HomeMy WebLinkAbout05-09-12 Regular Meeting of the La Porte Area Water Authority
STATE OF TEXAS )(
COUNTY OF HARRIS )(
)(
CITY OF LA PORTE
LA PORTE AREA WATER AUTHORITY
AGENDA
NOTICE IS HEREBY GIVEN OF A REGULAR MEETING OF THE LA PORTE AREA WATER
AUTHORITY TO BE HELD WEDNESDAY, MAY 9, 2012 IN THE DOWNSTAIRS
CONFERENCE ROOM OF THE PUBLIC WORKS SERVICE CENTER, 2963 NORTH 23RD
STREET, LA PORTE, TEXAS, BEGINNING AT 6:00 PM.
1. CALL TO ORDER.
2. CONSIDER APPROVAL OF MINUTES FROM FEBRUARY 8, 2012 MEETING.
3. CONSIDER APPROVAL OF AN AGREEMENT BETWEEN THE CITY
OF HOUSTON AND THE LA PORTE AREA WATER AUTHORITY FOR
RESOLUTION OF THE 2007 2010 TRUE-UP EXPENSES CLAIMED BY THE CITY
OF HOUSTON.
4. DISCUSS THE CITY OF HOUSTON FY 2013 DRAFT BUDGET AND RECEIVE
BOARD INPUT REGARDING THE SOUTHEAST WATER PURIFICATION PLANT
BUDGET APPROVAL PROCESS.
5.
6. BOARD COMMENTS.
A. MATTERS APPEARING ON AGENDA.
B. INQUIRY OF STAFF REQUIRING A STATEMENT OF SPECIFIC FACTUAL
INFORMATION OR A RECITATION OF EXISTING POLICY.
7. ADJOURNMENT.
THIS FACILITY HAS DISABILITY ACCOMODATIONS AVAILABLE. REQUESTS FOR
ACCOMODATIONS OR INTERPRETIVE SERVICES AT MEETINGS SHOULD BE MADE 48
AT 281-471-5020 OR TDD LINE 281-471-5030 FOR FURTHER INFORMATION.
THERE MAY BE A QUORUM OF CITY COUNCIL MEMBERS PRESENT AT THE MEETING.
COUNCIL WILL TAKE NO ACTION BUT MAY PARTICIPATE IN DISCUSSIONS.
Patrice Fogarty, TRMC, MMC
City Secretary
________________________
Date posted
LA PORTE AREA WATER AUTHORITY
MINUTES
FEBRUARY 8,2012
1. The meeting was called to order at 6:00 PM by President David Janda.
Members Present: President David Janda, Vice President Kenneth Schlather, Secretary Steve
Valerius,Members Dennis Steger,Randy Woodard
Members Absent: None
Others Present: General Manager Steve Gillett,Public Works Director David Mick,Asst. Public
Works Director Don Pennell, Director of Finance Michael Dolby, City Controller Phyllis
Rinehart,and Tom Peterson Null-Lairson,PC CPA Texas City Texas.
2. President David Janda called for election of new officers. Motion by Steve Valerius to re-elect all
existing officers to their same position,second by Randy Woodard motion was unanimous.
3. The minutes from the meeting held August 1, 2011 were reviewed. Motion by Steve Valerius to
approve minutes,second by Randy Woodard,motion was unanimous
4. Tom Peterson representing Null-Lairson C.P.A. reviewed the La Porte Area Water Authority
annual financial report for year ending September 30,2011. Steve Valerius noted that the officer
positions noted on page 33 is incorrect. Tom Peterson will email the final copy to all board
members and send a hard copy by mail to Kenneth Schlather. Steve Valerius motioned to approve
as noted second by Ken Schlather motion was unanimous.
5. David Mick presented a draft agreement received from the City of Houston for"true up" costs.
Randy Woodard asked if the lawyers retained have addressed the draft presented.The answer was
no. Steve Gillett advised that Freese Nichols Engineering had completed the report for feasibility
to obtain contract operation services for the Southeast Water Purification Plant (SEWPP). The
report indicated that savings may be obtained by contracting operations of the plant. David Mick
also pointed out that the report indicated there may be savings by contracting management of the
plant. Don Pennell advised the members that other Co-participants indicated a desire the look into
contract management along with operations as the Freese Nichols report indicated. Steve Gillett
advised the board that operations disagreement has occurred three times he can recall from the
beginning of the SEWPP. Board members agreed to continue to follow the lead of the larger co-
participants and have staff advise them of any change in direction to contracting operation
services.
6. The General Manager had no additional report comments.
7. The Board had no additional comments
8. There being no fiuther business,the meeting adjourned at 7:01 P
6
Secretary
PASSED AND APPROVE �O
ON THIS DAY
i
President
Memo
To: La Porte Area Water Authority Board
From: David Mick,Public Works Director
CC: Steve Gillett,Don Pennell,Michael Dolby
Date: April 17,2012
Re: Update City of Houston Settlement Agreement Offer for 2007-2010 True Up(Upcoming Board
Meeting Agenda Item#3)
LPAWA Board:
At your February board meeting we discussed that the City of Houston had forwarded a draft settlement
agreement to each of the Southeast Water Purification Plant (SEWPP) co-participants. The agreement states that
the City of Houston will drop any future claim for FY 2007, 2008, and 2009 True-Up claims against the co-
participant if the co-participant agrees to pay the City of Houston invoice to the co-participant for FY 2010. The
FY 2010 True-up amount provided to the LPAWA is $138,898. The City of Houston holds a LPAWA
contingency reserve balance of nearly $204,000. If this board is in agreement—pending La Porte City Council
approval as well—the FY 2010 invoice amount would be deducted from this contingency balance.
Staff contacted the City of Pasadena, Gulf Coast Water Authority, and Clear Lake Water Authority who are the
largest 3 co-participants in the SEWPP totaling 75% of the non-Houston ownership share. Clear Lake Water
Authority's board agreed to settle, and Pasadena and the Gulf Coast Water Authority has agreed in concept
pending slight modifications to the agreement. In fact, all of the co-participants except for LPAWA gave
indication to the City of Houston at the April quarterly meeting that their agencies plan to provide the City of
Houston with executed agreements prior to May 1. But while the co-participants are seemingly unanimous in their
decision to settle the FY 2007 - FY 2010 True-Up dispute with Ilouston, they also seem to be unanimous in
challenging the allocation costs proposed by the City of Houston with their draft FY 2013 budget utilizing the
process provided in the attached sections 3.4.2—3.4.5 and 5.15 from the current contract to object to those items
unless Houston can provide data to support these costs.
Staf 's recommendation is to settle with the City of Houston along with the other co-participants. Houston's
likely next step toward the minority co participant that does not settle would be to draw the FY 2010 invoiced
amount from the co participant's contingency fund. The challenging co-participant would then be in a position to
have to sue the City of Houston in an attempt to recover the funds. In our case, the cost to litigate would almost
surely be greater than the invoiced amount with the potential for being required to also pay for the City of Houston
legal fees if the challenge was unsuccessful.
1
.. a City of La. Porte
Established 1892
May 15, 2012
r 0
\
Mr. Mark Loethen, P.E.
Deputy Director, Planning and Development
City of Houston Public Works and Engineering Department
P.O. Box 1562
Houston, Texas 77251-1562
RE: Settlement Agreement for Cost-Sharing—Southeast Water Purification Plant
Dear Mr. Loethen:
We received your letter dated March 20, 2012 forwarding three copies of the revised Settlement
Agreement for Cost-Sharing— Southeast Water Purification Plant and added a fourth copy so that an
original copy can be filed with both the La Porte Area Water Authority(LPAWA) board of directors
and the City of La Porte City Council.
The amounts in the LPAWA's contingency reserve exceed the$138,898 that the LPAWA agrees to
pay the City of Houston under this Settlement Agreement, and it is the LPAWA's desire to pay the
$138,898 in full from the contingency reserve. Therefore, consistent with your letter, we have: (1)
revised section 1.a.1; (2) struck through sections 1.a.2 and I.a.3; (3) initialed those changes on all
four copies; and (4)executed all four copies.
Please return TWO fully executed copies of the Settlement Agreement to me.
Sincerely,
LA PORTE AREA WATER AUTHORITY
STEVE GILLETT, INTERIM GENERAL MANAGER
David S. Mick
Public Works Director, City of La Porte
Copy: Steve Gillett, Interim General Manager, La Porte Area Water Authority
604 W.Fairmont Pkwy. • La Porte,Texas 77571 • (281)471-5020
SETTLEMENT AGREEMENT
THE STATE OF TEXAS §
§ KNOW ALL BY THESE PRESENTS:
COUNTY OF HARRIS §
This Settlement Agreement (Agreement) is entered into between the
City of Houston, Texas (Houston), a Texas Home-Rule Municipal
Corporation, and La Porte Area Water Authority (Participant), a Texas
entity established by the Texas Legislature, upon the terms and conditions
described herein.
THAT WHEREAS, pursuant to Houston Ordinance Number 2001-
0417 Houston entered into Contract Number C52797 with Participant and
other Participants for a Cost Sharing Agreement for the Southeast Water
Purification Plant (Southeast Plant) - Restated and Amended (Contract),
and pursuant to Houston Ordinance Number 2007-927 Houston and
Participants amended the Contract (Amendment); and
WHEREAS, the Participants dispute whether amounts presented by
Houston under the true-up compensation calculation in connection with the
operation and maintenance of the Southeast Plant for the Fiscal Years
2007, 2008, 2009, and 2010 are owed (Dispute); and
WHEREAS, the Participants and Houston are aware of the hazards,
uncertainty and expense of litigation and desire to settle and compromise
any and all claims which Houston may have against the Participant, arising
out of, touching upon, or in any way related to the Dispute.
NOW THEREFORE, for good and valuable consideration, the
sufficiency of which is hereby acknowledged, all parties hereby agree as
follows:
1. Participant's Agreements and Representations:
a. Participant agrees to pay to Houston the total sum of $138,898.00 in
full and final satisfaction of any and all claims which Houston may
have against Participant relating to the Dispute on or before July 31,
2013.
1. Participant authorizes Houston to apply, : in
Participant's portion of the Southeast Plant contingency
reserve as of February 29, 2012, towards the sums due
Houston from Participant .
b. Participant represents that the persons signing this Agreement on its
behalf are fully authorized to bind it to all the terms hereof.
2. Houston's Agreements and Representations•
a. Houston agrees to accept the total sum of $138,898.00 in full and
final satisfaction of any and all claims which Houston may have
against Participant relating to the Dispute; and
b. Houston represents that the persons signing this Agreement on its
behalf are fully authorized to bind it to all the terms hereof; and
c. Conditioned only upon payment of the total sum referenced In §
1(a) above, Houston does hereby RELEASE, RELINQUISH,
ACQUIT, and FOREVER DISCHARGE Participant, of and from
any and all claims arising out of the Dispute.
3. Disclaimer: It is expressly understood and agreed by and between
the parties to this Agreement that this Agreement includes a
compromise and settlement of disputed claims, and that the
execution of this Agreement does not in any way constitute any
admission of liability on the part of any party to this Agreement, but
that all parties to this Agreement expressly disclaim any liability,
concerning the claims being compromised and settled herein.
4. Governing Law: This Agreement is being executed and delivered,
and is intended to be performed in Harris County, Texas, and the
laws of the State of Texas and of the United States of America, shall
2
govern the rights and the duties of the parties hereto and the validity,
construction, enforcement and interpretation of this Agreement.
5. Entire Agreement: This Agreement embodies the entire Agreement
between the parties, supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof, and
may be amended only by an instrument in writing executed jointly by
a duly authorized officer or agent of each of the parties. The terms of
this instrument are contractual and are not mere recitals, and the
undersigned specifically represent that the contents and effects
hereof are fully and completely agreed to and understood.
6. Interpretation: This Agreement shall not be construed against or
unfavorably to any party because of such party's involvement in the
preparation of this Agreement.
(Remainder of the page intentionally left blank.)
3
La Porte Area Water Authority
By:
Name:
Title:
Date Authorized:
Date Executed:
Attest/Seal
BY:
Name:
Title:
Date:
THE CITY OF HOUSTON, TEXAS
Mayor
Date: , 2012
SEAL/ATTEST
City Secretary
APPROVED:
Director, Department of
Public Works & Engineering
City Attorney
APPROVED AS TO FORM:
Assistant City Attorney
COUNTERSIGNED:
City Controller
Date Countersigned:
5
RESOLUTION NO. 2012-01
A RESOLUTION APPROVING A SETTLEMENT AGREEMENT WITH THE
CITY OF HOUSTON PROVIDING FOR THE RELEASE OF FUNDS FROM
THE LA PORTE AREA WATER AUTHORITY CONTINGENCY RESERVE TO
FUND THE FY 2010 TRUE UP EXPENSES CLAIMED BY THE CITY OF
HOUSTON AND AUTHORIZING THE GENERAL MANAGER OF THE LA
PORTE AREA WATER AUTHORITY TO EXECUTE THE SETTLEMENT
AGREEMENT.
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE LA PORTE AREA
WATER AUTHORITY:
Section 1. The Authority hereby approves the settlement agreement with the City of
Houston providing for the release of$138,898.00 to the City of Houston from the La Porte Area
Water Authority contingency reserve for the Southeast Water Purification Plant to fund the FY 2010
True Up expenses that are claimed by the City of Houston. In accepting the$138,898.00,the City of
Houston is agreeing to forever relinquish any further claims for FY 2007, FY 2008,FY 2009 and FY
2010. The approved settlement agreement is attached hereto as Exhibit A and incorporated herein by
reference.
Section 2. The General Manager of the La Porte Area Water Authority is hereby
authorized to execute the settlement agreement attached as Exhibit A.
Section 3. The Authority officially finds, determines recites and declares that a sufficient
written notice of the date,hour,place and subject of this meeting of the Authority was posted at a
place convenient to the public at the City Hall of the City of La Porte for the time required by law
proceeding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government
Code, and that the meeting has been open to the public as required by law at all times during which
this Resolution and the subject matter thereof has been discussed,considered and formally acted
upon. The Authority further ratifies,approves and confirms such written notice and the contents and
posting thereof.
Section 4. This Resolution shall be effective from and after its passage and approval of
the Authority Board of Directors.
PASSED AND APPROVED,this 9t"day of May,2012.
LA PORTE AREA WATER AUTHORITY
By:
David Janda,President
Board of Directors
ATTEST:
Steve Valerius, Secretary
Board of Directors
rrrr�rix�a�.'.
� CITY OF HOUSTON Annise D. Parker
Public Works and Engineering Mayor
, r f '' Department
Daniel W.Krueger,P.E.,
Director
P.O.Box 1582
Houston,Texas 77261-1562
www.lioustontx.gov
March 30,2012
Mr. David Mick
Director of Public Works
La Porte Area Water Authority
2963 North 23rd St.
La Porte,Texas 77571
Subject: Annual O&M Budget per Contract Number C52797(Ordinance#200I.M417 Dated May 16, 2001)
Restated and Amended Cost Sharing Agreement(Ordinance#2007-0927 Dated 08/15/2007)
Dear Mr.Mick:
Please find attached your preliminary water rate for Fiscal Year 2013. The rate of$0.6299/1000 gallons is
composed of two components according to the Contract;
6 O&M rate, calculated based on the FY2013 preliminary O&M budget, assuming a total projected
production of 80.0 MOD from the Southeast Water Purification Plant,plus 2.5%contingency.
• Raw Water rate, calculated based on the FY2013 preliminary raw water budget, assuming a total
projected raw water intake of 532.97 MGD plus 2.5%contingency.
In addition,the co-participants will be billed monthly for the debt service for CWA 96" line.
Attached are the supporting-worksheets for your information.
Your final water rate will be provided following approval of the City's budget in June. If you have any
questions,please contact Sophia Chang at(832)395-2580,
Sincerely, it
Susan Bandy
Deputy Director
Resource Management Division
Attachments
Council Davis JarnesG.Rodgpuez�eM kesr sYlor JLaarry V.Green iestephn C.Costellon R,Cohen A Andrew C.Burks.Jr. Melissa NoriegaVEC.O.Brad'Bradfo dr Jack Christie
Controller: Ronald C.Green
City of Houston
Department of Public Works and Engineering
South East Water Purification Plant
2000040017 Fund 8300
FY13 Budget
GL Account Description FY13 Proposed Budget
600010 Salary Base Pay-Civilian 1,361,297.00
600030 Salary Part Time-Civilian 0.00
500060 Overtime-Civilian 144,259.60
500070 Overtkne-Classified 0.00
500090 Premium Pay-Civilian 6.820.00
501070 Pension-Civilian 291,31800
501120 Termination Pay-Civilian 5,000.00
502010 FICA-Civilian 116.700.00
503010 Health Ins-ActCly 236,089,00
503015 Basic Life Ins-Ac Ci 813.00
503050 Health/Life Ins Ret 65,378.00
503060 Long Term pis-Civ 2,610.00
503080 Workers Comp-Cis Adm 0.00
503090 Workers Comp-Civ Adm 7,336.00
603100 Workers Comp-Civ CIm 8,200.00
504020 Compensation Contingency 0.00
504030 Unemployment Clakns 900.00
Total Personnel 2,235,702.60
511010 Chem/Gas&Spci Flul 1,907,600.00
511015 Cleaning&Sanitory 1,200.00
511020 Construclion Materials 15.000,00
511025 Electrical Hardware&Paris 100,000 00
511030 Mechanical Hardware&Parts 100,000.00
511035 Meters,Hydr&Plum 20,000.00
511045 Computer Supplies 600.00
611050 Paper,Printing Supplies 1,000.00
511055 Pub&Printed Mated 1,500.00
511060 Postage 300.00
611070 Misc Office Supplies 2,000.00
611080 General Laboratory Supplies 6,000.00
511090 Medical&Surgical Supplies 500.00
511096 Sm Tech&Scion Equi 5,000.00
611110 Fuet 300.00
511115 Veh Repair&Malnt S 1,000.00
511120 Clothing 7,500.00
511145 Sm Tools&Minor Equ 10,000.00
511150 Misc Parts&Suppllo 20,000,00
Total Supplies 2,489,&00.00
520101 Janitorial Services 33,500.00
520109 Mad,Dental&Lab S 1,000.00
520118 Refuse Disposal 400,600.00
620121 Application Services 200.00
620123 Veh&Motor Equip Sv 27,000.00
520124 Other Equipment Services 25,000.00
520170 Generator Equipment Svcs 578,900.00
620510 Mall/Delivery Services 300.00
520515 Print Shop Services 500.00
520520 Printing&Reprod Sv 1,000.00
520605 Advertising Services 1,000 00
520710 State/Fed Inspection 7000 00
520765 Membership&Prof Fe 700.00
620805 Education&Training 5,800.00
520905 Travel-Training Related 6,000.00
F:1FMB1FMB FS1FY13 GUS revenue BudgettPlant 8udgellWorkshootsl
FY13 Southeast Plant O&M Budget
SEWPP 3/29/2012 5:37 PM
Page f or3
City of Houston
Department of Public Works and Engineering
South East Water Purification Plant
2000040017 Fund 0300
FY13 Budget
GL Account Description FY13 Proposed Budget
521405 Bldg Maint Svcs 29,600.00
621605 Electricity 2,425,000.00
521515 Elect Fran Fee Exp 5,000.00
521605 Data Services 100.00
521610 Voice Services 14,700.00
521620 Voice Equipment 5,200.00
521625 Voice Labor 2,400.00
621715 Office Equipment Rental 3,000.00
621726 Other Rental 700.00
622305 Freight Charges 6,000.00
622795 Other inlet-fund Services 500.00
Total Other Sery&Chrgs __ 3,681,400.00
551025 Non-Cap Scientific/M
551030 Non-Cap Mach&Equip 87,500.00
Total Non-Capital Equipment 87,600.00
Total Expenditure 8,104,102.60
Property and Terrorism Insurance Premium 139.948.19
TCEQ 96.75
security 280,000.00
Audit Cost 8,000.00
Total Additional Sery&Chrgs 428,044,94
Subtotal Plant Operation 8,532147.64
//I -2,te •! f Direct Operation support(WM,WQ,ENO,UCS) -- ....--------- .--> 2,811,014.65
Direct Management Support(PUD,DWO) ---_ 1,pg8,888.04
' ' A't-/ Administration 12,442,147.23
Improvements&Betterments 662,929.66
0.00
Total Cost 13,106,077.09
rota₹Production(TG) 29,200,000.00
Raw Water
Total Raw Water Cost Other $ 32,232,182.51
Total Raw Water Cost Pasadena $ 31,347,096.50
Total Raw Water Volume TG) 194,534,252.67
Rate-Others
O&M S 0.4600
Raw Water $ 0.1698
$ 0,6299
Rate-Pasadona
O&M $ 0.4600
Raw Water $ 0.1652
0,6262
F:1FMB%FMB FSIFY13 GUS revenue Budgetiplant Budget%Worksheelsi
FY13 Southeast Plant O&M Budget 3/29/2012 5;37 PM
SEWPP Page 2 of 3
O O 30 O Co 00 co 00 N t c) r co
O o L'; W 1 00 00 00 CA ao O •c)` r O ry 'iid, •
v t
lY N c0 it CO N o Or Q it �S
N cep: Q Q 0o Lo CO N CU L-- N N N 'hf' 0.w
0D rn M m v v Nt It N rn LO ;� o
M __y11 z Z ''SU: rn
4? Q Q `VIC N N
`t' P i"'{ bbVLl
MU �
r
o
Li)- CM
0 0 0 0 0 0 0 0 0 0 0 0 0
r C) 'd' C) 6 C7 0 to C) O 0 C7 O '0 O
Z O O o O CV O O 0 O O N O
M t-• e- O 0 0 O O r U) to O O 0 Co O
to a w C, M n
m 00 O H to O N o co 0 O 00 o Co
• - o o r r r M T r- N CO CJ O 'CF o
o � N CM7 p U zd
f-
Q <
a
a O C) C) o CD U) U) 0 o a d' C
z us o U) w mot: n o 0 coo r
Q r d CV {` M M d CV e� O Oi 07
ws M t cf CO o
LU N CD 11
O
U
UJ
lq .�
o
I-
U }- m
w N H •v
to
z Q ❑ U
CD
DW rn Z `n ac Q 4 jJ�L a co o `► Mo
LLl U) 'a E
o
N
ow►- O Q
� H v 0 c �i �i U Y x U) Z ❑ h- c
w
U
tL
oa r M 0wcar �u m U a a O p Of 0 O •-
o C O
0nQLLjI u}. 0 H a0Zz 0 0 v o 0 0 0 m Q
store untreated water but are not listed in Exhibit "I" as well as improvements, repairs, or
expenses for items listed on Exhibit"I",for which the Managing Participant issues new debt.
B, Section 3.4 of the Restated Agreement is amended to read as follows:
3,4,1 The Managing Participant shall submit for review to all Participants, not later than
60 days prior to the beginning of the Managing Participant's fiscal year, an estimated Annual I
Budget consisting of various departmental components that constitute the O&M expenditures.
The components are described in greater detail in Exhibits "E", "E Pasadena"and "E LaPorte
Area Water Authority" (see Restated Agreement). The estimated Plant production will also be
provided, along with the breakdown of the production per Participant. The estimated Annual . . .
Budget and the estimated Plant production will be used to calculate the annual estimated cost per
thousand gallons for the ensuing fiscal year. The final Annual Budget will be submitted to the
Participants when the Managing Participant's City Council approves its yearly budget.
3.4.2 A majority of Participants by weighted vote may object to any specific item of the
Annual O&M Budget. However,if such item is necessary for regulatory compliance, health,
safety or security,it shall be excluded from this provision and the Participants shall continue to
make payments for such item as provided by the Annual O&M Budget presented by the
Managing Participant(or such amended Budget acceptable to the Managing Participant and the
majority of the Participants by weighted vote). If such item is not necessary for regulatory
compliance, health, safety or secuthty, the payment made for such item shall be the amount the
Participants by majority weighted vote decide and shall continue while the Participants pursue
dispute resolution procedures as described herein.
ua urnien((runnnr• t
3.4.3 During the first month after the objection to items of the Annual O&M Budget,
the Participants shall pursue the dispute resolution procedures found in Section 5.15 of the
Restated Contract.
3.4.4 If the Participants are still at an impasse one month after the vote objecting to
item of the Annual O&M Budget, the Managing Participant shall procure a mediator acceptable
to a majority of the Participants by weighted vote. If the Participants reach no agreement after
mediation, then the amounts established above shall continue for the remainder of the Budget
year unless amended by the majority of Participants
p by weighted vote, including the Managing
Participant. All Participants shall make payment to the-mediator as an O&M Expense.
3.4.5 As used herein "weighted vote" means a system of voting under which each
Participant's vote is weighted in proportion to the amount of water it has taken in the prior 12
months under the Restated Agreement. Thus, for example, if A has taken 10% of all the water
taken under the Restated Agreement, A is entitled to 10% of the voting strength. For voting
purposes, no Participant's shall count for more than 49% regardless of the amount of water
taken.
ARTICLE VIII.
COSTS FOR WATER LINE UPGRADE OR REPLACEMENT
It is anticipated that it will be necessary to replace one or more water lines joining the
Treated Water Transmission Facilities to the points of delivery of many of the Participants due to
an order of the Texas Department of Transportation that some of such facilities be removed from
State right-of-way or easement or other upgrade/replacement of the lines. Costs for any such
replacements, including the cost of real estate and right-of-way are the responsibility of the
Participants using the affected water line,and the Managing Participant shall charge the
MITI sOUTHE.DOC 14
e/ ei2nnh
5.13.3 All written notices, statements and payments required or permitted to be given
under this Agreement shall be deemed given by the third day following the deposit in a United
States Postal Service mailbox or receptacle,of certified or registered mail,return receipt
• requested,with proper postage affixed thereto,addressed asset forth above or at such other
address as shall be designated by written notice.
5.14 Fades ire Interest
This Agreement shall be for the sole and exclusive benefit of the Participants and shall
not be construed to confer any rights upon any other party. The Participants shall never be
subject to any liability in damage to any customer of the others with rights hereunder for any
failure to perform under this Agreement.
5.15 Dispute Resolution and Remedj
5.15.1 The Participants agree that If disputes arise regarding the terms or performance of
this Agreement or any review or approval called for hereunder,the respective Participants or
their Directors agree to meet and use their best efforts to resolve same,
5.15.2 It is not Intended hereby to specify an exclusive remedy for any dispute or default,
but all remedies existing at law or in equity, including specific performance,may be utilized by
Participants and shall be cumulative. Provided,however,as a necessary condition for declaration
of default under this Agreement,the non-defaulting Participant shall give the defaulting
Participant at least thirty(30)days'notice of default with the opportunity to cure during the
notice period.
LA,4:EWaIC97s.avI
Fcbwary 10,2000
L,r)FtlrNo 80-99146-02
36