Title
Oak Lawn Water System Service Agreement Extension
History
In May 2009, the Village of Oak Lawn released its Water System Master Plan to twelve (12) municipal customers on their system. The Master Plan identified multiple upgrades, expansion and enhancement to the system intended to meet both existing and long term water supply/service needs. As you know, over the last eighteen (18) months, Orland Park has been working with Oak Forest, Tinley Park, Mokena and New Lenox to collectively negotiate issues relative to the cost of the improvement upgrades, as well as operational components of our relationship with Oak Lawn.
A summary of the current issues the group is working through is outlined below:
1. Construction of a redundant line in a separate right-of-way from Central Avenue that will increase capacity and better protect our citizens in the event of a water main break or outage on the existing single service line;
2. Improved capacity to better handle big usage periods that exist during summer months; and
3. Conceptual acceptance of an operational review committee to consider customer service issues as well as long term rate allocations.
To date, we have made significant progress and have identified the remaining issues to be considered. Oak Lawn has agreed to commence preliminary engineering, at their own expense, that will include consideration of three (3) different alignments for the redundant line. In addition, monthly meetings have been set up to conduct a long term rate analysis.
Due to the fact that the existing agreement is due to expire as of October 1st, 2011, it is necessary for us to consider an extension that would provide sufficient time to complete negotiations on the new contract. Oak Lawn approved the extension at their Board meeting on September 27th.
Staff recommends that we take action on the extension at this time. It will provide for a one (1) year extension of the current agreement. Within that year, approximately nine (9) months will be provided to come to concept agreement on the major terms and an additional three (3) months for adoption of the final version.
Rather than see a longer term extension, being able to come to agreement on the new contract as soon as possible is important for the following reasons:
1. Oak Lawn has secured commitment on an IEPA low interest loan for $40,000,000 that will help control the long term costs and debt service for the project. It is important that progress be made in order to maintain the commitment from IEPA; and
2. Due to the existing system age, it is important that the redundant line and upgrades to the Harker pumping plant commence at the earliest possible date.
Please understand that the system as it stands is still sufficient and is not in any immediate danger of failing, but we need to consider long term needs. In addition, by approving this extension, the Village is not agreeing to any final terms of the new agreement. This action simply extends the terms of our existing contract with Oak Lawn. Under that agreement the primary water rate variable is dependent upon the initial charge from the City of Chicago to Oak Lawn.
Financial Impact
No financial impact
Recommended Action/Motion
I move to approve staff to execute the one-year extension of the Oak Lawn Water System service agreement as outlined herein.