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Home My WebLink About9/7/2005 - STAFF REPORTS (23) y V V * ytltl k RAtlAMEv AAA, r941FORN,P City Council Staff Report DATE: September 7, 2005 Consent Calendar SUBJECT: Short-Term Extension of Wastewater Services Agreement FROM: David H. Ready, City Manager BY: City Manager's Office SUMMARY The City's current agreement with Veolia (formerly US Filter) for the operations and management of the City's Wastewater Treatment Plant expires on June 30, 2005. On June 29, 2005 the City Council approved an amendment extending the term of the existing agreement for an additional thirty (30) days to facilitate negotiations on a new agreement. The City Council further extended the agreement on July 20, 2005 to allow the Desert Water Agency to review and comment upon the draft agreement. This extension expires on September 7, 2005. Although the parties have attempted to be responsive to the comments raised by the Desert Water Agency, there is insufficient tirne to properly finalize the agreement prior to the expiration date of the current term. The proposed amendment extends the term of the existing agreement through October 7, 2005 to allow the parties to complete their negotiations and to finalize an agreement. RECOMMENDATION: 1. Adopt a Minute Order approving the Fourth Amendment to Agreement 4123 with Veolia Water North America-West, LLC. (formerly US Filter Operating Services Incorporated) extending the term of the agreement through October 7, 2005 to facilitate further negotiations. STAFF ANALYSIS: In 1999, the City entered into an Operating and Maintenance Agreement (O&M Agreement) with US Filter to operate and manage the City's Wastewater Treatment Plant and sewage collection system. The term of this agreement was for a five year term expiring on June 30, 2005. ITEM NO. City Council Staff Report September 7, 2005 -- Page 2 Short-Term Extension to Wastewater Services Agreement with Veolia The City has reached tentative agreement with the Desert Water Agency to sell the Wastewater Treatment Plant. This transaction has not occurred as originally anticipated. In order to maintain current operations at the Wastewater Treatment Plant until the sale of this facility can be finalized, the City and Veolia have been negotiating a short-term extension to the existing O&M Agreement. To facilitate these negotiations, the City Council has approved two separate amendments extending the term of the existing O&M Agreement. The first amendment, which was approved on June 29, 2005, extended the term for thirty (30) days. The second amendment, which was approved on July 20, 2005, extended the O&M Agreement through September 7, 2005 to allow the Desert Water Agency to review and comment upon the draft agreement before it was fully finalized. The Desert Water Agency has submitted correspondence dated August 12, 2005 expressing some concerns regarding the draft agreement. The City and Veolia have reviewed the Desert Water Agency's comments and have worked cooperatively to modify the agreement in response to their concerns. Unfortunately, due to the exigencies of time the City and Veolia have not been able to fully finalize an amendment to the existing O&M Agreement prior to the expiration of the current extension. Under the proposed amendment, the term of the agreement will be extended through October 7, 2005 to provide additional time for the parties to finalize the draft agreement. All terms and conditions of the existing O&M Agreement will remain in effect during this extension. FISCAL IMPACT: There is no fiscal impact to the City. Ti c. Butzf ff, istant City Manager David H. Ready, Clifiy�M'aj ager Attachments: 1. Minute Order MINUTE ORDER NO. APPROVING THE FOURTH AMENDMENT TO THE WASTEWATER SERVICES AGREEMENT (O&M) WITH VEOLIA WATER NORTH AMERICA-WEST, LLC I, James Thompson, City Clerk of the City of Palm Springs, hereby certify that this Minute Order Approving the Fourth Amendment to the Wastewater Services Agreement (O&M) with Veolia Water North America-West LLC., was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 7th day of September, 2005. James Thompson, City Clerk FOURTH AMENDMENT TO WASTEWATER SERVICES AGREEMENT (O&M) THIS FOURTH AMENDMENT TO WASTEWATER SERVICES AGREEMENT (O&M) ("Amendment') is made and entered into as of this 7th day of September, 2005, by and between the CITY OF PALM SPRINGS, a California municipal corporation ("City") and VEOLIA WATER NORTH AMERICA-WEST, LLC., a Delaware limited liability company ("Veolia"). RECITALS A. Pursuant to a request for proposal issued by the City in November 1998 pursuant to California Government Code Section 5956.1 et. sea. and Chapter 3.12 of the Palm Springs Municipal Code, the City and Filter entered into that certain Wastewater Services Agreement No. 4123, dated as of July 30, 1999 (the "Agreement'), for the provision by Filter to City of certain operations and maintenance services related to the Treatment Facility, Sewage Collection System and Down and Under System, as those terms are defined in, and pursuant to the terms of, the Agreement. Initially capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement. B. On or about May 16, 2001, City and Filter entered into that certain Amendment No. 1 to Agreement No. 4123 (herein "First Amendment), for the provision of certain capital project administration parameters all related to the improvement of the Treatment Facility. C. On February 2, 2004, Filter officially became known as Veolia Water North America Operating Services, Inc. ("Veolia Water NA"). Through an inter-company reorganization and set of inter-company assignments, Veolia has acquired and succeeded to the right, title and interest in and to the Agreement. Veolia is the wholly owned-subsidiary and West Coast operating arm of Veolia Water North America Operating Services, LLC ("Veolia Water NA LLC), which was formerly known as Veolia Water NA. D. The original term of the Agreement was for five (5)-years, such that the original Agreement would have expired on June 30, 2005. E. City continues to require the services of Veolia to operate and maintain the Wastewater Treatment Facility and Sewage Collection System and has been actively negotiating with Veolia to extend the term of the Agreement. F. On June 29, 2005, City and Veolia entered into the "Second Amendment to the Agreement for Wastewater Services Agreement (O&M)" ("Second Amendment'), which extended the term of the Agreement an additional thirty (30) days, to allow the parties to continue their negotiations on a new agreement. C). On July 20, 2005, City and Veolia entered into the 'Third Amendment to the Agreement for Wastewater Services Agreement (O&M)" (`Third Amendment') which 9/2/2005 1 Draft Document extended the term of the agreement through September 7, 2005 to allow the Desert Water Agency an opportunity to review and comment upon the draft agreement. H. Desert Water Agency has submitted comments to City concerning the draft agreement. In the spirit of cooperation, City and Veolia have attempted to be responsive to the concerns raised by the Desert Water Agency by making numerous changes to the draft agreement. Unfortunately, due to the exigencies of time the parties are unable to revise and finalize an agreement for Council approval prior to the current expiration date as set forth in the Third Amendment. I. City and Veolia desire to extend the term of the Agreement through October 7, 2005 to enable the parties to finalize the agreement. J. This Amendment is entered into pursuant to both of California Government Code Section 5956.1 et. sea. and Chapter 3.12 of the Palm Springs Municipal Code. Each of the foregoing statutes constitutes an independent authority for the City to enter into this Amendment and procure the services with respect to the Treatment Facility, the Sewage Collection System, and the Down and Under System as described herein and in the Agreement. NOW THEREFORE, in consideration for promises and covenants contained herein, the above recitals, and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Term. Section 4.1 of the Agreement, entitled "Term", shall be amended in its entirety to read as follows: "Section 4.1 Term. The term of this Agreement shall be extended to October 7, 2005, unless earlier terminated in accordance with Section 12.10 of this Agreement, or until this Agreement has been superseded by an amended and restated agreement." 2. Authorization. The person(s) executing this Amendment on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are dully authorized to execute and deliver this Amendment on behalf of said party, (iii) by so executing this Amendment, such party is formally bound to the provisions of this Amendment, and (iv) the entering into this Amendment does not violate any provision of any other agreement to which said party is bound. 3. Except as modified by this Fourth Amendment, all other terms and conditions of the Agreement are hereby ratified and confirmed by the parties. IN WITNESS WHEREOF, the parties hereto executed this Fourth Amendment to be effective as of the date first written above. [signatures on next page] 9/2/2005 2 Draft Document IN WITNESS WHEREOF, the parties have executed and entered into this Amendment as of the date first written above. "City' ATTEST: CITY OF PALM SPRINGS, a California municipal corporation By City Clerk City Manager APPROVED AS TO FORM: City Attorney "Veolia" VEOLIA WATER NORTH AMERICA - WEST, LLC a Delaware limited liability company By Signature Name Title End of Signatures 9/2/2005 3 Draft Document