As City Council may recall, on October 3, 2018 at a work session, staff and the consultant firm of McKim & Creed presented to City Council the Orangewood Lakes Services, Inc. valuation report.  At the conclusion of the report City Council directed staff to proceed with the notice of intent to purchase the utility system.  As a result, the request of staff for Council is to review and consider for approval the attached notice of intent to purchase the Orangewood Lakes Services, Inc. Utility for a do not exceed amount of $950,000. 

As City Council is aware, staff began preliminary discussions with the owner of Orangewood Lakes Services, Inc. Utility and the possible acquisition of the system.  Subsequent to the completion of a valuation report on the utility, negotiations for the purchase took place.  The report’s methodology utilized three weighted criteria.  An asset valuation of the existing facilities, income valuation, and the comparable sales valuations of similar size utilities.  The report and summary memo from McKim & Creed identified a reasonable purchase price for the Orangewood Lakes Services, Inc. utility system to be between $800,000 and $900,000 excluding the additional 60 units currently requesting utility services into the existing system. Negotiations between staff and the current owner concluded on June 14, 2018 with an agreed purchase price of $950,000 for the Orangewood Lakes Services Inc. utility system.   In addition, it was agreed that the purchase price was contingent on Council's approval and the issuance of a notice of intent to purchase the utility systems.  The notice of intent's purpose is to identify all items specifically called out by each party as assigned responsibilities required for the purchase conclusion.  A May 1, 2019 date has been agreed to by all parties as a fair and reasonable time frame to complete the purchase process.

Subsequent to the City's Finance Director and the City's 2018 Utility Revenue Sufficiency Analysis Update (RSA) performed by Stantec Consulting Services, Inc. review of the proposed utility purchase, it has been recommended that the purchase of the system be included in the currently utility borrowing of funds identified in the RSA for capital construction projects.  In addition to the $950,000 proposed purchase price, the valuation report included the cost estimates for the City to replace the existing meters with the City's Automated Meter Infrastructure System.  The cost for the meter conversions is $241,000 and is included in the City’s current Capital Improvement Program (CIP).  Finally, the valuation report identified capital construction projects for water and sewer tie-ins of the Orangewood Lakes Services, Inc. utility system to the City’s utility system.  The cost of these two (2) construction projects is estimated at $920,000 and is also identified in the City’s current CIP. 

As City Council may recall, in January of 2017 the City purchased Lakewood Villas, Barbara Ann Acres, and Silver Oaks utility systems.  Staff has reviewed the operating and maintenance responsibilities of the Orangewood Lakes Services Inc. utility system in conjunction with the three utilities previously purchased and have concluded that it may require a request to City Council in the 2019/2020 fiscal budget year, for additional utility maintenance personnel and equipment in the form of two (2) water distribution utility mechanics, two (2) sewer collections utility mechanics, and two (2) utility service trucks.