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HomeMy WebLinkAboutOrd 163a-2004 GTUA -Potable Water Pass-Through & Pump.pdfORD 163A-2004 AN ORDINANCE by the City Council of the City of Anna authorizing the execution and delivery of a "Potable Water Pass -Through and Pumping Agreement' by and among the Greater Texoma Utility Authority, the City of McKinney, Texas, the City of Anna, Texas, the City of Melissa, Texas, the City of Van Alstyne, Texas, and the City of Howe, Texas, and resolving other matters incident and related to the execution and delivery of such Agreement including specifying the term, consideration, and obligations of the parties to such Agreement, and resolving provisions incident and related to the subject and purpose of this ordinance. WHEREAS, negotiations have been conducted between the Greater Texoma Utility Authority (the "Authority"), the City of McKinney, Texas, the City of Anna, Texas, the City of Melissa, Texas, the City of Van Alstyne, Texas, and the City of Howe (the four named Texas cities other than the City of McKinney being the "Participating Cities"), with respect to the execution of a Potable Water Pass -Through and Pumping Agreement (the "Agreement") the form of which is attached hereto as Exhibit A), whereby the City of McKinney, Texas, would provide use of its water supply transmission and pumping facilities for the benefit of the Authority and the Participating Cities, upon the terms and conditions and for the good and valuable consideration set forth and specified in the Agreement; WHEREAS, said Agreement has been prepared and submitted to this governing body for approval, and it has been determined by the City Council that the Agreement is in the best interest of the City and should be approved; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS: SECTION 1: That the "Potable Water Pass -Through and Pumping Agreement' by and among the Greater Texoma Utility Authority, the City of McKinney, Texas, the City of Anna, Texas, the City of Melissa, Texas, the City of Van Alstyne, Texas, and the City, attached hereto as Exhibit A and incorporated herein for all purposes is hereby approved for and on behalf of the City. The Mayor is hereby authorized and directed to execute such Agreement for and on behalf of the City and as its act and deed, and such Agreement may be countersigned by the City Secretary on behalf of the City. Section 2: This ordinance shall take effect and be in force from and after its passage. 45527373.1\10304552 PASSED AND APPROVED, this -93 day of 2004. (City Seal) of Anna, Texas /L/1�/�l iL ity Fecretary Ci of Anna, Texas 45527373.1\10304552 EXHIBIT A POTABLE WATER PASS-THROUGH AND PUMPING AGREEMENT 45527373.1\08000831 A_1 Greater Texoma Utility Authority — City of McKinney POTABLE WATER PASS THROUGH & PUMPING AGREEMENT THE STATE OF TEXAS THE COUNTY OF COLLIN THIS AGREEMENT (the "Agreement") made and entered into as of this the 30 day of November, 2004, .by and between the Greater Texoma Utility Authority ("GTUA'), a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution, the City of Anna, Texas ("Anna'), a Texas municipal corporation, the City of Howe, Texas ("Howe"), a Texas municipal corporation, the City of Melissa, Texas ("Melissa"), a Texas municipal corporation, the City of Van Alstyne ("Van Alstyne"), a Texas municipal corporation and the City of McKinney, Texas ("McKinney'l, a Texas municipal corporation. WITNESSETH: WHEREAS, GTUA has previously served as the coordinating entity to secure Texas Water Development Board ("TWDB'J loans on behalf of participating Texas cities including, but not limited to Anna, Howe, Melissa, and Van Alstyne (the "Participating Cities"), for the construction of a water transmission main to deliver surface water to said Participating Cities, all of whom are located in either Collin County or Grayson County, Texas; WHEREAS, said TWDB loans have been approved subject to execution of a water supply agreement and other similar contingencies; WHEREAS, the North Texas Municipal Water District ("NTMWD") has agreed to provide a surface supply of water to GTUA for sale to the Participating Cities, by transporting said water from NTMWD's transmission and delivery facilities to various points of delivery in McKinney's water distribution system until such time as NTMWD constructs an appropriate transmission line in closer proximity to a point where GTUA can access the water from a NTMWD transmission line directly; WHEREAS, it has been determined that the most efficient mechanism for GTUA to receive said transported water from NTMWD is through a cooperative arrangement with McKinney through which McKinney will receive and flow said water to a point of connection to GTUA facilities; WHEREAS, GTUA and NTMWD have entered into an agreement (the "GTUA/NTMWD Agreement') for the delivery and purchase of said water, a copy of which is attached hereto as "Exhibit A" and made a part hereof as if incorporated frilly herein; POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 WHEREAS, GTUA and McKinney have analyzed various options and system capabilities, including the construction by GTUA of a new transmission line funded by NTMWD, TWDB, or other GTUA sources which will become an extension of the McKinney water transmission system; WHEREAS, McKinney agrees, subject to available capacity of water from NTMWD, under its agreement with McKinney, and the payment of the direct and indirect operational, maintenance, and necessary capital costs incurred by McKinney (and as enumerated in this agreement) by virtue of the transportation of GTUA's purchased water, to transport potable water for GTUA for ultimate delivery to the Participating Cities through its water distribution system including receiving said water from NTMWD and pumping said water to a point of delivery to GTUA; WHEREAS, GTUA, Participating Cities and McKinney are authorized to enter into this Agreement pursuant to the Texas Government Code, Chapter 791, the Interlocal Cooperation Act, and other applicable laws; WHEREAS, McKinney is desirous of assisting GTUA and the Participating Cities in obtaining an adequate and dependable water supply; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained: (i) Subject to and conditioned upon GTUA's and Participating Cities' continuous performance under this Agreement, McKinney agrees to receive, and pump the hereinafter described volumes of water to GTUA's designated point of delivery as specified herein; and GTUA and the Participating Cities, jointly and severally, agree to pay for the delivery and transmission water by McKinney and for all direct and indirect costs of transmission of such water (including but not limited to the costs of transmission arising under the NTMWD/McKinney Agreement) regardless of any default by NTMWD or GTUA under the GTUA/NTMWD Agreement, upon the terms and conditions and for the consideration hereinafter set forth; (ii) GTUA and the participating Cities, jointly and severally, agree to pay to McKinney the amounts provided for in Section 7 hereinafter, but specifically including the direct and indirect costs of transmission of such water to GTUA. Section 1. DEFINITION OF TERMS. The following terms and expressions as used in this Agreement, unless the context clearly shows otherwise, shall have the following meanings: a. "Anna" means the City of Anna, Texas. b. "City Engineer" shall mean the City Engineer of McKinney, or the Designee or representative of the City Engineer of McKinney. C. "Eligible Oversize Costs" shall mean that portion of the cost of the New Transmission Line exceeding the standard waterline size requirements of McKinney (however, excluding those portions of the New Transmission Line POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 which exceed the standard waterline size requirements but which are required solely to serve GTUA and the Participating Cities) and only for those components of costs for which McKinney reimburses developers under its ordinances and policies (and particularly excluding easement acquisition costs). d. "Eligible Base Size / Pro -rata Reimbursable Costs" shall mean the costs recoverable from third -party developers under the McKinney Subdivision Ordinance. e. "Engineer" shall mean the Consulting Engineer with whom GTUA enters into an agreement to design the improvements contemplated by the TWDB Loan, the TWDB State Participation Loan, and other financing sources. f. "GTUA" means the Greater Texoma Utility Authority, a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution. g. "Howe" means the City of Howe, Texas. h. "McKinney" means the City of McKinney, Texas. i. "Melissa" means the City of Melissa, Texas. j. "MGD" is an abbreviation for "million gallons of water per day" and means a quantity of water during a period of time expressed for convenience in terms of an average annual daily quantity during an Annual Payment Period. k_ "New Transmission Line" means that variable -sized water transmission pipeline with diameters ranging from 36" to 20", installed at its cost by GTUA to the McKinney water transmission system; however specifically excluding any portion of the line (as depicted on McKinney's Water Master Plan as a future, developer - constructed transmission line) designed and constructed by third -party developers. ]. "NTMWD" means the North Texas Municipal Water District, as defined in the preamble to this Agreement. in. "NTMWD loan" means any financing obtained from North Texas Municipal Water District to construct the New Transmission Line on the McKinney water system. n. "Participating Cities" shall mean the cities which execute and approve agreements representing participation in the objectives contemplated and described in this Agreement, including, but not limited to, the Cities of Anna, Texas, Howe, Texas, Melissa, Texas, Van Alstyne, Texas, and other Texas cities. POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 3 o. "System" means collectively the existing system and the future improvements of GTUA for water storage, treatment, transportation, distribution, and supply, as contemplated by this Agreement and as more fully detailed by the TWDB loan application and/or subsequent engineering plans approved by the parties hereto. p. "TWDB Loan" shall mean the Texas Water Development Board loan approved by the TWDB on March 19, 2003 and extended by the TWDB on January 21, 2004. q. "TWDB State Participation Loan" shall mean the state participation portion of the loan approved March 19, 2003 and extended by the TWDB on January 21, 2004. r. "Van Alstyne" means the City of Van Alstyne, Texas. S. "Water Year" means the period of August I of each calendar year through July 31 of the next following calendar year or such other twelve (12) month period designated by City. Section 2. QUANTITY. McKinney agrees to use its water transmission and distribution system to transmit water received from NTMWD to the GTUA point(s) of delivery subject to the following conditions: a. The maximum volume of water delivered per day shall not exceed the amounts depicted in Column 1 entitled "Projected Average Surface Water Demand of Participating Cities" on Exhibit B, attached hereto for all purposes. The rates for the volumes depicted on Exhibit B, Column 1 shall be as shown in the water rate line (entitled "Column Water Rate") of Column 1. In addition to the maximum volumes described on Exhibit B, Column 1, and in such volumes (which volumes include those depicted in Column 1) depicted on Column 2 and at the rates shown on Exhibit B, rate line (entitled "Column Water Rate) of Column 2, GTUA may, at the sole discretion of McKinney, receive additional amounts purchased by GTUA from NTMWD, IF such volumes are available for delivery based on McKinney's day-to-day demand for water. If additional amounts are desired by GTUA above those amounts shown on Exhibit B, Column 2, GTUA shall make a written request for such additional amounts forty-eight (48) hours prior to any requested delivery. If McKinney provides volumes in any amounts exceeding Exhibit B, Column 1, McKinney may unilaterally reduce any such additional amounts in its sole discretion upon delivery of twelve (12) hours notice by fax, email, or phone to GTUA. Except during those periods where McKinney has determined that available volumes do not exist due to McKinney's day-to-day demand as described in this Section 2, McKinney shall not reduce available volumes to GTUA below the volumes shown on Column 2 of Exhibit B, during any year. For subsequent years, the applicable volumes to be shown on Column 1, Exhibit B shall be added to Column 1 after calculating the average daily volumes received over the preceding 12 months; however in no event shall such Projected Average Surface Water Demand volume for a subsequent year POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 4 exceed the corresponding amount shown on Exhibit B, Column 2. GTUA and Participating Cities shall enact and enforce a Drought Contingency Plan which shall apply concurrently with any plan adopted by McKinney. GTUA and Participating Cities shall provide McKinney with written notice of any implementation of such Drought Contingency Plan in any year of this Agreement. b. Participating Cities shall be permitted to maintain existing well capacity as depicted on Exhibit C, attached hereto and incorporated for all purposes, plus additional wells begun subsequent to the execution of this Agreement but prior to the initial flow of water through the System, throughout the term hereof to provide for a portion of the Participating Cities' needs and to reduce spikes in peak day usage. GTUA and Participating Cities shall have the right to construct additional wells if McKinney elects not to provide GTUA and Participating Cities with volumes in excess of the amounts provided for in Column 1, Exhibit B or if GTUA and Participating Cities' demand exceeds the capacity of the McKinney transmission system to deliver water in volumes exceeding Exhibit B, Column 3. C. All water transported and delivered to GTUA hereunder shall not impair the capacity or ability of McKinney to provide for the requirements of its existing and future citizens and the projected utility infrastructure needs arising from development during the term of this Agreement. Extensions of the term of this Agreement shall be analyzed, in addition to other factors, on the effect that the continuation of this Agreement has on McKinney's capacity and ability to serve its citizens and customers. d. McKinney shall designate Point(s) of Delivery during the term of this Agreement. The initial Point of Delivery shall be as shown on Exhibit D attached hereto and as such Point(s) of Delivery is further described in Section 4 hereinafter. The parties agree to discuss alternative points of delivery which are mutually beneficial to all parties and which would not impair any rights hereunder. e. McKinney shall review and approve the final design, final location, and construction agreement for the construction of the New Transmission Line to be located generally as shown on Exhibit D attached hereto. All costs of McKinney's review shall be borne by GTUA and Participating Cities. All costs of construction, including any easement acquisition, SCADA equipment, and any other associated equipment, shall be home by GTUA and Participating Cities. McKinney agrees to assist in condemnation, at its sole discretion, but in no event until GTUA and Participating Cities advance the reasonable costs of acquisition and continue the funding thereof to completion. f. McKinney shall designate the location and McKinney's engineer shall approve the specifications for GTUA's metering station for monitoring water volumes as more fully described in Section 5 hereinafter. McKinney and GTUA shall have mutual access to the metering station throughout the term of this Agreement. All costs of installation and maintenance of the metering equipment shall be bome by POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 5 GTUA and Participating Cities. McKinney shall designate the appropriate person(s) for recording the flows at the metering station. g. GTUA shall install a rate of flow controller, to specifications acceptable to McKinney's City Engineer, limiting the maximum daily flow to the volume provided for in Column 2, Exhibit B at the approved metering station described in Section 2(f) above. Section 3.UO AL1TY. McKinney does not warrant the water quality of the water to be delivered by McKinney. McKinney agrees to deliver water to GTUA in the same manner as any other wholesale customer. Section 4. POINT(S) OF DELIVERY. The initial point of delivery to GTUA shall be the western terminus of the New Transmission Line at a point approved by McKinney and GTUA which initial point of delivery location shall be a required agreement term in the construction documents for the GTUA/Participating Cities Delivery System and Pipeline. McKinney agrees to provide for delivery of GTUA- purchased water through McKinney's system to GTUA. The relevant points of delivery through the systems are hereby designated as follows: a. NTMWD Point(s) of Delivery. McKinney shall receive from NTMWD its required quantity of water for the City's use and the GTUA/Participating Cities' use at either the Highway 380 (McK POD #3) metering station or any of the existing McKinney points of delivery from NTMWD. b. GTUA/Participating Cities Initial Point of Delivery (hereinafter referred to as the GTUA POD). Said GTUA POD is generally described as being located near or at a GTUA (0.5 million gallon) ground storage water tank proposed to be constructed by GTUA at a location approved by McKinney's City Engineer. It is agreed that GTUA's Engineer shall keep McKinney's Engineer informed of the design process and the prospective locations for the proposed GTUA ground storage tank; it is anticipated that GTUA and McKinney may cooperate in the selection of a consolidated tank site appropriate for City of McKinney future delivery point # 4. It is further provided that GTUA, in concert with McKinney's Engineer may install additional connections to the McKinney transmission and distribution system if needed to maintain the agreed volume to GTUA; however only if McKinney can concurrently maintain the water system capacity necessary for McKinney's customers and growth. Any increased costs for pumping and any related costs for operation of the GTUA ground storage water tank shall be added to the amounts described in Section 7. Section 5. MEASURING EQUIPMENT. GTUA shall furnish and install, at its sole expense, at the GTUA POD the necessary rate of flow equipment of a standard type approved by McKinney (and NTMWD if required by its agreement with McKinney) for measuring properly the quantity of water delivered under the GTUA/NTMWD Agreement, and such Master Meter and other equipment so POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 6 installed shall become the property of NTMWD. Additionally, GTUA, at its sole expense, shall furnish and install at the GTUA POD the necessary rate of flow equipment of a standard type approved by McKinney (and NTMWD if required by its agreement with McKinney) for properly regulating / limiting the average hourly rate of flow as required by this Agreement. GTUA and 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 McKinney (or McKinney and NTMWD if required by McKinney's or GTUA's agreement with NTMWD). NTMWD shall perform the official meter reading for purposes of water billing, although McKinney shall have the right to perform a verification reading. For the purpose of this Agreement, the original record or reading of the meter shall be the journal or other record book of McKinney in ita office in which the records of the appropriate employees or agents of McKinney are kept or the record book or journal of NTMWD. Upon written request of the GTUA, McKinney will provide a copy of such journal or record book, or permit GTUA to have access to the same in the office of McKinney during reasonable business hours. Not more than once in any six month time period, GTUA/NTMWD shall test its meter if requested in writing by McKinney to do so, in the presence of a representative of McKinney, and the parties shall jointly observe any adjustments which are made to the meter In case any adjustments shall be necessary, and if the check meter hereinafter provided for has been installed, the same shall also be calibrated by NTMWD in the presence of a representative of GTUA and McKinney, and the parties shall jointly observe any adjustment if necessary. If McKinney shall request of GTUA in writing that it be present during the calibration of the meter, then GTUA shall give McKinney notice of the time when any such calibration is to be made and if a representative of McKinney is not present at the time set, GTUA/NTMWD may proceed with calibration and adjustment in the absence of any representative of McKinney. If either party at any time observes a variation between the delivery meter and the check meter or meters, if any such check meter or meters shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate calibration test and joint observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. Each party shall give the other party forty-eight (48) hours notice of the time of all tests of meters so that the other party may conveniently have a representative present. If upon any test, the percentage of inaccuracy of any metering equipment is found to be in excess of two percent (2%), registration thereof shall be corrected fora period extending back to the time when such inaccuracy began, if such tr_rne 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 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 parties hereto 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 POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 7 meters if the same have been installed and are accurately registering. Otherwise, the amount of water delivered during such period may be estimated (i) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (ii) estimating the quantity of delivery by deliveries during the preceding periods under similar conditions when the meter or meters were registering accurately. GTUA or McKinney may, at its option and its own expense, install and operate a check meter to check each meter installed by GTUA. The measurement of water for the purpose of this agreement shall be solely by the McKinney meters, except in the cases hereinabove 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 GTUA, but the reading, calibration and adjustment thereof shall be made only by McKinney except during any period when a 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 made by McKinney with like effect as if such check meter or meters had been furnished or installed by McKinney. Section 6. UNIT OF MEASUREMENT. The unit of measurement for treated water delivered under this Agreement shall be 1,000 gallons of water, U.S. Standard Liquid Measure. Section 7. RATES AND TERMS. Payments by GTUA to McKinney shall be for the following components of Base Cost for the services: a. Direct and Indirect Costs of Pumping and Transmission. GTUA shall pay McKinney an amount per thousand gallons of water flowing through the McKinney Transmission and Distribution System calculated as follows: the cost for pumping water (per thousand gallons) multiplied times the number of thousand gallons metered per month. The cost per thousand gallons pumped shall be determined and adjusted annually by McKinney by dividing the total of system -wide electrical service costs for water pumping by the total volume of gallons of water pumped system -wide on an annual basis. McKinney may use fiscal or calendar year for making this annual adjustment. It is specifically agreed that GTUA shall pay NTMWD directly for all water purchases, and GTUA and Participating Cities shall hold harmless McKinney for any amounts purchased by GTUA for which NTMWD attributes to McKinney. Unless the parties mutually agree otherwise, the initial rate charged shall be calculated on September 1, 2006 based on the prior 12 months of charges for the expenses described herein. b. Allowance for Water Loss. The initial cost shall be 2.5% times that rate charged by NTMWD to McKinney (McKinney rate)/1000 gallons, subject to McKinney's right to make future adjustments which adjustments shall not be made less than five (5) years after any previous adjustment. Any adjustment shall be based on a system -wide study after consultation with GTUA on the scope and design of the study; however in no event shall the cost be less than 2.5%. POTABLE WATER PASS THROUGH & PUMPtNG AGREEMENT . November 23, 2004 C. Overhead and Risk Return. The initial cost shall be $0.08/1000 gallons and shall be adjusted annually on September 1 based on the Consumer Price Index -All Urban Consumers -Dallas -Fort Worth (All Items) [Series ID: CUURA316SA0, CUUSA316SA01 as the index for the adjustment calculation. d. Capital Recovery Expense. GTUA shall pay a charge for the capacity reserved by McKinney for GTUA within the System which shall equal $3,204.44 per month, per MGD average daily rate of flow through the GTUA POD within the billing month, (as identified as "Projected Average Surface Water Demand") shown on Exhibit B, Column 1, for the initial year and as such is adjusted in subsequent years under Paragraph 2(a), minus the amounts owing to GTUA for the eligible oversize costs of the New Transmission Line as described in Section 10 (a). e. McKinney Franchise Fee. GTUA shall pay the fee charged to all water customers (as adjusted from time -to -time by McKinney) served by McKinney. The initial charge shall be 4% of all amounts paid under paragraphs a -d of this Section 7. Section 8. RATE FOR WATER DEL1VhXhQ tsz Avtcrs JYm1xi uN DAI.DJJ _JF MAXIMUM. During the primary term hereof, McKinney and GTUA may agree to the delivery by McKinney of additional volumes of water, in excess of those described in Column 2, Exhibit B. The rate for any amounts delivered under this Section 8 shall be as depicted on Columns 3 and 4, Exhibit B. Section 9. INDEMNIFICATION OF MCKINNEY BY GTUA. GTUA and Participating Cities agrees to indemnify McKinney for all claims of third -parties arising out of the obligations and performance of this Agreement by the parties, including any judgments, attorney's fees or costs. Notwithstanding the foregoing, the indemnification hereunder shall not apply to suit or claims brought by third -party customers under Section 10 (f). Section 10. OTHER CONDITIONS AND PROVISIONS. a. McKinney Acquisition of New Transmission Line between the Point of Connection to the McKinney System and the GTUA Pumping Station. McKinney may acquire the New Transmission Line between the point(s) of connection to the McKinney system and the GTUA pumping station upon the termination of this agreement. Such acquisition shall be based on the prior approval of the design and installation of said line(s) by the McKinney City Engineer. McKinney shall have the right to utilize the New Transmission Line as if it were part of the McKinney water transmission system under the same terms of this Agreement until all related GTUA debt for the subject line is retired. The foregoing provision and the hereinafter pro -rata reimbursement provision shall survive the termination or expiration of this Agreement. Unless the lien holders for such line approve transfer of ownership, ownership cannot be transferred to McKinney. GTUA shall use best efforts to execute debt instruments which will allow for the transfer sequence described in this Paragraph. At the time that all GTUA debt is retired on the New Transmission Line, GTUA shall transfer the New POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 9 Transmission Line to McKinney at no charge, free and clear of all liens and encumbrances. The "debt" shall be the actual cost of the New Transmission Line plus accrued interest charged to GTUA for that component portion of the debt incurred for its construction. As consideration for such transfer, McKinney shall collect pro rata utility fees from third -party developers connecting to the New Transmission Line in such amounts as are allowed by then existing McKinney ordinances, and in accordance with state law, for at least the term of this Agreement. McKinney shall remit such pro rata amounts to GTUA upon McKinney's receipt from developers, and such payments to GTUA shall terminate upon the termination of this Agreement or upon transfer of line ownership to McKinney hereunder. GTUA shall apply such payments to debt amortization of said line. In addition to the pro rata payments aforementioned and as additional consideration for the transfer of the New Transmission Line to McKinney, McKinney shall pay to GTUA the eligible oversize costs of the New Transmission Line. Such eligible oversize costs shall be deducted in equal monthly amounts (during the initial ninety-six (96) months of the Agreement) from the Capital Recovery Expense component of the rates charged to GTUA in Section 7. Notwithstanding the foregoing, the amounts credited for eligible oversize costs shall not exceed the amounts owing for the Capital Recovery Expense component. If the amount of the credit would have exceeded the Capital Recovery Expense Component, the term of the deducted credits shall be extended accordingly. If McKinney pays an aggregate amount of developer pro rata payments and eligible oversize costs equal to the debt on the New Transmission Line prior to the term of this Agreement, GTUA shall obtain a partial release of the New Transmission Line from any debt instrument and shall transfer title to the line to McKinney. b. Use of New Transmission Line by McKinney. It is agreed that McKinney may make connections to the New Transmission Line to the McKinney system between the GTUA metering station and the point of connection to the McKinney system for purpose of serving McKinney customers subject to mutual coordination of said connection point, it being the intent to accommodate McKinney service needs without negatively impacting the line capacity to a volume less than required by this Agreement. C. Maintenance of New Transmission Line. The line referenced in (b) above shall be maintained by McKinney. Direct maintenance costs incurred by McKinney shall be billed to GTUA / Participating Cities at the invoiced amounts, and said costs shall be paid in the same time frame as the pumping costs provided for in this agreement. Direct costs shall also include a factor for McKinney's internal costs which shall be computed in accordance with similar costs charged to departments within McKinney as described by McKinney finance policies; however in no event shall the internal costs exceed 25%. d. Other Agreements by GTUA. GTUA reserves the right to supply treated water from the System to additional or other parties as determined by GTUA's Board of POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 10 Directors and as approved by the initial Participating Cities, so long as doing so does not result in an increase in the maximum daily demand as provided for herein. e. Remedies for NTMWD's Failure to Commence Construction of Delivery Point. McKinney shall have the unilateral right to terminate this Agreement if by January 1, 2012 NTMWD has failed to initiate, in McKinney's sole determination, sufficient plans for design, funding, and construction of the NTMWD-GTUA delivery point contemplated by this Agreement. Upon such determination by McKinney and after 180 days written notice to GTUA, this Agreement shall terminate; however, GTUA shall have the continuing obligation to transfer the New Transmission Line under Section 10 (a). f. Adjustment of Price Based on Challenge to Customer Rates. GTUA agrees to a unilateral adjustment in the rates for delivery under Section 7 if any McKinney customer successfully challenges the rates charged in this Agreement. A successful challenge shall be one where the rates charged to GTUA are found to be discriminatory or unfair. Any ordered reduction or adjustment to the rates of other customers which results in less net revenue to McKinney shall entitle McKinney to increase the rates hereunder to an amount which will yield the same revenues contemplated by this Agreement. The date of adjustment shall be sixty (60) days after written notice is sent to GTUA. g. Shared Legal Exnenses for Challenge to Customer Rates. GTUA and McKinney shall equally share in any attorney's fees and expenses in defending any contest, challenge or lawsuit, whether through an administrative agency of the State of Texas or in a court of law. McKinney shall have the sole control over the engagement and direction of legal counsel for any lawsuit wherein McKinney is a ply. Section 11. PAYMENT AND REMEDIES FOR BREACH BY PARTY. McKinney shall use the same meter reading (volume of water) as NTMWD uses to determine water purchase volume. McKinney shall bill GTUA at the end of each month for the cost provided for in Section 7 above. GTUA shall remit payment to McKinney within 15 days of receipt of said billing. Liability for making payments, as herein set forth shall commence on the date of initial water flow from McKinney to GTUA. In the event that GTUA shall fail to make any such monthly payment within the time herein specified in this Section, interest on such amount shall accrue at the rate of ten percent (10%) per annum from the date such payment becomes due until paid in full with the interest as herein specified. In the event such payment is not made within thirty (30) days from the date such payment becomes due or in the event GTUA shall default in the performance of any other provision of this Agreement, City may at its option, after thirty (30) days' written notice to GTUA, discontinue delivery of water to GTUA until the amount due City is paid in full with interest as herein specified or the default is cured, or terminate this Agreement upon 30 days additional written notice and right to cure any default, POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 11 whether monetary or otherwise. It is further provided that in the event that GTUA shall fail to make any such monthly payment or annual payment within the time herein in this Section specified, City shall have the right to petition the District Court in Collin County for a writ of mandamus to compel compliance with this Agreement. GTUA may terminate this Agreement if McKinney fails to commence delivery in accordance with Section 10. Section 12. TERM OF AGREEMENT. So long as no default shall exist, McKinney shall exercise its best efforts to complete the design and necessary utility infrastructure to effectuate this Agreement, which if completed shall have a primary term commencing on December 31, 2006 (or sooner if McKinney completes the necessary utility infrastructure) and continue in force and effect until September 30, 2016 (or ten [10] years after the commencement date whichever is sooner), unless: McKinney agrees to extend said agreement on a year to year basis if 1) McKinney determines it has available capacity for any requested extension term, 2) the increased volumes requested are not more than 2.5 MGD over the previous year's volumes, and 3) GTUA agrees to a price for water delivery which is 150% more than the previous year's Base Cost; however in no event shall the agreement be extended without the mutual agreement to the then existing timeline for the pending the completion of a new NTMWD transmission facility designed to provide service to GTUA; however in no event shall this Agreement be extended more than three (3) consecutive one-year extensions. NTMWD completes construction of an adequate transmission facility designed to serve GTUA prior to the scheduled termination of this agreement. In such event, this agreement will be immediately terminated upon the connection of the NTMWD transmission line to the GTUA Point of Delivery and upon final payment for any costs incurred by GTUA to McKinney under this agreement. Section 13. MODIFICATION. This Agreement may be changed or modified only with the consent of the governing bodies of both GTUA and the McKinney, except that temporary delivery of additional water volumes may be coordinated and approved by the respective staffs of each entity; however only to the extent authorized by the McKinney City Charter, the budget of McKinney, and the limits of this Agreement. Section 14. FORCE MAJEURE. If by reason of force majeure any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Agreement, other than the obligation of GTUA and Participating Cities to make the payments required under Section 7 of this Agreement, then if such party shall give notice and full particulars of such force majeure in writing to the other party after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 12 reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 15. INSURANCE. GTUA agrees to cant' and arrange for fire, casualty, public liability, and/or other insurance, including self insurance, on the System, and with McKinney as an additional insured, for purposes and in amounts not less than $1,000,000 on its property and utility systems which, as determined by McKinney, ordinarily would be carried by a public utility district owning and operating such facilities, except that GTUA shall not be required to provide liability insurance except to insure itself and McKinney against risk of loss due to claims for which it can, in the opinion of McKinney's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of damaged or destroyed properties and equipment, to minimize the interruption of the services of such facilities. All premiums for such insurance shall constitute an operation and maintenance expense of the System. The insurance coverage does not extend to any facility owned by McKinney; however the coverage shall insure McKinney against all claims arising out of this Agreement. Section 16. REGULATORY BODIES AND LAWS. This Agreement is subject to all applicable Federal and State Laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum, having jurisdiction. Section 17. NOTICES. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice" herein provided or permitted to be given, made, or accepted by any party to any other party must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three (3) days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 13 If to GTUA, to: Greater Texoma Utility Authority 5100 Airport Drive Denison, Texas 75020 If to the City, as follows: City of McKinney P.O. Box 512 McKinney, Texas 75069 The parties hereto shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15) days written notice to the other parties hereto. Section 18. SEVERABILITY. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Agreement or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State of Texas, or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Agreement or the application of such sections, subsections, provisions, clauses, or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly; however only if the remaining sections are consistent and structurally dependent on one another. Section 19. VENUE. All amounts due under this Agreement, including, but not limited to, payments due under this Agreement or damages for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of City are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas, is the principal place of performance of this Agreement. POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 14 IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Agreement to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Agreement. GREATER T XOMA UTILITY AUTHORITY Denison, Te By: Lai g Presid nt, Boaz f Dir tors Attest: GREATER TEXOMA UTILITY AUTHORITY Denison, Texas Secretary, Board>of Directors Accepted and agreed to: zw:t�� NCE W. ROBII'3 N City Manager City of McKinney, Texas Attest: BEVERLY 610VINGTONO Deputy City Secretary City of McKinney, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 draft 15 d Name: jMayor City of Anna, Texas Attest: OrhifeA Name: aa,6o.K A. %66JAt-- City Secretary City of Anna, Texas Mayor City of Melissa, Texas Attest: City Secretary City of Howe, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT November 23, 2004 16 Printed Name: Mayor City of Van Alstyne, Texas Attest: n �` Printed Name:{ra Q. :hm o n City Secretary City of Van Alstyne, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT November 23, 2004 17