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HomeMy WebLinkAboutRES 13-032RESOLUTION NO. 13 -032 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be and he is hereby authorized to execute a five -year Water Supply Agreement and Mutual Release with Lower Neches Valley Authority to secure an uninterrupted surface water supply for the City of Beaumont. The agreement is substantially in the form attached hereto as Exhibit "A" and made a part hereof for all purposes. 2013. PASSED by the City Council of the City of Beaumont this the 5th day February, L1, '!""ALIZA - PRCIZ lc � in- �= F�'r"4' : - r WATER SUPPLY AGREEMENT AND MUTUAL RELEASI+; BETWEEN CITY OF BEAUMONT AND LOWER NECHES VALLEY AUTHORITY THE STATE OF TEXAS § § KNOW ALL BY THESE PRESENTS: COUNTY OF JEFFERSON § THIS WATER SUPPLY AGREEMENT AND MUTUAL RELEASE (the "Agreement's is entered into between the City of Beaumont, Texas, a Texas home -rule city operating pursuant to its charter and the provisions of the Texas Constitution and Laws of the State of Texas (the "City" }, and the Lower Neches Valley Authority, a political subdivision and agency of the State of Texas and a conservation and reclamation district created and governed by the provisions of Article 16, Section 59 of the Texas Constitution ( "LNVA'J. In this Agreement, the City and LNVA are sometimes individually referred to as "Party" and collectively referred to as the "Parties." WHEREAS, the LNVA has certain senior run of the river rights in the Neches River from 1913 of 326,360 acre feet; and WHEREAS, LNVA has the right to divert and use stored water from Sam Rayburn Reservoir ( "San: Rayburn ") and B.A. Steinhagen Lake ( "Steinhagen ") pursuant to its Certificate of Adjudication No. 06 -4411, as amended, and a 1956 contract with the United States Army Corps of Engineers; and WHEREAS, LNVA is authorized to make waters in Sam Rayburn and Steinhagen available for beneficial use for municipal, industrial, agricultural, and mining use; and WIIEREAS, the City is the holder of Certificate of Adjudication No. 06 -4415, as amended, which authorizes it to divert and use 56,468 acre -feet of water per annum from the Neches River; and WHEREAS, the City is in need of additional water supplies to supplement its run-of- river diversion authorization from the Neches River; and WHEREAS, the City and LNVA desire to enter into an agreement whereby LNVA makes available up to 6,000 acre -feet of uninterruptible water supplies per year for the City pursuant to the terms and conditions provided herein. NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and agreements of the Parties contained in this Agreement, the Parties agree as follows: January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority t 3316769.1 EXHIBIT "A" I. DEFINITIONS 1.01 "Agreement" means this agreement regarding water supply between LNVA and the City. 1.02 "Annual Reserved Quantity" means the total volume, expressed in acre -feet per Calendar Year, which LNVA agrees to make available and the City agrees to reserve. For this Agreement, the amount is 6,000 acre -feet per annum. 1.03 "Calendar Year" means that period beginning on January 1 and ending December 31 of any year. 1.04 "City " means the City of Beaumont. 1.05 "Delivery Point" means the point at which the City accepts delivery of water from the LNVA in the Neches River at its existing or future pumping facilities. 1.06 "Diversion Request" means the quantity of water reported to LNVA as a request from the City to be available in the Neches River for the City's use. This request must be delivered to LNVA four (4) days prior to the City's anticipated withdrawal from the Neches River near Beaumont, Texas, regardless of the anticipated source of the surface water. 1.07 "Effective Date" means December 31, 2012. 1.08 "LNVA "means the Lower Neches Valley Authority. 1.09 "LNVA Municipal Rate" means the published Municipal Rate approved by the LNVA Board of Directors and in effect on the ]effective Date of this Agreement, or on the 5 year anniversary date of this Agreement or any extension. 1.10 "Meter" means the meter installed and maintained by the City at its pumping facilities pursuant to the terms of this Agreement. 1.11 "Payment Date" means January 30t1' of each Calendar Year, that date on or before which the City shall remit the Reservation Fee. 1.12 "Release Fee" means the fee paid by the City for the Water LNVA actually released from storage for City's use pursuant to a request made by the City and any additional quantity of water withdrawn by the City from the Neches River which, as determined by accounting would not have been available as run-of-river but for the releases of water from Steinhagen and /or Rayburn storage. 1.13 "Release Point" means that point at which LNVA releases water to the Neches River immediately below the outfall of Steinhagen. 1.14 "Release Unit Price" means one quarter (%4) of the LNVA Municipal Rate. January 24, 2013 Water Supply Agreement between City of Beaumont and lower Neches Valley Authority 2 3316769.1 1.15 "Reservation Fee" means that amount paid by the City to reserve an uninterruptible supply of water from storage in the amount of the Annual Reserved Quantity from LNVA. 1.16 "Reservation Unit Price" means one quarter (' /a) of the LNVA Municipal Rate. 1.17 "TCEQ" means the Texas Commission on Environmental Quality and any successor agency. 1.18 "Uncontracted Water Rate" means the published Spot Purchase Rate approved by the LNVA Board of Directors and in effect at the time LNVA releases water for the benefit of the City in excess of the Annual Reserved Quantity. 1.19 "Uncontracted Water Fee" means the amount to be paid by the City for water released from storage for the City in excess of the Annual Reserved Quantity in any given calendar year. 1.20 "Water" means that raw water reserved by the City as part of the Annual Reserved Quantity made available by LNVA pursuant to this Agreement. II. WATER SUPPLY 2.01 Uninterruptible Water Supply and Title Thereto. The Parties hereby agree that from and after the Effective Date hereof, LNVA shall make the Annual Reserved Quantity available to the City for diversion and use. LNVA warrants that it can provide the Annual Reserved Quantity on a firm, uninterruptible basis throughout the term of this Agreement. LNVA agrees that the City may take Water at any time after the Effective Date of the Agreement, in accordance with the terms and conditions of the Agreement. Title to the Water actually released by LNVA pursuant to this Agreement shall pass to the City upon the LNVA's delivery at the Delivery Point. The Parties agree that there shall be no conveyance losses associated with the delivery of Water from the Release Point to the Delivery Point. City acknowledges that it will accrue no equity or any other interest in the LNVA water rights or any other assets of LNVA as a result of payment or other performance of City under this Agreement. 2.02 Water Release, Diversion, and Use. (a) Release. At any time, the City may exercise its right to take Water up to the Annual Reserved Quantity by delivering written notice thereof to LNVA of the City's anticipated demand not less than four (4) days prior to the City's diversion of that Water from the Neches River at the Delivery Point. The City's anticipated Diversion Request shall be reported to LNVA as a diversion rate in terms of cubic feet per second (CFS) or in terms of million gallons per day (MGD). Pursuant to the "Plan of Operation" attached hereto as "Exhibit A ", the City will communicate with LNVA its Diversion Request for every day of the year, regardless of whether or not the City believes its diversion will be met by its own water rights or supplemented by Water from the LNVA. The Water supplied hereunder shall be made available to the City by LNVA releasing water at the Release Point. The anticipated Diversion Request shall be delivered to LNVA by the City's Water Utilities Director or his designee and shall specify the rate and quantity at which the City anticipates diverting water from the Neches River. January 24, 2013 Water Supply Agreement between (Sty of Beaumont and Lower Neches Valley Authority 3 3316769.1 LNVA will have the sole responsibility of determining the appropriate release request to the United States Army Corps of Engineers and ensure a sufficient supply of water is available in the Neches River to meet the needs of both the LNVA and the City. Except during those events qualifying as a force majeure event under Section 4.18, LNVA shall make the delivery by allowing the Water to be released out of Steinhagen by use of the gated facilities located in or near the dam of Steinhagen. LNVA shall begin to release the amount of Water requested within forty -eight (48) hours of the City's request. Within twenty -four (24) hours of making the requested release, LNVA shall provide written confirmation that the requested quantity of Water has been released. LNVA shall have the sole responsibility for delivery of such Water to the Delivery Point. The City shall be responsible for obtaining any federal, state, county or local approvals required for acceptance, transport, diversion and use of the Water. The City shall be responsible for filing a copy of this Agreement with TCEQ as required by the agency's regulations. Notices provided under this Section shall not be required to be delivered to the "with copy to" parties identified in Section 4.16. (b) Diversion and Use. The City may divert Water up to the Annual Reserved Quantity at its pumping facilities on the Neches River, as the point of such facilities is reflected on the map attached hereto as "Exhibit B ". Notwithstanding the foregoing, the City shall be authorized to divert Water pursuant to this Agreement at any additional pumping facilities authorized by TCEQ for use by the City now or in the future. The City shall divert Water at a rate of no more than 156 cfs. The City shall use Water diverted pursuant to this Agreement for municipal, purposes only, except for that portion of Water it may sell to its existing raw water customer as of the date of this Agreement, the Beaumont Country Club. City is prohibited from selling Water delivered pursuant to this Agreement, except to the Beaumont Country Club, an existing customer to whom the City sells raw water at the time of the Effective Date of this Agreement; however, City may sell potable water within the City's extra territorial jurisdiction, municipal boundaries or Certificate of Convenience and Necessity area, as these areas may change from time to time, or to wholesale potable water customers. This Agreement in no way Iimits the City's right to sell its treated effluent for any lawful purpose. 2.03 Metering. The City shall install, operate, and maintain at the City's expense such flow meters and recording devices to permit, within two percent (2 %) accuracy, determination of quantities of water diverted by the City at its point(s) of diversion from the Neches River, in units of not more than 1,000 gallons. The City shall own the Meter and shall be responsible for operation, maintenance and replacement thereof. The Meter shall be calibrated annually, but may be tested at any reasonable time by either Party to this Agreement, provided that the Party making the test shall notify the other Party at least three (3) business days in advance and allow the other Party to witness the test. In the event that any question arises at any time as to the accuracy of the Meter, such Meter shall be tested by the City promptly upon the demand of LNVA, the expense of such test to be borne by LNVA if the Meter is found to be within 2% accuracy and by the City if it is found not to be within 2% accuracy. If, as a result of any test, any meter is found to be registering inaccurately (i.e., not within 2% accurate), the readings of such meter shall be corrected at a rate of its inaccuracy for any period which is definitely known or agreed upon or, if no such period is known or agreed upon, the shorter of the following periods shall be used as the basis for correction: January 24, 2013 Water supply Agreement between City of Beaumont and Lower Neches Valley Authority 4 3316769.1 a) a period extending back either thirty (30) days from the date of demand for the test or, if no demand for the test was made, thirty (30) days extending back from the date of the test; or b) a period extending back one -half of the time elapsed since the last previous test; and the records of the readings and all payments which have been made on the basis of such readings, shall be adjusted accordingly. 2.04 Accounting. LNVA agrees to pass all water through Sam Rayburn and/or Steinhagen to which the City is entitled pursuant to the City's priority under its water right authorizations, including Certificate of Adjudication No. 06 -4415, for diversion and use by the City. In order to account for that water passed through the reservoirs, available from inflows downstream of Steinhagen, and released from storage to satisfy the City's downstream demands, Parties shall maintain a detailed account of that water which it passes pursuant to the City's own water right authorizations, including Certificate of Adjudication No. 06 -4415, and that Water released pursuant to this Agreement which shall count against the Annual Reserved Quantity using an accounting plan. Parties agree that LNVA shall employ the accounting plan approved by the TCEQ for such purposes, which is attached hereto as "Exhibit C ". LNVA agrees to make the accounting of the water pursuant to the approved plan available for inspection by the City during normal business hours, and shall on a monthly basis provide the latest version of the accounting plan to the City at the address designated in this Agreement. The accounting plan attached as Exhibit C may be revised only by mutual written agreement of the City and LNVA. 2.05 Water Conservation and Drought Contingency Planning. The City agrees to use reasonable diligence to avoid waste and achieve water conservation of the Water and agrees to abide by the financial obligations imposed under Section 9 (a) — (d) of LNVA's Drought Contingency Plan, which incorporates provisions of Texas Water Code § 11.039 governing the distribution of water during the shortage, as adopted by the LNVA Board and approved by the TCEQ. The City agrees to at all times implement and enforce the provisions of its own water conservation and drought contingency plans, as formally adopted by the City Council and approved by the TCEQ. 2.06 Water Quality. The City and LNVA agree that LNVA makes no representations or warranties, express or implied, as to the suitability, quality, or usefulness for any purpose of Water supplied pursuant to this Agreement and that Water is provided by LNVA to the City "as- is" at the Delivery Point. III. PAYMENT 3.01 Reservation Fee. In consideration of the agreement of LNVA to provide the Annual Reserved Quantity each Calendar Year from and after the Effective Date pursuant to the terms of this Agreement, the City agrees that it shall pay annually to LNVA the Reservation Fee. January 24, 2013 water Supply Agreement between City of Beaumont and rower Neches Valley Authority 5 3316769.1 The Reservation Fee paid by the City to reserve the Annual Reserved Quantity to be made available by LNVA pursuant to this Agreement shall consist of annual payments calculated by multiplying the Annual Reserved Quantity times the Reservation Unit Price, to reserve the Annual Reserved Quantity for the City's use. 3.02 Release Fee. Should LNVA actually release Water pursuant to a Diversion Request made by the City under this Agreement, the City agrees to remit to LNVA the Release Fee, calculated by multiplying the Release Unit Price by the quantity of Water actually released by LNVA at the Release Point as necessary to satisfy the Diversion Request made by the City pursuant to this Agreement. Should the City actually divert Water in excess of the amount it has requested pursuant to its Diversion Request but less than the Annual Reserved Quantity, the City shall remit to LNVA the Release Fee for both that amount of Water it requested pursuant to its Diversion Request, as well as the additional amount of Water the City actually diverted above the amount in the Diversion Request. 3.03 Uncontracted Water Fee. Should LNVA actually release water pursuant to a Diversion Request made by the City under this Agreement in excess of the Annual Reserved Quantity, the City agrees to remit to LNVA the Uncontracted Water Fee, calculated by multiplying the Uncontracted Water Rate by the quantity of water actually released by LNVA at the Release Point in excess of the Annual Reserved Quantity. 3.04 Payment of Fees. (a) Reservation Fee. The City agrees to remit to LNVA the full sum of the Reservation Fee on or before the Payment Date each year, in consideration of LNVA's warranty that it will reserve and make available on a firm, uninterruptible basis, the Annual Reserved Quantity for diversion and use by the City in that Calendar Year. Should LNVA fail to receive the full Reservation Fee by the Payment Date, such failure shall be considered a breach of contract by the City, but upon written notice by LNVA to the City, the City will be entitled to cure such breach within thirty (30) days of its receipt of such written notice by payment of such Reservation Fee. (b) Release Fee and Uncontracted Water Fee. On or before the forty fifth (4511i) calendar day following the end of the first month after the Effective Date during which LNVA releases water for use by the City pursuant to its Diversion Request, and each month thereafter during which LNVA releases water pursuant to the City's Diversion Request, LNVA shall deliver to the City an invoice reflecting the amount of Water actually released and delivered for use by the City pursuant to this Agreement, and the amount of the Release Fee and Uncontracted Water Fee (if any) accrued therefrom. The Uncontracted Water Fee (if any) shall be based on that water released from storage by LNVA pursuant to a Diversion Request made by the City and as determined by the accounting plan attached as Exhibit C. No Release Fee or Uncontracted Water Fee will be assessed for flows to which the City is entitled under its own water right January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neebes Valley Authority 6 3316769.1 authorizations that are passed through Sam Rayburn and Steinhagen or that originate below Steinhagen. On or before thirty (30) calendar days from receiving such invoice, the City shall pay the Release Fee and Uncontracted Water Fee (if any) identified in the applicable invoice, in full, to LNVA at the address set forth in this Agreement, subject to the City's right to challenge the amount of the respective Release Fee and Uncontracted Water Fee (if any) in accordance with Section 3.05. 3.05 Dispute as to Fees. If the City at any time disputes the Release Fee or Uncontracted Water Fee (if any) included in an invoice provided to LNVA, the City shall notify LNVA in writing, on or before the date that payment to LNVA is due, of the amounts disputed in good faith by the City and the basis therefor. In the event LNVA agrees with any timely notice of dispute by the City, it shall notify the City and reflect the appropriate adjustments on the next month's invoice delivered to the City. If LNVA fails to respond to the City within thirty (30) days after receipt of a timely notice of a disputed Fee, then the disputed amounts in the notice shall be deemed to be resolved in the City's favor. Otherwise, LNVA shall give written notice to the City of its disagreement with the City regarding the disputed amount, stating the reasons therefor, within thirty (30) days after receipt of notification of the disputed amount from the City. If it is subsequently determined by agreement or court decision that the disputed amount should have been more or less, LNVA shall promptly revise the subsequent invoice amount in a manner that will allow the City to either recover or remit the amount overpaid or underpaid. 3.06 Price and Quantity Adjustment. The Reservation and Release Unit Price of Water shall be fixed from the Effective Date for a period of five (5) years, and in five -year increments thereafter. At the end of the first five -year period and each five -year period thereafter, the Reservation Fee Unit Price and the Release Unit Price will be reassessed based on the Municipal Rate then in effect as fixed by the LNVA Board of Directors. All prices are subject to compliance with the LNVA Drought Contingency Plan as approved by the TCEQ. The Uncontracted Water Rate will not be fixed for any extended term and will be the Spot Purchase Rate adopted by the LNVA Board of Directors from time to time and in effect at the time releases of Water by LNVA exceed the Annual Reserved Quantity. IV. GENERAL PROVISIONS 4.01 Term of Agreement. The term of this Agreement shall be for a period commencing on the Effective Date and ending five (5) years thereafter. The Parties agree that this Agreement may be extended by the City as set forth in Section 4.02, or by mutual agreement between the Parties. 4.02 Option to Extend Term. The Parties agree that the City shall have the right to elect to extend the term of this Agreement for up to eight (8) additional five (5) year periods (an "Extension Period "). In order to elect an Extension Period, the City shall deliver written January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 7 3316769.1 notice of said Extension Period four (4) years from the Effective Date hereof or one (1) year before the end of the term of the Agreement or any Extension Period. Should the City fail to elect an Extension Period by such date, LNVA shall provide written notice to the City of the expiration of the Agreement. Upon written notice by LNVA of the expiration of the Agreement due to the City's failure to elect an Extension Period, the City may cure such expiration by providing written notice to LNVA of its election of an Extension Period within thirty (30) days of receiving notice from LNVA. 4.03 Termination. The City may terminate this Agreement only as provided in Sec. 4.02 or by mutual written agreement of the Parties. 4.04 Representations and Warranties. The City and LNVA hereby represent and warrant that: (a) the signatories to this Agreement have been given the lawful authority by their respective governing bodies to enter into this Agreement; and (b) both LNVA and the City will at all times during the term of this Agreement comply with all orders, rules, and regulatory requirements of the TCEQ or any successor agency. LNVA hereby represents and warrants that: (a) the water supply it is providing to the City pursuant to this Agreement is intended to be made available on a firm, uninterruptible basis; and (b) it will not enter into any future water supply agreements or otherwise obligate itself in a manner beyond the firm yield of its State issued water rights authorizations. 4.05 Effectiveness. The effectiveness of this Agreement is dependent upon LNVA and the City's compliance with the requirement of Chapter 297, Subtitle J of Title 30 of the Texas Administrative Code (relating to Water Supply Contracts and Amendments). 4.06 Severability. The provisions of this Agreement are severable and, if any provision of this Agreement is held to be invalid for any reason by a court or agency of competent jurisdiction, the remainder of this Agreement will not be affected and this Agreement will be construed as if the invalid portion had never been contained herein. 4.07 Assignment. Except as otherwise provided herein, the assignment of this Agreement by any Party is prohibited without the prior written consent of the other Parties. All of the respective covenants, undertakings, and obligations of each of the Parties will bind that Party and will apply to and bind any successors or assigns of that Party. 4.08 Pledge of Revenue. City represents and covenants that all payments to be made by it under this Agreement shall constitute reasonable and necessary operating expenses of its system as defined in "Tex. Gov't. Code Ann. §§ 1502.001 -.058 (Vernon 2001), and that all such payments will be made from the revenues of its water system. City represents and has determined that the water supply to be obtained from the LNVA System is absolutely necessary and essential to the present and future operation of its facility and is the only available and adequate source of supply of water therefore, and, accordingly, all payments required by this Agreement to be made by City shall constitute reasonable and necessary operating expenses of City's plant and system or systems as described above with the effect that the obligation to make such payments from revenues of such system or systems shall have priority over any obligation to make any payments from such revenues, whether of principal, interest, or both, with respect to all bonds heretofore or hereafter issued by City. January 24, 2013 Water Supply Agreement between City of Beaumont and lower Neches Valley Authority 8 3316769.1 City agrees throughout the term of this Agreement to continuously operate and maintain its water system and to fix and collect such rates and charges for water services to be supplied by its water system as will produce revenues in an amount equal to at least (i) all of its payments under this Agreement and (ii) all other amounts as required by the provisions of the ordinances or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding. Unless otherwise specifically provided in writing by subsequent agreement between LNVA and City, LNVA shall never have the right to demand payment by City of any obligation assumed or imposed on it under this Agreement from funds raised or to be raised by taxation, it being expressly understood by LNVA and City that all payments due by City are to be made from the revenues and income received by City from the ownership and operation of its plant or facility. This is a contract that is subject to Chapter 271, Texas Local Government Code. 4.09 Cooperation. The Parties agree to cooperate at all times in good faith to effectuate the purposes and intent of this Agreement. 4.10 Third Party Beneficiaries. Except as expressly provided for herein, nothing in this Agreement, express or implied, is intended to confer upon any person or entity, other than the Parties, any rights, benefits, or remedies under or by reason of this Agreement. 4.11 Entire Agreement. This Agreement contains the entire agreement of the Parties regarding the subject matter hereof and supersedes all prior or contemporaneous understandings or representations, whether oral or written, regarding the subject matter. 4.12 Interpretation and Reliance. No presumption will apply in favor of either Party in the interpretation of this Agreement or in the resolution of any ambiguity of any provisions hereof. 4.13 Relationship of Parties. This Agreement is based upon the active participation of the Parties. Neither the execution nor the delivery of this Agreement shall create or constitute a partnership, joint venture, or any other form of business organization or arrangement between the Parties, except for the contractual arrangements specifically set forth in this Agreement. No Party shall have any power to assume or create any obligation on behalf of the other Party. 4.14 Amendments. Any amendment of this Agreement must be in writing and will be effective if signed by the authorized representatives of the Parties. 4.15 Applicable Law; Venue. This Agreement will be construed in accordance with Texas law. Venue for any action arising hereunder will be in Jefferson County, Texas. 4.16 Notices. Wherever under this Contract one party is required or permitted to give notice to the other party, such notice shall be in writing and shall be delivered personally, sent by facsimile transmission, sent by nationally recognized express courier, sent by certified, registered, first class mail, postage prepaid, or sent by electronic mail. Any such notice shall be deemed given when actually received when delivered either personally, by facsimile transmission or by express courier, or if hailed, on the fifth day after its mailing, postage prepaid to the recipient party, or if by electronic mail, by the date actually received. Notice to be January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 9 3316769.1 delivered pursuant to this Agreement shall be sent to the addresses indicated below: CITY: City of Beaumont 1350 Langham Rd PO Box 3827 Beaumont, TX 77704 -3 827 Attn: City Manager Telephone: (409) 880 -3708 Facsimile: (409) 880 -3112 E-mail: khayes @ci.beaumont.tx.us with copy to: Tyrone Cooper Beaumont City Attorney 801 Main St. Suite 325 Beaumont, Texas 77701 Telephone. (409) 880 -3715 Facsimile: (409) 880 -3121 E-mail: tcooper @ci.beaumont.tx.us Lloyd Gosselink Rochelle & Townsend, PC 816 Congress Ave., Suite 1900 Austin, Texas 78701 Attn: Martin Rochelle Telephone: (512) 322 -5810 Facsimile: (512) 874 -3909 Email: mrochelle@lgawlirni.com LNVA: Lower Neches Valley Authority 7850 Eastex Freeway Beaumont, Texas 77708 Attn: Scott Hall Telephone: (409) 892 -4011 Facsimile: (409) 898 -2468 Email: scott.hall@lnva.org with copy to: Benckenstein & Oxford, LLP 3535 Calder, 3rd Floor Beaumont, Texas 77706 Attn: Hubert Oxford Telephone: (409) 833 -9182 x394 Facsimile: (409) 833 -8819 Email: hubertoxford @benoxford.coln 4.17 Counterparts; Effect of Partial Execution. This Agreement may be executed simultaneously in multiple counterparts, each of which will be deemed an original, but all of which will constitute the same instrument. 4.18 Force Majeure. In the event that any obligation contained herein is not fulfilled January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 10 3316769.1 within the time period required hereby, and such failure is beyond either Party's reasonable control, including but not limited to compliance with any regulations, order or instruction of any federal, state or municipal government or any department or agency thereof, acts or omissions of any other Party hereto, acts of civil or military authority, fires, strikes, embargoes, war, terrorism, riots, delays in transportation, tempests, hurricanes, earthquakes, floods, drought and the inability (due to causes beyond such Party's reasonable control) to obtain necessary labor, manufacturing facilities or materials (all of the foregoing, without limitation, being herein referred to as "force majeure "), such Party shall give the other Party prompt notice of the occurrence of any such force majeure delay or expected delay, specifying the cause thereof and the suspected duration. In the event of any such delay, the date required for fulfilment of such obligation shall be automatically extended for a period equal to the time lost by reason of the delay. 4.19 Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the Parties, and their respective successors and assigns (as may be authorized pursuant to the terms of this Agreement) following the Effective Date. 4.20 Default and Remedies. If any Party now or hereafter subject to this Agreement fails to perform such Party's obligations hereunder in accordance with the terms, provisions and conditions of this Agreement, then any other Party hereto may provide written notice of such failure to the non - performing Party and the non - performing Party shall thereupon have fifteen (15) days to cure such failure. If such failure has not been cured after the expiration of such fifteen (15) day period, then the complaining Party hereto may, except as otherwise expressly provided herein, (i) institute suit for specific performance against the non- performing Party to compel performance of the obligation, and the costs of compelling performance (including, without limitation, attorneys' fees and expenses) shall be reimbursable to the prevailing Party in such litigation plus interest thereon, or (ii) pursue any and all other remedies available to the complaining Party at law or in equity, including, without limitation, suit for damages. 4.21 Waiver. The waiver by either Party of any provisions of this Agreement shall not be construed as a precedent or waiver of such provisions thereafter unless this Agreement is amended in writing reflecting such waiver. 4.22 Parties in Interest. This Agreement shall be for the sole and exclusive benefit of the Parties hereto and their successors and assigns hereof, and it shall not inure to the benefit of any other persons or entities, and is the result of negotiations between the Parties and is not to be considered a precedent with respect to either Party in any other like situation or with respect to any other Party in any other like situation. 4.23 Invalidity of Provisions. In the event any provision hereof is declared invalid by a final judgment of a court of competent jurisdiction, after all applicable court appeals have been exhausted, such invalidation shall not invalidate the remaining portions of this Agreement unless the provisions(s) so invalidated renders this Agreement un- performable by either Party and /or frustrates the purpose of the Agreement. 4.24 Enforcement. It is understood and agreed that either Party hereto may demand specific performance of this Agreement. 4.25 Responsibility for Water. Title to and responsibility and liability for Water January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 11 33 16769.1 supplied by LNVA shall be in LNVA until such Water reaches the Delivery Point. Once the Water supplied hereunder to City passes through the Delivery Point, said water shall become the responsibility of the City. 4.26 Indemnification. . THE PARTIES, TO TI4E FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, WILL INDEMNIFY AND HOLD HARMLESS EACH OTHER AND EACH OF THEIR PRESENT, FUTURE AND FORMER DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OR ANY OF THEIR SUBSIDIARIES, CONTRACTORS AND SUBCONTRACTORS AGAINST ANY COSTS OR EXPENSES (INCLUDING REASONABLE ATTORNEY'S AND INVESTIGATION FEES), JUDGMENTS, FINES, LOSSES, CLAIMS, DAMAGES, LIABILITIES AND AMOUNTS PAID IN SETTLEMENT IN CONNECTION WITH ANY ACTUAL OR THREATENED CLAIM, ACTION, SUIT, PROCEEDING OR INVESTIGATION, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE, ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THE ACTS OR OMISSIONS OF EACH OTHER OR ANY OF THEIR EMPLOYEES, SERVANTS, AGENTS, REPRESENTATIVES, CONTRACTORS AND SUBCONTRACTORS IN THE PERFORMANCE OF OR FAILURE TO PERFORM OBLIGATIONS AND REPRESENTATIONS UNDER THIS AGREEMENT 4.27 MUTUAL RELEASE. In consideration of execution of this Agreement and the mutual relinquishment of their respective rights with reference to any disputes and in consideration of the payment by City to LNVA of the sum of One Hundred Thousand Dollars ($100,000.00), receipt and sufficiency of which is acknowledged, each Party for themselves their successors, or assigns expressly releases the other and its, successors, or assigns from all liability for claims and demands arising out of any past obligations, acts, or omissions, which either Party may have against the other. The Parties agree that all claims, demands, and causes of action that either Party has or may have against the other as of the date of execution of this Agreement are satisfied, discharged, and settled. (Signature Page Follows) January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 12 3316769.1 (Signeaure Rage to Water Supply Agreement and Mutual Release between LNVA and City of Beaumont) IN WITNESS WHEREOF, the City and LNVA have executed this Agreement to be effective as of the Effective Date provided above. CITY: ATTEST: CITY OF BEAUMONT, TEXAS: By: City Secretary Printed Name: Title: Date: LNVA: ATTEST: LOWER NECHES VALLEY AUTHORITY: By: Printed Name: Title: Date: January 24, 2013 Water Supply Agreement between City of Beaumont and Lower Neches Valley Authority 13 331676).1 EXHIBIT A PLAN OF OPERATION The City will communicate with LNVA its Diversion Request for every day of the year, regardless of whether or not the City believes its diversion will be met by its own water rights or supplemented by Water from the LNVA. The communication, preferably by email, shall be directed to the Lockmaster at the Neches River Saltwater Barrier, whose email address saltwaterbarrier@lnva.dst.tx.us and phone number is (409) 898 -0561 The anticipated Diversion Request shall be delivered to LNVA by the City's Water Utilities Director or his designee and shall specify the rate and quantity at which the City anticipates diverting water from the Neches River. The Diversion Request may be made for multiple days in a single communication but shall be confirmed at least weekly. For example, a request made on a Thursday for the following Monday may stand for the entire following week. The contract specifies four (4) days notice be provided by the City for the Diversion Request due to the fact that water released from Lake BA Steinhagen travels approximately three (3) days down the bed and banks of the Neches River before it reaches the diversion locations of the City and LNVA. LNVA will have the sole responsibility of determining the appropriate release request to the United States Army Corps of Engineers and ensure a sufficient supply of water is available in the Neches River to meet the needs of both the LNVA and the City. LNVA evaluates all the water demands in the lower Neches Basin on a daily basis; including demands on its canal system, demands along the river such as the City's and others, and freshwater streamflow requirements to the Sabine Lake Estuary. The total demand is compared to the available streamflow in the lower Neches watershed; any resulting shortage results in a release request on Lake BA Steinhagen that is filed daily with the US Army Corps of Engineers Reservoir Control Office. LNVA, recognizing that the forecasting of available streamflow and demand is more of an art than a science, relies on the experience and judgment of the Saltwater Barrier Lockmaster to ensure a sufficient release request is made on Lake BA Steinhagen. The Lockmaster is generally conservative in nature as he forecasts available streamflow on preliminary data from the USGS gauge sites across the basin. As such, the determination of Water released to meet the City's demands shall be an after the fact accounting based on approved data, whether from the Corps of Engineers or USGS, that is more fully described in Exhibit C. LNVA response to City's Proposal 11/30/2012 3316769.1 EXHIBIT B DESCRIPTION OF PUMPING FACILITES The City of Beaumont owns and operates a raw pump station on the Neches River. The Pump Station can pump 60 MGD via a 48 inch pipe to the Water Treatment Plant for treatment and distribution. With minor changes, the Pump Station's capacity can be increased to 80 MGD. The Pump Station is equipped with a generator for backup power and SCADA for remote monitoring and operations. The water pumped from the Pump Station to the Water Treatment Plant is metered. EXHIBIT C ACCOUNTING PLAN LNVA shall maintain an accounting of water delivered pursuant to its Agreement with the City as provided below. In order to determine the quantity of run -of -river flow available at the surface water intakes for the Lower Neches Valley Authority (LNVA) and City of Beaumont (City) the following equation will be applied: AVAILABLE NEAR BEAUMONT = UPPER BASIN FLOWS(-3 DAYS) + LOWER BASIN FLOWS(-1 DAYS Determination of Upper Basin Flows Determination of Upper Basin Flows is based upon the following equation: UPPER BASIN FLOWS = RAYBURN INFLOW + 1.1342(NERO) Flows available from the upper reaches of the Neches River Basin will be determined by summing the Adjusted Daily Inflow to Sam Rayburn Reservoir as determined by the US Anny Corps of Engineers, Reservoir Control, Fort Worth District and 1. 13 42 times the Approved Daily Discharge value at the USGS stream gauge on the Neches River near Rockland, Texas (NERO).The Adjusted Daily Inflow to Sam Rayburn Reservoir and Approved Daily Discharge of the Neches River near Rockland may be retrieved from the following website addresses: Rayburn Inflow - htt1�: / /,vww_.swf,.�_c_usace,. r�►ty_.xziil`c� immhi�iireshlml��l? }.�agc °.w1,l�ciroio�iG NERO- _lynx; heat__ crclat4t., usgs, gc�Y.Itx:! is «is./dy / ?sitewno.08033500&azeLiq ode =^1.!$ , rq[grpd module_ -sti, While the NERO gauge accounts for flows contributed from an upstream watershed of 3,636 sq. miles on the main stem of the Neches River, there remains 488 sq. mi. of contributing watershed in the Neches Basin above Q.A. Steinhagen Reservoir that is neither accounted for in the inflows to Rayburn nor through the NERO gauge. The 1.1342 multiplier is applied to the NERO gauge values to account for ungauged inflows to B.A. Steinhagen Reservoir which occur downstream of the NERO gauge and Rayburn Reservoir, as noted on the accompanying drainage area map. Flows into Rayburn, flows at Rockland, and flows calculated as ungauged above B.A. Steinhagen are considered available at the outlet works of B.A. Steinhagen on the same day as the flows are measured at Rayburn and Rockland. This cumulative daily river flow available at B.A. Steinhagen Reservoir outfall is lagged 3 -days for travel time via bed -and -banks conveyance in the Neches River from the B.A. Steinhagen outlet works to the intake works of LNVA and the City near Beaumont. Determination of Lower Basin Flows Determination of Lower Basin Flows is based upon the following equation: LOWER BASIN FLOWS = 1.8528(VIKO+PISL) In addition to the run -of -river flows available from the upper reaches of the Neches River, the run -of -river flows available at the LNVA and City intakes from the lower reaches of the Neches River are determined by multiplying a factor of 1.8528 to the sum of the Approved Daily Discharge value at the USGS stream gauge on Village Creek near Kountze, Texas (VIKO) LNVA response to City's Proposal 11/30/2012 3316769.1 and the Approved Daily Discharge value at the USGS stream gauge on fine Island Bayou near Sour Lake, Texas (PISL). The Approved Daily Discharge at these gauge sites may be retrieved from the USGS website at the following addresses: VIKO - ltttp_ /iiw itei-da .i.u.L)ov_.tx,liiwi ie'dv/ ?site po=- 844J 50Q e erred nioduie_`',m PISL - lt L m_/Ay_ ztet _ciai__LIWs.go� /i:x /mvisldvi ?site np� °OKq�i,17GOR �t items- cd=1JSGS�Crcferrecl»1odule --SW Like the upper reach of the Neches Basin, the lower reach includes ungauged areas that are accounted for by means of adjusting the flows of the gauged drainage areas by a multiplier. The attached drainage area map details gauge locations and drainage areas, both gauged and ungauged. The cumulative daily river flow available in the lower reaches of the Neches River, below the B.A. Steinhagen Reservoir outfall, is lagged 1 -day for average travel time via bed -and- banks conveyance in the Neches River from the gauge locations to the intake works of LNVA and the City near Beaumont. Determination of Run of River Flows Available Near Beaumont Returning to the original equation for determination of Flows Available near Beaumont: AVAILABLE NEAR BEAUMONT = UPPER BASIN FLOWSt_3 nAYsy + LOWER BASIN FLOWS(_1 onv) On any given day, the run-of-river flows which would be available in the Neches River near Beaumont without interruption or supplementation by upstream reservoirs can be determined by summing the flows available three days prior in the upper reaches of the Neches River Basin, above B.A. Steinhagen Reservoir and the flows available one day prior in the lower reaches of the Neches River Basin, below B.A. Steinhagen Reservoir, each as previously detailed. The Neches River has no significant channel losses or gains, and therefore no other adjustment is needed to determine available run-of-river flow at the LNVA and City intakes near Beaumont, Texas. PRIORITY ACCOUNTING OF NECHES RIVER DIVERSIONS In order to provide effective management of water resources and ensure sufficient releases from storage to meet downstream demands, the City shall keep LNVA apprised of its projected demands for surface water from the Neches River. The larger of either the City's projected demand as reported to LNVA or its actual diversions from the river, shall be utilized on a daily basis in determining whether or not water was released from storage to meet the City's need. After determining the availability of run-of-river flows in the Neches River near Beaumont, Texas, water will be allocated between LNVA and the City in accordance with water rights adjudicated to each entity by the State of Texas according to the following system. • When run-of-river stream flows in the Neches River, as previously determined, are sufficient to meet the needs of LNVA and the City, all water needed by both LNVA and the City will be accounted for and charged against the most junior run -of -river water right available to either entity at that time. • When run -of -river stream flows are insufficient to fully satisfy the demands of both LNVA and the City, all water needed by both LNVA and the City will be accounted for and charged against the most senior run -of -river water right available to either entity at that time until the entirety of the calculated run-of-river stream flow is accounted for. LNVA response to City's Proposal 11/30/2012 3316769.1 • In order to satisfy downstrealr previously calculated, release,, LNVA's November 12, 1963 demands by LNVA and the City not supported by run -of -river flows from storage will be made and diversions accounted for under priority date. LNVA response to City's Proposal 11/30/2012 3316769.1