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HomeMy WebLinkAbout09-23-1987 Meeting~ LA PORTE AREA WATER AUTHORITY - MINUTES SEPTEMBER 23, 1887 1. The meeting was 'called to order at 6:10 P. N1. by President Jerry Bramlett. MEMBERS PRESENT: President Jerry Bramlett, Secretary Claude Graves, P~Iember Mike Wadsworth MEMBERS ABSENT: Vice-President Rick Matthews OTHERS PRESENT: Assistant City Manager John Joerns, Puble Works Director Steve Gillet, Water/Wastewater Superintendent Buddy Jacobs, Authority Attorney John Armstrong. 2. The minutes of the meeting held on September 1, 1987 were read. Motion was made to approve minutes as read by Mike Wadsworth and seconded by Claude Graves. Approval was unanimous. 3. John Joerns distributed copies of proposed contract with the City of Houston for buy-in of the Southeast Water Purification Plant and the purchase of treated water by the Authority. Authority Attorney John Armstrong stated the changes proposed in the September 1 meeting had been made as directed. The changes were discussed by the Board. Discussion of metering costs by Claude Graves. Motion was made by Claude Graves to accept and sign the contract between the City of Houston and the La Porte Area Water Authority for cost sharing of the Southeast Water Purification Plant. Motion was seconded by Mike Wadsworth. Approval was unanimous. 4. Authority Attorney John Armstrong stated that the Entity contracts for purchase of treated water from the Authority were not prepared at this time due to his inability to contact Mr. Johnson, Bond Counsel, for final review of the proposed contracts. The contracts were discussed by the Board. President Jerry Bramlett inquired about any difficulty on these contracts posed by the annexation of any Entity. John Armstrong stated there would be no difficulty. John Armstrong expressed the opinion that the General Manager should prepare a letter to the Bond Counsel, Mr. Johnson, stating the concern of the Board on the slow response to the Entity contracts. John Joerns stated Mr. Herrera, General Manager, would do so. Motion was made to table this item by Mike 4adsworth and seconded by Claude Graves. Approval of motion was unanimous. 5. EMERGENCY AGENDA ITEM: Interim Financing John Joerns distributed a proposal from a joint venture of the Bayshore National Bank and La Porte State Bank on interim financing of the operations of the Authority. Proposal was discussed by the Board. a. ~?`. ,~~ Page Two Minutes September 23, 1987 John Joerns stated that the General Manager, Bob Herrera, recommended approval of the proposal. A motion was made by Claude Graves to approve the interim financing proposal as outlined in the letter of September 18, 1987 from the Bayshore National Bank/La Porte State Bank and forward to the La Porte City Council for approval. Motion was seconded by Mike Wadsworth. Approval of motion was unanimous. 6. GENERAL MANAGERS REPORT: John Joerns stated that the items passed this meeting would go to the La Porte City Council .for approval Monday night September 28, 1987. La Porte is currently undergoing a utility rate study by a consultant and the La Porte Area Hater Authority will be included in this study. Steve Gillett distributed a six rnonth schedule for activity on the Southeast Water Purification Plant and water transmission lines. John Joerns stated a matrix would be prepared to track all contracts also. President Jerry Bramlett requested status of use of Coastal Water Authority. Steve Gillett stated a metes and bounds survey should begin approximately October 1, 1887 after City Council approval of the surveying contract with Baseline Corporation on September 28, 1987. 7. PRESIDENT"S REPORT: No additional report other than to request the General Manager to prepare a letter to the Band Counsel as disscussed earlier. CONTRACTS SIGNED THIS MEETING: 1. Engineering contract with Espey-Huston 2. City of Houston Water Purchase and Buy-in Contract 3. Letter of commitment for financing Engineering and Development costs 8. There being no further business, the meeting was adjourned at 7:15 P.M. Respectfully Submitted, Claude Graves Secretary/Treasurer PASSED AND APPRO~rED: ON THIS ~ DAY v 19 g~ Jerry\~~~t`~, Presiden SEPTEP1BEH 21 , 1987 CITY OF HOUSTON, TEXAS LA PORTE AREA WATER AUTHORITY COST SHARING WATER PROJECT CONTRACT STATE OF TEXAS COUNTY OF HARRIS KNOW ALL MEN BY THESE PRESENTS: This cost sharing water project contract (the "Contract") made and entered into as of the date last specified by and between the CITY OF HOUSTON, Texas, a municipal corporation which is situated and has its principal office at City Hall, Houston, Harris County, Texas (hereinafter called "Houston"), and the LA PORTE AREA WATER AUTHORITY, a conservation district and political subdivision of the State of Texas which is situated in and has its principal office at City Hall, La Porte, Harris County, Texas (hereinafter called "the Authority"). .• W I T N E S S E T H: WHEREAS, both 1Houston and the Authority desire to proceed expeditiously with the acquisition and construction of certain raw surface water transmission facilities, surface water treatment facilities, treated water storage facilities and pumping facilities otherwise known as the Southeast Water Purification Plant (the "Project"), to serve both Houston and the Authority, and ~:.. WHER£A.S, because of the plans of the Authority to~supplq ezia?t#ng and future treated water needs and the plans of Houston to supplq existing and future treated water needs, it is deemed and hereby found to be more efficient and cost-effective for both Houston and the authority to jointly finance the construction and operation of thQ Project; and . WHEREAS, the joint construction and the operation of the Project by-means of this Contract will facilitate needed water supplies to serve both Houston and the Authority, and will help alleviate area subsidence problems; and NOW, THEREFORE, Houston and the Authority hereby agree to cost sharing for the construction and operation of the Project under the terms and conditions and for the considerations hereinafter set forth as follows, to-wit: • i ~ ~ ARTICLE I DEFINITIONS 1.01 "Actual Construction Cost" for the Project is the total construction cost of the Project and includes such items as the following whether incurred prior to or after execution of this Contract: (a) the actual cost to Houston of the engineering and consulting services reasonably required for the preliminary engineering and design of the Project; (b) the actual cost of engineering services, inspection services and other consultant services reasonably required for the construction phase of the Project; (c) the actual cost of all contract and other payments for construction and acquisition of - equipment and materials for the Project; and, (d) the actual costs of land, easements, rights-of-way, property and persons, administrative, auditing and legal expenses associated with the construction of the Project, including an imputed cost when such services are performed by employees of Houston. - It is expressly understood that Actual Construction Cost shal.l-~not include expenses associated with financing the Project which expenses are to be borne by the party incurring them or as hereafter otherwise '~~`~' provided. It is further expressly understood that the Authority xill not be charged as part of the Project Construction Cost, the cost of any obligation or liabilities incurred as a result of negligent acts or omissions on the part of Houston, its employees or agents in the .construction of the Project. 1.02 "Actual Production Constrnetivn boat" is tht !lctnal Construction Cost of the Project less the Actual Pumping Construction Cost. 1.03 "Actual Pumping Construction Cost" is the total "~ construction cost of treated water storage and treated Water--pg - ~' '"`".~facil3ties associated with the Project. .. 1.04 "Billing Period" means a three (3) month period ea~ng at 8:00 o"clock a.m. on the first day of October, January, April and July or such other three month periods mutually agreeable to the ..Director and the Authority. 1.05 The term "CIWA" means the Coastal Industrial Water Authority whiek~ name has been subsequently changed to "CWA" (Coastal Water Authority), and the terms are used interchangeably herein. 1.06 "Demand Allocation Factor" is the percentage of the Production Capacity which a participant (either Houston or the Authority, or any other participant defined by separate contract) is entitled to use at any given time. 2 • • The initial Demand Allocation Factor for each participant will be a percentage equal in proportion to the part of that amount of Actual Production Construction Cost paid by that participant divided by the total Actual Production Construction Cost. The actual percentage for the Authority is specified in Section 2.01. The sum of the Demand Allocation Factors of the total number of all entities who have executed a cost sharing water Project contract for the Southeast Water Purifications Plant, together with the demand allocation factor of the City of Houston, at any given time shall always total one hundred percent (100) . 1.07 "Excess Production Fee" is the rate to be charged to the Authority for use of production capacity above the Authority"s share of committed capacity from the Project and shall be payable as set forth in Section 4.05 herein. 1.08 "Excess Pumpage Fee" is the rate to be charged to the Authority for use of pumping facilities associated with the Project in excess of the Authority"s share of committed capacity for the Project and shall be payable as set forth in Section 4.05 herein. 1.09 "Houston Director" means the Director of the City of ~~'~•- Houston"s Department of Public Works and Engineering or any, other person designated by such Director. Any notice by the Director of an~ alternate designation or of a revocation of an alternate designation shall be in writing and delivered to the Authority pursuant to the notice provisions herein. 1.10 The'term *initial" when used in tfiis Contract refers to that phase of the Project in which the Project has a maximum production capacity of 80 MGD and a maximum pumping capacity of 225 MGD expressed as a peak hour pumping rate. _' _ 1.11 "Major Replacement" means any single repair or _` ~ ``~r~lace~eut for the Project requiring the expenditure of ~~OQ,D40.D1f Ar wore _ . , 1.12 "MGD" is an abbreviation for "million gallons of water per day." As used in this Contract "MGD" refers to a quantity of Mater -: _ during a period of time expressed for convenience in terms of an _ average daily quantity during a calendar month (unless a different. •period of time is specified). 1.13 "0 & M" is an abbreviation for operations and maintenance. 1.14 "Participant" used in lower case means Houston, the Authority, and all other entities which at any given time have executed a cost sharing water project contract relating to the Southeast Water Purification Plant. The term "party" means either or both Houston and the Authority. 3 • i 1.15 "Authority Director" means the City Manager of the City of La Porte, or any other person designated by the Authority. Any notice by the Authority of an alternate designation or revocation of designation shall be in writing and delivered to Houston pursuant to the notice provisions herein. 1.16 "Point of Delivery" shall mean the point at which treated surface water produced by the Project is supplied to the Authority as shown in the attached Exhibit "A". The Point of Delivery shall include primary measuring equipment, valves, backflow prevention devices, devices to physically constrict the rate of flow of water to the Authority to an amount equal to the product of the Pumping Allocation Factor for the Authority times the Pumping Capacity for the Project, piping, a proper vault and such other items as are necessary in the judgment of the Houston and the Authority Director. The Point of Delivery shall also include a bypass and a bypass meter unless the Authority specifically requests in writing that these items be omitted. 1.17 "Production Capacity" means the maximum rate of production of water from the Project. The initial production capaei~ty of the Project equals 80 MGD. 1.18"Production 0 & M Expense" for a Billing Period means a•sum of . .. money computed according to the following formula: Production 0 & M Expense (A x C) + (A x D) B E Zn the foregoing formula: "A" is the number of gallons of treated potable water produced by the Project and delivered to the Authority at its Point of Delivery during the given Billing Period. _ - - "B." is the total number of gallons of treated potable watet'..'~' - :- ,.. praduced by the Project during the given Billing i'eriod-. "C" is the total Houston expenditure during the given billing period far the operation and maintenance of the Project; (including reasonable imputed costs for services of Houston employees as well as costs of fire insurance), and excluding >yhose operations and maintenance costs used to compute the Pumping 0 & M Expense and also excluding expenditures for the sale of bonds, notes, .and other evidence of indebtedness issued for capital purposes. "D" is the total Houston expenditures for the operation, maintenance and debt service for the raw water storage and transmission facilities during the Billing Period.' 4 "E" is the total amount of water sold to Houston water customers, that is diverted from the Trinity River into the CWA Main Canal during the given Billing Period. As defined herein "E" includes such raw water received at Houston water treatment plants receiving Trinity River water through the Main Canal as well as the billable quantity (including take-or-pay amounts as applicable) taken by Houston raw water ^ustomers, but excludes line loss by evaporation, leakage, etc. 1.19 "Project" is described by Exhibit "B," which is attached hereto and incorporated herein by reference. 1.20 "Pumping 0 & M Expense" for a given Billing Period means a sum of money computed according to the following formula: Pumping 0& M Expense - A x C B In the foregoing formula: "A" is the total gallons of water delivered from the Project to the Authority at the Point of Delivery during the given Billing ; Period. "B" is the total gallons of water pumped by the Project Pumping facilities during the given Billing Period. .."C" .is-the .total Eonston ex~endi.Tcnre -.for the pum~.ing arir! treated water storage facilities portion of the Project (including reasonable imputed costs for services of City of Houston employees as well as costs of fire insurance) less expenditures for the sale of bonds, notes and other evidences of indebtedness issued for capital purposes for the Project. ~ •.- ~ `` ~~ 1 .21 "Pumping Allocation Factor" is the perc.~tage of tit •° _ J pumpi.ag and related treated water storage capacity whiea i - party (either Houston or the Authority) is entitled to use at any gi~ren time. Tt3e initial Pumping Allocation Factor for each .party will be a ~ereentage equal in proportion to the part of-the Actual Construction Cost of the pumping and storage facilities actually paid by that party divided by the total Actual Construction Cost for such pumping and storage facilities. (The actual percentage for the Authority is specified in Subsection 2.01 hereof.) The sum of the Pumping Allocation Factors shall always total one hundred percent (1000.., including the Pumping Allocation factor of the City of Houston. 1.22 "Pumping Capacity" means the maximum rate of delivery of water from the Project. The initial Pumping Capacity equals 225 MGD expressed as a peak hour pumping rate. 5 As provided in Section 2.04 the total ultimate pumping capacity related to the Authority under the terms of this contract shall be the Authority"s proportionate share of the initial 225 MGD. x•23 "Raw Water Storage and Transmission Facilities" means Lake Livingston Reservoir and the Trinity River Channel downstream from Lake Livingston to the CIWA Pumping Station located on the .Trinity River north of the Redmond Community and south of the City of Liberty, Texas; the existing line, including said CIWA Pumping Station, which is shown on Exhibit "C" as Line A, which extends from said CIWA Pumping Station to the connection with Line H as shown on that same exhibit; the existing Line C as shown on Exhibit "C" which intersects Line A near its intersection with State Highway 225 and extends westward to its present west extremity. 1.24 "Surface Water Treatment Facilities" are those facilities of the Project that alter the physical, chemical, or biological characteristics of the surface water into the Project. The surface water treatment facilities of the Project are those facilities described above which are located upstream of the treated water storage facilities and downstream of the raw water transmission facilities. • 1.25 "Treated Water Pumping Facilities" are those facilities ~' located on the site of the Project which are downstream of tl~tt treated water storage facilities located on the site of the Project and upstream of any and all transmission or distribution pipelines which connect the Project to Houston"s or any other participant's distribution and transmission pipeline system. Under no circumstances shall the term Treated Water Pumping Facilities include any pipeline facilities belonging to Houston or any other participant"s whether transmission or distribution, located off-site of the Project. •- 1.26 "Treated Water Storage Facilities" are those eater ;- ~• - .storage facilities located downstream of the surface water treata~t? facilities of the Project and upstream of the treated water pumping facilities of the facility. x.27 "Trinity River Authority," hereinafter referred to as "TRA" means that agency .which controls that portion of the raw water storage and transmission. facility from and including Lake Livingston Reservoir and the Trinity River Channel to the CIWA Pumping Station located thereon and refere-need to in Section 1.23. 6 • ARTICLE II CONSTRUCTION OF THE PROJECT 2.01 The Project - In General It is understood by the parties that the Authority is buying an equity ownership in the Project in a proportion as evidenced by a percentage of the capital investment paid by the Authority as detailed elsewhere in this Contract, Houston and the Authority acknowledge and agree that Houston shall undertake to construct the Project under the terms of this Article. Such Project shall consist of certain raw surface water transmission facilities and surface water treatment facilities capable of producing approximately 80 MGD on the maximum day of treated potable water and of certain treated water storage facilities and treated water pumping facilities capable of storing approximately 25 million gallons of potable water and pumping approximately 156,000 gallons per minute (on the peak hours of demand) of treated potable water. Upon completion of the Project as described in Section 2.05 and payment in full of ali monies payable under Section 2.04, the Authority shall be entitled to .,. ,. s>. an Initial Demand Allocation Factor of 5.25 percent and as Initial - Pumping Allocation Factor of 2.33 percent. As part of its obligations under the terms of this Contract, - Houston shall pay its pro rata share of the cost of construction of the Project. iiovston admits t3~at .it will seek additional parties as participants in the c~onstrneton of the Project under separate contracts and under terms and conditions similar to those stated herein. 2.02 Design and Construction of the Project `~ ~_.-li) Houston has heretofore com leted the P design as• ~eli'~s - the plans and specifications for the Project. In Jrx~e of 1986, Houston awarded the principal construction contract for the Project. The above-mentioned documents are a public record of Houston and have been examined and approved by the Authority. (ii) Houston agrees to construct the Project and the additional facilities described in Sections 1.23, 1.24 and. 1.25 in accordance with the Preliminary Engineering Report and all-Supplements thereto prepared by Turner Collie and Braden, Inc. and the Preliminary Engineering Report and all supplements thereto prepared by Bovay Engineers, Inc. 7 • • (iii) Houston may award additional construction contracts as necessary to complete the Project, subject to the approval of the Authority Director. The Authority shall have the right to review and approve construction contracts, and estimates of the Actual Construction Cost of such additional construction contracts subsequent to the effective date of this agreement. (iv) Houston may enter into appropriate agreements with the Coastal Water Authority to provide capital financing or construction for the surface water transmission facilities and for the continued operations and maintenance of the raw surface water transmission facilities portion of the Project. The CWA contract for the construction of Line B as depicted on Exhibit "C" awarded in June 1987, is a public record of CWA and has _ been reviewed and approved by the Authority. (v) Houston shall be responsible for obtaining all permits ~~ and approvals of local, state or federal authorities .for construction and operation of the Project. • (vi) Houston warrants that it has good and marketable title to the real property constituting the premises aa~zarhich the Project will be constructed and that same is free and clear of any liens, encumbrances, taxes or other obligations or amounts due. _ ~ 2.03 Review of tfie Construction of the Frojeet and Facilities by the Authority. (i) During all working hours of the construction period, the Authority Director and anyone authorized by him shall have access to the Project premises and mag inspect or •~- ~ : review the Project and all engineering s~ecificz~.iana . _ and dacuments related to-the Project. (ii) Any changes in the design or specifications of the Project amounting to an increase or decrease of either .Actual Pumping Construction Cost or Actual Produet:ion Construction Cost amounting to Five Hundred Thousand and No/100 ($500,000.00) Dollars shall require the approval of the Authority Director. In no event shall additional cost be passed on to the Authority, unless related to water service to the Authority, and all changes regardless of size or amount will be submitted to the Authority Director for review. 8 • • c 2.04 Payment of Project Actual Construction Costs The Authority agrees to pay to Houston the Authority"s pro rata share of the Actual Construction Costs of the Project. The Authority"s Pro Rata share of the Actual Production Construction Cost shall be 5.25 percent (the initial Demand Allocation Factor) and the Authority"s share of the Actual Pumping Construction Cost shall be 2.33 (the initial Pumping Allocation Factor). The Authority"s pro rata share of Actual Construction Costs is due and payable as follows: (i) Authority shall pay to Houston ONE MILLION THREE HUNDRED FOURTY SIX THOUSAND EIGHT HUNDRED DOLLARS ($1,34b,800) on or before thirty (30) days folio~ing the date of the notice from the Authority to Houston as set forth in Section 5.17. (ii) Houston shall invoice the Authority for payment of its share of capital costs at the expiration of each calendar quarter (December, March, June, September). Each quarterly payment hereunder shall be the amount necessary for the Authority to "catch-up" its pro rata ' contribution under this Contract. ("Catch-up" as used • -`, herein means that the percentage of the pro rata soars - of estimated Construction Costs paid by the part3cipaat equals the percentage of the estimated Construction costs paid for construction of the Project.) - - - (iii ~ On or before the expiration of; ninety ~9tf J `dais fra~m the date of the formal acceptance of .the completed construction of the Project by the Houston City Council and the Authority, the Houston Director shall cause an accounting to be made of the Actual Construction Cost of the Project and deliver same to the Authority. -`• ~ ~ ~ ~'~- fiv) _ The accounting prepared by Houston shall .include an~ .-: .. =' audit of the Actual Construction .Cost. Ttie audit :ahaii *°~ be prepared by an independent firm~bf`certified public accountants, and the cost therefore shall be included in the Actual Construction Cost. The accounting shall state the difference between the Houston Director"s estimated .Actual Construction Cost and the Actual Construction Cost of the Project;. the estimated Actual Production Construction Cost and the Actual Production Construction Cost of the Project; and the estimated Actual Pumping Construction Costs and tfie Actual Pumping Construction Cost of the Project. Said accounting shall also set forth any adjustments necessary to be made in the Authority"s pro rata share payments between pumping and production costs. 9 In the event that the Houston Director"s estimates have been larger than Actual Construction Costs resulting in an overpayment by the Authority of its pro rata share, Houston shall refund such difference to the Authority on or before the expiration of ninety (90) days of date of the receipt of the accounting by the Authority. In the event that the Houston Director"s estimates have been less than Actual Construction Costs which has resulted in an underpayment by the Authority of its pro rata share, the Authority shall pay such difference to Houston on or before the expiration of ninety (90) days of the date of the receipt of the accounting by the Authority. 2.05 Completion of the Project When the Project is completed and has been accepted by the Houston City Council, Houston shall notify the Authority Director and designate a day upon which initial operation of the Project is to begin. Houston shall provide the Authority with full access to the • Project and to the books and records of the Project including all engineering reports, design specifications, change orders, correspondence, plant accounts, construction plan accounts or any other written document or instrument associated with or pertaining to the .construction of.the project. ARTICLE III • -.;___ OPERATION AND MAINTENANCE OF THE PROJECT .,,~ -n. ~ .._ _ _ 3-v1 In General (i) Houston and the Authority as co-owners of the Project, understand that, except in areas otherwise specified herein, Houston will serve as managing owner of the construction phase of the Project and of the maintenance and operation thereafter and shall have charge of its business and general conduct. (ii) The Authority shall have an interest in the conduct, affairs and decisions of the Project in proportion to its capital contribution. The Authority shall have the authority to enter the Project premises. 10 • C (iii) The Authority is willing to make capital contributions as specified herein on the basis that Houston as managing owner agrees to use its best efforts to assure proper construction, operation and maintenance of the Project and its structures, equipment and facilities and proper conduct of all employees, agents or contractors, to pay debts when due and conform to any federal, state or local regulations. (iv) The parties agree that the Authority shall be privy to any negotiations with other participants in the Project and all contracts with any such participant will be submitted to the Authority for review prior to execution. The Authority will receive notice and right to attend all meetings between all partic~3pants during the term of the contract. (v) Relationship of Parties The relationship of the parties is of a fiduciary character. Houston is trustee with respect to the _ Authority with respect to the operation of the Project ~''"~`~'~~ and care of all joint property specified herein. Each party shall act in the highest good faith to~aarQ`~the• other in conducting the operation of the Project as well as their respective duties under this Contract. Each - party is under obligation, on demand of the other, to • render trne_ and , foil information anid ~ ~rformance of al i - `matters affecting the Project and its operations under the terms of this Contract. (vi) Duties of Managing Owner (a) Houston shall keep and maintain an accurate ..: - Y_ -aooonnting system based on accepted accounting 5tan~rds •- .~ that provides documentation of the costs of cvtistrnc~ing - and operating the Project and separate the costs incurred as the Authority"s allocated share. Such records shall be maintained for a,minimum period of five (5) years and as otherwise required by law. -Ail such documents and records shall be available to the Authority for inspection, copying or audit at reasonable times, places and upon reasonable notice. (b) Houston shall provide an adequate program to insure that the Project is maintained in a state of repair in a cost effective manner. (e) Houston shall employ and supervise employees, agents, consultants or contractors connected with the Project in a cost effective manner by employing only those as reasonably necessary for proper operation and maintenance of the Project. 11 • 3.02 Demand Allocations (i) Each party may take water from the Project at that party"s Point of Delivery, but neither party.®ay take water from the Project to exceed the Production Capacity of the Project multiplied by that party"s then-current Demand Allocation Factor, nor may either party take water from the Project at a rate which exceeds the Pumping Capacity of the Project multiplied by that party"s then-current Pumping Allocation Factor. Houston shall monitor and control the amounts of water and the rates at which water is taken by the .parties. The monitor and control measures may include throttling devices for controllers, special oper'atin$ ~r'ocedures or other similar measures. (ii) In the event that the Project is not being operated at its Production Capacity or its Pumping Capacity, either party may, with agreement of the other party"s Director use a portion of all the unused Production Capacity or Pumping Capacity of such other party. During a billing period when such additional Production Capacity or Pumping Capacity is used, the party using the .same shall be subject to paying the Excess Production Feed"or the Excess Pumpage Fee, or both, as the case may be. Such fees shall be established as set forth in Section 4.05 of this Contract. 3.03 Changes is Ai3ocatian Factors (i) In the event that Houston undertakes an expansion of the Project, the Authority shall have the option of increasing its Demand Allocation Factor, its Pumping • •~~ Allocation Factor or both, by paying to Houston a sum or '. - -- - ~_..sums of money representing an additional capital - contribution to the cost of a future expansion of~t~ Southeast Water Purification Plant Project to increase its Production Capacity and its Pumping Capacity. Houston shall give one hundred fifty (150) days" advance written notice to the Authority flf any proposed fnt~ure enlargement or expansion of the .Project.. At-.any ~im•e during the one hundred fifty (i50) days" notice period, the Authority shall be authorized to give notice of intent to enter into such agreement. Houston and the Authority agree, in giving or responding to any such notice, to act timely and in good faith in order to permit an orderly enlargement or expansion of the Project for the lowest cost reasonably obtainable without causing undue delay. 12 ~ ~ Provided, however, the Authority understands that the option rights specified in this Section shall be limited to an allocation of capacity in the expanded project equal to or less than its then-current Demand Allocation. (ii) If, in order to continue supply to the Authority of water at its Demand Allocation Factor, and directly related and necessary to the operation and maintenance of the Project, it becomes necessary to perform a Major Replacement to the Project, plans and specifications for .such repair shall be made and reviewed by both Directors. The Authority will pay its pro rata share of the cost of any such work. Upon inspection and review of the work, the Authority shall pay its pro rata share of any such repair or replacement within ninety (9pj days after acceptance of the completed repair or replacement by the Authority. The Authority shali,aever be required to pay for portions of replacements, '~~, additions or transmission facilities that solely relate to other participants or customers. . 3.04 Operation in the Event of a Loss in Project Production ....~ . ~ Capacity or in Pro_~ect PumDlna Canaeit.. In the event that the capacity of the Project is materially reduced by reason of equipment failure or force majeure, the Authority .~a~:.request the. liauston Director to pro~ride alterna~.ive water supply service. Houston sY~ali use its best efforts to provide such alternative water supply service. Reduction in the supply of water to the Authority will occur only in the case that other Project participants receive such alternative water at a rate reduced pro-rata based on their then-current Demand Allocation Factors and the Project"s then-current Production Capacity. The cost of such alternative water ~.=.:" service shall be the total usage by the Authority ( in thousands ~ofv= .~ galionsl times the average operation and maintenance expenses of t~+e Project (computed on the basis of thousand gallon units) for the previous Billing Period. Provided, however, in the event the Authority is required to take water from the alternate source-for a period of time longer than one hundred eighty (180) days, operation and maintenance expenses shall be based on the actual operation and maintenance expenses of the facility providing the treated water, in accordance with specific agreement between Houston and the Authority. i3 • . 3.05 Measurement of Water There shall be furnished and installed by Authority, as a part of the Project, measuring equipment (and, if necessary, monitoring and controlling devices) designed to measure accurately all of the water to be produced by the Project and delivered to each partq at its Points of Delivery. Such equipment and devices shall constitute part of the Project, and both parties shall have access thereto at all reasonable times for inspection and examination. The reading, calibration and adjustment of such measuring equipment shall be performed by Houston and entered upon proper books and records to be maintained by Houston. Upon written request, the Authority may have access to such record books during reasonable business hours. Such books shall be kept by Houston for at least five (5) years. 3.06 Calibration No less than once in each year of operation, Houston shall calibrate the measuring equipment in the presence of a representative of the Authority. Additional calibrations shall be made by Houston if requested in writing by the Authority Director. Provided, however, if the Authority requests more than three (3) inspections of the measuring .equipment in any one (1) calendar year, the Authority shall bear the total cost of any additional inspections only in the ~ternt-that tti~e measuring equipment is found to be operating correctly. The parties nay jointly observe any .adjustments which are made to the measuring equipment, if any adjustments are found to be necessary. 3.07 Check Meters The Authority may, at its option and expense, install and operate check meters, but all official measurements of water shall be made by Houston"s measuring equipment, except in cases of specific written consent to the contrary by the Houston Director. ARTICLE IV OPERATION AND MAINTENANCE CHARGES 4.01 Introduction It is .expressly understood by the parties to this agreement that the Authority shall directly reimburse Houston on a periodic basis for the expenses incurred in producing and pumping the water actually delivered to the Authority. 14 • 4.02 Operation and Maintenance Charges (i) The first Project operation period extends from the initial day of the delivery of water to the Authority through three (3) months into the first day of a Billing Period as defined in Section 1.04. During this first Project operation period, the Authority will pay a rate of $0.41 per thousand gallons of actual water usage, plus Excess Production and Pumpage Fees, if applicable, as its total 0 & M Expense. At the completion of this period, the Houston Director will cause an accounting to be made on the total 0 & M Expenses relating to this initial period. This accounting shall be delivered to the Authority Director. (ii) In the event the total 0 & M Expense requires a fee greater or lesser than $0.41 per thousand gallons, tt~e Authority shall pay any excess or Houston refund any overage as the case may be. The Authority shall fiat thirty (30) days after receipt by the Authority of Houston"s invoice for payment to review and approve the accounting of Houston. If not disputed, excess payment ' or refund as applicable shall be made. within sixty (60) days-after receipt by the Authority of Houston"-s mto~ice for payment. (iii) For, the remainder of the Contract term at three (3) -.;.:,calendar month.intervals~ or at such other interval as may be agreed to by the parties, tfie Houston Director shall compute the total Production and Pumping 0 ~ M Expense (and if applicable, any Excess Production or Excess Pumping Fee), for the preceding Billing Period. (iv) A rate for the Authority"s appropriate pra rata sfiare of • _~ total 0 & M Expense will be billed on-tfie.tenth (iQ~~~ • - day of the month following each three (~3;.3 .mosrth ~ z interval. Such rate shall•be based on an accounting using required data and the Authority shall be billed its pro rata share of actual gallons of water received. Such accounting data will be furnished to the Authority along with the invoice for payment. Any errors of accounting adjustments will be corrected and/or reflected in the invoice for the next Billing Period. 4.03 Failure to Pay When Due ten percent (10~) Should the Authority fail to tender payment within thirty (30) days of invoice of any 0 & M Expense (or any part thereof) or should Houston fail to refund any overpayment to tht ^~ithority within thirty (30) days of the date due, interest thereon shall accrue at the rate per annum from the date due until paid. of 15 l 4.04 Itemization At the close of the First Billing Period and thereafter the Houston Director shall prepare for Authority Director an itemization of all accounts Production 0 & M Expense and Pumping 0 & M Expens Director shall have thirty (30) days from receipt to conduct such review. every Billing Period review by the used to compute e. The Authority of such itemization x•05 Excess Production Fee and Excess Pumpage Fee In the event that the Project is not being operated at its Production Capacity or its Pumping Capacity, Houston or the Authority may, with agreement of the other party, use a portion of the unused Production Capacity of Pumping Capacity of such other party. During a Billing Period when such additional Production Capacity or Pumping Capacity is used, the party using the same shall be subject to_paying an excess production fee or the excess Pumpage fee, or both, as the case may be. Such fees shall be established by mutual agreement of tt3e parties. Any agreement between the Authority and another Project participant for use of additional Production Capacity or Pumping Capacity shall be subject to prior review of the Houston Director. ARTICLE V MISCELLANEOUS 5.07 Title to All Water Produced by the Project Title to all water produced by the Project shall remain in Houston and the Authority (and other participants, if any), jointly in - proportion to their Demand Allocation Factors, until the same sha13•- `-::pass throu..the Point of Delivery. Thereafter, the Authority sfiat~, _ in ex~lusi~re control. a,ud possession thereof and solely'respons b3e therefore. 5.02 Unit of Measurement " The unit of measurement for water produced and delivered by~the Project shall be 1,000 gallons, U.S. Standard Liquid Measure. 5.03 Regulatory Action The parties recognize that the obligations of Houston to render operation and maintenance services as provided in this Contract are subject to all present and future permits, rules or regulations issued or adopted from time to time by any regulatory authority having jurisdiction, and the parties agree to cooperate in making such applications and in taking such actions as may be desirable to obtain compliance therewith. 16 • 5.0~I Water Quality The potable water to be delivered hereunder shall meet the minimum water quality standards and all laws of the Texas Department of Health and any other federal or state agency having jurisdiction. 5..05 Insurance Houston shall carry fire and extended coverage insurance on the Project in an amount at least equal to the replacement cost of such portion of the Project which is located above ground, provided Houston may elect to carry a one million dollar deductible for such insurance - policy. Premiums for the insurance policy shall be included in the Production and Pumping 0 & M Expenses and paid pro rata by the Authority as provided elsewhere herein. (In the event of casualt loss, Houston will bill the Authorit for Y, or uninsured loss as a "Major Replacement" aspprovidedfelsewherecherein~) If the Project shall be damaged or destroyed by fire~or other casualty, Houston shall apply the proceeds from any fire and extended coverage insurance either (i) to repair such damage or destruction so as to restore the Project as nearly as possible to the condition thereof immediately prior to such damage or destruction, or {ii) to • construct, install, or otherwise add to the project improvements substantially equal in value to the portion of the Project which was^ - damaged or destroyed, and of usefulness comparable to that destroyed or damaged such that the Production Capacity and the Pumping Capacity - specified elsewhere herein are._maintained. 5.06 _Houston to Keep Books; Annual Audits Houston shall keep books, records, and all other documents relating to the costs of operating the Project for at least five (5) years, and said books, records, and other documents shal~be available ~'~. faFr-inspection by the Authority at reasonable times reasonable notice. , places and u'.> ,.. Houston shall keep a list of all project participants, together With their current Demand and Pumping Allocation Factors, and shall make said list available to the Authority upon-request. Houston will furnish a copy of its Comprehensive Annual Financial Report, on an annual basis, to the Authority for its review, as well as any other information, records, and books relating to the Project. The Authority may, at the Authority"s expense or in cooperation with other participants, cause a detailed audit of the Project as a cost center. 5.07 Assignments This Contract shall bind and benefit the respective parties and their legal successors, but shall not otherwise be assignable, in whole or in part, by either party without first obtaining written consent of the other. 17 • r 5.08 Governing Law This Contract shall in all respects be interpreted, construed and governed by, and in accordance with the laws of the State of Texas, including the Charter of the City of Houston and the enabling legislation of the Authority, and the Charter of the City of La Porte. 5.09 Force Majeure If either Houston or the Authority is rendered unable, wholly or in part, by force majeure to carry out any of its obligations under this Contract, then the obligations of Houston or the Authority to the extent affected by such force majeure and to the extent that due diligence is being used to resume performance at the earliest practicable time, shall be suspended during the continuance of any inability so caused to the extent provided, but for no longer period. Such cause, as far as possible, shall be remedied with all reasonable diligence. The term "force majeure," as used herein, shall include, without limitation of the generality thereof, acts of God, strikes., lockouts, or other industrial disturbances, acts of the public enemy, orders of any kind of the Government of the United States or of the State of Texas or any civil or military authority, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraints of government and people, civil disturbances, explosions, breakage or accidents to machinery, shortage or contaminations of surface water, and any other inabilities of Houston or the Authority, whether similar to.: ho9e,enumerated or otherwise,. which are not within tfie control of ~iouston or the Authority and which Houston ar the Antfiority could not have avoided by the exercise of due diligence and care. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of Houston or the Authority and that the above requirement that any force majeure shall be remedied with all .reasonable dispatch, shall not require the settlement of stri#Ces and 'lodkouts by acceding to the demands of the opposing party or }~,art~,~s- When sucfi settlement is unfavorable to it, in the.. judgment of Iinvston or the Authority. 5.10 No Additional Waiver Implied The failure of either party hereto to insist on any or more instances upon performance of any of the terms, covenants or conditions of this Contract, shall not be construed as a waiver or relinquishment. of the future performance of any such term, covenant or condition by the other party hereto,~but the obligation of such other party with respect to such future performance shall continue in full force and effect. 18 5.11 Merger and Amendment This instrument contains all the agreements made between the parties and is the full and final expression of such agreement; and may only be amended in writing signed by both Parties. 5.12 Notices Until the Authority is otherwise notified in writing by the Houston Director, the address of the City is and shall remain as follows: Director, Department of Public Works and Engineering City of Houston P.O. Box 1562 Houston, Texas 77251 Until Houston is otherwise notified in writing by the Authority Director, the address of the Authority is and shall remain, as follows: General Manager La Porte Area Water Authority P.O. Box 1115 La Porte, Texas 77571 - All_Written notices, statements and payments required or permitted to be given under this Contract from one party to tfie other 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 to the respective other party at the address set forth above or at such other address that the parties respectively shall'desigaate by ~~rritten notice . 5.13 Parties in Interest This Contract shall be for the sole and exclusive benefit of the parties hereto and shall not be construed to confer any rights upon any .- third party. Houston and the Authority shall never be subject to .any liability in damage to any customer of the other for any failure to perform under. this Contract. 5.14 Approvals Unless otherwise provided for herein, any consent or approval of the parties shall be made by the governing body of each party. 19 • i 5.15 Dispute Resolution and Remedies (a) The parties agree that if disputes arise, regarding the terms or performance of this agreement or any review or approval called for hereunder, the respective parties or their Directors agree to meet and use best efforts to resolve same. (b) 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, my be availed of by either party and shall be cumulative. Provided, however, as a necessary condition for declaration of default under this Contract, the non-defaulting party shall give the defaulting party at least thirty (30) days notice of default with the opportunity to cure during the notice period. 5.16 Term This Contract shall be in force and effect as set forth in Section 5.17, unless sooner terminated or rescinded. The Contract shall remain in effect until any bonds issued by Houston to fund this Project as well as bonds issued to refund some are paid in full, or for forty (1~0) years; whichever is longer. The Parties hereto agree that upon the ~... egnfirmation of this Contract the Authority shall have the right to continued service of successive forty (~40) year intervals, or-for such other times as may be agreed upon. Upon the Authority"s and Houston"s completion of payments of capital costs as specified herein, they shall have ownership of their pro rata portion of the Project. 5.17 Effective Date This contract shall be effective for the term set out herein from and after the date of execution hereof by the parties. Houston recognizes that the payment of the Authority"s share of Actual Construction Cost is dependent on the approval, sale and delivery of bonds, and that certain procedural requirements must be satisfied aid .additional contracts signed before the Authority can make the payments to be made by it hereunder. The Authority agrees t~o use its best efforts to satisfy all necessary procedural requirements, and further agrees that if the Authority does not give written notice of the Continued effectiveness of this Contract on or before ninety (90) days from the effective date, this Contract shall be null and void, unless the Houston Director agrees to an extension of time for the giving of such notice. 5.18 Sale of Water The parties hereto are free to sell or dispose of water obtained pursuant *.~ i,his Contract as they may choose. 5.19 Additional Sales of Project Capacity Houston and the Authority agree that no more than one hundred percent (100) of the pumping and production capacity of the Project will be sold, including the pumping and production capacity of Houston. 20 • 5.20 Authorship It is agreed that this Contract shall not be construed more strictly against either party because that party authored particular provisions of this Contract. 5.21 Specification of Procedure for Modification It is agreed that this agreement is the entire agreement of the parties 'and may be amended or modified only by a written instrument approved by the governing bodies of the respective parties. 5.22 No Partnership Created Hereby The parties agree that no partnership relationship or joint venture is created by this Contract and that neither party is made an agent or representative of the other for any purpose. 5.23 Severability The invalidity or illegality of any term, provision or condition of this agreement shall not in any manner affect, invalidate or atuwl any other term, provision or condition hereof. 21 • • IN WITNESS WHEREOF, the parties hereto have executed this Contract in multiple copies, each of which shall be deemed to be an original, effective as of the date of countersignature by the City Controller of the City of Ifouston . CITY OF HOUSTON LA PORTE ARE WATER AUTHORITY BY: BY: Kathryn J. Whitmire Jerr Br t Mayor Preside` ATTEST: Anna Russell City Secretary ATTEST: ~~~~~ ~~ Claude Graves ~ ~, Secretary ~, (Seal) APPROVED AS TO FORM: E. k'. Beauchamp Assistant City Attorney APPROVEI/ Jon C. Vanden Bosch, Director Department of Public ~n'orks and Engineering Approved by Res. City of La Porte No. BY: Norman A9alone i~layor 22 COUNTERSIGNED: Cheri Black City Secretary Lance Lalor City Controller (Date: ) (Seal) APPROVED AS TO FORM: Knox Askins City Attorney . 23 EXHIBIT A The "Point of Delivery" shall be property line of the site of Houston"s Plant and the northern boundary of the described on Exhibit C. the intersection of the east Southeast Water Purification CWA right-of-way for Line B as 24 EXHIBIT B In general, the Project shall include among other properties and facilities: a forebay with 27 million gallon capacity; a low service pumping station with a total pumping capacity of 120 MGD; a water treatment module of 80 MGD and related treatment chemical storage and feed system facilities; filter wastewater tankage; ground storage tankage in an amount of 25 million gallons; a high service pump station with a total pumping capacity of 225 MGD spent filter wastewater clarifiers, sludge thickeners and sludge draw off facilities; sludge processing facilities including three centrifuges, chemical feed facilities and associated equipment; process overflow basins and sludge storage space; an electrical substation and distribution systems; instrumentation and control devices and systems; cathodic protection; process yard piping; and site enhancement and landscaping. In addition, the Project shall include such fittings, valves instrumentation and controls cathodic protection and other facilities located on-the Project site. The term Project shall also include the raw water transmission line shown on Exhibit "C" as Line B which is a transmission line from the existing CWA pipeline located east of the intersection of Genoa-Red Bluff Road and Red Bluff Road to the surface water treatment facilities. 25 ~ ~ BAySHORE v national BANK Albert D. Fields President September 18, 1987 Mr. Bob Herrera General Manager La Porte Area Water Authority P. O. Box 1115 La Porte, Tx. 77571 Dear Bob: We are pleased to offer La Porte Area Water Authority the following . commitment for a line of credit to fund engineering and developa~nt costs for the Authority: The terms and conditions are as follows: ~sait Avaiiahle: to $40Q, D(3D.O0 Term: 545 days Interest Rate: National Floating Prime plus one percent (1$). However, at no time will the rate exceed .10$. (Rate is National Prime RatQ as disclosed in-~•- .. the Wall .Street Jtxa-nai~. . ' Collateral: The unconditional Guaranty of this credit extension by the City of La Porte, Texas. Covenants: 1) Interest shall be paid on the drawn balance beginning on the 90th day after initial funding and each quarter thereafter until said note is paid. 2) The La Porte Area Water Authority and the City of La Porte shall provide copies of annual financial reports as they become available to each. 3) The Authority will be responsible for all legal fees. 1001 Hwy. 146 South • P. O. Box 998 • La Porte, Texas 77571 • 713/471-4400 Pagelof2 LJ Page 2 ~. Commitment Letter to ' La Porte Area Water Authority September 16, 1987 If you are in agreement with this commitment as detailed, please execute this document in the space provided. Sincerely, Sincerely, BAYSHORE NATIONAL BANK I.A PORTE STATE BANK ,' ~ -• Albert D. Fields obert Pizzit la President President AGREED AND ACCEPTED THIS DAY OF , 1987. 7~A PORTE WATEt~ AUTi~tITY BY: NAME AND TITLE CITY OF LA PORTE ~- SY: NAME AND TITLE ADF:kd + ~~ ~ .. Contract with Houston (SEWPP) 1 • Contracts with Entities Technical Corrections Engineering Contract • C.W.A. R.O.W. October 1987 1. Approval by Authority 2. Submit to Houston for approval I. Approval by Authority 2. Approval by Entities 1. Approval by Authority 2. Establish funding source for interim 3• Set up accounting system to track payments 1. Establish funding needed for survey and R.O.W. purchase 2. Establish funding source 3. Authorize survey 4. Deliver completed survey to C.W.A. with request to use R.O.W. LA PORTE AREA WATER AUTHORITY 6-MONTH SCHEDULE November 1987 December 1987 I. Receive executed contract from Houston 2. City Council App, 3. Submit to Water Dev. Fund as part of Phase I funding 4. Attach to Entity Contracts I. Pay "catch-up" to Houston 30 days after contract execution ($1,346,800) 2. Set up Accounting system to track pay- ments I. City Council approval 2. Establish firm "take-points" 3. Submit executed .. copies to Texas Water Development Fund 1. City Council approval 2. Notice to proceed 3. Begin preliminary engineering phase 4. Establish R.O.W. requirements 1. Develop R.O.W. Agreement 2. Approval by <; Authority 3. Approval by City Council Jamzary 1988 1. Pay first progress payment to Houston ($403,000) 2. Coordinate design of transmission system I. Establish future 1. Coordinate design payment schedule of transmission 2. Coordinate design system of transmission 2. Finalize necessary system _ improvements 3. Establish "Entity" improvements necessary to the project 1. Review Preliminary 1. Begin design phase Design Engineering 2. Geotechnical Report 3. Utility location 4. Prepare preliminary plan and submit for approval 5• Begin final plan and profile 1. Approval by C.W.A. 1. Coordinate design 2. Approval by City of transmission Council system 3. Purchase R.O.. W. February 1988 1. Coordinate design of transmission system I. Coordinate design of transmission system 1. Complete final plan & profile 2. Begin preparation of application for phase II funding 1. Coordinate design of transmission system March 2988. I. Coordinate desiga of transmission system 1. Coordinate design of transmission system 1. Prepare speci- fications 2. Continue preparation of application for Phase II funding 1. Coordinate design of transmission system s ~ !~~ LA P:-O RTE AREA WBT;ER AUTHORITY 6-MONTHSCHEDULE(Continued) r "~ October 1982 -._. ~iovember 1987____., December 19$7 ._ January 1988 February 1988 . . Texas Water Development I. DeYeiop applicatioa for release of Ph I 1. Submit executed I. ffeceive Phase I 1. Coordinate design 1. Coordinate design Fund ase funding throu h copy of Houston t t funds of transmission of transmission , g financial and con rac 2. Hond Ordinance 2. Set up accounting system/budget system 2. Obtain commitment system 2 Fundin com it t engineering advisors 3. Sufficiency of 3. Request extension extension . g m men expires Feb. 21 1988 funds letter 4 F of commitment through , 3. Begin preparation . und General Council August 1988 of application for to coordinate Water Phase II funding Commission Resolution 5. Bond Council .opinion Texas Water Commission I. Esstu~e that yjatex~ Commissio h L Fasure that Water I. Coordinate design I. Coordinate design n as approved plans and Commission has passed required Resolution of transmission oP transmission specs for SEWPP 2. Obtain Water system system Commission approval on bonds Private Interim 1. Establish funding for R.O.W. survey and 1. Disburse for survey ($8,900) 1. Disburse for R.O.W. ($40 000) 1. Engineering fee 1. Engineering fee Financing purchase and 2. Engineering fee , 2. Engineering fee engineering 2. Secure funding 3. Set up accounting system to track expenditures March 1988 _ I. Coordinate design of ` transmission sys. 2. Continue preparation of Phase II funding I. Coordinate design oP transmission system 1. Engineering s