Ordinance No. 5,413E
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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
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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
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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.
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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,
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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
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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
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CEDAR BAYOU WATER SUPPLY COMPANY,
INC.
BY
ALBERT J. McMULLEN, President
BAYTOWN AREA WATER AUTHORITY
BY
ROBERT GILLETTE, President