NORTH TEXAS MUNICIPAL

WATER DISTRICT BOARD MEETING

MEMBER CITIES CONTRACT DISCUSSION
 City of Plano Goal
Move to a system with a two way
ratchet that promotes water
conservation and benefits all
member cities.



Take or Pay Contract – One Way
Ratchet
Take or Pay contracts currently have
a one way Ratchet.
Differences in city size, growth
rates, and demographics have
always led cities to believe we
were very different.
The past 4 years have shown we
are all remarkably the same under
this contract.

 Take or Pay Losses by Member
City
2006-07 2007-08 2008-09 2009-10 Total
Allen ($1,148,284) ($524,979) ($277,126) ($406,013) ($2,356,402)
Farmersville ($55,308) ($43,481) ($24,968) ($64,363) ($188,119)
Forney Total ($182,815) ($156,413) ($149,856) ($274,648) ($763,732)
Frisco Total ($1,400,599) $5,425 ($653,504) ($1,410,195) ($3,458,872)
Garland ($1,557,720) ($762,823) ($726,801) ($1,576,805) ($4,624,149)
McKinney Total ($1,455,444) ($1,306,758) ($1,096,468) ($1,664,865) ($5,523,535)
Mesquite Total ($1,809,573) ($1,187,946) ($1,077,468) ($1,832,444) ($5,907,431)
Plano ($5,550,552) ($2,982,691) ($2,523,088) ($4,302,319) ($15,358,650)
Princeton ($40,010) ($23,642) ($16,790) ($10,707) ($91,149)
Richardson ($2,291,680) ($1,929,765) ($1,795,711) ($2,495,595) ($8,512,751)
Rockwall ($624,446) ($360,980) ($283,817) ($519,383) ($1,788,626)
Royse city ($50,197) ($55,781) ($89,634) ($34,258) ($229,871)
Wylie ($231,285) ($100,413) ($122,909) ($166,517) ($621,124)
Total ($16,397,913) ($9,430,248) ($8,838,139) ($14,758,112) ($49,424,411)
 Reserve Funds – Fund
Balance
Looking at the Comprehensive
Annual Financial Reports for the
District over the past 5 years show
an unrestricted fund balance
between $106 - $129 million.
Cash in the unrestricted reserves is
over $21 million.
Funds can be used to help smooth
implementation of a system that
utilizes a 2 way ratchet.
 Contract Customers
The markup for contract customers
has been $.05 since 1970 at which
time it was a 21% markup over the
wholesale rate.
Today the markup is still $.05 which
represents less than a 4% markup (At
20% the additional yield is $3.6
million annually).
The CIP shows the contract customers
growing from 19% of the system to
24% in the next 10 years.
 Time for Change
Same methodology in place since
1953.
All Member Cities have missed their
minimums for the past 4 years
(Garland, Mesquite, Richardson,
Plano - since 2001)
Benefit of membership has
diminished.
State of Texas pressure to conserve,
while current take or pay punishes
 A lte rn a tive to O n e W a y
R a tch e t
Choose new method that benefits
all member cities – each
achieving savings although at
different levels.
Utilize reserves, adjustment of
contract customer contracts,
adjustment of CIP to smooth
implementation and reduced
revenue requirement.
Reward conservation – which
changes the need for future
 T h e C ity o f P la n o R e q u e st
Implement a new system within
the next 3 years that
incorporates a 2 way ratchet
utilizing reserves, adjustment of
contract customer contracts,
adjustment of CIP to smooth
implementation and reduced
revenue requirement.
Adjust the contract customer
markup to a percentage basis.
Cap the amount of growth/debt
the District will take on for