HomeMy WebLinkAboutResolution - 2021-R0210 - Amendment No. 3 to Agreement with Palisade PipelineResolution No. 2021-R0210
Item No. 7.21
June 8, 2021
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT hh Mayor of the City of Lubbock is hereby authorized and directed to execute
for and on behaf of the City of Lubbock, Amendment No. 3 to that certain Memorandum of
Understanding dated June 11, 2019, whereby certain terms and conditions respecting the
potential purchase by Palisade of rights to a portion of the City's effluent water were
established, by and between the City of Lubbock and Palisade Pipeline, LLC, of Houston,
Texas, and related documents. Said Amendment is attached hereto and incorporated in this
resolution as if fully set forth herein and shall be included in the minutes of the City Council.
Passed by the City Council on
ATTEST:
Rebeck Garza, City S ret
APPROVED AS TO CONTENT:
lL'1
W. Jarrel
Atkinson, City Manager
June 8, 2021
�jv
DANIEL M. POPE, MAYOR
Assistant City Attorney
ccdocs/RES.Second Amendment to Memorandum of Understanding Palisade Pipeline
June 3, 2021
THIRD AMENDMENT TO MEMORANDUM OF UNDERSTANDING
This Third Amendment to Memorandum of Understanding ("Amendment") is entered
Into on this, the Sth day of June. 2021 by and between the City of Lubbock, Texas, a Texas
municipal corporation ("City") and Palisade Pipeline, LLC of Houston, Texas ("Palisade"),
collectively the "Parties".
WHEREAS, the Parties entered into a Memorandum of Understanding (the "MOU") dated
June 11, 2019 (Resolution No. 2019-110215) setting forth certain terms and conditions respecting
the potential purchase by Palisade of rights to a portion of the City's effluent water; and
WHEREAS, in light of the delays and other inconveniences resulting from the COVID-19
pandemic, the Parties amended the MOU on May 26, 2020 (Resolution No. 2020-110175) and
December 15, 2020 (Resolution No. 2020-110434) to extend time periods for performance and
exclusivity covenants; and
WHEREAS, the MOU, as amended, provides that, unless extended, the MOU shall expire
upon the earlier to occur of: 1) twenty-four (24) months passage from its execution; or 2) the
subsequent execution by the Parties of a Reclaimed Water Use Agreement ("Agreement"); and
WHEREAS, the MOU, as amended, further provides that, unless extended, an Exclusivity
Period shall run for a period of twenty-four (24) months from the date of the execution of the
MOU, wherein said period of time the City may not solicit, initiate, or participate in discussions or
negotiations, or otherwise enter into a Reclaimed Water agreement such as is contemplated by
the MOU, with any other party; and
WHEREAS, the MOU, as amended, further prospectively sets forth aspirational terms and
conditions of the contemplated Reclaimed Water Use Agreement, including an automatic
termination provision; and
WHEREAS, in light of the persistent and unforeseen delays and other inconveniences
resulting from the continuing COVID-19 pandemic, the Parties now desire to amend certain
provisions contained in the MOU, as set forth below, with all other terms of the MOU remaining
unchanged.
NOW THEREFORE, in consideration of the mutual promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties
hereto agree to amend, and do amend, the MOU as follows:
A. Section 1 of the MOU is amended to read as follows:
"1. TERM
Unless earlier terminated pursuant to the terms hereof, this MOU shall expire
upon the earlier to occur of: 1) thirty-six (36) months after its execution; or 2)
upon the execution by the Parties of a subsequent agreement (the "Reclaimed
Third Amendment to Memorandum of Understanding
City of Lubbock/Pallsade Pipeline, LLC Page 1 of 3
Water Use Agreement" or Agreement,") for the purchase of Reclaimed Water
(the "Term")."
B. Section 3(a) of the MOU is amended to read as follows:
"a. Exclusivity Period. In consideration of the time, effort and expense anticipated
to be incurred by Palisade in connection with its due diligence in advance of the
contemplated Agreement, the Parties agree that for a period of thirty-six (36)
months from the date of this MOU (the "Exclusivity Period"), City, its
administrators, officials, council members, officers, directors, employees, agents,
and representatives, shall not directly or indirectly solicit, initiate, or participate
in discussions or negotiations, or enter into any agreement with any person,
company or entity, other than Palisade, concerning any transaction related to the
Reclaimed Water, or otherwise similar to that described in this MOU or the
essential terms of an Agreement as set forth below, or any unrelated transaction
that would in any way reduce the amount of Reclaimed Water to be allocated to
Palisade pursuant to the Agreement; provided, however, that nothing herein shall
preclude or prohibit City from undertaking obligations it has attendant to existing
agreements concerning reclaimed water."
C. Section 3(b) of the MOU is amended to read as follows:
"b. Exclusivity Payments.
First Exclusivity Payment. As additional consideration for the
restrictions placed on the Reclaimed Water during the first twenty-
four (24) months of the Exclusivity Period described above, Palisade
and City agree that ONE HUNDRED TWENTY THOUSAND AND NO/100
DOLLARS ($120,000.00) will be paid by Palisade to the City in four (4)
equal payments of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00), with the first payment due within seven (7) days of the
full execution of this MOU, and each succeeding quarterly payment
due three months thereafter until all four payments have been made.
ii. Second Exclusivity Payment. As additional consideration for the
restrictions placed on the Reclaimed Water during the last twelve
(12) months of the Exclusivity Period described above, Palisade and
City agree that ONE HUNDRED TWENTY THOUSAND AND NO/100
DOLLARS ($120,000.00) will be paid by Palisade to the City in twelve
(12) equal payments of TEN THOUSAND AND NO/100 DOLLARS
($10,000.00), payable monthly beginning on the first day of the
twenty-fifth month of the Exclusivity Period, and continuing until all
twelve (12) payments have been made."
Third Amendment to Memorandum of Understanding
City of Lubbock/Palisade Pipeline, LLC Page 2 of 3
D. Section 4(n)(i) of the MOU is amended to read as follows:
"n. Term. The term of the Agreement shall be for twenty-four (24) years, with any
extensions based upon terms to be mutually agreed to by the Parties.
At any time after June 11, 2043, City shall have the option of terminating
the Agreement, without penalty, provided it gives Palisade ninety (90)
days advance notice of its intent to do so, and on such effective date of
termination, tenders to Palisade an amount equal to the depreciated
value of the pipeline constructed by Palisade for the transportation and
delivery of Reclaimed Water based upon a 25-year asset life, where the
base depreciable value equals the original, direct construction cost of the
pipeline infrastructure from the point of connection with the City system
to the point of delivery to Palisade's customer."
The Parties further agree that all other terms and conditions of the MOU shall continue in full
force and effect for all purposes.
CITY OF LUBBOCK
Daniel M. Pope, Mayor
Third Amendment to Memorandum of Understanding
City of Lubbock/Palisade Pipeline, LLC
PALISADE PIPELINE, LLC
oeel
Phillip J. Laughlin, President
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