02-01-2000 - Approval of the Purchase Contract for the Sale of the City of West Covina's Water System to Suburban Water Systemss
TO: City Manager and City Council
City of West Covina
Memorandum
AGENDA
FROM: Jeffrey W. Collier, Director DATE February 1.2000
Public Services Department ITEM NO. C-1
SUBJECT: APPROVAL OF THE PURCHASE CONTRACT FOR THE SALE
OF THE CITY OF WEST COVINA'S WATER SYSTEM TO
SUBURBAN WATER SYSTEMS
SUMMARY: The City Council will consider approval of the Purchase Contract and
resolution to complete the sale of the City's water system to Suburban
Water Systems. Also, as part of the terms for the sale of the water system,
the City Council will approve a rate reduction on rates charged on the
water commodity pursuant to the Letter of Intent signed with Suburban
Water Systems and approved by customer vote.
BACKGROUND:
During the past several years, the City has been considering the sale of the City's water
system. As part of this process, the City Council entered into a Letter of Intent (LOI)
with Suburban Water Systems on August 3,'..1999, which was subsequently amended on
September 7, 1999.
Pursuant to the LOI, the City conducted a mail ballot election of all West Covina
customers of the water system. A total of 3,834 ballots were mailed to all West Covina
customers and a total of 790+ ballots were cast with 88% in favor of selling the system to
Suburban Water Systems on the terms and conditions set out in the LOI.
During the December 7, 1999, City Council public hearing at which the votes were
tallied, the Council voted unanimously to proceed with the sale of the water system to
Suburban Water Systems. Since that time, City staff and Suburban Water staffhave
worked together to prepare the necessary documents to complete the sale transaction and
rate reductions incorporated in the terms of the sale.
DISCUSSION:
The attached Purchase Contract has been prepared pursuant to the terms agreed to
between the City and Suburban Water Systems. City and Suburban staff have reviewed
the contract and various attachments to assure that they address the terms of the sale as
outlined within the LOI approved on August 3, 1999 and: amended on September 7, 1999.
As proposed; the closing date 'of the sale is scheduled for February 25, 2000. Staff
anticipates that additional Council actions may be necessary at the February 15 Council
meeting in order to address creation of easements or similar actions to accommodate the
transfer of the water system. In addition, the resolution approving the purchase contract
authorizes the City Manager or Public Services Director and the City Clerk to execute
additional documents to carry out the sale of the system.
Also before the Council is a resolution approving .rate reductions that will take effect
concurrent with the closing of the sale. Consistent with the terms of the sale, customers
with the City of West Covina will receive a 15% decrease in water commodity rates
while Walnut customers will receive a 0.2% rate reduction.
OPTIONS:
The actions before the Council are those that are necessary to carryout their stated intent
to sell the water system pursuant to the LOI, as amended. 'As such no other_ options are
before the City Council.
SALE OF, WATER SYS J
Page 2 — February 1, 2000
FISCAL IMPACT:
No additional impacts are foreseen by the proposed sale of the water system beyond those
considered by the City Council last year.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Adopt the following resolution authorizing the Mayor and City Clerk to execute
the. necessary documents for the sale. of the City's water system to Suburban
Water Systems.
�,D00 i0
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA APPROVING THE
SALE OF THE WEST COVINA WATER SYSTEM
2. Adopt the following resolution amending water. rates pursuant to the Letter of
Intent:
V-000 -%>
A RESOLUTION OF THE CITY OF WEST COVINA,
CALIFORNIA AMENDING THE PREVIOUS
RESOLUTION NO. 9159 ADOPTED BY THE CITY Via;
COUNCIL
'To . r.�2�� v� A�- �,ornn�z?b�,' R 9' G'I ARbsS
ey W. Collier
61l
ic Services Director
Reviewed by:
2,;_
Margaret F. cker
Finance Director
Attachments:
- Resolution approving the sale of 'die water system
Draft Purchase Contract
Resolution approving rate reductions
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