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Ordinance No. 10,003Published in the Baytown Sun on Tuesday, February 15, 200 ORDINANCE NO. 10,003 and Thursday, February 17 , 20 • AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AMENDING CHAPTER UTEXAS,S'BY OF THE ADDING OA NEW ORDINANCES, CITY OF BAYTOWN, ARTICLE TO BE NUMBERED AND ENTITLED ARTICLE VII "IN -CITY MUNICIPAL UTILITY DISTRICTS," IN ORDER TO ESTABLISH AND DELINEATE THE PROCEDURES, CONDITIONS, GUIDELINES AND RULES ADDRESSING THE REQUIREMENTS R PATHE OF IN- CITY MUNICIPAL UTILITY D NIAXIMUM PENALTY OF FIVE HUNDRED RAND � NOONTA.INING�S SAVINGS PROVIDING A REPEALING CLAUSE; AND PROVIDING FOR THE PUBLICATION AND EFFECTIVE DATE THEREOF. BE -IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That Chapter 98 "Utilities" of the Code of Ordinances, City of Baytown, Texas, is hereby amended by adding a new article to be numbered and entitled Article VII "In- City Municipal Utility Districts," which shall read as follows: CHAPTER 98. UTILITIES ARTICLE VII. IN -CITY MUNICIPAL UTILITY DISTRICTS Sec. 98 -701. Policy. There is hereby adopted a policy and plan establishing the conditions under which a municipal utility district may be formed within the corporate limits of the city, which shall read as follows: The following terms, conditions and standards establish the basis under which the city council may consent to the formation of a municipal utility district within the corporate limits of the city in writing. Sec. 98 -702. Resolution to create a municipal utility district. (a) The city's consent to the creation of a municipal the Texas utility l Water proposed and the Texas within the corporate limits of the city under Constitution Section 59, Article XVI, shall be evidenced by the adoption of a resolution. (b) No resolution shall be adopted consenting to the creation of a municipal utility district until the city council finds that the proposed municipal utility district (1) will be an • economically feasible and sound development benefiting the city, (2) will not adversely affect the existing city water, sewer and storm facilities or other city utilities or city functions, and (3) will not increase the city's taxes or utility rates or adversely impact the ,1 17+ city's financing or bond rating, and that (4) all of the conditions imposed by this article have been agreed to by the majority in value of landowners within the proposed municipal utility district. Sec. 98 -703. Conditions to creation. The following conditions shall apply to every municipal utility district within the city: (1) the municipal utility district may acquire property outside its boundaries with prior written consent of the city only for purposes of providing storm water drainage and detention, potable water distribution, wastewater collection, and for other purposes permitted by law; provided that no land shall be annexed or added to the municipal utility district unless the city has given its written consent by resolution of the city council to such addition or annexation; (2) the municipal utility district shall not provide services for, or acquire property to provide services for, any property outside its boundaries without the prior written consent of the city; (3) the municipal utility district shall not allow use of easements or storm water drainage facilities owned or controlled by the municipal utility district for any property or development outside its boundaries without the prior written consent of the city; (4) the municipal utility district shall pay the actual costs incurred by the city for legal, engineering and financial advisory services in connection with the allocation agreement (hereinafter defined) and the adoption of a resolution consenting to creation of the municipal utility district; (j) the facilities to be constructed by the municipal utility district shall be designed and constructed in compliance with all applicable requirements and criteria of the applicable regulatory agencies and subject to the applicable provisions of the city's resolution granting a petition for inclusion of certain territory in the municipal utility district (the "consent resolution "); (6) Prior to the sale or offer to sell any bonds of the municipal utility district, the terms and conditions in this ordinance and the consent resolution must be approved and ratified in an instrument executed by the governing body and officers of the municipal utility and such instrument must be delivered to the city attorney; (7) the city shall not allow any connection to be made to the municipal utility • district's wastewater system until, with respect to such connection: h • (A) the municipal utility district has issued an assignment of capacity specifying the number of gallons per day of water supply and wastewater treatment allocated for such connection, and has provided a copy thereof to the city manager; (B) the city has inspected the connection and premises and has issued a building permit for that connection; and (C) all buildings or structures served by connections shall be located entirely within the boundaries of a lot or parcel shown in a plan, plat or replat filed with and finally approved by the city and duly recorded in the official records of the county where the property is located (provided this limitation shall not apply if no plan, plat or replat is required by applicable state statutes or city ordinances); (g) unless and until the city shall dissolve the municipal utility district and assume the properties, assets, obligations and liabilities of the municipal utility district, the bonds of the municipal utility district, as to both principal and interest, shall be and remain obligations solely of the municipal utility district and shall never be deemed or construed to be obligations or indebtedness of the city; (9) all contracts with third parties for construction of water, wastewater and storm water facilities to serve the proposed municipal utility district will contain the following provisions: (A) a requirement that all plans and specifications for construction of improvements or modification of improvements which are to be built to serve the municipal utility district and/or require approval of the Texas Commission on Environmental Quality be prepared in accordance with the then adopted city specifications and requirements for such facilities and delivered to the city for approval prior to submission to the Texas Commission on Environmental Quality. All plans and specifications presented to the bidders shall be approved by the city in writing prior to advertising for bids; (B) a requirement that prior to the construction of such facilities within the municipal utility district's territory, written notice by registered or certified mail be given to the city, stating the date that such construction will commence. (C) an agreement that all construction or modification of improvements to serve the municipal utility district will be subject to periodic inspections by the city or its duly authorized agent and that no underground improvements will be backfilled prior to inspection and written approval 0 by the city; 3 (D) all contracts for construction of improvements will be awarded in compliance with the terms contained within public bidding statutes in Chapter 49 of the Texas Water Code; If the municipal utility district is performing the services, the same terms and conditions as set forth herein shall be applicable to the municipal utility district. (10) as the municipal utility district's facilities are acquired and constructed, the Municipal utility district shall convey the same to the city, including all warranties relating to the facilities; provided, however, that the municipal utility district shall not convey, and the city shall not accept, stormwater detention systems; (11) as acquisition and/or construction of each phase of the facilities is completed, representatives of the city shall inspect the same and, if the city finds that the same has been completed in accordance with the final plans and specifications, the city will accept the same, whereupon such portion of the facilities shall be operated and maintained by the city at its sole expense; provided, however, that the city shall not accept, or operate and maintain, stormwater detention systems; and further provided, however, that in the event that the facilities have not been completed in accordance with the final plans and specifications, the city will immediately advise the municipal utility district in what manner said facilities do not comply, and the municipal utility district shall immediately correct the same, whereupon the city shall again inspect the facilities and accept the same if the defects have been corrected; .(12) the city shall bill and collect from customers of the facilities and shall from time to time fix such rates and charges for such customers of the facilities as the city, in its sole discretion, determines are necessary; provided that the rates and charges for services afforded by the facilities will be equal and uniform to those charged other similar classifications of users in non - municipal utility district areas of the city; and all revenues from the facilities shall belong exclusively to the city without rebate of such revenues to the municipal utility district; (13) the city may impose a charge for connection to the facilities at a rate to be determined from time to time by the city, provided the charge is equal to the sums charged other city users for comparable connections; and the connection charge shall belong exclusively to the city; (14) the municipal utility district is authorized to assess, levy and collect ad valorem taxes upon all taxable properties within the municipal utility district to provide for (a) the payment in full of the municipal utility district's obligations, including principal, redemption premium, if any, and interest on the bonds to be issued by the municipal utility district and to establish and maintain any interest and sinking fund, debt service fund or reserve fund, (b) for administration, operation and • maintenance purposes, all in accordance with applicable law and (c) to pay expenses of assessing and collecting the taxes. The city will levy and collect ad 4 • valorem taxes upon all taxable properties in the city, including the municipal utility district; (15) unless the municipal utility district is in default under the terms of its allocation agreement after reasonable opportunity to cure, the city shall not dissolve the municipal utility district until the water, wastewater and drainage utilities required to serve the municipal utility district have been completed and bonds issued by the municipal utility district to finance same; and the city shall afford the municipal utility district the opportunity to discharge any obligations of the municipal utility district pursuant to any existing agreements of the municipal utility district with third parties for construction of facilities, by either (a) authorizing the municipal utility district to sell its bonds before or during a transition period prior to the effective date of dissolution, as established by the city, (b) issuing bonds and selling bonds of the city pursuant to Vernon's Texas Codes Annotated, Local Government Code Section 43.080, as amended, in at least the amount necessary to discharge the municipal utility district's obligations, including those under any such agreements, or (c) providing written notice to the municipal utility district that the city has sufficient funds available from other sources to discharge the municipal utility district's obligations, including those under any such cxisting agrcements with third parties. The city shall have the right to dissolve the municipal utility district if construction of water, wastewater or drainage utilities required to serve the municipal utility district does not begin within thirty -six (36) months of execution of the allocation agreement; (16) all city ordinances and codes, including applicable permits, fees and inspections, shall be of full force and effect within the boundaries of the municipal utility district in the same manner as with respect to other areas within the city's corporate limits, except as specifically herein provided otherwise; (17) no bonds, other than refunding bonds, or notes of the municipal utility district shall be issued or sold unless not less than twenty (20) days following the filing of an application with the Texas Commission on Environmental Quality for the approval of projects and bonds, the municipal utility district provides the city with a copy of such application and not less than thirty (30) days prior to publication of notice of sale, the municipal utility district provides the city with a copy of the staff memorandum 'of Texas Commission on Environmental Quality approving the projects and bonds, a copy of its proposed bond order, preliminary official statement, bid form and notice of sale and the following criteria are met. The municipal utility district shall not issue bonds unless the following conditions have been satisfied: (A) The municipal utility district shall not issue any bonds, other than refunding bonds, unless the purpose for which the proceeds of such bonds • may be used is limited to one or more of the following and no others: W, 0 (i) Designing, purchasing and/or constructing or otherwise acquiring (a) Waterworks facilities to provide water supply for municipal, domestic, and commercial uses, excluding industrial uses, (b) Wastewater facilities to collect, transport, process, dispose of and control all domestic or communal wastes, excluding industrial waste, whether in fluid, solid or composite state, or (c) Storm water drainage and detention facilities to gather, conduct, divert and control local storm water or other local harmful excesses of water in the municipal utility district, 1i Purchasing, constructing, owning, operating, repairing, improving, () property, extending or otherwise acquiring interests in real improvements, facilities, appliances, equipment, buildings, p lants or structures necessary or incidental to the operation of waterworks facilities, «,astewater facilities, or storm water drainage facilities. Proceeds of the bonds for costs of operations of the municipal utility district shall not exceed ten percent (10 %) of the issuance amount; and (iii) All costs of issuance of the bonds (including but not limited to legal fees, financial advisory fees, administrative and organizational fees and expenses and costs of operations during construction, bond discount, capitalized interest, developer interest, creation costs, printing expenses, publication expenses and contingencies relative to facilities not yet under contract). Proceeds of the bonds for costs of operations of the municipal utility district shall not exceed ten percent (10 %) of the issuance amount. (B) The municipal utility district shall not sell or issue any bonds unless: (i) The terms of such bonds expressly provide that the municipal utility district reserves and shall have the right to redeem the bonds not later than the 15th anniversary of the date of issuance, without premium; (ii) The bonds, except refunding bonds, are sold after the taking of public bids therefor; (iii) None of such bonds and bonds sold to a federal or state agency, is other than refunding bonds, is sold for less than 95% of par; 6 (iv) The net effective interest rate on bonds so sold, taking into account any discount or premium as well as the interest rate borne by such bonds, does not exceed two percent (2 %) above the highest average interest rate reported by the Daily Bond Buyer in its weekly "20 Bond Index" during the one -month period next preceding the date notice of the sale of such bonds is given and bids for the bonds will be received not more than forty -five days after notice of sale of the bonds is given; (v) The maximum term of any debt issuance shall be no greater than 25 years; (vi) The minimum par amount of any bonds issued, except a final issue, shall be $1 million; (vii) Each issue of bonds shall be structured to achieve either level principal payments or level debt service payments, excluding the first two years of debt service; (viii) The municipal utility district shall submit to the city pro forma cash flows prepared in a manner consistent with the financial feasibility rules of the Texas Commission on Environmental Quality evidencing a municipal utility district tax rate (both maintenance and operations rate and interest and sinking rate combined) not to exceed $1.50 per $100 assessed valuation; and (ix) Each bond issue shall not include more than two years of capitalized interest. The city staff shall review the documents required to be provided hereunder and the evidence of compliance with the foregoing criteria within fifteen (15) days following receipt of same. If the city staff gives a favorable approval of the bonds, an item will be placed on the next available regular or special council meeting agenda for consideration by the city council. The issuance of bonds by the municipal utility district must be approved by the city council of the city, or its designee. Any costs incurred by the city in connection with review of the issuance of bonds shall be paid by the municipal utility district, in an amount not to exceed $2,500; (C) the municipal utility district's resolution authorizing the issuance of the municipal utility district's bonds must contain a provision that the pledge of the revenues from the operation of the municipal utility district's water and sewer and/or drainage system to the payment of the municipal utility district's bonds will terminate when and if the city takes over the assets of 7 the municipal utility district and assumes all of the obligations of the municipal utility district. (18) the city acknowledges that a municipal utility district has authority to assess an unlimited tax for payment of debt service. However, prior to implementation of any increase in tax rate above its initial rate, the municipal utility district shall make a formal presentation to city council explaining the need for the increase, at which time residents of the municipal utility district shall be given an opportunity to be heard. Notice of such presentation shall be sent to each owner of taxable property within the municipal utility district as reflected on its most recent certified tax roll. This provision shall be in addition to any requirements of notice and hearing which may be contained in the Texas Water Code and in the Texas Tax Code whicb apply to the municipal utility district; (19) in addition to the information the municipal utility district is required to file of record as required by the Texas Water Code, the municipal utility district shall annually deliver to each property owner within the municipal utility district, as reflected on its most recent certified tax roll, written notice of the existence of the municipal utility district and its right to assess taxes in addition to those assessed by the city. Such notice shall also contain a reference to the allocation agreement, the consent resolution and this paragraph. Such notice shall advise the property owner that such documents are available for inspection during regular business hours in the municipal utility district's office; (20) the majority in value of landowners within the proposed municipal utility district "allocation shall enter into a Utility Functions and Services Allocation Agreement ( agreement ") with the city, which shall contain the terms and conditions set forth in this Section 1.03, as well as other terms and conditions which may be agreed to by the city or imposed herein. The allocation agreement shall be assigned by the proponent to the municipal utility district upon its creation; (21) the allocation agreement shall be entered into simultaneously with the adoption of the consent resolution; (22) the municipal utility district shall establish an official meeting. location within the corporate limits of the city and at all times after the municipal utility district has 100 residential connections shall hold the meetings of its board of directors at such location; (23) in addition to any other notice requirements applicable to the municipal utility district, the municipal utility district must post an agenda of the meetings of its board of directors at all primary entrances to the municipal utility district and at the location designated for notices at city hall not less than 72 hours prior to any meeting. An agenda shall also be provided to the city manager of the city prior to any meeting of • the board of directors. • (24) the official office for recordkeeping of the municipal utility district must be accessible to the District's residents and shall not require a long distance phone call for a District resident to contact the official office for recordkeepmg; (25) the municipal utility district shall comply with all applicable requirements of the Texas Commission on Environmental Quality regarding the display of signage at entrances into the municipal utility district. The city may specify other conditions with which the municipal utility district must comply in this code, the resolution consenting to the creation of the municipal utility district, and/or the allocation agreement. Sec. 98 -704. Petition for creation of municipal utility district. Upon the presentation of a petition for consent for the creation of a municipal utility district within the corporate limits of the city, the majority in value of landowners within the proposed municipal utility district shall: (1) present evidence that the proposed municipal utility district contains 100 or more acres; present evidence that the petition is filed on behalf of the majority in value of Iandowners within the proposed municipal utility district; and show that the proposed municipal utility district is wholly within the corporate limits of the city; (2) present a preliminary report describing the municipal utility district and proposed use of the land within the municipal utility district showing that the proposed municipal utility district and land use are feasible; (3) present an estimate of assessed valuation of the municipal utility district showing the value of property as it exists on date of the petition; a build -out schedule showing the projected value of the property when 50% of the projected vertical improvements for the municipal utility district, exclusive of wastewater, water, sewer and drainage improvements, have been completed; and showing the projected value of the improvements upon completion of the development within the municipal utility district; and (4) agree that the majority in value of landowners within the proposed municipal utility district shall develop the property for the purposes substantially as described in the preliminary report, except as may otherwise be agreed by the proponent and the City, and that prior to commencement of any improvements, will comply with all provisions of the subdivision ordinances and zoning ordinances of the city. C • Sec. 98 -705. Other requirements. (a) The city reserves the right to impose other specific requirements relative to a given municipal utility district, including, but not limited to park requirements, construction material for houses and other buildings, amenities, and minimum lot sizes, which shall be agreed to and set forth in the allocation agreement. (b) The land within the District will be developed in accordance with the General Plan to be approved by the City. Sec. 98 -706. Abolition. It is the policy of the city that a municipal utility district created within the city should not be abolished until such time as it has retired all of its outstanding bonded indebtedness, so that the city's taxpayers outside the municipal utility district shall not have to pay off all or any part of the bonded indebtedness incurred by the municipal utility district. The city does reserve the right to abolish any municipal utility district, regardless of whether it has any outstanding debt, if it is deemed to be in the best interest of the city. Sec. 98 -707. City services. The city shall provide fire, police and other general city services to the areas within the municipal utility district similar to those provided in similarly situated non - municipal utility district areas of the city. Different levels of service may be provided if different characteristics of topography, land uses and population density constitute a sufficient basis for providing different levels of service as determined by the city. Section 2: Any person who fails to comply with any provision of this ordinance shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine not more than FIVE HUNDRED AND NO 1100 DOLLARS ($500.00). Each act of violation and each day upon which any such violation shall occur shall constitute a separate offense. In addition to the penalty prescribed above, the City may pursue other remedies such as abatement of nuisances, injunctive relief, administrative adjudication and revocation of licenses or permits. Section 3: All ordinances or parts of ordinances inconsistent with the terms of this ordinance are hereby repealed; provided, however, that such repeal shall be only to the extent of such inconsistency and in all other respects this ordinance shall be cumulative of other ordinances regulating and governing the subject matter covered by this ordinance. Section 4: If any provisions, section, exception, subsection, paragraph, sentence, clause or phrase of this ordinance or the application of same to any person or set of • circumstances, shall for any reason be held unconstitutional, void or invalid, such invalidity shall not affect the validity of the remaining provisions of this ordinance or their application to other E • persons or sets of circumstances and to this end all provisions of this ordinance are declared to be severable. Section 5: This ordinance shall take effect from and after ten (10) days from its passage by the City Council. The City Clerk is hereby directed to give notice hereof by causing the caption of this ordinance to be published in the official newspaper of the City of Baytown at least twice within ten (10) days after passage of this ordinance. INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown this the 10`h day of February, 2005. ` CALVIN MUNDINGER, Mayor ATTEST: AeW'f'� rk SMITH; City Cle APPROVED AS TO FORM: ACIO RAMIREZ, City Attorney RAKaren \Files \City Council \Ordinances\2005 \February 10\ MUDOrdinanceRecovcred020805C1ean .doc L--•—•-------•—•—._. _._._._._._._._._.— ._._._._._.— = .... .......... r P% L--•—•-------•—•—._. _._._._._._._._._.— ._._._._._.— = EUBff c -W ,91 H 3H.. Hat z Z - ------------- 4 ------------------ `., - ----------------- ------------- ---------- - -- ------- - --------- ----------- ------------ EUBff c -W ,91 H 3H.. Hat z Z - ------------- ------- ----------- --- ----------- ------------ EUBff c -W ,91 H 3H.. Hat • Exhibit "D" Point of Connection • Sewer for the development east of Thompson will be a 24" gravity line on the south side of the I- 10 feeder. Sewer for the development on the west side of Thompson will be a 42" gravity line on the south side of the I -10 feeder. Water for the development will be from a 12" line on the south side of the 1 -10 feeder and from a 12" line on the east side of Thompson Rd. Exhibit "D." Page Solo 1 a • UTILITY FUNCTIONS AND SERVICES ALLOCATION AGREEMENT STATE OF TEXAS § § COUNTY OF HARRIS § THIS UTILITY FUNCTIONS AND SERVICES ALLOCATION AGREEMENT ("UTILITY FUNCTIONS AND SERVICES ALLOCATION AGREEMENT (the "Allocation Agreement") is entered into as of the date specified in Section 7.13 hereof, by and between THE CITY OF BAYTOWN, TEXAS ,(the "City"), a municipal corporation and home-rule city situated in Harris and Chambers Counties, Texas, and MOODY SIMMONS BAYTOWN, LTD., a Texas Limited Partnership, and MOODY SIMMONS BAYTOWN II, LTD., Texas Limited Partnership (cumulatively "Developer"), _on_--behalf-_of-proposed- HARRIS__-COUNTY_ MUNICIPAL- UTILITY DISTRICT NO.. 459 to be created as a body politic and corporate and a governmental agency of the State of Texas under the provisions of Article XVI, Section 59 of the Texas Constitution and Chapters 49 and 54 of the Texas Water Code, .as amended (the "District")''. It is the intention of the parties to this Allocation Agreement that all rights, benefits and obligations pursuant to this Allocation Agreement shall ultimately be assigned to the District upon its creation. Thus, the representations by the District at this time represent the Developer's commitment to cause or direct the same to occur. Recitals WHEREAS, the City is a home-rule city and municipal corporation that provides various municipal services to its citizens; and WHEREAS, the Developer has purchased three contiguous tracts of land comprising approximately 138.439 acres which is within the City's corporate limits attached hereto as Exhibit A-1 (the "Tract"); and WHEREAS, the District is proposed to be created within the City covering the property described on Exhibit "A-1" for the purpose of, among other things, providing water distribution, wastewater collection, wastewater treatment and drainage facilities and services as more fully described below, (the "Facilities")_to serve the development occurring with and near that portion of the City situated within the boundaries of the District,by financing and purchasing the Facilities; and WHEREAS, the development will occur in phases and the Developer anticipates that each phase will be platted separately; and 59327_3.doc WHEREAS, the parties recognize that the District cannot approve and execute this Allocation Agreement until the District is created by the Texas Commission on Environmental Quality and confirmed by a majority of the votes cast at the confirmation election; and WHEREAS, the City has agreed to provide the services described herein under the conditions and terms set forth in this Utility Contract; and WHEREAS, this Allocation Agreement is entered into under the authority of Local Government Code Section 402.014, as amended, and applicable provisions of Chapters 49 and 54 of the Texas Water Code, as amended, and applicable provisions of the City of Baytown Code of Ordinances;and WHEREAS, the City and the Developer have determined that they are authorized by the Constitution and laws of the State of- Texas to enter into this Allocation Agreement and have further determined that the terms, provisions and conditions hereof are mutually-fair and advantageous to each; NOW THEREFORE, AGREEMENT For and in consideration of the mutual promises, obligations, and benefits contained herein, and subject to the Consent Resolution of even date herewith, the City, the Developer;and the District agree as follows: ARTICLE I. DEFINITIONS AND EXHIBITS 1.1 Definitions. Unless,the context indicates otherwise, the following words as used in this Allocation Agreement shall have the following meanings: Approving Bodies shall mean the City, Harris County, Texas, the Texas Commission on Environmental Quality, the Attorney General of Texas, the Comptroller of Public Accounts of Texas, the United States Department of Justice and all other federal,-state and local governmental authorities having regulatory jurisdiction and authority over the financing, construction or operation of the Facilities or the subject matter of this Allocation Agreement. Bonds shall mean the District's bonds, notes or other evidences of indebtedness issued from time to time for the purpose of financing the costs of acquiring, constructing, purchasing, operating, repairing, improving or extending the Facilities as more fully set forth in Baytown Code of Ordinances, whether payable from ad valorem taxes, the proceeds of one or more future bond issues or otherwise, and including any bonds,notes or similar obligations issued to refund such bonds. 59327_3.doc -2 City means the City of Baytown, Texas. City Wastewater System means all the wastewater treatment facilities, lines, components and equipment owned and used by the City to collect, convey, 'treat, monitor, regulate, and dispose of Wastewater to the Northeast District Wastewater Treatment Plant City Water System means all the water production pumps, lines, : meters, components, facilities, and equipment owned and used by the City to pump, treat, monitor, convey, supply, and distribute Water to the public. : . Consent Resolution means the resolution of even date herewith adopted by the City consenting to the creation of the District. Commission means the Texas Commission on Environmental Quality and any successor or successors exercising any of its duties and functions related to municipal utility district. Detention Tract means the approximately 16 acres located in the District and used for detention facilities to serve the Tract, as shown in Exhibit C. Developer means cumulatively MOODY SIMMONS BAYTOWN, LTD., a Texas Limited Partnership, and MOODY SIMMONS BAYTOWN II, LTD., a Texas Limited Partnership, and their successors and assigns. Development Plan means the conceptual plan for the development within the District attached as Exhibit"C" and approved simultaneously herewith. District means Harris County Municipal Utility District No. 459 to be created as a body politic and corporate and a governmental agency of the State of Texas and to be organized under the provisions of Article XVI, Section 59 of the Texas Constitution and Chapters 49 and 54 Texas Water Code, as amended, and which is proposed to include within its boundaries approximately 138.439 acres of land situated wholly within the corporate limits of the City, as described in Exhibit A-1. District Assets means (i) all rights, title and interests of the District in and to the Facilities, (ii) any Bonds of the District which are authorized but have not been issued by the District, (iii) all rights and powers of the District under any agreements or commitments with any persons or entities pertaining to the financing, construction or • operation of all or any portion of the Facilities and/or the operations of the District, and (iv) all books, records, files, documents, permits, funds and other materials or property of the District. 59327_3.doc 3 District's Obligations means (i) all outstanding Bonds of the District, (ii) all other debts, liabilities and obligations of the District to or for the benefit of any persons or entities relating to the financing, construction or operation of all or any portion of the Facilities or the operations of the District, and (iii) all functions performed and services rendered by the District, for and to the owners of property within the District and the customers of the Facilities. Engineers or District Engineers means consulting engineers, or its replacements, successors or assignees designated by the District as its engineer. Engineering Reports means and refer to that certain Preliminary Engineering Report prepared by the Engineers relating to the creation of the District and describing the initial scope and extent of the Facilities and any additional engineering reports prepared by the Engineers from time to time relating to the issuance of Bonds by the District, copies of which shall be on file in the offices of the District. Equivalent Single-Family Connection or ESFC means that daily measure of Water and Wastewater that is attributed to one Single-Family Residential Home as determined by the City. Facilities means and include the water supply and distribution, sanitary sewer collection, transportation and treatment, and storm water collection, detention and drainage systems constructed or acquired or to be constructed or acquired by the District to serve lands within and adjacent to its boundaries, and all improvements, appurtenances, additions, extensions, enlargements or betterments thereto, together with all contract rights, permits, licenses, properties, rights-of-way, easements, sites and other interests related thereto, all as more fully described in the Engineering Reports. Point of Connections means the location of the connection of the wastewater collection line from the Tract to the City's wastewater collection system as designated on Exhibit "E", or such other location as is mutually agreeable to the City and the Developer. Regional Improvements means those Facilities described in Section 2.7 which serve areas outside and inside the District and which may include, but not be limited to: sanitary sewer trunk lines, lift stations and force mains, water trunk lines, offsite drainage right-of-way and ditch improvements, and transportation improvements. Single-Family Residential Home means a building designated to be used and occupied by one family, with a detached single-family residence being one residential home, a duplex being two residential homes, and each unit in an apartment complex being one residential home. 59327_3.doc -4 k v. Stormwater Detention System means those facilities used to detain the difference in stormwater runoff between the developed and the pre-developed run-off rate for the 100-year flood event. Temporary Wastewater Systems means those temporary systems constructed, operated and maintained by the District used to receive treat, test, and "dispose of wastewater prior to the date that the District's wastewater treatment capacity is provided through the City's Northeast District Wastewater Treatment Plant, including, but not limited to the package treatment plant. Tract means the 138.439 acres of land to be developed by the Developer as described in Exhibit "A-I ", and to which the City has agreed to provide the services described in this Allocation Agreement. Wastewater means the water-carried wastes, exclusive of ground, surface, and storm waters, normally discharged from the sanitary conveniences of residential or commercial structure of a domestic nature (not industrial), meeting the requirements of the City set forth in the City's Code of Ordinances. Wastewater Service means the services provided by the City in receiving, treating, testing, and disposing of Wastewater from the District once the District's wastewater is sent to the City's Northeast District Wastewater Treatment Plant. Water means potable water that meets Federal and State standards for consumption by humans. Water Supply Service means the services provided by the City in treating, pumping, transporting, and delivering of Water to the District for consumption by District customers in accordance with this Allocation Agreement. 1.2 Exhibits. The following Exhibits attached or to be attached to this Allocation Agreement are a part of the Contract as though fully incorporated herein: Exhibit A Description of the District Exhibit B In City Procedures Exhibit C Development Plan Exhibit D Right-of-Way and Municipal Utility Easement Exhibit E Point of Connection 59327_3.doc ARTICLE II. AGREEMENT CONCERNING WATER SUPPLY AND WASTEWATER SERVICES TO THE DISTRICT 2.1. City's Obligation to Provide Services. The City agrees to provide Water Supply Services to the District to serve the Tract in accordance with the terms and conditions of this Allocation Agreement. In order to obtain Water Supply Services, the Developer agrees that it will connect to a 12" water line on Sjolander Road and extend the line across the property frontage on Needlepoint Road to the eastern most boundary line of the Tract. Upon notice to the District and after completion and acceptance by the City of the Northeast District Wastewater Treatment Plant, a. the District agrees, within 365 calendar days of receipt of such notice, 1. to cease operations of the Temporary Wastewater System; 2. to construct, at its own cost and expense, the necessary appurtenances to connect the wastewater facilities to the Northeast District Wastewater Treatment Plant, including, but not limited to, extending the sewer line from the Tract to the Point of Connection; b. the District agrees to remove the Temporary Wastewater System within 6 months after the date the District receives wastewater treatment service from the City's Northeast District Wastewater Treatment Plant; and c. the City agrees to accept wastewater from and to provide Wastewater Services to the District to serve the Tract in accordance with the provisions of this Allocation Agreement. All services to be provided by the City herein shall be expressly subject to the payment of the appropriate impact fees and other fees specified in this Allocation Agreement and the City's Code of Ordinances. 2.2. Assignment to District. The parties hereto assume that this Allocation Agreement will be assigned by the Developer to the District after creation of the District. Any provision of this Allocation Agreement, whether referring to the Developer or the District, shall apply to the Developer until assigned to the District as provided by this Allocation Agreement; thereafter all provisions, except those contained in Article III, shall apply to the District. 2.3. Standard of Service. The Water Supply Services and Wastewater Services provided by the City to the Developer under this Allocation Agreement shall be equivalent in quality to the water supply and wastewater services, once the Northeast 59327_3.doc 6 District Wastewater Treatment Plant is operational, the City provides to other City customers. Nothing contained in this Allocation Agreement shall create or imply in the Developer or the District a preferential right to the Water Supply Services or Wastewater Services over other City customers. 2.4. Maximum Number of Connections. 'The City agrees to provide-up-to 580 ESFCs to-serve the District. ' 2.5. Facilities. The Facilities, as described in the Engineering Reports, will be designed and constructed in compliance with all applicable requirements and criteria of the City as well as the applicable Approving Bodies and will be subject to the Consent Resolution. The design and construction of the Facilities will be subject to the review and approval of the City. Except as otherwise provided in Section 2.1, the District shall design, construct or extend the Facilities in such phases or stages as the District, in its sole discretion, from time to time may determine to be economically feasible. All designs, design standards, construction plans and drawings for any plants, facilities, connectors or points of connection including all supporting facilities must be reviewed by and approved by the City Engineer before any implementation or construction shall occur as provided herein. 2.6. Letter of Assurance and Issuance of Assignments of Capacity by the District. The City agrees that, at such time as the District has acquired Water Supply Service or Wastewater Service from the City up to 580 ESFCs. The City shall, upon reasonable request, issue a letter of assurance that the District is entitled to the use and benefit of such capacity. The letter of assurance shall provide for the use and benefit of quantities of services up to, but not in excess of, the capacities as provided for herein necessary for the District to provide water and wastewater services up to 580 ESFCs. The District shall have the right to assign all or part of its capacity on assignment forms approved by the City for reservation of capacity to landowner(s) and developer(s) within its boundaries. At such time as a landowner or developer located within the boundaries of the District requests a building permit from the City, the City shall honor such assignments of capacity or agreements; provided, however, that the City shall have no duty to honor any assignment of capacity that in the City's sole opinion was not validly issued or which will result in capacity which exceeds the uncommitted capacity reserved by the District. Any such assignment shall be subject to the restrictions noted herein. 2.7. Design and Construction of the Facilities; Regional Improvements; Easement. The Facilities shall be constructed by or on behalf of the District at the District's sole expense and shall be designed using the City's current standard criteria. It is understood and agreed that certain of the Facilities, as referenced in the Letter Agreement concerning the annexation of Hunter's Creek Subdivision which was 59327_3.doc - 7 executed by the City Manager of the City on September 1, 2004, and as herein amended to extend to the entire Tract shall be oversized to serve areas not within the District (hereinafter referred to as "Regional Improvements").The District agrees that it will provide the necessary engineering and construction for the Regional Improvements, including all necessary appurtenances. The Developer shall require that all engineers involved in designing the Regional Improvements tender a Certificate of Insurance evidencing a commercial liability policy, a business automobile policy and a workers' compensation policy with the limits established hereinbelow along with an errors and omissions policy complying with the following: • Limit: $1,000,000 for this project. • For all architects, engineers, and/or design companies • Claims-made form is acceptable • Coverage will be in force for three (3) years after construction of the Project is completed. Before commencing construction of the Regional Improvements, the District must receive the written approval from the City of (i) the plans and specifications for the Regional Improvements. Upon written approval of the plans and specifications by the City, the District shall proceed to construct the Regional Improvements and complete the same within eighteen months from the effective date of this Agreement. The City shall have the right to inspect the construction of the Regional Improvements. Upon completion of the Regional Improvements, the City shall inspect the same and shall note any deficiencies in the construction of the Regional Improvements. Upon completion, the District shall convey the Regional Improvements and any right-of-way for the Regional Improvements to the City, subject to its acceptance, and the City shall be responsible for the operation and maintenance of the Regional Improvements. The District shall warrant the Regional Improvements or cause any construction contract warranty to run to the City for a period of one year after final completion of the Regional Improvements. Before beginning construction on the Regional Improvements, the District shall provide the City with executed copies of payment and performance bonds that comply with all applicable requirements of law, specifically including the bond requirements of Texas Government Code Chapter 2253 and that name the City as • an additional obligee on such bonds. Evidence of proper authority of all signing officers or representatives must be submitted. Additionally, prior to the construction of the Regional Improvements the City shall be provided with a copy of a Certificate of Insurance reflecting that the contractor has the following minimum coverage amounts: (1) Workers' Compensation Policy ❑ Statutory amounts required by Texas law. ❑ Employer's Liability: $500,000 59327_3.doc 8 (2) Commercial General Liability Policy ❑ General aggregate of$1,000,000 ❑ Owners' and Contractors' Protective Liability of$500,000 ❑ Products and Completed Operations of$1,000,000 ❑ Personal and Advertising Injury of$1,000,000 ❑ Minimum of$500,000 per occurrence ❑ Coverage shall be at least as broad as ISO CG 00 0110 93. ❑ No coverage exclusions shall be deleted,from standard policy without notification of individual exclusions being attached for review and acceptance. (3) Automobile Liability Policy ❑ Combined single.limits of$1,000,000 ❑ Coverage for "Any Auto." All insurance certificates required in this section shall contain a provision that coverages afforded under the policies will not be canceled, suspended, voided, -or reduced until at least thirty (30) days' prior written notice has been given to the City via certified mail, return receipt requested. Prior to the end of each coverage period during the term of this Agreement, a new Certificate of Insurance must be filed with the City evidencing continuation of coverage. The contractor shall also file with the City valid Certificates of Insurance covering all Subcontractors. The following are general requirements, which are applicable to all policies required in this section: - (a) General Liability and Automobile Liability insurance shall be written by a carrier with an A.M. Best Rating of B+ or higher in accordance with the current Best Key Rating Guide. (b) Only Insurance Carriers licensed and admitted to do business in the State of Texas will be accepted. (c) Deductibles shall be listed on the Certificate of Insurance and are acceptable only on a per occurrence basis. (d) Claims-made policies will not be accepted. - (e) The City, its officials, agents and employees are to be added as "Additional Insureds" to all liability policies. The coverage shall contain no special limitation on the scope of protection afforded to the City its officials, agents and employees. - 9 59327_3.doc _ (f) A waiver of subrogation in favor of the City with respect to Workers' Compensation Insurance must be included. (g) Upon request, certified copies of all insurance policies and/or certificates of insurance shall be furnished to the City at no cost to the City. (h) The CONTRACTOR shall comply with Section 110.110 of Title 28 of the Texas Administrative Code. The Developer shall dedicate to the City a 10-foot right-of-way for the widening of Needlepoint Road abutting the south boundary line of such road and a 20-foot municipal utility easement adjacent to such right-of-way, which shall run the entire length of the Tract for the construction and maintenance by the City of a sanitary sewer line. Such right-of-way and easement are more particularly depicted in Exhibit"D." 2.8. Ownership by City. As the Facilities are acquired and constructed, the District shall convey the same to the City (except for the Detention Tract and Temporary Wastewater Systems) including all warranties. The conveyance to the City shall be subject to the acceptance by the City after inspection by the City. The District shall not convey, and the City shall not accept, the Detention Tract and Temporary Wastewater Systems. 2.9. Operation by the City. As construction of each phase of the Facilities (except for the Detention Tract) is completed, representatives of the City shall inspect the same and, if the City finds that the same has been completed in accordance with the final plans and specifications, the City will accept the same, whereupon such Facilities shall be conveyed to the City as provided in Section 2.8 and operated and maintained by the City at its sole expense as provided herein. In the event that the Facilities have not been completed in accordance with the final plans and specifications, the City will advise the District in what manner said Facilities do not comply, and the District shall immediately correct the same; whereupon the City shall again inspect the Facilities and accept the same if the defects have been corrected. During the term of this Allocation Agreement, the City will operate the Facilities and provide Water Supply Service and Wastewater Service, only to the extent necessary to satisfy the City's obligations as specified in Section 2.1, to all users within the District without discrimination. The City shall at all times maintain the Facilities or cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles in operating and maintaining the Facilities, and the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or orders by any governmental, administrative or judicial body promulgating the same. -10 - 59327_3.doc • Prior to the first connection to the Water System within the Tract being made,.the District shall enter into a contract with the homeowners association within the District, or other entity acceptable to the City, but hereinafter 'referred to as "HOA". Said contract shall provide that (a) the HOA will operate and maintain the Stormwater Detention Systems from inception at no cost to the District or the City, (b) the Developer will convey fee. title to any Stormwater Detention System to the HOA and retain a drainage easement on behalf of the District, it being understood and agreed that the City will not have the obligation to own, operate or maintain any Stormwater Detention. System, including the Detention Tract, or Temporary Wastewater Systems. 2.107 Rates arid_Meters: The City-shall bill and-collect from-customers of the, Facilities-and-shall-from-time to-time-fix-such rates and-charges-for:such-customers of, tthe_Facilities-as the-City;-in its-sole discretion,-deterrnmines are-necessary;-provided-that. the-rates and-charges-for-services:afforded-by the:Facilities-wilt be equal-and uniform-_to those charged othersimilar classifications of-users-in-non-municipatutility district--areas=: of the City. All revenues from the Facilities shall belong exclusively to the City. The-City shall_-be r-esponsible =for—_providing _and_-installing_any _necessary-_meters--with_-the-. individual,customers. Additionally, .the City_shall refund forty percent (40%) of the- '(sewer rates referenced in_this_section actually collected within the Tract during the that the-Temporary-Wastewater_System is operational by...the_District.. 2.11. Connection Charges. Notwithstanding any City ordinance to the contrary and except as otherwise specifically set forth herein, the City may impose a charge for connection to the Facilities at a rate to be determined from time to time by the City, provided the charge is equal to the sums charged other City users for comparable connections, and the connection charges shall belong exclusively to the City. 2.12. Impact Fees. The District shall pay to the City impact fees for water supply and wastewater services. The impact fees.shall be shall be the amount as adopted by the City Council for water and wastewater services. The District shall pay water impact fees to the City in accordance with Section 114-101, and as may be hereinafter amended and wastewater impact fees to the City in accordance with such section, as amended, regardless of the date that the that such service is available through the Northeast District Wastewater Treatment Plant, which plant is identified in the capital improvements plan of the City. The City has committed to the construction of such plant within two years and to have service available within a reasonable period of time, as determined by the City, which period of time shall not exceed five years. 2.13. Default; Remedies. Any party to this Allocation Agreement that believes that the other party to this Allocation Agreement has defaulted in the performance of any condition, term, or obligation owed to that party under this Allocation Agreement 59327_3.doc - 11 - shall within ten (10) business days after discovery of said default, give written notice of the default to the defaulting party, specifying in detail the provision or provisions of this Allocation Agreement that have allegedly been breached, what specific action must be taken to cure or correct the default, and requesting that the City Council of the City provide the parties an opportunity to be heard in public session to discuss the default at the next scheduled city council meeting. The City Council, after review of such request,. shall determine whether to provide the parties the opportunity to be heard in public session to discuss the default at the next scheduled city council meeting. Should the party receiving the notice fail to commence action to correct the default within the time determined by City Council and/or thereafter fail to diligently pursue the completion of the action to correct the default, or should City Council determine not to hear the matter, the party giving the notice of default may exercise other available remedies at law and in equity. Notwithstanding the foregoing, the parties hereto shall have all remedies provided at law and in equity with respect to this Allocation Agreement. ARTICLE III. DEVELOPMENT PLAN 3.1. Development Plan. The Developer's Development Plan for the overall development of the District is attached as Exhibit "C." The City and the Developer agree that specific approvals are required for each phase or part of the Development Plan, provided, however, that the City shall not withhold such approvals if the applicable phase or part is in conformance with the Development Plan. In addition, the parties agree as follows: (a) The Developer understands and agrees that a portion of the consideration for the City to enter into this Allocation Agreement is the Developer's obligation to develop the property consistent with the Development Plan. The creation of the District was predicated on the Developer's ability to develop the Property in conformance with the Development Plan. The City, the Developer, and the District agree that the Developer shall develop, and the City shall allow development of, the Tract in accordance with the Development Plan; provided that the same complies with the Code of Ordinances. The current Development Plan presented to the District by the Developer provides for 122.3 net acres of single family development and the balance of the Tract shall be for recreational facilities, stormwater detention, open spaces and roadways, as shown on Exhibit "C." Any material change to the Development Plan, as determined by the City, shall be approved by the City and shall conform to the then- current City standard criteria and Code. 59327_3.doc -12 (b) The City, the Developer, and the District recognize the City's rights and obligations to insure that all Facilities are constructed in accordance with approved plans and specifications. The City, the Developer, and the District agree that the City shall be named as an additional beneficiary on all construction, payment, performance, and maintenance bonds and that no additional bonds shall be required of the Developer or the District. (c) The obligations provided in this Article shall be obligations solely of the Developer and shall not be obligations of the District. Further, the Developer's obligations in this Article shall. survive the creation of the District and shall exist for the term of this Allocation Agreement. Notwithstanding any other provision of this Allocation Agreement, the Developer may not assign any of its obligations under this Article to the District or any other person or entity without the prior written consent of the City. ARTICLE IV. FINANCING OF FACILITIES 4.1. Authority of District to Issue Bonds. The District shall have authority to issue, sell and deliver Bonds from time to time, as deemed necessary and appropriate by the Board of Directors of the District, for the purposes, in such forms and manner and as permitted or provided as federal law, the general laws of the State of Texas and the Consent Resolution. No Bonds shall be issued by the District unless all terms and conditions of the City's Procedures for the Creation of In-City Municipal Utility Districts attached as Exhibit"B" and of the Consent Resolution have been followed. • 4.2. Bonds as Obligation of District. Unless and until the City shall dissolve the District and assume the District Assets and District Obligations, the Bonds of the District, as to both principal and interest, shall be and remain obligations solely of the District and shall never be deemed or construed to be obligations or indebtedness of the City. V. DISTRICT TAXES 5.1. District Taxes. The District is authorized to assess, levy and collect ad valorem taxes upon all taxable properties within the District to provide for (i) the payment in full of the District's Obligations, including principal, redemption premium, if any, or interest on the Bonds and to establish and maintain any interest and sinking fund, debt service fund or reserve fund and (ii) for administration, operation, and 59327_3.doc - 13 - Y maintenance purposes, all in accordance with applicable law. The parties agree that`_ nothing herein shall be deemed or construed to prohibit, limit, restrict or otherwise inhibit the District's authority to levy ad valorem taxes as the Board of Directors of.the District from time to time may determine to be necessary. The City and the District recognize and agree that all ad valorem tax receipts and revenues collected by the District shall become the property of the District and may be applied by the District to the payment of all or any designated portion of the principal or redemption premium, if any, or interest:on the Bonds or otherwise in accordance with applicable law. 5.2. Sale or Encumbrance of Facilities. Except as expressly provided in Sections 2.8 and 2.9 and as provided by applicable law, it is acknowledged that the District may not dispose of or discontinue any portion of the Facilities. ARTICLE VI. DISSOLUTION OF THE DISTRICT 6.1. Dissolution of District Prior 'to Retirement of Bonded Indebtedness. The City and the District recognize that, as provided in the laws of the State of Texas and'the Consent Resolution, the City has the right to abolish and dissolve the.District and to acquire the District's Assets ' and assume the District's Obligations. Notwithstanding the foregoing, the City agrees that it will not dissolve the District until the Facilities required to serve the District have been completed. To discharge any remaining District's Obligations, the City may (i) if requested by the District in writing, authorize the District to sell its Bonds before or during a transition period prior to the effective date of dissolution, as established by the City, (ii) pursuant to Local Government Code Section 43.080, as amended, issue and sell bonds of the City in at least the amount necessary to discharge the District's Obligations, including -those under any utility development and reimbursement agreements with developers in the District, or (iii) provide written notice to the District that the City has sufficient funds available from other sources to discharge the District's Obligations, including those under the utility development and reimbursement agreements with developers in the District. Upon dissolution of the District, the City shall acquire the District's Assets and shall assume the District's Obligations. The City further agrees that it will not dissolve the District until the developer(s), including the Developer, developing Facilities in the District shall have been reimbursed by the District to the maximum extent permitted by the rules of the Commission or the City assumes any obligation for such reimbursement of the District under such rules. 6.2. Transition upon Dissolution. In the event all required findings and procedures for the dissolution of the District have been duly, properly and finally made and satisfied by the City, and unless otherwise mutually agreed by the City and the District pursuant to then existing law, the District agrees that its officers, agents and 59327_3.doc - 14 representatives shall be directed to cooperate with the City ,in any and all respects reasonably necessary to facilitate the dissolution of the District and the transfer of the District's Assets to, and the assumption of the District's Obligations by, the City. ARTICLE VII. MISCELLANEOUS 7.1. City Code of Ordinances, Permits, Fees, Inspections. The District understands and agrees that all City ordinances and codes, including applicable permits, fees and inspections, shall be of full force and effect within its boundaries and shall apply in`the same manner as to other areas within the City's corporate limits and this Allocation Agreement shall at all times be subject to full compliance with the City Code of Ordinances. The District understands and agrees that any improvements to the Detention Tract will be done in accordance with the Development Plan and conditions related thereto and any agreement entered into between the City and the District as provided in Section 3.2 hereof. 7.2. Approvals and Consents. Approvals or consents required or permitted to be given under this Allocation Agreement shall_ be evidenced by an ordinance, resolution or order adopted by the governing body of the appropriate party or by a certificate executed by a person, firm or entity previously authorized to give such approval or consent on behalf of the party. 7.3. Force Majeure. If any party is rendered unable, wholly or in part;by force majeure to carry 'out any of its obligations under this Allocation Agreement, except the obligation to pay amounts owed or required to be paid pursuant to the terms of this Allocation Agreement, then the obligations of such party, to the extent affected by such force majeure and to the. extend 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 to the extent provided but.for no longer period. As soon as reasonably possible after the occurrence of the force majeure relied upon, the party whose contractual obligations are affected thereby shall give notice and full particulars of such force majeure to the other party. Such cause, as far as possible, shall be remedied with all reasonable diligence. The term "force majeure";as used herein, shall include, without limitation of the generality thereof, acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy including acts of terrorism, orders of any kind of the government of the United States or the State of Texas or any civil or military, authority other than a party to this Allocation Agreement, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, drought, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply resulting in an inability to provide water 59327_3.doc -15 - necessary for operation of the water system and sewer system, to the extent required herein, or in an inability of the City to provide Water or receive Wastewater in accordance with Section 2.1, and any other inabilities of any party, whether similar to those enumerated or otherwise, which are not within the control of the party claiming such inability, which such party could not have avoided by the exercise of due diligence and care. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demands of the opposing party when such settlement is unfavorable to it in the judgment of the party experiencing the difficulty. 7.4. Law Governing; Venue; Authority for Actions. This location Agreement shall be governed by the laws of the State of Texas and no lawsuit shall be prosecuted on this Allocation Agreement except in a court of competent jurisdiction located'in Harris County. The parties hereto recognize and understand that disputes may occur or actions may be required under this Allocation Agreement and that this Allocation Agreement involves a governmental entity and, as such, there can be no delegation to a third party individual or third party entity of the duties and obligations of the parties as herein provided. 7.5. No Additional Waiver Implied. No waiver or waivers of any breach or default '(or any breaches or defaults) by any party hereto of any term, covenant,, condition, or liability hereunder, or the performance by any party of any duty or obligation hereunder, shall be deemed or construed to be a waiver of subsequent breaches or defaults or any kind, under any circumstances. 7.6. Addresses and Notice. Unless otherwise provided in this Allocation Agreement, any notice, communication, request, reply, or advice (herein severally and. collectively, for convenience, called "Notice") herein provided or permitted to'be given, made, or accepted by any party to the other (except bills), must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to such , addressed to the party above described shall be conclusively on lus be notified. vely Notice deposited in the mail in the manner herein deemed to be effective, unless otherwise stated in this Allocation Agreement, from and after the expiration of three (3) days after it is so deposited. Notice given in any such other manner shall be effective when'received by the party to be notified. For the purpose of notice, addresses of the parties shall, until changed as hereinafter provided, be as follows: If to the City, to: City of Baytown -16 - 59327_3.doc Attn: City Manager P.O. Box 424 Baytown,TX 77522 If to the Developer,to: Moody Simmons Baytown, Ltd. Moody Simmons Baytown II, Ltd. Attn: Charles E. Simmons 3003 West Alabama Houston,TX 77098 If to the District,to: Harris County Municipal Utility District No.459 c/o Allen Boone Humphries Robinson LLP Attn: Stephen M. Robinson 3200 Southwest Freeway, Suite 2600 Houston,Texas 77027 The parties shall have the right from time-to-time and at any time to change their respective addresses and each shall have the right to specify any other address by at least fifteen (15) days written notice to the other. 7.7. Assignability. Except as set forth below, this Allocation Agreement may be not be assigned by either party except upon written consent of the other party hereto. Developer shall assign this Allocation Agreement to the District within ninety (90) days after the results of the election within the District at which the qualified voters vote in favor of confirmation of the creation of the District are declared. If any such election results in a vote against the confirmation of the District, Developer or the City may terminate this Allocation Agreement upon thirty (30) days written notice to the other party. If terminated by the District, the contract shall not be terminated until it has paid the City all reasonable costs and expenses incurred by.the City due to such termination. 7.8. Merger and Modifications. This Allocation Agreement, including the exhibits that are attached hereto and incorporated herein for all purposes, embodies the entire agreement between the parties relative to the subject matter hereof. This Allocation Agreement shall be subject to change or modification only with the written mutual consent of the parties. All agreements or parts thereof inconsistent with the terms of this Allocation Agreement are hereby repealed; provided, however, that such repeal shall be only to the extent of such inconsistency. 7.9. Reservation of Rights. All rights, powers, privileges and authority of the parties hereto not restricted or affected by the express terms and provisions hereof are 59327_3.doc - 17 reserved by the parties and, from time to time, may be exercised and enforced;by the - parties. 7.10. Captions. The captions of each section of this Allocation Agreement are inserted solely for convenience and shall never be given effect in construing the duties,, obligations or liabilities of the parties hereto or any provisions hereof, or in ascertaining the intent of either party, with respect to the provisions hereof.` 7.11. Severability. The provisions of this Allocation Agreement are severable, and if any part of this Allocation Agreement or the application thereof to any person or _ circumstances shall ever be held by any court of competent jurisdiction to be invalid or unconstitutional for any reason, the remainder of this Allocation Agreement and the application of part of this Allocation Agreement to other persons or circumstances shall not be affected thereby. 7.12. Benefits of Contract. This Allocation Agreement is for the benefit of the City, the Developer, and the District, and shall not be construed to confer any benefit on any other person except as expressly provided for herein. 7.13. Term and Effect. Except as otherwise specifically set forth herein, including in this Section below, this Allocation Agreement shall become effective on the . date of execution by the City and shall remain in effect until the earlier to occur of (i) the dissolution of the District by the City or (ii) the expiration of thirty-five (35) years from the effective date hereof. Further, this Allocation Agreement shall automatically terminate unless extended in writing by mutual agreement between City and Developer in the event that the Commission does not adopt an order consenting to the creation of the District on or before December 31, 2006. The City may terminate this Allocation Agreement (i) after two (2) years from its effective date if the City has not, by that date, received a properly executed copy of the assignment of the Developer's obligations relating to Water Supply Service and Wastewater Service to the District in a form approved by the City, (ii) after three (3) years from its effective date should Developer fail to complete the installation of the Regional Facilities and/or (iii) after eighteen (18) months from its effective date should the Developer fail to commence any construction of Facilities to serve the Tract. Notice shall be given by the City in writing to the Developer and the District at least thirty (30) days prior to the termination date. • 7.14. Meetings and Notices. The District shall comply with all provisions of the Procedures for Creation of In-City Municipal Utility Districts related to District meetings and notices. [EXECUTION PAGE FOLLOWS) 59327_3.doc - 18 - IN WITNESS WHEREOF, the parties hereto have executed allocation Agreement in multiple copies, each of equal dignity, on this . day of 7 4__) , 200g CITY OF BAYTO By: Name: GARY JAI SON Title: CITY GER Date: 3- 30- 65 ATTEST: • AP ROVE ji)it„dOncu.tiu GARY r . SMITH IGNACIO RAMIREZ, SR. CITY CLERK CITY ATTORNEY DEVELOPER MOODY SIMMONS BAYTOWN,LTD., a Texas limited partnership By: Moody Simmons Baytown GP, LLC its General Partner. By. Dan Moody,Jr., M ger MOODY SIMMONS BAYTOWN II,LTD., a Texas limited partnership By: Moody Simmons Baytown II GP, LLC its Gener er By: Dan Moody,Jr., Manage 59327_3.doc - 19 - instrument was acknowledged before me on this the / day of ell' 1 ; ,s g 200, by Dan Moody, Jr., authorized as general partner- to� sign this k Agreement on behalf of MOODY SIMMONS BAYTOWN, LTD., a Texas Limited. Partnership, and MOODY SIMMONS BAYTOWN II, LTD., a Texas Limited Partnership, on behalf of said limited partnerships. ,PR„„. .ANGELA MARIE NICOTRA - i �.'*E NOTARY PUBLIC a %�!y; State of Texas t'.....Of.....,COMm. Exp. 12-02-2006 Not ublic In or the State of Texas (NOTARY SEAL) 59327_3.doc - 20 Exhibit "A" Tract The Tract is more particularly described in Exhibit"A-1" attached hereto. • Exhibit"A,"Page Solo • HUNTER'S CREEK BOUNDARY 138.439 ACRES• 138.439 ACRES OF LAND BEING ALL THAT CERTAIN 14.727 ACRE TRACT OF LAND AS DESCRIBED IN DEED RECORDED IN CLERK'S FILE NO. X990277 OF THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY HARRIS COUNTY, TEXAS,.ALL THAT CERTAIN 71.570 ACRE TRACT OF LAND AS DESCRIBED IN DEED RECORDED IN CLERK'S FILE NO. X633713 OF THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY HARRIS COUNTY,TEXAS, AND ALL THAT • CERTAIN 52.142 ACRE TRACT OF LAND AS DESCRIBED INDEED RECORDED IN CLERK'S FILE NO. X961225 OF THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY HARRIS COUNTY, TEXAS AND BEING SITUATED IN THE WILLIAM BLOODGOOD SURVEY, A-4,HARRIS COUNTY,TEXAS AND THE SJOLANDER SURVEY,A-1644 HARRIS COUNTY, TEXAS AND BEING MORE PARTICULARLY DESCRIBED BY MEETS AND BOUNDS AS FOLLOWS: BEGINNING at a found 1 inch iron pipe being the northeast corner of previously mentioned 14.727 acre tract and the northwest corner of previously mentioned 71.570 acre tract, a point on the south line of Needlepoint Road (60' R.O.W.) and having point • having State Plane Coordinates N:13866344.75, E:3257836.37, South Central Zone; • THENCE N 77°37'10" W, along the north line of previously mentioned 71.570 acre . tract and the south line of Needlepoint Road, a distance of 819.64 feet to a found 1 inch iron pipe located at the northeast corner of said 71.570 acre tract and the northwest corner of previously mentioned 52.142 acre tract; . THENCE N 77°38'25"E, along the north line of said 52.142 acre tract and the south line of Needlepoint Road, a distance of 812.21 feet to a found 1 inch iron • pipe located at the northeast corner of said 52.142 acre tract and the northwest corner of that certain 43.1651 acre tract of land as described in deed recorded in Clerk's File No. V726885 of the Official Public Records of Harris County,Texas; THENCE S 12°48'23"E, leaving the south line of Needlepoint Road and along the east • line of previously mentioned 52.1.42 acre tract and the west line of previously mentioned 43.1651 acre tract, a distance of 2,272.45 feet to a found 5/8 inch iron rod with cap being the southeast corner of said 52.142 acre tract. Said point also being on the southeast line of a 50 foot wide Houston Lighting and Power Company easement as filed for record in Volume 3474,Page 14 of the Deed Records of Harris County, Texas and a point on the northwest line of a 100 foot wide Dayton-Goose Creek Railway easement as filed for record in Volume 390, Page 431 of the Deed Records of Harris County,Texas; THENCE S 24°48'5l" W, along the southeasterly line of previously mentioned 52.142 acre tract, along the southeasterly line of previously mentioned Houston Lighting and Power Company easement and along the northwesterly line of Exhibit "A-1" ,, ����� «,���,,,,,�,•� r,-Pptr niclrict Ro mdarv.doc. Pap 1 of 3 previously mentioned Dayton-Goose Creek Railway easement, a distance of 1,325.49 feet to a found 5/8 inch iron rod with cap. Said point being the southwest corner of said 52.142 acre tract and the southeast corner of aforementioned 71.570 acre tract: THENCE, S 24°45'07" W, along the southeasterly line of previously mentioned 71.570 acre tract, along the southeasterly line of previously mentioned Houston Lighting and Power Company easement and along the northwesterly line of previously mentioned Dayton-Goose Creek Railway easement, a distance of 1291.62 feet to a found '/2 inch iron rod for corner being the southwest corner of said 71.570 acre tract and a point on the east line of Landmark Estates,,a recorded subdivision as filed for record in Volume 338,Page 106 of the Map Records of Harris County, Texas; THENCE N 13°35'23" W, along the west line of previously mentioned 71.570 acre tract and the east line of previously mentioned Landmark Estates, a distance of 965.12 feet to a found V2 inch iron rod for corner being the northeast corner of previously mentioned.Landmark Estates and the southeast corner of McGee Place Phase Two, a recorded subdivision as filed for record in Volume 345,Page 60 of the Map Records of Harris County,Texas; • THENCE N 13°20'13"W, along the west line of the said 71.570 acre tract and the east line of McGee Place Phase Two, a distance of 1,530.44 feet to a foundV2 inch iron rod for corner; THENCE N 13°03'00"W, continuing along the west line of the 71.570 acre tract and the east line.of McGee Place Phase Two, a distance of 269.41 feet to a found 1 inch iron pipe for corner, the northeast corner of McGee Place Phase Two • and the southeast corner of that certain 19.000 acre tract of land as described in deed recorded in SO48441 of the Official Public Records of Harris County, Texas; THENCE N 13° 05'48" W, along the west line of the said 71.570 acre tract and the east line of previously mentioned 19.000 acre tract, a distance of 267.81 feet to a found 1 inch iron pipe being the northeast corner of said 19.000 acre tract and southeast corner of that certain 13.210 acre tract of land as described in deed recorded in Clerk's File No. V229558 of the Official Public Records of Harris County,Texas; THENCE N 13°06'03" W, continuing along the west line of said 71.570 acre tract and along the east line of previously mentioned 13.210 acre tract, a distance of 265.77 feet to a found 1 inch iron pipe being the northeast corner of said 13.210 acre tract and the southeast corner of that certain 2.542 acre tract of land as described in deed recorded in Clerk's File No. L275249 of the Official Public Records of Real Property Harris County Texas; J:\2003\2003066\WP\Hunter's Creek District Boundary.doc Page 2 of 3 q ORDINANCE NO. 10,355 • AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,CONSENTING TO THE ASSIGNMENT AND ACCEPTANCE OF THE UTILITY FUNCTIONS AND SERVICES ALLOCATION AGREEMENT FROM MOODY SIMMONS BAYTOWN,LTD.,AND MOODY SIMMONS BAYTOWN II, LTD., TO HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 459; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ********************************************************************************* 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 consents to the assignment and acceptance of the Utility Functions and Services Allocation Agreement from Moody Simmons Baytown, LTD., and Moody Simmons Baytown II, LTD., to Harris County Municipal Utility District No. 459. A copy of said assignment is attached hereto as Exhibit "A" and incorporated herein 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 and PASSED by the affirmative vote of the City Council of the City of Baytown this the 22nd day of June, 2006. ST'PHEN H. DONCARLOS, Mayor ATTEST: • LORRI COODY, City Clerk APPROVED AS TO FORM: ACIO RAMIREZ, SR., Attorney R:\Karen\Files\City Council\Ordinances\2006\June 22\Consenting2AssignmentforMoodySimmonsRevised.doc