Consider and take action on a Cost Share Agreement for the FM 517 Water Plant Expansion Project - Phase 2

The City Commission approved the master plan and gave preliminary zoning approval to the District I - Planned Unit Development (PUD) rezoning for Lakeside Bayou Subdivision, f/k/a Southlake Subdivision, at its regular meeting on August 18, 2021 upon recommendations for approval from the Planning Board and Zoning Commission upon proper notice and public hearings.  The City Commission granted two extensions of time to the preliminary zoning approval at its regular meetings on August 3, 2022 and August 2, 2024.  The City Commission also approved the name change to Lakeside Bayou Subdivision at its meeting on August 3, 2022.  

The Lakeside Bayou Subdivision proposes to subdivide and develop approximately 438 acres into 1200 single family residential units and 12.8 acres of commercial reserve.  The development is located south of FM 646, north of FM 517 and west of FM 3436.  The single family residential units will be developed with a lot mix of 10% - 45ft lots, 40% - 50ft lots, 40% - 60ft lots and 10% - 70ft lots.  Phase I consisting of 232 lots in Sections 1, 3 and 4 has received all preliminary and final plat approvals from the Planning Board. Construction plans for the water, sewer, paving and drainage and detention infrastructure have been approved.  The developer has issued the construction plans for bids and is prepared to start construction in early 2024.  

Texas City has sufficient capacity in existing water and sewer infrastructure to support the development of the 232 lots in Phase I.  However, water system improvements are required at the existing water plant on FM 517 to provide the capacity required to develop Phases 2 and following.  The water system improvements required include the addition of a water well as a backup water source, a 20,000 gal hydropneumatic tank, a 350,000 gal ground storage water tank, and the addition of two 500 gpm pumps to the existing booster station, together with related piping and chemical injection systems.  It is in the long term, best interest of the City's water system for the water well and the ground storage water tank to be constructed to the capacity required for the full buildout of the service area.  Such capacity is greater than the buildout required for only the Lakeside Bayou Subdivision.  Also, it is beneficial to the City to select and oversee the design engineer because improvements will be made to an existing operational facility which is active and in service.  

The water system improvement project is included in the 2022 Update to the City's Capital Improvement Plan and is eligible for funding from impact fees.  

The agreement caps the City's cost share for construction at $1,500,000. In December 2022 the estimated construction cost was $4,150,240 which included a 5% contingency. The agreement also provides for the City to select and contract for the engineering design services with 60/40 cost share with the Developer or MUD.  The December 2022 estimated design fees were $613,294 with the City's 60% share being $367,976.40.  The source of funds will be Zone 2 impact fee revenue for water.  A budget amendment will be required in the amount of $1,867,976.40 for the Project.  

Staff recommend approval of the cost share agreement for the following reasons: (1) the water improvements subject to the cost share agreement and required for the buildout of the Lakeside Bayou Subdivision are included in the City's Capital Improvement Plan as updated in 2022 and eligible for payment from impact fees; and (2) the City owns and operates the existing water plant on FM 517 which will be expanded with the subject improvements; and (3) the City will select and oversee the design engineer for the subject improvements; and (4) the improvements will include a 700 gpm water well and a 350,000 gal ground storage water tank which exceed the capacity required for the Lakeshore Bayou Subdivision but are necessary to provide the estimated capacity required for the full build out of the water plant service area; and (5) the City's cost share commitment will be capped at $1,500,000.00 for construction cost.