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AI# 12850  Regular City Council Meeting 5.12. 09/24/2024:

Information

Agenda Item

Resolution - Water Utilities: Consider a resolution authorizing the Mayor to execute an Interlocal Contract with the City of Shallowater for the continued purchase of wholesale water from the City’s potable water system.

Item Summary

In October 1994, the City of Lubbock entered into a 15-year water supply contract with the City of Shallowater.  Shallowater’s request for water was based on their need to blend their well water with Lubbock’s water supply, in order to meet federal and state water quality standards.    In July 2009, Lubbock continued providing water to Shallowater by entering into a 5-year wholesale water supply contract, which included a provision for Shallowater to provide annual updates regarding their efforts to decrease reliance on Lubbock as a supplemental water provider.       In January 2014, the City of Lubbock entered into another 5-year contract to continue supplying water to Shallowater.  During this contract period, Shallowater began design and construction of additional well field and treatment facilities that would reduce their reliance on Lubbock’s water supply, limiting their need for Lubbock’s water supply to emergencies only.   In September 2019, the City of Lubbock entered into another 5-year contract to continue supplying water to Shallowater. This contract updated the terms and conditions of the existing contract, limiting the amount of water that could be purchased to 85 million gallons per year.  In addition, the City of Shallowater began to be required to enact water conservation and/or drought restrictions that are at least as stringent as the City of Lubbock’s restrictions. The City of Shallowater was also given the ability to move the current Point of Delivery to another location along the Bailey County Well Field transmission pipeline, as soon as their new water project is completed. This new contract proposes to renew the contract with an additional 3 years of wholesale water supply service, with two additional 1-year option periods.  Certain new limiting provisions will apply.  Under this new contract, the City of Shallowater will be allowed to take a maximum of 60 million gallons of wholesale water per year (down from 85 million) and only 1.0 million gallons per 24-hour day (down from 1.5 million gallons per 24-hour period in the previous 5-year contract). The City of Shallowater anticipates undergoing substantial infrastructure upgrades in the next 5 years. Shallowater has requested from the City of Lubbock, approval of a temporary allowance for additional maximum wholesale water delivery during the period of construction, up to 85 million gallons per year, which is the allotment in the current contract.  Shallowater is still permitted to change the point of delivery, should constructed facilities require it.  Wholesale customers are required by ordinance to pay wholesale water rates adopted by the City Council in Section 22.03.085(6) of the City’s Code of Ordinances. This contract includes a provision that the City of Shallowater will continue to pay the standard wholesale water rates. Wholesale customers pay a 1.5x multiplier more than commercial customers within the city limits, since Lubbock citizens have paid for expensive water supply projects necessary to continue meeting Lubbock’s water demand.    The City used a total of 12.8 billion gallons of water in Fiscal Year 2022-23.  The amount of water Lubbock supplies to Shallowater on an annual basis represents less than 0.7% of Lubbock’s total usage. The Lubbock Water Advisory Commission met on September 16, 2024, and is recommending the contract as referenced above.

Fiscal Impact

This contract will generate approximately as much as $580,000 annually in metered water revenue for the next 5 years.

Staff/Board Recommending

Erik Rejino, Assistant City Manager L. Wood Franklin, P.E., Division Director of Public Works Lubbock Water Advisory Commission

Attachments Resolution Contract

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