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