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HomeMy WebLinkAboutResolution No. 87-08 ,, '- __ r.�r..�+.r�"�.,""��..�_._,. __ , _ '_ � � 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 . �'c k �Y * x 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 - , , �WB81 • � � , . ' ' ����'� 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 �WB81.. � . _ , . 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. , - 2 - ; F.WB81 . � . . � , , . 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 - 3 - EWB81., ' , ' . , • 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. - 4 - EWB81, ` � . • , 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. - 5 - EWB81 . � . ' , , 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. - 6 - EWB81 . ` � . 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. - 7 - EWB81 � (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) - 8 - EWB81, � . (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 ) . - 9 - EWB81 . ' , 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 - 10 - , . EWB81. . . , . 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. - 11 - EWB81, � 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 - 12 - �WB81� 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. - 13 - EWB81 • , . 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. 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