INTRODUCTION OF FRANCHISE AGREEMENTS
FOR WATER AND WASTEWATER SERVICE
BETWEEN CECIL COUNTY AND ARTESIAN

Click on link for document:

Water Franchise Agreement

Wastewater Franchise Agreement

Click on link for maps of proposed future service areas:

Map 1

Map 2

Map 3

             The Board of County Commissioners of Cecil County (BOCC) is pleased to announce the introduction of two agreements relating to the grant of a franchise to Artesian Water Maryland, Inc. /Artesian Wastewater Maryland, Inc., to provide water and wastewater service to the Elkton West franchise area.  This endeavor is in response to action taken by the Board of County Commissioners on December 18, 2007.  At the BOCC meeting on December 18, 2007, the recommendation of the Elkton West review committee was presented to the Board with respect to whom the county would engage in negotiations for the award of a franchise agreement for water and wastewater systems within the Elkton West service area, as contemplated in the request for proposals.

             Based on the evaluation of the technical and financial proposals set forth in the respondent's responses to the request for proposals, the evaluation committee recommended that the Board of County Commissioners select Artesian as the respondent with whom the county shall engage in detailed negotiations for the award of a franchise agreement for water and wastewater systems for the Elkton West service area.  At the December 18, 2007 meeting the Board voted to approve and accept the recommendation of the evaluation committee and authorized the evaluation committee to engage in negotiations with Artesian for the award of a franchise agreement for water and wastewater systems for the Elkton West service areas.

             The evaluation process was initiated on September 7, 2007 when the county received in response to solicitation and advertisement two proposals from Tidewater Utilities, Inc., and Artesian Water, Maryland.  The evaluation committee reviewed each of the written responses and found them to be compliant with the requirements of the request for proposals.  The evaluation committee met with the respondents on October 19, 2007 to receive formal presentations with each respondent, including an executive summary/overview with respect to its' presentation.

             In November 2007, the evaluation committee interviewed law firms to provide legal advice and counsel to the evaluation committee, and in early November, with the approval of the BOCC, the evaluation committee engaged the services of the law firm of Miles and Stockbridge, to act as special counsel for this purpose.  The evaluation committee and counsel met in extended sessions on November 9 and November 16, 2007 to review and evaluate the respondents' responses.  Follow up questions were generated and the respondents were invited back on November 28, 2007.  At the conclusion of these meetings, the committee deliberated and agreed to make a recommendation to the BOCC.

             Since December 18, 2007, the evaluation committee has been negotiating with Artesian toward the development of a water franchise agreement and wastewater franchise agreement.  Because of complex issues including gaining nutrient credits for the future expansion of the northeast advanced wastewater treatment plant and other financial and operational issues, the franchise agreements have expanded in scope.  The two franchise agreements being introduced on August 5, 2008 encompass the following:

1.  Establishment of Elkton West franchise area, establishes initial term of 20 years and extension term of 3 (20) year terms
2. Terms associated with expanding, and altering the franchise area
3. Design, development, and installation of systems
4. Reports, books, and records
5. Fees, costs, guaranty
6. Insurance and indemnification
7. Operation, transfer of control of franchisee and franchise
8. Enforcement, termination of franchise, and agreement
9. Determination of fair market value of system
10. Material changes to agreement
11. Miscellaneous provisions

             The water and wastewater franchise agreements also include conditional provisions that are outlined in "Letters of Intent", reflected in Exhibit a, b (description of service areas and maps), Exhibit f (Letter of Intent between BOCC and Artesian Water Maryland, Inc., for transfer of County's water facilities).  This is subject to the approval of a subsequently negotiated definitive agreement.  The water systems associated with this Letter of Intent and proposed transfers are Meadowview, Pine Hills, Harbour View, and Route 7.  The details of the transfer are to be outlined in the definitive agreement.

             In the wastewater services agreement, the following Exhibits outline the proposed wastewater facility transfers: Exhibit a , b (description of service areas and maps), Exhibit c (Letter of Intent between BOCC and Artesian Wastewater Maryland, Inc.- Cherry Hill Wastewater Facility purchase and CECO transfer to franchisee), Exhibit d (Letter of Intent between BOCC and Artesian Wastewater Maryland, Inc - Meadowview Wastewater Facility lease/purchase), and Exhibit e (Letter of Intent between BOCC and Artesian Wastewater Maryland, Inc.- Harbour View Wastewater Facility transfer)

             As is the case with the water services franchise agreement, details relating to the transfer of Cherry Hill WWTP, CECO WWTP, Harbour View WWTP, and Meadowview WWTP will be outlined in a subsequent definitive agreement.

             Should definitive agreements be reached between the BOCC and Artesian, current county employees working at the transferred facilities shall be offered the following.  It is estimated that up to 9 current county employees work at the subject facilities proposed to be transferred.

1. Employees will be given the opportunity to stay within county government, at the same salary as the employee is currently receiving.
2. Employees will be given the opportunity to transfer to Artesian, while receiving comparable benefits.
3. Those employees affected by the proposed transfers having 25 + years of county service will be able to move to Artesian contractual employ while retaining county pension benefits.

             The BOCC understands the significance of this action and have not considered this initiative lightly.  Also, this proposed action is not intended to imply that the BOCC is dissatisfied with the operations staff of the County.  We are proud of our staff and that is why we are protecting their employment with the County as indicated above.  The BOCC believes that our existing water systems are too decentralized, have small customer bases, and high future capital costs.  Fiscally, it could be argued that these systems are nothing but a liability to the county and not a core part of government operations.

             The primary benefit from this proposal will be the transfer of sewer flow from Elkton West, Cherry Hill, and CECO utilities to the Meadowview WWTP.  This will transfer this flow out of the Chesapeake Bay watershed and resultantly enable the county to obtain nutrient credits for the expansion of the Northeast River advanced wastewater treatment plant (aka Seneca Point).  On the fiscal side, this proposal will eliminate future planned capital costs associated with improvements to the facilities being transferred.  As a result, proceeds from the transfers and the elimination of capital funding for the transferred facilities will enable the county to be in a better financial position with the expansion of Seneca Point WWTP.

 These agreements will be introduced at the August 5, 2008 BOCC meeting at 2:00 p.m., and placed on the August 19, 2008 BOCC meeting as an action item.  If approved, work toward the approval of the definitive agreements will commence in order to detail the terms of the transfer of facilities and other matters relating to the transfer of facilities.