Response to Council Member Rodriguez provided by Tyler Hjorth, Director of Utilities:
Correct - the company, ”Highlander SM Two, LLC”, is no long a participant. During the deliberation of Amendment No. 2 last fall, we received notification from the developer that they were not able to close on the property in mid-2025 as anticipated and needed to exit the agreement. We understood this as a possibility when we entered the original Agreement. References to them were removed in Amendment No. 3 since they are no longer signatories, but we thought it best to show them zeroed out in Exhibit D and E in this amendment and to keep the tables the same, otherwise the total developer contribution and the number of developers would look different from the tables in the Agreement and earlier Amendments, and may also raise questions. In the next amendment, if there is one, we will remove those columns from the Exhibits.
Response to Mayor Hughson:
There are no new entities, per se. The signature pages were expanded from the original participating parties and the city to also include the three MUD’s that have been formed. This was anticipated in the original agreement, and a Joinder Agreement was included as an exhibit to the original. So, not really new members but additional signatories are showing up in this Amendment. Council granted consent to the formation of these MUD’s by Ordinances 2024-33 and 2024-34 (Sedona MUD no. 1 and Sedona MUD No. 2) and 2025-24 (Guadalupe MUD No. 9).
The primary changes created through this amendment are the changes to the Definition 23. “LUE Fee” and the Absorption Schedule. The change to the “LUE Fees” was significant enough the amendment replaced the old definition entirely and replaced it. So, a mark up wasn’t really practical. Below is the old definition and amendment No. 3 language.
Current language
- “LUE Fee” shall mean: (i) the $8,300 per LUE that Jones, Rattler and Highlander agree to pay, or cause to be paid, to the City in accordance with the Payment Schedule (as hereinafter defined); and (ii) the $7,550 per LUE that JLBC agrees to pay, or cause to be paid, to the City in accordance with the Payment Schedule. The LUE Fees shall be the only fees required by the City to be paid for a unit to be connected to the Facilities, except for new account charges or deposits that are standard for retail Wastewater utility service customers of the City.
Proposed Language
- “LUE Fee” shall mean: (i) the $8,300 per LUE used to calculate the Jones and, Rattler 2025 payments; (ii) the $7,550 per LUE used to calculate the JLBC 2025 payment; (III) the $8,600 per LUE that Jones and Rattler agree to pay, or cause to be paid, to the City in 2026 and subsequent years in accordance to the Payment Schedule (as hereinafter defined”; (iv) the $8,300 per LUE Fee that Mason and Cottonwood agree to pay, or cause to be paid, to the City in accordance with the Payment Schedule; (v) the $8,500 per LUE Fee that Mulberry agree to pay, or cause to be paid, to the City in accordance with the Payment Schedule; and (vi) the $7,700 per LUE that JLBC agrees to pay, or cause to be paid, to the City in accordance with the Payment Schedule. The LUE Fees shall be the only fees required by the City to be paid for a unit to be connected to the Facilities, except for new account charges or deposits that are standard for retail Wastewater utility service customers of the City.
The change from a flat rate to the development specific amount is to be sure that the revised Absorption Schedules provide the same net-present-value as the original payment plan. So a development like Mason, for example, who did not seek to have their payment plan adjusted is still paying their original $8,300 per unit; whereas a development like Fleming Farms who sought out an elongated payment plan would have to pay $300 more per unit than originally agreed to.
Exhibits D and E, then, reflect the new LUE Fee and revised Absorption Schedule. For your quick reference, attached are both the current and proposed Exhibits.
And last of the changes was adjusting the 2026 payment due date change to August 1st in Article 3 in the same manner as we did with 2025 payments.
Current Language
- Certain of the annual installments of the LUE Fee payments commence in 2025 and shall be paid on or before August 1, 2025 in accordance with the Payment Schedule, Exhibit E.
Proposed Language
- Certain of the annual installments of the LUE Fee payments commence in 2025 and shall be paid on or before August 1, 2025 in accordance with the Payment Schedule, Exhibit E. LUE Fee payments due in 2026 shall be paid on or before August 1, 2026, in accordance with the amended Payment Schedule, Exhibit E.
