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HomeMy WebLinkAboutD-2. Meritage Homes WSAF J AZUSA CONSENT CALENDAR TO: FROM: DATE: HONORABLE CHAIRPERSON AND MEMBERS OF THE BOARD GEORGE F. MORROW, DIRECTOR OF UTILITIES OCTOBER 23,2017 A UTILITY SUBJECT: APPROVE WATER SUPPLY AGREEMENT WITH MERITAGE HOMES OF CALIFORNIA, INC. SUMMARY: The Citrus Promenade residential development ("Development") is under construction in the City of Covina within the Azusa Light & Water ("ALW") water system boundaries. To promote sound water conservation/drought practices, ALW has developed a Water Supply Agreement ("Agreement") with the developer Meritage Homes of California, Inc. ("Meritage") and the subsequent managing agency Citrus Promenade Association ("HOA"). Under the Agreement, each residential unit, common facility and/or landscape service will be individually metered and charged for water service in accordance with ALW's Water Rate Schedules. The proposed action approves a Water Supply Agreement with Meritage Homes of California, Inc. RECOMMENDATION: Staff recommends the Utility Board approve the following action: 1) Approve a Water Supply Agreement with Meritage Homes of California, Inc. DISCUSSION: The Citrus Promenade residential development is under construction in the City of Covina within ALW's water system boundaries. The Development will be supplied water through a single 6" master meter that will seive an anticipated 117 residential units plus common facilities and/or landscape services. A Meter Service Charge for the 6" master meter. Commodity Charge and the Replacement Water Cost Adjustment Factor ("RWCAF") will be charged to the development based on the then applicable ALW Water Rate Schedules, which are subject to change from time to time. UB-9 APPROVED UTILITY BOARD 10/23/2017 Water Supply Agreement - Meritage Homes October 23, 2017 Page 2 In the interest of sound water conservation/drought practices, ALW is requiring each residential unit to be sub-metered by the developer. The HOA is the managing entity of the development and will be responsible for reading water meters and issuing water bills to each residential unit. The HOA shall own and maintain the sub-meters. The rights and obligations of the HOA in regard to performance of the Agreement will be documented in the Covenants, Conditions and Restrictions ("CC&R's") for the development. At all times, ALW shall have the right to audit the HOA sub-meter reads and invoices to the individual dwelling units to ensure individual residents are being charged according to the then applicable ALW Water Rate Schedules. The Agreement provides that any discrepancies found by ALW shall be remedied within thirty (30) days by the HOA to the satisfaction of ALW. New legislation, including Senate Bill No. 7, (Wolk) encourages the conservation of water in multifamily residential buildings. Such legislation establishes the practice of sub-metering dwelling units for water service and determines that sub-metering of multi-family complexes is just and reasonable while including appropriate safeguards for both tenants and managing agents. Under this legislation, a HOA would be required to make certain disclosures prior to the execution of an agreement with the tenant and charge only applicable water rates set forth by the applicable water purveyor. FISCAL IMPACT: The HOA will be billed a bi-monthly Meter Service Charge, Commodity Charge, and RWCAF based on the then applicable ALW Water Rate Schedules, which are subject to change from time to time. Prepared by: Reviewed and Approved: Jared J. Macias George F. Morrow Assistant Director - Water Operations Director of Utilities Reviewed and Approved: Don Penman Interim City Manager Attachment: 1) Water Supply Agreement - Meritage UB-10 Water Supply Agreement This Water Supply Agreement ("Agreement") Is entered Into as of October 23, 2017, by and between the City of Azusa acting through Its Light & Water Department ("ALW"), a municipal corporation ("Azusa"), and Merltage Homes of California, Inc., a California corporation ("Merltage"). Azusa, Merltage and HOA, as defined below, are referred to herein Individually as "Party" and collectively as "Parties" as applicable. RECITALS A. ALW provides water service to residential, commercial, and Industrial customers within the ALW water system boundaries. B. As of the date of this Agreement, Merltage Is developing the Citrus Promenade residential development ("Development"), located In the City of Covlna, that is within the ALW water system boundaries for the purpose of water service. ALW is willing to provide water service to the Development subject to ALW's rules and regulations for the connection and Initiation of service and subject to the terms and conditions of this Agreement. The rules, regulations, rates and charges for service are subject to change from time to time. It Is anticipated that the Development will be composed of 117 residential condominium units and various related common facilities and/or landscape services. C. Public water policy and sound water conservation/drought principles dictate that, to the e}ctent practicable, water usage to residential condominium units Is to be Individually metered. D. Meritage intends to create the Citrus Promenade Association ("HOA") as a California nonprofit mutual benefit corporation to be the managing entity for the Development and is (or will be) comprised of homeowners who have volunteered to serve on the HOA board. The HOA will be responsible for reading water meters of residential units within the Development and Issuing water bills to each unit. The rights and obligations of the HOA In regard to performance of this Agreement shall be documented by the HOA, or its predecessor-in-interest, in the Covenants Conditions and Restrictions ("CC&R's") for the Development and shall reference and authorize the key aspects of this Agreement. The parties agree that the HOA shall be the successor In Interest to Meritage and shall be responsible for the obligations of Merltage herein upon the transfer of such obligations to the HOA Including, but not limited to, the development and recording of the CC&R's as set forth herein. E. This Agreement describes the rates that shall be charged to each individual dwelling unit in accordance with the currently adopted Water Rate Schedules, which Is subject to change from time to time, as well as other terms and conditions of water service to the HOA and to the residential units of the Development. UB-11 NOW, THEREFORE, In consideration of the mutual covenants hereinafter contained, and for other good and valuable consideration, the Parties agree as follows: 1. The Development will be served by ALW through a single 6" master meter from which water service will be provided to the Development, including 117 residential units. A bi-monthly Meter Service Charge, as per the then applicable ALW Water Rate Schedules, will be invoiced to the HOA for the 6" master meter. The HOA will also be charged for a Commodity Charge which will be based on the then applicable ALW Water Rate Schedules and will include the Replacement Water Cost Adjustment Factor ("RWCAF"). The frequency for issuing bills for service is subject to change from time to time. For example, and not by way of limitation, at some future date, ALW may elect to bill the HOA for water service on a monthly basis. 2. Each residential unit shall be sub-metered by the HOA to measure individual unit water consumption. The HOA shall own, install and maintain the sub-meters. 3. The HOA shall be responsible for all activities for the operation of facilities and the provision of service to the units on the Development side of the master meter and for the imposition and collection of all applicable rates and charges. For example, and not by way of limitation, the HOA shall be responsible for the following: (a) to collect meter reads from the individual sub meters on a bi-monthly basis on approximately the same day of the month; (b) each residential unit shall be invoiced by the HOA for water service bi-monthly on approximately the same day each month; and (c) each residential unit shall be charged a Meter Service Charge, a Commodity Charge and the RWCAF by the HOA as per the then applicable ALW Water Rate Schedules. At some future date, ALW may require the HOA to read sub- meters and bill residential customers for water service on a monthly basis. Note that other fees and charges may also be applicable in the future in accordance with the Water Rate Schedules. 4. At all times, ALW shall have the right to audit the HOA sub meter reads and invoices to the individual dwelling units for up to the past 24 months. The purpose will be to ensure that individual residents are being charged according to the then applicable ALW Water Rate Schedules. Any discrepancies that are discovered shall be remedied within thirty (30) days by the HOA to the satisfaction of ALW. The HOA shall retain records for a minimum period of 24 months and shall provide records to ALW within 30 days of ALW's request. In the event the sum of the individual unit water use billings exceeds the cost for water paid by the HOA to ALW, the HOA shall use such excess funds for the benefit of all condominium owners in the Development. UB-12 5. The HOA shall ensure that the accuracy of the sub meters are consistent with the meter accuracy limits contained in ALW's Water Rules. Adjustments to customer bills for inaccurate meters shall also be consistent with such rules. 6. In addition to this Agreement, terms of water service to the HOA shall be governed by ALW's Water Rate Schedules and Water Rules. These items are subject to change from time to time by ALW in accordance with its rules and procedures. 7. It is hereby acknowledged and agreed that ALW's sole customer shall be the HOA through the sole connection of the master meter to the Development. ALW shall have no obligation to communicate with, or provide any customer service to, any condominium owners or any other residents or users of the water which is conveyed through the master meter to the Development. There shall be no third party beneficiaries to this Agreement. The HOA shall indemnify, defend and hold harmless ALW from and against any claim, liability or damage which may arise in connection with the relationship of the HOA to condominium owners or any other residents or users of water in the Development. 8. All notices, demands, requests or other communications relating to this Agreement shall be in writing and shall be sent via overnight delivery through a nationally recognized overnight delivery service, or, delivered or transmitted by hand delivery or telecopy (provided that a copy is sent at the same time via U.S. Mail), addressed as follows: If to ALW: Director of Utilities P.O. Box 9500 Azusa, California 91702-9500 If to HOA: Citrus Promenade Association c/o Seabreeze Management Co. 391 North Main Street, Suite 106 Corona, California 92879 This Agreement shall become effective upon execution by the Parties, and shall remain in effect as long as ALW provides water service to the Development, subject to ALW's rules, regulations, fees and charges for service as the same may be revised from time to time. UB-13 IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be executed by its respective duly authorized officers. City of Azusa George F. Morrow Director of Utilities Meritage Homes of California, Inc. a California corporation Phil Bodem Division President Attest by: City Clerk Approved as to Form: City Attorney UB-14