Ordinance No. 4,33051126 -7
ORDINANCE NO. 4330
AN ORDINANCE APPROVING THE BAYTOWN AREA WATER
AUTHORITY'S CONTRACTS WITH SAN JACINTO PLACE MUNICIPAL
UTILITY DISTRICT NUMBERS 1 AND 2 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 has
approved contracts to supply treated water to San Jacinto Place Municipal Utility
District Numbers 1 and 2, copies of which are attached as Exhibit "A" and "B" and
made a part hereof; and
WHEREAS, the Baytown Area Water Authority desires that the City Council
of the City of Baytown approve these Contracts; 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 contracts between the Baytown Area Water Authority and San Jacinto Place
Municipal Utility District Numbers 1 and 2, copies of which are attached as Exhibit
"A" and "B."
Section 2: This ordinance shall take effect immediately from and after its
passage by the City Council of the City of Baytown.
INTRODUCED, READ, and PASSED by the affirmative vote of the City
Council of the City of Baytown, this the 26th day of November, 1985.
•,
TIT I.H TO, Mayor
ATTEST:
EN P. HAIL, Cfty -Clerk
APPROVED:
OR ME— � � �•,
51126 -7a
W- 10LESALE WATER SUPPLY CONTRACT
IREATED WATER
SAN JACINTO PLACE NON CIPAL UTILITY DISTRICT NO. 1
THE STATE OF TEXAS
COUNTY OF HARRIS
This Contract made and entered into on the date hereinafter
last specified by and between the BAYTOINN AREA WATER AUTHORITY, a
governmental agency and 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 SAN JACINTO PLACE NUNICIPAL UTILITY
DISTRICT NO. 1, which is principally situated in the
extraterritorial jurisdiction of Baytown, Harris County, Texas,
and has its principal office in Houston, Harris County, Texas,
(hereinafter called "buyer ").
W 1 T N E S S E T H:
W- iEREAS, 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 or contracted with Seller to construct certain
facilities to enable Buyer to receive the aforementioned treated
water; and
WHEREAS, Setter 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 Setter 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 hereinafter set forth, and
Seller and Buyer specifically contemplate the provisions of
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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 Texas Water Code;
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 o take and pay for,
or to pay for, if not taken, during any calendar month under the
provisions of Article III hereof.
2. "t,/GD" is an abbreviation for million gallons of water
per day. As used in this contract, "M.U" 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 M31-�
for a calendar month, for example, is calculated as follows: Two
million gallons multiplied by the number of days in such calendar
month.
Article II
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 quantities, 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
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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 (906)
of Buyer's minimum 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 W Date - No minimum purchase required.
1st
seven months after W Date
.U25
Ivry
2nd
year it of „
.050
M3D
3rd
year of "
.750
NW
4th
year " " "
.100
M�D
5th
year if " "
.127
NGL)
To determine the minimum monthly quantities for Buyer, the
minimum in terms of ivGD (from the above tabulation) shall be
multiplied by the number of days in the month.
As used herein, "Initial Delivery" rneans the date on which
Buyer is ready to receive treated water from Seller, of which
elate Buyer shall give Seiler one (1) month advance notice, but
which in no event shall be later than June 1, 1987.
As used herein, "M' 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 gallons per day
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
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the minimum monthly take or pay cornmitment of Buyer for the
remaining period of the term of this Contract. In the event the
total requirements of purchases 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, affect, interfere 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.
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 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 As a contribution to the capital investment of the
Seller and in consideration for connection of buyers work system,
EIGHTY -TWO THOUSAND THREE HUNDRED EIGHTY -SEVEN AND 5 0 / 1 U U
($82,387.50) UOLLARS, within two (2) weeks of the funding of the
first issue of capital improvement bonds by the Buyer.
Notwithstanding the above, however, the Buyer is obliged and
hereby promises to pay or cause to be paid to the Seller said
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amount no later than two (2) years from the date of this
Contract. Additionally, in order to further secure Buyer's
assurance of the availability of such funds, the Buyer will
provide or cause to be provided to the Seller an irrevocable
letter of credit, payable to the Seller, in a form acceptable to
the Seller in the amount of EIGHTY -TWO THOUSAND THREE HUNDRED
EIC;HTY -SEVEN A143 501100 ($82,387.50) WLLAKS, so that, should the
Seiler be required to enlarge or expand its water treatment
facilities to provide treated water to Buyer in the amounts set
forth herein prior to the payment to the Seller by the Buyer of
EIGHTY -TWO THOUSAND THREE HUNDRED EIGHTY -SEVEN AND 50/100
($82,387.50) DOLLARS described above, then, in such event, the
Letter of Credit can be drawn upon by the Seller in such amounts
and installments necessary in order to provide funds for such
enlargement or expansion of water treatment facilities in the
amount of Buyer's pro rata share of any such capital expansion
casts. The Seller shall also be entitled to draw upon the full
amount of such letter of credit if the full amount of the capital
investment contribution has not been paid within two (2) years of
the date of this Contract.
3.2 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 (10%) the minimum monthly
quantity obligation of Buyer designated herein, an additional
charge of ten percent (10%) upon the entire monthly charge will
be made over what the monthly charge would be as determined from
Section 3.2.
3.3 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 3.2;
provided, however, that except where an independent rate analysis
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conducted by a qualified concern indicates that a certain rate
increase is required, the price or prices for treated water shall
not be increased percentagewise 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.
3.4 The total price or charge to Buyer for water hereunder
shall be the price or prices for water referred to in Sections
3.2 and 3.3 above.
Article 1V
Reports
Within thirty (30) days after 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 its own cost and expense, Buyer shall furnish and
install or contract with Seller to furnish and install at the
point of delivery hereunder, measuring equipment properly
equipped with meters, totalizers and devices of standard type for
measuring and recording accurately the quantity of water
delivered under this contract. The meters shall have a capacity
for measuring the quantity of water delivered within an accuracy
tolerance of two per cent (2 %) plus or minus for a given rate of
flow. Buyer shall also install, or contract with Seller to
install, operate and maintain, as required by Seller, pressure
regulating devices and equipment. Such measuring equipment shall
be approved by Seller, and after Seller's approval of the
installation, same 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
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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 order to
maintain the accuracy tolerance within the guarantees of the
manufacturer thereof, not to exceed a tolerance of two percent
(2%), at least once every twelve (12) months. At reasonable
intervals, Seller agrees to properly check and calibrate the flow
recording and totalizing measuring equipment 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 with a copy of the results of ail checks and
calibration test 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 %) 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 (5 %) percent
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
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51126 -7g
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
later, but 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 a 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 (nay 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 V1
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 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.
51126 -7h
6.2 The measuring equipment shall be read on the last day
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
offices 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
(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
Seiler.
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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, 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 respective ownership and control.
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 Seller
from all damage to real and personal property occasioned or
caused by the making of the water connection or connections
herein referred to or caused by the furnishing of water
hereunder, 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.
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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 foe
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 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 treated water for domestic
purposes, fighting fires, sprinkling streets, flushing sewers and
drains, watering parks and parkways, and recreational purposes
including public and private swirrming 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 (75 %) percent
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
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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 requesting that the same be
remedied with promptness and dispatch. In the event Buyer within
sixty (50) 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 NGD 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 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
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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 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 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 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 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, lighting,
earthquakes, fires, storms, floods, washouts, droughts,
tornadoes, hurricanes, arrests and restraints of government and
people, explosions, breakage or damage to machinery, equipment,
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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 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
unforseen 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 XI
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:
Leonard Koehn Hurt Schweinle Strawn and Ingoldsby
Attorneys at Law
Suite 150
6750 West Loop South
Bellaire, Texas 77401
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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 deerned 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.
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 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 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 approval or
consent is given before or after the time given herein.
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13.4 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 the day of , 1985.
ATTEST:
Secretary
ATTEST:
PETER BLIENIZ, Secretary
SAN JACINTO PLACE "ICIPAL UTILITY
DISTRICT NO. 1
By
President
BAYTOWN AREA WATER AUTHORITY
By
ROBERT GILLETTE, President
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W- OLESALE WATER SUPPLY CONTRACT
TKLA—rM WATM
SAN JACINTO PLACE Nt NICIPAL UTILITY DISTRICT NO. 2
THE STATE OF TEXAS
COUNTY OF HARRIS
This Contract made and entered into on the date hereinafter
last specified by and between the BAYTOWN AREA WATER AJTHURITY, a
governmental agency and body politic and corporate which is
principally situated in Harris County, Texas, and has its
principal office in Baytown, Harris County, Texas, (hereinafter
called "Seiler "), and SAN JACINTO PLACE MUNICIPAL UTILITY
DISTRICT NO. 2, which is principally situated in the
extraterritorial jurisdiction of Baytown, Harris County, Texas,
and has its principal office in Houston, Harris County, Texas,
(hereinafter called "Buyer ").
W I T N E S S E T H:
Vk- IEREAS, 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 tsuyer as
treated water, at several paints of delivery, and Buyer has
constructed or contracted with Seller to construct certain
facilities to enable Buyer to receive the aforementioned treated
water; and
VVHEREAS, 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 hereinafter set forth, and
Seller and Buyer specifically contemplate the provisions of
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51125 -7q
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 Texas Water Code;
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 shaiI be construed to have meanings as
follows:
1. "Minimum monthly quantity" shall mean the minimum
quantity of water which Buyer is obligated to o take and pay for,
or to pay for, if not taken, during any calendar month under the
provisions of Article III hereof.
2. "MGU" is an abbreviation for million gallons of water
per day. As used in this contract, "MAD" 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 NGD
for a calendar month, for example, is calculated as follows: Two
million gallons multiplied by the number of days in such calendar
rnonth.
Article II
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 quantities, 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
2
51126 -7r
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 Buyer's minimum 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 year after MP Date .U50 Nth
2nd year it .100 N D
3rd yea r " " . 15 0 NLj)
4th year to .206 MGD
To determine the minimum monthly quantities for Buyer, the
minimum in terms of iA�U (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 one (1) month advance notice, but
which in no event shall be later than January 1, 1968.
As used herein, "MP Date" means minimurn purchase date, the
date at the end of the first calendar month during which the
Buyer purchases an average of at least 10,000 gallons per day
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
Seiler 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
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51126 -7s
remaining period of the term of this Contract. In the event the
total requirements of purchases 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,
5eller reserves the right to reject any
point of delivery
designated by Buyer which would, affect,
interfere 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.
2.5 The treated water to be delivered
shall rneet minimum
standards prescribed by the State of Texas for
municipal purposes
or any standards which may supersede them.
2.6 Buyer shalt own and be responsible for ail 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 As a contribution to the capital investment of the
Seller and in consideration for connection of Buyers work system,
ONE HUNDRED THIRTY-THREE THOUSAND EIGHT HLJNDREU SIXTY-SEVEN A D
50/100 ($133,867.50) UOLLARS, within two (2) weeks of the funding
of the first issue of capital improvement bonds by the Buyer.
Notwithstanding the above, however, the Buyer is obliged and
hereby promises to pay or cause to be paid to the Seller said
amount no I a t e r than two ( 2 ) years from the date of this
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51126 -7t
Contract. Additionally, in order to further secure Buyer's
assurance of the availability of such funds, the Buyer will
provide or cause to be provided to the Seller an irrevocable
letter of credit, payable to the Seller, in a form acceptable to
the Seller in the arnount of ONE HUNDRED THIRTY -THREE THOUSA4)
EIC-A-iT HUNDRED SIXTY -SEVEN AND 50/100 ($133,867.50) DOLLARS, so
that, should the Seller be required to enlarge or expand its
water treatment facilities to provide treated water to Buyer in
the amounts set forth herein prior to the payment to the Seller
by the Buyer of CM HJ4_'*ZED THIRTY -THREE THOUSAND EIUHT HUNDRED
SIXTY -SEVEN AND 50/100 ($133,867.50) DOLLARS described above,
then, in such event, the Letter of Credit can be drawn upon by
the Seller in such amounts and installments necessary in order to
provide funds for such enlargement or expansion of water
treatment facilities in the amount of Buyer's pro rata share of
any such capital expansion costs. The Seller shall also be
entitled to draw upon the full amount of such letter of credit if
the full amount of the capital investment contribution has not
been paid within two (2) years of the date of this Contract.
3.2 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 (10%) the minimum monthly
quantity obligation of Buyer designated herein, an additional
charge of ten percent (10`i6) upon the entire monthly charge will
be made over what the monthly charge would be as determined from
Section 3.2.
3.3 Additionally, Buyer understands and agrees that Seller
may at any time, by order duty enacted, increase or change the
price or prices for treated water as set forth in Section 3.2;
provided, however, that except where an independent rate analysis
conducted by a qualified concern indicates that a certain rate
5
51126 -7u
increase is required, the price or prices for treated water shall
not be increased percentagewise 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.
3.4 The total price or charge to Buyer for water hereunder
shall be the price or prices for water referred to in Sections
3.2 and 3.3 above.
Article 1V
Reports
Within thirty (30) days after 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 its own cost and expense, buyer shall furnish and
install or contract with Seller to furnish and install at the
paint of delivery hereunder, measuring equipment properly
equipped with meters, totalizers and devices of stanuard type for
measuring and recording accurately the quantity of water
delivered under this contract. The meters shall have a capacity
for measuring the quantity of water delivered within an accuracy
tolerance of two per cent (2 %) plus or minus for a given rate of
flow. Buyer shall also install, or contract with Seller to
install, operate and maintain, as required by Seller, pressure
regulating devices and equipment. Such measuring equipment shall
be approved by Seiler, and after Seller's approval of the
installation, same 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
51126 -7v
measurement and quantity of treated water actually delivered
hereunder, but the reading of the meters for purposes of billing
shall be done by Setter.
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 guarantees of the
manufacturer thereof, not to exceed a tolerance of two percent
(2%), at least once every twelve (12) months. At reasonable
intervals, Seller agrees to properly check and calibrate the flow
recording and totalizing measuring equipment 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 with a copy of the results of a I I checks and
calibration test performed on said measuring equipment. If any
tests or calibration checks show a condition of inaccuracy,
adjustments shall be made irnnediately 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 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 1f, upon any test, the percentage of inaccuracy of any
measuring equipment is found to be in excess of five (5%) percent
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
7
51126 -7w
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
later, but not to exceed one hundred twenty (1Z0) 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 a 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 V1, the terra "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 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.
1:1
51126 -7x
6.2 The measuring equipment shall be read on the last day
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
offices as specified in Article
X11 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
(106) 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.
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51126 -7y
Article VII
Title to and Responsibility for Water
7.1 Title to, possession, and control of water shall remain
in Seiler, 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 respective ownership and control.
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 Seller
from all damage to real and personal property occasioned or
caused by the making of the water connection or connections
herein referred to or caused by the furnishing of water
hereunder, and shall also save and keep harmless the Seiler 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.
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51126 -7z
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 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 treated water for domestic
purposes, fighting fires, sprinkling streets, flushing sewers and
drains, watering parks and parkways, and recreational purposes
including public and private swirrrning 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 (75 %6) percent
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
11
51125 -7aa
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 U on 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 requesting that the same be
remedied with promptness and dispatch. 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 Seiler is unable to
deliver to Buyer on each day the minimum N-�D 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 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
12
51126 -7bb
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 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 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 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 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, epidernics, landslides, lighting,
earthquakes, fires, storms, floods, washouts, droughts,
tornadoes, hurricanes, arrests and restraints of government and
people, explosions, breakage or damage to machinery, equipment,
13
51126 -7cc
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 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
unforseen 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:
Leonard Koehn Hurt Schweinle Strawn and Ingoldsby
Attorneys at Law
Suite 150
6750 West Loop South
Bellaire, Texas 77401
14
51126 -7dd
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.
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 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 Arnerica, 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 approval or
consent is given before or after the time given herein.
15
51126 -7ee
13.4 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 the day of , 1985.
ATTEST:
Secretary
ATTEST:
PETER BUENZ, Secretary
SAN JACINTO PLACE NLNICIPAL UTILITY
DISTRICT N0. 2
By
President
BAYTCMt4 AREA WATER AUTHORITY
By
ROBER CT LLETTE, President
16
W-DLESALE WATER SUPPLY CONTRACT
TREATED WATER
SAN JACINTO PLACE N ICIPAL UTILITY DISTRICT NO. 1
THE STATE OF TEXAS
COUNTY OF HARRIS
This Contract made and entered into on the date hereinafter
last specified by and between the BAYTOMN AREA WATER AUTHORITY, a
governmental agency and 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 SAN JACINTO PLACE NJNICIPAL UTILITY
DISTRICT NO. 1 , which is principally situated in the
extraterritorial jurisdiction of Baytown , Harris County , Texas ,
and has its principal office in Houston , Harris County , Texas ,
(hereinafter called "Buyer") .
W I T N E S S E T H:
MiHEREAS, 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 or contracted with Seller to construct 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 hereinafter set forth , and
Seller and Buyer specifically contemplate the provisions of
1
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 Texas Water Code;
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 o take and pay for ,
or to pay for , if not taken , during any calendar month under the
provisions of Article III hereof.
2 . "MGD" is an abbreviation for million gallons of water
per day. As used in this contract , "NGD" 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 M3D
for a calendar month, for example , is calculated as follows : Two
million gallons multiplied by the number of days in such calendar
month.
Article II
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 quantities , 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
2
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 Buyer ' s minimum 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 NP Date - No minimum purchase required.
1st seven months after NP Date .025 NGD
2nd year of if of .050 NGD
3rd year It
It
of .750 NGD
4th year of " of . 100 NGD
5th year of It . 127 MOD
To determine the minimum monthly quantities for Buyer , the
minimum in terms of NGD ( 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 one ( 1 ) month advance notice , but
which in no event shall be later than June 1 , 1987 .
As used herein, "NP 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 gallons per day
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
3
the minimum monthly take or pay commitment of Buyer for the
remaining period of the term of this Contract. In the event the
total requirements of purchases from Seller plus Seller ' s other
obligations or com-ni tments 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 , affect , interfere 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.
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 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 As a contribution to the capital investment of the
Seller and in consideration for connection of Buyers work system,
EIGHTY-TWO THOUSAND THREE HUNDRED EIGHTY- SEVEN AND 50/ 100
($82 ,387.50) DOLLARS , within two (2) weeks of the funding of the
first issue of capital improvement bonds by the Buyer .
Notwithstanding the above , however , the Buyer is obliged and
hereby promises to pay or cause to be paid to the Seller said
4
amount no later than two ( 2 ) years from the date of this
Contract . Additionally , in order to further secure Buyer ' s
assurance of the availability of such funds , the Buyer will
provide or cause to be provided to the Seller an irrevocable
letter of credit , payable to the Seller , in a form acceptable to
the Seller in the amount of EIGHTY-TWO THOUSAND THREE HUNDRED
EIGHTY-SEVEN AND 50/100 ( $82 ,387 .50) DOLLARS, so that , should the
Seller be required to enlarge or expand its water treatment
facilities to provide treated water to Buyer in the amounts set
forth herein prior to the payment to the Seller by the Buyer of
EIGHTY-TWO THOUSAND THREE HUNDRED EIGHTY- SEVEN AND 50/ 100
($82 ,387.50) DOLLARS described above , then , in such event , the
Letter of Credit can be drawn upon by the Seller in such amounts
and installments necessary in order to provide funds for such
enlargement or expansion of water treatment facilities in the
amount of Buyer ' s pro rata share of any such capital expansion
costs . The Seller shall also be entitled to draw upon the full
amount of such letter of credit if the full amount of the capital
investment contribution has not been paid within two (2) years of
the date of this Contract.
3 . 2 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 ( 10%) the minimum monthly
quantity obligation of Buyer designated herein , an additional
charge of ten percent ( 10%) upon the entire monthly charge will
be made over what the monthly charge would be as determined from
Section 3. 2.
3 . 3 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 .2;
provided , however , that except where an independent rate analysis
5
conducted by a qualified concern indicates that a certain rate
increase is required , the price or prices for treated water shall
not be increased percentagewise 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 . 4 The total price or charge to Buyer for water hereunder
shall be the price or prices for water referred to in Sections
3. 2 and 3 . 3 above.
Article IV
Reports
Within thirty ( 30 ) days after 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 its own cost and expense , Buyer shall furnish and
install or contract with Seller to furnish and install at the
point of delivery hereunder , measuring equipment properly
equipped with meters , totalizers and devices of standard type for
measuring and recording accurately the quantity of water
delivered under this contract. The meters shall have a capacity
for measuring the quantity of water delivered within an accuracy
tolerance of two per cent (2%) plus or minus for a given rate of
flow. Buyer shall also install , or contract with Seller to
install , operate and maintain , as required by Seller , pressure
regulating devices and equipment . Such measuring equipment shall
be approved by Seller , and after Seller ' s approval of the
installation, same 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
6
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 order to
maintain the accuracy tolerance within the guarantees of the
manufacturer thereof , not to exceed a tolerance of two percent
( 2%) , at least once every twelve ( 12 ) months . At reasonable
intervals , Seller agrees to properly check and calibrate the flow
recording and totalizing measuring equipment 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 with a copy of the results of all checks and
calibration test performed on said measuring equipment . If any
tests or calibration checks show a condition of inaccuracy ,
adjustments shall be made irrmediately 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 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 ( 5%) percent
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
7
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
later , but 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 a 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 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.
a
6 . 2 The measuring equipment shall be read on the last day
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
offices 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
( 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 .
9
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 , 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 respective ownership and control .
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 Seller
from all damage to real and personal property occasioned or
caused by the making of the water connection or connections
herein referred to or caused by the furnishing of water
hereunder , 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.
10
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 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 treated water for domestic
purposes , fighting fires , sprinkling streets , flushing sewers and
drains , watering parks and parkways , and recreational purposes
including public and private swirrming 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 ( 75%) percent
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
11
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 requesting that the same be
remedied with promptness and dispatch. 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 W3D 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 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
12
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 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 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 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 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 , lighting ,
earthquakes , fires , storms , floods , washouts , droughts ,
tornadoes , hurricanes , arrests and restraints of government and
people , explosions , breakage or damage to machinery, equipment ,
13
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 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
unforseen 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:
Leonard Koehn Hurt Schweinle Strawn and Ingoldsby
Attorneys at Law
Suite 150
6750 West Loop South
Bellaire, Texas 77401
14
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.
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 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 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 approval or
consent is given before or after the time given herein.
15
13 . 4 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 the day of �� � , 1985.
SAN JACINTO PLACE M-NICI UTILITY
DISTRICT 1
By Gv
lei qXr
ATTE
t, Sec
PAVID m ~.
u`-1 N
BAYTOM AREA WATER AUTFIORITY
R BERG` GILLETTE, President
ATTEST:
PETER , cretary
16
MOLESALE WATER SUPPLY CONTRACT
TREATED WATER
SAN JACINTO PLACE M-IICIPAL UTILITY DISTRICT NO. 2
THE STATE OF TEXAS
COUNTY OF HARR I S
This Contract made and entered into on the date hereinafter
last specified by and between the BAYTOWN AREA WATER AUTHURITY, a
governmental agency and 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 SAN JACINTO PLACE MJNICIPAL UTILITY
DISTRICT NO. 2 , which is principally situated in the
extraterritorial jurisdiction of Baytown , Harris County , Texas ,
and has its principal office in Houston , Harris County , Texas ,
( hereinafter called "Buyer") .
W I T N E S S E T H:
VYI-fEREAS, 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 or contracted with Seller to construct 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 hereinafter set forth , and
Seller and Buyer specifically contemplate the provisions of
1
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 Texas Water Code;
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 o take and pay for ,
or to pay for , if not taken, during any calendar month under the
provisions of Article III hereof.
2 . "MGD" is an abbreviation for million gallons of water
per day. As used in this contract , "MaD" 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 M3D
for a calendar month, for example, is calculated as follows : Two
million gallons multiplied by the number of days in such calendar
month.
Article II
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 quantities , 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
2
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 Buyer ' s minimum 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 NP Date - No minimum purchase required.
1st year after MP Date .050 NCO
2nd year it if to . 100 K D
3rd year it of it . 150 NOD
4th year of Is if .206 MGD
To determine the minimum monthly quantities for Buyer , the
minimum in terms of NGD ( 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 one ( 1 ) month advance notice , but
which in no event shall be later than January 1 , 1988.
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 gallons per day
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
3
remaining period of the term of this Contract . In the event the
total requirements of purchases 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 , affect , interfere 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.
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 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 As a contribution to the capital investment of the
Seller and in consideration for connection of Buyers work system,
ONE HUNDRED THIRTY-THREE THOUSAND EIGHT hLJ DRED SIXTY-SEVEN AND
50/100 ($133 ,867 . 50) DOLLARS, within two (2) weeks of the funding
of the first issue of capital improvement bonds by the Buyer .
Notwithstanding the above , however , the Buyer is obliged and
hereby promises to pay or cause to be paid to the Seller said
amount no later than two ( 2 ) years from the date of this
4
Contract . Additionally , in order to further secure Buyer ' s
assurance of the availability of such funds , the Buyer will
provide or cause to be provided to the Seller an irrevocable
letter of credit , payable to the Seller , in a form acceptable to
the Seller in the amount of ONE HUNDRED THIRTY-THREE THOUSAND
EIGHT HUNDRED SIXTY-SEVEN AND 50/100 ( $133 ,867 . 50 ) DOLLARS , so
that , should the Seller be required to enlarge or expand its
water treatment facilities to provide treated water to Buyer in
the amounts set forth herein prior to the payment to the Seller
by t h e Buyer of ONE HUNDRED THIRTY-THREE THOUSAND EIGHT HUNDRED
SIXTY- SEVEN AND 50/ 100 ( $1332867 . 50 ) DOLLARS described above ,
then , in such event , the Letter of Credit can be drawn upon by
the Seller in such amounts and installments necessary in order to
provide funds for such enlargement or expansion of water
treatment facilities in the amount of Buyer ' s pro rata share of
any such capital expansion costs . The Seller shall also be
entitled to draw upon the full amount of such letter of credit if
the full amount of the capital investment contribution has not
been paid within two ( 2) years of the date of this Contract .
3 . 2 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 ( 10%) the minimum monthly
quantity obligation of Buyer designated herein , an additional
charge of ten percent ( 10%) upon the entire monthly charge will
be made over what the monthly charge would be as determined from
Section 3. 2 .
3 . 3 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. 2;
provided , however , that except where an independent rate analysis
conducted by a qualified concern indicates that a certain rate
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increase is required , the price or prices for treated water shall
not be increased percentagewise 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 . 4 The total price or charge to Buyer for water hereunder
shall be the price or prices for water referred to in Sections
3 . 2 and 3 . 3 above.
Article IV
Reports
Within thirty ( 30 ) days after 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 its own cost and expense , Buyer shall furnish and
install or contract with Seller to furnish and install at the
point of delivery hereunder , measuring equipment properly
equipped with meters , totalizers and devices of standard type for
measuring and recording accurately the quantity of water
delivered under this contract. The meters shall have a capacity
for measuring the quantity of water delivered within an accuracy
tolerance of two per cent (2%) plus or minus for a given rate of
flow. Buyer shall also install , or contract with Seller to
install , operate and maintain , as required by Seller , pressure
regulating devices and equipment . Such measuring equipment shall
be approved by Seller , and after Seller ' s approval of the
installation , same 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
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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 order to
maintain the accuracy tolerance within the guarantees of the
manufacturer thereof , not to exceed a tolerance of two percent
( 2%) , at least once every twelve ( 12 ) months . At reasonable
intervals , Seller agrees to properly check and calibrate the flow
recording and totalizing measuring equipment 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 with a copy of the results of all checks and
calibration test 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%) 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 ( 5%) percent
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
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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
later , but 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 a 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 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 last day
of each month (or at such period of frequency arranged between
the parties ) at 8 : 0 0 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
offices 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
( 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 .
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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 , 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 respective ownership and control .
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 Seller
from all damage to real and personal property occasioned or
caused by the making of the water connection or connections
herein referred to or caused by the furnishing of water
hereunder , 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.
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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 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 treated water for domestic
purposes , fighting fires , sprinkling 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 ( 75%) percent
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
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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 requesting that the same be
remedied with promptness and dispatch. 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 NCaD 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 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
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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 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 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 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 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 , lighting ,
earthquakes , fires , storms , floods , washouts , droughts ,
tornadoes , hurricanes , arrests and restraints of government and
people , explosions , breakage or damage to machinery , equipment ,
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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 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
unforseen 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:
Leonard Koehn Hurt Schweinle Strawn and Ingoldsby
Attorneys at Law
Suite 150
6750 West Loop South
Bellaire, Texas 77401
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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.
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 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 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 approval or
consent is given before or after the time given herein.
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13 . 4 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 the -2 _ day of 1985.
SAN JACINTO PLACE KNICIPAL UTILITY
DISTRICT NO. 2
By
President
ATTE.S T
Secretar
BAYTOWN AREA WATER AUTHORITY
c
R BERT G LL TTE, President
ATTEST:
aiw
PETER BUENZ, ecretary
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