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Ordinance No. 5,413E L7J 0 ORDINANCE NO. 5413 AN ORDINANCE APPROVING AND AUTHORIZING THE A CONTRACT BETWEEN THE BAYTOWN AREA 147ATER CEDAR BAYOU WATER SUPPLY COMPANY, INC.; FOR THE EFFECTIVE DATE THEREOF. AM M 0 .31 n � BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1® That the City Council of the City of Baytown, Texas, hereby approves and authorizes the execution of a contract for treated water between Cedar Bayou Water Supply Company, Inc. and Baytown Area Water Authority. A copy of said contract is attached hereto, marked Exhibit "A," and made a part hereof for all intents and purposes. Section 2: This ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown® INTRODUCED, READ City Council of the December, 19B9. and PASSED by the affirmative vote of the City of Baytown, this the 14th day of 6:M:METT O�.HUTTO, Mayor EILEEN P. HALL, City Clerk RAND ALL B. STRONG, ey -Attorney WHOLESALE WATER SUPPLY CONTRACT TREATED WATER CEDAR BAYOU WATER SUPPLY COMPANY 4 INC. THE STATE OF TEXAS 5 COUNTY OF HARRIS 5 This Contract made and entered into on the date hereinafter last specified by and between the Baytown 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 Cedar Bayou Water Supply Company, Inc. a Texas Corporation which is principally situated in the extraterritorial jurisdiction of Baytown, Harris County, Texas, and has its principal office in Baytown, Harris County, Texas, (hereinafter called "Buyer"). W I T N E S S E T H: WHEREAS, Seller has the right under a contract with the City of Houston to buy untreated waters from the City of Houston; and WHEREAS, Seller has constructed certain facilities to treat and deliver the aforementioned untreated water to Buyer as treated water, 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 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 Def initiona As used in this contract, the following terms are intended and used herein and shall be construed to have meanings as follows: 1. "MGD" is an abbreviation for million gallons of water per day. As used in this contract, "MGDh refers to a quantity of water during a period of time expressed for convenience in terms' of an average daily quantity during a calendar month (unless a different period of time is specified). The volume of two MGD for a calendar month, for example, is calculated as follows: Two million gallons multiplied by the number of days in such calendar month. Article II Sale and Delivery -of,Wa.teT 2.1 Subject to the terms and conditions of this contract, Seller agrees to sell and deliver (or cause to be delivered) to - 2 -- Buyer, all of Buyer's water requirements of treated water at the point of delivery, and Buyer agrees to purchase from Seller, all of Buyer's treated water requirements for resale during the term of this Contract in the respective times hereinafter set forth. Buyer's estimated requirement is .05 MGD. Buyer shall give Seller one (1) month advance notice of the date on which Buyer is ready to receive treated water from Seller, but in no event shall said date be later than June 1, 1990. 2.2 The point 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 - 3 - 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. 2.3 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. 2.4 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. - 3 - Article III Rate and Prices 3.1 As a contribution to the capital investment for ground storage facilities of the Seller and in consideration for connection of Buyer's water system, Buyer shall pay to Seller $7r500.O0. In addition thereto Buyer shall pay to the City of Baytown $25,000.00 as a capital buy-in fee for elevated storage capacity and $28,000.00 for the City's connection fee. 3.2 Payment of the above described capital buy-in fees and connection fee shall be made to Seller at Seller's address, and Seller shall forward the appropriate amount due to the City of Baytown. Buyer shall pay to Seller the sum of the above described fees, being $60,500.00, with interest from June 1, 1990, at the rate of 8.25% per annum until paid. Principal and interest shall be payable in monthly installments of Seven hundred forty-two and 05/100 dollars ($742.05) commencing on the lst day of July 1, 1990, and on the first day of each month thereafter until June 1, 2000, on which last mentioned date the entire unpaid balance of principal and interest then owing shall become immediately due and payable. The interest shall be paid monthly by apportioning for that purpose out of each monthly payment when made, a sum sufficient to pay said interest; interest to be computed on the unpaid principal balance at the beginning of each monthly interval; the balance of the monthly payments after such apportionment to interest, shall be credited on the principal hereof. - 4 - 3.3 Failure to pay any installment as required, shall at the election of the Seller, mature all of the principal without notice, and all of the principal, and then accrued interest shall at once become due and payable. Furthermore, such failure to pay any installment shall be a breach of this contract and entitle Seller to terminate any and all of its obligations under this contract. The Buyer reserves the right to prepay the balance of the amount due at any time without prepayment penalty. The amount required under this section is in addition to the charge for the water purchased by Buyer under this contract. 3.4 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 $1.10 per 1000 gallons of water utilized by Buyer. 3.5 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 3.4; provided, however, that except where an independent rate analysis 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. 3.6 The total price or charge to Buyer for water hereunder shall be the price or prices for water referred to in Sections 3.4 and 3.5 above. - 5 - 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 percent (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 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. - 7 - 0 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 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 0 rated for such partial month. 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 total quantity of treated water delivered to Buyer in such month determined as set forth in Article V 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 00 during the preceding month. Payment of such statements shall be due and payable to Seller at its offices in Baytown, Harris - 9 - County, Texas, on or before the twentieth (20th) day after receipt of such statement. 6.5 Should Buyer fail to tender payment of any amount when due, interest thereon shall accrue at the rate of ten percent (10%) per annum from the date when due until paid. 6.6 In the event Buyer fails to tender payment of any amount when due and such failure continues for forty-five (45) days after notice in writing to Buyer of such default, Seller may suspend delivery of treated water hereunder, but the exercise of such right shall be in addition to any other remedy available to Seller. Article VII Title to and Responsibility for water 7.1 Title to, possession, and control of water shall remain in Seller, or its assigns, to the point of delivery as provided in Section 2.4 hereof where title to, 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 INFEM 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 final execution of this contract. ARTICLE' IX Performance by Seller and Buyer 9.1 Seller convenants 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 00 State of Texas, particularly Section 5.039(a) of the Texas Water Code. It is specifically agreed and understood that this - 11 - 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. 93 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 expenses, reasonable attorney fees, and all other remedies available to the City of Houston. Buyer hereby agrees to totally indemnify and save Seller harmless fom and against any such expenses and liability which ,Seller might incur, or any loss - 12 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 UL?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. 101.2 During any monthly period in which Seller is unable to deliver to Buyer, Buyer's daily requirements of water, 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 quantities of treated water actually delivered to Buyer under this contract during such month. During - 13 - 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 - 14 - 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, 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 unforeseen breakdown or scheduled maintenance and repairs, and Seller is in no case to be held to any liability for failure to furnish any specific amount or pressure of water. Seller agrees that it will attempt to make any necessary repairs or adjustments to its equipment within reasonable times mutually agreeable to both parties. -- 15 - 0 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: Cedar Bayou Water Supply Company, Inc. Attn.: Albert J. McMullen, President 3012 Terry Lane Baytown, Texas 77521 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, -- 16 - 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 b�ecome,, 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. 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 - 17 - an original, but all of which shall constitute but one and the same contract, this the I day of r 19-. ATTEST: YVONNE McMULLEN, Secretary ATTEST: PETER BUENZ, Secretary 5 :5:19 :6 L7J CEDAR BAYOU WATER SUPPLY COMPANY, INC. BY ALBERT J. McMULLEN, President BAYTOWN AREA WATER AUTHORITY BY ROBERT GILLETTE, President