DEPARTMENT: Finance
DEPARTMENT HEAD: Ben Gorzell, Chief Financial Officer
COUNCIL DISTRICT(S) IMPACTED: City Wide
SUBJECT: Council Consideration Request -- Council Oversight of Changes to the Vista Ridge Agreement
SUMMARY:
On February 10, 2016, Councilman Ron Nirenberg submitted a Council Consideration Request (CCR) requesting consideration on a resolution for Council oversight of changes to the Vista Ridge Agreement.
BACKGROUND INFORMATION:
The San Antonio Water System (SAWS) is a city-owned utility. The complete management and control of the System is vested in a Board of Trustees, consisting of the Mayor of San Antonio as an ex-officio member and six residents appointed by the City Council. Under the System Ordinance, only the City Council can fix rates and charges for service rendered by the System. State law provides that only the City Council can authorize the sale of revenue bonds or other securities, exercise the use of condemnation for the acquisition of real property, and select and appoint members of the Board.
On September 29, 2014, the SAWS Board of Trustees authorized execution and approval of the proposed Vista Ridge Regional Supply Project Water Transmission and Purchase Agreement in substantially final form. Subsequently, on October 15, 2014, they approved various clarifying and conforming modifications to the contract.
The City Council voted to approve the Vista Ridge Water Transmission and Purchase Agreement on October 30, 2014. With this approval, City Council delegated the approval of changes to the contract to the SAWS Board of Trustees so long as the amendments do not involve an increase in the amount of water to be delivered or the manner in which the System's payment for delivered water is calculated. Amendments to terms and provisions of the contract not attributed to an increase in the water received or the calculation of payment for water delivered were reserved to the sole discretion of the Board without further action or approval by the City Council.
On November 19, 2015, the City Council approved a rate plan to provide support for water supply project, including the development of Vista Ridge.
|
Year |
Vista Ridge Projected Impact Percentage |
Total Projected System Rate Adjustment |
|
2016 |
.2% |
7.5% |
|
2017 |
.3% |
7.9% |
|
2018 |
.5% |
6.2% |
|
2019 |
4.4% |
8.7% |
|
2020 |
9.7% |
13.7% |
Total Projected System Rate Adjustment Includes Vista Ridge Projected Impact
On November 25, 2015, Abengoa Sociedad Anónima (S.A.), Abengoa Vista Ridge LLC’s parent company, began pre-bankruptcy proceedings, entering into “pre-insolvency,” which allows the company four months to reach agreements with its creditors to avoid entering full bankruptcy. The end of the four month period is March 28, 2016.
On March 23, 2016, it was announced that Garney Construction is set to purchase 80% of the Vista Ridge Project equity, reducing Abengoa’s role to a silent 20% equity partner, creating a change in control of the project. This change in control would require consent of the SAWS Board of Trustees to be effective. If approved by SAWS, Garney will retain 100% decision-making authority. This is not considered a material change to the contract. This agreement does not alter the risk profile under the existing contract. SAWS mandated that any partners on the Vista Ridge project must abide by existing covenants in the original contract.
While this change does not require Council approval, SAWS and City staff are committed to keeping the City Council fully informed on any changes. Additionally, SAWS will conduct public meetings and will brief the City Council on this change in control on April 7, 2016.
ISSUE:
This item is a briefing on a Council Consideration Request from Councilman Ron Nirenberg, District 8, regarding Council oversight of changes to the Vista Ridge Agreement.
ALTERNATIVES:
This item is for briefing purposes only.
FISCAL IMPACT:
This item is for briefing purposes only.
RECOMMENDATION:
This item is for briefing purposes only.