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HomeMy WebLinkAboutContract 32902 CITY SECRETARY /. no (DON TRACT NO. AGREEMENT FOR SALE OF TREATED WATER This Agreement for Sale of Treated Water ("Agreement") is entered into by and between Aqua Utilities, Inc., formerly known as Aqua Source Utility, Inc., a Texas corporation(and/or its corporate successors and assigns) ("Aqua Utilities") and the City of Fort Worth, a Texas home rule municipality(the "City"). ARTICLE I RECITALS A. Aqua Utilities wishes to provide retail water utility service to the land shown on Exhibit A and more particularly described in Exhibit B to this Agreement, and consisting of approximately 431.303 acres in Denton County, Texas (the "Development"), located entirely within the City's extraterritorial jurisdiction CIE—Till). B. The City and Aqua Utilities are parties to the "Superseding Agreement Regarding Water and Wastewater Utility Service," dated December 21, 2005, City Secretary Contract No. 32899, ("Superseding Utility Agreement"), which sets forth the rights and obligations of the parties to that agreement with respect to the provision of retail and wholesale water and wastewater service to the Development, and provides, among other things, for the City and Aqua Utilities to enter into a contract for the provision of wholesale water service to the Development. C. The Development is located within Certificate of Convenience and Necessity No. 11157 issued to Aqua Utilities by the Texas Commission on Environmental Quality, pursuant to which Aqua Utilities is to be the retail provider of a continuous and adequate supply of water to the Development. D. The City has obtained at its own expense, and now owns, operates and maintains facilities for processing and distributing a supply of surface water, and is authorized to furnish and deliver treated water, both inside and outside its corporate boundaries. E. Aqua Utilities has considered its various alternatives for obtaining a water supply for its retail water service to the Development under its CCN and has elected to seek to obtain water from the City. F. Aqua Utilities has independently obtained a water utility engineering study describing facilities and equipment needed for retail water service to the Development, including the Storage Tank. G. The City and Aqua Utilities have reached a mutually satisfactory agreement by which Aqua Utilities may purchase a supply of treated water from City to serve the Development. Agreement for Sale of Treated Water Page 1 NOW, THEREFORE, for and in consideration of the mutual agreements, covenants, and conditions hereinafter set forth, the Parties contract and agree as follows: ARTICLE II DEFINITIONS "Agreement" means this Agreement for Sale of Treated Water between the City and Aqua Utilities. "Annual Consumption" means the total quantity of water purchased under the terms of this Agreement by Aqua Utilities during the City's Fiscal Year as determined by the difference in the annual October Meter readings. "Aqua Utilities" means Aqua Utilities, Inc., a Texas corporation (and/or its corporate successors and assigns). "Average Daily Use"means the total Annual Consumption divided by 365 days. "City" means the City of Fort Worth, Texas, a home-rule municipality. "Cily Council"means the City Council of the City. "Cure Period"means the period of time to cure a material breach, as defined in Section 9.04. "Customer System" means all water mains and distribution facilities (whether owned by Aqua Utilities or third parties) within the Development and on Aqua Utilities' side of the Meter shown on Exhibit C, from and beyond the Point of Delivery of treated water by the City. "Development" means that certain 431.303-acre tract located in Denton County, Texas shown on Exhibit A and more particularly described in Exhibit B, which Development is located entirely within the ETJ of the City. "Director" means the City Water Department Director or designee. "Effective Date" means the effective date as defined in Section 9.03. "ETJ" means the extraterritorial jurisdiction of a city as defined by the Texas Local Government Code, as amended, with the City's ETJ being an unincorporated area presently extending five miles from the City's corporate limits, excluding other incorporated municipalities and their respective ETJs. "Fiscal Year"means the City's fiscal year from October 1 through September 30. "Fort Worth System" means the City's water treatment and distribution system. Agreement for Sale of Treated Water "Maximum Day Demand" means the maximum quantity of water used by Aqua Utilities during one calendar day of the City's Fiscal Year. "Maximum Hour Demand" means the maximum quantity of water used by Aqua Utilities during the one hour of the year that more water passed through the Meter serving Aqua Utilities than during any other hour of the City's Fiscal Year multiplied by 24 hours. "Metering Facilities" means all facilities associated with metering the water provided hereunder, excluding Meters, and including without limitation continuous flow chart recording devices and telemetering equipment connected with the City's SCADA control center. "Meter"means the six-inch(6")meter located at the Point of Delivery shown on Exhibit C. "MGD"means million gallons per day. "Notice"means notice as defined in Section 11.02 of this Agreement. "Parties" means, all of the City and Aqua Utilities, their successors and their assigns, as permitted by this Agreement. "Parly" means, individually, the City or Aqua Utilities, their successors and their assigns, as permitted by this Agreement. "Point of Delivery" means the meter vault connection to Aqua Utilities' side of the Meter installed by Aqua Utilities in accordance with Article IV, as shown on Exhibit C. "Rate of Use Charge" means the charge determined for the Maximum Day Demand in excess of Average Daily Use and the Maximum Hour Demand in excess of Maximum Day Demand rates of use. "Raw Water Charge" means the rate per 1,000 gallons for out-of-district raw water charged to the City by the Tarrant Regional Water District, as such rate may be adjusted, plus eight percent (8%) of said rate, representing the City's system losses of four percent (4%), and the street rental charge of 4%. "Storage Tank"means the 600,000 gallon storage tank owned and/or operated by Aqua Utilities, as shown on Exhibit C. "Superseding Utilily Agreement"means the agreement defined in Recital B. "System Cost" means the operating expense and capital related cost incurred by the City pursuant to the provision of water treatment and transmission to the wholesale class of water customers. Such costs are to be collected by the City as a component of the annual cost of providing wholesale water service. Agreement for Sale of Treated Water Page 3 "Temporary Emergency Condition" means a situation created by unforeseeable mechanical failure or by unprecedented high rate of water usage such as might result from a major fire or a major water main break. This term does not include events that are foreseeable or preventable by the exercise of due diligence. "Treatment, Pumping and Transmission Charge" means that part of the rate charged for 1,000 gallons used, regardless of rate of use. This charge shall include the maintenance and operation costs and the capital facilities cost on the part of the production and transmission system related to annual use. "Volume Charge" means the combined Treatment, Pumping and Transmission Charge and the Raw Water Charge. ARTICLE III WATER SUPPLY, USE AND STORAGE 3.01 Supply of Treated Water. The City agrees to furnish and sell to Aqua Utilities treated water of potable quality meeting all applicable governmental standards, delivered under the normal operating pressure prevailing in the Fort Worth System at the Point of Delivery. Aqua Utilities agrees to accept delivery under the conditions of this Agreement and to pay for such water in accordance with the terms herein. Aqua Utilities' sole connection to the Fort Worth System shall be at the Point of Delivery. 3.02 Rate of Withdrawal, Construction of Storage Tank and Pressure. The rate at which water is withdrawn from the Fort Worth System by Aqua Utilities shall be limited by system design based on a six-inch(6") Meter. Aqua Utilities shall install and maintain or cause to be installed and maintained a 600,000 gallon Storage Tank at the location shown on Exhibit C; all construction costs for the storage tank, including, but not limited to, site acquisition and preparation, design and engineering and rights-of-way, and all maintenance costs shall be paid by Aqua Utilities. In addition, Aqua Utilities shall maintain a minimum pressure of 35 pounds per square inch ("PSI") at the Meter. 3.03 Extension of Facilities. The City's water supply line is approximately 8,000 feet from the Development. In order for Aqua Utilities to receive treated water from the City pursuant to this Agreement, the City's water supply line will have to be extended to the Development. The City has no obligation to extend such line. 3.04 Backflow Prevention. Prior to the delivery of any water by the City pursuant to this Agreement, Aqua Utilities, at its sole expense, shall install and maintain a backflow prevention device approved by the Texas Commission on Environmental Quality immediately after the Meter on Aqua Utilities' side, as reflected in Exhibit C. 3.05 Sale and Use Within Development Only. Aqua Utilities may not sell or transfer any water furnished by the City under this Agreement to any connections or for any use outside of the Development, except that Aqua Utilities may (a) serve a maximum of 10 retail residential connections outside the Development with City's written consent and (b) serve outside the Agreement for Sale of Treated Water �,� age 4 Development as provided in Section 3.08. The City is under no obligation to sell or otherwise deliver any treated water to Aqua Utilities except pursuant to all of the terms and conditions this Agreement. 3.06 Tarrant Regional Water District Contract. In accordance with the terms of City Secretary Contract No. 12720 between the City, City of Arlington, City of Mansfield, Trinity River Authority and the Tarrant County Water Control and Improvement District No. 1, a Water Control and Improvement District created under authority of Article XVI, Sec. 59 of the Texas Constitution and now named the Tarrant Regional Water District, this Agreement shall be deemed subordinate in all respects to the water requirements of the contracting parties as specified in Section 3 of that Contract No. 12720. 3.07 Conservation. If the City shall ration the use of water throughout its corporate limits or issue water conservation measures or restrict the use of water in any way, the City shall notify Aqua Utilities, who shall immediately impose and enforce the same rationing, conservation measures, or restrictions to the use of water within the Development. 3.08 Delivery of Water by Aqua Utilities Outside the Development. At the request of the Director, Aqua Utilities agrees to furnish water to areas and premises situated adjacent to the Development and within the City's ETJ. The metered quantity of water used in such area each month by the City shall be the total of all individual customer meter readings. The metered quantity of such water furnished by Aqua Utilities to the City shall be deducted from the total quantity of water withdrawn from the Fort Worth System by Aqua Utilities before the charge for water service to Aqua Utilities is computed as provided in this Agreement. No adjustment will be made to the Rate of Use Charge for water furnished pursuant to this Section 3.08; however, at the option of Aqua Utilities or the City, a master meter may be installed where practicable at the City's expense to meter and deduct from the Rate of Use Charge calculation all water used by the City under the terms of this section. ARTICLE IV METER AND METERING FACILITIES 4.01 Construction and Title. All water furnished by the City under this Agreement shall be measured by a six-inch (6") Meter equipped with continuous flow, chart-recording devices, and telemetering equipment connected with the City's control center. Aqua Utilities shall construct and install or cause to be constructed and installed the Meter, Metering Facilities and appurtenances. All construction shall be in accordance with Article V of the Superseding Utility Agreement, which requires, among other things, that all construction of water infrastructure shall be in accordance with plans and specifications meeting City standards and shall be approved in advance by the City. All construction costs, including, but not limited to, site acquisition and preparation, design and engineering and rights-of-way, shall be paid for by Aqua Utilities. Upon acceptance of the Meter, Metering Facilities and appurtenances, the City shall own and have title to such equipment, along with the exclusive right to use, operate and maintain such equipment. Agreement for Sale of Treated Water Page 5 4.02 Operation and Maintenance. Upon acceptance of the Meter, Metering Facilities and appurtenances, the City shall pay all costs associated with the operation and maintenance of such equipment and shall pay for the repair and replacement of such equipment as necessary, excluding upsizing of the Meter. Such costs, as well as charges for repair and replacement of the telelink line and microwave transmitter and the power to operate same, shall be a System Cost. The Meter will be properly sealed, and the seal shall not be broken unless representatives of both Parties have been notified and given a reasonable opportunity to be present. 4.03 Service and Calibration. City shall test for accuracy, and service and calibrate if necessary, the Meter no less than once during each twelve (12) month period. Copies of the results of such calibration and all related information shall be provided to Aqua Utilities. 4.04 Access to Facilities. Aqua Utilities shall have access to the Meter and Metering Facilities at all reasonable times; provided, however, that any reading, calibration or adjustment to such equipment shall be done by employees or agents of City, or other mutually approved third party calibration agent, in the presence of representatives of Aqua Utilities and City, if so requested by Aqua Utilities. The City shall notify Aqua Utilities at least seventy-two (72) hours in advance of the date and time for any calibration and Aqua Utilities may observe the calibration. 4.05 Corrections. Upon any calibration, if it is determined that the accuracy envelope of the Meter is found to be lower than ninety-five percent (95%) or higher than one hundred five percent (105%) expressed as a percentage of the full scale of the Meter, the registration of the flow as determined by the defective Meter shall be corrected for a period extending back to the time such inaccuracy began, if such time is ascertainable; or, if such time is not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the date of the last calibration, but in no event further back than a period of six (6)months. 4.06 Out of Service Meter. If the Meter used to determine the flow of treated water to Aqua Utilities is out of service or out of repair so that the amount of water metered cannot be ascertained or computed from the reading thereof, the water delivered during the period the Meter is out of service or out of repair shall be estimated upon the extrapolation of past patterns of flow for that Meter location under similar conditions. ARTICLE V METER READING,BILLING AND PAYMENT 5.01 Meter Reading and Access. City will read the Meter at monthly intervals. City and Aqua Utilities shall have free access to read the Meter daily, if either so desires. It shall be the duty of City and Aqua Utilities to give immediate Notice, each to the other, should the Meter or Metering Facilities be found not functioning properly and, upon such Notice, City shall promptly repair such equipment. 5.02 Access to Records. All data obtained from Meter readings will be maintained by the City in its usual and customary manner. Aqua Utilities shall have access to such records during reasonable business hours and shall be furnished with monthly readings for the Meter. Agreement for Sale of Treated Water Page 6 5.03 Billing. Bills for water service shall be rendered to Aqua Utilities monthly by the City. All such bills shall be due and payable by Aqua Utilities not more than thirty (30) days from the billing date. The bills will show current charges, as well as past-due charges, if any. Past-due charges shall be the total amount unpaid from all prior billings as of the current billing date. Payments received by the City shall first be applied to the past-due charges, if any, and thereafter to the current charges. A review of water usage amounts by Aqua Utilities for the past twelve (12) months shall be made during the presentation of the October bill each year. The October statements shall be prepared so as to reflect any and all Rates of Use Charges that have not been previously billed and paid. A copy of the rate of flow charts or other records showing the Maximum Day Demand and the Peak Hour Rate of the year shall be furnished to Aqua Utilities with the October billing. 5.04 Disputes. If Aqua Utilities disputes a bill and is unable to resolve the difference informally, Aqua Utilities shall notify the Director in writing. The Director and Aqua Utilities shall use their best efforts to resolve the disputed bill; however, dispute of a bill is not grounds for non- payment. In the event a payment is not paid as specified in this Agreement, a finance charge of ten percent (10%) per annum will be calculated from the date which the payment was required to be made. ARTICLE VI OWNERSHIP,LIABILITY AND INDEMNIFICATION 6.01 Water Quality; Additional Water Sources. The City shall deliver water that meets all state and federal water quality requirements to the Point of Delivery. If Aqua Utilities obtains water from any source other than the City, the City makes no representation that the treated water to be delivered to Aqua Utilities will properly mix with water that Aqua Utilities obtains from other sources. Aqua Utilities assumes all responsibility and liability for any combining or mixing of water delivered by the City that is combined or mixed with water from Aqua Utilities' other sources. The City's sole responsibility is to provide to Aqua Utilities water of a quality that meets state and federal drinking water standards at the Point of Delivery. From the Point of Delivery on, Aqua Utilities is solely responsible for meeting state and federal drinking water quality standards. Aqua Utilities shall notify the Director in writing before obtaining water for the Development from any source other than the City. 6.02 Liability and Ownership. Ownership of and liability for the water shall remain with the City until the water passes through the Point of Delivery. Aqua Utilities assumes all liability and responsibility for, together with ownership of, the water after it passes through the Point of Delivery, including but not limited to liability for mixing, transportation and quality of water. In addition, repair and maintenance of the Customer System shall be Aqua Utilities' responsibility and the City has no liability or responsibility for maintenance and operation of the Customer System. No provision of this Agreement shall be construed to create any type of joint or equity ownership of any property or any partnership or joint venture, and Aqua Utilities' payments (whether past, present, or future) shall not be construed as granting Aqua Utilities partial ownership of, pre-paid capacity in, or equity in the Fort Worth System. Agreement for Sale of Treated Water �,��1 P ige 7 6.03 Indemnity. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AQUA UTILITIES AGREES TO INDEMNIFY AND DEFEND THE CITY, ITS OFFICERS, ELECTED OFFICIALS, EMPLOYEES, AGENTS, ATTORNEYS, CONSULTANTS, CONTRACTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, `INDEMNITEES") WITH REGARD TO ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, LIENS, FINES, SUITS, JUDGMENTS, ADMINISTRATIVE PROCEEDINGS, REMEDIATION OR CORRECTIVE ACTION REQUIREMENTS, ENFORCEMENT ACTIONS, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS' FEES, COSTS OF INVESTIGATION AND EXPENSES, INCLUDING THOSE INCURRED BY CITY IN ENFORCING THIS INDEMNITY), DIRECTLY OR INDIRECTLY ARISING OUT OF, CAUSED BY OR RESULTING FROM (IN WHOLE OR IN PART). ANY BREACH OF THIS AGREEMENT OR ANY CONNECTION OF THE CUSTOMER SYSTEM TO THE FORT WORTH SYSTEM (COLLECTIVELY, "LIABILITIES"), EVEN IF SUCH LIABILITIES ARISE FROM OR ARE ATTRIBUTED TO STRICT LIABILITY OR TO THE SOLE OR CONCURRENT NEGLIGENCE OF ANY INDEMNITEE. ARTICLE VII REPORTS AND AUDIT 7.01 Required Records. Aqua Utilities shall provide the following data to the City upon 30 days Notice: A. Actual number of customer accounts consuming directly or indirectly from the Customer System; B. Classification of domestic and nondomestic accounts within the Development by number and percentage of accounts consuming directly or indirectly from Customer System; and C. Aqua Utilities' water usage from all sources other than the Fort Worth System, including, but not limited to, ground water, other surface water, and water supply agreements with other entities. 7.02 Inspection and Audit. The City and Aqua Utilities shall maintain all records and accounts related to this Agreement for a period of five (5) years. Each Party shall at all times, upon Notice, have the right at reasonable times to examine and inspect said records and accounts during normal business hours; and further, if required by any law, rule or regulation, make said records and accounts available to federal and/or state auditors. ARTICLE VIII RATES AND CHARGES 8.01 Rates Charged Pursuant to this Agreement. The Parties agree that the rates charged pursuant to this Agreement will be calculated using the methodology set forth in Exhibit D, which also serves as the basis for the wholesale water rates that the City charges to each municipality that is a wholesale water customer of the City,pursuant to each of their separate contracts. The majority of the City's contracts with its municipal wholesale customers will expire in 2010 and the City Agreement for Sale of Treated Water Page 8 expects to enter into negotiations for new wholesale contracts with such customers. The City shall provide Aqua Utilities at least ten (10) days prior Notice of the commencement of the negotiations between the City and the Water System Advisory Committee. If this Agreement is renewed pursuant to Section 9.02(A), and if the renegotiated contracts with the City's wholesale customers who are municipalities include a rate methodology that differs from Exhibit D, then Aqua Utilities and the City expressly understand and agree that for the renewal term of this Agreement the rate methodology described in Exhibit D will be automatically superceded and replaced with a new Exhibit D that adopts the same rate methodology used to calculate the rates for those wholesale customers of the City who are municipalities, and such Exhibit D will then be used to calculate rates charged pursuant to this Agreement. 8.02 Initial Rate. The initial rates for this Agreement shall be those adopted by the City Council and effective on October 1, 2005,which are as follows: Treatment,Pumping and $0.6829 per 1,000 gallons Transmission Charge withdrawn by Aqua Utilities Raw Water Charge $0.6775 per 1,000 gallons Annual charge per MGD of $104,348 per MGD Maximum Day Demand in excess of Average Daily Use Maximum Hour Demand in excess $27,043 per MGD of the Maximum Day Demand Service Charge $25.00 per month per meter 8.03 Annual Payment. The annual payment to the City for water used by Aqua Utilities will be computed based on all water delivered by the City to Aqua Utilities during the current Fiscal Year using rates charged pursuant to this Agreement. For purposes of calculating the annual payment, the current year will be the Fiscal Year during which the water usage occurred. However, the minimum annual payment will be the greater of the following: (a) The charges calculated by applying the current Volume Charge to Annual Consumption, the appropriate Meter reading and billing charge, and the Rate of Use Charge for the current Fiscal Year; or (b) The current Fiscal Year Volume Charge, the appropriate Meter reading and billing charge, and the current Fiscal Year Rate of Use Charge applied to the average of the Maximum Day Demand above Average Daily Use and the average of the Maximum Hour Demand above Maximum Day Demand for the most recently completed three Fiscal Years. The most recently completed three Fiscal Years will include the current Fiscal Year; or (c) Twelve thousand dollars ($12,000). Agreement for Sale of Treated Water J Page 9 8.04 Monthly Payment. Except as provided for in Section 8.05 below, the monthly payment will be the greater of either one thousand dollars ($1,000) or a sum equal to the Volume Charge for the actual volume of water taken plus one twelfth(1/12)of the sum of the estimated Rate of Use Charges and the appropriate Fiscal Year charges for meter reading and billing. For purposes of estimating the rate of use payments, the current Fiscal Year Rate of Use Charges will be applied to the prior Fiscal Year's Maximum Day Demand, Maximum Hour Demand and Average Daily Use. 8.05 Adjustment of Rates. Aqua Utilities agrees that the City shall have the right to unilaterally adjust the rates charged for the water services provided pursuant to this Agreement, from time to time, so long as the adjustment is based on the agreed methodology set forth Exhibit D and in effect pursuant to Section 8.01, and otherwise in compliance with this Agreement. Aqua Utilities' agreement that the City has the right to unilaterally adjust the rates charged pursuant to this Agreement is an essential part of the consideration given by Aqua Utilities in exchange for the City's entering into this Agreement to provide wholesale water service to the Development, which is in the City's ETJ and in Aqua Utilities' CCN, and without which consideration the City would not have provided wholesale water service to Aqua Utilities, either by entering into this Agreement or otherwise. Furthermore, in exchange for the City's right to unilaterally adjust the rates charged hereunder, in addition to other rights under this Agreement, should Aqua Utilities object to any unilateral rate adjustment, Aqua Utilities shall have the right to terminate this Agreement with one year's Notice and the following rate relief. Upon any rate adjustment pursuant to this Article VIII and Exhibit D, Aqua Utilities has the following options: A. Agree to pay the adjusted rate; or B. Give Notice (i) that it wishes to terminate this Agreement one year after the effective date of the proposed rate adjustment and (ii) that it rejects the rate change, in which case the City will continue to charge Aqua Utilities the contract rates that were in effect immediately prior to the proposed rate adjustment. If Aqua Utilities elects to terminate this Agreement under this Section 8.05, then the Agreement will expire at the earlier of the one-year Notice period or the Section 9.01 expiration date. If Aqua Utilities continues to accept delivery of treated water and has not disconnected the Customer System from the Fort Worth System on the date this Agreement is to expire pursuant to this Section 8.05, then the Agreement shall not expire pursuant to this Section 8.05 and Aqua Utilities shall immediately pay the City the difference between the amount that would have been charged pursuant to this Agreement under the rate Aqua Utilities rejected, and the amount actually charged to Aqua Utilities during the preceding year, with interest, and subject to any other rate adjustment, past or future, pursuant to this Article VIII and Exhibit D. Aqua Utilities agrees that the remedy provided by this Section 8.05 provides its sole and exclusive remedy, in law and equity, for any rate adjustments pursuant to this Agreement, and that it will not pursue a wholesale rate appeal of such rates at any regulatory agency. 8.06 Minimum Revenue Collection. Aqua Utilities agrees, throughout the term of this Agreement,to fix and collect such rates and charges for water service to be supplied as will produce Agreement for Sale of Treated Water Page 10 revenues in an amount equal to at least all of its operation and maintenance expenses of the Customer System, including specifically its payments and obligations under this Agreement. ARTICLE IX TERM AND RELATED PROVISIONS 9.01 Term of Agreement. This Agreement shall expire upon the sooner of: (i) the date upon which Aqua Utilities ceases to be the retail water provider for the Development; (ii) termination in accordance with this Article IX; or (iii)December 31, 2011. 9.02 Extension. Where expiration of this Agreement occurs pursuant to Section 9.01(iii), the City will offer to continue to sell wholesale water to Aqua Utilities under one of two options,to be chosen by the City in its sole discretion: A. A renewal of this Agreement, in its entirety, amending only Section 9.01(iii) to state"December 31, 2025" and Section 8.02 to state initial rates that are those in effect on the first day of the renewal term for the City's wholesale customers who are municipalities. B. A wholesale water agreement with terms that are the same as the terms of the renegotiated contracts with the City's wholesale customers whose contracts now expire in 2010, and subject to all the terms and conditions of those contracts, except that the expiration date of the wholesale agreement with Aqua Utilities shall not extend beyond the earlier of the date on which Aqua Utilities ceases to be the retail water provider for the Development or December 31,2025. The City will advise Aqua Utilities of the City's selected option by providing Notice one hundred eighty (180) days before the Section 9.01(iii) expiration date. Aqua Utilities can then either (i) agree to accept the option offered by the City in its Notice, in which case Aqua Utilities and the City will execute the documents necessary to formalize the terms of such agreement within 60 days of Aqua Utilities' receipt of Notice; or (ii) elect not to continue to purchase water from the City, in which case this Agreement terminates on the Section 9.01(iii)expiration date and thus the City shall have no further service obligation thereafter. If the City's wholesale customers' 2010 expiration dates are extended,then the Section 9.01(iii) expiration date of this Agreement will be extended for the same number of years or months,but in no event beyond December 31,2025. 9.03 Effective Date. This Agreement, together with all terms and conditions and covenants, shall be effective December 21, 2005. 9.04 Termination. In addition to termination pursuant to this Article IX and Section 8.05, this Agreement may be terminated in whole or in part by the mutual consent of Aqua Utilities and the City, and the Agreement shall expire on any such mutually agreed date. Notwithstanding anything contained herein to the contrary, any material breach by Aqua Utilities in the performance of any of the duties or the obligations assumed by Aqua Utilities hereunder, or to faithfully keep and perform any of the terms, conditions and provisions hereof, shall be cause for termination of this Agreement by the City in the manner set forth in this Section 9.04. If Aqua Agreement for Sale of Treated Water Page 11 Utilities commits a material breach, then, except as provided in Sections 9.06 and 9.07, the City shall deliver to Aqua Utilities ninety (90) days Notice of its intention to terminate this Agreement, including in such Notice a reasonable description of the breach. Aqua Utilities shall commence curing such breach within fourteen (14) calendar days after receipt of such Notice and shall diligently pursue and complete such cure without unreasonable cessation of activities within ninety (90) days from the date of the Notice; however, if the breach is not reasonably susceptible to cure by Aqua Utilities within such ninety (90) day period, the City agrees that it will not terminate this Agreement so long as Aqua Utilities has diligently pursued such cure within the foregoing ninety (90) days and diligently completes the work, without unreasonable cessation, within a reasonable time thereafter. The time authorized by this Agreement to cure the breach is the "Cure Period." If Aqua Utilities shall fail or refuse to cure such material breach to the satisfaction of the City within the Cure Period, then and in such event, the City shall have the right with additional sixty (60) days advance Notice to Aqua Utilities and without any liability whatsoever on the part of the City to declare this Agreement terminated, and the Agreement will immediately expire at the end of such Notice period. The City shall give Notice to Aqua Utilities immediately upon acceptance of the cure of any breach. A material breach of this Agreement includes, but is not limited to: (a) Failure to pay any bill, charge or fee as provided for in this Agreement; (b) Making any connection to the Fort Worth System at any point except the Point of Delivery; (c) Failure to provide City ingress and egress for purposes of operation and maintenance of any Metering Facility; (d) Failure to comply with Sections 3.02, 3.05, 4.01, or 8.05; and (e) Failure to comply with Article X. 9.05 Non-Material Breach. In the event of any non-material breach, default or failure to perform duties under this Agreement, the City shall deliver to Aqua Utilities sixty (60) days Notice of such default. If Aqua Utilities fails to cure such breach, default or failure within said sixty (60) days, then the City shall give Aqua Utilities Notice of such failure to cure and may surcharge Aqua Utilities Five Thousand Dollars ($5,000) per month until such time as Aqua Utilities cures such non-material breach. 9.06 Failure to Impose Conservation Measures. If the City rations the use of water throughout its corporate limits, issues water conservation measures or restricts the use of water in any way pursuant to Section 3.07, and Aqua Utilities fails or refuses to impose and enforce the same rationing, conservation measures or restrictions, Aqua Utilities shall be in material breach of this Agreement. The 90-day Notice provision contained in Section 9.04 shall not apply and the Director, in his or her sole discretion, shall provide Notice to Aqua Utilities of the deadline for curing such breach. If Aqua Utilities fails or refuses to cure such breach within the stated time, the City shall have the right, with six (6) months additional advance Notice to Aqua Utilities, and without any liability whatsoever on the part of the City, to declare this Agreement Agreement for Sale of Treated Water ` �' -'�`� i`� age 12 1 terminated, and the Agreement will immediately expire at the end of such Notice period, notwithstanding the expiration or rescission of the rationing, conservation measures or restrictions during such six-month period. The City shall give Notice to Aqua Utilities immediately upon acceptance of the cure of any breach. 9.07 Failure to Prevent Backflow. The Notice and cure provisions set out in Section 9.04 do not apply to a breach of Section 3.04. The City shall have the right to terminate this Agreement without further Notice if Aqua Utilities commits a breach of Section 3.04 and fails to cure such breach after reasonable Notice and opportunity to cure. 9.08 Obligation to Develop Alternative Sources. Aqua Utilities shall develop alternative or replacement water supplies prior to the expiration of this Agreement. 9.09 Effect of Termination. In event of termination of this Agreement, except to the extent provided in Section 9.10, all rights, powers, and privileges of Aqua Utilities hereunder shall cease and immediately terminate upon the expiration date, and Aqua Utilities shall not assert any claim of any kind whatsoever against the City, its agents, or representatives, by reason of such termination or any act incident thereto, provided City acted reasonably and such termination was not unreasonable, arbitrary and capricious. 9.10 Surviving Provisions. As part of, or in addition to, survival rights to which the Parties may be entitled in law or equity, the following provisions shall survive following termination or expiration of this Agreement for any reason: (a) any payment obligation of any Party under the terms of this Agreement; (b) Section 6.03 (Indemnity); (c) Article VII (Reports and Audit); Article X(Construction Standards) and(d)Article XI (Miscellaneous). ARTICLE X PERFORMANCE PURSUANT TO SUPERSEDING UTILITY AGREEMENT This Agreement is executed pursuant to, and shall be performed consistent with the terms of, the Superseding Utility Agreement. Accordingly, all construction, operation and maintenance activities undertaken pursuant this Agreement shall be performed in compliance with the Superseding Utility Agreement, including the standards for construction, operation and maintenance set forth in Article V of that agreement. In the event of a conflict between this Agreement and the Superseding Utility Agreement, the Superseding Utility Agreement shall control. Agreement for Sale of Treated Water Page 13 ARTICLE XI MISCELLANEOUS 11.01 Governing Law; Jurisdiction and Venue. THIS AGREEMENT MUST BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS THEY APPLY TO CONTRACTS PERFORMED WITHIN THE STATE OF TEXAS AND WITHOUT REGARD TO ANY CHOICE OF LAW RULES OR PRINCIPLES TO THE CONTRARY. THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS PERFORMABLE IN TARRANT COUNTY, TEXAS AND HEREBY SUBMIT TO THE JURISDICTION OF THE COURTS OF TARRANT COUNTY, AND HEREBY AGREE THAT ANY SUCH COURT SHALL BE A PROPER FORUM FOR THE DETERMINATION OF ANY DISPUTE ARISING HEREUNDER. 11.02 Notice. Any notices, approvals, or other communications required to be given by one Party to another under this Agreement (a"Notice") shall be given in writing addressed to the Parry to be notified at the address set forth below and shall be deemed given: (a) when the Notice is delivered in person to the person to whose attention the Notice is addressed; (b) when received if the Notice is deposited in the United States Mail, certified or registered mail, return receipt requested, postage prepaid; (c) when the Notice is delivered by Federal Express, UPS, or another nationally recognized courier service with evidence of delivery signed by any person at the delivery address; or (d) five business days after the Notice is sent by FAX (with electronic confirmation by the sending FAX machine) with a confirming copy sent by United States mail within 48 hours after the FAX is sent. If any date or period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the Notice shall be extended to the first business day following the Saturday, Sunday, or legal holiday. For the purpose of giving any Notice, the addresses of the Parties are set forth below. The Parties may change the information set forth below by sending Notice of such changes to the other Parry as provided in this section. To the City: City of Fort Worth, Texas 1000 Throckmorton Street Attn: City Secretary Fort Worth, Texas 76102 FAX: (817) 392-6196 City of Fort Worth, Texas 1000 Throckmorton Street Attn: City Manager Fort Worth, Texas 76102 FAX: (817) 392-6134 City of Fort Worth, Texas 1000 Throckmorton Street Attn: Water Director Fort Worth, Texas 76102 Agreement for Sale of Treated Water Page 14 FAX: (817) 392-2398 To Aqua Utilities: 1421 Wells Branch Pkwy., Ste. 105 Pflugerville, TX 78660 Attn: Vice President FAX: (512) 989-9891 762 West Lancaster Ave. Bryn Mawr, Pennsylvania 19010 Attn: Chief Legal Officer FAX: (610) 520-9127 11.03 Consent Required for Assignment and Binding on Successors and Assigns. All of the terms of this Agreement shall be binding upon, shall inure to the benefit of, and shall be severally enforceable by and against each Party to this Agreement, individually, and such Party's respective personal representatives, successors, trustees, receivers, and assigns. However, no Parry shall assign this Agreement without the written consent of each of the other Party. It is specifically intended that this Agreement and all terms, conditions and covenants herein shall survive a transfer, conveyance or assignment occasioned by the exercise of foreclosure of lien rights by a creditor or a Party hereto, whether judicial or non judicial. 11.04 Amendment. This Agreement may be amended only with the written consent of all Parties and with approval of the governing body of the City. 11.05 No Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof, and the Party shall have the right at any time thereafter to insist upon strict performance of any and all provisions of this Agreement. No provision of this Agreement may be waived except by writing signed by the Party waiving such provision. Any waiver shall be limited to the specific purposes for which it is given. No waiver by any Party hereto of any term or condition of this Agreement shall be deemed or construed to be a waiver of any other term or condition or subsequent waiver of the same term or condition. Agreement for Sale of Treated Water i�c i Page 15 11.06 Severability. The provisions of this Agreement are severable and, in the event any word, phrase, clause, sentence, paragraph, section, or other provision of this Agreement, or the application thereof to any person or circumstance, shall ever be held or determined to be invalid, illegal, or unenforceable for any reason, and the extent of such invalidity or unenforceability does not cause substantial deviation from the underlying intent of the Parties as expressed in this Agreement, then such provision shall be deemed severed from this Agreement with respect to such person, entity or circumstance, without invalidating the remainder of this Agreement or the application of such provision to other persons, entities or circumstances, and a new provision shall be deemed substituted in lieu of the provision so severed which new provision shall, to the extent possible, accomplish the intent of the Parties as evidenced by the provision so severed. 11.07 Captions. Captions and headings used in this Agreement are for reference purposes only and shall not be deemed a part of the Agreement. 11.08 Interpretation. The Parties acknowledge that each Party and, if it so chooses, its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits hereto. As used in this Agreement, the term "including" means "including without limitation" and the term "days" means calendar days, not business days. Wherever required by the context, the singular shall include the plural, and the plural shall include the singular. Each defined term herein may be used in its singular or plural form whether or not so defined. 11.09 Conspicuous Provisions. The Parties acknowledge that the provisions of this Agreement that are set out in bold, CAPITALS (or any combination thereof) satisfy the requirements for the express negligence rule and/or are conspicuous. 11.10 No Third Party Beneficiary. This Agreement is solely for the benefit of the Parties, and neither the City nor Aqua Utilities intends by any provision of this Agreement to create any rights in any third-party beneficiaries or to confer any benefit upon or enforceable rights under this Agreement or otherwise upon anyone other than the City and Aqua Utilities. 11.1 l Force Majeure. No Parry shall be considered to be in default in the performance of any of the obligations hereunder(other than obligations of either Parry to pay costs and expenses) if such failure of performance shall be due to an uncontrollable force beyond the control of the Parties, including, but not limited to, the failure of facilities, flood, earthquake, tornado, storm, fire, lightning, epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or material shortage, sabotage, or restraint by a court order or public authority, which by the exercise of due diligence and foresight such Party could not have reasonably been expected to avoid. Either Party rendered unable to fulfill any obligation by reason of an uncontrollable force shall exercise due diligence to remove such inability with all reasonable dispatch. In the event the proper operation of the Fort Worth System, as a result of the above, requires the City to temporarily interrupt all or part of the services to Aqua Utilities, no claims for damage shall be made by Aqua Utilities against the City. Agreement for Sale of Treated Water Page 16 11.12 Emergencies. In the event of a Temporary Emergency Condition, it may be necessary for Aqua Utilities to withdraw water from the Fort Worth System at a rate of usage in excess of that required for Aqua Utilities' usual peak requirements. If a Temporary Emergency Condition occurs and Aqua Utilities provides Notice to the Director within 48 hours of the onset of the Temporary Emergency Condition describing the unforeseeable mechanical failure or unprecedented high rate of water usage, obtains the Director's written concurrence that the situation constitutes a Temporary Emergency Condition, and exercises due diligence in ending the Temporary Emergency Condition, then the City shall not consider the Rate of Use Charge established during the Temporary Emergency Condition for billing purposes. Volume charges for all water delivered during the Temporary Emergency Condition shall be due and payable as described elsewhere herein. 11.13 Applicable Laws. This Agreement is subject to all applicable federal and state laws and any applicable permits, amendments, orders, or regulations of any 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, order, rule or regulation in any forum having jurisdiction. 11.14 Access to Facilities. Upon prior Notice to Aqua Utilities by the City, any employee of City bearing proper credentials and identification shall be given access to the Development as may be necessary for the purpose of inspections and observation, measurements, sampling and testing and/or auditing, in accordance with the provisions of this Agreement. Aqua Utilities may elect to accompany the City's representative. 11.15 Incorporation of Exhibits by Reference. All exhibits attached to this Agreement are incorporated into this Agreement by reference for the purposes set forth herein, as follows: Exhibit A map of the Development Exhibit B legal description of the Development Exhibit C map showing the Development's Point of Delivery into the Fort Worth System, Storage Tank, Meter, and backflow prevention device Exhibit D Rate Methodology Each Party has caused this Agreement to be executed by its duly authorized representative in multiple copies on the date or dates indicated below. Agreement for Sale of Treated Water f( ''V,;:?`, u'U+ ��ru'4� Page 17 /-" AT C11 0 ORT W By. 07 Marty Hendrix City Secretary (print name) ;�Sslstant City Title: APYRO D AS TO F cj-a� LEG Y: Contract Authorization 6 Acg-s-isianrty�tto 1ey Date ATTEST: AQUA UTILITIES, INC.,7exas Corporation &14 7 L Corporate Secretary PI-1 L: Lnj,dbWajn Title I a Cif f Wholesale Wastewater Service Agreement Page 18 Exhibit A Map of the Development Exhibit Ato ,��L Agreement for Sale of Treated Water Page 1 U, ``,`a`'i �;l �� — A __ �. �:;.. �_ _,. _�: S++-. r�"�� � .4 �� �, '�' r.. ._ ' _ ate;, t` � �.' _ ._ ".. ., �. L 1,,;' ,'_ ,. , • .: r. ��� < � .. 1 f .. (. r..MV. . . � �-�� +. � I �� � � � � � t" ' .7. »-- U n�� �s°��{� r -� ,. ��`` 9f. h 1 �. ,: a .-r . +�r � �_,• . . + . a .. ,� ._ t..,� r, _. .. • �..�l c: �_ ._ ,r � - �. .._,.r. °N � � �, Ti " nisi, mi.. ' i � -. � �- � 1` r' v i. _ r 1� _ . .._ .., i p � � � i �I a� .�. 'j y r r � .1.: . � �. -- � ,. yy ., • y � ] i� ,, '� '. �� M � � L .. "L.�"'T. T. t•� -. �' i f V �+ .. � �+s _ � — ti Sa, ;y ] ,, �,,. �. .. Y.'.,,4._ ��.i �....�,��. �. � mss � }r.�°r `� �,. K (L� ..; r _. t Y -.�.� r. . r.. -� ,x w .. } .� ,.. I _ Exhibit B Legal Description of the Development BEING a 431.303 acre tract of land comprised of two separate tracts of land in the G. Cardinas Survey, Abstract No. 214, situated in Denton County, Texas and being a combination of that tract conveyed to Alliance 161 Investments by deed recorded in Volume 2778, Page 958 of the Real Property Records of Denton County, Texas (RPRDCT), a portion of those tracts conveyed to Aperion Communities, L.L.L.P. by deed recorded under County Clerk's File No. 2004-11913 RPRDCT (Aperion Tract One-A and Aperion Tract One-B) and a portion of that tract conveyed to Nancy Talley Reynolds, et al, by deed recorded in Volume 2301, Page 223 RPRDCT and being more particularly described as follows: Tract 1 BEGINNING at a capped 5/8" iron pin found, said iron pin also being on the north right-of-way line of State Highway No. 114, said iron pin also being on the west line of said Alliance 161 Investments tract, said iron pin also being on the east line of a tract conveyed to Betty Marie McIntyre, et al, by deed recorded in Volume 2906, Page 363 RPRDCT; THENCE N OOE32'36" W along the west line of said Alliance 161 Investments tract and the east line of said McIntyre, et al, tract recorded in Volume 2906, Page 363 RPRDCT, a distance of 3701.24 feet to a 3/8" iron pin found; THENCE N 89E39'59" E along the north line of said Alliance 161 Investments tract and the east line of said McIntyre, et al, tract recorded in Volume 2906, Page 363 RPRDCT, a distance of 1826.89 feet to a 1/2" iron pin found, said iron pin also being on the west line of said Aperion Tract One-A; THENCE N OOE22'44" W along the east line of said McIntyre, et al, tract recorded in Volume 2906, Page 363 RPRDCT, and the west line of said Aperion Tract One-A, a distance of 1294.80 feet to a capped 1/2" iron pin set; THENCE S 86E14'27" E, a distance of 222.13 feet to a capped 1/2" iron pin set; THENCE S 52E34'22" E, a distance of 867.86 feet to a capped 1/2" iron pin set; THENCE S 44E08'03" E, a distance of 999.82 feet to a capped 1/2" iron pin set; THENCE S 65E58'36" E, a distance of 1029.92 feet to a capped 1/2" iron pin set; THENCE N 90E00'00" E, a distance of 773.31 feet to a capped 1/2" iron pin set; said capped 1/2" iron pin set also being on the east line of said Aperion Tract One-A and the west line of that tract conveyed to Ferbro Investments, LLC by deed recorded under County Clerk's File No. 97- 0003605 RPRDCT; Exhibit B to Agreement for Sale of Treated Water Page 1 THENCE S OOE07'20" E along the east line of said Aperion Tract One-A and the west line of said Ferbro Investments tract, a distance of 857.55 feet to a 1/2" iron pin found, said iron pin being on the northwesterly line of a tract conveyed to The Atchison, Topeka and Santa Fe Railway Company by deed recorded under County Clerk's File No. 93-R0020408 RPRDCT; THENCE S 44E23'02" W along the east line of said Aperion Tract One-A and the northwesterly line of said Atchison, Topeka and Santa Fe Railway Company tract a distance of 2256.14 feet to a 5/8" iron pin found; THENCE N 47E15'51" W along the east line of said Aperion Tract One-A and the northwesterly line of said Atchison, Topeka and Santa Fe Railway Company tract, a distance of 24.73 feet to a 5/8" iron pin found; THENCE S 44E27'42" W along the east line of said Aperion Tract One-A and the northwesterly line of said Atchison, Topeka and Santa Fe Railway Company tract, a distance of 1121.43 feet to a brass monument in concrete found, said brass monument also being on the said north right-of- way line of State Highway No.114; THENCE S 89E47'36" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 28 6.3 3 feet to a brass monument in concrete found; THENCE S 84E30'09" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 703.04 feet to a brass monument in concrete found; THENCE S 89E48'48" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 1249.97 feet to a capped 1/2" iron pin set; THENCE N OOE 11'12" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 15.00 feet to a capped 1/2" iron pin set; THENCE S 89E48'48" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 250.00 feet to a capped 1/2" iron pin set; THENCE S OOE11'12" E along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 15.00 feet to a capped 1/2" iron pin set; THENCE S 89E48'48" W along the south line of said Aperion Tract One-A and the north right- of-way line of State Highway No.114, a distance of 238.28 feet to the Point of Beginning and containing 16,728,840 square feet or 384.041 acres of land,more or less. Tract 2 BEGINNING at a brass monument in concrete found, said brass monument also being on the south line of said Aperion Tract One-B, said brass monument also being on the north right-of- Exhibit B to Agreement for Sale of Treated Water Page 2 way line of State Highway No. 114, said brass monument also being on the west line of a tract conveyed to Ferbro Investments by deed recorded under County Clerk's File No. 97-0003605 RPRDCT THENCE S 89E46'48" W along the south line of said Aperion Tract One-13 and the north right- of-way line of State Highway No.114, a distance of 1072.97 feet to a brass monument in concrete found; THENCE N 86E29'44" W along the south line of said Aperion Tract One-B and the north right- of-way line of State Highway No.114, a distance of 900.20 feet to a brass monument in concrete found, said brass monument also being on the southeasterly line of a tract conveyed to The Atchison, Topeka and Santa Fe Railway Company by deed recorded under County Clerk's File No. 93-RO020408 RPRDCT; THENCE N 44E26'31" E along the west line of said Aperion Tract One-B and the southeasterly line of said Atchison, Topeka and Santa Fe Railway Company tract, a distance of 2809.53 feet to a 5/8" iron pin found, said iron pin also being on the west line of said Ferbro Investments tract; THENCE S OOE07'09" E along the east line of said Aperion Tract One-B and the west line of said Ferbro Investments tract, a distance of 2056.80 feet to the Point of Beginning and containing 2,058,725 square feet or 47.262 acres of land, more or less. Exhibit B to Agreement for Sale of Treated Water Page 3 i, Exhibit C Map Showing the Development's Point of Delivery into the Fort Worth System, Storage Tank,Meter, and Backflow Prevention Device Exhibit C to Agreement for Sale of Treated Water Page 1 � o v n u v B ti 3 f I ® ' •'�. II SFA;$ •� 1 ' I I ° u v • v. AL f. Exhibit D Wholesale Rate Methodology 1. Wholesale water rates will be based upon cost-of-service rate studies performed by independent utility rate consultants. The independent utility rate consultant shall be selected by the Director from a list of five qualified firms submitted to the Director by the Fort Worth "Water System Advisory Committee." The cost of such studies shall be a System Cost. All cost-of-service studies shall be conducted utilizing the utility cost basis of determining revenue requirements applicable to the wholesale customer class. 2. A detailed wholesale cost-of-service water rate study was performed by an independent utility rate consultant for the Fiscal Year beginning October 1, 2005. An additional detailed wholesale cost-of-service water rate study will be performed in accordance with this Exhibit D for the Fiscal Year beginning October 1, 2008, using the same methodology of the previous rate study, subject to modifications recommended by a majority of the Water System Advisory Committee and approved by the Fort Worth City Council. In the Fiscal Years between detailed rate studies,the City will perform a wholesale water rate study using the same methodology as the last detailed rate study, and will utilize the actual operating data for the twelve month period ending September 30th of the prior year, adjusted for all known and measurable changes in cost data that may have occurred since the last audited financial statement. Such adjustments should allow for year-end trending and the spreading of non-recurring expenses over an appropriate benefit period. 3. The cost-of-service for the wholesale class shall include allocated reasonable and necessary operation and maintenance expense, depreciation expense and a fair and reasonable return on allocated capital facilities. To determine the allocation and distribution of costs to the wholesale customer class, the independent utility rate consultant shall consider at least the following factors: total volume, rate of flow, metering, and customer-related costs such as accounting, billing, and monitoring. Capital-related costs will consist of depreciation expense and return on original cost rate base. The rate base shall consist of all allocated capital facilities, net of depreciation and contributions, and shall include construction work in progress, a reasonable allowance for working capital, and a reasonable inventory of materials and supplies necessary for the efficient operation of the Fort Worth System. Records of the original cost and the accumulated depreciation of all capital facilities shall be maintained in the Fort Worth Fixed Asset Tracking System. These records shall be available for inspection at the City's Water Department during reasonable business hours upon request by Aqua Utilities. 4. The City shall be allowed an adequate opportunity to earn a reasonable rate of return. The return shall be sufficient to assure confidence in the financial soundness of the City's utility, shall be adequate to maintain and support its credit, shall enable it to raise the money necessary for the proper discharge of its public duties, and shall be equal to the weighted average imbedded cost of outstanding debt plus one and one-half percent(1-1/2%). 5. The Raw Water Charge shall be equal to the rate per 1,000 gallons for out-of-district raw water charged to the City by the Tarrant Regional Water District, plus eight percent (8%) Exhibit D to �'c, Agreement for Sale of Treated Water Page 1 1.-•,�: of said rate, representing the City's system losses of four percent (4%) and the street rental charge of four percent (4%), and shall be charged for the amount of water ftmjished by the City at the Point of Delivery. Adjustments to the Raw Water Charge shall made whenever the rate per 1,000 gallons charged to the City is adjusted by the Tarrant Regional Water District. 6. The rates set forth in Article 8.02 shall be automatically adjusted to equal those adopted by the City Council based on the foregoing rate studies, and shall become effective on the effective date as determined by the City Council. 7. The total annual payment for water by Aqua Utilities shall be related to the annual and peak volumes used by Aqua Utilities during the Fiscal Year, as determined by the Meter, flow recording devices or other approved methods, subject to the annual payment provisions set forth above. The October bill for September usage shall reflect any necessary adjustment to the annual payment due to actual rates of withdrawal from the Fort Worth System. Example: The rate used in the example is based on Aqua Utilities not being in Tarrant Regional Water District and water being withdrawn at one metering station. The Volume Charge and Rate of Use Charges are those that were in effect until September 30, 2005. Usage Monthly Rate Service Month Consumption Volume of Use Charge Total Oct. 1,000,000 $ 1,223.90 $ 1,466.93 $25 $ 2,715.83 Nov. 1,000,000 1,223.90 1,466.93 25 2,715.83 Dec. 1,000,000 1,223.90 1,466.93 25 2,715.83 Jan. 1,000,000 1,223.90 1,466.93 25 2,715.83 Feb. 1,000,000 1,223.90 1,466.93 25 2,715.83 March 2,000,000 2,447.80 1,466.93 25 3,939.73 April 3,000,000 3,671.70 1,466.93 25 5,163.63 May 3,000,000 3,671.70 1,466.93 25 5,163.63 June 3,000,000 3,671.70 1,466.93 25 5,163.63 Usage Monthly Rate Service Month Consumption Volume of Use Charge Total July 3,000,000 3,671.70 1,466.93 25 5,163.63 August 4,000,000 4,895.60 1,466.93 25 6,387.53 Subtotal 23,000,000 $28,149.70 $16,136.23 $275 $44,560.93 Sept. 3,000,000 3,671.70 3,214.32 25 6,911.02 26,000,000 $31,821.40 $19,350.55 $300 $51,471.95 j7��,' Exhibit D to gym- ,17<Z, Agreement for Sale of Treated Water Page 2 Prior Year Rate Of Use Calculation(for use in estimated monthly Rate of Use Charge) Average Daily Use for the prior year = 60,000 gallons Maximum Day Demand for the prior year = 175,000 gallons Maximum Hour Demand for the prior year = 480,000 gallons Maximum Day Demand above Average Daily Use = 115,000 gallons Maximum Hour Demand above Maximum Day Demand = 305,000 gallons Monthly Excess Maximum Day and Hour Payment Calculation .115 mg X $108,262 = $12,450.13 (Maximum day) .305 mg X $16,895 = 5,152.98 (Maximum hour) Total $17,603.11 Monthly Rate of Use Payment(Total Divided by 12)_$1,466.93 A. The annual payment calculation will be computed on the basis of the current year maximum usage rates or the average of the maximum usage rates of the most recent three Fiscal Years, whichever is greater. In Example A, the current year exceeds the average of the most recent three Fiscal Years. Current Year Rate Of Use Calculation Average Daily Use for the year = 71,233 gallons Maximum Day Demand for the current year = 200,000 gallons Maximum Hour Demand for the current year = 520,000 gallons Maximum Day Demand above Average Daily Use = 128,767 gallons Maximum Hour Demand above Maximum Day Demand = 320,000 gallons Fiscal Year Average of Most Recent Three Years CURRENT FY FY FY 2004 2003 Maximum Day Demand above Average Daily Use 128,767 115,000 130,000 Maximum Hour Demand above Maximum Day Demand 320,000 305,000 325,000 Three year average of Maximum Day Demand above Average Daily Use 124,589 Three year average of Maximum Hour Demand above Maximum Day Demand 316,667 Exhibit D to Agreement for Sale of Treated Water Page 3 Aqua Utilities' annual payment will be based on the greater of the current year maximum usage rates or the average of the maximum usage rates of the most recent three Fiscal Years. Annual Payment Calculation FY 2005 Rates (Based on Current Year Data) 26,000 X $ 1.2239 $31.821.40 .1288 mg X $108,262 13,944.15 .3200 mg X $16,895 5,406.40 12 X 1 X$25 300.00 Total Annual Payment $51,471.95 Previous Billings for October through August Usage 44,560.93 October Billing for September Usage $ 6,911.02 B. Example of computation when the average of the maximum usage rates of the most recent three Fiscal Years is greater than the current Fiscal Year rate of use: Current Year Rate of Use Calculation Average Daily Use for the current year = 71,233 gallons Maximum Day Demand for the current year = 200,000 gallons Maximum Hour Demand for the current year = 520,000 gallons Maximum Day Demand above Average Daily Use = 128,767 gallons Maximum Hour Demand above Maximum Day Demand = 320,000 gallons Fiscal Year Average of Most Recent Three Years CURRENT FY FY FY 2004 2003 Maximum Day Demand above Average Daily Use 128,767 130,234 130,000 Maximum Hour Demand above Maximum Day Demand 320,000 323,010 325,000 Three year average of Maximum Day Demand above Average Daily Use 129,667 Three year average of Maximum Hour Demand above Maximum Day Demand 322,670 Aqua Utilities' annual payment will be based on the greater of the current Fiscal Year maximum Exhibit D to Agreement for Sale of Treated Water Page 4 usage rates or the average of the maximum usage rates of the most recent three Fiscal Years. Annual Payment Calculation FY 2005 Rates (Based on average of most recent three years) 26,000 X $1.2239 $31,821.40 .1297 mg X $108,262 14,041.58 .3227 mg X $16,895 5,452.02 12X 1 X$25 300.00 Total Annual Payment $51,615.00 Previous Billings for October through August Usage 44,560.93 October Billing for September Usage $ 7,054.07 Exhibit D to Agreement for Sale of Treated Water Page 5 Page 1 of 2 City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 12/13/2005 DATE: Tuesday, December 13, 2005 LOG NAME: 60TRADITION REFERENCE NO.: C-21198 SUBJECT: Approval of Strategic Partnership Agreement, Development Agreement, Tradition Project Special Regulations Agreement, and Agreements Concerning Water and Wastewater Service for the First Phase of the Tradition Development RECOMMENDATION: It is recommended that the City Council authorize the City Manager or a designee to execute the following agreements: 1. Strategic Partnership Agreement between the City and Fort Worth Municipal Utility District No. 1 of Denton County (the "District"); 2. Development Agreement between the City and Aperion Communities, LLLP, Eladio Properties, LLLP and Drooy Properties, LLLP ("AED"); 3. Tradition Project Special Regulations Agreement between the City and AED; 4. Superseding Agreement Regarding Water and Wastewater Utility Service between the City, Aqua Utilities, Inc., AED and the District; 5. Buy-Out Option Contract between the City, Aqua Utilities, Inc., AED and the District; 6. Memorandum of the Buy-Out Option Contract; 7. Agreement for Sale of Treated Water between the City and Aqua Utilities, Inc.; and 8. Wholesale Wastewater Service Agreement between the City and Aqua Utilities, Inc. DISCUSSION: AED owns and intends to develop approximately 2,663 acres in Denton County in Fort Worth's extraterritorial jurisdiction as a mixed-use development to be known as "Tradition". AED intends to develop the southernmost 431 acres as the first phase (the "Development") and has requested that the City Council consent to creation of a municipal utility district over the Development. (M & C C-21197). The documents listed above, which have been provided to the City Council and are available for public inspection and copying in the City Secretary's Office, can be summarized as follows: The Strategic Partnership Agreement authorizes the City to annex approximately 107 acres within the Development designated for commercial development for the limited purpose of imposing sales and use tax. The agreement provides that the City and the District will divide the sales tax proceeds equally for the first 19 years after annexation. The City's share will increase to 75% in year 19. http://www.cfwnet.org/council_packet/Reports/mc_print.asp 3/21/2006 Page 2 of 2 The Development Agreement provides for the enforcement of municipal building codes and establishes land use and development regulations for the Development. Special Regulations, which govern design issues such as block lengths and street, right-of-way and sidewalk widths, are attached to the agreement as Exhibit E. The Tradition Project Special Regulations Agreement provides that the Special Regulations attached to the Development Agreement as Exhibit E will be deemed to be incorporated in any other development agreements for the remainder of Tradition for the next 10 years. The agreement recognizes that approval of any future development agreements for Tradition is within the sole discretion of the City Council. The five remaining agreements identified as items 4 through 8 above relate to utility service for the Development. Aqua Utilities will provide the retail water and wastewater service to customers within the Development through an operations contract with the District which will finance and own the facilities. The agreements provide for the City to sell treated water service and wastewater service to Aqua Utilities. The City has the option to purchase the water and wastewater facilities in the Development from Aqua Utilities for $10 and to become the retail provider at any time after 17 years and within 15 to 17 years if the City annexes during that period. FISCAL INFORMATION/CERTIFICATION: The Finance Director certifies that approval of this Agreement will not require the expenditure of City funds. TO Fund/Account/Centers FROM Fund/Account/Centers Submitted for City Manager's Office by: Marc Ott (8476) Originating Department Head: S. Frank Crumb (8207) Additional Information Contact: S. Frank Crumb (8207) http://www.cfwnet.org/council_packet/Reports/mc_print.asp 3/21/2006