R-768 - 03/27/2001 - WATER - Resolutions Supporting DocumentsDATE:
TO:
FROM:
j
VILLAGE OF OAK BROOK
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS 60523 -2255
MEMORANDUM
March 22, 2001
Village President and Board of Trustees
Stephen B. Veitch, Village Manager /V/
I, r 145 1b
PHONE 630 990 -3000
FAX 630 990 -0876
SUBJECT: DuPage Water Commission Charter Customer Agreement
The attached memorandum, addressed to the DuPage Mayors and Managers Conference
Intergovernmental Relations Committee from Woodridge Mayor Bill Murphy, explains a situation
that has arisen at the DuPage Water Commission which is most troubling to the Charter Customers
of the Commission. Oak Brook is one of the 23 Charter Customers of the Commission
The crux of the issue is that DuPage County has requested service for one of its six water systems
on terms more favorable than those applicable to the Charter Customers; i e , without committing to
accept a full water allocation and take its "full water requirements" from the Commission. All four
entities that have become customers of the Commission since execution of the Water Purchase and
Sale Contract between the Commission and the Charter Customers in 1986 (Winfield, Oakbrook
Terracle, Citizens Utilities and Argonne National Laboratory), have made the same commitments as
the Charter Customers and are paying their full share of capital costs. DuPage County desires to do
less.
The Charter Customers are, as far as I know, unanimous in their vehement opposition to this
unprecedented action. A model resolution of opposition has been prepared and is attached hereto
Substantially all of the Charter Customers will be adopting such a resolution within the next two
weeks, in advance of the Commission's meeting on April 12.
I recommend that the Board authorize the Village Attorney to prepare a resolution of opposition to
extension of water service by the DuPage Water Commission Nwithout requ *ipng_,the subsegl ent
customer to accept full water allocation for consideration on the Active Agenda for your meeting on
April 1,0.
Please
/sv
let me know if you have any questions.
To:
F
V'"1011aiie of Woodridge
Village Hall • Five Plaza Drive • Woodridge, IL 60517 -5014
(630) 852 -7000. • TTY (630) 719 -2497 • FAX (630) 719 -0021
Intergovernmental Relations Committee
Mayor William Murphy
Date: 03/06/01
Re: DuPage Water Commission Consideration of DuPage County
Request for Lake Michigan Water
The DuPage Water Commission (DWC) is considering providing Lake Michigan water to the
Greene Road water system at the request of DuPage County. The Greene Road water system is
operated by DuPage County and serves a 100 home gated subdivision immediately west of
Woodridge. I consider this proposal contrary to the Charter Customer Contract of the DuPage Water
Commission and a serious threat to the development potential of our community. The DWC
proposal holds similar negative consequences for every DuPage municipality. I will outline below
relevant historical, legal, and financial background so that we can further discuss this matter at your
March 13 Committee meeting.
DWC HISTORY AND LEGAL BACKGROUND
The DWC is a corporate entity created in 1986 through the commitment of municipalities (Charter
Customers) to fund bonds to create a waterworks system to bring Lake Michigan water to DuPage
County. Woodridge is one of 23 Charter Customers —all municipalities. No additional customers
can be added to the system at rates, charges, or terms more favorable than those provided to the
Chart er Customer. DuPage County is one of four municipalities who chose not to join the DWC in
1986. The DWC is governed by an independent 13- person board consisting of seven County
appointed representatives and six municipal appointed representatives. The Commission must have
support from both municipal and County representatives to approve any project over S100,000.
As an active participant in the establishment of the DWC, I was surprised by the proposal to serve
the Greene Road water system because "partial" service to any municipal entity (including the
County) was contrary to the Charter Customer Contract. We have retained James Knippen, of
Walsh, Knippen, Knight & Diamond, to advise us. Mr. Knippen also advised municipalities in
1985 -186 that entered into the Charter Customer Contract and currently is the Village Attorney for
Wheaton and Roselle, DWC Charter Customers. Mr. Knippen has reviewed the contract between
the D WC and Woodridge. It is his opinion, based upon his review of the Charter Contract as well as
the Commission's historical interpretation of that contract, that the DWC is not permitted to provide
water ito subsequent customers on a partial basis, but must provide "full water requirements." In the
Intergovernmental Relations Committee Page Two
3/6/01
case of DuPage County, this would mean that all six systems owned by the County should connect
and pay the fees and rates required by the Charter Customer Contract in order to obtain service from
DWC. Our preliminary calculation (for recovery of fixed costs advanced by Charter Customers)
indicates that we can readily establish financial damage to the Charter Customers of $4 million.
This constitutes only a small share of the damage that will be inflicted upon Woodridge and the
other Charter Customers. These damages are:
• Material Breach of Charter Contract.
• Loss of Future Capital Contribution. If DuPage County is permitted to serve only a small
portion of its customer base, then Charter Customers will also receive a lower
contribution from the County for future capital costs incurred by DWC.
• Definition of "System." Recovery of the investment made by Charter Customers is
dependent on the estimated demand of the subsequent customer. Partial service
arrangements permit the new customer to "low- ball" the investment for entry into the
DWC system.
• Inefficient Use of Funds. If DWC permits small systems like Greene Road, then the cost
of service or capital for Charter Customers could rise dramatically if such small systems
proliferate.
• Lack of Planning/Pipe Duplication. If service areas are not identified, water supply
agencies will be forced to duplicate pipes to serve adjacent areas.
• Zoning Control. The uncertainty generated by unclear water service territories will
reduce municipal zoning control and diminish future revenues.
• DWC Fragmentation. Charter Customers may begin to operate water systems under the
rules established for the County ( "separate unit systems ") that will subtract from the
DWC and its financial strength.
RECENT HISTORY
The Village sought to acquire the Greene Road water system in 2000 in order to efficiently serve
Thornb�erry Woods and our western planning area, including areas now unincorporated. We
proposed to acquire and serve the Woods of Hobson Greene without requiring annexation of these
existing customers. After we thought that we had reached tentative agreement, the County insisted
that the acquisition be predicated upon Village service to adjoining unincorporated territory at
Villa_e, resident rates.
STRATEGIC CONCERNS
The County is seeking to obtain Lake Michigan water from the DWC to replace an inferior water
supply, but without making the same financial commitment as required of the Charter Customers.
What is at stake if this proposal is not challenged and is allowed to go forward? Woodridge would
sustain significant damage as noted above plus:
Intergovernmental Relations Committee
Page Three
3/6/01
• We would lose substantial control over our ability to require development standards
acceptable to the Village. Our hard work to develop boundary agreements over the past
decade with our municipal neighbors would be virtually negated. The Village's long-
term strategic initiative to promote quality development would be hindered.
• Our water operation would encounter higher costs through duplication of pipes, fewer
customers, and lower revenues.
• The role of municipalities to influence quality buildout of DuPage is diminished.
We are prepared to challenge the proposal by the DWC and County staff to provide Lake Michigan
water, to the Greene Road system. This proposal will be detrimental to the Village's development
and financial well being and is not permitted by the Charter Customer Contract of the DWC. The
stakes are similar for each Charter Customer and, probably, every community in DuPage.
ACTION RECOMMENDED
I am scheduled to appear before the Administration Committee of the DWC on March 15, 2001 at
6:30 p.m. I welcome your participation in this discussion.
c: Board of Trustees
1, t
E
RESOLUFUTION IN OPPOSITION OF THE DUPAGE WATER COMMISSION'S
TENSION OF WATER SERVICE WITHOUT REQUIRING THE SUBSEQUENT
CUSTOMER TO ACCEPT FULL WATER ALLOCATION
WHEREAS, (Insert the name of the Charter Customer), is a Charter Member of the DuPage
Water; Commission; and
WHEREAS, the (insert name of Charter Customer) has been obligated by the DuPage Water
ssion pursuant to the terms of the Water Purchase and Sales Contract (hereinafter "Charter
ent ") to accept it's full allocation water requirement; and
WHEREAS, there is currently a request from DuPage County to secure a partial water
allocation for its Greene Road Water customers also known as the Woods of Hobson Greene
subdivision; and
WHEREAS, DuPage County has not agreed to accept a frill water allocation, and
WHEREAS, granting an isolated group of customers, which are not a public utility or a
municipality, partial water allocation is inconsistent with the Charter Agreement and the Water
Commission's prior practice of requiring full water allocation; and
WHEREAS, failure to require a subsequent customer to accept its full water allocation
prejud';ices the Charter Customers recoupment of both past and future fixed costs; and
WHEREAS, there is no justification under the Charter Agreement to require Charter
Customers or Subsequent Customers to accept a full allocation and permit a subsequent customer
to accept only a partial allocation; and
• w
O w
by the
WHEREAS, equal treatment of Charter Customers and Subsequent Customers is required
Agreement and is fundamentally fair; and
WHEREAS, (insert name of Charter Customer) has no objection to the Water Commission
servicing DuPage County or any other subsequent customer so long as they are required to accept
a full water allocation within a reasonable period of time based on the practicalities associated with
connection to the Water Commission and so long as they are required to accept a subsequent user
water agreement subject to the same essential terms and conditions of the Charter Customers and
subsequent customer's Water Purchase Agreement and Sales Contract.
NOW, THEREFORE, BE IT RESOLVED BY THE CORPORATE AUTHORITIES OF
THE (insert name of Charter Customer) that (insert name of Charter Customer) is opposed to the
granting of a partial water allocation to any subsequent customer of the Water Commission,
including, but not limited to the Greene Valley customers unless the municipality or the private
utility entity agrees to accept its full allocation within a reasonable date established by the
Commission. That the Village/ City Clerk is hereby directed to immediately forward a certified copy
of this resolution to Joel Herter-Chairman of the DuPage Water Commission.
AYES:
NAYS:
ABSENT:
PASSED AND APPROVED this day of )200 .
Mayor / President
Dated:
ATTEST:
Villlage Clerk / City Clerk
i
10.
A.
Trustee Caleel voiced a concern of setting a precedent. Trustee Kenny
noted that Community Director Kallien indicated in the Zoning Board
of Appeals Minutes that the .48 increase would be beneficial to this
property but it may be negligible to other properties.
Trustee Caleel noted a comment was made to the effect of spot zoning.
Village Manager Veitch indicated it was not spot zoning by definition
but a change to language within the ordinance, which is general
applicable to any property in that zoning classification and does not
rezone anything.
Trustee McInerney noted that the Board rejected the dramatic proposals
in the Lohan Report when it was presented and which were never
enacted. Village Manager Veitch explained that staff then postulated a
more conservative density pattern still designed to encourage
appropriate redevelopment but manageable within the limitations of the
existing traffic infrastructure. A traffic study was done by Metro
Transportation and presented to the Village Board and material from
that study will be used in the next update of the Comprehensive Plan.
When the census data is received then a new document should be
initiated. Trustee McInerney noted for the record that the reason some
of the proposals offered in the Lohan Study were rejected by the
Village Board was because some of Lohan's ideas did not match our
vision of Oak Brook.
Motion by Trustee McInerney, seconded by Trustee Kenny, to concur
with the recommendations of the Plan Commission and Zoning Board
of Appeals and authorize Village Attorney Martens to draft the
necessary ordinance for final consideration at the April 10, 2001
Village Board meeting. VOICE VOTE. Motion carried.
BJ DISCUSSION - DUPAGE WATER COMMISSION CHARTER
CUSTOMER AGREEMENT
DuPage County has requested service for one of its six water systems
on terms more favorable than those applicable to the Charter
Customers; i.e., without committing to entities that have become
customers of the Commission since execution of the Water Purchase
and Sale Contract between the Commission and the Charter Customers
in 1986 (Winfield, Oakbrook Terrace, Citizens Utilities and Argonne
National Laboratory), have made the same commitments as the Charter
Customers and are paying their full share of capital costs. DuPage
County desires to do less The Charter Customers are vehement in their
VILLAGE OF OAK BROOK Minutes Page 12 of 13 March 27, 2001
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RES #01 -DWC-
R -768, DP H2O
CONiNI EXT
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B.
opposition to this unprecedented action. A model resolution of
opposition has been prepared. Substantially all of the Charter
Customers will be adopting such a resolution within the next two
weeks, in advance of the DuPage Water Commission's meeting on
April 12, 2001. Village Manager Veitch, for the record, stated that the
DuPage Water Commission in 1987 -1988 existed only on paper and
went to the bond market for several hundred million dollars and with
only the signatures of twenty -three (23) Charter customers as evidence
of a market for its product.
Motion by Trustee Caleel, seconded by Trustee Craig, that the Village
Board approve Resolution #2001 -DWC -R -768, "A Resolution in
Opposition of the DuPage Water Commission's Extension of Water
Service Without Requiring the Subsequent Customer to Accept Full
Water Allocation," as presented and waive the full reading thereof.
ROLL CALL VOTE:
Ayes: 5 - Trustees Butler, Caleel, Craig, Kenny and McInerney.
Nays: 0 - None.
Absent: 1 - Trustee Savino. Motion carried.
OTHER BUSINESS PERTAINING TO VILLAGE OPERATIONS: None.
ADJOURNMENT
Motion by Trustee Caleel, seconded by Trustee Craig, to adjourn the meeting
at 9.45 p m. VOICE VOTE: Motion carried.
ATTEST:
Linda KJGonnella, CMC
Village Clerk
BOT -03:
VILLAGE OF OAK BROOK Minutes
Page 13 of 13 March 27, 2001
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