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Regular City Council Meeting
Resolution - City Manager:
Consider a resolution authorizing the Mayor to execute the Third Amendment to the Memorandum of Understanding with Palisade Pipeline, LLC, to define roles and responsibilities of the City of Lubbock and Palisade Pipeline, LLC.
On June 11, 2019, the City of Lubbock entered into a Memorandum of Understanding (MOU) with Palisade Pipeline, LLC, (Palisade) to set forth certain expectations of discussion and negotiation between the City and Palisade regarding the potential purchase by Palisade of up to 6 million gallons per day (MGD) of reclaimed water produced by the City, and the lease of real property from the City. The term of the MOU was for a period of 12 months with the opportunity for two 45-day extensions, if needed. This time period, called the exclusivity period, allows Palisade to conduct its due diligence and negotiate the terms of the Reclaimed Water Use Agreement with the City. Pursuant to the obligations set forth in the MOU, Palisade paid $120,000 to the City, for the 12-month exclusivity period.
On May 26, 2020, staff recommended amending the MOU to extend the exclusivity period for an additional 6 months at no additional cost, in light of the COVID-19 pandemic in which widespread travel restrictions and business closures to the public were enacted. On December 15, 2020, staff again recommended amending the MOU to extend the exclusivity period for an additional 6 months at no additional cost due to the ongoing impact of the pandemic.
Palisade Pipeline is requesting an extension of the MOU and exclusivity period for another 12 months, in order to continue developing the project. Staff recommends approval of the extension request at a cost of $120,000. Additionally, the amendment reduces the overall term of the future Reclaimed Water Purchase Agreement to 24 years.
Revenue of $120,000 to the General Fund
Jesica McEachern, Assistant City Manager
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