HomeMy WebLinkAboutItem 09 MOU with SUB
AGENDA ITEM SUMMARY Meeting Date: 6/7/2021
Meeting Type: Regular Meeting
Staff Contact/Dept.: Kristina Kraaz, CAO
Staff Phone No: 541-744-4062
Estimated Time: Consent Calendar
S P R I N G F I E L D
C I T Y C O U N C I L
Council Goals: Provide Financially
Responsible and
Innovative Government
Services
ITEM TITLE: MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF
SPRINGFIELD AND SPRINGFIELD UTILITY BOARD REGARDING SEWER
BILLING AND PAYMENTS IN LIEU OF TAXES
ACTION
REQUESTED:
Authorize the City Manager to enter into a memorandum of understanding with the
Springfield Utility Board (SUB) regarding sewer billing conducted by SUB on
behalf of the City and SUB’s payment to the City in lieu of taxes.
ISSUE
STATEMENT:
The proposed memorandum of understanding includes a one-time payment by SUB
to the City for $230,000 under the understanding that City and SUB will work
together to discuss sewer billing rates and the current PILOT agreement. City and
SUB will commit to renegotiating the PILOT agreement. Entering into the
proposed MOU is a required condition of the sale of downtown property between
the City, SEDA and SUB.
ATTACHMENTS: Attachment 1 – Proposed Memorandum of Understanding
Attachment 2 – Sewer Billing Service Agreement and Addendum
Attachment 3 – Payment In Lieu of Taxes (PILOT) Agreement
DISCUSSION/
FINANCIAL
IMPACT:
The MOU proposes that SUB pay the City the $230,000 to be paid at the same time
the property transactions close. Thereafter, SUB and the City agree to discuss the
sewer billing rate and to renegotiate the PILOT Agreement. The MOU does not
commit the City or SUB to any specific terms for the discussion and renegotiation.
Any amendments to either Agreement would need City Council approval.
Sewer Billing: Under the Sewer Billing Service Agreement (dated July 1, 1998,
amended July 1, 2000), SUB provides monthly billing and collection of City sewer
fees, and the City pays for those services based on the rate set by SUB. SUB would
like to increase the amount that the City pays for these services, under the terms of
the current agreement. Since 2005, the City has paid SUB $1.11 per sewer bill.
Payment in Lieu of Taxes (PILOT): ORS 225.270 requires a municipal-owned
electric utility to pay at least 3% of its annual gross electrical operation revenue to
the city, to offset the City’s tax base. SUB and the City are parties to a PILOT
Agreement (dated January 1, 2003) that sets the formula for SUB’s payments. In
2003, SUB paid approximately 4.46% of its gross electric revenue, but the rate has
declined over time to less than 3.5%. SUB had anticipated renegotiation of the
PILOT Agreement during the 2019-2020 fiscal year and budgeted $230,000 for
increased payments to the City.
Downtown Property Transactions: The City Council and SEDA have authorized a
three-party transaction with SUB in which the City sells SUB the parking lot
adjacent to SUB property at 245 A Street, and SUB sells SEDA property. Entering
into the MOU is a condition required for the property transaction to close, although
the terms of the MOU are not directly related to the transaction.
MEMORANDUM OF UNDERSTANDING – Page 1 {00015099:5}
MEMORANDUM OF UNDERSTANDING
BETWEEN THE CITY OF SPRINGFIELD &
SPRINGFIELD UTILITY BOARD
REGARDING SEWER BILLING & PAYMENTS IN LIEU OF TAXES
RECITALS:
A. The City of Springfield (City) and Springfield Utility Board (SUB) are parties to a Sewer
Billing Service Agreement dated July 1, 1998; which was amended by an addendum
effective July 1, 2000, in which SUB provides monthly billing and collection of sewer fees
for the City, in exchange for payment for said services by the City.
B. The City understands that SUB has an interest in increasing the amount that the City
pays to SUB for sewer fee billing and collection under the Sewer Billing Service
Agreement.
C. The City and SUB are parties to a Payment In Lieu of Tax Agreement (PILOT
Agreement) pursuant to ORS 225.270, effective January 1, 2003.
D. The City, SUB, and Springfield Economic Development Agency (SEDA) have entered into
negotiations for SEDA to purchase certain real property on Main Street owned by SUB,
and for SUB to purchase Parking Lot 56 owned by the City. This transaction is expected
to close between June 22 and June 30, 2021, pursuant to the Purchase and Sale
Agreement entered into between the City, SUB, and SEDA dated May 10, 2021.
E. SUB had anticipated a renegotiation of the PILOT Agreement during the 2020/2021
fiscal year and had budgeted $230,000 in additional funds over the fiscal year
2019/2020 budget. Although the anticipated negotiation has not occurred, SUB has
agreed to transfer the $230,000 budgeted to the City simultaneous to the closing of the
real property transaction referenced above. The parties understand and agree that this
payment will have no effect on any subsequent negotiations between the City and SUB
regarding the PILOT Agreement.
NOW, THEREFORE, in consideration of the foregoing, City and SUB agree to the following:
1. SUB will make a one-time payment to the City of $230,000 as a payment in lieu of
taxes for fiscal year 2020/2021, in addition and not offsetting the payment due to
the City under the existing PILOT Agreement.
2. City and SUB agree to discuss and renegotiate the PILOT Agreement. Any changes
to the PILOT Agreement will not take effect any earlier than the 2021/2022 fiscal
year. The parties agree that neither party will rely upon the $230,000 payment
made pursuant to this MOU in renegotiating the PILOT Agreement.
3. City and SUB agree to discuss billing service rates under the Sewer Billing Service
Agreement. Any change to the fee charged for billing service shall be consistent
with the current agreement, unless the parties mutually agree otherwise.
Attachment 1, Page 1 of 2
MEMORANDUM OF UNDERSTANDING – Page 2 {00015099:5}
4. The City and SUB agree to mutually cooperate with each other in good faith to
implement the matters described in this MOU.
5. Nothing in this agreement modifies the existing terms and conditions of the Sewer
Billing Service Agreement or the PILOT Agreement referenced herein.
6. If any provision of this agreement shall be deemed unenforceable or invalid, such
enforceability or invalidity shall not affect the enforceability or validity of any other
provision of this agreement. The validity, meaning, enforceability, and effect of the
agreement and the rights and liabilities of each the City and SUB hereto shall be
determined in accordance with the laws of the State of Oregon.
7. This MOU may only be amended or terminated by the agreement of both parties in
writing.
THE PARTIES, by execution of this MOU, hereby acknowledge that their signing
representatives have read this MOU, understand it, and agree to its terms and conditions.
CITY OF SPRINGFIELD: SPRINGFIELD UTILITY BOARD:
_____________________________ ______________________________
Nancy Newton Jeff Nelson
City Manager General Manager
Date: ____________________________ Date: ____________________________
City Contact: SUB Contact:
Nancy Newton, City Manager Jeff Nelson, General Manager
City of Springfield Springfield Utility Board
225 Fifth Street 250 A Street
Springfield, OR 97477 Springfield, OR 97477
(541) 726-3700 (541) 744-3603
Attachment 1, Page 2 of 2
ADDENDUM TO SEWER BILLING SERVICE AGREEMENT
OF JULY 1,1998
BETWEEN
SPRINGFIELD UTILITY BOARD
AND
CITY OF SPRINGFIELD,OREGON
This agreement is an Addendupi to the attached Sewer Billing Agreement between the
Spririgfield Utility Board (SUB)|nd the City of Springfield (City)dated July 1 ,1 998.
With this addendum agreement both parties agree to the following terms and conditions:
1 .Effective July 1 ,2000 the sewer billing rate will be adjusted to a fixed rate of
$0.92-05 per sewer billing transaction*rendered for at least a one year period.
SUB will review this rate on an annual basis,and provide the City with notice of
potential rate changes on or before January 1 5th of each subsequent year.
*If a location has both a sanitary sewer and a storm drain this is one
transaction even though there are two charges;an account with only a
sanitary sewer is one transaction;an account with only a storm drain is
one transaction.
2.SUB agrees to credit the City twelve thousand six hundred dollars ($12,600)in
September of 2000 based upon a revised sewer billing transaction approach that
accounts for the total number of times that sewer service has been billed rather
than the number of meters as of a specific point in time.
3.The City will provide SUB with forty-five (45)days notice of routine changes to
sewer rates,such as a date or rate per unit change.The City will provide SUB
with ninety (90)days written notice of changes to sewer rates which may result in
SUB billing program or data modifications.SUB will determine whether the
modifications can be done internally or if they will require outside help.Costs
over one thousand dollars ($1 ,000)for services provided by an outside contractor
for SUB billing program or data modifications are the City's responsibility.
4.The City is entitled to include sewer brochures with customer utility bills twice per
year and prefers the June and December mailings.City will give SUB ninety (90)
days notice if City does not intend to use either of these months or if the City
would like to use another month for a brochure insert.It is understood that SUB
will provide mailings in other than June or December only if the insert can fit into
SUB's annual schedule.
The brochure content is at the discretion of the City but City will review the
content with SUB staff to assess the impact of the information on SUB's
customer service people (since they receive many of the questions asked by
residents).The brochure will normally be a single 8 1/z X 1 1 "-70 lb.sheet.If the
City wishes to exceed the paper size,weight or quantity,City will confer with
Attachment 2, Page 1 of 6
ADDENDUM TO SUB SEWER BILLING SERVICE AGREEMENT
Page 2 -
SUB on these variables at least ninety (90)days prior to the mailing month.It is
schedule.The intent here is to be sure we do not go over the basic weigh tlimit
.required to assure the lowest possible mailing costs...:..
5.The City,and SUB will meet as needed,but at least every January to discuss,
relevant sewer billing issues.
This addendum is effective July 1,2000.
(
General ManagerCityManager
Springfield Utility BoardCityofSpringfield
g/WY/3-j/on o oDateDate
Attachment 2, Page 2 of 6
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a-vSEWERBILLINGSERVICEAGREEMENT
BETWEEN
SPRINGFIELD UTILITY BOARD
AND
CITY OF SPRINGFIELD,OREGON
THIS AGREEMENT is made this Isl day of
City of Springfield (CITY)and the Springfield Utility Board (SUB).In consideration of the
mutual covenants and agreements herein contained,the parties agree as follows:
1998,between the
SECTION A -DEFINITIONS -The following terms,when used in this agreement,
shall have meanings as set forth:
(1)Billing and Collection of Fees -Those functions related to the billing and
collection of sewer user fees,including the accounting,reporting and data
processing functions needed to accomplish these activities.
(2)Billing System -The programs used by the computer to process the data for
the purpose of billing and collection of sewer fees.
(3)Data Processing -Any function performed on SUB'S computer system
including data entry,computer run time,and programming.
(4)Hardware -The physical equipment or devices forming a computer and its
peripheral equipment.
(5)Sewer Fee -That amount of money authorized by the CITY to be collected
from SUB customers for sewer services.
Attachment 2, Page 3 of 6
SUB SEWER BILLING Sr VICE AGREEMENT
Page 2
(6)Sewer Bill -Any SUB customer billing which includes a charge for sewer
services.-
(7)Software -The totality of programs and routines used for data processing on
the Hardware^.
SECTION B -SERVICE AND SUPPORT TO BE PROVIDED -For the fee
established by this agreement,SUB agrees to provide monthly billing and collection of
sewer fees for the CITY,including the following:
COMPUTER -SUB will provide the necessary hardware to process the billing
of sewer fees and prepare the bills.In addition,SUB will pay all maintenance
and insurance costs of the computers.
d)
BACKUP -SUB will provide adequate backup and recovery procedures
consistent with good data processing standards.
(2)
PAPER AND SUPPLIES -Bills,envelopes,stock paper,and miscellaneous
supplies for the normal processing of bills and generation of reports will be
provided by SUB.
(3)
MAILING AND INSERTS -SUB will be responsible for the mailing of all bills
generated by SUB.This includes the insertion of the bills into envelopes,
postage and transportation to the post office.Also included is the insertion of
special customer sewer related information notices up to two times per year.
(4)
(5)PERSONNEL -SUB will provide trained staff knowledgeable in the operation of
the billing and collection system to answer CITY's questions regarding the
system.This will include data entry,programming,accounting,credit and
Attachment 2, Page 4 of 6
SUB SEWER BILLING SERVICE AGREEMENT
Page 3
customer service personnel.Questions from customers regarding sewer fees
and disputed sewer charges will be referred to the CITY.
(6)PROGRAM DEVELOPMENT AND MAINTENANCE -SUB will perform all
error corrections to the existing software system to meet the CITY'S currently
established billing and reporting requirements.SUB further agrees to modify
the computer system to accommodate future rate adjustments,so long as
those adjustments are compatible with the existing Hardware,Software and'
Billing System.Such modifications may include,but are not limited to:
(a)Changes in the length of the summer billing period,
(b)Changes in the number of months used to determine the average
;billing amount,and
(c)Changes in the mathematical formulas used to compute rates,so
long as no new data elements are required.
(7)CUSTOMER INFORMATION ACCESS -SUB will provide access to the SUB
customer information base by authorized CITY staff so that the CITY may
answer questions from customers regarding sewer fees and sewer charges
and generate computer reports such as:
(a).Summaries of sewer user characteristics by user class,
(b)Monthly customer account information such as service address
and account number cross reference,and
(c)Such other sewer related reports as may be necessary for
management purposes.
SECTION C -PAYMENT TO SUB.The CITY agrees to pay SUB for services
and support,as outlined in SECTION B above,a fixed rate of .8675 cents per sewer bill
per month.The amount due will be calculated by multiplying the rate times the number
of bills generated by SUB each month which include a sewer fee.Requests for
services that are not covered in SECTION B above,will be charged on a time plus
Attachment 2, Page 5 of 6
SUB SEWER BILLING SERVICE AGREEMENT
Page 4
overhead plus materials basis.Requests shall be submitted by the CITY with as much
advance notice as possible and SUB will respond to such requests in a timely manner
in conjunction with SUB's internal prioritization policies.
SECTION D-PAYMENT TO CITY -SUB will remit monthly to the CITY those
funds attributable to sewer services,less billing and collection costs.......
SECTION E -MONTHLY REPORTS -SUB will provide to the CITY regular
monthly reports of financial activity regarding billings and collections.
SECTION F -TERMINATION OF AGREEMENT -This agreement may be
terminated by either party by giving one hundred eighty (180)days notice to the other
party.
SECTION G -MODIFICATION OF AGREEMENT -The terms of this agreement
may be modified from time to time through negotiations between the two parties.
DATED this day of 1998.
CITY OF SPRINGFIELD,OREGON
A Municipal Corporation
kBy
Ciw Manager
SPRINGFIELD UTILITY BOARD
By
General Manager
Attachment 2, Page 6 of 6
Attachment 3, Page 1 of 2
Attachment 3, Page 2 of 2