Acquisition and Service Agreements

News from RCH Water Supply: Acquisition and Service Agreements

Date: Sept 1, 2023

Dear Valued RCH Members,

I hope this letter finds you in good health and spirits. We are at an important juncture for RCH, and I am writing to you today with a sense of utmost confidence and anticipation for the future.

Over the years, we have diligently strived to provide our community with a safe and reliable water supply as it grew from a primarily agriculture community to a rapidly expanding residential area. As members, you have been at the heart of this endeavor, guiding our path and enabling us to overcome challenges. Certainly, all of this growth has presented challenges. 

We now have an important opportunity to both serve our existing members but address the growth that lies ahead. After careful consideration and exhaustive discussions with potential buyers, the RCH Board recommends the sale of certain RCH assets to Aqua, a proven leader in water utility management. This sale is not merely a transaction, but a strategic decision aimed at securing our future, bolstering our capabilities, and fortifying our commitment to the community we hold dear.

The contract for the sale of our utility to Aqua represents rigorous due-diligence negotiations. It is a testament to our dedication to ensuring the stability of our current situation and to our ambition to facilitate the sustainable growth of our region. Aqua's resources will empower us to invest in critical infrastructure upgrades to accommodate our growth and guarantee a safe, reliable, and increased water supply for future generations. During this transitional period, Aqua will assume responsibility for the operation, maintenance, and servicing of the RCH system. A copy of the aforementioned agreement is attached for your review. Additionally, we have enclosed executive summaries for your convenience, providing summary overviews of the important facts of each agreement. I look forward to discussing the details with you in future communications and town hall style meetings.

I understand the gravity of this decision and the responsibility that rests upon each of us as members. The path ahead may be unfamiliar, but I firmly believe it is right for RCH and the member community. Our community's well-being remains at the forefront of this choice.

You will have the opportunity to cast your vote on this monumental decision. Please approach this decision with the same dedication and thoughtfulness that has characterized our community in the past. Together, we can shape our future.

Asset Purchase Agreement

Operations Agreement

Thank you for your trust and unwavering support.

Warm regards,

David Naylor
Board President

For your convenience below is a summary of some key insights and important facts from the Aqua Purchase Agreement (APA) and the Amended and Restated Operation and Maintenance Services Agreement. This is a high-level executive summary.

The Aqua Purchase Agreement Summary, Insights, and Important Facts

Agreement Details: 

Aqua and RCH have agreed to a deal where Aqua will buy certain assets from RCH, involving a water system pending member approval. The member vote will occur in the next six months.

Purchase and Sale: 

Aqua is buying the assets from RCH. The assets will be transferred to Aqua on a specific date, pending member and PUC approval.

Assets Definition: 

The assets include various things related to the water system, like buildings, equipment, pipes, licenses, agreements, and other items. It's everything Aqua needs to run the water system.

Excluded Assets: 

Some things are separate from the deal, like certain customer water lines, internal piping in customers' structures, RCH's existing cash, and others.

Liabilities: 

Aqua will take on certain responsibilities and debts related to the assets. They'll handle things like contracts and customer deposits. 

Purchase Price: 

Aqua will pay RCH $6 million for the assets. This amount might change if some assets are lost, or the service area is changed. An independent expert will decide the new price if needed.

Assumed Obligations: 

After the deal, Aqua will provide water services in the specified area, take over some obligations from RCH, and maintain the water system according to regulations.

Operation and Maintenance Services Agreement Summary, Insights, and Important Facts:

Parties Involved:

RCH: Owner and operator of a public water system providing retail water services in Rockwall County.

Aqua: Selected as the exclusive party to negotiate an Asset Purchase Agreement (APA) for acquiring RCH System assets.

Agreements:

The Parties entered an Original Agreement for Aqua to provide interim operations and maintenance services for the RCH System.

The Parties now desire to amend and restate the Original Agreement.

Exclusivity:

RCH agrees not to entertain offers or negotiate with any other party regarding the sale of RCH System Assets during the Exclusive Negotiation Period with Aqua.

RCH must notify Aqua about any significant contact with other parties regarding offers or proposals.

Basic Services Provided by Aqua:

Aqua will provide Basic Services through a TCEQ licensed operator for the RCH System during the APA Contract Term.

Basic Services include system operations, inspections, maintenance, preventive maintenance, regulatory reports, 24-hour response, alarm monitoring, customer support, personnel training, and more.

Aqua will assist with the purchase and installation of new automated meter reading (AMR) systems.

Aqua will inspect water connections, perform valve and hydrant surveys, and maintain security and professional conduct.

Non-Basic Services and Compensation:

Aqua will provide customer billing services to RCH customers.

Compensation for Basic Services: Aqua and RCH will share costs during the Exclusive Negotiation Period; RCH will pay all costs after the APA terminates.

Non-Basic Services (e.g., repairs): RCH will reimburse Aqua for actual costs plus 10%.

Responsibilities:

Aqua is responsible for professional operation and maintenance services and operational deficiencies caused by negligence.

RCH provides necessary information and access, secures utilities, and takes responsibility for system compliance, improvements, and repairs.