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HomeMy WebLinkAbout029387 ORD - 02/28/2012Page 1 of 2 An ordinance authorizing the City Manager to execute a temporary raw water sales contract with Formosa Plastics Corporation, Texas; and providing for severance. Be it ordained by the City Council of the City of Corpus Christi, Texas: Section 1. The City Manager is authorized to execute a temporary raw water sales contract with Formosa Plastics Corporation, a substantial copy of which is attached to and incorporated into this ordinance as Exhibit "A". Section 2. If for any reason any section, paragraph, subdivision, clause, phrase, word or provision of this ordinance 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 ordinance, for it is the definite intent of this City Council that every section, paragraph, subdivision, clause, phrase, word or provision of this ordinance be given full force and effect for its purpose. Formosa Contract ord 12142011.docx INDEXED That the foregoing or name was read r he first time and passed to its second reading on this the j day of , 2012, by the following vote: Joe Adame Chris N. Adler Kelley Allen Larry Elizondo Priscilla G. Leal David Loeb d John E. Marez Nelda Martinez Mark Scott That the foregoing ordinance was read for the second time and passed finally on this the 2-61' day of ,A,Lr-�-tr�i , 2012, by the following vote: Joe Adame Chris N. Adler Kelley Allen Larry Elizondo Priscilla G. Leal PASSED AND APPROVED, this the Attest: alsokyq Armando Chapa David Loeb John E. Marez a'a( Nelda Martinez Mark Scott OvdC/ day of F y , 2012. 1 1217i,/36/1/,/ Joe Ad a `' City Secretary Mayor Approved: f day of C-L/LE-uc-,1,( 2012 R. Jay Reining, First Assistant City Attorney For City Attorney 029387 TEMPORARY RAW WATER SALES CONTRACT BETWEEN THE CITY OF CORPUS CHRISTI AND FORMOSA PLASTICS CORPORATION, TEXAS THE STATE OF TEXAS § COUNTY OF NUECES § This Contract for the temporary sale of untreated raw water, made as of this day of January, 2012, by and between the City of Corpus Christi ("City"), a Texas home - rule municipal corporation, whose address is P.O. Box 9277, Corpus Christi, Texas 78469-9277, and acting through its duly authorized City Manager, or the City Manager's designee ("City Manager"), which is supplied water from, among other sources, Lake Texana by the Lavaca Navidad River Authority ("LNRA") and which owns a regional water supply system that provides untreated raw water and treated water to municipal and industrial districts, and Formosa Plastics Corporation, Texas ("Formosa"), a Delaware corporation, authorized to do business in Texas, whose address is 201 Formosa Drive, Point Comfort, Texas 77978, acting by and through its duly authorized representative ("Formosa's Representative"), which also is supplied water from Lake Texana by LNRA. This Contract is the only agreement of the parties relating to the retail sale, diversion, and use of untreated raw water. Any prior understandings or written or oral agreements between the parties are superseded by this Contract. The City and LNRA entered into a Water Delivery and Conveyance Contract dated December 14, 1993 under which LNRA conveys 41,840 acre feet of water annually from Lake Texana to the City from an intake structure, pipeline, and pump referred to the West Delivery System ("LNRA/City Contract"). Formosa and LNRA entered into a Water Delivery and Conveyance Contract dated May 1, 1980, as amended, under which LNRA conveys 30,800 acre feet of water annually from Lake Texana to the Formosa from an intake structure, pipeline and pump referred to the East Delivery System ("LNRAIFormosa Contract").Formosa wants to divert through the East Delivery System untreated raw water supplied by LNRA to the City for the City's sale to Formosa for its use for industrial purposes , or any corporation, which is a successor to, subsidiary to, or affiliated with Formosa in the operation of Formosa's plants and all additions to the plants, or affiliated or subsidiary plants located in Calhoun County, Texas (for the purpose of this Contract they are collectively considered as the "Plant"), and the City desires to allow or otherwise facilitate the diversion, sale, and use of untreated raw water by Formosa through this retail raw water sale contract. In consideration of the above recitals and the mutual promises, covenants, and agreements, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows: Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx Exhibit A 1 1. Term. This Contract remains in effect from the date of final approval of this Contract, until March 31, 2012, and is subject to the termination provisions contained in this Contract. 2. Use and Quantity of Water. a. The City agrees to allow Formosa to divert and use consumptively untreated raw water from Lake Texana supplied to the City under the LNRA/City Contract, at Formosa's existing point of diversion defined in the LNRA/Formosa Contract, for industrial purposes in such quantity as may be required by Formosa, but not exceeding a total of 2,000 acre feet. Formosa may divert the water the rate of diversion authorized by LNRA. b. However, if a situation arises, Formosa may divert the untreated raw water at a higher rate of diversion, as long as the City and LNRA permit the increase. Formosa recognizes that the City may need to limit the rate of diversions due to the City's own need for water. However, Formosa may not divert from the water supplied to the City by LNRA more than the contracted for 2,000 acre feet during the term of this agreement. Because LNRA has implemented a pro -rata reduction of water deliveries as defined in LNRA's current Drought Contingency Plan (DCP), the volume of water to be transferred as a result of this agreement will be added to Formosa's average daily allotment as defined per the DCP and an equal amount deducted from the City's current delivery rate. c. Under the LNRA/City Contract and LNRA/Formosa Contract, title to and possession of the untreated raw water passes from LNRA to Formosa at the point of diversion. 3. Point of Diversion. Formosa will divert the untreated raw water at and with its current facilities. 4. Measurement of Raw Water. a. The untreated raw water delivered under this contract must be measured in U.S. standard gallons by a suitable water meter or meters installed and maintained by LNRA at the point of diversion, which shall be accurate within 2%, either plus or minus. Checks as to the accuracy of the meter or meters may be made by the Director of Water Operations by request to LNRA, at the City's expense. The Director of Water Operations will notify the Formosa's Representative in writing 10 days in advance of all checks and tests in order that the Formosa may have a representative present as a witness. However, if the Formosa's representative is not present, LNRA may proceed with the check. (1) If either the City's Director of Water Operations or Formosa's Representative, at any time, notifies the other that it desires a special test of any meter, the parties will cooperate in arranging for a special test to be made by LNRA. (2) The expense of the special test of the meter or meters will be paid by the party requesting the test. Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx (3) If, on any test, the meter tested is found to be inaccurate, the inaccuracy will be addressed in accordance with the provisions relating to meter inaccuracies in the LNRAIFormosa Contract. (4) If, for any reason, the meter or meters are out of service so that the volume of untreated raw water delivered cannot be ascertained or computed, the untreated raw water delivered during the period the meter or meters are out of service will be estimated under the provisions relating to meter inaccuracies in the LNRA/Formosa Contract. b. LNRA will read the meter or meters under the LNRA/Formosa Contract and will determine from these readings the amount of untreated raw water delivered to the Formosa. All meter readings will be made available to the Formosa's Representatives during the City's normal office hours. 5. Price of Raw Water. The price to be charged for untreated raw water sold by the City to the Formosa is One Thousand One Hundred Dollars ($1,100.00) per acre foot or fraction thereof. 6. Fixed Minimum Obligation. Formosa is obligated to purchase the contract amount of untreated raw water by the end of the contract term, March 31, 2012, but Formosa must pay the City for the water at the daily amount in increments of twenty two (22) acre feet per day. 7. Billing. a. All untreated raw water taken in any one calendar month will be billed between the first and tenth of the next succeeding calendar month, and Formosa will pay the bill within 10 days of the receipt of such bill. Any clerical error in the bill or minor question regarding the bill is not sufficient grounds to delay payment by Formosa to the City. Any such questions, will be properly settled under the terms of this Contract and by the agreement of both parties. Any adjustments in the amount paid as a result of such agreement will be added to or deducted from the following month's bill. b. Any failure by Formosa to pay the monthly billing within 10 days after such billing date is a "default" under Section 14 of this Contract. In the event it becomes necessary to collect such charges through any Court procedure, the City is entitled to also recover reasonable attorney's fees. If Formosa fails to pay its water bills, the City may require the payment in advance of each monthly water bill based on a diversion of eight (8) acre feet per day, plus a deposit, as a condition to furnishing untreated raw water to Formosa, and may request LNRA cease delivery of water to Formosa until the City receives the required advanced payment and deposit. 8. Restrictions on Resale. Formosa, its affiliates, its subsidiaries, or any successor may use at the Plant all water diverted up to the maximum stated in Section 2.a. of this Contract. Formosa's water may not be used by any other person, corporation, Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx partnership, or entity, except for activities performed for Formosa at Formosa's Plant. Sale to or use by any other person, corporation, partnership, or entity is "default" under Section 14 of this Contract. 9. Water Rights. It is mutually agreed and understood that the City has acquired the contracted water from the LNRA, which water contracted by the City is not under Contract to others, and may be used to supply water to Formosa during the time this Contract remains in force. Further, that this Contract is subject to the City's responsibility and obligation to provide water to municipal and industrial consumers within the Corpus Christi city limits and municipal and industrial consumers outside its city limits. It is also mutually agreed and understood that this Contract is subject to the jurisdiction of the Texas Commission on Environmental Quality ("TCEQ"), any successor agency, or any other regulatory authority that may have jurisdiction over such matters. Formosa agrees for the term of this Contract to support any future City requests to the TCEQ or other regulatory authorities for permission to acquire water rights or provide water to Formosa and other customers. 10. Water Conservation and Drought Contingency Measures. a. Formosa acknowledges the terms of the TCEQ Agreed Order of April 28, 1995, which amended the operational procedures relating to Special Condition 5.B, Certificate of Adjudication No. 21-3214, and the City's responsibilities under both the Agreed Order and the Certificate of Adjudication. The agreed order requires the City to provide in any future contracts or any amendments, modifications, or changes to existing contracts the condition that all customers and any subsequent customers must develop and have in effect a water conservation and drought management plan consistent with the City plan as required by the TCEQ rule. Therefore, Formosa agrees that during the term of this Contract, Formosa, its affiliates, and subsidiaries shall comply with any restrictions imposed on industrial customers within the City of Corpus Christi when the City has implemented any provisions of its Water Conservation and Drought Contingency Plan, adopted under Section 55-156, Code of Ordinances, City of Corpus Christi, or any amendments to the City's Water Conservation and Drought Contingency Plan or successor plan adopted by the City. The failure of Formosa, its affiliate, or subsidiary to comply with the City's Water Conservation and Drought Contingency Plan is a "" under Section 14 of this Contract. b. To the extent that the TCEQ or other regulatory agency requires rationing of water in a manner stricter than that imposed by the City, Formosa shall comply with such stricter method of rationing water. 11. Force Majeure. If the City or Formosa are prevented, wholly or in part, from fulfilling its obligations under this Contract by reason of any act of God, unavoidable accident, acts of enemies, strikes, fires, floods, conservation of water for those with superior and legal rights to such water, governmental restraint or regulation, other causes of force majeure, or by reason of circumstances reasonably beyond its control, then the obligations of City or Formosa, as provided in this Contract, are temporarily suspended during continuation of such force majeure. No damage is recoverable by Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx 1 Formosa from City by reason of the temporary suspension of delivery of water due to any of the causes above mentioned. If the City's obligation is affected by any of such causes, the City will promptly notify Formosa's Representative in writing, giving full particulars of such force majeure as soon as possible after the occurrence of the cause or causes relied upon. 12. Right to Terminate. a. Formosa may, by giving 48 hours written notice to the City's Director of Water Operations, cancel, and terminate this Contract in its entirety. Formosa may give the notice by facsimile at (361) 826-4382. Notice by the same manner must be provided to LNRA. b. The City may terminate this Contract upon written notice to Formosa's Representative and LNRA in the event the combined storage capacity of the City's Lake Corpus Christi -Choke Canyon Reservoir system reaches fifty (50%) percent of capacity as determined by the City. 13. Assignability. This Contract may not be assigned by Formosa to an unrelated third party without the prior written consent of the governing body of the City and LNRA, which consent will not be unreasonably withheld. 14. Authority to Execute. In order to make this Contract fully binding, the individual signing this Contract on behalf of each of the parties must have been duly authorized to execute this Contract by proper ordinance or resolution of its governing body (e.g., the City's City Council and Formosa's managers) and certified copies of the authorization must be furnished by each party to the other party for attachment to this Contract. The City's authorization shall be Exhibit A, and Formosa's authorization shall be Exhibit B. 15. Notices and Addresses. a. Any notice, communication, or statement required to be given pursuant to this Contract will be in writing and deemed to have been received when delivered in person or three (3) days after mailing if sent by certified mail, postage prepaid, return receipt requested, to the address of the respective party indicated below: City of Corpus Christi Attn.: Director of Water Operations P. O. Box 9277 Corpus Christi, Texas 78469-9277 Phone: (361) 826 1881 Fax: (361) 826 1889 Formosa Plastics Corporation -- Texas Attn.: Randy Smith Vice-President/General Manager 201 Formosa Drive Point Comfort, Texas 77978 Phone: (361) 987-7410 Fax: (361) 987-8121b. b. Either party may change the individual or address to which notice is sent by sending a notice to the address designated in subsection (a) of this section. Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx 16. Regulatory Agencies. Formosa and City agree that the effectiveness of this Contract is subject to the jurisdiction of the TCEQ and is dependent upon compliance with the regulations in Title 31, Texas Administrative Code, Chapter 295 and 297, Subchapter J., and any amendments thereto. 17. Severability. In case any one or more provisions contained in this Contract is for any reason held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability does not affect any other provision hereof, and this Contract will be construed as if such invalid, illegal, or unenforceable provision had never been contained in this Contract. 18. Captions. All titles of the Sections of this Contract have been inserted for convenience of reference only and are not considered a part of this Contract and in no way will they affect the interpretation of any provisions of this Contract. 19. Modifications. Any amendments, or alternative or supplementary agreements, to this Contract must be made in writing and duly executed by an authorized representative or agent of each of the parties to this Contract. 20. No Third Party Beneficiaries. This Contract is for the sole and exclusive benefit of the parties, and shall never be construed to confer any benefit on any third party. This Contract will be binding upon and inure to the benefit of the parties and their respective successors and assigns where permitted by this Contract. 21. Texas Law to Apply. This Contract will be construed under and in accordance with the laws of the State of Texas. 22. Venue. Performance of this Contract will take place in Nueces County, Texas. Any action or proceedings relating to this Contract must be taken in Nueces County, Texas. The parties agree that the courts in Nueces County, Texas, shall have exclusive jurisdiction over this agreement. 23. Prior Agreements Superseded. This Contract constitutes the sole and only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter. 24. All Agreements Contained in this Written Instrument. This Contract represents the entire agreement between Formosa and City and supersedes all prior negotiations, representations, or agreements either oral or written. The parties have executed this Contract in multiple counterparts, each executed copy shall be considered as an original, by their respective duly authorized representatives, this day of January, 2012. Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx FORMOSA PLASTICS CORPORATION, TEXAS By: Name: Randy Smith Title: Vice-President/General Manager ACKNOWLEDGMENT STATE OF TEXAS COUNTY OF § This instrument was acknowledged before me on the day of , 2012, by Randy Smith, Vice-President/General Manager, Formosa Plastics Corporation — Texas, on behalf of the corporation. Notary Public, State of Texas ATTEST: CITY OF CORPUS CHRISTI Armando Chapa Ronald L. Olson City Secretary City Manager ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF NUECES § This instrument was acknowledged before me on the day of , 2012, by Ronald L. Olson, City Manager, City of Corpus Christi, on behalf of the City. Notary Public, State of Texas Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx