HomeMy WebLinkAboutC2012-040 - 2/28/2012 - ApprovedTEMPORARY 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 temp orary k-
p ry sale of untreated raw water, made as of this � s
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
.78460-9277, 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between the parties are superseded by this Contract.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 Wafter Delivery and Conveyance Contract dated
May 1, 1980, as amended, underwhich 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 ( "LNRA/Formosa 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:
2012 -040
Ord029387 1
02/2$/12 Corpus and Formosa 01092012.docx
Formosa Plastics Corporation, TX
INDEXED
I . 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/Clty 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.
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Temporary flaw 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
LNRA/Formosa 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. I_NRA 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.
a. 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 Flaw Water Contract Between Corpus and Formosa 01092012.dorx
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 brought 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 5.13, 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 udder 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
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Temporary Raw Water Contract Between Corpus and Formosa 01092012.docx
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) 8261881
Fax: (361) 826 1889
Formosa Plastics Corporation -- Texas
Attn.: Randy Smith
Vice- PresidentlGeneral 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. .
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Temporary Raw Water Contract Between Corpus and Formosa 01092012.doex
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. Severablilty. 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, suoh 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 A S day of ft= �, 2012.
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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 Oga6u 18 §
This instrument was acknowledged before me on the 2 day of -Pe,� - - - _, 2012,
by Randy Smith, Vice- PresidentlGeneral Manager, Formosa Plastics Corporation —
Texas, on behalf of the corporation.
Notary. Public, Statd of Texas
ATTEST:
a ncn��,�
Armando Chapa
City Secretary
E 42r `�: IANA MARIE TAYLOR "= MY COMMISSION EXPIRES - -.
Ap ril 19, 2013
ACKNOWLEDGMENT &u 0 2,13n AUTHORILUE
STATE OF TEXAS § Z 200112-
pre-
COUNTY OF NUECES °w' ° ......,, " . "..�".`
�SFI^RfTARuT�
This instrument was acknowledged before me on the day cff CK , 2012, by
Ronald L. Olson, City Manager, City of Corpus Christi, on behalf of the City.
Notary Public, State of TexasYP
0 � 4 ESTHER VEtAZCUEZ
n Ally Commis81on Explre5
a July 05, 2014
Temporary Raw Water Contract Belwean Corpus and Formosa 01092012,docx
7
APPROVED: _ day of February, 2012
B
Lisa Aguilar, Assi nt City Attorney
For the City Attorney