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<br /> <br />LA ~PORTE AREA WATER AUTHORITX <br />P~tOPOSED SEWPP CONTRACT <br />INTRODUCTION <br />The City of Houston and its Consultant, Camp Dresser & McKey (CDM) have been <br />evaluating the expansion of the Southeast Water Purification Plant (SEWPP) for the past <br />several months. The Study has centered on the improvements necessary to increase firm <br />capacity from 80 MGD'to 120 MGD. The proposed expansion will primarily involve the <br />upgrade of existing plant structures and equipment. Additionally, the repair and upgrade <br />of the existing facility at current capacity is also planned. <br />PROPOSED CONTRACT <br />In order to allocate capacity and costs to Participants, as well as revise language to <br />improve the contract for all parties, a new contract is being developed to address these <br />issues. A proposed contract was presented to all Participants in September. After <br />review, the Participants met in La Porte on November 3, 1999 to discuss the issues <br />without the City of Houston present. A list of changes and/or clarifications was <br />presented to Houston the following week. A subsequent meeting was held and Houston <br />agreed to most of the Participants' suggestions. The following is a list of major <br />differences between the existing and proposed Contract. <br />1. Flow restriction devices change from allowed to mandatory. However, at the <br />suggestion of the Participants, these remote-controlled devices would only be <br />activated if certain trigger conditions were met. The Participants' Advisory <br />Committee will develop the triggers. <br />2. Excess Production and Pumping fees are eliminated from the Contract at the <br />request of the Participants. <br />3. O&M costs will be based on an annual budget, and with quarterly progress <br />reports. This will result in a fixed cost for one year. <br />4. Establishes a contingency fund of $1 million maximum, and based on 2.5% of <br />annual budget. Paid through O&M. This fund would be used to make major <br />repairs and modifications. It would also earn interest. <br />5. The payment plan for the repair and upgrade includes up-front payment to be <br />held by Houston (interest paid) or independent escrow fund that Houston <br />could draw. "Catch-up" will not be an option. <br />6. The delivery point varies with each contract. At the suggestion of the Participants, <br />Houston agreed to the Point of Measurement. This is what is in current <br />LPAWA contract. <br />7. City of Houston indirect overhead would be fixed at 9% (historical) rather <br />than adjusted quarterly. Direct costs would be billed directly. <br />8. Houston would be defined as the "Managing Participant" instead of <br />"Managing Owner". <br />2 <br />