HomeMy WebLinkAboutC2025-207 - 10/21/2025 - Approved SHORT-TERM OPTION FOR POTABLE WATER RESERVATION AND
DIVERSION CONTRACT
THIS SHORT-TERM OPTION FOR POTABLE WATER RESERVATION AND
DIVERSION CONTRACT ("Option Contract") is made and entered into pursuant to
Texas Special Districts Local Laws Code, Chapter 8511 (collectively the "NRA Act") by
and between the NUECES RIVER AUTHORITY ("NRA"), a conservation and
reclamation district created pursuant to Article 16, Section 59 of the Texas Constitution,
and CITY OF CORPUS CHRISTI ("Customer"). In this Option Contract, NRA and
Customer are sometimes individually referred to as a "Party" and collectively referred to
as the"Parties." The effective date ("Effective Date") of this Option Contract shall be the
date it is last signed by a Party.
RECITALS
WHEREAS, pursuant to the NRA Act, a purpose of NRA is the conservation and
development of the State of Texas' (the "State's") natural resources inside the Nueces
River Basin, including the control, storage, preservation, and distribution of the State's
water for municipal and industrial uses;
WHEREAS, NRA has entered into a formal agreement with the Port of Corpus
Christi Authority (the "Port") whereby the Port will lease property and permit use of the
necessary regulatory permits to NRA to enable NRA to construct, own, and operate a
seawater desalination plant on Harbor Island to enhance water supply and water resource
security in the region;
WHEREAS, by virtue of its agreement with the Port, NRA will have license to
certain water rights held by the Port authorizing NRA to divert seawater for desalination;
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WHEREAS, Customer desires eventually—at a time subsequent to this Option
Contract—to contract with NRA for the purchase and diversion of potable water resulting
from NRA's intake and treatment of seawater at its Harbor Island desalination plant;
WHEREAS, Customer desires to first acquire an option to contract with NRA for
the future purchase and diversion of up to 56,007 acre-feet per year of potable water for
Customer's future municipal or industrial use;
WHEREAS, NRA has stated and Customer agrees that Customer is entering into
this Option Contract to reserve potable water from the Harbor Island desalination plant and
will pay a total option fee of$2,737,622.16 which equals the two annual payments that
covers the entire option period("Option Fee");
WHEREAS,NRA has stated and Customer agrees that the option period begins on
the Effective Date of the Option Contract and shall continue until the Harbor Island
desalination plant is producing potable water that can be delivered to Customer ("Option
Period").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained,NRA grants Customer an option to contract for up to 56,007 acre-feet per
year of potable water resulting from NRA's intake and treatment of seawater at its Harbor
Island desalination plant for Customer's future municipal or industrial use, and Customer
agrees to pay NRA a one-time Option Fee for such right, upon terms and conditions
hereinafter set forth, to-wit:
ARTICLE 1.
1.1 Customer specifically acknowledges that this Option Contract does not
grant the Customer any right or option to purchase any portion of any certificate of
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adjudication or other water right owned by NRA or the Port now or into the future or to
reserve and/or divert any water subject to the same and does not provide any right or option
to purchase capacity in the desalination plant or any future conveyance infrastructure.
Rather, this Option Contract involves only the reservation and option to purchase potable
water from NRA. Terms and conditions relating to the purchase and diversion of potable
water, including but not limited to transportation at Customer's sole cost and expense, will
be negotiated in a separate water supply agreement.
1.2 Customer specifically acknowledges that NRA and/or the Port reserve the
right to seek amendment by the applicable regulatory authority to any certificate of
adjudication or other water right held by NRA and/or the Port as deemed necessary by NRA
and/or the Port.
1.3 Customer specifically acknowledges that the future availability and timing
of potable water for purchase and diversion from the Harbor Island desalination plant is not
guaranteed and is wholly dependent upon factors outside of NRA's dominion and control,
including but not limited to regulatory permitting, entry of agreements with the Port, and
the timely and competent performance of third-party contracted work.
1.4 By entering into this Option Contract, Customer warrants that it has
exercised its due diligence in determining the viability and legality of obtaining future
water service from NRA from the proposed Harbor Island desalination plant,including,but
not limited to due diligence in determining whether Customer is located in the CCN of any
other entity obligated to provide water service. Customer agrees, warrants, and represents
that if it has determined that there are CCN, or any other obstacles to the receipt of water
from NRA, it is solely Customer's responsibility to address and remove such obstacles.
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1.5 NRA hereby grants Customer an option to contract for the reservation
and/or purchase and diversion of up to 56,007 acre-feet per year (the "Option Quantity")
of potable water resulting from NRA's intake and treatment of seawater at its Harbor Island
desalination plant for Customer's municipal or industrial use for the Option Period.
1.6 The Parties agree that the Option Quantity shall represent the amount of
potable water Customer shall be entitled to subsequently contract with NRA to purchase
and divert from the Harbor Island Desalination plant if Customer exercises the option
authorized herein, and that the Option Quantity stated herein may be increased but may not
be decreased in any subsequent amendments to this Option Contract without mutual
agreement of both parties.
1.7 The Parties agree that during the Option Period, Customer may exercise its
option by entering into a water supply contract with NRA that identifies the purchase and/or
diversion quantities at such rates as may be adopted in future.
The parties agree that if a water supply contract is not executed by both parties
before the end of the Option Period, this Option Contract shall automatically terminate as
of the next day immediately following the end of the Option Period.
ARTICLE 2.
2.1 For the right to preserve the option to subsequently reserve and/or
purchase and divert up to 56,007 acre-feet per year potable water as provided by this Option
Contract, Customer unconditionally agrees to pay NRA the Option Fee of$24.44 per acre-
foot for the Option Period, or the total sum of $2,737,622.16, to preserve Customer's
option. The total sum will be paid to NRA on or before November 7, 2025. The one-time
Option Fee paid by Customer shall be non-refundable when made and shall not apply
against the purchase price of any water purchased by Customer in the future.
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2.2 Customer specifically acknowledges that payments made pursuant to this
Option Contract are for the purpose of securing Customer's reservation for future purchase
and diversion of potable water from the Harbor Island desalination plant, and NRA has the
right to use such payments or portions thereof to finance the Harbor Island desalination
plant project, at the sole discretion of NRA.
ARTICLE 3.
3.1 The execution of this Option Contract has been duly authorized by NRA
and Customer pursuant to proper notices and procedures, and each Party warrants and
represents to the other that it is duly authorized to execute this Option Contract upon the
terms set forth herein.
3.2 This Option Contract may not be assigned by Customer without NRA's
agreement to same in writing.
3.3 The Parties agree that this Option Contract shall not be construed in favor
or against either Party on the basis that the Party did or did not draft this Contract.
3.4 This Option Contract shall be for the sole and exclusive benefit of the Parties
hereto and shall not be construed to confer any rights upon any third party.
3.5 No modifications to or rescission of this Option Contract may be made
except by a written document signed by NRA's and Customer's authorized representatives.
3.6 This Option Contract is by and between NRA and Customer and is not
intended and shall not be construed to create the relationship of agent, servant, employee,
partnership, joint venture, or association as between NRA and Customer nor between
Customer and any officer, employee, contractor, or representative of NRA. No joint
employment is intended or created by this Option Contract for any purpose. Customer
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agrees to so inform its employees,agents, contractors, and subcontractors who are involved
in the implementation of or construction under this Option Contract.
3.7 Any notice, request or other communication under this Option Contract
shall be given in writing and shall be deemed to have been given by either party to the other
party at the addresses shown below upon any of the following dates:
(a) The date of notice by electronic mail, which is confirmed promptly in writing;
(b) Three business days after the date of the mailing thereof, as shown by the post
office receipt if mailed to the other party hereto by registered or certified mail;
(c) The date of actual receipt thereof by such other party if not given pursuant to
(a) or (b) above.
The address for notice for each of the Parties shall be as follows:
Nueces River Authority
539 South Highway 83
Uvalde, Texas 78801
Customer: City of Corpus Christi
1201 Leopard Street
Corpus Christi, Texas 78401
or the latest address specified by such other Party in writing.
3.8 In the event that any clause or provision of this Option Contract shall be
held to be invalid by any court of competent jurisdiction, the invalidity of such clause or
provision shall not affect any of the remaining provisions of this Option Contract.
3.9. Venue for any disputes arising out of this Contract shall be in Nueces
County, Texas.
3.10 Each signatory to this Contract agrees, warrants, and represents that such
person is authorized by the Party associated with such signature to execute this Contract
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24th October
SIGNED this day of , 2025.
N/R�A /�
l lg�iv� l 1.
Joh .Byrum II(Oct 24, 5 17:19:25 T
John J. Byrum II
Executive Director
ATTEST:
fCicOct 27,2025 07:25:36 CDT)
Eric Burnett
President, Board of Directors
(SEAL)
CITY OF CORPUS CHRISTI
N hok; Gyi�k dwaim
Nicholas W inkelmann(Oct 24,202510:08:32 CDT)
Nick Winkelmann
Corpus Christi Water
Interim Chief Operating Officer
Approved as to legal form:
JarTet Whitehead(Oct 23,2025 12:18:53 CDT)
Assistant City Attorney
ATTEST: m2025-154
AUTHORIZED
Rebeooa Ki)orfa BY COUNCIL 10/21/25
Rebecca Huerta(Oct 24,2025 14:16:53 CDT)
Rebecca Huerta k l M,R
City Secretary RH/MR(Oct24,202514:15:39 CDT)
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