1. 1 New Territory Municipal Utility Districts Strategic Partnership Agreement Discussions With the City of Sugar Land

2. 2 PUBLIC HEARING OF FORT BEND COUNTY MUNICIPAL UTILITY DISTRICT NO._____ (THE “DISTRICT”) ON STRATEGIC PARTNERSHIP AGREEMENT (“SPA”) WITH THE CITY OF SUGAR LAND DISCLAIMER: The District makes no representations or warranties regarding the provisions of the SPA, the GRP Agreement, any terms of service from the City or the District, or any matters set forth in this presentation.

3. 3 New Territory MUDs  There are 5 municipal utility districts (“MUDs”) that serve all of New Territory –67, 68, 69, 111, and112  Each MUD is governed by 5 directors elected by the residents

4. 4 What Do the MUDs Do? –Water –Sewer –Drainage –Trash pickup –Fire Protection

5. 5 MUDs’ Revenue -MUD Taxes on property -Water & Sewer Rates / Fees  MUDs pay for the initial installation of the District infrastructure and for operation and maintenance costs. Sources of funds:

6. 6 MUDs Do Not:  Maintain or repair the streets  Provide law enforcement services  Collect any sales tax

7. 7 MUD Meetings  Each New Territory MUD meets at least monthly on a regular basis  All meetings are open to the public

8. 8 MUD Directors  All directors are residents of the New Territory district they serve  Elected by the residents of the New Territory district they serve

9. 9 What Started Discussions With the City? 1. Groundwater Reduction Plan (“GRP”) The Fort Bend Subsidence District requires conversion from current well water usage to surface water. –2008: GRP must be submitted –2013: only 70% of water used may be well water –2025: only 40% of water used may be well water

10. 10 What started Discussions with the City  The GRP imposes substantial fines for failure to convert to surface water by deadlines.  Converting infrastructure from well to surface water is very expensive.

11. 11 What started Discussions with the City 2. New Territory’s need for long term fire protection The City of Sugar Land will acquire a fire station site in Telfair. The City will design, construct, and operate a two-bay fire station on the Telfair site.

12. 12 What Started Discussions With the City  MUDs investigated options for the GRP and fire protection needs. –Contract with the City for inclusion in its GRP –Develop a GRP for New Territory only –Contracting with another entity for fire protection –Constructing a New Territory Fire Station

13. 13  After about 2 years of discussions and studies by directors, engineers, operators, City representatives, and attorneys: –The New Territory directors determined entering into negotiations with the City for a Strategic Partnership Agreement and inclusion in the City’s GRP was the best solution to meet the water and fire protection needs of the MUDs. What Started Discussions With the City

14. 14 Why a Strategic Partnership Agreement?  MUDs may be annexed by the City at any time with 3 years notice.  In order to participate in City’s GRP, the City requires the MUDs to enter into a Strategic Partnership Agreement (“SPA”) to outline the terms for continued City services and ultimate annexation by the City. -The SPA provides that MUDs will be in the City GRP -The SPA includes terms for permanent fire protection services, including Telfair fire station

15. 15 The GRP  The City will prepare the GRP, will include New Territory in the GRP, and will timely ensure compliance with the Fort Bend Subsidence District regulatory plan.  The City will begin planning and constructing a series of major infrastructure projects to convert total area in GRP to meet conversion percentages.

16. 16 The Cost of Conversion  Sugar Land will incur significant costs to convert to surface water, shared by all customers within the GRP.  All of Fort Bend County will incur significant cost to comply.

17. 17 What does it cost New Territory MUDs?  GRP Pumpage Fee: –The MUDs will pay the City $0.25 per 1,000 gallons of water pumped, beginning April 2006 –plus a 20% out-of-City charge (for a total of $0.30 per 1,000 gallons of water pumped) –pumpage fee will increase in the future.

18. 18 What does it cost New Territory  GRP Participation Fee: -The MUDs will pay a one-time fee of $35 per equivalent single family connections anticipated at build out -This will be used to contribute to the City’s cost of developing the GRP.

19. 19 What does it cost the MUDs?  Fire Station Cost: -The MUDs will pay 40% of costs associated with the new fire station, not to exceed a total of $1,280,000.  Fire Protection Fee: -Effective January 1, 2008, New Territory districts will pay an additional 20% out-of- City charge on the City Fire Protection Plan fee.

20. 20 Proposed Fire Station Site

21. 21 Fire Services  The City will acquire the fire station site by 1/1/2008 and, after MUD elections, will design, construct, and operate the new fire station.  Fire station may open in 2012 or 2013.

22. 22 Fire Services  Once the fire station is fully operational, the City will provide the same level of fire protection services as currently provided to residents of the City. –The City’s current goal is to have 1 st responding unit arrive within 5 minutes of first call for 90% of calls. All units are to be staffed with an emergency medical technician.

23. 23 SPA & City Services  Items included in the SPA, other than the GRP and fire protection services: -Simultaneous Annexation of all 5 MUDs no earlier than 2017 -Debt Reduction Fund -Wastewater Treatment Plant

24. 24 Annexation  The City will annex all MUDs at the same time no earlier than January 1, 2017.  Sugar Land will assume all assets and liabilities of the MUDs.  Sugar Land will begin providing the same services to New Territory they provide the rest of the City.

25. 25 Debt Reduction Fund  Sugar Land will establish Debt Reduction Fund specifically for New Territory  Source of funds: –The 20% out-of-City charge on groundwater pumpage fee and on fire protection fee –The City will deposit up to $150,000 annually from sales tax revenues generated in Fort Bend County MUD No. 1

26. 26 Debt Reduction Fund  The funds in the New Territory Debt Reduction Fund may only be used to: –Retire MUD debt upon annexation –Complete MUD infrastructure repairs to meet City standards –Fund other direct costs associated with annexation of the MUDs –Pay for fire service costs after MUD dissolution and prior to City tax levy

27. 27 Wastewater Treatment Plant  After execution of the SPA, the MUDs will convey the plant to the City and the City will become the operator of the plant  The City may expand the existing wastewater treatment plant facilities to no more than 10.5 MGD  The City will minimize aesthetic impact to New Territory residents and will not remove current landscaping on north border.  The City will designate the remaining property, not within the expansion site, as park property

28. 28 Proposed Wastewater Treatment Plant Expansion Site

29. 29 Proposed Wastewater Treatment Plant Expansion Site  The City will not expand beyond the blue line unless: –A necessary buffer zone is not obtained –Future regulatory changes require it –A structure must be replaced and there is not sufficient property within the plant site –Impact from the Flood Hazard Area as determined by FEMA requires the encroachment

30. 30  Questions