Ordinance No. 3,026 ii/
11/
ORDINANCE NO. 3026
AN ORDINANCE APPROVING THE BAYTOWN AREA WATER AUTHORITY' S
CONTRACT WITH LAKE MUNICIPAL UTILITY DISTRICT FOR THE
SALE OF TREATED WATER.
WHEREAS, pursuant to the provisions of House Bill No.
967 enacted by the 63rd Legislature of the State of Texas,
the Board of Directors of the Baytown Area Water Authority
is authorized, with prior approval of the City Council of
the City of Baytown, to enter into contracts with persons,
corporations, municipal corporations, and political subdi-
visions of the State; and
WHEREAS, the Board of Directors of of the Baytown Area
Water Authority have approved a contract to supply treated
water to Lake Municipal Utility District , a copy of which is
attached as Exhibit "A" and made a part hereof; and
WHEREAS, the Baytown Area Water Authority desires that
the City Council of the City of Baytown approve this contract ;
NOW THEREFORE;
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
BAYTOWN
Section 1: That the City Council of the City of Baytown
hereby approves the contract between the Baytown Area Water
Authority and Lake Municipal Utility District , a copy of which
is attached as Exhibit "A" .
Section 2 : This ordinance shall take effect immediately
from and after its passage.
INTRODUCED, READ, and PASSED by the affirmative vote of
the City Council on this, 13th day of November
1980.
EMMETT 0. . HUTT , Mayor
ATTEST:f.
ILEEN P. HALL, ity Clerk
::APPROVED
ANDALL B. STRONG, Cit r " 'torney
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WHOLESALE WATER SUPPLY CONTRACT
TREATED WATER
THE STATE OF TEXAS 0 EXHIBIT A
COUNTY OF HARRIS 0
This contract made and entered into on the date herein-
after last specified by and between the Baytown Area Water
Authority, a governmental agency and a body politic and
corporate which is principally situated in Harris County,
Texas, and has its principal office in Baytown, Harris
County, Texas, (hereinafter called "Seller "), and Lake
Municipal Utility District which is principally situated in
the extraterritorial jurisdiction of Baytown, Harris County,
Texas, and has its principal office at 2727 Allen Parkway,
Suite 1680, Houston, Harris County, Texas 77019, (herein-
after called "Buyer").
W I T N E S S E T H:
WHEREAS, Seller has the right under a contract with the
City of Houston to buy untreated waters from the City of
Houston;.and
WHEREAS, Seller has constructed certain facilities to
treat and deliver the aforementioned untreated water to
Buyer as treated water, at several points of delivery, and
Buyer has constructed certain facilities to enable Buyer to
receive the aforementioned treated water; and
WHEREAS, Seller is desirous of selling large quantities
of treated water from such source or sources to Buyer, and
Buyer is, subject to the above, desirous of purchasing from
Seller its treated water; and
WHEREAS, Seller and Buyer have found, and do hereby
find, that Seller and Buyer are authorized by the laws of
the state of Texas to enter into a contract for the sale of
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water upon such terms and for the period of time as are
hereinafter set forth, and Seller and Buyer specifically
contemplate the provisions of articles 4413(32c) and 1109e,
Texas Revised Civil Statutes, as they have been enacted to
the date of this contract, in making these findings; and
WHEREAS, Buyer has held an election which authorized
entering into a contract for the purchase of treated water
from Seller; and
WHEREAS, Buyer is authorized to enter into a contract
for the purchase of treated water from Seller pursuant to
Section 54.218 of the Water Code, Texas Revised Civil Statutes;
NOW THEREFORE, for and in consideration of the premises
and the mutual covenants and agreements herein contained,
the parties hereto do hereby mutually agree as follows:
Article I
Definitions
As used in this contract, the following terms are
intended and used herein and shall be construed to have
meanings as follows:
1. "Minimum monthly quantity" shall mean the minimum
quantity of water which Buyer is obligated to take and pay
for, or to pay for, if not taken, during any calendar month
under the provisions of Article III hereof.
2. 11.MGD" is an abbreviation for million gallons of
water per day. As used in this contract, 11MGD" refers to a
quantity of water during a period of time expressed for
convenience in terms of an average daily quantity during a
calendar month (unless a different period of time is specified).
The volume of two MGD for a calendar month, for example, is
calculated as follows: Two million gallons multiplied by
the number of days in such calendar month.
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Article 11
Sale and Delivery of Water
2.1 Subject to the terms and conditions of this contract,
Seller agrees to sell and deliver (or cause to be delivered)
to Buyer, Buyer's water requirements of treated water as
hereinafter set forth in the respective minimum monthly
quantity, at various points of delivery, and Buyer agrees to
purchase from Seller, Buyer's treated water requirements as
hereinafter set out for resale during the term of this
contract in the respective minimum monthly quantities and at
the respective times hereinafter set forth. The quantities
of treated water to be purchased by Buyer and sold by Seller
hereunder shall at all times during the term hereof equal or
exceed ninety percent (900) of minimum of Buyer's monthly
total water requirements. Buyer's total treated water
requirements shall mean the total quantity of treated water
Buyer needs to conduct operations, use, or resell within its
boundaries.
2.2 Notwithstanding the provisions of Section 2.1
above the minimum monthly quantity of treated water Buyer is
obligated to purchase from Seller, or pay for, whether taken
or not, shall be:
initial delivery through first year .05 MGD
2nd year .15 ��GD
3rd year .25 -MGD
4th year .35 MGD
5th year through 40th year .50 MGD
To determine the minimum monthly quantities for Buyer,
the minimum in terms of MGD (from the above tabulation)
shall be multiplied by the number of days in the month.
As used herein, "Initial Delivery" means the date on
which Buyer is ready to receive treated water from Seller,
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of which date Buyer shall give Seller six (6) months' advance
notice, but which in no event shall be later than December
31, 1981.
2.3 In the event Buyer wishes to reserve for - itself
additional monthly minimum quantities of treated water
during any of the time periods set forth in Section 2.2 it
must notify Seller in writing of its desire to do so, and in
the event Seller then has treated water available for sale
to its customers, it may enter into a suitable amendment
hereof with Buyer increasing the minimum monthly take or pay
commitment of Buyer for the remaining period of the term of
this contract. In the event however, the total requirements
of purchasers from Seller plus Seller's other obligations or
commitments with respect to treated water exceed the quantity
of such water Seller has available for sale or delivery,
Seller may pro rate such additional requirements among its
customers and its other obligations on a fair and equitable
basis.
2.4 The points of delivery for treated water sold
under this contract shall be designated by Buyer provided,
however, Seller reserves the right to reject any point of
delivery designated by Buyer which would, in effect, inter-
fere with or increase the cost of any other facilities or
operations which Seller might wish to construct or implement,
or plan to construct or implement, or which would adversely
affect Seller's ability to provide treated water to any of
its customers. Buyer agrees to give Seller notice in writing
of any point of delivery designated by Buyer, and Seller
agrees to accept or reject such point of delivery by a
prompt response in writing.
In the event that Buyer should fail to designate a
point of delivery acceptable to Seller by the date of Initial
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Delivery (as defined in Section 2.2 herein) Seller may
designate the point of delivery for Buyer, and such desig-
nation shall be forever binding on Buyer.
2.5 The treated water to be delivered shall meet
minimum standards prescribed by the state of Texas for
municipal purposes or any standards which may supersede
them.
2.6 The Buyer shall install a backflow preventer or
air gap approved by Seller's Engineer at each point of
delivery or such alternate locations as agreed to by Seller
and Buyer.
Article III
Rate and Prices
3.1 All water sold and delivered by Seller to Buyer
for which Buyer is obligated to pay for hereunder shall be
sold to Buyer from Seller at the rate of $1.00 per 1000
gallons of water utilized by Buyer.
Whenever the quantity of water taken during a monthly
period by Buyer exceeds by ten percent (107o) the minimum
monthly quantity obligation of Buyer designated herein, an
additional charge of five percent (50) upon the entire
monthly charge will be made over what the monthly charge
E
would be as determined from Section 3.1.
3.2 Additionally, Buyer understands and agrees that
Seller may at any time, by order duly enacted, increase or
change the price or prices for treated water as set forth in
Section 3.1, provided, however, that except where an inde-
pendent rate analysis indicates that a certain rate increase
is required, the price or prices for treated water shall not
be increased percentagewise as to Buyer during any 12 -month
period of this contract in excess of the percentage rate
increase in Seller's water rates to other purchasers of
treated water during the same period.
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3.3 The total price or charge to Buyer for water
hereunder shall be the price or prices for water referred to
in Sections 3.1 and 3.2 above.
Article IV
Reports
Within thirty (30) days after the end of each quarterly
period during the term of this contract Buyer shall furnish
Seller with a statement, under oath, showing the quantities
and sources of all water for use or resale by Buyer.
Article V
Measuring Equipment
5.1 At Buyer's own cost and expense, Buyer shall
furnish and install, at the point of delivery hereunder,
measuring equipment properly equipped with meters, totalizers
and recording devices of standard type for measuring and
recording accurately the quantity of water delivered under
this contract, the meters to have a capacity for measuring
the quantity of water delivered within an accuracy tolerance
of two percent (2%) plus or minus for a given rate of flow,
and Buyer shall also install, operate and maintain, as
required by Buyer, pressure regulating devices and equipment.
Such measuring equipment shall be approved by Seller, and
after Seller's approval of the installation, shall become
the property of Seller.
5.2 During all reasonable hours, Seller and Buyer
shall have access to such measuring equipment so installed.
Buyer shall have access to all records pertinent to determining
the measurement and quantity of treated water actually
delivered hereunder, but the reading of the meters for
purposes of billing shall be done by Seller.
5.3 After approved installation thereof, Seller shall
perform, at its own cost and expense, periodic calibration
tests on the primary measuring equipment so installed in
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order to maintain the accuracy tolerance within the guarantees
of the manufacturer thereof, not to exceed a tolerance of
two percent M), at least once every twelve (12) months.
At reasonable intervals, Seller agrees to properly check and
calibrate the flow recording and totalizing measuring equip-
ment for the purpose of ascertaining their condition of
accuracy. Seller agrees to notify Buyer at least forty -
eight (48) hours in advance of the time any test is to be
made, to permit Buyer to observe such test and to furnish
Buyer a copy of the results of all checks and calibration
tests performed on said measuring equipment. If any tests
or calibration checks show a condition of inaccuracy,
adjustments shall be made immediately so said measuring
equipment will register correctly within the aforesaid
accuracy tolerance of two percent (2 %fl) plus or minus, for a
given rate of flow. In addition, Buyer shall have the right
to independently check said measuring equipment at any time
upon notification to Seller or its authorized representative.
5.4 Seller may install, at its own cost and expense,
such check meters in Buyer's pipeline as may be deemed
appropriate and Seller shall have the right of ingress and
egress to such check meters during all reasonable hours;
provided, however, that billing computation shall be on the
basis of the results of the measuring equipment set forth in
Section 5.1 above.
5.5 If, upon any test, the percentage of inaccuracy of
any measuring equipment is found to be in excess of five
percent (50) for the aforesaid given rate of flow, then
Buyer's account shall be adjusted for a period extending
back to the time when such inaccuracy began, if such time is
ascertainable, and if such time is not ascertainable, for a
period extending back one -half (1/2) of the time elapsed
since the date of the last test, or, the date of the last
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adjustment to correct the registration, whichever is later,
not to exceed one hundred twenty (120) days. If, for any
reason, the measuring equipment is out of service or out of
repair and the amount of treated water delivered cannot be
ascertained or computed from the reading thereof, water
delivered during the period shall be estimated and agreed
upon by the parties hereto on the basis of the best data
available.
5.6 In the event of dispute between Seller and Buyer
as to the accuracy of the testing equipment used by the
Seller to conduct the test of accuracy upon the meters being
used, an independent check may be mutually agreed upon
between Buyer and Seller to be conducted by an independent
measuring equipment company suitable to both Buyer and
Seller, the cost of such test to be at Buyer's sole expense.
5.7 As used in this Article V, the expression "given
rate of flow" means the total quantities of treated water
delivered during the preceding period (usually a calendar
month) as reflected by the recording devices, divided by the
number of days in the period.
Article VI
Billing and Payment
6.1 As used in this Article VI, the term "day" shall
mean a period of twenty -four (24) consecutive hours beginning
at 8:00 o'clock a.m. on one calendar day and ending at 8:00
o'clock a.m. on the next succeeding calendar day, and the
term "month" shall mean a period beginning at 8:00 o'clock
a.m. on the first day of a calendar month and ending at 8:00
o'clock a.m. on the first day of the next succeeding calendar
month, except that the first month or partial month shall
begin on the day of initial delivery of water hereunder, and
the minimum monthly payment, if any, shall be pro rated for
such partial month.
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6.2 The measuring equipment shall be read on the day
at the end of each month (or at such period of frequency
arranged between the parties at 8 :00 o'clock a.m., or as
near thereto as practicable.
6.3 The quantities of treated water for which payment
is due by Buyer hereunder in any month shall be the greater
of:
(a) the total quantity of treated water delivered
to Buyer in such month determined as set
forth in Article V hereof; or
(b) the total quantity of treated water Buyer is
obligated to take hereunder, or pay for if
not taken, in such month, pursuant to the
provisions of Section 2.2 hereof.
6.4 Seller shall render to Buyer at Buyer's principal
office as specified in Article XII hereof on or before the
tenth (10th) day of each calendar month a statement showing
the quantity of treated water for which payment is due
hereunder during the preceding month. Payment of such
statements shall be due and payable to Seller at its offices
in Baytown, Harris County, Texas, on or before the twentieth
(20th) day after receipt of such statement.
6.5 Should Buyer fail to tender payment of any amount
when due, interest thereon shall accrue at the rate of ten
percent (100) per annum from the date when due until paid.
6.6 In the event Buyer fails to tender payment of any
amount when due and such failure continues for forty -five
(45) days after notice in writing to Buyer of such default,
Seller may suspend delivery of treated water hereunder, but
the exercise of such right shall be in addition to any other
remedy available to Seller.
Article VII
Title to and Responsibility for Water
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7.1 Title to, possession, and control of water shall
remain in Seller, or its assigns, to the point of delivery
as provided in Section 2.4 hereof where title to, possession,
and control'of water delivered under this contract shall
pass from Seller to Buyer, and Buyer will take such title,
possession, and control at such point of delivery.
7.2 As between the parties hereto, Seller shall be in
exclusive control and possession of the water deliverable
hereunder and solely responsible for any damage or injury
caused thereby until the same shall have been delivered to
Buyer at such point of delivery, after which delivery Buyer
shall be in exclusive control and possession thereof and
solely responsible for any injury or damage caused thereby,
and each party respectively shall save and hold the other
party harmless from all claims, demands, and causes of
action which may arise while said water is under its respec-
tive ownership and control.
Article VIII
Term
This contract shall be for a term of forty (40) years
beginning on the date of Initial Delivery.
Article IX
Performance by Seller and Buyer
9.1 Seller covenants and agrees that it will not
contract for the sale of water to other users to such an
extent or for such quantities as to impair Seller's ability
to perform fully and punctually its obligations to Buyer
under this contract. In case of temporary shortage of water
notwithstanding Seller's compliance with the provisions of
this Article IX, Seller shall distribute the available
supply as provided by the laws of the state of Texas,
particularly Section 5.039(a) of the Texas Water Code. It
is specifically agreed and understood that this agreement
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contemplates that Buyer will resell the water purchased
pursuant to the terms hereof.
9.2 Buyer covenants and agrees that it is taking
treated water for the purpose of distribution through its
municipal water system, and such water shall be used for
municipal purposes and for no other purpose.
9.3 Buyer acknowledges that according to the terms of
the contract between Seller and the City of Houston, Seller
may be liable to the City of Houston for monetary damages in
the event that Buyer (or any purchaser of water from or
through Buyer) fails to comply with the restrictions and
limitations on the sale of water set out in Section 9.2
herein. Buyer acknowledges that such monetary damages would
amount to seventy -five percent (750) of the consideration or
revenue received by Seller for the estimated amount of water
distributed, sold, or used in violation of such restrictions
or limitations, plus all litigation expenses, reasonable
attorney fees, and all other remedies available to the City
of Houston. Buyer hereby agrees to totally indemnify and
save Seller harmless from and against any such expenses and
liability which Seller might incur, or any loss Seller might
suffer, as a result of any failure by Buyer, or any purchaser
of water from or through Buyer, to comply with such restrictions
and limitations.
Article X
Remedies Upon Default
10.1 In the event of any default by Buyer in the
performance of any of Buyer's obligations hereunder which
shall continue for a period of thirty (30) days or more,
Seller shall give written notice to Buyer specifying the
matter with respect to which Buyer is in default and request-
ing that the same be remedied with promptness and dispatch.
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In the event Buyer within sixty (60) days after the mailing
of such notice by Seller to Buyer has failed to remedy the
matter in default, Seller may suspend further delivery of
treated water to Buyer hereunder; and in the event such
default on the part of Buyer continues for an additional
thirty (30) days, Seller may, by an additional written
notice to buyer, cancel and terminate this contract, whereupon
all rights of Buyer and all obligations of Seller hereunder
shall terminate and be at an end.
10.2 During any monthly period in which Seller is
unable to deliver to Buyer on each day the minimum MGD
specified in Section 2.2 hereof, whether as a result of
temporary curtailments resulting from temporary shortages as
provided in Section 9.1 hereof or of force majeure as
provided in Article XI hereof, Buyer shall be obligated to
pay Seller only for the greater of (a) the quantities of
I treated water actually delivered to Buyer under this contract
` during such month or (b) the minimum monthly quantity of
water which Buyer is obligated to take and pay for, or pay
for, whether taken or not, during such month multiplied by a
fraction, the numerator of which is the number of calendar
days in the month in which there is no curtailment and the
denominator of which is the number-of days in the calendar
month. During any such period, Buyer shall be free to
obtain treated water from other sources.
10.3 The failure of either party to insist in any one
or more instances upon performances of any of the terms,
covenants, or conditions of this contract, shall not be
construed as a waiver or relinquishment of the future per-
formance of any such term, covenant, or condition by the
other party hereto, but the obligation of such other party
with respect to future performance shall continue in full
force and effect.
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Article XI
Force Majeure
11.1 In the event either party is rendered unable,
wholly or in part, by force majeure, to carry out any of its
obligations under this contract, or in the event Buyer is
rendered unable, wholly or in part, by force majeure to
operate Buyer's facilities, it is agreed that on such
party's giving notice and full particulars of such force
majeure in writing or by telegraph to the other party as
soon as possible after the occurrence of the cause relied
upon, then the obligations of the party giving such notice,
to the extent it is affected by force majeur 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 as to the extent
provided, but for no longer period. Such cause shall as far
as possible be remedied with all reasonable dispatch.
11.2 The term "force majeure ", as used herein, shall
include but not be limited to, acts of God, strikes, lockouts,
or other industrial disturbances, acts of the public enemy,
war, blockades, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, storms, floods, washouts,
droughts, tornadoes, hurricanes, arrests, and restraints of
government and people, explosions, breakage or damage to
machinery, equipment, pipelines or canals, and any other
inabilities of either party, whether similar to those
enumerated or otherwise, and not within the control of the
party claiming such inability, which by the exercise of due
diligence and care such party could not have avoided.
11.3 It is understood and agreed that the settlement
of strikes or lockouts shall be entirely within the discretion
of the party having the difficulty, and the above requirement
that any force majeure be remedied with all reasonable
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dispatch shall not require the settlement of strikes or
lockouts by acceding to demands of the opposing party when
such course is inadvisable in the discretion of the party
having the difficulty.
11.4 Buyer shall not be guaranteed any specific quantity
or pressure of water whenever Seller's treated water supply
is limited or when Seller's equipment may become inoperative
due to unforeseen breakdown or scheduled maintenance and
repairs and Seller is in no case to be held to any liability
for failure to furnish any specific amount or pressure of
water. Seller agrees that it will attempt to make any
necessary repairs or adjustments to its equipment within
reasonable times mutually agreeable to both parties.
Article X11
Addresses and Notices
12.1 Until Buyer is otherwise notified in writing by
Seller, the address of Seller is and shall remain as follows:
Baytown Area Water Authority
2401 market Street
Baytown, Texas 77520
Until Seller is otherwise notified in writing by Buyer,
the address of Buyer is and shall remain as follows:
Lake Municipal Utility District
% Rowe, izay & Young
Andrew P. Johnson, III
Suite 1680, American General Tower
2727 Allen Parkway
Houston, Texas 77019
12.2 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 deposit
in a United States Postal Service mailbox or receptacle of
certified or registered mail, with proper postage affixed
thereto, addressed to the respective other party at the
address set forth above or at such other address as the
parties respectively shall designate by written notice.
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Article XIII
Miscellaneous Provisions
13.1 This contract shall bind and benefit the respective
parties and their legal successors, but shall not otherwise
be assignable, in whole or in part, by either party without
first obtaining the written consent of the other; provided,
however, that Buyer shall have the right, without any consent
of Seller, to pledge or otherwise assign Buyer's rights
hereunder to the extent required by any mortgage, deed of
trust or other similar agreement to which Buyer may now be,
or hereafter become, a party or to otherwise assign Buyer's
rights and obligations hereunder in connection with any
merger or consolidation of any sale of all or substantially
all of Buyer's facilities, provided that Buyer's successor
or assignee, as the case may be, is a responsible person and
shall (by operation of law or otherwise) expressly assume
Buyer's obligations hereunder.
13.2 This contract shall be subject to all present and
future valid laws, orders, rules, and regulations of the
United States of America, the state of Texas, and of any
regulatory body having jurisdiction.
13.3 This instrument contains all the agreements made
between the parties.
IN WITNESS WHEREOF, the parties hereto have executed
this contract in multiple copies, each of which shall be
deemed to be an original, but all of which shall constitute.
but one and the same contract, this ay of
1980.
LAKE MUNICIPAL UTILITY DISTRICT
ATTEST:
Albert Haddad, Secretary
By
Richard G. Myers, President
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ATTEST:
Peter R. Buenz, Secretary
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BAYTOWN AREA WATER AUTHORITY
By
Robert L. Gillette, President
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