HomeMy WebLinkAboutResolution No. 87-08 ,, '- __
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'_ � � RESOLUTION NO�:' R ��-8 � �
A RESOLUTION AUTHORIZING THE MAYOR TO EXECUTE AND THE
CITY SECRETARY TO ATTEST A COST SHARING WATER PROJECT
CONTRACT BY AND BETWEEN THE CITY OF FRIENDSWOOD,
TEXAS , AND THE CITY OF HOUSTON, TEXAS .
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BE IT RESOLVED BY THE CITY �OUNCIL OF THE CITY OF FRIENDSWOOD,
STATE OF TEXAS :
Section 1 . That the Mayor be, and he is hereby , authorized
to execute for and in behalf of the City of Friendswood , Texas ,
and the City Secretary be, and she is her�by, authorized to
attest a contract by and between the City of Friendswood,
Texas , and the City of Houston, Texas , for the sharing of costs
for the construction and operation of facilities to provide
treated potable water. A copy of such contract is attached
hereto and made a part hereof for all purposes .
PASSED AND AFPROVED THIS 6th day of April , 1987 .
1 � � �u ' � /� �
,��. `��
Mayor Ral h L. Lowe
ATTEST:
. " �
City ecretary De oris cKenzie, CMC
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CITY OF HOUSTON, TEXAS
CITY OF FRIENDSWOOD, TEXAS
COST SHARING WATER PROJECT CONTRACT
THE STATE OF TEXAS §
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS �
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 in and has its principal office at City Hall ,
Houston, Harris County, Texas (hereinafter called "Houston" ) , and
CITY OF FRIENDSWOOD, a municipal corporation which is situat;ed
and has its principal office at City Hall, Friendswood, Galveston
County, Texas (hereinafter called "Friendswood" )
W I T N E S S E T H:
WHEREAS , because of the plans of Friendswood to supply
existing and future treated water needs and the plans of Houston
to supply existing and future treated water needs , it is deemed
and hereby found to be more efficient and cost-effective for both
Houston and Friendswood to jointl�r finance the construction arid
operation of the Project and share in ownership thereof; 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 Friendswood, and will help
alleviate area subsidence problems;
NOW, THEREFORE, Houston and Friendswood hereby agree to the
provision for interim treated surface water and to cost sharing
for the construction and operation of the Project under the terms
and conditions and for the considerations hereinafter set for.th
as follows, to-wit:
ARTICLE I
DEFINITIONS
1 . 01 "Actual Construction Co'st" 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 engineering and
consulting services reasonably required for the preliminary
engineering and design of the Project; (b) the actual cost uf
engineering services, inspection services and other consultant
services reasonably required for the construction phase of ►..he
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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
shall 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 Friendswood will 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
Plant.
1 . 02 "Actual Production Construction Cost" is the Actual
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
pumping facilities associated with the Project.
1 . 04 "Billing Period" is defin�H in Section 4 . 02 .
1 . 05 The term "CIWA" means the Coastal Industrial Water
Authority which name has been subsequently changed to "CWA"
(Coastal Water Authority) , and the terms are used interchangeahly
herein.
1 . 06 "Demand Allocation Factor" is the percentage of the
Production Capacity which a participant (either Houston or
Friendswood or any other participant defined by separate
contract) is entitled to use at any given time.
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 Friendswood is specified in
Section 2 . 04 . 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 Purification Plant
at any given time shall always total one hundred percent ( 100� ) .
1 . 07 "Excess Production Fee" is the rate to be charged to
Friendswood for use of production capacity above Friendswood's
share of committed capacity from the Project and shall be payable
as set forth in Section 4 . 07 herein.
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1 . 08 "Excess Pumpage Fee" is the rate to be charged to
Friendswood for use of pumping facilities associated with the
Project in excess of Friendswood' s share of committed capacity
for the Pro�ee�C--and shall be payable as set forth in Section 4 . 07
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 Friendswood
pursuant to the notice provisions herein.
1 . 10 The term "initial" when used in this 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
replacement for the Project requiring the expenditure of
$100,000 . 00 or more.
1 . 12 "MGD" is an abbreviation for "million gallons of water
per day. " As used in this Contract "MGD" refers to a quantity of
water during a twenty-four ( 24 ) hour period of time and may be
expressed as average daily quantity during a specified period of
t ime. °"
1 . 13 " 0 & M" is an abbreviation for operations and
maintenance.
1 . 14 "Participant " used in lower case means Houston,
Friendswood 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 Friendswood.
1 . 15 "Friendswood Director" means the City Manager of the
City of Friendswood or any other person designated by
Friendswood . Any notice by Friendswood 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
Friendswood as shown in the attached Exhibit "B. " Each Point of
Delivery shall include primary measuring equipment, valves ,
backflow prevention devices , devices to physically constrict the
rate of flow of water to Friendswood to an amount equal to the
product of the Pumping Allocation Factor for Friendswood times
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the Pumping Capacity for the Project, piping, a proper vault and
such other items as are necessary in the judgment of the Houston
and Friendswood Directors . The Point of Delivery shall also
include �-- -}�}>ass and a bypass meter unless Friendswood
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
Capacity of the Project equals 80 MGD.
1 . 18 "Production 0 & M Expense" is the sum of all operations
and maintenance expenses to be paid by Friendswood which is
associated with the number of gallons of water delivered to
Friendswood from the Project and shall be computed as set forth
in Section 4 . 05 herein.
1 . 19 "Project" means those facilities located south of
Genoa-Red Bluff Road and north of Ellington Field otherwise known
as the Southeast Water Purification Plant.
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 tota� 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 that raw water
transmission line shown on Exhibit "A" as Line B which is a
transmission line from the existing CIWA pipeline located east
of the intersection of Genoa-Red Bluff Road and Red Bluff Road to
the surface water treatment facilities .
1 . 20 "Pumping 0 & M Expense" is the sum of all operations and
maintenance expenses to be paid by Friendswood which is
associated with the number of gallons of water delivered to
Friendswood from the Project and shall be computed as set forth
in Section 4 . 06 herein.
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1 . 21 "Pumping Allocation Factor" is the percentage of the
Project ' s pumping and related treated water storage capacity
which a party (either Houston or Friendswood) is entitled to use
at any give�-t�me.
The initial Pumping Allocation Factor for each party shall be
a percentage equal in proportion to that portion paid by such
party of the Actual Pumping Construction Cost divided by the
total Actual Pumping Construction Cost for such facilities .
Friendswood ' s percentage is specified in Section 2 . 04
hereof . The sum of the Pumping Allocation Factors for the total
number of all entities who have executed a cost sharing water
Project contract for the Southeast Water Purification Plant at
any given time shall always total one hundred percent ( 100�) .
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.
As provided in Section 2 . 04 the total ultimate pumping
capacity related to Friendswood under the terms of this contract
shall be Friendswood' s proportionate share of the initial 225
MGD.
1 . 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 "A" as Line
A, which extends from said CIWA Pumping Station to the connection
with Line B as shown on that same exhibit; the existing Line C as
shown on Exhibit "A" 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 the
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 distribution and
transmission pipeline system.
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Under no circumstances shall the term Treated Water Pumping
Facilities include any pipeline facilities belonging to Houston
whether transmission or distribution, located off-site of the
Project. ----�--
1 . 26 "Treated Water Storage Facilities " are those water
storage facilities located downstream of the surface water
treatment facilities of the Project and upstream of the treated
water pumping facilities of the facility.
1 . 27 "Treated Water Transmission Facilities " is that 96 "
pipeline to be constructed by Houston which will connect the
Treated Water Pumping Facilities of the Pro ject to the existing
42 " line at the intersection of Old Galveston Highway and
Allen-Genoa Road, and continues on to connect other Houston
transmission lines to the Project. This line is depicted on
Exhibit "B" as being the line that runs from Point B through
Point C to Point D.
1 . 28 "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 referenced to in
Sec�ion 1 . 23 .
ARTICLE�' II
CONSTRUCTION OF THE PROJECT
2 . 01 The Project - In General
It is understood by the parties that Friendswood is buying an
equity ownership in the Project in a proportion as evidenced by a
percentage of the capital investment paid by Friendswood as
detailed elsewhere in this Contract. Houston shall also pay an
appropriate amount for its proportionate interest.
Houston and Friendswood acknowledge and agree that Houston
shall undertake to construct the Project . In general , the
Project shall be capable of producing approximately 80 MGD on the
maximum day. In general , the treated water storage facilities
shall be capable of storing appro�imately 25 million gallons of
potable water, and the treated water pumping facilities shall be
capable of pumping approximately 156 , 000 gallons per minute
during peak hours of demand of potable water.
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2 . 02 Design and Construction of the Project
and Facilities
(a) Hc�s�er� has heretofore completed the design as well as
the plans and specifications for the Project described generally
in Sections 1 . 19 and 2 . 01 .
(b) In June of 1986 , Houston awarded the principal
construction contract for the Project.
(c) Houston may award additional construction contracts as
necessary to complete the Project, subject to the approval of the
Friendswood Director. Friendswood 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.
(d) Houston agrees to construct the Project and the
additional facilities described in Sections 1 . 19 and 2 . 01 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 .
(e) Houston shall be responsible for obtaining all permits
and approvals of local , state or federal authorities for
construction and operation of the P'toject.
( f) 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 .
Friendswood shall have the right to review and approve any such
construction contracts for raw water transmission facilities that
are part of the Project.
(g) Houston warrants that it has good and marketable title
to the real property constituting the premises on which 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 the Construction of the Proiect and Facilities
by Friendswood
(a) During all working hours of the construction period, the
Friendswood Director and anyone authorized by him shall have
access to the Project premises and may inspect or review the
Project and all engineering specifications and documents related
to the Project.
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(b) Any changes in the design or specifications of the
Project amounting to an increase or decrease of either Actual
Pumping Construction Cost or Actual Production Construction Cost
amounting .t.�.�'sve Hundred Thousand and No/100 ( $500 , 000 . 00 )
Dollars shall require the approval of the Friendswood Director.
In no event shall additional cost be passed on to Friendswood
unless related to water service to Friendswood and all charges
regardless of size or amount will be submitted to the Friendswood
Director for review.
2 .04 Determination and Payment of the Actual Construction
Costs by Friendswood
(a) Upon completion of the Project and notice of the same to
Friendswood pursuant to Section 2 . 05 herein, Friendswood agrees
to pay Friendswood' s pro rata share of the Actual Construction
Costs of the Project.
1 . Friendswood ' s initial pro rata share of the Actual
Production Construction Costs of the Project shall be
3 . 75 percent ( 3 . 75� ) representing 3/80 and shall be
known hereinafter as "Initial Demand Factor. "
2 . Friendswood' s initial pro rata share of the Actual
Pumping Construction Costs shall be 1 . 33 per cent
( 1 . 33$ ) representing 3 /225 and shall be known
hereinafter as "Initial P�nping Allocation Factor. "
(b) Friendswood's pro rata share of Actual Construction Costs
is due and payable as follows :
1 . Friendswood shall pay to Houston Six Hundred Thousands
and No/100 ( $600, 000 . 00 ) Dollars on or before thirty
( 30 ) days following the date of execution of this
Contract by Houston and Friendswood.
2 . Houston shall invoice Friendswood 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 Friendswood to "catch up" its pro rata
contribution under this Contract . ( "Catch-up" as used
herein means that the percentage of the pro rata share
of estimated Construction Costs paid by the participant
equals the percentage of the estimated Construction
costs paid for construction of the Project . ) When
Houston begins construction of the Treated Water
Transmission Facilities , Friendswood ' s quarterly
payments shall include a pro rata amount to pay its
share of the capital costs for the Treated Water
Transmission Facilities . (Reference Section 4 . 08)
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(c ) Within ninety ( 90) days of the formal acceptance of the
completed construction of the Project by the Houston City Council
and the Friendswood City Council , the Houston Director shall
cause an acc.ouuting to be made of the Actual Construction Cost of
the Project to �'riendswood.
The accounting prepared by Houston shall include an audit of
the Actual Construction Cost as well as the actual cost of the
Treated Water Transmission Facilities . The audit shall be
prepared by an independent firm of certified public accountants ,
and the cost therefor 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 the Actual Pumping Construction Cost of the Project; and the
estimated cost of the Treated Water Transmission Facilities and
the actual cost of the Treated Water Transmission Facilities .
Said accounting shall also set forth any adjustments necessary to
be made in Friendswood's pro rata share payments between pumping
and production costs .
In the event that the Houston Director's estimates have been
larger than Actual Construction Cos�ts resulting in an overpayment
by Friendswood of its pro rata share, Houston shall refund such
difference to Friendswood within ninety ( 90) days of date of the
receipt of the accounting by Friendswood.
In the event that the Houston Director's estimates have been
less than Actual Construction Costs which has resulted in an
underpayment by Friendswood of its pro rata share, Friendswood
shall pay such dif ference to Houston within ninety ( 90 ) days of
the date of the receipt of the accounting by Friendswood.
(d) Notwithstanding any other provision of this Contract to
the contrary, should Friendswood fail or refuse to make payments
for its share of capital costs pursuant to this Contract other
than as required in Section 2 . 04 (b) 1 hereof, then in such event
Friendswood shall not be considered in default hereunder but, in
lieu thereof, shall have its Demand Allocation Factor, Pumping
Allocation Factor, and percentage of capacity in the Treated
Water Transmission Line ( as per Section 4 . 08 ) reduced to a
percentage equal in proportion to the actual capital payments
made by Friendswood divided by the total of the Actual Production
Construction Costs , the Actual Pumping Construction Costs , and
the capital costs for the Treated Water Transmission Line (as per
Section 4 . 08 ) .
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2 . 05 Completion of the Project
When the Project is completed and has been accepted by the
Houston Ct��--Council , Houston shall notify the Friendswood
Director and designate a day upon which initial operation of the
Project is to begin.
Houston shall provide Friendswood 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
3 . 01 In General
(a) Houston and Friendswood, 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.
(b) Friendswood shall have �n interest in the conduct,
affairs and decisions of the Project in proportion to its capital
contribution. Friendswood shall have the authority to enter the
Project premises .
(c ) Friendswood 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 .
(d) The parties agree that Friendswood shall be privy to any
negotiations with other participants in the Project and all
contracts with any such participant will be submitted to
Friendswood for review prior to execution . Friendswood will
receive notice and right to attend all meetings between all
participants during the term of the contract.
(e) Relationship of Parties
The relationship of the parties is of a fiduciary character.
Houston is trustee with respect to Friendswood with respect to
the operation of the Project and care of all joint property
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specified herein. Each party shall act in the highest good faith
toward the other in conducting the operation of the Project as
well as their respective duties under this Contract . Each party
is under o}a�igation, on demand of the other, to render true and
full information and performance of all matters affecting the
Project and its operations under the terms of this Contract.
( f) Duties of Managing Owner
1 . Houston shall keep and maintain an accurate accounting
system based on accepted accounting standards that provides
documentation of the costs of constructing and operating the
Project and separate the costs incurred as Friendswood ' s
allocated share. Such records shall be maintained for a minimum
period of five ( 5) years and as otherwise required by law. All
such documents and records shall be available to Friendswood for
inspection, copying or audit at reasonable times, places and upon
reasonable notice.
2 . Houston shall provide an adequate program to insure that
the Project is maintained in a state of repair in a cost
effective manner.
3 . 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 maintenanc�e of the Project.
3 . 02 Demand Allocations
( a ) Each party may take water from the Project at that
party's Point of Delivery, but neither party may 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 operating
procedures or other similar measures .
(b) In the event that the Prdject 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 Fee or
the Excess Pumpage Fee, or both, as the case may be. Such fees
shall be established as set forth in Section 4 . 07 of this
• Contract.
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3 . 03 Changes in Allocation Factors
(a) In the event that Houston undertakes an expansion of the
Project, F��ie-�dswood 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 the 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
Friendswood of any proposed future enlargement or expansion of
the Project . At any time during the one hundred fifty ( 150 )
days ' notice period, Friendswood shall be authorized to give
notice of intent to enter into such agreement . Houston and
Friendswood 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.
Provided, however, Friendswood 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.
(b) If, in order to continue supply to Friendswood of water
at its Demand Allocation Factor, and directly related and
necessary to the operation and marintenance 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 . Friendswood will pay its pro rata
share of the cost of any such work. Upon inspection and review
of the work, Friendswood shall pay its pro rata share of any such
repair or replacement within ninety ( 90) days after acceptance of
the completed repair or replacement by Friendswood. Friendswood
shall never 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 Proiect Production
Capacity or in Project Pumping Ca acity
In the event that the capacity of the Project is materially
reduced by reason of equipment failure or force majeure ,
Friendswood may request the Houston Director to provide interim
alternative water supply service . Houston shall use its best
efforts to provide such interim alternative water supply
service. Reduction in the supply of water to Friendswood 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
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water service shall be the total usage by Friendswood ( in
thousands of gallons ) times the average operation and maintenance
expenses of the Project (computed on the basis of thousand gallon
units ) for---tl��-previous Billing Period. Provided, however, in
the event Friendswood 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.
3 .05 Measurement of Water
There shall be furnished and installed, by Friendswood 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 party 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, Friendswood may
have access to such record books during reasonable business
hours . Such bobks 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 Friendswood. Additional calibrations shall be
made by Houston if requested in writing by the Friendswood
Director. Provided, however, if Friendswood requests more than
three ( 3) inspections of the measuring equipment in any one ( 1 )
calendar year, Friendswood shall bear the total cost of any
additional inspections only in the event that the measuring
equipment is found to be operating correctly. The parties may
jointly observe any adjustments which are made to the measuring
equipment, if any adjustments are found to be necessary.
3 . 07 Check Meters
Friendswood 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.
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ARTICLE IV
OPERATION AND MAINTENANCE CHARGE5
4 . 01 Introduction
It is expressly understood by the parties to this agreement
that Friendswood shall directly reimburse Houston on a periodic
basis for the expenses incurred in producing and pumping the
water actually delivered to Friendswood.
4 . 02 Operation and Maintenance Charges
( a) The first Project operation period extends from the
initial day of the delivery of water to Friendswood through three
( 3 ) months to the first day of a Billing Period as defined in
Section 1 . 04 . During this first Project operation period,
Friendswood will pay a rate of $0 . 41 per thousand gallons of
actual water usage, plus excess Production and Production 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 accountinq shall be delivered to the Friendswood
Director.
(b) In the event the total 0 & M Expense requires a fee
greater or lesser than $0 . 41 per°`thousand gallons , Friendswood
shall pay any excess or Houston refund any overage as the case
may be. Friendswood shall have thirty ( 30) days after receipt by
Friendswood 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 Friendswood of Houston' s invoice for
payment.
(c ) 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 "Billing Period" , the Houston Director
shall compute the total 0 & M Production and Pumping Expense (and
if applicable, any Excess Production or Excess Pumpage Fee) , for
the preceding Billing Period.
(d) A rate for Friendswood ' s appropriate pro rata share of
total 0 & M Expense will be billed on the tenth ( lOth) day of the
month following each three ( 3 ) month interval . Such rate shall
be based on an accounting using required data and Friendswood
shall be billed its pro rata share of actual gallons of water
received. Such accounting data will be furnished to Friendswood
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.
- 14 -
EWB81 �
4 . 03 Failure to Pay When Due
Should Friendswood fail to tender payment within thirty ( 30 )
days of in�e�ee of any 0 & M Expense (or any part thereof ) or
should Houston fail to refund any overpayment to Friendswood
within thirty ( 30) days of the date due, interest thereon shall
accrue at the rate of ten percent ( 10� ) per annum from the date
due until paid.
4 . 04 Itemization
At the close of the First Billing Period and every Billing
Period thereafter the Houston Director shall prepare for review
by the Friendswood Director an itemization of all accounts used
to compute Production 0 & M Expense and Pumping 0 & M Expense.
The Friendswood Director shall have thirty ( 30) days from receipt
of such itemization to conduct such review.
4 . 05 Production 0 & M Expense
Production 0 & M Expense for a given Billing Period of time
means a sum of money computed according to the following
formula:
Production 0 & M Expense = (A x C) + (A x D)
B E
�
In the foregoing formula:
"A" is the number of gallons of water produced by the project
and delivered to Friendswood at its Point of Delivery during
the given Billing Period.
"B" is the total number of gallons of water produced by the
Project during the given Billing Period.
"C" is the total Houston expenditure during the given Billing
Period for 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
those operations and maintenance costs used to compute the
Pumping O & 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 operations ,
maintenance and debts service for the Raw Water Storage and
Transmission Facilities during the Billing Period.
- 15 -
FWB81
F . .
"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
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
customers , but excludes line loss by evaporation, leakage,
etc .
4 . 06 Pumping 0 & M Expense
Pumping 0 & M Expense for the given Billing Period means a
sum of money computed according to the following formula:
Pumping 0 & M Expense = (A x C) + D
B
In the foregoing formula:
"A" is the total gallons of water delivered from the
Project to Friendswood at the Point of Delivery during
the given Billing Period.
"B" is the total gallons of water pumped by the pumping
facility during the given Billing Period.
"C" is the total Houston wxpenditure for the pumping and
treated water storage facilities portion of the Project
( including reasonable imputed costs for
services of City of Houston employees as well as fire
insurance) less expenditures for the sale of bonds ,
notes and other evidences of indebtedness issued for
capital purposes for the Project.
"D" is a pro rata share of the total Houston expenditure
for the water transmission lines leading from the
Project to the Point of Delivery ( "Transmission
Lines" ) . The ratio used to determine this cost shall be
based on the quantity of water transmitted through the
Transmission Lines to the Consortium during a given
Billing Period divided by the total quantity of water
transmitted through the Transmission Lines during the
Billing Period . The cost shall include reasonable
imputed costs for services of Houston employees but
shall not include the expenditures of the sale of bonds,
notes and other evidences of indebtedness issued to
finance the capital cost of the Transmission Lines .
- 16 -
FWB81: . � . ,
4 . 07 Excess Production Fee and Excess Pumpage Fee
In the event that the Project is not being operated at its
Productioh--6-a��acity or its Pumping Capacity, Houston or
Friendswood may, with agreement of the other party, use a portion
of 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 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 the parties . Any
agreement between Friendswood and another Project participant for
use of additional Production Capacity or Pumping Capacity shall
be subject to prior review of the Houston Director.
4 . 08 Capital Cost Sharing Related to Treated Water
Transmission Line
Friendswood intends to take water from its share of the
Project at the Point of Delivery indicated on Exhibit "B" shall
make a capital contribution for the segment of Treated Water
Transmission Facilities to be built by Houston leading from the
property line of the Project to Houston' s existing 42-inch water
line on State Highway 3 . This capital contribution shall be
equal to:
A x B x Total capital cc�+st of the Treated Water
C x D Transmission Facilities ( including land,
engineering, inspection and testing fees)
Where:
"A" is the Friendswood's Pumping Allocation in MGD.
"B" is the distance in miles between the property line of the
Project site and the point of connection with Houston ' s
existing 42-inch water line on State Highway 3 . (Segment BC
as depicted on Exhibit "B" )
"C " is the capacity of the Treated Water Transmission
Facilities to be built by Houston in MGD, which is 675 MGD.
"D" is the total length of the Treated Water Transmission
Facilities to be built by Houston in miles . ( Segment BD as
depicted on Exhibit "B" )
4 . 09 Supplemental Point of Delivery
Houston agrees that at such time as its water distribution
system extends to a point adjacent to the intersection of Beamer
Road and Dixie Farm Road (same being hereafter referred to as the
- 17 -
__ _
,
�WB81
"Supplemental Point of Delivery" ) , Friendswood shall be entitled
to take a portion of its share of water from the Project at such
Supplemental Point of Delivery. Friendswood shall not be liable
for any capi�a�I costs incurred by Houston in constructing its
water distribution system to the Supplemental Point of Delivery.
The Supplemental Point of Delivery is more particularly depicted
on Exhibit "B" attached hereto. All technical requirements of
this Contract relating to measurement of water, calibration and
check meters ( Sections 3 . 05 through 3 . 07 ) shall apply to the
Supplemental Point of Delivery.
ARTICLE V
MISCELLANEOUS
5 . 01 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 0 & M Expense and paid
pro rata by the participants as provided elsewhere in this
Contract . ( In the event of casualty covered by the insurance,
Houston will bill participants for�ayment of the deductible as a
"Major Replacement" as provided elsewhere in this Contract. )
If the Project shall be damaged or destroyed by fire or otr►er
casualty, Houston shall apply the proceeds from any fire and
extended coverage insurance either ( 1) 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 ( 2 ) 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.
A copy of all insurance policies shall be forwarded to
Friendswood upon request. Insurance requirements may be adjusted
by agreement of Houston and Friendswood.
5 . 02 Title to All Water Produced by the Proiect
Title to all water produced by the Project shall remain in
Houston and Friendswood jointly in proportion to their Demand
Allocation Factors, until the same shall pass through the Point
of Delivery. Thereafter, Friendswood shall have exclusive title,
control and possession thereof and solely responsible therefor.
- 18 -
�WB81 . . ,
5 .03 Unit of Measurement
The unit of ineasurement for water produced and delivered by
the Projec�-e�-- provided under the terms of Article V Interim
Water Supply shall be one thousand ( 1 , 000 ) gallons , U. S .
Standard Liquid Measure.
5 . 04 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 Regulatory Action
Houston and Friendswood 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.
5 . 06 Houston to Keep Books
Houston shall keep books , recbrds , and all other documerits
relating to the costs of operating the Project for at least five
( 5 ) years and thereafter as required by law, and said books ,
records, and other documents shall be available for inspection,
copying or audit by Friendswood at reasonable times, places and
upon reasonable notice.
5 . 07 Assignments
This Contract shall bind and benefit Houston and Friendswood
and their legal successors, but shall not otherwise be assignable
by either without first obtaining the written consent of the
other.
5 . 08 Governing Law
This Contract shall in all respects be subject to the
regulatory authority of the State of Texas and shall 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 Charter of the City of Friendswood.
- 19 -
FWB81
5 . 09 Force Majeure
If either Houston or Friendswood is rendered unable, wholly
or in part;- -�--�-force ma jeure to carry out any of its obligations
under this Contract, then the obligations of Houston and
Friendswood 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, 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 , fire , 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 Friendswood, whether similar to those
enumerated or otherwise, which are not within the control of
Houston or Friendswood and which Houston or Friendswood could not �
have avoided by the exercise of due diliqence and care.
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 .
5 . 11 Merger and Amendment
This instrument contains all the agreements made between the
parties; is the full and final expression of such agreement; and
may only be amended in writing signed by both parties .
5 . 12 Notices
Until Friendswood 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
City of Houston
P. 0 . Box 1562
Houston, Texas 77251
- 20 -
EWB81� .
Until Houston is otherwise notified in writing by the
Friendswood Director, the address of Friendswood is and shall
remain as follows :
City Manager, City of Friendswood
City Hall
109 Willowick
Friendswood, Texas 77546
All written notices , statements and payments required or
permitted to be given under this Contract from one party to the
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 designate by written 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 Friendswood 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 in writing by the governing body of
each party.
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 eguity, including specific performance, may 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.
- 21 -
� EWB81,
5 . 16 Term
This Contract shall be in full force and effect from and
after the -da-t.e�- of execution of this Contract by the parties ,
unless sooner terminated or rescinded.
5 . 17 Sale of Water
The parties hereto are free to sell or dispose of water
obtained pursuant to this Contract ( including interim water
supplies ) as they may choose.
5 . 18 Additional Sales of Project Capacity
Houston and Friendswood agree that no more than one hundred
percent ( 100� ) of the pumping and production capacity of the
Project will be sold.
5 . 19 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 . 20 Specification of Procedure for Modification
It is agreed that this agreemCnt 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 . 21 Severability
The invalidity or illegality of any term, provision or
condition of this agreement shall not in any manner affect ,
invalidate or annul any other term, provision or condition
hereof .
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.
- 22 -
L'rWDO 1• � . - . .
�
� .
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 Contro�3�•-of the City of Houston.
"Houston" ,� � "Friendswood"
CITY OF' U�E�!'�� ',��,�,,.����C�TY OF FRIENDSWOOD
�. �
.
BY� � Y� ,
Kath yn J. Whitmire Ralph . Lowe
or .�U1 ��' 1987 Mayor
ATTE ATTEST:
C
_ .
.
0
nna Russell De oris McKen ie, M ,�
; � , .�,�,;
City Secretary � ��� C_i ty Secretar .3'/i//P?
APPROVED AS TO FORM:
JERRY SMITH
City Attorney ,�
r` /
��; �F/
By: a l/ ' � !�� °`
E. W. Beauchamp
Assistant City Attorney
APPROVED:
'�- Z� G%�������
Jon C. anden Bosch, Director
Department of Public Works
�,a n_d Enqinee ing
�'WlM 6. (�Ff�
COUNTERSIG ED:
a e La r
C ' tr ler (Date: �- o��� g7 )
r
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