HomeMy WebLinkAbout021816 RES - 12/14/1993A RESOLUTION
AUTHuRIZ'ING THE CITY MANAGER TO EXERCISE THE CITY OF
CORPUS CHRISTI'S OPTION TO ENTER INTO A WATER DELIVERY
AND CONVEYANCE CONTRACT WITH THE LAVACA-NAVIDAD RIVER
AUTHORITY BY EXECUTING THE ATTACHED CONTRACT TO PURCHASE
31,440 ACRE FEET OF WATER ON A PERMANENT BASIS AND 10,400
ACRE FEET UNTIL NEEDED IN JACKSON COUNTY, AT A COST OF
SERVICE RATE BASED ON A FORMULA, FOR A TERM OF 42 YEARS
WITH AN OPTION TO RENEW FOR AN ADDITIONAL 50 YEARS, WITH
RELATED TERMS AND PROVISIONS; AND PROVIDING FOR SEVERANCE
WHEREAS, present water supplies are insufficient to meet
the future needs of Corpus Christi and areas dependent on Corpus
Christi; and
WHEREAS, on September 22, 1992, the City Council by
resolution authorized acceptance of an assignment from the Port of
Corpus Christi Authority of an Option Agreement to purchase water
from the Lavaca-Navidad River Authority; and
WHEREAS, on September 14, 1993, the City Council adopted
a resolution expressing the City's intent to exercise said option
with the Lavaca-Navidad River Authority; and
WHEREAS, the need to secure future water supplies remains
compelling, urgent, and essential to the health, welfare, and
economic prosperity of Corpus Christi and South Texas.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CORPUS CHRISTI, TEXAS;
SECTION 1. The City Manager is hereby authorized to
exercise the Option Agreement with the Lavaca-Navidad River
Authority by executing on behalf of the City of Corpus Christi the
Water Delivery And Conveyance Contract Between Lavaca-Navidad River
Authority And City of Corpus Christi, Texas, attached hereto as
Exhibit A and incorporated herein for all purposes.
SECTION 2. If for any reason any section, paragraph,
subdivision, clause, phrase, word or provision of this resolution
shall be held invalid or unconstitutional by final judgment of a
court of competent jurisdiction, it shall not affect any other
section, paragraph, subdivision, clause, phrase, word or provision
of this resolution for it is the definite intent of this City
Council that every section, paragraph, subdivision, clause, phrase,
word or provision hereof be given full force and effect for its
purpose.
AT T: /n
C ty Secretary
MAYOR
APPROVED: )3—DAY OF THE CITY •, CORPUS CHRISTI
N c J c t. ,, 19 i 6
JAMES R. BRAY, JR., CITY ATTORNEY
By
As
\ord\93108
City Atrney
021816
aCROBLMEE
WATER DELIVERY AND CONVEYANCE CONTRACT
BETWEEN
LAVACA-NAVIDAD RIVER AUTHOujY
AND
CITY OF CORPUS CHRISTI, TEXAS
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TABLE OF CONTENTS
Page
RECITALS
1
ARTICLE I --DEFINITIONS AND INTERPRETATIONS
1
Section 1.01. Definitions.
Section 1.02. Interpretation 1
7
ARTICLE II—ACQUISITION AND CONSTRUCTION OF LNRA PROJECT 7
Section 2.01. General.
Section 2.02. Location of Project. 7
Section 2.03. Construction 7
7
Section 2.04. Selection of Project Engineer; Plans and Specifications. 8
Section 2.05. Award of Construction Contract
Section 2.06. Liens 8
Section 2.07. Revisions of Plans 8
Section 2.08. Completion 8
Section 2.09. Ownershipand 8
Operation of LNRA Facilities 8
ARTICLE III --FINANCING, ACQUISITION AND CONSTRUCTION
OF CITY PROJECT
9
Section 3.01. Project Bonds
Section 3.02. Sources of Water for the City 9
Section 3.03. General 9
Section 3.04. Description of City Project 9
Section 3.05. Ownershipand 9
Operation of City Facilities and the
City Project 9
Section 3.06. LNRA Easement
Section 3.07. Completion 9
10
ARTICLE IV --WATER SALES AND PURCHASES
10
Section 4.01. Delivery and Acceptance of Requirements; Title
Section 4.02. Measurement of Water 10
Section 4.03. Payments by the City 11
Section 4.04. Budgets 12
Section 4.05. Budget Review and Revision 13
Section 4.06. Billing 14
14
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Page
Section 4.07. Nature of Financing Obligations of the Parties
Section 4.08. Quality of Water 14
Section 4.09. Texas Natural Resource Conservation Commission 15
Jurisdiction
Section 4.10. Source of Payment 15
Section 4.11. Revenue Sources Pledged 15
15
ARTICLE V --OPERATION AND MAINTENANCE OF
PROJECT; INSURANCE; MODIFICATION
15
Section 5.01. Operation and Maintenance; Insurance
Section 5.02. Modification After the Completion Date 16
Section 5.03. Reporting Requirements 16
16
ARTICLE VI --CASUALTY
16
Section 6.01. Casualty of Project or Lake Texans
Section 6.02. Effect of Casualty 16
17
ARTICLE VII --CONDITIONS PRECEDENT
17
Section 7.01. Regulatory Approvals
Section 7.02. Financial Ability to Perform 17
Section 7.03. Tax Exemption of LNRA Bonds 17
17
ARTICLE VIII --SPECIAL COVENANTS
18
Section 8.01. Removal of Liens
Section 8.02. Bonds are Special Obligations. 18
18
ARTICLE IX--OUT-OF-BASIN WATER
19
Section 9.01. Mutual Cooperation
Section 9.02. No Impairment of Contract 19
19
ARTICLE X --TERMINATION; OPTION TO RENEW;
GENERAL PROVISIONS
19
Section 10.01. Term
Section 10.02. Termination by LNRA 19
Section 10.03. Termination by the City. 19
19
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Page
Section 10.04. Notice of Tennination.
Section 10.05. Option to Renew. 20
Section 10.06. Default. 21
Section 10.07. Rights After Termination 21
Section 10.08. Force Majeure. 21
Section 10.09. Assignment 21
Section 10.10. City Financing 22
Section 10.11. City Audit 22
Section 10.12. Notices. 22
Section 10.13. Governing Law, Entire Agement, Etc 22
23
WATER DELIVERY AND CONVEYANCE CONTRACT
This Water Delivery and Conveyance Contract, dated as of
(this "Contract") is between the LAVACA-NAVIDAD RIVER AUTHORITY,e
and reclamation district, a body politic and co g nunental age a cof nservation
State
of Texas (herein, together with any successor to its and
and functions, called "NRA"),
organized and existing under the provisions of a series of acts formally compiled as Article
8280-131, Tex. Civ. Stat. Ann., as amended (the "Act"), and the CITY OF CORPUS CHRISTI,
TEXAS, (herein, together with any permitted successor or assign, called the "City").
RECITALS
The City has concluded that substantial additional supplies of water are needed to satisfy
projected demands for water for municipal and industrial purposes within its boundaries, and
existing and potential service areas.
The LNRA has available to sell and convey to the City 31,440 acre-feet per year of water
on a permanent basis, and 10,400 acre-feet on a temporary basis until such water is needed to
supply demand in Jackson County.
The City desires to purchase and receive such additional available water from the LNRA,
and the LNRA desires to sell and convey such additional available water to the City.
IN CONSIDERATION of the foregoing and the mutual benefits, covenants and
agreements herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the LNRA and the City agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATI NS
Section 1.01 Definitions. In addition to the terms defined above, the following terms
shall have the meaning assigned to them below wherever they are used in this Contract, unless
the context clearly requires otherwise:
"Annual Budgets" are defined in Section 4.04 of this Contract.
"Authorized Representative" means either of the two persons at the time designated as
such in a written certificate, containing a specimen signature of such person, which in the case
of the City's representative is signed on behalf of the City by the City Manager and which is
furnished to LNRA, and, in the case of LNRA's representative, is signed on behalf of LNRA
by the General Manger.
1
"Bond Documents" mean the bond resolution, trust indenture and all other documents
relating to the authorization and issuance of Bonds.
"Bonds" mean the Project Bonds and the Texana Bonds. The Bonds, if issued, shall be
payable as to principal, interest and premium, if any, solely from the net revenues of the System
and in certain events from amounts attributable to Bond proceeds, the final terms and provisions
of which shall be set forth in the Bond Documents.
"City Facilities" means the pipeline with booster pumps and related appurtenances from
the Delivery Point to the Corpus Christi area, as further described in Section 3.04.
"City Manager" means the City Manager of the City of Corpus Christi, Texas or his
Authorized Representative.
"City Project" is defined in Section 3.04 of this Agreement.
"Completion Date" is defined in Section 2.07 of this Agreement
"Delivery Point" means the mutually agreeable point or points at which water will be
delivered by LNRA to the City.
"Federal Contract" means the contract dated February 2, 1972, between LNRA, TWDB,
and the United States of America for Palmetto Bend Reclamation Project.
"Federal Contract Payments" means the aggregate principal and interest payments due
from LNRA and TWDB under the Federal Contract. A current schedule is attached hereto as
Exhibit A.
"Force majeure" is defined in Section 9.08 of this Contract.
"General Manager" means the General Manager of LNRA and any successor, assistant
or designee who, pursuant to law and proper proceedings, is empowered to carry out the duties
of the General Manager.
"Indenture" means the trust indenture to be executed by LNRA, as issuer, and by a bank,
as Trustee, securing the Bonds.
"LNRA" is defined in the introduction of this Contract.
"LNRA Facility" or "LNRA Facilities" means the intake structure, pipeline, pumps,
meter, and related facilities described in Exhibit B hereto.
2
"LNRA Project" means the LNRA Facilities and the LNRA Site.
"LNRA Project Costs" means reasonable and necessary:
(a) costs incurred in preparing a metes and bounds description of the LNRA
Site;
(b) if financing is required by the City, costs incurred in connection with the
financing of the City Project, including payment of' fmancial, legal, accounting and
appraisal fees, expenses and disbursements, LNRA's direct expenses and indirect
overhead and administrative expenses attributable to the issuance of the Project Bonds
in connection with the City Project, the cost of printing, engraving and reproduction
services, and the initial or acceptance fee of the trustee of the Project Bonds; the fees and
disbursements of the trustee of the Project Bonds payable in accordance with the
applicable indenture prior to completion of the City Project, all other fees, charges and
expenses incurred in connection with the authorization, preparation, sale, issuance and
delivery of the Project Bonds (including all costs, fees, expenses and other amounts
[other than interest, principal or prepayment premiums on the Project Bonds] which may
be payable by LNRA under the bond purchase agreement or agreements pursuant to
which the Project Bonds are sold), the preparation and filing or recording of the
indenture or any agreement with the City (including any amendments or supplements
thereto), and the preparation of the applicable bond purchase agreement and other related
documents entered into or prepared in connection with the fmancing of the City Project.
(c) costs of preliminary project planning and initial site preparation and related
costs, including all advances, payments and expenditures made in connection with the
surveying and mapping of the LNRA Site, the preparation of and amendments to the
plans and specifications for the LNRA Project (including plans, specifications,
renderings, mock-ups and other simulations, and any preliminary studies, tests, surveys,
investigations or planning with respect to the LNRA Project or any aspect thereof,
whether as proposed or as constructed), site preparation (including any demolition,
excavation, removal, relocation and landscaping), together with all incidental costs
incurred in connection therewith (including the cost of architectural, legal, engineering,
appraisal, accounting, financial, consulting, design, statistical and other technical and
supervisory services with respect to any of the foregoing);
(d) costs of constructing the LNRA Facilities (whether direct or indirect, and
whether or not on account of payments to contractors and subcontractors, materialmen,
suppliers, carriers or similar payments) including payment, or reimbursement, for labor,
services, materials and equipment used, furnished or installed and any other costs
incurred in connection with the acquisition, construction, improvement or installation of
the improvements constituting a part of the LNRA Project, including utilities on or off
the site, and all other real and personal property deemed necessary in connection with
the LNRA Project, the cost of acquiring any performance and payment bonds, the costs
3
of start-up and operational testing of the LNRA Facilities, the fees for architectural,
legal, engineering, accounting, financial, consulting, design, statistical and other technical
supervisory services with respect to the LNRA Project, and for the miscellaneous
expenses incidental to any thereof;
(e) any of the following: the cost of insurance in respect of the period prior
to the Completion Date; the cost of all licenses, permits, amendments to permits,
contractual amendments, technical data, plans and designs obtained or employed in
connection with the construction of the LNRA Facilities or the acquisition or perfection
of the appropriative rights of LNRA in the water to be provided to the City pursuant to
this Contract; the cost of providing electricity, water, waste disposal, transportation and
utility services in connection with the construction of the LNRA Facilities; and the
expenses of seeking to enforce any remedy against any contractor, subcontractor or other
person in respect of any default under a contract or other liability or obligation relating
to the LNRA Project;
and all other costs, charges, fees and expenses attributable for federal income tax purposes to
the capital cost of the LNRA Project.
"LNRA Project Operating and Maintenance Expenses" means the reasonable and
necessary expenses incurred in the efficient and economical administration, management and
operation (at the delivery point and on the LNRA side of the delivery point) and the maintenance
of the LNRA Project in good repair and operating condition, including, subject to the last two
sentences of this definition, the following items: costs of salaries, wages and other compensation
for the employees and members of the on-site staff of LNRA, payments to pension, retirement,
health, hospitalization and other employee benefit funds for such members and staff, and the
general and administrative expenses of LNRA which are allocable to the LNRA Project under
normal and accepted ratemaking principles, fees and expenses of counsel and accountants,
insurance premiums, costs of materials and supplies used in the ordinary course of business,
including costs of ordinary and current rentals of equipment, costs of routine repairs,
replacements and renewals occurring in the usual course of business, any impositions unposed
on or with respect to the LNRA Project, or any part hereof, costs of utility services, all other
costs and expenses of managing, operating, maintaining and repairing the LNRA Project arising
in the routine and normal course of business; and the costs of maintaining the LNRA Project
Operating Reserve Fund. Costs of salaries, wages and other compensation for the employees
and members of the on-site staff of LNRA shall be considered reasonable and necessary
expenses only to the extent that such salaries, wages and other compensation do not exceed
compensation rates prevailing generally in the Lake Texana service area or, if no comparable
positions exist within the Lake Texana service area, prevailing generally in the State of Texas
for organizations of a comparable size and nature. "LNRA Project Operating and Maintenance
Expenses" shall not include (a) any allowance for depreciation or amortization, or (b) any
payments of the principal of and premium, if any, and interest on, the Bonds (if any) or other
evidence of indebtedness.
4
"LNRA Project Operating and Reserve Fund" means a fund equal to three (3) months
Project Operating and Maintenance Expenses, as estimated in an Annual Budget.
"LNRA Site" means the land, easements, rights of way and other interests in real estate
in or on which the LNRA Facilities will be located.
"Lake Texana" means the lake and related facilities located in Jackson County, Texas,
which are owned by the United States of America and in which LNRA has acquired a portion
of the conservation storage pursuant to the Federal Contract.
"Lake Texana Operating and Maintenance Expenses" means the reasonable and necessary
expenses incurred in the efficient and economical administration, management and operation of
Lake Texana and the maintenance of Lake Texana in good repair and operating condition,
including, subject to the last two sentences of this defmition, the following items: costs of
salaries, wages and other compensation for the employees and members of the on-site staff of
LNRA, payments to pension, retirement, health, hospitalization and other employee benefit funds
for such members and staff, and the general and administrative expenses of LNRA attributable
to Lake Texana under normal and accepted ratemaking principles, fees and expenses of counsel
and accountants, insurance premiums, costs of materials and supplies used in the ordinary course
of business, including costs of ordinary and current purchase or rentals of vehicles, equipment,
and office furnishings, costs of routine repairs, replacements and renewals occurring in the usual
course of business, any impositions imposed on or with respect to Lake Texana, or any part
thereof, costs of utility services, all other costs and expenses of managing, operating,
maintaining and repairing Lake Texana arising in the routine and normal course of business; the
costs of accumulating and maintaining the Lake Texana Operating Reserve Fund. Costs of
salaries, wages and other compensation for the employees and members of the on-site staff of
LNRA shall be considered reasonable and necessary expenses only to the extent that such
salaries, wages and other compensation do not exceed compensation rates prevailing generally
in the Lake Texana service area or, if no comparable positions exist within the Lake Texana
service area, prevailing generally in the State of Texas for organizations of a comparable size
and nature. The "Lake Texana Operating and Maintenance Expenses" shall not include (a) any
allowance for depreciation or amortization, or (b) any payments of the principal of and premium,
if any, and interest on, Project Bonds (if any) or other evidence of indebtedness.
"Lake Texana Operating Reserve Fund" means a fund equal to three (3) months Lake
Texana Operating and Maintenance Expenses, as estimated in an Annual Budget.
"Permitted Liens" means:
(a) Minor irregularities, charges, liens, encumbrances, defects, easements,
licenses, rights-of-way, servitudes, restrictions, mineral rights and clouds on title which,
in the opinion of counsel to LNRA, a copy of which shall be forwarded to the City, do
not materially impair the use of the City Project or the LNRA Project for the purposes
for which it is designed.
5
(b) Easements for roads (as used in this Contract, the term "roads" shall
include, without limitation, streets, curbs, gutters, drains, ditches, sewers, conduits,
canals, mains, aqueducts, aerators, connections, camps, docks, viaducts, alleys,
driveways, parking areas, walkways and trackage), utilities (which for purposes of this
Contract shall include, without limitation, water, sewer, electricity, gas, telephone,
pipeline, railroad and other collection, transportation, light, heat, power and
communication systems) and similar easements and other easements, rights-of-way, rights
of flowage, flooding, diversion or outfall, licenses, restrictions and obligations relating
to the operation of the City Project or the LNRA Project which, in the opinion of counsel
to LNRA, a copy of which shall be forwarded to the City, do not materially impair the
use of the City Project or the LNRA Project for the purposes for which it is designed.
(c) Mechanics', materialmen's, workmen's, repairmen's, suppliers', vendors'
or carriers' liens or other similar liens, provided that the same shall be discharged in the
ordinary course of business or the amount or validity of the same shall be contested in
good faith with any pending execution thereof appropriately stayed.
(d) Rights of the United States or any state or political subdivison thereof, or
other public or governmental authority or agency or any other entity vested with the
power of eminent domain to take or control property or to terminate any right, power,
franchise, grant, license or permit previously in force.
(e) Any lien or security interest to be imposed by the Indenture.
"Person" includes any individual, corporation, governmental entity, partnership, joint
venture, business association, or other organization or entity.
"Plans and Specifications" means the plans and specifications prepared for the LNRA
Project by the Project Engineer, as the same may be revised from time to time in accordance
with this Contract.
"Project Bonds" mean revenue bonds of LNRA to be issued to pay the LNRA Project
Costs and to finance the City's acquisition and construction of the City Project, whether in one
or more issues, and any bonds issued to refund any Project Bonds or to refund any such
refunding bonds.
"Project Engineer" means HDR Engineering, Inc. or such other engineering firm or firms
as may be designated by LNRA and approved by the City.
"Qualifying Project Costs" means the LNRA Project Costs which, in the opinion of bond
counsel of LNRA, may be financed with the proceeds of the Project Bonds without jeopardizing
the tax exempt status of the Project Bonds.
"State" means the State of Texas.
6
"System" means the LNRA Project and Lake Texana, together with any extensions,
improvements, substitutions or additions thereto.
"Texana Bonds" mean the special obligations of LNRA to be issued to finance repayment
of TWDB's interest and cost in Lake Texana.
"TNRCC" means the Texas Natural Resource Conservation Commission or any successor
agency for the State performing substantially the same functions.
"Trustee" means that national banking association (and its corporate successors)
designated as Trustee under the Indenture, and its successor or successors as such Trustee.
"TWDB" means the Texas Water Development Board or any successor agency of the
State performing substantially the same functions.
Section 1.02. Interpretation. The table of contents and caption headings of this
Contract are for reference purposes only and shall not affect its interpretation in any respect.
Unless the context otherwise requires, words of the masculine gender shall be construed to
include correlative words of the feminine and neuter genders and vice versa. This Contract and
all the terms and provisions, including exhibits, hereof shall be liberally construed to effectuate
the purposes set forth herein and to sustain the validity of this Contract.
ARTICLE II
ACQUISITION AND CONSTRUCTION OF LNRA PROJECT
Section 2.01. General. Subject to the remaining terms and provisions of this Contract,
LNRA agrees to construct and/or acquire the LNRA Facilities.
Section 2.02. Location of Project. The LNRA Facilities will be located on the LNRA
Site both of which are more specifically described on Exhibit B attached hereto.
Section 2.03. Construction. When requested by the City, LNRA shall make, execute
and deliver all contracts, orders, receipts, writings and instructions with or to other persons, and
in general do or cause to be done all such other things as may be requisite for the proper
acquisition, construction and installation of the LNRA Facilities. The LNRA Facilities shall be
constructed on the LNRA Site.
LNRA agrees to use its best efforts to cause construction of the LNRA Facilities to be
sufficiently complete to enable LNRA to commence delivery of water on the schedule jointly
agreed upon by LNRA and the City, but failure to do so shall not be a default under this
Contract, and LNRA shall not be liable to the City for any delay in completing the LNRA
Facilities so long as the LNRA uses its best efforts to cause the LNRA Facilities to be
completed.
7
Section 2.04. Selection of Project Engineer; Plans and Specifications. When
requested by the City the LNRA will enter into a contract with the Project Engineer for the
preparation of the Plans and Specifications and other materials to be used in obtaining bids for
construction of the LNRA Facilities, and performing such other engineering tasks as shall be
necessary for construction of those facilities. This engineering contract shall be subject to the
approval of the City, within thirty (30) days following submission by LNRA, which approval
shall not be unreasonably withheld.
Section 2.05. Award of Construction Contract. After the receipt of bids for
construction contracts, LNRA shall provide the City with a tabulation of bids received and shall
identify the lowest and best bidder(s). The City shall have ten (10) days from the receipt of such
information to advise LNRA of any suggestions or objections it may have with regard to the bids
received by LNRA. After giving due consideration to the City's suggestions or objections, or
after the passage of ten (10) days, if no comments from the City are received within that time,
LNRA shall in its sole judgment award the Construction Contract(s) to the contractor(s)
submitting the lowest and best bid(s), unless LNRA in its sole judgment determines that all bids
should be rejected. If all bids are rejected, bids will again be solicited until such time as a bid
satisfactory to LNRA has been received. LNRA shall not be obligated to award a construction
contract unless the proceeds from the Project Bonds are available to pay the contract(s) or the
City has advanced funds to LNRA sufficient to make the required payments under such contract
or has provided a letter of credit acceptable to LNRA in an amount sufficient to secure its
obligation to advance such funds. At its option, LNRA may pay the contractor(s) directly, with
the understanding that LNRA shall be promptly reimbursed from the proceeds of the Project
Bonds or by the City. However, LNRA agrees not to solicit bids until requested by the City to
do so.
Section 2.06. Liens. The City and LNRA agree that neither will voluntarily create or
permit to remain any lien, encumbrance or charge upon the City Project or LNRA Project or
any interest therein at any time, except Permitted Liens.
Section 2.07. Revisions of Plans. The Plans and Specifications may be revised prior
to the Completion Date. Minor revisions and change orders (plus or minus up to 5% of the item
being modified) may be implemented by LNRA, with notice to the City. Any other change
order or revision of plans and specifications will require advance approval of the City.
Section 2.08. Completion. When the LNRA Facilities have been completed, LNRA
shall deliver to the City a certificate signed by an Authorized Representative of LNRA stating
that, as of a specified date, the LNRA Facilities have been completed, or substantially
completed, and placed in service (the date specified in such certificate being herein called the
" Completion Date"). Any payments or refunds required as a result of change orders during
construction shall be made within forty-five (45) days following Completion Date.
Section 2.09. Ownership and Operation of LNRA Facilities. The LNRA Facilities
shall be owned and operated by the LNRA.
8
ARTICLE III
FINANCING. ACQUISITION AND CONSTRUCTION OF CITY PROTECT
Section 3.01. Bonds. If directed by the City in anticipation of its decision to proceed
with the City Project as contemplated, the LNRA will use its reasonable efforts to issue the
Project Bonds for the City Project as soon as deemed advisable and necessary by LNRA. The
proceeds from the Project Bonds (less certain expenses and costs) shall be used by the City for
the purpose of financing the City's acquisition and construction of the City Project. The Project
Bonds, if issued, shall be payable solely from LNRA's net revenue (of the LNRA Project and
this Contract) and in certain events from amounts attributable to the Project Bond proceeds, the
final terms and provisions of which shall be set forth in the Bond Documents. The parties
recognize that because of the bond market or other conditions beyond the control of LNRA and
the City, it may be impossible for the Project Bonds to be issued. In connection with the
issuance of the Project Bonds, LNRA shall use its reasonable efforts to secure the agreement of
any person or entity to guarantee the Project Bonds, and the City agrees to cooperate with
LNRA in securing any such guarantee. In connection with the sale of any Project Bonds, the
LNRA will furnish to the City an official statement or offering circular, if any, for review and
comment by the City. The City will be responsible for representations in the official statement
or offering circular regarding the City.
Section 3.02. Sources of Water for the City. The City avails itself of the benefits of
TEX. GOV'T CODE, Section 791.026 (Vernon Pamph. 1993) (Texas Interlocal Cooperation
Act), to obtain part of its water supply from LNRA as provided in this Contract.
Section 3.03. General. Subject to the remaining terms and provisions of this Contract,
City agrees to acquire the necessary easements and interests in land for the City Facilities and
to construct and/or acquire the City Facilities.
Section 3.04. Description of City Proiect. The "City Project" means the easements,
rights-of-way and other interest in real estate in or on which the City Facilities are to be located.
The City Facilities means a pipeline, together with any necessary booster pumps and other
appurtenances sufficient to deliver the water to which the City is entitled under this Contract
from the Delivery Point to a point in the Corpus Christi area to be chosen by the City. The
capacity, destination and route of the City Facilities shall be designated by the City. The City
Facilities will have a tap to allow service to future customers in Calhoun and/or Victoria
Counties, subject to the entry of an agreeable contract.
Section 3.05. Ownership and Operation of City Facilities and the City Project. The
City Facilities and the City Project will be owned and operated by the City, and the City will
pay all expenses of operation and maintenance and any other expenses of any kind associated
with the City Facilities and the City Project.
9
Section 3.06. LNRA Easement The LNRA will cooperate and assist the City in
obtaining an easement from the federal government in form and substance necessary to permit
construction of the City Facilities on LNRA land to connect to the Delivery Point. If requested
by the City, LNRA will include the portion of the City pipeline from LNRA Facilities to the
Federal Property line within the scope of LNRA Project described herein. Additional costs
incurred will be handled in the same fashion as other LNRA Project Costs.
Section 3.07. Completion. The City Completion Date shall be the date set forth in the
engineer's certificate certifying that the City Facilities are complete or substantially complete.
Because, pursuant to Section 4.01, the City will make payments whether water is delivered or
not, the City is not obligated to commence or complete construction of City Facilities until, in
the City's sole judgment, it is appropriate to do so.
ARTICLE IV
WATER SALES AND PURCHASES
Section 4.01. Delivery and Acceptance of Requirements: Title. (a) Subject to the
terms and conditions of this Contract, LNRA agrees to sell, convey and deliver to the City at
the Delivery Point water from Lake Texana in amounts up to and including 41,840 acre-feet per
annum for municipal or municipal and industrial use, and the City agrees to purchase and take
at the Delivery Point such water as it may require for industrial or municipal use, and to make
payment, whether or not taken, based on 3486.7 acre-feet of water per month. LNRA agrees
to commence delivery of water at the request of the City at any time following completion of
the LNRA Facilities (or substantial completion to the extent necessary to enable LNRA to
commence delivery of water), and the City agrees to begin taking water from the LNRA
Facilities in the amounts provided herein, or to pay for such water, whether or not taken, and
whether City Facilities are complete or not, no later than the earlier of August 1, 1995 or the
date the City begins taking water under this Contract. The City shall begin making payments
calculated pursuant to Section 4.03(c) and (d) of this Contract upon the earlier to occur of (i)
August 1, 1995, or (ii) the date the City begins taking water pursuant to this Contract. The City
shall begin making payments calculated pursuant to Section 4.03(a) and (b) in addition to those
calculated pursuant to Section 4.03(c) and (d) of this Contract either (i) upon delivery of water
to this City pursuant to this Contract or (ii) on a schedule phasing costs under Section 4.03(a)
& (b) beginning with 20% of such costs on August 1, 1996, and increasing 20% each year
thereafter until 100% of those costs are included in the year 2000. Title to the water sold
pursuant to this Contract shall pass to the City as and when it passes through the metering
equipment located at the Delivery Point. Title to such water shall remain in LNRA until it
passes through said metering equipment.
(b) In delivering water under this Contract, water for anticipated future demand,
under the Federal Contract, shall be delivered last in order to retain the payment deferral for as
long as possible.
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(c) The parties agree that of the 41,840 acre-feet per annum of water referred to in
the foregoing paragraph (a) of this Section 4.01, 31,440 acre-feet per annum is intended to be
available to the City throughout the term of this Contract, whereas 10,400 acre-feet per annum
is intended for use in Jackson County and following initiation of use in Jackson County the
monthly payments to be paid pursuant to Section 4.03 of this Contract shall be reduced in a
proportionate amount to such reduction of water available. The LNRA may therefore reduce the
amount of water available to the City to 31,440 acre-feet to the extent such reduction is
necessary to provide water for use in Jackson County. If a reduction is required by the LNRA
pursuant to the previous sentence, the LNRA will give the City two years notice of such
reduction. Any reduction shall be subject to the provisions of paragraph (d) of this Section 4.01
below.
(d) No single reduction in the amount of water available to the City pursuant to the
foregoing paragraph shall be greater than 5,400 acre-feet per annum.
(e) When requested in writing to do so by the City, which request shall not be made
more than once every three years, the LNRA will give the City its estimate of Jackson County
demand over the next ten years. Any estimate given pursuant to such request shall be for
planning purposes only, and shall not be binding on the LNRA.
(f) At least 19,000 acre-feet per annum of the water referred to in paragraph (a)
above, must be for municipal use in order to avoid potentially jeopardizing the tax exempt status
of existing LNRA bonds.
Section 4.02. Measurement of Water. LNRA shall furnish, install, operate and
maintain at the Delivery Point the necessary equipment and devices of standard type for
measuring properly and controlling the quantity of water delivered under this Contract. Such
meter or meters or other equipment so installed shall remain the property of LNRA. The City
shall have access to such metering equipment at all reasonable times, but the reading, calibration
and adjustment thereof shall be done only by the employees or agents of LNRA. For the
purposes of this Contract the original record or reading of the meter or meters shall be in a
joumal or other record book of LNRA in its office. Upon written request of the City, LNRA
will give the City a copy of such journal or record book, or permit the City to have access to
the same in the office of LNRA wherein such records are customarily kept during reasonable
business hours.
Not more often than once in each calendar month, on a date as near to the end of such
calendar month as practicable, LNRA shall calibrate its meters at the Delivery Point if requested
in writing by the City to do so, in the presence of a representative of the City, and the parties
shall jointly observe any adjustment that shall be necessary, and if the check meters hereinafter
provided for shall have been installed, the same shall also be calibrated by the City in the
presence of a representative of LNRA and the parties shall jointly observe any adjustment in
case any adjustment is necessary. If the City shall in writing request LNRA to calibrate its
meters at the Delivery Point, LNRA shall give the City notice of the time when any such
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calibration is to be made. If the representative of the City is not present at the time set, LNRA
may proceed with calibration and adjustment in the absence of any representative of the City.
The City may, at its option and expense, install and operate a check meter to check each
meter installed by LNRA, but the measurement of water for the purposes of this Contract shall
be solely by LNRA's meters at the Delivery Point, except in the cases hereinafter specifically
provided to the contrary. All such check meters shall be of standard make and shall be subject
at all reasonable times to inspection and examination by any employee or agent of LNRA, but
the reading, calibration and adjustment thereof shall be made only by the City, except during
any period when the check meter may be used under the provisions hereof for measuring the
amount of water delivered, in which case the reading, calibration and adjustment thereof shall
be by LNRA with like effect as if such check meter or meters had been furnished or installed
by LNRA.
If upon any test, pursuant to this Section 4.02, the percentage of inaccuracy of any
metering equipment if found to be in excess of two percent (2 %), registration thereof shall be
corrected for a period extending back to the time when such inaccuracy began, if such time is
ascertainable, and if such time is not ascertainable, then for a period extending back one-half
(1/2) of the time elapsed since the Last date of calibration, but in no event further back than a
period of six (6) months. If for any reason any meters are out of service or out of repair so that
the amount of water delivered cannot be ascertained or computed from the reading thereof, the
water delivered through the period such meters are out of service or out of repair shall be
estimated and agreed upon by the Authorized Representatives of the City and LNRA upon the
basis of the best data available. For such purpose, the best data available shall be deemed to
be the registration of any check meter or meters of the same which have been installed and are
registering accurately. Otherwise, the amount of water delivered during such period may be
estimated (a) by correcting the error if the percentage of the error is ascertainable by calibration
tests or mathematical calculation, or (b) by estimating the quantity of water delivered by
deliveries during the preceding period under similar conditions when the meter or meters were
registering accurately.
Section 4.03. Payments by the City. Whether actually supplied or not, pursuant to
Section 4.01, the City shall pay monthly for water pursuant to this contract at rates to be
established from time to time by the Board of Directors of LNRA. LNRA's rates shall be based
on costs of service, and the following costs shall be considered in establishing such rates:
(a) A fractional portion of the Lake Texana Operating and Maintenance
Expenses, with the numerator of such fraction being the number of acre-feet per annum
that the City is entitled to take pursuant to Section 4.01, and the denominator being the
permitted annual yield (in acre-feet of water) of Lake Texana, exclusive of release /
pass-through obligation (currently anticipated to be a 74,400 acre-feet per annum fum
yield).
(b) LNRA Project Operating and Maintenance Expenses.
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(c) A fractional portion (calculated in the same manner as the fraction in
paragraph (a) of this Section 4.03 above) of the principal and interest payments, and
premium (if any) and reserve fund payments (if any), due on the Texana Bonds and the
Federal Contract payments and any purchase by LNRA of the interest of the United
States of America or the Texas Water Development Board in the Palmetto Bend
Reclamation Project.
(d) Principal, interest, premium (if any), and reserve fund payments
(if any) due on the Project Bonds.
A sample rate computation is provided in Exhibit C.
Prior to issuance of the Project Bonds, the City shall, from time to time, advance (or
reimburse if initially paid by LNRA) funds in such amounts and at such times as may be
required duly and punctually to provide for the payment of the LNRA Project Costs. At such
time (if ever) as the Project Bonds have been issued, all Qualifying Project Costs, including
Qualifying Project Costs incurred prior to the issuance of the Project Bonds, shall be paid from
the proceeds of the Project Bonds. The City agrees to pay all LNRA Project Costs to the extent
that Project Bond proceeds are not available for such purpose.
Section 4.04. Budgets. The rates to be paid by the City pursuant to the provisions of
Section 4.03 shall be based on projected expenditures of LNRA established by budgets. Within
sixty (60) days prior to the date the LNRA Project is estimated to be placed in service, LNRA
shall submit to the City a proposed budget (the "Initial Budget") covering the period beginning
on such date and ending on September 30 of that year (or September 30 of the next year if the
Initial Budget is submitted during the period from October 1 through December 31). Such
budget and all subsequent budgets (the "Annual Budgets") prepared pursuant hereto shall
comprise an estimate on a fiscal year basis of the costs described above in Section 4.03. Such
budgets shall make provision for maintaining any reserve funds required by this Contract. In
preparing such budgets, LNRA shall consider actual expenses experienced during the previous
twelve (12) month period, expected inflation and other reasonably predictable increases in
expenses, deficits or surpluses in any funds on hand and available for such purpose.
Within thirty (30) days from the receipt by the City of the Initial Budget, the City shall
either consent to such budget or institute negotiations with LNRA with respect thereto. If LNRA
and the City have not agreed on the Initial Budget within thirty (30) days from the receipt by
the City of the Initial Budget, the Initial Budget submitted to the City, with any agreed
modifications thereto, shall become effective without the City's approval. This paragraph does
not waive the City's rights under Section 4.09.
Annual Budgets shall be submitted by LNRA to the City thirty (30) days prior to each
September 30 during the term of this Contract and the City shall either consent to each such
budget by fifteen (15) days prior to such date or institute negotiations with respect thereto. If
LNRA and the City have not finally agreed on the Annual Budget by fifteen (15) days prior to
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each September 30, the Annual Budget submitted to the City, with any agreed modifications,
shall become effective without the City's approval.
LNRA and the City agree and covenant with each other that any budget negotiations will
be conducted in good faith and with a view toward establishing the lowest possible rates on a
cash requirements basis for the provision of water supply services from the System consistent
with good operating practices.
Section 4.05. Budget Review and Revision. If LNRA determines at any time during
the year that the actual LNRA Project Operating and Maintenance Expenses and/or Lake Texana
Operating and Maintenance Expenses have varied by more than ten percent (10%) from budget
projections LNRA shall make appropriate revisions to the budget and rates. Budget revisions
made during the year shall take into consideration any surplus or deficiency in any fund. Budget
revisions made during the year and rates established as a result of such revisions shall take effect
immediately. This paragraph does not waive the City's rights under Section 4.09.
Section 4.06. Billing. LNRA will render monthly bills for the payments required by
Section 4.03 on or before the tenth (10th) day of each month, and such bills shall be due and
payable on or before the tenth (10th) day of the succeeding month. If LNRA commences
delivery of water on a day other than the first day of the month, the City's bill for the first
month shall be pro -rated for the number of days during which water is delivered. Bills shall be
deemed paid when payment actually has been received by LNRA or its designee. For any bill
not paid on or before the due date, interest shall accrue on the unpaid bill at the rate of fifteen
percent (15 %) per annum until paid in full. LNRA may from time to time, by forty-five (45)
days written notice, change the monthly date on which it shall render bills and the corresponding
due dates. Payment to LNRA shall be made at its offices in Jackson County, Texas.
Section 4.07. Nature of Financing Obligations of the Parties. So long as any Bonds
are outstanding, the obligations of the City to pay rates sufficient to provide for the costs
described in Section 4.03 of this Contract shall be absolute and unconditional, irrespective of
any rights of set-off, recoupment or counterclaim that the City might otherwise have against
LNRA, or any other person or persons, and the City will not suspend or discontinue any such
payment for any cause including without limiting the generality of the foregoing, any event
constituting force majeure, any acts or circumstances that may constitute an eviction or
constructive eviction, failure of consideration, failure of title, or commercial frustration of
purpose, or any damage to or destruction of all or part of the LNRA Project or Lake Texana
or the failure of the LNRA Project to be constructed or be completed, or the failure to obtain
any permit or order from any governmental agency which is required to be obtained in
connection with the construction or operation of the LNRA Project, or the taking or
condemnation of title to or the use or possession of all or any part of the LNRA Project, or any
change in the laws of the United States, or the State, or any political subdivision thereof, or any
failure of LNRA to perform and observe any agreement or covenant, whether express or
implied, or to discharge any duty, liability, or obligation arising out of or connected with this
Contract or any other agreement between the City and LNRA. The preceding sentence shall not
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be construed to release LNRA from the performance of any of its agreements contained in this
Contract, including obligations under Section 7.01, or except to the extent provided in this
Section 4.07, to prevent or restrict the City from asserting any rights which it may have against
LNRA, or any other persons under this Contract or under the provisions of law or to prevent
or restrict the City, at its own cost and expense, from prosecuting or defending any action or
proceeding against or by third parties or taking any other action to secure or protect its rights
under this Contract.
Section 4.08. Ouality of Water. LNRA makes no representations, and shall have no
duty or responsibility, with respect to the quality of the water in Lake Texana furnished by
LNRA or the suitability of the water provided by LNRA for the City's purposes. The City
agrees that any variation in the quality or characteristics of the water furnished or available
hereunder shall not reduce or abate the City's obligations to pay for such water.
Section 4.09. Texas Natural Resource Conservation Commission Jurisdiction. If
the City believes the rates for service hereunder from time to time are unreasonable, the City
will be entitled to request the TNRRC to fix reasonable rates pursuant to the provisions of
Sections 11.036-11.041 and 12.013 of the Texas Water Code or if the City determines that
TNRCC has no jurisdiction, the City may enforce its contractural rights in court.
Section 4.10. Source of Payment. LNRA and the City agree that no tax revenues of
the City shall be pledged to the payment of any amounts to be paid by the City to LNRA under
this Contract, nor shall the LNRA have the right to demand payment of any amounts to be paid
by the City under this Contract be paid from funds raised or to be raised from taxation from the
City. The Bonds shall be secured by a pledge to LNRA of the payments made by the City
pursuant to this Contract, and the funds for payment by the City to LNRA under this Contract
shall be operating expenses of the City's water supply system or wastewater treatment facilities,
or both, as the case may be.
Section 4.11. Revenue Sources Pledged. The City hereby pledges the revenues,
income and funds identified in Section 4.10 to the payment of its obligations under this contract.
LNRA pledges the payments owing to it by the City under this contract to the payment of the
Bonds and agrees to make the payments for the said Bonds and obligations when and as required.
by the Bond Resolution, the Federal Contract, and this Contract.
ARTICLE V
OPERATION AND MAINTENANCE OF
PROJECT: INSURANCE; MODIFICATION
Section 5.01. Operation and Maintenance; Insurance. LNRA shall provide, or cause
to be provided, management, manpower and all other services required for the operation and
maintenance of the LNRA Project and Lake Texana. LNRA agrees to use, or cause to be used,
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reasonable diligence and care in operating, maintaining and keeping in good repair the LNRA
Project and Lake Texana and all equipment and apparatus relating thereto, to permit it to deliver
water to the City in the quantities to which the City is entitled pursuant to Section 4.01. LNRA
shall assume complete responsibility for and shall have sole obligation to maintain, repair or
replace the LNRA Project and Lake Texana or any portions thereof. After consultation with the
City, LNRA will acquire and maintain the liability insurance coverage on the LNRA Facilities
and on all of its operations relating to the LNRA Facilities, and property damage insurance on
the LNRA Facilities; the City or its assign will be named as additional insured parties for
liability coverage.
Section 5.02. Modification After the Completion Date. After the Completion Date,
LNRA shall have the right to remodel or alter any portion of the LNRA Project or Lake Texana,
make substitutions, additions or improvements thereto, or to abandon or remove any part
thereof; provided, however, no such remodeling, alteration, substitution, addition or
improvement shall have the effect of interrupting the continuous supply of the City's
requirements for water unless the written consent of the City is first obtained. Notwithstanding
the preceding sentence, it is expressly recognized by the City that LNRA may be required to
make necessary alterations, repairs and extensions of new or additional facilities to be made a
part of the LNRA Project or Lake Texana from time to time during the term of this Contract,
and any suspension of delivery to the City due to such operation shall not be cause for claim or
damage on the part of the City, provided LNRA is using its best efforts to provide the City with
water in accordance with this Contract; provided further, the City shall retain its right to receive
the volume of water that would have otherwise been delivered, and LNRA shall make delivery
of such water as soon as is reasonably possible following resumption of deliveries, or upon such
other terms as the parties may agree. In such case, LNRA shall give the City as much advance
notice as may be practicable of the suspension of delivery and of the estimated duration thereof.
Section 5.03. Reporting Requirements. LNRA agrees to submit annual written reports
to the TNRCC in accordance with the rules of the TNRCC.
ARTICLE VI
CASUALTY
Section 6.01. Casualty of Proiect or Lake Texana. If any material damage,
destruction or taking of the LNRA Project or Lake Texana shall occur, LNRA shall with
reasonable promptness notify the City, as to the nature and extent of such damage, destruction
or taking and whether, in the judgment of LNRA, it is practicable to restore the LNRA Project
or Lake Texana. If the Authorized Representatives of the City and LNRA determine that
restoration is practicable, LNRA shall proceed to restore and complete such portion of the
LNRA Project or Lake Texana and an amount equal to the proceeds of any insurance award
received in connection with such damage, destruction or taking after payment of all expenses
incurred in the collection thereof, shall be used to pay restoration costs. If the Authorized
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Representatives determine that it is impracticable to restore the LNRA Project or Lake Texana,
the amount equal to the net proceeds of any insurance award shall be applied to the payment of
the Bonds; any proceeds remaining, following payment of all Bonds and amounts due under the
Federal Contract, shall be equitably distributed between LNRA, the City, and any other entity
that has contributed toward payment for such insurance as part of its cost of water from the Lake
Texana and LNRA Project.
If the parties' Authorized Representatives are unable to reach agreement on the
practicality of restoring the Lake Texana and LNRA Project, LNRA agrees nevertheless to
restore the Lake Texana and LNRA Project if the City bears all unreimbursed costs of Lake
Texana and LNRA Project restoration.
Section 6.02. Effect of Casualty. The occurrence of a casualty shall not entitle the City
to any abatement, postponement or reduction in the amount of the payments payable under
Section 4.03 of this Contract, and the City hereby waives the benefits and provisions of all laws
and rights which, by reason of the casualty might relieve the City from any of its obligations
under this Contract.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Regulatory Approvals. This Contract shall be effective upon filing with
the Texas Natural Resource Conservation Commission, or successor agency, as required by
TNRCC rules, and upon approval by TWDB of the sufficiency and allocation of the rates and
charges, and other provisions directly related thereto for the sale of water contained herein.
Other governmental approvals required to furnish and take water, more fully identified in
Sections 10.02 and 10.03, are not preconditions to this Contract's effectiveness, but the failure
to obtain said approvals may provide a basis for termination.
Each party will cooperate with the other in obtaining all necessary regulatory approvals
and permits, and each party shall have the right to approve the consultants used by the other
party in connection with this Contract. All expenses incurred in obtaining the foregoing
regulatory approvals and permits shall be paid either directly by the City, or, if paid by the
LNRA, shall be reimbursed to LNRA by the City.
Section 7.02. Financial Ability to Perform. Prior to issuance of Project Bonds under
this Contract, the City shall provide evidence satisfactory to the LNRA that the City has legal
authority and financial ability to perform its obligations under this Contract. The LNRA shall
furnish to the City written evidence of LNRA's decision as to whether or not it is satisfied with
such evidence, within sixty (60) days of when the City furnishes the evidence described in the
foregoing sentence, and if necessary the City shall have the opportunity to respond.
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Section 7.03. Tax Exemption of LNRA Bonds. Notwithstanding anything in this
Contract to the contrary, the identity of the contracting party, whether it be the City or its
permitted successor or assign, and the intended use of the water delivered pursuant to this
Contract, shall be such as to not jeopardize the tax exempt status under the Internal Revenue
Code of 1986, as amended, of any bonds that the LNRA has outstanding as of the effective date
of this Contract or the Bonds. If the City intends to make use of the water supplied under this
Contract in some fashion other than treatment and distribution to City customers through the
City water distribution system, the City shall notify LNRA of such plans and LNRA shall
furnish to the City written evidence of LNRA's decision as to whether or not it is satisfied that
the contracting party and the intended use of the water will not jeopardize the tax exempt status
of any of the Bonds within sixty (60) days of when the City furnishes the information as to the
identity of the contracting party and the intended use of the water delivered pursuant to this
Contract.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.01. Removal of Liens. If any lien, encumbrance or charge of any kind based
on any claim of any kind (including, without limitation, any claim for income, franchise or other
taxes, whether federal, state or otherwise), shall be asserted or filed against any amount paid or
payable by the City under or pursuant to this Contract or any order (whether or not valid) of any
court shall be entered with respect to any such amount by virtue of any claim of any kind, in
either case so as to interfere with the payment of such amount to LNRA then the City will
promptly take such action to the extent permitted by law (including, but not limited to, the
payment of money) as may be necessary to prevent, or to nullify the cause or result of, such
interference.
Section 8.02. Bonds are Special Obligations. The Bonds (if any) and the obligations
of LNRA hereunder shall be special obligations of LNRA and shall be payable solely out of the
revenues of the System and, in certain events, amounts attributable to Bond proceeds or amounts
obtained through the exercise of certain remedies provided for in the Indenture. The Bonds (if
any) shall never be paid out of any funds raised or to be raised by taxation or any other funds
of LNRA or the State of Texas except such revenues derived by LNRA from or in connection
with the System.
ARTICLE IX
OUT -OF -BASIN WATER
Section 9.01. Mutual Cooperation. The City intends to explore acquisition of the right
to divert out -of -basin water that may be stored in Lake Texana for delivery to and use by the
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City, pursuant to terms on which the City and the LNRA will endeavor in good faith to agree.
The LNRA agrees to cooperate with the City in facilitating the acquisition and transfer of those
water supplies.
Section 9.02. No Impairment of Contract. The inability of the parties to reach or
implement a contract for use of out -of -basin water by the City shall have no effect on this
Contract.
ARTICLE X
TERMIINATION: OPTION TO RENEW: GENERAL PROVISIONS
Section 10.01. Term. The term of this Contract shall be for a period of forty two (42)
years beginning on the date first appearing above and terminating on the same month and day
in 2035 unless sooner terminated as herein provided.
Section 10.02. Termination by LNRA. This Contract may be terminated by LNRA
if it becomes illegal or impossible for LNRA to perform its obligations under this Contract as
a result of the occurrence of any one or more of the following:
(a) the cancellation, amendment or other limitation by any local, state or
federal agency of any of the permits, amendments, licenses or authorizations required for
the LNRA Project, the City Project or the appropriation of water from Lake Texana for
municipal or industrial use, or for the sale to the City of the water to be furnished
hereunder, or for the construction or operation of the LNRA Project or the operation of
Lake Texana, or
if:
(b) the promulgation or issuance of any order, rule, regulation or
determination by a court or governmental agency.
Section 10.03. Termination by the City. This Contract may be terminated by the City
(a) it becomes illegal or impossible for the City to take the water as a result
of the occurrence of any one or more of the following:
(i) the failure of any local, state or federal agency to issue or approve
any of the permits, amendments, licenses or authorizations required for the
LNRA Project or the City Project ,
(ii) the revocation or modification of any such permit, amendment,
license or authorization, or
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(iii) the promulgation or issuance of any order, rule or regulation or
determination by a court or governmental agency.
(b) it becomes illegal or impossible for the City to utilize the water furnished
or to be furnished hereunder as a result of the occurrence of any one or more of the
following:
(i) the cancellation, amendment or other limitation by any local, state
or federal agency of any of the permits, amendments, licenses or authorizations
required for the appropriation of water from Lake Texana for industrial or
municipal use, or for the purchase and use by the City of the water to be
furnished hereunder, or for the construction or operation of the City Project or
the operation of Lake Texana, or,
(ii) the promulgation or issuance of any order, rule, regulation or
determination by a court or govenunental agency.
Notwithstanding the foregoing, upon issuance of Texana Bonds or Project Bonds by LNRA this
Contract shall not be subject to termination by the City unless all amounts due on Texana Bonds
and Project Bonds have been paid in full and all amounts due under the Federal Contract
described in Section 4.03 have been paid in full. Provided, however, LNRA shall make
application to the TNRCC for approval of amendments to the Lake Texana water right
(Certificate of Adjudication No. 16-2095) required to enable the use of water under this
Contract, including authorization for transbasin diversion; TNRCC approval of such application
is deemed fundamental to this Contract; prior to TNRCC approval of such application, no
payment from the City for Texana Bonds will be required from the City; if the TNRCC fails to
approve the amendments, the City shall retain the absolute right of termination with no further
obligations except as provided by Section 10.07.
Section 10.04. Notice of Termination. If a party desires to terminate this Contract by
reason of any of the events described in Section 10.02 or section 10.03 above, it shall, within
three (3) months after it acquires knowledge of such event, deliver to the other party a written
notice stating such desire, describing the event, and specifying the date on which this Contract
is to terminate, which date shall be at Least six (6) months from the date of such notice.
Section 10.05. Option to Renew. If, at the expiration of the fixed term of this Contract
as above provided, City is not in default and this Contract is then in full force and effect, the
City shall have an absolute right to renew and extend this contract for an additional period of
fifty (50) years on the terms and conditions providing for the supply at a rate which is
reasonable, just and nondiscriminatory, provided that City delivers written notice to the LNRA
by registered or certified, prepaid and properly addressed first class United States mail of its
intention to do so not less than ninety (90) days prior to the expiration of the original term
herein provided.
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Section 10.06. Defau It. If either party defaults in the observance or performance of any
of the provisions, agreements or conditions to be observed or performed on its part under this
Contract, the other party may give written notice to the party in default of its intention to
terminate this Contract, specifying the failure or default relied upon. Upon the expiration of
forty-five (45) days after the giving of such notice, this Contract shall terminate, unless, within
such forty-five (45) day period, or such longer period as may be specified in such notice or any
amendment of or supplement to such notice, the default specified in such notice shall have been
fully cured.
Section 10.07. Rights After Termination If the City terminates this Contract pursuant
to Section 10.03 above, the City shall pay all LNRA Project Costs through the date of
termination, including any claims or damages arising out of contracts entered into by LNRA for
acquisition and construction of the LNRA Site and LNRA Facilities. This provision shall survive
any such termination.
Section 10.08. Force Majeure. If by reason of force majeure, either party shall be
rendered unable, wholly or in part, to carry out its obligations under this Contract, and if such
party gives notice and full particulars of such force majeure, in writing, to the other party within
a reasonable time after occurrence of the event or cause relied on, the obligations of the party
giving such notice (other than obligations for the payment of money), so far as they are affected
by such force majeure, shall be suspended during the continuance of the inability then claimed,
including a reasonable time for removal of the effect thereof. The term "force majeure" shall
mean acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy,
orders of any kind of the Government of the United States, or any state, or any agency or
political subdivision of the United States or any state, or any other civil or military authority,
insurrections, riots, epidemics, landslides, lightening, earthquakes, fire, hurricanes, tornadoes,
storms, floods, washouts, droughts, arrests, civil disturbances, explosions, breakage or accidents
to machinery, transmission pipes or canals, shortages of labor, materials, supplies or
transportation, or any other cause not reasonably within the control of the party claiming such
inability. The requirement that any force majeure shall be reasonably beyond the control of the
party shall be deemed to be fulfilled even though the existing or impending strike, lockout or
other industrial disturbance may not be settled but could have been settled by acceding to the
demand of the opposing person or persons. The parties shall use their best efforts to remove
the cause of any force majeure; provided further, to the extent the inability does not continue
the City shall retain its right to receive the volume of water that would have otherwise been
delivered, and LNRA shall make delivery of such water as soon as is reasonably possible
following resumption of deliveries, or upon such other terms as the parties may agree.
Section 10.09. Assignment. The City may not transfer or assign this Contract, or
transfer its rights or delegate its duties hereunder, without the consent of LNRA, which consent
shall not be unreasonably withheld. Upon any permitted assignment of this Contract, effective
as of the date of such permitted assignment, the City shall be released from all of its obligations
under this Contract except any pending and unsatisfied payment obligations as of the date of the
permitted assignment.
21
LNRA shall not assign this Contract without the written con
a successor of the duties and functions of LNRA.
Section 10.10. City Financing. Nothing contained in this
from itself financing the City Project should it elect to do so.
Section 10.11. City Audit. Upon reasonable notice, during
City shall be entitled to inspect and review LNRA records of any
under this Contract.
Section 10.12. Notices. All notices, requests, demands
hereunder shall be in writing and shall be deemed to have been
first-class mail, postage prepaid, addressed
if to LNRA:
Lavaca-Navidad River Authority
P.O. Box 429
Edna, Texas 77957
Attention: General Manager
and if to the City:
City of Corpus Christi , Texas
P.O. Box 9277
Corpus Christi, Texas 78469-9277
Attention: City Manager
sent of the City, except to
Contract prevents the City
normal business hours, the
costs assessed or incurred
and other communications
duly given when sent by
or, in each case, at such other address as may hereafter have been designated most recently in
writing by the addressee to the addressor.
Section 10.13. Governing Law, Entire Agreement. Etc. This Contract (a) may be
executed in several counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same instrument; (b) constitutes the entire agreement between LNRA
and the City with respect to the subject matter hereof; (c) shall be governed in all respects,
including validity, interpretation and effect, by and shall be enforceable in accordance with the
laws of the State of Texas; (d) may be modified only by an instrument signed by the duly
Authorized Representative of each of the parties, and (e) shall not be construed as a contract for
the benefit of a third party other than a permitted successor or assign of a party. In the event
that any clause or provisions of this 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 hereof. Each party may specifically, but only in writing, waive any breach
22
of this Contract by the other party, but no such waiver shall be deemed to constitute a waiver
of similar or other breaches by such other party.
IN WITNESS WHEREOF, LNRA and the City have caused this Contract to be
executed in their behalf by their duly Authorized Representatives, as of the date first set forth
above.
LAVACA-NAVIDAD RIVER AUTHORITY
By:
[SEAL]
ATTEST:
Secretary
President and Director
CITY OF CORPUS CHRISTI, TEXAS
BY:
[SEAL]
ATTEST:
CITY SECRETARY
APPROVED AS TO FORM:
CITY ATTORNEY
loncewg.dgc
23
CITY MANAGER
EXHIBIT A
I AL cacTRXCT
PLI ? co(RFR NTC
co LAKE TIRANA PIOJD'T
FISCAL LNRA (ONIRACT
TEAR IsmOONTRACT----_-------- cello)
- ----`-
ENDINPRINCIPAL INSERfST TOTALTOTAL
8-31 PRINCIPAL INTEREST TOTAL
1990 (5457,316) 51,466,190 51,008,874 5 $ $ 51,008,874
1991 (280,449) 1,482,196 1,201,141 1,201,147
1992 (91,391) 1,492,012 1,394,621 1,394,621
1993 92,013 .1,495,420 1.587,493 1;587,493
1994 288,169 1,492,198 1,780,367 1,180,361
1,913,240
1995 491,128 1,482,112 1,913,240 . -
1996 (223,018) 1,464,922 1,241,904 (151.444) 994.777 843,333 2,085,237
1997 (120,243) 1,472,728 1,352,485 (81.653) 1,000,017 918,424 2,270,909
1998 (13,811) 1,476,931 1,463,066 (9,419) 1,002,935 993,516 2,456,582
1699 96,224 1,477,422 1,513,646 65,342 1,003,265 1,068,607 2,642,63
2000 210,112 1,474,054 1,684,226 142,721 1,000,978 1,143,699 2.821,925
2001 328,109 1,466,698 1,194,807 222,807 995,983 1,218,790 3,013,597
2002. 450,173 1,455,214 1,905,387 305,697 988,184 1,293,881 3,199,268
2003 576,510 1,439,458 2,015,968 391,481 917,485 1,368,972 3,384,940
2004 707,268 1,419,280 2,126,548 480,281 963,183 1,444,064. 3,570,612
2005 . 732,023 1,394,526 2,126,549 497,090 946,973 1,444,063 3,570,612
2006 ' 757,643 1,368,905. 2,126,548 514,489 929,575 1,444,064 3,510,612
2007 784,161 1,342,388' 2,126,549 532,496 911,566 1,444,062 3,570,611
2008 811,607 1,314,942 2,126,549 551,133 892,930 1,444,063 3,570,612
2009 840,013 1,286,536 2,126,549 570,423 873,641 1,444,064 3,570,613
2010 869,413 1,257,135 2,126,548 590,388 853,676 1,444,064 3,570,612
2011 899,843 1,226,706 2,126,549 611,051 833,012 1,444,063 3,570,612
2012 931,331 1,195,211 2,126,548 632,438 811,626. 1,444,064 3,570,612
2013 963,934 1,162,615 2,126,549 654,573 789,490. 1,444,063 3,570,612
2014 991,672 1,128,871 2,126,549 611,483 766,580 1,444,063 3,510,612
2015 1,032,590 1,093,958 2,126,548 701,195 742,868 1,444,063 3,570,611
2016 1,068,731 1,057,818 2,126,549 125,737 118,326 1,444,063 3,570,612
2017 1,106,131 1,020,412 2,126,549 151,138 692,926 1,444,064 3,570,613
2018 1,144,851 981,691 2,126,548 777,428 666,636 '1,444,064 3,570,612
2019 1,184,921 941,628 2,126,549 804,638 639,426 1,444,064 3,510,613
2020 1,226,393 900,155 2,126,548 832,800 611,264 1,444,064 3,510,612
2021 1,269,317 857,232 2,126,549 861,948 582,116 1,444,064 - 3,510,613
2022 1,313,743 812,805 2,126,548 892,116 551,947 1,444,063 3,570,611
2023 1,359,724 766,824 2,126,548 923,340 520,723 1.444,063 3,570,611
2024 1,401,315 719,234 2,126,549 955,651 488,406 1,444,063 3,570,612
2025 1,456,571 669,918 2,126,549 989,105 454,958 1.444.E 3,570,612
2026 1,507,551 618,998 2,126,549 1,023,724 420,340 1,444,064 3,510,613
2027 1,560,315 566,234 2,126,549 1,059,554 384,509 1,444.063 3,570,612
2028 1,614,926 511,623 2,126,549 1,096,639 347,425 . 1,444.064 3,570,613
2029 1,671,448 455,100 2,126,548 1,135,021 309,043 1,444.064 3,570,612
2030 1,729,949 396,600 2,126,549 1,174,147 269,317 1,444,064 3,570,613
2031 1,790,497 336,052 2,126,549 1,215,853 228,201 1,444,064 3,570,613
2032 1,853,165
213,384 2,126,549 1,258,418 185,646 1,444,064 3,570,611
2033 1,918,025 208,523 2.126,548 1,302,463 141,601 1,444,064 3,510,612
3,570,613
2034 1,985,156 96,015 1,444,064 141,393 2,126,549 1,348,049 48,833 1,444,063 3.570.60`-
2035 2,054,630 71,912 2,126,542 1,395,230
$41,891,139 548,136,242 $90,027,381 $28,422,193 $26,637,062 555,059,255 $145,086,63!
EXHIBIT B
LAVACA-NAVIDAD RIVER AUTHORITY
PROPOSED FACILITIES
r 141 -'EXPANSION OF WATER
L i DISTRIBUTION SYSTEM
CONTROL BUILDING
LOCATED AT LNRA
HEADQUARTERS
EX/STING
\ WEST ma/
OUTLET
FM 3/3/
EXISTING
WEST Ma/
CONDUIT
SPILLWAY
11
PUMP STA770N, WET 11
WELL MOTORS PUMALL
PS, II EL4TEDOAPPURENANCE4 L
\AND CO VTROL FACILITIES �
LnJ
II
I I
FLOW 111
METER ��
,1
-7%
CZE /-
'b
;1-411`—PIPELIAE BETWEEN AFTER AND
MAY BE INCLUDED /
VF�� - L RA FACIL /77ES AT DSCRETACW N
OF C/rr OF CORPUS CHRIST/
(SCHEMAPC)
EXHIBIT C
SAMPLE RATE COMPUTATION
[For Illustrative Purposes Only]
I. CORPUS CHRISTI NOT TAKING WATER, 1995
(a) Lake Texana Operation & Maintenance: -0-
(b) LNRA Project O&M: -0-
(c) Federal Contract Payment': ($2,085,237.00)
41.840
$2,085,237.00 X 74,400 = $1,172,665.00
(d) Lake Texana Bonds: -0-
(assume not issued)
TOTAL:
$1,172,665.00
Cost/Acre Foot: = $28.03/Acre Foot
II. CORPUS CHRISTI TAKING WATER, 1995
(assuming Texana Bonds)
(a) Lake Texana Operation & Maintenance:
Annual Budgeted Amount, e.g.: ($1,129,223.00)2
41.840
$1,129,23.00 X 74,400
(b) LNRA Project O&M:
[Unknown -- dependent on project
design factors]
(c) Federal Contract Payment: ($2,085,237.00)
41,840
$2,085,237.00' X 74,400
(d) Lake Texana Bonds: ($374,000.00)
$ 635,036.00
$1,172,665.00
41,840 $ 210,325.00
$374,000.00' X 74,400 = $2,018,026.00
Cost per acre-foot
$48.23/Acre Foot
1 1996 Federal payment collected during 1995, under current schedule,
Exhibit A.
2 Estimated for 1995 by increasing current Lake Texana General Budget O&M by
2.17% annually.
3 Estimated principal of $3,400,000 amortized over 20 years at 6%.
Corpus Christi, Texas
u day of
Q(i1 r , 19
The above resolution was passed by the following vote:
Mary Rhodes
Dr. Jack Best
Melody Cooper
Cezar Galindo
Betty Jean Longoria
Edward A. Martin
Dr. David McNichols
David Noyola
Clif Moss
\forme\066
Guy
i
C.� ),
021.9'1 F