Memorandum

Utilities Department

TO:	Dave Corliss, City Manager Diane Stoddard, Assistant City Manager
FROM:	Mike Lawless, Assistant Director of Utilities
CC:	Dave Wagner, Director of Utilities Philip Ciesielski, Assistant Director of Utilities
DATE:	August 5, 2008
RE:	Public Wholesale Water Supply District #25 Request

At the August 5, 2008 City Commission meeting, a request for water service was received from Public Wholesale Water Supply District #25 (PWWSD) and referred to staff for a recommendation.  Staff recommends a response of interest by the City.

The following is a summary of the request. The request proposes water quantities that would eventually exceed PWWSD’s current water contract amounts with the Kansas Water Office. The City would be asked to supplement the difference with City water rights or contract amounts. These quantities represent a small percentage, less than 4%, of our total water allocations. The PWWSD request would also change the structure of payment for water service and delivery. PWWSD has requested a connection fee to cover capital costs needed to supply the contract amount with a water rate based on the cost of production. This is a change from current contracts where there is no connection fee and capital costs are included in the water rate at the time the projects are implemented.

The response to PWWSD proposes the tasks and timeline to thoroughly respond to their request including the need for a consultant specializing in water system finance to establish the capital costs, connection fee and cost of service. The response proposes a memorandum of understating to define how the cost of the consultant will be allocated. If PWWSD is agreeable to the tasks and timeline, future Commission items concerning this request will be forthcoming.