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Ordinance No. 3,48521014 -14 ORDINANCE NO. 3485 AN ORDINANCE APPROVING THE BAYTOWN AREA WATER AUTHORITY'S CONTRACT WITH HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 3, 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 subdivisions of the State; and WHEREAS, the Board of Directors of the Baytown Area Water Authority have approved a contract to supply treated water to Harris County Municipal Utility District No. 3, 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, TEXAS: Section 1: That the City Council of the City of Baytown hereby approves the contract between the Baytown Area Water Authority and Harris County Municipal Utility District No. 3, a copy of which is attached as Exhibit "A ". Section 2: This ordinance shall take effect from and after its passage. INTRODUCED, READ and PASSED, by the affirmative vote of the City Council of the City of Baytown on this the 14th day of October , 1982. 21014 -14a ATTEST: EILEEN P. HALL, City Clerk APPROVED: WA RANDALL E. STRONG, City'Attorney -2- 21014 -14b WHOLESALE WATER SUPPLY CONTRACT TREATED WATER THE STATE OF TEXAS 0 COUNTY OF HARRIS 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 Harris County Municipal Utility District No. 3, which is princi- pally situated in the extraterritorial jurisdiction of Baytown, Harris County, Texas, and has its principal office at Houston, Harris County, Texas, (hereinafter 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 water upon such terms and for the period of time as are 21014 -14c 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 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 Sta- tutes; 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. "GPD" is an abbreviation for gallons of water per day. As used in this contract, "GPD" 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 twenty thousand GPD for a calendar month, for example, is calculated as follows: Twenty thousand gallons multiplied by the number of days in such calendar month. Article II Sale and Delivery o.f Water 2.1 Subject to the terms and conditions of this contract, Seller agrees to sell and deliver (or cause to be delivered) -2- 21014 -14d 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 (90 %) 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 until MP Date - no minimum purchase required. 1st six months after MP Date 10,000 gpd 7th - 12th Month it If 25,000 gpd 2nd year It " 50,000 gpd 3rd year If 100,000 gpd 4th year " " 200,000 gpd 5th year " It " 412,000 gpd To determine the minimum monthly quantities for Buyer, the minimum in terms of GPD (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, of which date Buyer shall give Seller six (6) months' ad- vance notice, but which in no event shall be later than January 1, 1983. -3- 21014 -14e As used herein, "MP Date" means minimum purchase date, the date at the end of the first calendar month during which the Buyer purchases an average of at least 10,000 gpd for that month. 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 quan- tity 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, br 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 writ- ing 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. 21014 -14f In the event that Buyer should fail to designate a point of delivery acceptable to Seller by the date.of Initial 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 Buyer shall install an air gap which shall sepa- rate Buyer's system from that of Seller's. 2.7 Buyer shall own and be responsible for all lines connected to Seller's transmission line, beginning at the point where the metering device is installed to meter sales to 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 (loo) the minimum monthly quantity obligation of Buyer designated herein, an additional charge of five percent (5 %) upon the entire monthly charge will be made over what the monthly charge 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 -5- 21014 -14g 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. 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 with remote readouts, 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 (2u) 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 and responsibility of Seller. 21014 -14h 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 deter- mining the measurement and quantity of treated water actu- ally 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 order to maintain the accuracy tolerance within the guaran- tees of the manufacturer thereof, not to exceed a tolerance of two percent (20), 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, ad- justments shall be made immediately so said measuring equipment will register correctly within the aforesaid accuracy tolerance of two percent (2 %) 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 representa- tive. 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; -7- 21014 -141 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 (57o) 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 adjustment to correct the registration, whichever is latex, 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. 21014 -14j 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 begin- ning 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. 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 Wn 21014 -14k 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 (10 %) 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 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, possess- ion, 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. -10- 21014 -141 7.3 Seller shall not be responsible in damages for any failure to supply water or for interruption of the water furnished hereunder. Buyer agrees to save harmless the Buyer from all damage to real and personal property occasioned or caused by the making of the water connection or connections herein referred to or cause by the furnishing of water here- under, and shall also save and keep harmless the Seller from all damage of any kind, nature and description which may arise as the result of the making of this Agreement. Article VIII Term This contract shall be for a term of twenty (20) 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, parti- cularly Section 5.039(a) of the Texas Water Code. It is specifically agreed and understood that this agreement w 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. For the purpose of this section municipal purpose is defined as the use of _11- 21014 -14m treated water for domestic purposes, fighting fires, sprinkl- ing streets, flushing sewers and drains, watering parks and parkways, and recreational purposes including public and private swimming pools, the use of treated water in commercial enterprises supplied by the distribution system without special construction to meet its demands, and for the watering of lawns and family gardens. 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 purchas 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 -12- 21014 -14n matter with respect to which Buyer is in default and request- ing that the same be remedied with promptness and dispatch. In the event Buyer within sixty (60) days after the mailing 6 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, where- upon 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 GPD 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 pro- vided in Article XI hereof, Buyer shall be obligated to pay Seller only for the greater of (a) the quantities of 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- -13- 21014 -14o 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. 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 possi- ble 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 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 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 enume- rated 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. -14- 2X014 -14p 11.3 It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discret- ion of the party having the difficulty, and the above re- quirement that any force majeure be remedied with all reason- able 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 XII 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:. Harris County Municipal Utility District No. 3 ATTENTION: W. James 11urdaugh, Jr. Smith & Murdaugh 1811 Houston Natural Gas Bldg. 1200 Travis Houston, Texas 77002 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 -15- 21014 -14q 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. Article XIII Miscellaneous Provisions 13.1 This contract shall bind and benefit the respec- tive 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 other- wise 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 other- wise) 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 Whenever this contract requires or permits approval or consent to be hereafter given by any party, such approval or consent shall not be unreasonably withheld, and if finally given, shall be effective without regard to whether such ap- proval or consent is given before or after the time given here- in. 13.4 This instrument contains all the agreements made between the parties. -16- 21014 -14r 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 day of , 1982. HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 3 ATTEST: ATTEST: Secretary BAYTOWN AREA WATER AUTHORITY ME -17-