HomeMy WebLinkAboutAgenda Report - January 19, 2022 C-15AGENDA ITEM
CITY OF LODI
COUNCIL COMMUNICATION
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ICO,1!5
AGENDA TITLE: Adopt Resolution Authorizing Payment of Supplemental Invoices to Settle
Underpayments Associated with Woodbridge Irrigation District Water Sale
Agreement Consumer Price Index Increases Utilizing Banked Water Credits In
Lieu of Cash
MEETING DATE:
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January 19, 2022
Public Works Director
RECOMMENDED ACTION: Adopt Resolution Authorizing Payment of Supplemental Invoices to
Settle Underpayments Associated with Woodbridge Irrigation
District Water Sale Agreement Consumer Price Index Increases
utilizing banked water credits in lieu of cash.
BACKGROUND INFORMATION: In May 2003, the City of Lodi (City) and Woodbridge Irrigation
District (WID) agreed to a Water Sale Agreement (Agreement)
which allows the City of Lodi to purchase 6,000 Acre -Ft of surface
water from the Mokelumne River each year that is treated for municipal use.
Since, there have been three amendments to the Agreement. The Third Amendment of the Agreement
executed in 2012, established that WID could increase the water cost each year by the annual change
in Consumer Price Index (CPI -W, Unadjusted U.S. Average) published each December up to a
maximum of 5%. Between the years of 2011 through 2020, WID had been adjusting the annual cost by
a maximum of 2% annually as allowed by the original Agreement and did not consider the additional
CPI increases allowed over this time period that fell between 2% and the maximum of 5% as per the
2003 original water purchase agreement.
This billing oversight (identified by WID auditors) resulted in WID under billing the City by $227,162.09
between 2011 and 2020 as shown in Exhibit A. The under billing was brought to the City's attention in
March 2021 by letter. Subsequent meetings with the WID General Manager generated a variety of
solutions to repay the overage; after which staff brought the item to closed session during the April 21,
2021 Council meeting to discuss options. During closed session, two Council members requested to
meet with the WID General Manager to discuss additional options. At this meeting, held last
November, it was proposed the City consider repaying the entire overage amount by using banked
water credits in lieu of a cash payment as the City has amassed over 53,000 Acre -Ft of banked surface
water.
Utilizing banked water credits in lieu of cash payment satisfies WID's audit review and avoids impacting
the Water Utility Fund balance. Staff finds this solution very attractive since it is unlikely the City can
utilize all 53,000 Acre -Ft of banked water by the end of the Agreement. The current value of each
Acre -Ft of banked water is $255. The amount of banked water credits in Acre -Ft needed to satisfy the
under payment of $227,162.09 is 891 Acre -Ft ($227,162.09 / $255 per Acre Ft = 891.83 Acre Ft)
leaving a balance of banked water in excess of 44,000 Acre -Ft.
APPROVED: Steve SChWabaUer
Stephen Schwabauer, City Manager
\\cvcfilv02\pubwks$\WP\COUNCIL\2022\CC Auth Payment for WID CPI Overages doc 1/10/22
Adopt Resolution Authorizing Payment of Supplemental Invoices to Settle Underpayments Associated with Woodbridge Irrigation District Water Sale Agreement
Consumer Price Index Increases Utilizing Banked Water Credits In Lieu of Cash
January 19, 2022
Page 2
The City and WID has developed a very positive working relationship over the years not only related to
the water sale agreement, but also with storm drainage and groundwater sustainability. This close
relationship greatly benefits the constituents represented by both public entities.
Staff recommends City Council adopt a resolution authorizing payment of supplemental invoices to
settle underpayments associated with Woodbridge Irrigation District Water Sale Agreement Consumer
Price Index increases utilizing banked water credits in lieu of cash.
FISCAL IMPACT: By Woodbridge Irrigation District allowing the use of banked water credits
in lieu of cash, there is no fiscal impact to the City's Water Fund.
FUNDING AVAILABLE: N/A
fl
Charles E. Swimley, Jr.
Public Works Director
Prepared by Charles E. Swimley Jr., Public Works Director
CES/cs/cd
Attachments
cc: Woodbridge Irrigation District, Attn: General Manager
City Manager
Public Works Director
Utilities Manager, Roberts
Water Treatment Superintendent, Kahrs
Public Works Management Analyst, Areida-Yadav
Signature: OM
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Email: sschwabauer@lodi.gov
\\cvcfilv02kpubwks$\WP\COUNCIL\2022\CC Auth Payment for WID CPI Overages doc 1/10/22
Woodbridge Irrigation Dist.
P.O. Box 580
Woodbridge, CA 95258
209-625-8438
Sold To:
City of Lodi -Public Works Dept
P.O. Box 3006
Lodi, CA 95241
Ship Date: 7/22/21 Via:
Quantity Item/Service
Exhibit A
Invoice Date Number
7/22/21 2039
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, CPI Adjustment
1.00 each, Credit from City of Lodi Water Bank Fund
Shipped To:
P.O. Box 3006
Lodi, CA 95241
Due Date: 7/22/21
Reference Rate Amount
2011
827.59
827.59
2012
19,899.63
19,899.63
2013
21,572.73
21,572.73
2014
22,004.19
22,004.19
2015
22,444.27
22,444.27
2016
22,893.16
22,893.16
2017
23,351.02
23,351.02
2018
25,574.56
25,574.56
2019
33,957.89
33,957.89
2020
34,637.05
34,637.05
Tier II Water Bank
-227,162.09
-227,162.09
Su bTota I: $0.00
No Sales Tax: $0.00.
Please pay this amount: so.00
Make all [hocks payablc to: Woodbrid e lrri ation Distict
RESOLUTION NO. 2022-23
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING
PAYMENT OF SUPPLEMENTAL INVOICES TO SETTLE UNDERPAYMENTS
ASSOCIATED WITH WOODBRIDGE IRRIGATION DISTRICT WATER SALE
AGREEMENT CONSUMER PRICE INDEX INCREASES UTILIZING BANKED
WATER CREDITS IN LIEU OF CASH
WHEREAS, in May 2003, the City of Lodi (City) and Woodbridge Irrigation District (WID)
agreed to a Water Sale Agreement (Agreement) which allows the City of Lodi to purchase 6,000
Acre -Ft of surface water from the Mokelumne River each year that is treated for municipal use;
and
WHEREAS, there have been three amendments to the Agreement; and
WHEREAS, the Third Amendment of the Agreement executed in 2012, established that
WID could increase the water cost each year by the annual change in Consumer Price Index
(CPI -W, Unadjusted U.S. Average) published each December up to a maximum of 5%; and
WHEREAS, between the years of 2011 through 2020, WID had been adjusting the
annual cost by a maximum of 2% annually as allowed by the original Agreement and did not
consider the additional CPI increases allowed over this time period that fell between 2% and the
maximum of 5% as per the 2003 original water purchase agreement; and
WHEREAS, this billing oversight resulted in WID under billing the City by $227,162.09
between 2011 and 2020 and was brought to the City's attention in March 2021 by letter; and
WHEREAS, it was proposed the City consider repaying the entire overage amount by
using banked water credits in lieu of a cash payment as the City has amassed over 53,000
Acre -Ft of banked surface water; and
WHERAS, it is unlikely the City can utilize all 53,000 Acre -Ft of banked water by the end
of the Agreement. The current value of each Acre -Ft of banked water is $255. The amount of
banked water credits in Acre -Ft needed to satisfy the under payment of $227,162.09 is 891
Acre -Ft ($227,162.09 / $255 per Acre Ft = 891.83 Acre Ft) leaving a balance of banked water in
excess of 44,000 Acre -Ft; and
WHEREAS, staff recommends authorizing payment of supplemental invoices to settle
underpayments associated with Woodbridge Irrigation District Water Sale Agreement Consumer
Price Index increases utilizing banked water credits in lieu of cash.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize payment of supplemental invoices to settle underpayments associated with
Woodbridge Irrigation District Water Sale Agreement Consumer Price Index increases utilizing
banked water credits in lieu of cash; and
BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol
Manual (adopted 11/6/19, Resolution No. 2019-223), the City Attorney is hereby authorized to
make minor revisions to the above -referenced document(s) that do not alter the compensation
or term, and to make clerical corrections as necessary.
Dated: January 19, 2022
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I hereby certify that Resolution No. 2022-23 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held January 19, 2022 by the following vote:
AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and
Mayor Chandler
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
PAMELA M. FARRIS
Assistant City Clerk
2022-23