be enforced. 12. Amendment of Agreement. This Agreement may be amended at any time by written agreement signed by both parties. 13. Counterpart Documents. This Agreement shall be executed in duplicate, and it may be executed in counterparts. Execution in counterparts shall not affect or alter the validity of this Contract or the rights and responsibilities of the parties hereto. Facsimile signatures shall be treated as originals for all purposes applicable hereto, but the parties agree to exchange fully executed (non-facsimile) originals as soon as they are reasonably able to do so. 6
10 14. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, but it is not otherwise intended to be for the benefit of any party not a signatory hereto. 15. Captions/Headings. The captions and headings used in this Agreement are for convenience only and in no way define, limit or otherwise describe the scope or intent of any provision hereof. 16. Severability: The provisions of this Agreement shall be deemed severable. If any provision of this Agreement is held to be invalid, void or unenforceable, in whole or in part, by a court of competent jurisdiction, the remaining provisions shall not be affected thereby and shall continue in full force and effect. REMAINDER OF PAGE INTENTIONALLY BLANK SIGNATURES ON FOLLOWING PAGES 7
11 BOARD OF SUPERVISORS OF LOUDOUN COUNTY, VIRGINIA APPROVED AS TO FORM: By: Tim Hemstreet Loudoun County Administrator By: Courtney R. Sydnor Deputy County Attorney Date: COMMONWEALTH OF VIRGINIA: COUNTY OF LOUDOUN, to-wit: The foregoing contract was acknowledged before me this day of, 2017, by Tim Hemstreet on behalf of the Board of Supervisors of Loudoun County, Virginia. Notary Public Notary Registration No. My commission expires: 8
12 LOUDOUN COUNTY SANITATION AUTHORITY d/b/a Loudoun Water By: Date: COMMONWEALTH OF VIRGINIA: COUNTY OF LOUDOUN, to-wit: The foregoing contract was acknowledged before me this day of, 2017, by on behalf of the Loudoun County Sanitation Authority. Notary Public Notary Registration No. My commission expires: 9
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40 Attachment 3 to Service Agreement Tall Oaks Water and Sewer Project Costs Eligible for Reimbursement to Loudoun Water Easement acquisition Utility location and relocation Legal fees (exclusive of those incurred in preparation of the agreement) Surveying Engineering and Design Fees Construction Costs Inspection Services by Loudoun Water, pursuant to the standard inspection fees adopted as part of Loudoun Water s Rates, Rules, and Regulations Materials and supplies Rental of equipment Other actual costs incurred in the design and construction of the facilities Costs associated with securing necessary permits or approvals for construction VDOT Fees Financing costs in an amount equal to 1.68 % of the total project costs reflected in the Accounting (as defined in Section 3 of the Service Agreement), amortized for bi-annual payments over a period of twenty (20) years; however, in no event shall the sum of project costs and financing costs exceed the maximum Special Assessment amount stated in the Ordinance.
41 Attachment 2
42 Attachment 3
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