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Home My WebLink AboutResolution - 6106 - Agreement - CRMWA - Improving Quality Of Municipal Water Supply - 11/12/1998Resolution No. 6106 Item No. 56 November 12, 1998 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Agreement by and between the City of Lubbock and the Canadian River Municipal Water Authority for the public purpose of improving quality of the Municipal Water Supply, and any associated documents, attached hereto, which Agreement shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 12th day of November , 1998. c WIND S ON, ATT ST: Ka i Darnell, City Secretary APPROVED AS TO CONTENT: terry Ellerbfook, Managing Director of Water Utilities APPROVED AS TO FORM: Richard K. Casner, Natural Resources Attorney da/ccdocs1CRMWA.res October 14, 1998 CANADiANRivER MuNiciPAL WATERAuTHoRrry EXECUTIVE COMMITTEE E.R. MOORE, PRESIDENT NORMAN WRIGHT. VICE-PRESIDENT JOHN C. WILLIAMS, GENERAL MGR. AND SECRETARY -TREASURER BUDDY TRENT ADMINISTRATIVE OFFlCER ANDASST.SE6RETARY l MEMBER CITIES DIRECTORS AMARILLO HAL MINER GEORGE SELL BORGER BILLWILLARD TOM EDMONDS PAMPA JERRY CARLSON WILLIAM HALLERBERG PLAINVIEW NORMAN WRIGHT GLENN BICKEL LUBBOCK JAMES COLLINS ROBERT RODGERS SLATON STEVE TUCKER TAHOKA LARRY HAGOOO O'DONNELL E.R. MOORE LAMESA RAY RENNER DALE NEWBERRY BROWNFIELD LJ. RICHARDSON LEVELLAND CARLSHAMBURGER O.W. MARCOM P.O. BOX 99, SANFORD, TEXAS 79078 PHONE 806 865MM / FAX 806 8653314 December 11, 1998 Mr. Bob Cass, City Manager City of Lubbock P.O. Box 2000 Lubbock; Texas 79457 Dear Bob: DEC r/r1. 1-998 r �1,Q,vA��R,s 0 Attached for your records and official files is one completely executed copy of the Agreement between the Canadian River Municipal Water Authority and the City of Lubbock, Texas for the desalinization of the Municipal Water Supply. This agreement was approved by the Board of Directors of the Authority on April 8, 1998 and by the govering body of your city on November 12, 1998. An effective date of November 12, 1998 has been inserted on the first page of the Contract. The attached copy is complete with all attachments except the Financing Plan. This document will be provided when the Authority's Board of Directors has approved the issuance of the necessary bonds, and the applicable amounts are known. Please be advised that the Notice of Intent to issue Bonds is being sent today under separate cover. The Authority looks forward to providing the improved water supply which will be made possible by these contracts. Please let me know if you have any question concerning the proposed Project, or any aspect of the attached Contract. Enclosures A ly yyours, Williams, P. E. l Manager RESOLUTION NO. 98-11A A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CANADIAN RIVER MUNICIPAL WATER AUTHORITY AUTHORIZING THE APPROVAL AND EXECUTION OF AN AGREEMENT FOR THE DESALINIZATION OF THE MUNICIPAL WATER SUPPLY WITH EACH MEMBER CITY WHEREAS, the CANADIAN RIVER MUNICIPAL WATER AUTHORITY is a conservation and reclamation district duly created and existing under the laws of the State of Texas (the "Authority") and provides water to the cities of Amarillo, Borger, Brownfield, Lamesa, Levelland, Lubbock, O'Donnell, Pampa, Plainview, Slaton, and Tahoka (the "Member Cities") under water supply contracts; and WHEREAS, the Authority provides the Member Cities with water for their municipal water supply through the operation and maintenance of the Sanford Dam and Lake Meredith (the "Canadian River Project"); and Whereas, due to natural sodium -chloride brine seeping into the Canadian River upstream from the Sanford Dam, the concentration of sodium, chlorides, and sulfates in Lake Meredith exceeds recommended secondary standards for drinking water supplies; and Whereas, the United States Congress, through Title VIII of the Reclamation Project Authorization and Adjustment Act of 1992, authorized the United States Secretary of the Interior (a) to construct and test the Lake Meredith Salinity Control Project for the purposes of improving the quality of water by controlling the brine seepage to the Canadian River entering into Lake Meredith (the "Project") and (b) to enter into a contract with the Authority for the Department of the Interior Bureau of Reclamation to perform the design and construction management of the Project; and Whereas, the Legislature of the State of Texas enacted House Bill No. 2131, Acts 70th Leg., R.S., ch. 251, 3080 (formerly Article 8280-154 Vernon's Texas Civil Statutes) to authorize the Authority to acquire, develop, construct, operate and maintain projects such as the Lake Meredith Salinity Control Project; and Whereas, the Texas Water Development Board is authorized by House Bill No. 2131, Acts 70th Leg., R.S., ch. 251, 3080 (formerly Article 8280-154 Vernon's Texas Civil Statutes) and by the Texas Appropriations Act, Acts 73 Leg., R.S., ch 1051, p. 4868 (item 6 to the Water Development Board appropriation for the fiscal year 1994-95 biennium) with such appropriation being carried forward in the Texas Appropriations Act, Acts 75 Leg., R.S., Ch. 1452, p. 6151 (Item 13), to participate in the Project by providing funds in an amount equal to the costs to be incurred by the United States; and Whereas, the Authority, the Texas Water Development Board, and the Bureau of Reclamation have entered into a Cooperative Agreement providing for, among other matters, the construction of the Project, and the manner in which costs will be shared by the Authority, the Bureau of Reclamation, and the Texas Water Development Board; and .. At Whereas, a condition precedent to the construction of the Project is the execution -1 of a contract between the Authority and each of its member cities to provide for the funding of the Authority's share of the costs of the Project; and Whereas, each of the Member Cities desires to have the quality of its water supply improved to meet the secondary standards for drinking water supplies and desires to share in the construction costs of the Project and its maintenance, operation and replacement; and Whereas, each of the Member Cities has executed or is in the process of executing an Agreement for the Desalinization of the Municipal Water Supply, and has submitted it or is in the process of submitting it to the Authority to approve and execute in order to provide for the funding and costs of the Project; and Whereas, the Authority needs to approve and execute the Agreement for the Desalinization of the Municipal Water Supply with each Member City. NOW, THEREFORE, be it resolved: Section 1. The Agreement for the Desalinization of the Municipal Water Supply with the cities of Amarillo, Borger, Brownfield. Lamesa, Levelland, Lubbock, O'Donnell, Pampa, Plainview, Slaton, and Tahoka are hereby approved. Section 2. The President of the Authority is authorized to execute and the Secretary of the Authority is authorized to attest each of the Agreement for the Desalinization of the Municipal Water Supply Agreements with the respective Member Cities. Section 3. A copy .of this Resolution shall be attached to each of the executed Agreements for the Desalinization of the Municipal Water Supply with each Member City. E. R. Moore, President Canadian River Municipal Water Authority Attest: ,& e, ""', JohnX. Williams; Secretary Cariddian River Municipal Water Authority RESOLE-1.HW 2 Resolution No. 6106 Item No. 56 November 12, 1998 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Agreement by and between the City of Lubbock and the Canadian River Municipal Water Authority for the public purpose of improving quality of the Municipal Water Supply, and any associated documents, attached hereto, which Agreement shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 12th day of November , 1998. ATTEST: Ka Darnell, City Secretary APPROVED AS TO CONTENT: - I= �: �"� �' '6 '- - w-:-- - - , erry Ellerbr ok, Managing Director of Water Utilities APPROVED AS TO FORM: Richard K. Casner, Natural Resources Attorney da/ccdocs/CRMWA.res October 14, 1998 AGREEMENT BETWEEN THE CANADIAN RIVER MUNICIPAL WATER AUTHORITY AND THE CITY OF LUBBOCK, TEXAS FOR THE DESALINIZATION OF THE MUNICIPAL WATER SUPPLY TABLE OF CONTENTS Page ARTICLE 1. PURPOSE 1.1 .................................................. Purpose of Agreement ... 3 ........................................ ... 3 1.2 Obligations.....................................................3 1.3 Existing Contracts ............................................... 3 1.4 Contract Payments ............................................... 3 ARTICLE 2. DEFINITIONS .................................................... 3 ARTICLE 3. TERM OF AGREEMENT ............................................ 7 ARTICLE 4. CITY'S PAYMENT OF ITS SHARE OF PROJECT CONSTRUCTION COSTS ................................. 7 4.1 Construction Repayment Obligation ............................ 7 4.2 Payment of Project Construction Costs ................................ 7 4.3 Cites Option to Pay Construction Cost Payment Without Providing Payment of the Authority's Revenue Bonds ................. ... 8 4.4 Construction Cost Payments Due for Revenue Bonds and Payments from Escrow Accounts .................................... 9 4.5 Termination of Project ......................................... 11 4.6 Advances by the Authority ........................................ 12 ARTICLE 5. OPERATION AND MAINTENANCE COSTS ............................ 12 ARTICLE 6. FINANCING ARRANGEMENTS .............................. 13 6.1 Issuance of Revenue Bonds ............................... 13 6.2 Revenue Bond Proceeds ....................................... 13 6.3 Establishment of Funds and Flow of Funds ........................... 13 6.4 Project Payment Fund....................................14 6.5 Construction Fund 6.6 .......................................... Interest and Sinking Fund 14 .................................. 15 6.7 Bond Reserve Fund ........................................ 15 6.8 .. Unallocated and Unpledged Balance 6.9 ..................... Investments 16 6.10 ................................................. Final Payment 16 6.11 .............................................. Additional Bonds 17 ...............................................18 Page ARTICLE 7. COVENANTS AND OBLIGATIONS OF THE AUTHORITY ................. 19 7.1 Obligation to Complete Project ..................................... 19 7.2 Operation of Project ............... I ............................. 20 7.3 Project Alterations and Repairs .................................... 20 7.4 Maintenance and Operation - Insurance .............................. 20 7.5 Records and Accounts ......................................... .20 7.6 Defeasance...................................................21 7.7 Sale or Encumbrance of Properties ................................. 21 7.8 Board to Submit Information to Meet Continuing Disclosure Requirements ........................................ 22 7.9 Reports and Inspections..........................................22 ARTICLE 8. COVENANTS AND OBLIGATIONS OF THE CITY ....................... 22 8.1 Rate Covenant ............................... ................22 8.2 Additional Sources of Payments .................................... 23 8.3 Compliance with Law ............................................ 23 8.4 Authorization and Validity ........................................ 23 8.5 Prior Obligations of City's Waterworks System ......................... 23 8.6 Exclusive Agreement ............................................ 23 8.7 City Obligation Not Separable ...................................... 24 8.8 City's Disclosure Agreement ....................................... 24 ARTICLE 9. GENERAL PROVISIONS .................................. . . . . . . . . 24 9.1 Assignment of Agreement . 24 9.2 Inspection of Books and Records ................................... 24 9.3 Past Due Payments ............................................. 24 9.4 Default under Bond Documents .................................... 24 9.5 Amendment..............................................25 9.6 Subject to Authority Contract............ 25 9.7 Notices..................................................25 9.8 Governing Law...........................................25 9.9 Further Action ................................................ .25 9.10 Binding Effect. ......................................... ....26 9.11 Integration ........ ..........................................26 9.12 Severability ....................................... .......... . 26 9.13 Waiver......................................................26 9.14 Defaults and Remedies ........................................... 26 9.15 Force Majeure.......................................27 9.16 Counterparts.............................................27 9.17 Descriptive Headings ......................................... .27 9.18 Construction of Agreement .............................. . . . . . . . . . 27 9.19 Non -Discrimination ........................... .............28 9.20 Determinations....................................28 9.21 Costs, Expenses and Legal Fees ................................... 28 9.22 Remedies.....................................................28 Schedule A - Contract Between the Canadian River Municipal Water Authority and the City of Lubbock, Texas for providing a Municipal Water Supply Schedule B - Canadian River Municipal Water Authority Manual Schedule C - Notice Information Schedule D - Project Financing Schedule E - Cooperative Agreement between the Department of Interior Bureau of Reclamation, Canadian River Municipal Water Authority and Texas Water Development Board for the Lake Meredity Salinity Control Project of the Canadian River Project, Texas and New Mexico Home Rule City AGREEMENT FOR THE DESALINIZATION OF THE MUNICIPAL WATER SUPPLY This Agreement is made as of November 12 , 1998, between the CANADIAN RIVER MUNICIPAL WATER AUTHORITY, a conservation and reclamation district duly created and existing under the laws of the State of Texas (the "Authority") and the CITY OF LUBBOCK, Home Rule city and municipal corporation in the State of Texas acting by virtue of authority of its city charter and the laws of the State of Texas (the •City"). RECITALS: 1. The Authority provides the City all or a portion of its municipal water supply through the operation and maintenance of the Sanford Dam and Lake Meredith (the "Canadian River Project"). 2. The Canadian River Project was authorized by Act of Congress dated December 29, 1950 (64 Stat. 11240), and constructed pursuant to the Repayment Contract between the United States and the Canadian River Municipal Water Authority, Texas, dated November 28, 1960, and as subsequently amended (the "Repayment Contract"). 3. The Authority was created in 1953 by chapter 243, Acts of the 53rd Legislature, Regular Session, as amended, and such enabling legislation was formerly codified as article 8280-154 of Vernon's Texas Civil Statutes. 4. Due to natural sodium -chloride brine seeping into the Canadian River upstream from the Sanford Dam, the concentration of sodium, chlorides, and sulfates in Lake Meredith exceeds recommended secondary standards for drinking water supplies. Therefore, the United States Congress, through Title VIII of the Reclamation Project Authorization and Adjustment Act of 1992, authorized the United States Secretary of the Interior (a) to construct and test the Lake Meredith Salinity Control Project for the purposes of improving the quality of water by controlling the brine seepage to the Canadian River entering into Lake Meredith (the "Project") and (b) to enter into a contract with the Authority for the Department of the Interior Bureau of Reclamation to perform the design and construction management of the Project. 5. The Legislature of the State of Texas enacted House Bill No. 2131, Acts 70th Leg., R.S., ch. 251, 3080 (formerly Article 8280-154 Vernon's Texas Civil Statutes) to authorize the Authority to acquire, develop, construct, operate and maintain projects such as the Lake Meredith Salinity Control Project. 6. The Texas Water Development Board is authorized by House Bill No. 2131, Acts 70th Leg., R.S., ch. 251, 3080 (formerly Article 8280-154 Vernon's Texas Civil Statutes) and by the Texas Appropriations Act, Acts 73 Leg., R.S., ch 1051, p. 4868 (Item 6 to the Water Development Board appropriation for the fiscal year 1994-95 biennium) with such appropriation being carried forward in the Texas Appropriations Act, Acts 75 Leg., R.S., Ch. 1452, p. 6151 (Item 13), to participate in the Project by providing funds in an amount equal to the costs to be incurred by the United States. 7. The Authority, the Texas Water Development Board, and the Bureau of Reclamation have entered into the Cooperative Agreement, as defined below, providing for, among other matters, the construction of the Project, and the manner in which costs will be shared by the Authority, the Bureau of Reclamation, and the Texas Water Development Board. 8. A condition precedent to the construction of the Project is the execution of a contract between the Authority and each of its member cities to provide for the funding of the Authority's share of the costs of the Project. 9. The City desires to have the quality of its water supply improved to meet the secondary standards for drinking water supplies and desires to share in the construction costs of the Project and its maintenance, operation and replacement. 10. The City and the Authority are authorized to enter into this Agreement under various legislative authority, including, but not limited to chapter 243, Acts of the 53rd Legislature, Regular Session, as amended, section 791.026, Texas Government Code, section 402.012, Texas Local Government Code, and article 1113, TEx. REV. Civ. STAT. ANN. 11. The City and the Authority therefore desire to agree to (a) the terms of the City's payment of its share of the construction and development costs of the Project, (b) the City's payment of its share of the operation, maintenance and replacement costs of the Project, (c) the obligation of the Authority to maintain the Project, and (d) the other obligations and performances of the parties set forth herein. NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the parties agree as follows: K ARTICLE 1. PURPOSE 1.1 Purpose of Agreement. This Agreement is the agreement between the Authority and the City concerning the Project. The purpose of the Agreement is to set forth basic considerations and agreements concerning, inter alia, the financing, construction, and operation of the Project which will be imposed on the Authority and paid for by the Member Cities. 1.2 Obligations. The obligations imposed under this Agreement and the similar agreements with other Member Cities for financing and operating the Project are in addition to the contributions, if any, made by the Department of Interior Bureau of Reclamation and the Texas Water Development Board in accordance with the Cooperative Agreement. 1.3 Existing Contracts. (a) Each of the Member Cities has a water supply agreement ("Meredith Supply Agreement") with the Authority for water from the Canadian River Project. This agreement is separate and in addition to the Meredith Supply Agreement between the City and the Authority for the Canadian River Project. (b) The Authority and each of the Member Cities have entered into a contract to an agreement for the purchase and acquisition of a conjunctive use ground water ("Conjunctive Use Groundwater Agreement"). This Agreement is separate from the Conjunctive Use Groundwater Agreement between the City and the Authority. 1.4 Contract Payments. This Agreement establishes two payment obligations— the payments for Project Operation and Maintenance Costs, and the payments to fund the Project Construction Costs. ARTICLE 2. DEFINITIONS 2.1 Additional Bonds means the additional revenue bonds for the Project or Project Expansion which the Authority reserves the right to issue and deliver in the future as provided by this Agreement. 2.2 Agreement means this Agreement between the Canadian River Municipal Water Authority and the City of Lubbock, Texas for the Desalinization of the Municipal Water Supply, as it may hereafter be amended from time to time. 3 2.3 Authority means the Canadian River Municipal Water Authority, a conservation and reclamation district duly created and existing under the laws of the State of Texas. 2.4 Board means the Board of Directors of the Authority. 2.5 Bond Documents means this Agreement, the bond resolution or resolutions, and the indenture or indentures authorizing the issuance of the Revenue Bonds for the Project, and all amendments or supplements thereto. 2.6 Bond Reserve Fund means the fund established by the Board in accordance with Section 6.7 of this Agreement. 2.7 Canadian River Project means the project that includes the Sanford Dam and Lake Meredith as authorized by the Act of Congress dated December 29, 1950 (64 Stat. 1124). 2.8 City has the meaning ascribed to it in the introductory paragraph of this Agreement. 2.9 City's Share means thirty-seven and 58/1000 percent (37.058%). The City's Share shall at all times be equal to and may be adjusted from time to time to reflect the percentage of the City's water supply allocation from Lake Meredith as provided in the Water Supply Contract. 2.10 Construction Completion Date means the date, after the construction and testing of the Project, upon which the Authority or its designee has accepted responsibility for the operation, maintenance and replacement of the Project facilities in accordance with Section IV.D.2 of the Cooperative Agreement. 2.11 Construction Cost Payment Schedule means the schedule prepared by the Board in accordance with Article 4 of this Agreement. 2.12 Construction Fund means the fund established by the Board in accordance with Section 6.5 of this Agreement. 2.13 Cooperative Agreement means the Cooperative Agreement between the Department of Interior Bureau of Reclamation, Canadian River Municipal River Water Authority and Texas Water Development Board for the Lake Meredith Salinity Control Project of the Canadian River Project, Texas and New Mexico, as it may hereafter be from time to time amended, a copy of which is attached as Schedule E. 4 2.14 Desalinization Agreements mean the agreements, in form and substance substantially identical to this Agreement, entered into between the Canadian River Municipal Water Authority and the respective Member Cities, for the Desalinization of the Municipal Water Supply. 2.15 Effective Date means the date upon which the Authority notifies the Bureau of Reclamation and the Member Cities that a Desalinization Agreement has been entered into between each Member City and the Authority, which shall be evidenced by written notice to each Member City. 2.16 Financing Costs means the costs associated with the issuance of the Revenue Bonds, including but not limited to the cost of funding the Reserve Fund, rating agency fees, bond insurance premiums, underwriters discount, original issue discount, printing, professional services associated with the Revenue Bonds, and cost of the validation lawsuits. 2.17 Fiscal Year means from October 1 through September 30 of the following calendar year, or any other period subsequently designated by the Board to be the fiscal year of the Authority. 2.18 General Manager means the General Manager of the Authority. 2.19 Interest and Sinking Fund means the fund established by the Board in accordance with Section 6.6 of this Agreement. 2.20 Member City means a city, town, or municipality which is a member of the Authority pursuant to Acts 53 d Leg., Ch. 243 (1953), as amended. 2.21 Meredith Supply Agreement means that certain Contract -between the Canadian River Municipal Water Authority and the City of Lubbock, Texas, for providing a Municipal Water Supply, dated January 9, 1961, a copy of which is attached as Schedule A. 2.22 Operation and Maintenance Cost Payment Schedule means the schedule prepared by the Board in accordance with Article 5 of this Agreement. 2.23 Parity Bond shall have the meaning as ascribed in Section 6.11. 2.24 Project means the Lake Meredith Salinity Control Project which is created for the purposes of improving the quality of water by controlling the brine seepage to the Canadian River entering into Lake Meredith. 5 2.25 Project Construction Costs means any and all costs and expenses whatsoever, of all kinds, of the Authority with respect to the acquisition, determination of the feasibility of, testing, or construction of the Project or the abandonment, sale, exchange, or other disposition of the Project for which the Authority is liable, incurred on or after the date hereof, including but not limited to, the Authority's share of costs arising under the Cooperative Agreement, all Financing Costs, labor, materials, equipment, engineering, legal fees, superintendence, administration, overhead, general expenses, acquisition of land, rights-of-way and other property rights, inspections, special services, National Environmental Policy Act compliance, property damages, insurance, costs of all licenses and permits; provided, however, to the extent a Member City participates in Project Construction Costs under Section 4.3, the Financing Costs of the Revenue Bonds shall not be included as Project Construction Costs for that Member City. Unless approved in writing by the City and each of the other Member Cities, Project Construction Costs may not exceed $4,125,000 (representing approximately $3,600,000 in project costs and $525,000 in Financing Costs). 2.26 Project Expansion means the construction of additional well fields, collection and injection facilities. 2.27 Project Operation and Maintenance Costs means the reasonable and necessary expenses incurred in the efficient and economical administration, management and operation and the maintenance of the Project in good repair and operating condition as provided in the Revised Manual. 2.28 Project Payments means the payments from each Member City (other than the City) under its respective Desalinization Agreement and from the City under this Agreement. 2.29 Project Payment Fund means the fund established by the Board in accordance with Section 6.4 of this Agreement. 2.30 Requisition means an invoice, statement, or progress payment request submitted to the Authority for payment as a part of the Project Construction Costs. 2.31 Revenue Bonds means bonds to be issued by the Authority to pay Project Construction Costs, whether in one or more issues, including Parity Bonds, such bonds to be secured by a lien on and pledge of Project Payments and any bonds issued to refund any revenue bonds or to refund any such refunding bonds. 2.32 Revenue Bond Funding Date means the date the Revenue Bonds are delivered to the initial purchasers of the Revenue Bonds. C. 2.33 Revised Manual means the current version of the Canadian River Municipal Water Authority Manual, as amended from time to time by the unanimous vote of the Board. 2.34 Rule means United States Securities and Exchange Commission Rule 15c2- 12, as amended. 2.35 Unallocated and Unpledged Balance means the balance of funds determined by the Board according to Article 6 of this Agreement. 2.36 United States or Bureau of Reclamation means the United States of America acting through the Department of the Interior, Bureau of Reclamation. 2.37 Year means the period January 1 through the next following December 31 unless otherwise indicated by the text. ARTICLE 3. TERM OF AGREEMENT 3.1 The term of this Agreement is, unless sooner terminated in accordance with the provisions hereof, for the period beginning on the Effective Date of this Agreement and continuing until the latter to occur of (a) the date on which the Revenue Bonds are fully paid; or (b) the date certified to the City by the Authority that there are no obligations remaining to be fulfilled by any party to the Cooperative Agreement, or (c) the date that the Project is terminated or abandoned by the Authority, as provided in Section 4.5. The Project shall not be deemed terminated or abandoned by the Authority unless the Board has finally terminated, with no intention to resume, the construction, development, operation, or maintenance of the Project or any part thereof, and has notified the Member Cities that the Authority has no further financial, maintenance, operational or other material obligations with respect to the Project or with respect to any Revenue Bonds. ARTICLE 4. CITY'S PAYMENT OF ITS SHARE OF PROJECT CONSTRUCTION COSTS 4.1 Construction Repayment Obligation. In consideration for the ability to participate in the Project to improve quality of water it receives from the Authority from Lake Meredith to result from the implementation of the Project, the City shall pay to the Authority the City's Share of Project Construction Costs. 4.2 Payment of Project Construction Costs. The Authority anticipates issuing Revenue Bonds to pay for the construction of the Project that will be payable from and secured by the Project Payments from Member Cities pursuant to this Agreement. Payment of the City's Share of Project Construction Costs will be made to the Authority in 7 accordance with the applicable Construction Cost Payment Schedules for each series of Revenue Bonds established from time to time by the General Manager. Such Construction Cost Payment Schedule shall correspond to the debt service schedules for the Revenue Bonds issued to fund any portion of the Project Construction Costs. All payments will be made in such manner to provide the Authority with immediately available funds on the due date for such payment. 4.3 City's Option to Pay Construction Cost Payment Without Providing - Payment of the Authority's Revenue Bonds. Rather than committing to make monthly payments of the City's Share of Project Construction Costs for the Authority's Revenue Bonds, a Member City shall have the option to independently fund all or a portion of its own City's Share of the Project Construction Costs for any series of Revenue Bonds. In order to exercise this option, the City must notify the Authority of its intent to provide such funding so as not to participate in the payment of all or a portion of its City's Share of Project Construction Costs attributable to such series of the Authority's Revenue Bonds. Such notification must occur on or before thirty (30) days after the Authority notifies the City of its intention to issue Revenue Bonds as provided in Section 6.1. (a) The City, if it gives such notice, shall arrange for the payment of all or a portion of the City's Share of Project Construction Costs which it will fund separately from the Revenue Bonds. The City shall deposit, in the time and manner provided below, the City's Share of Project Construction Costs which it desires to independently fund in an escrow account, pursuant to an escrow agreement, in a state or national bank with trust powers having a combined capital, surplus and undivided profits of at least $75,000,000, that will be for the exclusive benefit of making the City's payment to the Authority for the payment of the City's Share of Project Construction Costs. The Authority shall have the right to approve and accept the form and provisions of the escrow agreement. The City and the Authority shall resolve any problem with the form and provisions of the escrow agreement to their mutual satisfaction. The City shall certify that it has unencumbered available funds to make its deposit into escrow according to the following schedule: (1) For the first series of Revenue Bonds issued under this Agreement, the City shall make its certification within thirty (30) days after the receipt of notice provided in Section 6.1 and (2) for any subsequent series of Revenue Bonds the City shall make its certification within one hundred twenty (120) days after the receipt of notice provided in Section 6.1. If the City having given notice, fails to make its certification and provide for firm banking arrangements to create an escrow fund for the full payment of all or a portion of the City's Share of Project Construction Costs, the Authority shall notify the City that it is proceeding to issue the Revenue Bonds for an amount that includes all of the City's Share of the Project Construction Costs. Thereafter, the Authority may issue its Revenue Bonds in an amount that includes all of the City's Share of the Project Construction Costs, and the City agrees that it will be responsible for the payment on the same basis as if it had never given notice that it intended to provide independent funding for its own City's Share of the Project Construction Costs. 3 (b) Within 15 days following receipt of the notification that the City has certified the availability of funds to place in escrow under Section 4.3(a) of this Agreement, the Authority shall calculate the City's Share of the Project Construction Costs remaining, if any (the "Remaining Project Cost Percentage"), which percentage shall be attributable to costs associated with the issuance of Revenue Bonds. The Authority shall notify City of its Remaining Project Cost Percentage, if any. Such Remaining Project Cost Percentage shall be calculated by reducing the portion of the total Project Construction Costs attributable to the City by the amount of funds to be deposited in escrow pursuant to Section 4.3(a) hereof (the "Remaining Project Cost Amount"). The Remaining Project Cost Amount shall be divided by the total Project Construction Cost to determine the Remaining Project Cost Percentage. (c) If the City does timely give notice and makes its certification of available funds pursuant to section 4.3(a), the Authority shall then reduce the amount of the Revenue Bonds to be issued to account for the City's escrow of the City's Share of Project Construction Costs and proceed to issue the Revenue Bonds. The City shall then place the funds in the escrow account no later than five work days prior to the date of the Revenue Bond Funding Date. The Authority shall notify the City of the Revenue Bond Funding Date on or about the time the contract for the purchase of the Revenue Bonds is approved by the Board. (d) If the City elects to fund all or a portion of the City's Share of Project Construction Costs by depositing funds in an escrow account, the City shall be entitled to manage the account by making short term investments as authorized by the City's investment policy and to retain the interest earned on such account. The City shall not be entitled to interest on money transferred to the Construction Fund Payment Subaccount. (e) To the extent that the City funds all of the City's Share of Project Construction Costs by depositing funds in an escrow account pursuant to this Article 4, the City shall have no liability for any of the Financing Costs, and any obligations associated with financing by Revenue Bonds, including, but not limited to, those described in Sections 4.2, 4.4, 4.5, 8.1, 8.8 and Article 6 shall not apply to the City. 4.4 Construction Cost Payments Due for Revenue Bonds and Payments from Escrow Accounts. (a) If the Authority issues Revenue Bonds to construct the Project, the Authority for each series of Revenue Bonds shall provide to each Member City a debt service schedule reflecting the total annual debt service on the Revenue Bonds prior to the Revenue Bond Funding Date. The debt service schedule will also reflect the City's Share of Project Construction Costs being funded by the issuance of the Revenue Bonds, the calculation being based on the Project Construction Costs. Unless the City has paid P7 its City's Share of the Project Construction Costs into escrow pursuant to Section 4.3(a) above, the City shall pay to the Authority, no later than the first day of each month after the closing on the Revenue Bonds (the "Revenue Bond Funding Date"), the City's share of the annual debt service for the Revenue Bonds in accordance with the debt service schedule provided by the Authority without further notice or billing from the Authority. (b) The Authority shall also prepare and provide to each Member City prior to the Revenue Bond Funding Date a Construction Cost Payment Schedule that indicates the estimated schedule for the expenditures to be made throughout the Construction of the Project for each series of Revenue Bonds. Such schedule shall be updated, as necessary, and provided to each Member City. (c) As the Authority receives a Requisition for Project Construction Costs, the Authority shall transfer from the Construction Fund into a subaccount of the Construction Fund (the "Construction Fund Payment Subaccount") the amount necessary to fund the share of such Requisitions payable from the proceeds of the Revenue Bonds, and shall also make a draw on any escrow account for such share of the Requisition that is attributable to that escrow account. (d) If the City has paid funds into escrow pursuant to Section 4.3(a), then the City must arrange to transfer that portion of the City's Share of Project Construction Costs necessary to pay a Requisition referenced in Section 4.4(c) to the Construction Fund Payment Subaccount The Authority shall provide to each Member City that has paid funds into escrow, documentation for such payment. For items that do not relate to the actual construction which require an engineer's certification, the Authority shall submit the Requisition with the Authority's calculation of the City's Share. For construction items, the Authority shall submit a copy of the Requisition, a certification by the Project engineer as to the accuracy of the Requisition and compliance with the plans and specifications for. construction, and the Authority's calculation of the City's Share of the Requisition. The City shall have 15 days to review the Requisition and the accompanying documentation to check the calculations and the engineers certification. Unless the City finds a discrepancy in the Requisition and accompanying documentation during the 15 day review period, the City shall immediately transfer its share of such Requisition from the escrow account into the Construction Fund Payment Subaccount. Should the City find a discrepancy in the Requisition and accompanying documentation, it shall immediately notify the General Manager of the Authority and both the City and the Authority agree to cooperate to resolve the problem prior to release of the funds from the escrow account. (e) The Authority shall not release a payment for a Requisition from the Construction Fund Payment Subaccount unless the amount related thereto and required both from the Revenue Bond financing and the escrow account or accounts have been placed in the Construction Fund Payment Subaccount. 10 (f) The parties understand and agree that, because of the nature of the Project, it is necessary that each debt service installment be made. Therefore, in the event of the failure or inability of a Member City to make its proportionate share of the debt service payments on Revenue Bonds, the Board may, for each year of nonpayment, establish an increased proportionate share of debt service for the other Member Cities that are participating in the Project through the particular series of Revenue Bonds related to the nonpayment, and increase each participating Member City's proportionate share of debt service (provided the City was not the Member City with the failure or inability to pay or a Member City that is participating in the financing solely through the escrow payment authorized in Section .4.3(a)) for the particular series of Revenue Bonds related to the nonpayment to prevent a default on such series of Revenue Bonds. The share of debt service of the non-paying Member City shall be apportioned and allocated among the other participating Member Cities obligated for the payment of said series of Revenue Bonds according each Member City's Share of Project Construction Costs at the time the allocation is made. If requested by the City, the Authority agrees to pursue collection of any delinquent payments from a Member City which is in default under this Agreement, including litigation to recover any payments that are in default and to compel performance under the contract for payments by the defaulting Member City. Any recovery of such amounts that have been paid by the nondefaulting Member Cities that are participating in the Project through the particular series of Revenue Bonds related to the nonpayment will be credited back to those Member Cities which made the payments in proportion to the amount paid. If such amounts are not capable of being credited back, the defaulting Member City's allocation of the Meredith Water Supply will be reduced and credited proportionately to those Member Cities that have paid the non-paying Member City's share that are not in default under this Agreement. Notwithstanding anything to the contrary herein, a Member City that is participating in the Project solely through the escrow deposit provided for in Section 4.3(a) shall not, in any circumstance, be required to assume a part of the debt service attributable to the non-paying Member City. A Member City that is participating in the Project solely through the escrow deposit method may elect to participate in assuming its proportionate share of the non-paying Member City's share of debt service. 4.5 Termination of Project. (a) If the construction of the Project is terminated or abandoned, the City shall continue to pay timely to the Authority the City's Share of Project Construction Costs and the City's portion of Project Operation and Maintenance Costs incurred by the Authority or obligated to be paid by the Authoritv at such time and in such manner as will permit the Authority to meet its obligations and to otherwise fulfill its obligations and liabilities with respect to the Project, including without limitation, any obligations under any Revenue Bonds. 11 (b) The Project may not be terminated unless written notice is given to each Member City thirty (30) days prior to a meeting when the issue of termination of the Project is on the agenda, and three-fourths of the Members of the Board of the Authority vote to terminate the Project. 4.6 Advances by the Authority. The Cooperative Agreement provides that the Authority may advance funds to the Bureau of Reclamation to cover costs for which the Bureau of Reclamation is liable with respect to the Project. The Authority may, in its discretion, advance such funds to the Bureau of Reclamation. Any such amounts advanced by the Authority to the Bureau of Reclamation shall be deemed Project Construction Costs for the purposes of this Agreement, and may be included in the Project Construction Cost Payment Schedules described in Section 4.2 of this Agreement. With respect to advances made to it with funds received from the Cities pursuant to this Agreement, upon receipt of reimbursement by the Bureau of Reclamation for any such advances, the Authority shall apply the amounts received from the Bureau of Reclamation to the Project Construction Cost Payment obligations of any and all of the Member Cities which provided the funds for such advances in accordance with their Percentage Shares, as prepayments under Section 4.2 of this Agreement. If advances were made from Authority funds, the Authority may reimburse itself from the Bureau of Reclamation reimbursement. ARTICLE 5. OPERATION AND MAINTENANCE COSTS 5.1 City agrees to pay City's portion of the Project Operation and Maintenance Costs. 5.2 Project Operation and Maintenance Costs shall be established based on the cost of providing service to each Member City, as described in the Canadian River Municipal Water Authority Manual ("Revised Manual"), a copy of which is attached as Schedule B, as such manual may be revised from time to time by unanimous action of the Board. 5.3 At an appropriate meeting in each calendar year, in no event, however, to be later than July 15, the Board of Directors of the Authority shall determine the total charges estimated to be required for operation and maintenance of the Project including accumulating the necessary reserve funds for the next ensuing fiscal year. A detailed budget, including the Operation and Maintenance Cost Payment Schedule, shall be made available to the City at least two weeks prior to the Board meeting for review and comment. 5.4 Payment of all operation and maintenance charges due from the City shall be made by the City to the Authority on such dates and in such amounts as are designated by the Authority to provide it with funds when needed, as determined by the Authority. Whenever collections from all sources are insufficient to defray Project Operation and 12 Maintenance Costs, proportionate additional payments may be required through supplemental notice to the City at least sixty (60) days in advance of the effective date of the change. Such notice shall set forth the justification for the increase in full detail. ARTICLE 6. FINANCING ARRANGEMENTS 6.1 Issuance of Revenue Bonds. (a) Except for the first series of Revenue Bonds issued under this Agreement, the Authority shall determine and provide each Member City, not less than one hundred twenty (120) days prior to proposed issuance of any Revenue Bonds, a notice of the projected Project Construction Costs, the amount of Project Construction Costs that will be included in the proceeds of the Revenue Bonds, the principal amount of Revenue Bonds to be issued and each City's Share of Project Construction Costs. The Authority shall be required to provide not less than forty-five (45) days' notice to each Member City prior to the issuance of the first series of Revenue Bonds under this Agreement. (b) The Authority may, but is not required to, file a bond validation suit under article 717m-1, TEx. REV. Civ. STAT. ANN. prior to issuing its Revenue Bonds under this Agreement. (c) If and at such time as the Revenue Bonds have been issued, all Project Construction Costs, including Project Construction Costs incurred prior to the issuance of the Revenue Bonds, shall be paid from the proceeds of the Revenue Bonds and escrow funds established pursuant to Section 4.3, to the extent permitted by state and federal law. (d) The Authority agrees to use reasonable efforts to issue, sell and deliver the Revenue Bonds at the earliest practicable time and in an amount sufficient to pay all Project Construction Costs. 6.2 Revenue Bond Proceeds. The Authority agrees that all proceeds received from the sale of the Revenue Bonds, if any, as well as all other moneys and payments paid by the City to the Authority pursuant to this Agreement, shall be applied solely in the manner and for the purposes specified in this Agreement and the Bond Documents. 6.3 Establishment of Funds and Flow of Funds. For each series of Revenue Bonds equally and ratably secured from the same source of Project Payments from the same group of Member Cities, the following special funds shall be established and maintained by the Authority at an official depository bank of the Authority as provided in the Bond Documents, and must be kept separate and apart from all other funds and accounts of the Authority, including other issues of Revenue Bonds (except for Parity Bonds) issued under the Agreement; and shall be secured in accordance with the Laws 13 of the State of Texas so long as any of the Revenue Bonds or any additional obligations or interest thereon are outstanding and unpaid: Project Payment Fund Construction Fund Interest and Sinking Fund Bond Reserve Fund 6.4 Project Payment Fund. (a) The Authority shall establish a Project Payment Fund for each series of Revenue Bonds issued under this Agreement. (b) All payments from the Member Cities to the Authority under the Desalinization Agreements with the Member Cities, except for payments under an escrow agreement as provided for in Section 4.3 or payments for Project Operation and Maintenance Costs, as received, are to be deposited in the Project Payment Fund for the particular series of Revenue Bonds. All money in the Project Payment Fund shall be applied as hereinafter provided. (c) The money in each Project Payment Fund is to be used by the Board to pay the debt service on the Revenue Bonds for which such fund was established and to make deposits or payments required for the reserve funds or special accounts as provided herein for the particular series of Revenue Bonds. 6.5 Construction Fund. Concurrently with the delivery of each series of Revenue Bonds to the initial purchasers thereof, the Authority shall establish a Construction Fund to be funded from a portion of the proceeds of the sale of the Revenue Bonds. A subaccount of the Construction Fund, the Construction Fund Payment Subaccount, shall be established for payments of Requisitions. The Construction Fund Payment Subaccount shall be funded with (1) money from escrow accounts of Member Cities which are established pursuant to Section 4.3, and (2) a transfer of bond proceeds from the Construction Fund. Such payments into the Construction Fund Payment Subaccount shall be limited to the prorata portion of such Requisition to be paid from proceeds of the Revenue Bonds and the escrow accounts established pursuant to Section 4.3. All Project Construction Costs, including those incurred prior to the establishment of the Construction Fund, shall be paid from the Construction Fund. Any amount remaining in this fund after the Construction Completion Date is to be transferred to the Interest and Sinking Fund, except that the prorata amount attributable to any excess payment by a Member City making payments under an escrow agreement as provided for in Section 4.3 shall be returned to that Member City. 14 6.6 Interest and Sinking Fund. For each series of Revenue Bonds, the Authority shall establish an "Interest and Sinking Fund." The Authority shall deposit in the Interest and Sinking Fund the following: (a) such amounts, in substantially equal monthly installments, made on or before the fifth day of the month following the Revenue. Bond Funding Date and each month thereafter, as will be sufficient to pay the interest scheduled to come due on the Revenue Bonds on the next interest payment date; and (b) such amounts, in substantially equal monthly installments, made on or before the fifth day of the month following the Revenue Bond Funding Date and each month thereafter, as will be sufficient to pay the principal of the Revenue Bonds next due and payable. Except for Parity Bonds, the money deposited into the Interest and Sinking Fund for a particular series of Revenue Bonds shall be used only for principal and interest due on that series of Revenue Bonds. Money in each Interest and Sinking Fund shall be invested as provided in Section 6.9 of this Agreement, and interest earned on such investment is to be retained in the Interest and Sinking Fund for such series of Revenue Bonds. 6.7 Bond Reserve Fund. The Authority shall establish a "Bond Reserve Fund" for each series of Revenue Bonds on or before the Revenue Bond Funding Date. Concurrently with the delivery of the Revenue Bonds to the initial purchasers thereof, the Authority shall transfer to the Bond Reserve Fund for that series of Revenue Bonds an amount not to exceed the least of (i) ten percent of the par amount of the Revenue Bonds, (ii) the maximum annual principal and interest requirements on the Revenue Bonds, or (iii) 125 percent of the average annual principal and interest requirements on the Revenue Bonds from the proceeds of the sale of the Revenue Bonds; provided, however, the Bond Reserve Funds of Parity Bonds may be considered in the aggregate in meeting this requirement. Such amount shall never exceed the legally allowed amount permitted by Section 148(d) of the Internal Revenue Code of 1986, as amended. When and so long as the Bond Reserve Fund contains the legally authorized amount, no further payments need be made therein. But in the event it becomes necessary to withdraw money from the Bond Reserve Fund to prevent a default in the payment of principal of or interest on the Revenue Bonds, the Authority shall begin monthly transfers of funds from the Project Payment Fund into the Bond Reserve Fund on the fifth day of each month following the withdrawal from the Bond Reserve Fund at a rate, which in the judgment of the Board, will restore such fund to the required level within a reasonable period of time, such requirement to be specified in the resolution authorizing the issuance of the Revenue Bonds. Money in the Bond Reserve Fund is to be invested by the Board in the manner allowed by Section 6.9 of this Agreement. Interest earned on such investment must be deposited in the Interest and Sinking Fund for the particular series of Revenue Bonds; provided, however, if at any time, the Bond Reserve Fund contains less than the amount permitted under Section 148(d) of the Internal Revenue Code of 1986, as amended, 15 interest on such investment shall be retained in the Bond Reserve Fund until such time as this fund again becomes fully capitalized. The Bond Reserve Fund shall be used solely for the purpose of paying when due the principal of and/or interest on that particular series of Revenue Bonds (and Additional Bonds if issued as Parity Bonds) when and to the extent the amounts in the Interest and Sinking Fund are insufficient for such purpose, for defeasing outstanding Revenue Bonds (and Additional Bonds if issued as Parity Bonds) when excess funds are available resulting from a refunding, and for the purpose of finally retiring the last of the outstanding Revenue Bonds of that series (and Additional Bonds if issued as Parity Bonds). 6.8 Unallocated and Unpledged Balance. Within thirty (30) days after the close of each fiscal year after the fiscal year in which any Revenue Bonds are issued, the Board shall examine for each series of Revenue Bonds (or all series of Parity Bonds) the balances in the Project Payment Fund, the Interest and Sinking Fund, and the Bond Reserve Fund. If, on the last day of any such fiscal year, the Board is current in the making of deposits into the Interest and Sinking Fund and the Bond Reserve Fund for that particular series of Revenue Bonds, so that all deposits required under the Agreement have been made into the respective funds, and if there are no unpaid obligations against any of the respective funds, or in the event there are unpaid obligations if they are taken into account as indicated below, the Board will take the following actions with respect to the funds maintained for each series of Revenue Bonds that are similarly secured: (a) Ascertain the balance of funds in the Project Payment Fund for that particular series of Revenue Bonds; (b) Ascertain for that particular series of Revenue Bonds the total amount of unpaid obligations against: the Project Payment Fund, the Interest and Sinking Fund, and the Bond Reserve Fund (taking into account the special treatment afforded Parity Bonds) , including obligations which have been filed and those which have not been filed but, which in the opinion of the Board, will probably be filed; (c) Subtract item (b) from the sum from item (a). The remainder shall constitute the Unallocated and Unpledged Balance for that particular series of Revenue Bonds; (d) Transfer to the Interest and Sinking Fund for that particular series of Revenue Bonds such Unallocated and Unpledged Balance. 6.9 Investments. Any money held in the Project Payment Fund for each series of Revenue Bonds will be separately invested and reinvested in the following investments, as authorized by the Texas Public Funds Investment Act, Chapter 2256, Texas Government Code: (1) obligations of the United States or its agencies and EL= instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions or any state having been rated as to investment quality of not less than 'W or its equivalent; (5) certificates of deposits issued by state or national banks domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or are secured by obligations as permitted by Chapter 2256, Texas Government Code; (6) commercial paper payable in the United States of America, having original maturities of not more than 92 days that either is rated not less than A-1, P-1, or the equivalent by at least two nationally recognized credit rating agencies; or is rated at least A-1, P-1 , or the equivalent by at least one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state thereof; (7) prime domestic bankers' acceptances with a stated maturity of 270 days or less; or (8) fully collateralized repurchase agreements, as provided in Chapter 2256, Texas Government Code. Any money held in the Interest and Sinking Fund and the Bond Reserve Fund for each series of Revenue Bonds will be separately invested and reinvested by the Board in investments described in subsections (1), (2) or (5) of the preceding paragraph. Any investments will be held by or under the control of the Board and while so held will be deemed a part of the fund in which such money was originally held. The earnings accruing on such investments, including any profit realized, will be credited to such funds as provided for in this Agreement. The Authority in the resolution authorizing the issuance of the Revenue Bonds or any Additional Bonds will covenant to pay the required rebate to the United States on any excess earnings on its investments in accordance with Section 148(f) of the Internal Revenue Code of 1986, as amended. 6.10 Final Payment Notwithstanding anything to the contrary herein, whenever the total amount of funds in the Interest and Sinking Fund and the Bond Reserve Fund for a particular series of Revenue Bonds is equivalent to the aggregate principal and interest amount due and to become due on that series of Revenue Bonds (and Additional Bonds if Parity Bonds), no further payments need be made into the Interest and Sinking Fund or the Bond Reserve Fund securing that series of Revenue Bonds, and the obligations shall not be regarded as being outstanding except for the purpose of being paid with the funds on hand. Any amounts remaining in any of these funds after defeasance and payment of the particular series of Revenue Bonds (and any Additional Bonds issued as a parity with such bonds) may be transferred to the Project Payment Fund for that particular series of Revenue Bonds. 17 6.11 Additional Bonds. The Authority reserves the right to issue, on a parity or non -parity basis, further revenue obligations (the "Additional Bonds") payable from the Project Payments for the purpose of refunding Revenue Bonds or completing the Project or for a Project Expansion to the extent contemplated by this Agreement. Unless Additional Bonds expressly provide they have a junior lien position, Additional Bonds will have a first lien position on the Project Payments for such Bonds. (a) Parity Bonds. When issued as Parity Bonds in compliance with applicable law and the terms and conditions set forth in this Agreement and Bond Documents, if any, such Additional Bonds shall occupy an equal position with any previously issued Revenue Bonds that are secured by the same Project Payments from the same Member Cities. The Authority hereby covenants and agrees that no Additional Bonds will be issued on a parity basis with previously issued series of Revenue Bonds unless and until the following conditions have been met: (1) The Authority is not then in default as to any covenant, condition or obligation prescribed by this Agreement or the Bond Documents and that the Interest and Sinking Fund, and the Bond Reserve Fund contain the amounts then required to be on deposit therein; (2) The applicable laws of the State of Texas in force at such time and which provide permission and authority for the issuance of such Additional Bonds have been fully complied with; (3) The resolution authorizing such Additional Bonds shall contain provisions for increasing the Project Payments made in accordance with the Construction Cost Payment Schedule so that the monthly deposits to be made into the Interest and Sinking Fund will assure the availability of money on time for the purpose of paying the installments of interest and principal of such Additional Bonds; (4) The Additional Bonds are scheduled to mature only on the same interest payment dates as the Revenue Bonds, and the interest thereon is scheduled to be paid only on the same interest payment dates as the Revenue Bonds; (5) The calculation of average annual principal and interest requirements made pursuant to this section shall be made as of and from the date of the installment or series of Revenue Bonds then proposed to be issued; and (6) The resolution authorizing the issuance of such installment or series of Additional Bonds provides that the aggregate amount to be 18 accumulated and maintained in the Bond Reserve Fund shall be increased from bond proceeds of the Additional Bonds to an aggregate amount not less than the least of the average annual principal and interest requirements for the Revenue Bonds and the installment or series of Additional Bonds then proposed to be issued or the amounts stated in Section 2.25. (b) Non parity Basis. Unless the Additional Bonds are issued as Parity Bonds, such bonds shall be issued with the establishment of separate Project Payment Funds, Construction Funds, Interest and Sinking Funds, and Bond Reserve Funds which shall not be used except for the series of Revenue Bonds for which they were issued. Such Additional Bonds issued on a non -parity basis may not be issued unless (1) The Authority is not then in default as to any covenant, condition or obligation prescribed by this Agreement; (2) The applicable laws of the State of Texas in force at such time and which provide permission and authority for the issuance of such Additional Bonds have been fully complied with; and (3) The Additional Bonds are scheduled to mature only on the same interest payment dates as the other Revenue Bonds, and the interest thereon is scheduled to be paid only on the same interest payment dates as the other Revenue Bonds. (c) limitation on Revenue Bonds. The aggregate amount of Revenue Bonds issued under this Agreement (exclusive of refunding bonds) shall not exceed the amount specified in Section 2.25 unless written approval has been obtained from each of the Member Cities. ARTICLE 7. COVENANTS AND OBLIGATIONS OF THE AUTHORITY 7.1 Obligation to Complete Project. (a) The obligation of the Authority to contract for payment of the reimbursable costs of construction, operation, and maintenance of the Project shall be conditioned upon the execution of Desalinization Agreements with the Member Cities to produce revenues which, in the judgment of the Authority and participating Member Cities, will repay the costs of acquiring, constructing and operating the Project. If Desalinization Supply Agreements are not secured whereby such estimated costs of the Authority can be met, the Authority shall notify the City, whereupon this Agreement will be voided. 19 (b) Prior to the Bureau of Reclamation proceeding with construction of the Project, the Authority shall enter into Desalinization Agreements with each Member City. (c) The Authority agrees to proceed promptly and to the best of its ability for securing construction of the facilities necessary for the performance of its obligations hereunder and to negotiate all contracts necessary to finance the construction of the Project. It is understood that at this time the Authority is not in a position to guarantee the undertaking of the construction of the Project. The Authority shall not be liable to the City for any damages occasioned by any delay in the commencement of the desalinization project. 7.2 Operation of Project. The Authority shall exercise reasonable efforts to ensure that the Project is operated and maintained in accordance with applicable federal, state, and local laws. 7.3 Project Alterations and Repairs. It is expressly recognized by the City that the Authority may be compelled to make necessary alterations, repairs, and installations of new or additional equipment from time to time during the life of this Agreement. 7.4 Maintenance and Operation - Insurance. The Authority agrees that the Project will be maintained in good condition and that it will be operated in an efficient manner and at a reasonable cost. To the extent available and economically feasible, the Authority may maintain insurance or coverage through a governmental self-insurance pool for the benefit of the holders of the Revenue Bonds and of any Additional Bonds of the kinds and in the amounts, if any, which are normally provided for governmental projects of this type, and that during such time all policies of insurance or governmental pool coverages shall be maintained in force and effect and that payments will be made promptly when due. All moneys received from losses under such insurance policies or governmental pool coverages, other than public liability policies will be pledged as security for the Revenue Bonds and any Additional Bonds except for the prorata amount attributable to a Member City making payments under an escrow agreement as provided in Section 4.3, which shall be pledged as security for those payments, until and unless the proceeds are paid out in making good the loss or damage in respect of which such proceeds are received, either by replacing the property destroyed or repairing the property damaged. Adequate provision for making good such loss or damage is to be made within ninety days after the date of the loss. The payment of premiums for all insurance policies required are to be considered as Project Operation and Maintenance Costs. 7.5 Records and Accounts. (a) So long as any of the Revenue Bonds or any interest thereon remain outstanding and unpaid, the Authority will keep and maintain a proper and complete system of books, records and accounts pertaining to the acquisition, construction and 20 operation of the Project, separate and apart from all other records and accounts in which complete and correct entries shall be made of all transactions relating to the Project, and that the registered owner of any of the Revenue Bonds or any duly authorized agent or agents of such registered owner shall have the right at all reasonable times to inspect all such books, records, accounts and data relating thereto, and to inspect the properties comprising the Project. Within six (6) months following the close of each fiscal year, the Board will cause an audit of such books and accounts to be made by an independent certified public accountant, showing the receipts and disbursements for account of the Project for such fiscal year. Each such audit, shall in addition to any other items considered proper by the independent certified public accountant, particularly include the following: (1) a detailed statement of the income and expenditures for account of the Project for such fiscal year; (2) a balance sheet as of the end of such fiscal year; (3) the independent certified public accountant's comments regarding the manner in which the Board has carried out the requirements of this Agreement and Bond Documents, and his or her recommendations for any changes or improvements in the operation, records and accounts of the Project; and (4) a list of the insurance policies in force at the end of the fiscal year on the properties of the Project, setting out as to each policy the amount thereof, the risk covered, the name of the insurer, and the policy's expiration date. (b) For so long as the Project is in operation, the Authority will maintain a proper set of books, records and accounts pertaining to the operation of the Project which shall be available for inspection by the Member Cities. The original purchaser of the Revenue Bonds and any bondholder shall have the right to discuss with the accountant making the annual audit the contents thereof and to request such additional information as he may reasonably request. (c) Expenses incurred in making the audits above required shall be considered as Project Operation and Maintenance Costs and paid as such. 7.6 Defeasance. The Authority may provide for the defeasance of its Revenue Bonds in the Bond Documents. 7.7 Sale or Encumbrance of Properties. So long as any Revenue Bonds remain outstanding, the Authority shall not, except as otherwise prescribed herein or in the Bond Documents or as consented to by the holders of the Revenue Bonds, sell, or in any other manner dispose of any properties comprising the Project, including property acquired 21 later with the proceeds of Additional Bonds. Notwithstanding anything herein to the contrary, the Board may dispose of property which in its judgment has become inexpedient for use in connection with the Project. In the event of the disposition of any property under such circumstances, the proceeds from such sale shall be used to acquire other property suitable for use and needed by the Project or, if such sale occurs following the termination of the Project pursuant to Section 4.5 hereof, the proceeds of the sale will be disposed of as follows: (a) return the pro rata portion attributable to a Member City which were paid directly pursuant to Section 4.3, and (b) deposit the remainder to the credit of the appropriate Interest and Sinking Fund for the payment of the Revenue Bonds issued to pay all or a part of the property sold. 7.8 Board to Submit Information to Meet Continuing Disclosure Requirements. In order to meet the requirements imposed by United States Securities and Exchange Commission Rule 15c2-12, as amended (the "Rule"), if Revenue Bonds are issued and outstanding, the Authority shall provide annually to each Nationally Recognized Municipal Securities Information Repository ("NRMSIR") and the State Information Depository ("SID") for the State of Texas, within six months after the end of each fiscal year ending in or after 1996, financial information and operating data with respect to itself of the general type included in the final Official Statement. To the extent the City and the other Member Cities provide the requisite information, the Authority will provide such financial information and operating data with respect to the City and the other Member Cities of the general type included in the final Official Statement annually to each NRMSIR and the SID for the State of Texas, within six months after the end of each fiscal year ending in or after 1996. The obligation to make such reports will be for so long as the City or any of the Member Cities provide the information to the Authority and remain an "obligated person" as defined in Rule 15c2 -12(f)(10). The Authority, with respect to the Revenue Bonds, also agrees to notify the SID for the State- of Texas and either each NRMSIR or the Municipal Securities Rulemaking Board, in a timely manner, of any of the events listed in Rule 15c2-12(b)(5)(ii)(C), if such event is material within the meaning of the federal securities laws. This covenant is for the benefit of the City, the other Member Cities, and the holders of the Revenue Bonds and shall remain in effect for so long as the Authority remains an 'obligated person." 7.9 Reports and Inspections. The Board covenants that it will obtain or prepare progress reports in connection with acquisition of real property and construction as required by the Bureau of Reclamation. ARTICLES. COVENANTS AND OBLIGATIONS OF THE CITY 8.1 Rate Covenant. The City covenants that during the term of this Agreement and if and for so long as any Revenue Bond is outstanding after the term of this Agreement, it shall fix, maintain and collect uniform and nondiscriminatory charges for the 22 facilities and services afforded by its waterworks system as required by TEX. REV. Civ. STAT. ANN. art. 1113. 8.2 Additional Sources of Payments. The City may appropriate money from any lawfully available source for the purpose of relieving the necessity of increasing the rates and charges of its water service. 8.3 Compliance with Law. The City's obligations under this Agreement shall never be construed to constitute a debt of the City of such kind as to require it under the constitution and laws of the State of Texas to levy and collect a tax to discharge such obligation. 8.4 Authorization and Validity. The City represents and warrants that the execution, delivery and performance of this Agreement have been duly authorized by the City, that this Agreement has been duly executed and delivered by the City and constitutes a legal, valid and binding obligation of the City, enforceable against it in accordance with its terms. The City represents and warrants this Agreement does not exceed any constitutional or statutory limitations, and that provision will be made for all payments due hereunder by irrevocably pledging to the payment hereof sufficient revenues of the water works system of the City. The City warrants and guarantees that it has not obligated itself, and is not now bound by the issuance of prior bonds or otherwise in such a manner that prohibits or makes inoperative any of the terms, conditions or obligations herein provided. Neither the execution and performance of this Agreement, nor the consummation of the transactions contemplated hereby will (a) result in a violation or breach of any agreement or other instrument under which the City is bound or (b) violate any applicable law, ordinance or regulation, or any judgment or order of any court or governmental agency affecting the City. 8.5 Prior Obligations of City's Waterworks System. The City represents and covenants that the facilities and services to be obtained pursuant to this Agreement are essential and necessary to the operation of the City and its waterworks system, and that all payments made hereunder by it will constitute operating expenses of the City's waterworks system within the meaning of the provisions of all City ordinances and resolutions authorizing the issuance of the City's revenue bonds, payable from revenues of its waterworks system, with the effect that the City's obligation to make payments to the Authority from its waterworks system revenues under this Agreement shall have priority over its obligations to make payments of the principal and interest on any and all of such bonds. 8.6 Exclusive Agreement. Pursuant to section 791.026(b), Tex. Govt. Code, the City agrees that it will obtain all of its desalinization water treatment services as contemplated by this Agreement from the Authority. The City may obtain other water 23 treatment services which are not provided by the Authority under this Agreement from other sources. 8.7 City Obligation Not Separable. The City as a whole is obligated to pay to the Authority the charges becoming due by it and only it as provided in this Agreement, notwithstanding the default in the payment to the City by individual water users of charges fixed by the City. 8.8 City's Disclosure Agreement. The City acknowledges that if Revenue Bonds are issued, it will be "obligated person" as defined in Rule 15c2 -12(f)(10) of the Rules of the United States Securities and Exchange Commission. If Revenue Bonds are issued, the City appoints the Authority as its agent to file the financial information and operating data required by the Rule. The City agrees to provide to the Authority a copy of its annual audited financial statement and such other financial and operating information necessary for the Authority to comply with the continuing disclosure requirements under the Rule. The information for the annual report shall be provided no later than four months from the end of the City's fiscal year. This covenant is for the benefit of the Authority and the holders of the Revenue Bonds and shall remain in effect for so long as the City remains an "obligated person" as defined in Rule 15c2 -12(f)(10). Should the City fail to provide the requisite information to the Authority within the four month period after the end of its fiscal year, the City agrees that it will make its own filings to comply with the Rule within six months after the end of its fiscal year. ARTICLE 9. GENERAL PROVISIONS 9.1 Assignment of Agreement. This Agreement or the payment of performance obligations of the City hereunder, may be assigned by the Authority without the consent of the City only to a legislatively created or determined successor entity. The City may not assign all or any part of this Agreement without the prior written consent of the Authority, which consent shall not be unreasonably denied. 9.2 Inspection of Books and Records. Each party shall have the right, during normal office hours, to inspect and at its own expense to make copies of the other party's books and official records relating to matters covered by this Agreement. 9.3 Past Due Payments. A past due penalty of one-half of one percent (.5%) per month shall be charged on any amount owed under this Agreement which is not paid when due. 9.4 Default under Bond Documents. If at any time, the Authority has failed to perform any of its obligations under this Agreement (a) which are related to the Bond Documents or (b) which result in the occurrence of an event of default under the Bond 24 Documents, the Authority may obtain from the holder of the Revenue Bonds a consent to the Authority's failure to perform the obligation or a waiver of the event of default. The consent or the waiver of the holders of the Revenue Bonds will automatically cure an event of default under this Agreement resulting from the Authority's failure to perform the obligation and will relieve the Authority from performing the obligation to the holders of the Revenue Bonds. 9.5 Amendment. Subject to Section 9.9 and Section 9.12 of this Agreement, this Agreement may not be modified or amended without the mutual written agreement of the Authority and the City. 9.6 Subject to Authority Contract. This Agreement shall be subject to the terns, conditions, and provisions of a cooperative agreement between the Authority and the Bureau of Reclamation for constructing the Project, as amended or modified, and to all applicable state, federal and local government laws or regulations. 9.7 Notices. Each notice, request, demand, approval or other communication which may be or is required to be given under this Agreement shall be in writing and shall be deemed to have been properly given when delivered personally at the address set forth in Schedule C for the intended party during normal business hours at such address, when sent by facsimile or other electronic transmission to the respective facsimile transmission numbers of the parties set forth in Schedule C with the telephone confirmation of receipt, or when sent by recognized overnight courier or by United States registered or certified mail, return receipt requested, postage prepaid, addressed as provided in Schedule C. Notices shall be given to such other addressee or address, or both, or by way of such facsimile transmission number as the particular party may from time to time designate by written notice to the other parties hereto. Each notice, request, demand, approval or other communication made in accordance with this Section 9.7 shall be deemed given and received for all purposes of this Agreement as of three business days after the date of deposit thereof for mailing in a duly constituted United States post office or branch thereof, one business day after deposit with a recognized overnight courier service, or upon confirmation of receipt of any facsimile transmission. Notice given to a party hereto by any other method shall only be deemed to be given and received when actually received in writing by such party. 9.8 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Texas. 9.9 Further Action. The parties shall execute and deliver all documents, provide all information and take such action as may be reasonably necessary or appropriate to achieve the purposes of this Agreement or to assist the Authority in obtaining financing for the Project and related activities. The City specifically understands and agrees, in this respect, that the Authority may. in its discretion, obtain financing for all 25 or a part of the Project from one or more sources, including but not limited to the issuance of Revenue Bonds. The City shall, as reasonably requested, execute such documents and enter into such amendments to this Agreement as the Authority reasonably requests, in order to facilitate the issuance of Revenue Bonds or obtaining other financing for the Project and related activities. A description of any issue of Revenue Bonds, or other Project financing, shall be attached to this Agreement as Schedule D, as soon as practicable after arrangements for such financing activities are finalized. 9.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors, legal representatives, and permitted assigns. 9.11 Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. 9.12 Severability. In the event that any of the provisions, or portions thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the validity and enforceability of the remaining provisions, or portions thereof, shall not be affected thereby. The parties shall, if any portion of this Agreement is determined to be unenforceable or invalid, exercise their reasonable best efforts to negotiate an amendment to this Agreement which will evidence the original intent of the parties with respect to the invalid or illegal provision. 9.13 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition. 9.14 Defaults and Remedies. (a) An event of default shall occur when the City fails to pay all or any part of a payment to the Authority when due hereunder. (b) If the City fails to pay all or any part of a payment to the Authority when due, and such amount remains outstanding and unpaid for ninety (90) days, the Authority shall send notice to the City and all the other Member Cities of the failure of the City to make the payment. The City shall have ninety (90) days after the receipt of the notice to become current. Should the City fail to bring its account current within this time, an event of default occurs and the Authority may invoke Section 25 of the Water Supply Agreement. 26 (c) If an event of default occurs, the Parties may, in addition to any other rights or remedies provided herein or at law, exercise any or all of the following right and remedies: (i) The City stipulates that payment of the City's obligations hereunder is a ministerial duty. (ii) The Authority may terminate this Agreement. Such termination shall not relieve the City of its obligations under this Agreement. 9.15 Force Majeure. If by reason of force majeure, either party shall be rendered unable, wholly or in part, to carry out its obligations under this Agreement, and if such party gives notice and full particulars of such force majeure, in writing, to the other party within a reasonable time after occurrence of the event or cause relied on, the obligations of the party giving such notice (other than obligations for the payment of money), so far as they are affected by such force majeure, shall be suspended during the continuance of the inability then claimed, including a reasonable time for removal of the effect thereof. The term "force majeure" shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, orders of any kind of the Government of the United States, or any state, or any agency or political subdivision of the United States or any state, or any other civil or military authority, insurrections, riots, epidemics, landslides, lightening, earthquakes, fire, hurricanes, tornadoes, storms, floods, washouts, arrests, civil disturbances, explosions, breakage or accidents to machinery, transmission pipes or canals, shortages of labor, materials, supplies or transportation, or any other like cause not reasonably within the control of the party claiming such inability. The requirement that any force majeure shall be reasonably beyond the control of the party shall be deemed to be fulfilled even though the existing or impending strike, lockout or other industrial disturbance may not be settled but could have been settled by acceding to the demand of the opposing person or persons. The parties shall use their best efforts to remove the cause of any force majeure. 9.16 Counterparts. This Agreement may be exercised in counterparts. All counterparts together shall constitute one agreement binding on all the parties, notwith- standing that all parties are not signatories to the original or the same counterparts. 9.17 Descriptive Headings. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpreta- tion of this Agreement. 9.18 Construction of Agreement. The parties intend that this Agreement relate specifically to the Project, and constitutes an activity distinctly separate and apart from the Canadian River Project and the Conjunctive Use Groundwater Supply Agreement. The parties do not intend that this Agreement constitute an amendment or modification of the 27 Meredith Water Supply Contract or the Conjunctive Use Groundwater Supply Agreement. It is the further intention of the parties that this Agreement not be strictly construed against either party hereto, it being understood that this Agreement was negotiated, in good faith, by each party to this Agreement. 9.19 Non -Discrimination. In connection with the performance of work under this Agreement and in the provision of its water works services, the City agrees not to discriminate against any employee or applicant for employment because of race, religion, color or national origin. 9.20 Determinations. Where the terms of this Agreement provide for action to be based upon the opinion or determination of either party to this contract, whether or not stated to be conclusive, said terns shall not be construed as permitting such action to be predicated upon arbitrary, capricious, or unreasonable opinions or determinations. 9.21 Costs, Expenses and Legal Fees. Each party shall bear its own costs and expenses (including attorneys fees) except that each party hereto agrees, to the extent allowed by applicable law, to pay the costs and expenses, including reasonable attorneys fees, incurred by the other party in successfully (a) enforcing any of the terms of this Agreement or (b) proving that the other party breached any of the terms of this Agreement in any material respect. 9.22 Remedies. The remedies provided in this Agreement shall not be exclusive of any other rights or remedies available by one party against the other, either at law or in equity. M. AUTHORITY: ATTEST: CITY: ATTEST: kayt i Darnell, City Secretary APPROVED AS TO CONTENT: Terry Elle ook, Managing Director of Water Utilities APPROVED AS TO FORM: Anita Burgess, City Attorney CANADIAN RIVER MUNICIPAL WATER AUTHORITY By: g "'e, A "�<_ 29 QF�LUBqOCK SCHEDULE C Notice Information If to Authority: Canadian River Municipal Water Authority 1 mile west of City of Sanford on Water Authority Road (zip 79078) P.O. Box 99 (zip 79078) Sanford, Texas Attention: General Manager If to city.- City ity. City of Lubbock 162513 th Street (zip 79401) P. 0. Box 2000 (zip 79457-0001) Lubbock, Texas Attention: Mayor APPROVED: The United States of America i jSgd) Leon W. Hitt Title�Regional Direcf -3- i'l,� x Af CONTRACT between the CANADIAN RIVER MUNICIPAL WATER AUTHORITY and the CITY OF LUBBOCK, TEXAS for providing a • MUNICIPAL MATER SUPPLY TABLE OF COTI`1'ENTS ARTICLE SUBJECT PAGE Preamble------------------------------------------------ 1 Whereas Articles ---------------- ------ ------------------ 1 1 General Defintions------- ----------------------- -------- 1 2 P2an------------------ ---------------- ------------------- 2 3 Construction repayment obligation----------------------- 3 4 Operation and Maintenance Charges----------------------- 4 5 Water supply-------------------------------------------- 5 6 Water Shortages----------------------------------------- 6 7 Control of Water---------------------------------------- 6 8 Point of Delivery--------------------------------------- 6 9 Allocation of Aqueduct Capacity------------------------- 6 10 Obligation to Complete Project-------------------------- 7 11 Pledge of Contract-------------------------------------- 7 12 Project Alterations and Repairs------------------------ 7 13 Limitation on Financial Liability of City--------------- 8 14 Water Measurement--------------------------------------- 8 15 Contract Contingent Upon. Construction of Project-------- 8 16 Easements----------------------------------------------- 9 17 Certification------------------------------------------- 9. 18 Benefits Conditioned Upon Payment ------- 9 19 Term of Contract-----------------------=---------------- 9 20 Rates and Charges by the City--------------------------- 10 21 City Obligation not Separable--------------------------- 10 22 Access to Books and Records----------------------------- 13. 23 Determinations------------------------------------------ u 24 Penalty for Delinquent Payments------------------------- 11 25 Default------------------------------------------------- 32 26 Notices------------------------------------------------- 12 27 Subject to United States and Authority Contract--------- 12 28 Assignments by City------------------------------------- 12 29 Nondiscrimination in M ployment------------------------- 12 CONTRACT between the CANADIAN RIM MUNICIPAL WATER AUTHORITY and the CITY OF LUBBOCK, TEXAS for providing a MUNICIPAL WATER SUPPLY THIS CONTRACT made this day of between the CANADIAN RIMER bMICIPAWATER AV 0 , an au ri y duly created and existing under the laws of the State of Texas, and the CITY OF LUBBOCK, a municipal corporation in the State of Texas acting by virtue of authority of general law. WHEREAS, the Authority has contracted or is negotiating with - the United States for payment of the reimbursable costs of construction, operation, and maintenance of the project Works of the Canadian River Project, Texas, vhich project is designed to provide a municipal water supply for member cities of the Authority, and WHEREAS, the City desires to secure a municipal water supply from the Authority, and WHEREAS, construction of the project depends upon the negotiation of a sufficient number of contracts for. a municipal vater supply from the- project., heproject, and a number of water users within the boundaries of the Authority, and possibly others outside the Authority, must execute contracts to receive a share of the project water supply; NOW, THMUWQRE, in consideration of the mutual and dependent covenants herein contained, it is mutually agreed between the parties hereto as follows: GENERAL DEFINITIONS 1. Where used in this contract, a. United States - Shall mean the United States of America, seting through the Secretary of the Interior, or his duly authorised representative. 1 Lubbock, Texas b. Authority - Shall mean the Canadian River Municipal Water Authority, an authority duly created and existing under the laws of the State of Texas, acting through its Board of Directors. c. City - Shall mean the City of Lubbock, Texas. d. Member City - Shah mean a city, town, or nunicipality which is a member of the Authority and is contracting for project water. e. Dam and Reservoir - Shall refer to the Sanford Dam and Reservoir on the Canadian River used for storing and regulating project water, including all lands and rights of way. f. Project - Shall mean the Canadian River Project, Texas, as authorized by the Act of Congress dated December 29, 1950 (64 Stat. 1124). g. Project Water - Smallmean water available for use through the project works for municipal and industrial purposes. h. Project Water User - Sha31 refer to all member cities and other contractors, their successors and assigns, which have contracted with the Authority to receive a portion of the project water supply. I. Aqueduct - Shall mean the project system for transport - Ing stored water to the points of delivery established for the project, and includes all pipelines, conduits, pumping facilities and related works, and the land and rights of way for such works and facilities. J. Repayment Contract - Shall mean the contracts or contracts, between the Canadian River Municipal Water Authority and the United States of America for construction of the project. k. Normal. Water Supply - Shall mean the amount of water which studies indicate will normally be available from the project for delivery each calendar year. Allocations of water are based upon an estimate of 103,000 acre-feet (33:563 million gallons) to normally be available for release from the reservoir each year. 1. Year - Shall mean the period January 1 through the next following December 31. PLAN 2. This contract between the City, which owns and operates its water distribution system, and the Authority is for requiring the Authority to make available for delivery to and use by the City, all or part of the nnmicipal water supply to be used in or for the distributioa system of such City. This contract provides for payment solely out of the water system revenues of such City and all moneys herein required to be paid by the City shall constitute an operating expense of the City's water system, and the 2 Lubbock, Texas City shall fix and maintain rates and charges for services rendered by such water system as will be sufficient to pay the expenses thereof, including those contemplated by Articles 1109e, 11098 and 1113, Vernon's Texas Civil Statutes. CONSTRUCTION REPAYMENT OBLIGATION 3. In consideration of the allocation to it of 37.058 percent of the normal water supply from the project, or a like percentage of any lesser available supply, the City shall pay to the Authority 15.752 per- cent of the actual reimbursable cost of constructing the dam and reser- voir, and 50.975 percent of the actual cost of constructing the aqueduct all as determined by the United States. Such construction charge obli- gation shall be paid in fifty (50) successive annual installments as follows, based upon a total construction obligation allocation to the City of $37,548,x, plus interest during construction and interest on the unamortized balance thereof at the rate of 2.632 percent. FULL CAIENM:ANNUAL :FULL CALEEDMANNUAL :FULL CALF M: ANNUAL YEAR AFTER XONSTRUC-:YEAR AFTER :CONSTRUC-:YEAR AFTER :CONSTRUC- COMMCEMENT :TION :C01++ WCENENT :TION :C MCENT :TION OF SEMCE :SERVICE :OF SERVICE :SERVICE :OF SERVICE :SERVICE :CHAME :CDME :CHAFJ3E 1 952,400 18 1,587,E 35 1,634,600 2 990,100 19 1,619,100 36 1,634,600 3 1,028,500 20 1,634.600 37 1,635,ow 4 1,066,800 21 38 . 5 1,104,500 22 39 6 1,142,800 23 40 7 1,181,100 24 41 8 1,219,100 25 42 9 1,257,200 26 43 1,635,E 10 1,2953,000 27 44 1,635400 11 1,333,300 28 45 i 12 1,371,100 29 46 y 13 1,9,4 30 47 1,635,500 14 1,447,700 31 48 1,635:600 15 1,485,400 32 49 16 i,521,800 33 50 1,635,E 17 .1,555,7OO 34 Should construction costs payable by the Authority to the United States vary from $92,960,000, the amount upon which annual installments are established for repayment by the Authority, the amounts designated in the preceding table sha11 be adjusted, but not increased unless the City has executed an emendatory contract or contracts by which it agrees to pay an increased amount. The City may make additional payments on the construction repayment obligation at any time, whereupon appropriate adjustments in the schedule of future payments will be made. Under the 3 r All terms of the contract between the Authority and the United States, each annual installment due the United States shall become due and payable on or before October 1 of each year commencing with the year Inmediately following that in which a notice is given by the United States stating that the project is sufficiently complete to permit the initiation of water deliveries and water is available to serve member cities, if such notice is given prior to October 1, otherwise to commence in the second calendar year after such notice is given. 22e first annual construction repayment obligation payment by the City to the Authority shall become due and payable on or before September 1 of the same year in which the first installment is due and payable by the Authority to the United States. Subsequent installments shall become due consecutively on September 1 of each succeeding year. Payments shall be made on the basis of the above table until all project costs are finally determined by the United States and reported to the Authority at which time a revised schedule of payment shall be prepared based upon the same ratio of annual repayment as was used in preparing the above table. Payments thereafter shall conform with that table. If construction of the project works shall have been commenced, but is terminated prior to completion by reason of lack of Bunds or failure to secure the necessary amendatory contracts, then the City shall pay to the Authority its percentage share of the total amount theretofore incurred or obligated by the Authority at such time and in such manner as will permit the Authority to meet its obligation to the United States. OPERATION AND MAINMAM CHARGES 4. a. At an appropriatemeeting in each calendar year, in no event, however, to be later than November 1, the Board of Directors -of the Authority shall determine the total charges estimated to be required during the neat year for operation and maintenance of the project includ- ing accumulating the necessary reserve Hinds. A detailed budget shall be made available to the City at least two weeks prior to the Board tweeting for review and comment. b. The City shall pay its share of the total operation and maintenance charges required to deliver water to the City.. on the basis of the advance estimates prepared by the Authority. At the end of each year an adjustment will be made in the operation and maintenance charges to reconcile the charges with actual costs, reserve fund require- ments, and water uses: c. Payment of all operation and maintenance charges due from the City shall be made by the City to the Authority on such dates and in such amounts as are designated by the Authority to provide it with funds when needed, as determined by the Authority, provided that no installment shall be due and payable before the day upon which the project is sufficiently complete to permit diversion by the City of the supply of water allocated to it in this contract, or when the M Lubbock, Texas project works shall be deemed to have been completed withia the meaning Of the contract between the United States sad the Authority for con- structing and financing the project, all as set. forth in a prior written notice by the fuuthority to the City. Whenever collections from all sources are insufficient to defray Authority operation and maintenance expenses and payments, proportionate additional payments may be required through supplemental notice to the City at least sixty (60) days in advance of the effective date. Such notice shall set forth the justi- fication for the increase in full detail. WATER SMIPLY 5. a. Quantity - For and in consideration of the payments required to be made un�r�this contract, the Authority agrees to make 12,438 million gallons of untreated project grater available to the City for municipal and industrial use during each year of normal supply, which is the City's pro rata share of the project normal water supply. b. Allocations - Nothing in this contract shall be construed as restricting the right of the Authority to enter into firm contracts for delivery of the entire es#mated normal water supply of the project, provided, however, that all such contracts shall recognise the right and responsibility of project water users to share in the normal water supply in the ratio of their contract rights. During periods of scarcity when rationing is in the opinion of the Authority required., the allocation of a lesser volume than listed in Article 5a shall not affect the continuing obligation of the City to make the payments provided in this contract. c. Quality of water - Water delivered to the *City under this contract sball be as received from storage in the Sanford Reservoir. d. Unit of Measurement - The unit of measurements for water delivered hereunder shall be 1,000 gallons of water, U. S. Standard liquid measure. e. Allocated Water not Used - If the City does not use the total Wunt'of water to which it is entitled in any particular year, it shall not retain any carryover rights into succeeding years. f. Other Uses - It is understood that the Project is authorized for the purpose of irrigating land, delivering water for industrial and municipal use, controlling floods, providing recreation and fish and wildlife benefits, and controlling and catching silt. The supply to be available for City use and the price it pays for water may 5 Lubbock, Texas reflect Opportionment among these purposes or regulation of releases to coordinate all listed benefits. g. Surplus Water - All project water available for use in excess of the normal water supply, as determined by the Authority, is hereby defined as surplus water. Surplus water may be disposed of by the Authority for municipal and industrial purposes on such terms or at such rates as are established by it. 6. On account of drought or other causes beyond the reasonable control of the Authority, there may occur at times during any year a shortage in the quantity of water available for transmission to the City by the Authority pursuant to this contract. In no event shall any Liability accrue against the Authority, the United States, or any of their officers or employees for any damage, direct or indirect, arising out'of any such shortages. CONTROL OF WATER 7. Right and responsibility for the control of all waters of the project to the point or points of delivery shall, remain in the Authority or the United States.. Upon passing through the Authority's meter installed at the point or points of delivery, right and respon- sibility for the control of water shall pass to the City. • • • •11vialz• B. Deliveries of water to the City shall be made at one point on thg aqueduct system, which point shall be designated by the City in advance of construction. A location map or plat showing the proposed location of the aqueduct will be available for use by the City in selecting its point of delivery. Thereafter, the City may request that all or any part of its share of the project water supply be delivered at, the dam and reservoir, or may request deliveries at additional points on the'aqueduet where the City has reserved aqueduct capacity.' Upon approval of such request for a change in the point of delivery or for additional points of delivery, the cost of new connections as determined by the Authority shall be advanced by the City as provided in Article A. ALLOCATION OF AQUEDUCT CAPACITY . 9. In the event the combined demand of all water users at a given time for the delivery of water sha11 exceed the. carrying capacity of the aqueduct to the proposed point of diversion, deliveries to project water users will be made equitably on the basis that the maximum rate of delivery to each project water user will be in pro- portion to its share of the designed capacity of the aqueduct. When the carrying capacity of the aqueduct is taxed to its limit, the rate of delivery available for serving the City shall be at least 41.69 million gallons daily (64.50 cubic feet per second). The rate of P f—W delivery will be increased when possible without infringing upon the rights of others, giving consideration to the demands made by all project water users and the relative rights of each which remain unused for the year. The determination of availability of water fromi time to time, and quantity, shall be made by the Authority, whose determination shall be final. 10. The obligation of the Authority to contract for payment of the reimbursable costs of construction, operation, and maintenance of the project shall be conditioned upon the execution of contracts with sufficient water users to produce revenues Which, in the judgment of the Authority and the United States, will repay the costs of constructing' and operating the project water supply and distribution system. If con- tracts are not secured whereby such estimated costs of the Authority can be met, the Authority shall notify the City, whereupon this contract will be voided. PIMGE OF COIMACT 11. This contract, or the repayment obligations assumed by the City under it, may be pledged or assigned by the Authority to the United States as security for repayment of the Authority obligation for construction, operation, and maintenance of the project, but only together with other like contracts with all project water users covering the disposition of the major portion of the project normal water supply PROJECT AIS'ERATI(3NS AND REPAIRS 12. It is expressly recognised by the City that the Authority may be compelled to make necessary alterations, repairs, and installa, tions of nev or additional equipment from time to time during the life of this contract, and any suspension of delivery to the City due to such work shall not be cause for claim of damage on the part of the City. However, every, reasonable effort shall be .made by the Authority, to pro- vide the City with water in accordance with this contract. In cases of necessary suspension, the Authority shall give the City as much advance notice as is practicable, in no event to be less than fifteen (15) days, and set forth the estimated duration thereof. In the event any project facility instrumental in the delivery of water to the City is destroyed or damaged as the result of any cause, whether by force majeure or otherwise, so as to make deliveries of water requirements as herein specified impossible, the Authority steal]., to the extent of available resources, immediately proceed to restore said project. facilities. Each City assumes the responsibility for maintenance of its distribu- tion system from the point of connection with the aqueduct and agrees that its system shall be constructed and maintained to result in a miaitmm of waste. Should the Authority determine that any part of the City system is causing unreasonable waste, it shall notify the City, and upon failure of the City to remedy the situation, at its option the Authority may discontinue or limit deliveries until the condition complained of has been corrected. 7 All LIIDIITATION ON FINANCIAL LIABILITY OF CITY 13. The City is obligated under this contract to pay its Share of the costs of construction, operation, and maintenance of the project. Nothing herein shall be construed as prohibiting the Authority from making reasonable rate increases to cover expenses authorised by this contract. 14. a. water shallbe metered at the point or points of delivery. The Authority shall furnish, install, operate and maintain at its ovu expense at said delivery point a master meter of standard type for measuring properly the quantity of water delivered under this contract. Meters for more than one point of delivery requested by the City shall be furnished, installed, operated, and maintained by the Authority, with the cost of the meter and its installation to be paid by the City. The City may, at its option and expense, install, operate and maintain at said delivery points, a check meter or meters of standard type. The City shall have access to all such metering equipment at all reasonable times, but the reading, calibration, and adjustment of the Authority's master meter shall be done only by employees or agents of the Authority. The Authority shall keep a true record of all meter readings as transcribed frm'the reports of the Authority's employees or agents with respect thereto. Upon written request of the City, the Authority will give it such infor- mation as it may request from the Authority's journals; or record books -or permit the City to have access to the same in the office of the Authority during business hours. 1. b. The Authority shall calibrate its metering equipment as often as it considers necessary and at such times as the City may shoe reasonable evidence of error. If upon any test, the percentage of any inaccuracy thereof is found to be in excess of 2 percent, registration thereof shall be corrected for a period extending back to the time when such inaccuracy began if .such time is ascertainable, and if not, then for a period extending back one-half of the time elapsed since the last date of calibration, but in no event further back than a period of six months., In the event the City has provided no check meter with reference thereto and if for any reason any master meter is out of service or out of repair so that the amount of water delivered cannot be ascertained or computed, from the reading thereof, the wager delivered during the period such meter is out of service or out of repair shall be agreed upon by the parties thereto, by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculations, or by estimating the quantity of delivery by the deliveries made during preceding periods under similar conditions when the meter was registering accurately. CONTRACT CONTINGENT UPON CONSTBUCTION C' PROJECT 15. This contract shall not be valid and binding unless the repayment contract between the Authority and the United States is confirmed. mhe ALthority agrees to proceed promptly and to the best �-I 10/20/60 of its ability for securing construction of the facilities necessary for the performance of its obligations hereunder and to negotiate all contracts necessary to finance the construction of such facilities. It is understood that at this time the Authority is not in a position to guarantee the undertaking of the construction of the facilities or the date upon vhich it will be able to make the first delivery of water to the City. The Authority shall not be liable to the City for any damages occasioned *by any delay in the commencement of such service to the City. 16. The Authority is hereby granted the right to use any easements, right-of-way, or property held by the City for the purpose of making connections to the point or points of delivery and the placing of necessary equipment to carry out the Authority's obligation to deliver water to the City, including related operation and maintenance. CERTIFICATION 17. The City certifies and recites that the execution of this contract is duly authorized by lav and by a majority of the resident qualified electors owning taxable property in said City and vho have duly rendered the same for taxation, voting at an election held for that purpose within said City; that all acts, conditions, and things required to exist precedent to this contract, to render the same lawful and valid, have been properly done, and happened, and have been performed in regular and. due time, form and manner as required by the consitution and lava of the State of Texas, and that this contract does not exceed any constitutional or statutory limitations, and that provision will be made for all payments due hereunder by irrevocably pledging to the:pay- ment hereof sufficient revenues of the vaterworks system of. the City. The City warrants and guarantees that it has not obligated itself, and is not now bound by the issuance of prior bonds or otherwise in such a manner that prohibits or makes inoperative any of the terms, conditions, or obligations herein provided. BENEFITS CONDITION® UPON PAYMENT 18. Should any charges or payments required by the terms of this contract and levied against any water user be judicially determined to be irregular or void, or the City or its officers be enjoined or restrained from making or collecting any charges as provided for herein, such user shall have no right to any of the benefits of this contract and no water shall be made available from the project for such user. If it is judicially determined that the City is not authorized to accomplish collections necessary for the sale or distribution of water to meet its obligations under the contract, the Authority is hereby authorized to sell water direct to those using the City supply and apply net revenues therefrom to the credit of the City's account. 19. This contract shallbe effective on execution and shall continue until the construction repayment obligation is paid in full. P� Upon the expiration of said term the City shall have a vested right to renew said contract indefinitely at appropriate annual service charges so long as a water supply may be availablb and the City is current on its payments for water service. After the construction repayment obligation is paid, succeeding payments shallbe the estimated amounts which will be required to meet the City's proper share of the Authority's obligations. RATES AND CHARGES BY TR$ CM 20. a. City shall fix and collect such rates and charges for water and services to be supplied by its waterworks system as will make possible the prompt payment of all expenses of operating and maintaining its waterworks system, the making of all payments contracted hereunder, and the prompt payment of the principal and interest on all of its obligations payable framt the revenues of its waterworks system. The City may in its discretion, as permitted under laws at the time effective, appropriate money from any sources for the purpose of relieving the necessity of increasing the said rates and charges for water service. b. The Authority shall never have the right to demand payment by the City of any obligation assumed or imposed on it under and by virtue of this contract from funds raised or to be raised by taxation. The City's obligations under this contract shall never be construed to be a debt of the City of such kind as to require it under the Constitution and laws of the State of.Texas to levy and collect a tax to discharge such obligation, it being expressly understood by.the parties hereto that all payments due by the,City hereunder are to be made fromlwater revenues received by the City. c. The City represents and covenants that all payments to be made hereunder by it shall constitute Operating Expense, of its waterworks system as defined in Article 1113, Vernon's Texas Civil Statutes. A. Should the City fail to collect charges due from any water user, or should the City be prevented from collecting such charges by any judicial proceeding, or otherwise fail to collect them, no such water user shall receive water available under this contract. The Authority reserves the right without liability to refuse delivery of water to the City in the event the City fails to pay charges at the time and in the manner and amounts provided for in this contract. 21. The City as a whole is obligated to pay to the Authority the charges becoming due as provided in this contract, notwithstanding the default in the payment to the City by individualwater users of charges fired by the City. 10 All 22. Each party shall have the right, during office hours, to inspect and to make copies of the other party's books and official records relating to matters covered by this contract. DE'PEkiNQNUJONS 23- There the terms of this contract provide for action to be based upon the opinion or determination of either party to this contract, whether or not stated to be conclusive, said terms shall not be construed as permitting such action to be predicated upon arbitrary, capricious, or unreasonable opinions or determinations. 24. Every installment or charge required to be paid to the Authority under this contract which remains unpaid after it has become due and payable, shall be subject to a penalty of one-half of one percent per month from the date of delinquency. DEE'AUIM 25. rn the event the City shall fail to pay all, or any part of its obligations incurred under this contract, and such delinquency shall.Have continued for -.a period of not less than.,two-yearej, the, Authority may, at its option, in addition to all otber rights provided In this contract, exercise all or any of the following rights and remedies. a. The Authority may stipulate water rates to be charged by the City and the City shall conform its rates accordingly. b. The Authority may withhold all or any part of the normal water sulYply allocated to the City by this contract and malt sell or dispose of such part without obligation, responsibility, or liability for damages to the City and shall, apply the net revenue from said sales as a credit upon the obligation of the City to the Authority. c. The Authority may terminate this contract whereupon all rights thereunder accruing to the City shall cease and determine. Such termination, however, shall not relieve the City from its obliga- tion to pay all costs, charges, or s due and payable under this contract prior to the effective date of such termination. 11 Lubbock, Texas A11 rights of action for breach of this contract are reserved to the Authority or the United States. Nothing contained in this con- tract shall be construed as abridging, Limiting, or depriving the United. States or the Authority of any means of enforcing any remedy either at Lav or in equity for the breach of any provisions hereof which either party Would otherwise have. The waiver of a breach of any of the pro- visions of this contract shall not be deemed to be a Waiver of any pro- visions hereof, or of any other or subsequent breach of any provision hereof. 80TICES 26. Any notice authorised or required by this contract shall be deemed properly given, except Where otherwise herein specifically provided, if mailed postage prepaid to the office of the General Manager, Canadian River Municipal Water Authority, on behalf of the Authority, and to the Mayor of the City of Lubbock, at Lubbock, Texas, on behalf of the City. The designation of the person to be notified, or the address of such person, may be changed at any time by similar ngtice. 27. This contract shall be subject to the terms, conditions, and provisions of the repayment contract between the Authority and the United States for constructing and financing the project, as amended or modified. This contract cannot be amended or supplemented Without the advance written approval of a duly authorised representative of the . United States. The Authority may assign all or any part of its rights` or authority under.this contract to the United States._ ASSIGNMENTS BY CITY 28. The City may sell or assign this contract or any portion of its allocation of the right to receive project water only With the approval of the Authority and the United States. Under any assignment, It must be established to the Authority's satisfaction that the Water right may be transferred under Texas lav and the lasts of the United States for diversion as proposed. The -alternate user must enter a•con- tract or contracts satisfactory to the Authority and the United States. 29. a. In.0-onnection with the performance of work under this contract, the City agrees not to discriminate against any employee or applicant for employment because of race, religion, color or national origin. The aforesaid provision shall include, but not be limited to, the fol -loving: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprentice- ship. The City agrees to post hereafter in conspicuous places, avail- able for employees and applicants for employment, notices to be provided by the United States setting forth the provisions of the nondiscrimination clause. W Lubbock, Texas b. The City further agrees to insert the foregoing pro- vision in all subcontracts hereunder, except subcontractq for standard commercial supplies or rav materials. IN WITH SS WHEREOF, the parties hereto acting under authority of their respective governing boOies have caused this contract to be duly executed in several counterparts, each of Which shall constitute an original, all as of the day and year first above vritten. CANADIAN RIVER MUNICIPAL WATER By CITY OF LITRMK, TEXAS By CZwa C. Title iti'.'�YCite or L: ATTEST: City C I' of Urb!:cc!.-, Taxa: Approved as to Form: c 'eit l" City Attorney 13 I AMENEMM TO THE COMMACT BETWEEN THE CANADIAN RIVER MUNICIPAL WATER AUTHORITY AND TEE CITY OF LUBBOMS TEXAS This Agreement is made this the 26�h day 1969,1 between the CANADIAN RIVER MUNICIPAL NATER AUTHORITY.. an authority duly created and existing under the lave of the State of Texas, and the CITY OF LUBBOQt,1 TEnS a municipal corporation in the State of Texas. FOR AND IN CONSIDERATION of the mutual agreements and covenants, the parties hereto do hereby amend their contract dated the qday of `MM 19121_..o as follows: A. So that Article 1,1'se cticn.l, shall hereafter be as follows: "1.1 Year - shall mean the period January 1 through the next following December 31 unless otherwise Indicated by the text." B.. So that Article 4,1 sections a. and b. shall hereafter be as follows: "4.a. At an appropriate meeting in each calendar year, In no event, however, to be later than Avzust 1, the Board of Directors of the Authority shall determine the total charges estimated to be required for operation and maintenance of the project including accumulating the necessary reserve funds for the next ensuing budget year ccmarencing October 1 and ending the following September 30. A detailed budget shall be made available to the City at Least two weeks prior to the Board meeting for review and comment." "b. The City she" pay its share of they total operation and maintenance charges required to deliver water to the city, an the basis of the advance est3ma.tes prepared by the Authority. At the end of each budget year an adjustment will be made In the operation and maintenaace charges to reconcile the changes with actual costs, reserve fund requirements, and water uses." This AGR 1T shall not become effective until a similar agreement has beea executed by the Authority and each of the other member cities. Its *%==S VIBSFCWI,, the parties hereto acting under authority of their respective governing bodies, and with the prior approval of a duly authorized representative of the U%Ited States, have caused this contract to be duly executed in several conaterpartsi each of which shall constitute an original, all as of the day and year first above Written. YJ+ APPROVED AS TO FWi: /�� , City Attorney m 10004; ylk'1000T, Amended by action of the Board of Directors of CRMWA on October 8, 1997 CANADIAN RIVER MUNICIPAL WATER AUTHORITY MANUAL I. SCOPE AND APPLICABILITY: The respective cities' share of the total operation and maintenance charges as contemplated by the Meredith Supply Agreement and the Groundwater Supply Agreement between the Authority and the respective member cities, including the establishment of and maintenance of reserve funds, shall be allocated in accordance with this Manual. This Manual allocates the expenses for producing and delivering water to the Authority's member cities from the facilities of the Canadian River Project, as constructed for the Authority by the Bureau of Reclamation in accordance with Contract No. 1406-500-465 and such supplements and amendments thereto as have been executed prior to the date of approval of this Manual, from the facilities of the Conjunctive -Use Groundwater Supply Project, to be constructed in accordance with 'the Groundwater Supply Agreements, and to the facilities of the Lake Meredith Salinity Control Project to be constructed in accordance with the Desalinization Agreements, and shall apply to all expenses payable under Article 4 of the Meredith Supply Agreements, Article 5 of the Groundwater Supply Agreements between the Authority and its member cities and Article 5 of the Desalinization Agreements between the Authority and its member cities. Such expenses for production and delivery shall include only those costs and expenses reasonably related to the fulfillment of the Authority's contractual obligation to the cities and to the United States, and shall include no other costs or expenses. Rates and charges applicable to any programs, functions, or operations, not covered under contracts in effect as of the date of approval of this Manual are to be established and determined by the Board of Directors of the Authority prior to the initiation of such future activities. Nothing in this Manual shall be construed as affecting in any way the Construction Repayment Obligations of each member city, as provided for in the City/Authority contracts. Amended by action of the Board of Directors of CRMWA on October S, 1997 II. DEFINITIONS: The following definitions shall apply in all cases where the defined terms are used in this Manual: A. "Pumping and Chemical Costs' shall mean the following specific costs: 1. The direct cost of energy or motive power required for the pumping of water from wells in the well field or fields and for the pumping of water through the Aqueduct system. 2. The direct cost of chemicals required for the efficient operation of the Aqueduct system. 3. Contributions to the Pumping and Chemical Reserve Fund, as described in Section 111-13 hereof and to the Well and Well Pump Reserve Fund, as described in Section 111-C hereof. B. "General Operation and Maintenance Costs' shall mean all costs covered by this Manual other than "Pumping and Chemical Costs". C. "Lake Water Supply Allocation" shall mean that percentage share of the normal water supply allocated to each member city by the terms of Paragraph 3 of the -Meredith Supply Agreement. D. "Groundwater Supply Allocation' shall mean that percentage share of the. normal water supply allocated to each member city by the terms of Article 6.1 of the Groundwater Supply Agreement. E. "Cost Accounting System' shall mean a system of accounting to determine the cost of delivery of water to each member city, through the Aqueduct systems as constructed to deliver water to the member cities of the Authority. The Cost Accounting System described in Appendix A shall be used for this purpose, as more fully described therein and in Section IV of this Manual. Page 2 Amended by action of the Board of Directors of CRMWA on October 8, 1997 F. All other terms used herein shall have the meaning ascribed to them in the Meredith Supply Agreements, the Groundwater Supply Agreements, and the Desalinization Agreements between the Canadian River Municipal Water Authority and each of the respective member cities. G. `Meredith Supply Agreements° shall mean the contracts between each member city and the Authority fbr providing a municipal water supply from Lake Meredith and the facilities of the Canadian River Project, as entered in 1960 and 1961. H. `Ground Water Supply Agreements' shall mean those contracts between the Authority and each member city for Conjunctive Use Groundwater Supply, providing for the acquisition of an underground water supply by the Authority and the provision of water from that source of supply to the member cities for conjunctive use with water from Lake Meredith, as entered in 1996. 1. `Desalinization Agreements" shall mean those contracts between the Authority and each member city for Desalinization of the Municipal Water Supply for construction, operation and maintenance of the Lake Meredith Salinity Control Project for the purpose of improving the quality of Water by controlling the brine seepage to the Canadian River entering Lake Meredith, as entered in 1997 and/or 1998. Page 3 Amended by action of the Board of Directors of CRMWA on October 8, 1997 III. COMPUTATION OF ASSESSMENTS FOR PUMPING AND CHEMICAL COSTS: Expenses incurred for meeting pumping and chemical costs shall be charged against the City or Cities benefitted by the expenditure, as follows: A. Pumping Power Costs: At the end of each Fiscal Year of the Authority, each member city shall be billed for the direct cost of energy or motive power used in pumping water to or on behalf of that city during said Fiscal Year. Such charges shall be computed by distributing the cost of energy or motive power used at each of the Authority's pumping plants and well fields among the cities receiving water through that plant or from that well field in proportion to the volumes of water delivered to those cities. Where water delivered consists of a blend or mixture of well water and lake water, the costs shall be calculated in proportion to the total amounts delivered from each source of supply. Only one such computation, covering the entire Fiscal Year, shall be made annually. (All computations and the resulting adjustment of charges shall be made at the end of the complete Fiscal Year.) Chemical Costs: At the end of each Fiscal Year of the Authority, each member city shall be billed for the direct cost of chemicals applied to water delivered to or on behalf of that city during said Fiscal Year. Such charges shall be computed by distributing the cost of chemicals used at each point of application among the cities receiving water past or through the facility at which such chemicals are applied, in proportion to the volumes of water delivered to those cities. One such computation shall be made with respect to each Fiscal Year. B. Contributions to the Pumping and Chemical Reserve Fund: Whenever the amount accumulated in the Pumping and Chemical Reserve Fund at the end of the last complete Fiscal Year was less than the maximum amount specified in Section V-A hereof, interim charges and final adjusted charges for Pumping and Chemical Costs shall be increased by two percent (2%) for contribution to the Pumping and Chemical Reserve Fund, unless a greater amount be approved by the Board of Directors of the Authority. Page 4 Amended by action of the Board of Directors of CRMWA on October 8, 1997 C. Contributions to the Well and Well Pump Reserve Fund: Whenever the amount accumulated in the Well and Well Pump Reserve Fund at the end of the last complete Fiscal Year was less than the maximum amount specified in Section V-13 hereof, interim charges and final adjusted charges for Well Pumping Cost shall be increased by an amount established by the Board of Directors of the Authority, not to exceed ten percent (10%) of the actual cost of energy for pumping water from wells. The amount by which Well Pumping Cost is to be increased each year for the purpose of funding the Well and Well Pump Reserve is to be determined by the Board at the time the annual Budget for Operation and Maintenance is established, on the basis of the anticipated requirement for funds for the purposes spelled out in Section V B hereof. D. Interim Charges: During the progress of each Fiscal Year, charges for pumping and chemical costs shall be billed monthly to each city at rates per thousand gallons estimated by the General Manager of the Authority to represent the actual pumping and chemical costs, determined as described above, as accurately as practicable. These rates shall be applied to the amount of water delivered in each month to each member city to determine the monthly Interim Charge for. Pumping and Chemical Costs. E. Revision of Interim Charges: Should it become apparent during, the progress of any Fiscal Year that the estimated rates being charged are not representative of actual costs being incurred, the General Manager shall advise the Board and thereafter make charges for subsequent deliveries at increased or decreased rates more nearly representative of actual costs. The cities shall be given sixty (60) days notice prior to the application of any increased rates under this Subsection. F. Adjustment of Charges: At the end of each Fiscal Year, an adjustment will be made to reconcile the interim charges (described in Subsection D above) to the actual pumping and chemical costs (described in Subsection A, B, and C above). G. Credits: If the Board of Directors of the Authority determines that the year- end charges for actual costs should be reduced to some amount less than the total actual pumping and chemical costs, such reduction shall be made uniformly in proportion to the amounts otherwise due for pumping and chemical costs from each of the cities for that year. Page 5 Amended by action of the Board of Directors of CRMWA on October 8, 1997 H. Minimum Charge Provision: In the event that the minimum charge provision of the contracts or tariffs covering the furnishing of motive power to the Authority's pumping plants and/or well fields should be invoked, each city's "basic share' of the total minimum charges under each contract or tariff shall be in proportion to the reserved aqueduct capacity of each city at the affected facility. The amounts payable by each respective city under the foregoing Paragraph Ill -A shall first be credited to the `basic share of the city making such payment. If such amount paid or charged under Paragraph IIIA exceeds any city's "basic share", the amount paid by such city in excess of its "basic share" shall be credited to the `baslc shares" of the other cities whose amounts paid or charged to not equal their `basic shares°, in the ratio that their respective °basic shares" bear to the remaining total minimum charge. If such application should cause the amount credited to any such city to exceed the `basic share of such city, the amount by which such credit causes the total credit against such city's `basic share" to exceed such `basic share' shall in tum be credited in the same fashion to the other cities whose credits do not equal their 'basic share". Each city shall then pay the amount owing on its "basic share' after such `basic share" has been so reduced by such city's credits for payments and charges to such city under Paragraph IIIA and by its share of credits of excess payments made by other cities as here provided. The provisions of this Subsection H shall apply reqardless of any transfers of water allocations between member cities. 1. Special Charge Provisions: Any capacity charge or other charge which may become payable by the Authority by reason of a member city's request to receive water in excess of contractual obligations shall be reimbursed by the city or cities making the request. J. Termination or Rene-gotiation of Power Contracts: Upon any renegotiation of existing power supply contracts or tariffs or the making of new contracts or tariffs with terms such as would make the charges for pumping energy (including minimum charges) payable by the Authority incompatible with the foregoing, this Section III shall be revised as necessary to maintain the principle of charging pumping and chemical costs against the city or cities benefitted by the expenditure. Page 6 Amended by action of the Board of Directors of CRMWA on October 8,1997 IV. COMPUTATION OF ASSESSMENTS FOR GENERAL O & M COSTS: A. For the purposes of budgeting, accounting, and computation of assessments, General O&M Costs shall be separated into four categories which shall be allocated or distributed among the member cities on the basis of the following: 1. Administrative Costs, determined in accordance with the Cost Accounting System as described in Appendix A, shall be distributed in proportion to the Lake water supply allocations. 2. Dam and Reservoir Operation and Maintenance Costs, determined in accordance with the Cost Accounting System as described in Appendix A shall also be distributed in proportion to the Lake water supply allocations. Credit received from the Bureau of Reclamation for the reasonable annual cost of operation and maintenance of Sanford Dam and Reservoir -allocated to Flood Control and Fish and Wildlife facilities shall be credited to this category of General O&M Costs. - . 3. Operation and Maintenance Costs of the Lake Meredith Salinity Control Project, determined in accordance with the Cost Accounting System as described in Appendix A shall also be distributed in proportion to the Lake Water supply allocations. 4. Well Field General Operation and Maintenance Costs, determined in accordance with the Cost Accounting System described in Appendix A shall be distributed in proportion to the Groundwater Supply Allocations. 5. Aqueduct System General Operation and Maintenance Costs shall be distributed among the member cities as follows: After the cost of General O&M associated with each segment of the Aqueduct System is determined in accordance with the cost Accounting System as described in Appendix A, one-half (50%) of the General O&M charged to each Aqueduct segment shall be allocated to the cities in proportion to the amounts of water actually delivered to or on behalf of that city through the Aqueduct segment in question. The remaining one-half (50%) shall be allocated to the cities which have reserved aqueduct capacity in the segment in question in proportion to their respective water supply Page 7 Amended by action of the Board of Directors of CRMWA on October 8, 1997 allocations in that segment For all segments of the Canadian River Project Aqueduct System, the percentages used for this computation shall be the Lake Water Supply Allocation percentages; for all segments of the Groundwater Aqueduct System the percentages used in this computation shall be the Groundwater Supply Allocation percentages. Undistributed Indirect Cost of Operation and Maintenance as described in the Cost Accounting System attached to this Manual as Appendix A shall be allocated to the cities in proportion to their respective Lake water supply allocations, in addition to the costs associated with each segment as described above. B. Interim Billings to cover General O&M Costs expected to be encountered during any Fiscal Year shall be calculated on the basis of the average distribution of adjusted final costs payable for the last five completed Fiscal Years, as applied to the approved amounts budgeted for Administrative Costs, Dam and Reservoir O&M Costs, Well Field General O&M Costs, and Aqueduct System General O&M Costs, PROVIDED, that interim billings for General Operation and Maintenance of the Well Field and Ground Water Aqueduct System shall be based on estimates prepared by the General Manager of the Authority until such time as five years of actual operation cost history is available. Unless the Board of Directors determines otherwise at the time of budget approval, interim billings to cover General O&M Cost shall be paid in monthly installments, equal to the nearest dollar, on or before the first day of each month of the Fiscal Year. C. If the Board of Directors determines that an additional assessment is necessary to add funds to the General Reserve Fund, such assessment shall be added to the interim billings for General O&M Costs calculated as described in Section IV -B above, in proportion to the total interim billings for all categories of General O&M Costs. D. At the end of each Fiscal Year, an adjustment shall be made to reconcile amounts collected for General O&M Costs with actual expenses, water deliveries, and reserve fund requirements, to the end that the adjusted amounts payable by each of the cities for the year just ended shall always be proportionate to the costs incurred on behalf of that city during that year for each category of General O&M Costs; PROVIDED: That no adjustment shall be made of the amount collected for contribution to the General Reserve Fund. Page 8 Amended by action of the Board of Directors of CRMWA on October 8, 1997 E. In the event that the total actual cost incurred for all categories of General ON Cost on behalf of any member city during any Fiscal Year is less than the amount collected from that city as interim billings the excess amount shall be refunded. In the event that the total actual cost incurred for all categories of General O&M Cost on behalf of any member city during any Fiscal Year is more than the amount collected from that city as interim billings, the deficit shall be due and payable upon notice; PROVIDED: That the total amount payable by any member city for any Fiscal Year shall not exceed one hundred ten percent (110°/x) of the interim billings to that city during that Fiscal Year, and the excess cost over 110% shall be met by withdrawing funds from the General Reserve Fund. Funds so withdrawn shall be replaced as provided in Section V B hereof, PROVIDED FURTHER: That the occurrence of any expense or event which results in final charges to any city or group of cities exceeding the Interim billings shall not be due cause for the elimination of any item of expense from the calculation of cost distribution under the Cost Accounting System. F. 9 the Board of Directors of the Authority determines that the total of charges to cover General Operation and Maintenance Costs should be reduced to some amount less that the anticipated or actual costs, such reduction shall be made by reducing the anticipated costs to be encountered during the year and by crediting actual costs at the end of the year with the same amount. Any such credit shall be applied proportionately to the total charges for General Operation and Maintenance payable by each city with respect to that ygar. Page 9 Amended by action of the Board of Directors of CRMWA on October B, 1997 V. RESERVE FUNDS: The Authority shall maintain the following Reserve Funds: A. Pumping and Chemical Reserve Fund: This Reserve shall be maintained for the purposes described below. 1. Replacement or repair of the following items of pumping plant facilities which are anticipated to deteriorate or wear during the repayment period to such an extent as to require periodic replacement or major repair. a) Pump units b) Pump unit motors and motor controls c) Check valves and valve actuating systems d) Ventilating units for pump unit motors This fund shall be used to pay for replacement or major repair of the listed items only. Minor component parts and supplies shall be provided for as part of the annual budget for General Operation and Maintenance Costs. 2. Payment of minimum charges in the event that the minimum charge provisions of any of the contracts or tariffs covering the furnishing of motive power to the Authority's pumping plants are invoked, until such time as the minimum charges are paid by the cities in accordance with Section III H. Interest earned on amounts accumulated in this Reserve and amounts collected as pumping and chemical charges for this purpose shall be set aside to maintain this Reserve. Any assessments for use in increasing or replenishing this Reserve shall be included as part of the charges for pumping and chemical costs, as provided in Section III -B. The maximum amount of this Reserve shall be the amount required to pay the minimum charges for one (1) year, plus the average annual direct cost of pumping energy for the two (2) immediately preceding complete budget years. Any amount accumulating in this Reserve in excess of maximum amount shall be credited to required revenue to meet Pumping and Chemical Costs as described in Section III -G. Page 10 Amended by action of the Board of Directors of CRMWA on October 8, 1997 B. Well and Well Pump Reserve Fund: This Reserve shall be maintained for the purpose of providing for the major repair or rehabilitation of wells, well pumps, well pump motors, motor controls, or related equipment, and for the purpose of paying any applicable minimum charges which may become due on contracts or tariffs for motive power for pumping from wells, until such time as the minimum charges are paid by the cities in accordance with Section III -H. Normal repair including replacement of minor component parts and supplies shall be provided for as part of the annual budget for Well Field General Operation and Maintenance. interest earned on amounts accumulated in this Reserve and amounts collected as Well Pumping Cost for this purpose shall be set aside to maintain this Reserve. Any assessment for use in increasing or replenishing this Reserve shall be included as part of the charges for Well Pumping Cost, as provided in Section Ill -C. The maximum amount of this Reserve shall be the amount required to pay the minimum charges on any contract or tariff for motive power for pumping, plus the average annual direct cost of motive power for well pumping for the two (2) immediately preceding complete budget years. Any amount accumulating in this Reserve in excess of the allowable maximum amount shall be credited to required revenue to meet Well Pumping Cost as described in Section III -G. C. injection Well Reserve Fund. This Reserve shall be maintained for the purpose of major repair or rehabilitation of the injection well or wells at the Lake Meredith Salinity Control Project, for the purpose of maintaining or restoring the capacity of the well or wells to receive injectate, or to comply with regulatory requirements. Interest earned on amounts accumulated in this Reserve and amounts collected from member cities for deposit to this Reserve as contained in the approved budget for General Operation and Maintenance Costs shall be set aside to maintain this Reserve. The Board of Directors of the Authority shall determine the maximum amount of this Reserve. Any amount accumulating in this Reserve in excess of the allowable maximum amount shall be credited to the cost of operation and maintenance of the Lake Meredith Salinity Control Project. Page 11 Amended by action of the Board of Directors of CRMWA on October 8, 1997 C. General Reserve Fund: This Reserve shall be maintained for the following purposes: 1. To meet the extraordinary and unforeseen Costs of operation and maintenance, repair and betterment of project works. 2. Replacement or major repair of, items of equipment and facilities not provided for by the Pumping and Chemical Reserve Fund or the Well and Well Pump Reserve. 3. For capital or major improvement of project works. PROVIDED: The amount accumulated in this reserve shall not be reduced to less than $300,000 for the purposes listed in Items 2 or 3 above without the approval of the Contracting Officer of the Bureau of Reclamation: Interest earned on amounts accumulated in this Reserve and amounts collected as General O&M charges for contribution to this Reserve shall be set aside to maintain this Reserve. Any interest, dividends, or other earnings of the Authority not otherwise provided for shall also be placed in this Reserve. The Maximum amount of this Reserve shall be $300,000.00 plus the average of the amounts budgeted for General Operation and Maintenance Costs during the two (2) immediately preceding complete budget years. Any amount accumulating in this Reserve in excess of the maximum amount shall be credited to required revenue to meet General Operation and Maintenance Costs as described in Section IV -F. No withdrawal of funds from this Reserve shall be made for any purpose during any budget year until the total amount budgeted to meet current General Operation and Maintenance Costs for that budget year has been expended. Thereafter, funds may be withdrawn from this Reserve to meet necessary expenses, provided, the payment of such expenses is approved by the Board of Directors. Page 12 It Amended by action of the Board of Directors of CRMWA on October 8, 1997 Whenever funds are withdrawn from this Reserve to reduce the amount due and payable from any member city as a result of the year-end adjustment of General Operation and Maintenance Costs, the city receiving the benefit of such withdrawal shall be charged annually one-tenth of the amount withdrawn plus interest on the unpaid balance at the weighted average rate being then currently earned on all Authority Reserve funds invested for periods of one year or longer. Amounts thus payable for replenishment of the General Reserve shall be added to the interim billings for General Operation and Maintenance Costs for the second subsequent Fiscal Year after the end of the Fiscal Year for which withdrawal was necessary, and shall be payable in the same manner as such interim billings. Notwithstanding the provision for repayment of funds owing this Reserve over a ten-year period, such repayments shall be made at a rate adequate to meet the requirements of Paragraph 9-b of the Authority/Bureau of Reclamation Contract (No. 14-06-500-485). If payments due under the above provision total less than the required amount, the payments due from all cities which owe funds to the Reserve shall be increased by the same proportion so as to equal the required amount, provided that such increase shall not cause the repayment obligation of any city for that year to exceed its total obligation to the Reserve fund. Member cities may at their option repay any or all amounts owing to the General Reserve in advance of the ten-year period provided above, but any such payment shall include interest as provided above from the date of withdrawal of funds from Reserve to date of payment C. Other Optional_ Reserve Funds: The Authority may establish and maintain other reserve funds in addition to those described above. However, no assessment or charge shall ever be made to any member city in support of any reserve fund except as provided herein, and funded deprecation as provided in Appendix A. Page 13 Amended October 82 1997 CANADIAN RIVER MUNICIPAL WATER AUTHORITY MANUAL APPENDIX A COST ACCOUNTING SYSTEM A. GENERAL: This Accounting System shall be used as described herein to determine the actual cost- of General Operation and Maintenance which is properly attributable to the various segments of the Authority's Aqueduct System (including both the Canadian River Project Aqueduct and the Groundwater Aqueduct), to Sanford Dam and Lake Meredith, to the operation of underground well fields, to the operation and maintenance of the Lake Meredith Salinity Control Project, and to Administration of the Authority's affairs. The facilities serving the member cities shall be divided into segments, with points of division determined on the basis of service provided to member cities. A new segment shall be established at each bifurcation or terminal point, with each segment serving a designated city or group of cities. The Dam and Reservoir, the Lake Meredith Salinity Control Project, and the underground well field shall be considered as separate segments. A separate Cost Account, designated by a code number, shall be assigned for each Project segment. A Cost Account shall also be assigned for Administrative Costs. Whenever My item of Special Work is authorized with the, cost.thereof to be reimbursed separately .from the cost of General Operation and Maintenance payable by the member cities, a separate Cost Account shall be assigned to that item of Special Work. All expenditures which can reasonably be identified as benefitting a given Cost Account shall be charged directly to that account, including items or portions thereof listed herein. Expenditures which cannot be so identified, or which are more equitably distributed to the various Cost Accounts on an accumulative basis rather than at the time of expenditure, shall be charged to Distributive Accounts as described herein. At the close of each fiscal period, Distributive Accounts shall be cleared and the amounts accumulated therein shall be charged to the Cost Accounts in accordance with the procedure given herein. All expenditures made to deliver water to the member cities, or to assure the continued capability of fulfilling the contractual obligations of the Authority, shall be included in determining the distribution of costs in accordance with this Cost Accounting System, whether or not such costs are considered normal or abnormal. i. CRMWA MANUAL Amended October 9, 1997 Appendix A -- Cost Accounting System Page 2 B. COST ACCOUNTS: The following Cost Accounts shall be maintained: 01 thm 21- CANADIAN RIVER PROJECT (CRF) AOUEDUCT SYSTEM GENERAL O&M COSTS: The following Cost Accounts shall be .used to accumulate and reflect all costs of General Operation and Maintenance related to segments of the Aqueduct System provided to deliver water from Lake Meredith to the member cities: 01- Main Aqueduct I Main Aqueduct to and including the forebay at Pumping Plant No. 2 02 - East Aqueduct I - From the forebay at Pumping Plant No. 2 to and including Borger Regulating Reservoir 03 - East Aqueduct II - Borger Facilities) -Borger Outlet at Borger Regulating Reservoir and Borger Terminal (Also includes the Camex Turnout) 04 - East Aqueduct III (Pampa Facilities) -From Borger Regulating Reservoir to and including the Pampa Terminal 05 - Main Aqueduct II -Main Aqueduct from the forebay at Pumping Plant No. 2 to and including the Amarillo Turnout 06 - Main Aqueduct III (Amarillo Facilities) - Amarillo Delivery Points 07 Main Aqueduct IV - Main Aqueduct from the Amarillo Turnout to . and including the Plainview Lateral Turnout 08 - Plainview Lateral Plainview Lateral and Plainview Terminal 09 - Main Aqueduct V -Main Aqueduct from the Plainview Turnout to and including the Southwest Aqueduct Turnout 10- Southwest Aqueduct I - From the Southwest Aqueduct Turnout to and including Regulating Tank No. 3 11- Southwest Aqueduct II (Levelland Facilities) - Pumping Plant No. 11 and Levelland Lateral 12 - Southwest Aqueduct III Brownfield Facilities) - Southwest Aqueduct from Regulating Tank No: 3 to end 13 - Main Aqueduct VI - Main Aqueduct from the Southwest Aqueduct Turnout to and including Regulating Tank No. 6 14 - Main Aqueduct VII (Lubbock Facilities) - North Lubbock Lateral and Lubbock Delivery Points 15 - Main Aqueduct VIII -Main Aqueduct from Regulating Tank No. 6 to and including the Slaton Turnout 16 - Slaton Lateral !Slaton Facilities) - Slaton Lateral, including the Slaton Terminal 17 - Main Aqueduct IX - Main Aqueduct from the Slaton Turnout to and including Regulating Tank No. 7 CRMWA MANUAL Appendix A -- Cost Accounting System Amended October 8, 1997 Page 3 18 - Tahoka Facilities -Tahoka Terminal 19 -Main Aqueduct X - Main Aqueduct from Regulating Tank No. 7 to and including the O'Donnell Turnout 20 - O'Donnell Lateral (O'Donnell Facilities) -O'Donnell Lateral, including the O'Donnell Terminal 21- Main Aqueduct M (Lamesa Facilities) - Main Aqueduct from the O'Donnell Turnout to end The following specific costs, or portions thereof identifiable as being of benefit to that segment of the CRP Aqueduct System, shall be charged to each of the above Cost Accounts 01 through 21 as applicable: Salaries and Wages of employees working on aqueduct En;g neerina Fees for work on aqueduct facilities Contracted Repairs on aqueduct facilities Right -of -Way Damages incurred along aqueduct Fuel and Lubricants for use on aqueduct Parts for Facilities used on aqueduct Supplies --Building Material and Hardware used on aqueduct Supplies - Plumbing and Electrical used on aqueduct Paint and Painting Supplies used on aqueduct Other Consumable Supplies and Materials used on aqueduct Telephone service provided at aqueduct structures Utilities {Excep-t Pumping Powerl service to aqueduct structures Insurance on aqueduct structures and facilities Travel and Per Diem for work on aqueduct Rents and Leases - Equipment for use on aqueduct Leased Telephone Lines provided for remote control and telemetering along aqueduct System improvements - Special budget line items as applicable Any Other Expense chargeable in accordance herewith Share of the Following Distributive Accounts: 71 - Fringe Benefits 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) 53 - Indirect Expenses - Field Office (applies only to that segment representing all cities served by the Field Office) 52 - Indirect Expenses - Headquarters Office CRMWA MANUAL Appendix A — Cost Accounting System B. COST ACCOUNTS - Continued Amended October 8, 1997 Page 4 25 - DAM AND RESERVOIR GENERAL O&M COSTS: The following Cost Account shall be used to accumulate and reflect those costs of General Operation and Maintenance related to Sanford Dam, Lake Meredith, and the water stored therein, including water quality surveillance and protection. 25 - DAM AND RESERVOIR O&M The following specific costs, or portions thereof identifiable as being of benefit to this feature, shall be charged to Cost Account 25: Salaries and Wages of employees working on this feature Engineering Fees for work on dam or reservoir Contracted Repairs on dam and reservoir facilities Other Contracted Maintenance on dam and reservoir facilities Fuel and Lubricants for use in facilities of this feature Laboratory Chemicals and Supplies Parts for Facilities used on dam or reservoir Supplies - Building Material and Hardware used on dam or reservoir Supplies Plumbing and Electrical used on dam or reservoir Paint and Painting Supplies used on dam or reservoir Other Consumable Supplies and Materials used on dam or reservoir Utilities for structures at Sanford Dam Insurance on structures at Sanford Dam Travel and Per Diem for work on dam or reservoir Rents and Leases - Equipment for work on dam or reservoir System Improvements - Budget line items as applicable Any Other Expense chargeable in accordance herewith Share of the Following Distnbutive Accounts: 71- Fringe Benefits 61- Equipment Expenses (Boat, 1040/*) 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) 52 - Indirect Expenses - Headquarters Office CRMWA MANUAL Amended October 8, 1997 Appendix A -- Cost Accounting System Page 5 29 - LAKE MEREDITH SALINITY CONTROL PROJECT GENERAL O&M COSTS: The following Cost Account shall be used to accumulate and reflect those costs of General Operation and Maintenance related to the Lake Meredith Salinity Control Project, including the expense of operating and maintaining production wells, injection wells or other brine disposal facilities, pipelines or. other facilities needed to control or prevent the inflow of brine to the Canadian River above Lake Meredith. 25 - SALINITY CONTROL PROJECT O&M The following specific costs, or portion's thereof identifiable as being of benefit to this feature, shall be charged to Cost Account 29: Salaries and Wages of employees working on this feature Engineering Fees for work on, Salinity Control Project Contracted Repairs on salinity control facilities Other Contracted Maintenance on salinity control facilities Fuel and Lubricants for use in facilities of this feature Laboratory Chemicals and Sup p lies Parts for Facilities used on salinity control facilities. Supplies - Building Material and Hardware used on salinity control facilities SM Iies - Plumbing and Electrical used on salinity control facilities Paint and Painting Supplies used on salinity control facilities Other Consumable Supplies and Materials used on salinity control facilities Utilities for production wells, injection wells, or other salinity control facilities Insurance on structures of the salinity control facilities Travel and Per Diem for work on salinity control facilities Rents and Leases - Equipment for work on salinity control facilities Syjtem Improvements - Budget line items as applicable Any Other Expense chargeable in accordance herewith Share of the Following Distributive Accounts: 71- Fringe Benefits 61- Equipment Expenses (Boat, 100%) 62 - Equipment Expenses ('Vehicles) 63 - Equipment Expenses (Other) , 52 - Indirect Expenses - Headquarters Office CRMWA MANUAL Amended October 8, 1997 Appendix A -- Cost Accounting System Page 6 B. COST ACCOUNTS — Continued 32 thru 36 - GROUNDWATER PROJECT AQUEDUCT SYSTEM GENERAL O&M COSTS: The following Cost Accounts shall be used to accumulate and reflect all costs of General Operation and Maintenance related to segments of the Aqueduct System provided to deliver waxer from Lake Meredith to the member cities: 32 - Main Groundwater Aqueduct I -Main Groundwater Aqueduct to the outlet of the Ground Storage Tank upstream from Pump Station No. 22 33 - Joint B2Mg/Pampa facilities - Common Branch line from main Groundwater Aqueduct to bifurcation of Borger and Pampa delivery lines 34 - Borger Facilities -Branch line to Borger Outlet at Borger Treatment Plant, and Borger Terminal with control valves and associated facilities as required to deliver groundwater into the Borger Treatment Plant Clearwell. 35 - Pampa Facilities -- Branch line, mixing valves and controls provided to inject water from the Groundwater Aqueduct into the Canadian River Project Aqueduct at a point near the Borger Regulating Reservoir 36 -Main Groundwater Aqueduct II - All facilities from the outlet of the ground storage tank at Pump Station 22 to the Forebay at CRP Main Aqueduct Pumping Plant No. 3, including all facilities necessary to inject water from the Groundwater Aqueduct into the CRP Main Aqueduct. The following specific costs, or portions thereof identifiable as -being of benefit to that segment of the Groundwater Aqueduct System, shall be charged to each of the above Cost Accounts 32 through 35 as applicable: Salaries and Wages of employees working on aqueduct En ig neering Fees for work on aqueduct facilities Contracted Repairs on aqueduct facilities Right -of -Way Damage s incurred along aqueduct Fuel and Lubricants for use on aqueduct Parts for Facilities used on aqueduct Supplies - Building Material and Hardware used on aqueduct Supplies - Plumbing and Electrical used on aqueduct Paint and Painting Supplies used on aqueduct Other Consumable Supplies and Materials used on aqueduct Telephone service provided at aqueduct structures B. COST ACCOUNTS —Continued 32 through 36 - GROUNDWATER PROJECT AQUEDUCT SYSTEM GENERAL O&M COSTS - Specific Costs -- Continued CRMWA MANt1AL Amended October 8, 1997 Appendix A -- Cost Accounting System Page 7 Utilities (Except Pumping Powers service to aqueduct structures Insurance on aqueduct structures and facilities Travel and Per Diem for work on aqueduct Rents and Leases - Equipment for use on aqueduct Leased Telephone Lines provided for remote control and telemetering along aqueduct System Improvements - Special budget line items as applicable Any Other Expense chargeable in accordance herewith Shares of the Following Distributive Accounts: 71- Fringe Benefits 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) 52 - Indirect Expenses - Headquarters Office 39 - WELL FIELD SUPPLY GENERAL O&M COSTS: The Mowing Cost Account shall be used to accumulate and reflect those costs of General Operation and Maintenance related to the groundwater wells and collection system, including water quality surveillance and protection. 39 - WELL FIELD GENERAL O&M COSTS The following specific costs; or portions thereof identifiable as being of benefit to this feature, shall be charged to Cost Account- 39:.: Salaries and Wages of employees working on this feature Enarneering Fees for work on wells or collection system Contracted Repairs on facilities at the well field Other Contracted Maintenance on well field facilities Fuel and Lubricants for use in facilities of this feature Parts for Facilities used on well field facilities Supplies - Building Material and Hardware used on well field facilities Supplies - PIumbing and Electrical used on well field facilities Paint and Painting Sup Ip ies used on well field facilities Other Consumable Supplies and Materials used on well field facilities B. COST ACCOUNTS —Continued 39 - WELL FIELD GENERAL O&M COSTS - Specific Costs -- Continued CRMWA MANUAL Amended October 8, 1997 Appendix A — Cost Accounting System Page 8 Utilities for structures at the well field (but not pumping energy) Insurance on structures at the well field Travel and Per Diem for work on well field facilities Rents and Leases - Equipment for work on well field facilities S tySImprovements - Budget line items as applicable Any Ocher Expense chargeable in accordance herewith Share of the Following Distributive Accounts: 71- Fringe Benefits 61- Equipment Expenses (Boat, 100%) 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) 55 - Indirect Expenses - Headquarters Office 40 - ADMINISTRATIVE COSTS: The following Cost Account shall, be used to accumulate and reflect those expenses which are necessary to the conduct of the affairs of the Authority as part of the cost of providing a water supply to the member cities, but which are not specifically related to the operation and maintenance of Project facilities: 45- Administrative Costs The following specific costs shall be charged to this Cost Account Director's Fees Salaries and Wages of employees as follows: General Manager and Assistant Manager -r----100% Administrative Assistant (Board Secretary)-•-- 50% Clerk -Stenographer 50% al Fes Auditing Fees Bookkeeping Legal Notices Surety Bond Premiums of Directors and General Manager Travel and Per Diem of Directors and General Manager Dues to Organizations Books. Subscriptions. and Publications for Administrative Use Any Other Expense chargeable in accordance herewith Share of the Following Distributive Accounts: 71- Fringe Benefits 62 - Equipment Expenses (Vehicles) CRMWA MANUAL Amended October 8, 1997 Appendix A -- Cost Accounting System Page 9 55 - Headquarters Facility Expense (50%) C. DISTRIBUTIVE ACCOUNTS: The following Distributive Accounts shall be maintained: 50 - INDIRECT GENERAL O&M EXPENSES: The following Distributive Accounts shall be used to accumulate those expenses of overhead and supervision incurred at the office of the Authority and made necessary by the functions of operating and maintaining Project facilities provided for the purpose of furnishing a water supply to the member cities of the Authority, but which cannot be directly connected or identified with a specific segment or feature of the Project facilities. 52 - Indirect Expenses-- Headquarters Office The following.specific expenses incurred at the Headquarters Office, or portions thereof which cannot be identified as benefitting a project segment or the Administrative fimction shall be charged to this Distributive Account 4-1 ®: Salaries and Wages not related to project segments, administration, or equipment maintenance Contracted Repairs for headquarters shop area Radio System Maintenance (All) Other Contracted Maintenance for headquarters shop area Janitorial and Grounds Maintenance for headquarters shop area Fuel and Lubricants used at headquarters shop Small Tools used at headquarters shop Parts for Facilities used at headquarters shop Su lies - Building Material and Hardware used at headquarters shop Supplies - Plumbing and Electrical used at headquarters shop Paint and Painting Super used at headquarters shop Other Consumable Supplies and Materials used at headquarters shop Utilities for headquarters shop and residence Insurance on headquarters shop, residence, and storage buildings, and all Liability Insurance Surely Bond Premiums of Employees other than the General Manager Books, Subscriptions and Publications for O&M purposes Rents and Leases - Space for radio antennae C. DISTRIBUTIVE ACCOUNTS: -Continued 52 - Indirect Expenses -- Headquarters office - Continued Leased Televhone Lines for radio system operation Capitalized Items not for office use System Improvements - Budget line items as applicable CRMWA MANUAL Amended October 8, 1997 Appendix A — Cost Accounting System Page 10 C. piny Other Expense chargeable in accordance herewith Share of the Following Distributive Accounts: 71- Fringe Benefits 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) 55 - Headquarters Facility Expenses (50%) At the end of each fiscal period, amounts accumulated in or distributed to this Account 52 shall be distributed as follows: a) Shares of Account 52 shall be distributed to Account 25 and to the 80 Series Accounts in the proportion that amounts accumulated in those Accounts bear to the total of amount accumulated in all.of Accounts 01 through 39, and the 80 Series. b) One-half (50%) of the amount remaining in this Account 52 after making the above distribution to Accounts 25 and 80 Series shall be distributed to Accounts OI through 21, 32 through 35, and 39, in the proportion that the amount accumulated in each of those accounts bears to their total. c) After all of the above distributions have been made, the amount remaining in this Account 52 shall be classified as Undistributed Indirect Cost of Operation and Maintenance, and such amount shall be allocated to the member cities as prescribed in the Manual. 53 - Indirect Expenses - Lubbock Field Office The following specific expenses incurred at the Lubbock Field Office or portions thereof which cannot be identified as benefitting a project segment, shall be charged to this Distributive Account 53: Salaries and Wages not related to Project segments Training of field office employees Contracted Repairs for field office area Janitorial and Grounds Maintenance at field office Other Contracted Maintenance at field office DISTRIBUTIVE ACCOUNTS: Continued 53 - Indirect Expenses — Lubbock Filed Office - Continued Printing and Office Supplies for field office use Fuel and Lubricants for use at field office shop Small Tools for general use by field office personnel CRMVVA MANUAL Amended October 8, 1997 Appendix A — Cost Accounting System Page 1 I Parts for Facilities to be used at field office Supplies - Building Material and Hardware to be used at field office Suunlies - Plumbing and Electrical to be used at field office Paint and Painting Sup lues to be used at field office Other Consumable Supplies and Materials to be used at field office Postage used at field office Telephone Service at field office Utilities at field office Insurance on field office buildings Travel and Per Diem of field office personnel. Books. Subscriptions, and Publications for field office use Rents and Leases - Equipment such as copy machine at field office Capitalized Items for general use by field office Svstem Improvements of field office or shop areas An Other Expense chargeable in accordance herewith Share of the following Distributive Accounts: 71- Fringe Benefits 62 - Equipment Expenses (Vehicles) 63 - Equipment Expenses (Other) At the end of each fiscal period, amounts accumulated in or distributed to this Account 53 shall be cleared and distributed to that Cost Account for Aqueduct System General O&M Costs representing all of the cities .served by portions of the Aqueduct maintained by the Lubbock Field Office. CRMWA MANUAL Amended October 9, 1997 Appendix A — Cost Accounting System Page 12 C. DISTRIBUTIVE ACCOUNTS: Continued 55 - HEADOUARTERS FACH= EXPENSES: The following Dis1n'butive Account shall be used to accumulate and reflect the expense of providing, maintaining, and operating Headquarters Facilities of the Authority: 55 - Headquarters Facility Expenses The following specific expenses incurred at the Headquarters Office or portions thereof which can reasonably be identified as being of benefit to this fimction, shall be charged to this Distributive Account 55: Salaries and Wages for repair and maintenance of Headquarters Building or office equipment Contracted Repairs of Headquarters Building Janitorial And Grounds Maintenance of building and yard Other Contracted Maintenance for upkeep of building, office equipment Printing and Office Supplies used at Headquarters Fuel and Lubricants used at Headquarters Building Small Tools for general office use Parts of Facilities used at Headquarters Building Supplies -Building Material and Hardware used at Headquarters Building Supplies - Plumbing and Electrical used at HeadquWers Building Paint and Painting Supplies used at Headquarters Building Other Consumable Supplies and Materials used at Headquarters Building Postage Telephone Service at Headquarters Utilities for Headquarters Building Insurance on Headquarters Building and contents Rents and Leases - Equipment for copy machines, etc. Capitalized Items for general office use Minor Equipment Replacement of office equipment System Improvements for Headquarters improvement Share of the Following Distributive Accounts: 71- Fringe Benefits 63- Equipment Expense (Other) CRMWA MANUAL . Appendix A -- Cost Accounting System C. C. Amended October 8, 1997 DISTRIBUTIVE ACCOUNTS: Continued 55 - Headquarters Facility Expenses - Continued Page 13 At the end of each fiscal period, the amount accumulated in or distributed to this Distributive Account 55 shall be cleared. One-half (50%) of the amount shall be charged to Cost Account 45 (Administrative Costs) and one-half (5001a) to Distributive Account 52 (Indirect Expenses - Headquarters). 60- EQUIPMENT EXPENSES: The following Distributive Accounts shall be used to accumulate and reflect the expense of ownership, operation, and maintenance of boats, vehicles, trucks, tractors, and other equipment. Each account shall reflect the expense of fuel, lubricants, contracted repairs and maintenance, parts (including tires), labor and force account repairs or maintenance, and funded depreciation as budgeted, all for the class of equipment covered by the respective Account. Shares of the Distributive Account 71 shall also be added to each of these accounts at the end of each fiscal period 61- Equipment Expenses Moat) (This Account shall contain those expenses related to the Authority's boat or boats on Lake Meredith.) At the end of each fiscal period, this Account shall be cleared and the amount accumulated therein shall be charged, to Cost Account 25 (Dam and Reservoir O&M). 62- Equipment Expenses CVehicles) (This Account shall contain those expenses related to passenger vehicles and light trucks up to and including 3/4 ton.) At the end of each fiscal period, the amount accumulated in this Account shall be cleared and charged to the following Accounts in proportion to the pro rata number of hours charged to those Accounts by field and Administrative personnel utilizing vehicles, as shown by the Time and Attendance reports of such personnel. (In making this distribution, hours worked by office personnel, control room operators, or other employees who do not require transportation shall be excluded) Accounts 01 through 21 Account 25 Account 29 Accounts 32 through 36 Account 39 Account 45 Accounts 52 and 53 Account 55 80 Series Accounts DISTRIBUTIVE ACCOUNTS: Continued CRMVVA MANUAL Appendix A — Cost Accounting System Equipment Expenses -Continued Amended October 8, 1997 Page 14 63- Fgpipment Expenses Other) (This Account shall contain those expenses related to all movable equipment other than boats and vehicles, such as trucks above 3/4 ton, tractors, air compressors, welders, pumps, generators, sprayers, painting equipment, sand blasters, augers, or other items.) At the end of eachfiscal period the amount accumulated in this Account shall be cleared and charged to the following Accounts in proportion to the number of hours charged to those accounts by field personnel below the level of Division Head, as shown by the Time and Attendance reports of those employees: Accounts 01 through 21 Accounts 25 Account 29 Accounts 32 through 36 Account 39 Accounts 52 and 53 Accounts 55 80 Series Accounts •• CRMWA MANUAL Amended October 8, 1997 Appendix A — Cost Accounting System Page 15 C. DISTRIBUTIVE ACCOUNTS: Continued 70 - INDIRECT LABOR EXPENSES: The following Distributive Account shall be used to accumulate the expense of fringe benefits and other expenses of employing personnel: 71- Fringe Benefits This Account shall contain the expenses of the following for all employees: Contributions to Retirement Fund Social Security Taxes Health Insurance Premiums Life Insurance Premiums Annual, Sick or Other Leave (including sick leave bonus) Worker's Compensation Insurance Disability Income Insurance Unemployment Compensation Any other benefit program provided At the end of each fiscal period, the amount accumulated in this account shall be cleared out and distributed to all other accounts in proportion to the amounts of direct labor cost contained therein. SEOUENCE OF CLEARING DISTRIBUTIVE ACCOUNTS: At the close of each fiscal period, Distributive Accounts shall be cleared in the following sequence: 1. Account 71 2. Account 61 3. Account 62 4. Account 63 5. Account 55 6. Account 53 7. Account 52 CRMWA UAWAL Amended October 8,199? Appendix A — Cost Accounting System Page 16 D. ALLOCATION OF COST TO CITIES: After the total cost (other than Pumping and Chemical Costs) attributable to each project segment or function has been determined at the end of each Fiscal Year, including the clearing of Distributive Accounts to Cost Accounts as described in the foregoing sections, the resulting segment costs shall be allocated to the member cities as prescribed in the Manual. E. SPECIAL WORK: Whenever any item of Special Work is authorized with the cost thereof reimbursable separately from the costs of General Operation and Maintenance, the following Special Cost Accounts shall be used to accumulate and reflect such costs: 80 - SPECIAL WORK: (Assign a separate account code for each job) These Special Cost Accounts shall be used to accumulate and reflect all cost reasonably identifiable with items of work such as installation of additional delivery points, repair of damage caused and/or rE;iwbursable by any identifiably party, performance of work outside the scope of normal Authority operations (such as installation of protective facilities at proposed road or railway crossings), or maintenance or repair of facilities owned by any party other than the Authority. Such costs shall include labor, materials, contracted work, and travel expense, as well as shares of Distributive Accounts for Fringe Benefits, Equipment Expense, and Indirect Expenses (Hdq.� as applicable. Costs accumulated in or distributed to Special Cost Accounts shall be charged to the party or parties responsible for reimbursement of such costs. Since costs of Special Work may be chargeable to responsible parties prior to the close of the fiscal period, shares of distributive accounts added to each job shall be determined on the basis of available information from past accounting periods. The amounts so determined shall be deducted fmm the Distributive Accounts at the time billing is issued. 7-2278 MC) Bureau of Reclamation 1. MODIFICATION NUMBER 002 2. ISSUED BY Bureau of Reclamation Great Plains Region P.O. Box 36900 Billings MT 59107-6900 UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION MODIFICATION OF ASSISTANCE AGREEMENT Date of Signature See Block 12 CODE OP -3800 15. ACCOUNTING AND APPROPRIATION DATA T. RECIPIENT HAMS AND ADDRESS Canadian River Municipal (later Authority P.O. Box 99 Sanford Tx 79078 FUNDING INFORMATION Recipient BOR IThis obligation S S s r Previousobligation s B. COOPERATIVE AGREEMENT 1--1 GRANT yt� o Total S S NO. 3 -FC -60-03470 obligation DATED 09/28/93 9. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF Reclamation Projects Authorization and Adjustment Act of 1992 (PL 102-575) Title Vit It modifies -the above numbered assistance agreement as set forth in block 8 10. DESCRIPTION OF MODIFICATION: Prosect Title: Lake Meredith Salinity Control Project, Canadian River Project, Texas and New Mexico This modification incorporates the fotlowing changes to this agreement: See attachment Except as provided herein, all terms and conditions of the document referenced in block 8, as heretofore changed, remain unchanged and in full force and effect. 11. Acceptance of this Modification in accordance with 12. Acceptance of this Modification in accordance with the terse; and conditions contained herein is hereby the terms and conditions herein is hereby made on made on behalf of behalf of the United States of America, Bureau of Reclamation. dnad-rm., Alle-1 Wk,1-A6f,,A1,50.' HANE RECIPIENT BY BY �9 E DATEor 4 DATEGNATURE DATE TYPED NAME TITLE l9Li�rli�B� Mor,Qo d-+/ Attach additional signatures Leatha Frost TYPED NAME TITLE Grants and Cooperative Agreements Officer W Agreement No. 3 -FC -60-03470 Cooperative Agreement Between DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION AND CANADIAN RIVER MUNICIPAL WATER AUTHORITY AND TEXAS WATER DEVELOPMENT BOARD FOR LAKE MEREDITH SALINITY CONTROL PROJECT CANADIAN RIVER PROJECT TEXAS AND NEW MEXICO This cooperative agreement is between the UNITED STATES OF AMERICA, acting through the Department of the Interior, Bureau of Reclamation, hereinafter called 'Reclamation," represented by the officer executing this agreement, hereinafter called the "Grants and Agreements Officer," the CANADIAN RIVER MUNICIPAL WATER AUTHORITY, organized and existing pursuant to the laws of the State of Texas, with its principal place of business and office at Sanford, Texas hereinafter called the "Authority" and the TEXAS WATER DEVELOPMENT BOARD, with its principal place of business and office at Austin, Texas hereinafter called the "Board_ This agreement is entered into Pursuant to Federal Reclamation Laws, Act of June 17, 1902 (32 Stat. 388), and acts amendatory thereof and supplementary thereto, and particularly Title VIII of the Reclamation Projects Authorization and Adjustment Act of 1992. 1. Back and A. The Canadian River Project, consisting of Sanford Dam and Lake Meredith, was constructed during the 19Ws to provide 103,000 acre-feet of municipal water supplies to 11 cities and towns in northwestern Texas. B. Since impoundment began in 1965, Lake Meredith has experienced a gradual decline in water quality associated with reduced reservoir levels. Avaffable data suggests that the quality of water in Lake Meredith will continue to decline, especially during periods of low flow and low volume accompanied by high evaporation. The main value of concentration for sodium, chlorides, and sulfates can be expected to remain in excess of the recommended secondary standards for drinking water supplies. C. Interpretation ofthe hydrologic and geologic data available has led to the conclusion that natural sodium -chloride brine seeps into the Canadian River near Logan, New Mexico. The proposed method for controlling the brine leakage to the river is to pump the brine aquifer to lower the hydraulic head, thus reducing or eliminating the driving force controlling brine movement. The brine removed from the aquifer would then be transported by pipeline to a disposal area. Disposal is proposed to be by injection into a deep well completed in an acceptable receiving formation or other environmentally acceptable method. D. Title to project features constructed pursuant to this agreement and Title VIII of the. Reclamation Projects Authorization and Adjustment Act of 1992 shall remain with the United States, as well as responsibility for National Environmental Policy Act (NEPA) of 1969 compliance. E. The Board desires to become a party to this agreement and to share equally in the costs to be incurred by Reclamation. The Reclamation Projects Authorization and Adjustment Act of 1992 authorized the Secretary of the Interior (Secretary) to enter into this agreement with the Authority for the design and construction management of project facilities by Reclamation. Reclamation's contribution to the cost of the activities undertaken under the authority of this title shall be the actual cost of design and fiction management not to exceed 33 percentum of the total cost of the project. The Board is authorized by House Bill No. 2131, 70th Texas Legislature, Regular Session, 1987, and by the Texas Appropriations Act for the FY 19941995 biennium to participate equally with the U.S. Government in any chlorine control project within or without the State of Teacas as necessary to benefit the Canadian River Basin The Board's contribution to the cost of these activities shall be equal to the Federal share but not exceed $3,000,000. The purpose of the agreement is to attempt to improve the quality of water carried by the Canadian River downstream of Ute Reservoir, New Mexico, and entering Lake Meredith, Texas. The project facilities (facilities) to be constructed under this agreement will be those outlined in the Technical Report on the Lake Meredith Salinity Control Project Canadian River Texas -New Mexico by the United States Department of the Interior, Bureau of Reclamation, June 1985. The facilities wM consist of seismic test points, test wells, production wells, observation wells, pipelines, pumping plants, brine disposal faciliities, power facilities, and other appurtenant facilities as Reclamation may find proper and necessary for the purpose of improving the quality of water entering Lake Meredith, Texas. III. Benefits to be Derived A Improvement of water quality entering Lake Meredith will allow the Authority to meet the Environmental Protection Agency's recommended secondary water quality standards for sodium and chlorides. There will also be Some' in sulfates because of the better quality water entering Lake Meredith. This improvement in quality will result in cost savings throughout the life of the project. B. Improvement of water quality will enhance both fish and wildlife habitat and populations which will thereby enhance recreational opportunities on Federally owned lands. N. Statement of Work A Project construction shall not commence until the State of New Mexico has granted the necessary permits for the facilities. B. All parties agree to cooperate in completing compliance with requirements ofNEPA and associated Federal, State, and local environmental laws and regulations, including the National lEstoric Preservation Act.' shall be the lead Federal agency in all NEPA compliance actions. Prior to initiating any construction activities, Reclamation shall assure NEPA compliance is complete. The project shall be completed in two phases as described below. C. Reclamation agrees to: 1. Be responsible for the design and construction management of the facilities. This responsibility includes associated NEPA compliance, preconsiruction planning, preparation of designs and specifications, acquiring permits, acquisition of land and rights, award of construction contracts, and construction management. The Authority may award the construction contracts and may perform construction management functions when Reclamation and the Authority agree that the Authority's performance of such deities is in the best interest of the project. 2. Expend fimds from Reclamation appropriations in an amount equal to, the costs for design preparation and construction management amstmice, but not exceeding 33 percent of the total project cost, as the nonreimbursable Federal contribution for emrironmental enhancement through water quality improvement. Design preparation is considered to be all preconstruction activities except acquisition of lands and right"f- wary. If the costs for design preparation and construction management are less than 33 percent of the total cost of the project, the amount of design and construction management shall be the maximum Federal nonreimbursable contribution. Construction management costs hwu red by the Authority shall be reimbursed by Reclamation to the extent Reclamation has funds available for the project and the amount of the costs are within Reclamation's 33 percent of the total project costs: 3. Proceed with the project in two phases; 1) Testing and investigations to determine project feasibility and design; Z) Assistance with construction management, construction of facilities and subsequent transfer of operation and maintenance of the system to the Authority. - 4. Consult with the Authority and the Board upon the completion of the first phase of the project for concurrence in proceeding with the second construction phase. D. The Authority agrees to: 1. Pay all costs not covered by the Board's and by Reclamation's contribution. Z H%en Reclamation and the Authority agree that it is in the best interest of the projec4 the Authority may award construction contracts and may serve as construction manager. In such instances, the Authority may perform the functions of a construction manager directly or subcontracting construction management actfvfties, as Reclamation and the Authority may agree to be in the best interest of the project 3., Accept the responsibility for the operation, maintenance, and replacement (OM&R) of the project facilities upon completion of construction and testing of the project, or shall at its option transfer such OM&R to a bona fide entity mutually agreeable to Reclamation and the States of New Mexico and Texas. Upon assumption of OM&R responsibilities by Authority, Reclamation shall assure appropriate NEPA compliance return unexpended balances of the funds advanced, assign to the Authority or the bona fide entity the rights to any agreement(s) in force, convey to the Authority or the bona fide entity any real estate, easements or personal property acquired by the advanced fiords, and provide any data, drawings, or other items of value procured with advanced funds. Title to any facilities constructed under the authority of this title. shall remain with the United States. E. The Board agrees to: . 1. Cooperate with Reclamation and the Authority in providing funding. The Board agrees to contribute equal shares with Reclamation up to one-third the total cost of the project, NOT TO EXCEED IIMEE MILLION DOLLARS. V. Funding of Project Costs A. The Authority and the Board shall advance finds to Reclamation as necessary to meet the expense of carrying out preconstruction and construction expense. Provided however, the Authority may make payments directly to the contractor with a confirmation of the payment provided to Reclamation and the Board The advance of funds shall be on a schedule mutually acceptable to the Board, the Authority, and Reclamation. B. The Authority and the Board may advance funds to Reclamation for use in preconstruction planning, preparation of designs and specifications, acquiring permits, acquisition of land and rights, award of construction contracts, and construction management. C. Reclamation shall reimburse the Authority and the Board any funds advanced to Reclamation for costs for which Reclamation is responsible in accordance with Title VIII of the Reclamation Projects Authorization and Adjustment Act of 1992. Such reimbursement will be contingent upon the appropriation of funds by congress. D. At any time following the first advance of funds the Authority may request that the Reclamation terminate activities then in progress, the Authority and the Board shall reimburse Reclamation a sum equal to 67 percent of all costs incurred by the Redamation in project verification, design and construction management reduced by any sums previously paid by the Authority and the Board to Reclamation for such purposes. E. The costs which shall be the basis of determining the various charges to be paid by the Authority, the Board, and Reclamation under this agreement shall embrace expenditures of whatsoever land in connection with, growing out og or pursuing from the work or operation .described, including but without limitation by means of this enumeration, the cost of labor, materials, equipment, engineering, legal fees for rights-of-way and land acquisition and disposition, superintendence, administration and overhead, general expenses, rights- of way, inspections, special services. NEPA compliance, property damages of all kinds, and any construction claims determined to be reimbursable by the Grants and Agreements Officer or a board or court of higher appeal. The Bete mination of what costs are property chargeable hereunder and the amount thereof shall be determined by the Grants and Agreements Officer.on the basis of costs actually incurred in construction and completion of the project. F. Reclamation shall keep detailed accounting records which shall be available for inspection by the Authority and the Board at any reasonable time upon request. G When contracts for construction management and construction work have been awarded directly by the Authority, funds to pay the costs of such work shall be disbursed &rectly by the Authority from funds advanced by the Board or from funds available to the Authority to pay its share of construction costs. To the extent that unencumbered funds are available to Reclamation to pay for construction management. Reclamation shall provide such fronds to the Authority on a schedule mutually acceptable to Reclamation and the Authority. The Authority shall keep detailed according records of such disbursements which shall be available for inspection by Reclamation and the Board at any reasonable time upon request Within a reasonable time after completion of constriction of the project, the Authority shall provide a detailed accounting of expenses incurred in the construction of the project Any funds paid to theAuthority for construction tncmagement services which ear Reclamation's total con shwe far thePt ject to exceed one-third (33%) Ordw 101101 shall be reiwbw=d to Rec&wffiVon by the Authority. VI. Contingent Upon Appropriations The Board's eommimaent and defivar of f rods is based upon assume. of'geclamation that appropriated federal monies will be made avaft61e to provide the match of fiords contemplated by this agmemeaL The Board's participation is further oonthW= upon continued reauthorization to expend said fiords beyond the Fiscal Year 1994-1995 biennium. Redamatioa proposes to seek the total fiords for ties work through its budget process inFiscalyear 1995, however, budget constrxiats may require that funds be made available in later fiscal years. Reclamation also understands that at the time of this agreement a potential Fiscal Year 1994 writo-in is moving through Congress. VIL Contras Contiagem on Execution of City Contracts It is anticipated by the parties to this agrecment that Binds to be contributed by the . Authority will be derived from payments by the member cities of the Authority. Tire obligations of the Authority cinder the terms of this agreement are, at its option, contingent upon the esCCation of contracts„ in form and substance satisfactory to the Authority, with its member city suffida t to provide for fundmg of the costs of the salinity control project: VIII. Grants and Agreements offiicees Technical Represautive The Grants and Agreements Offi W$ Tecinaicai Representative forReclamation is GweM 81—debeew TZ—. 30; Gity GN; 9 102 F.liaabeth 8arrlsor; Arear Manager. Oklahoma-Terars Area Office, 300 AM 8th S1reeA Room 80, �jtrft Toros 78701-3225. VC Tenn ofAgremnent A. This agreement is effective on the date shown in Block 16 of the cover sheet (Form 7- 2277) and shall remain in d&P.-t until September 30, 1997 unless tamlinated earlier by W&en modification. B. Following the first advance of funds, the Authority and the Board may request that the Secretary terminate activities then inprogress, and such request shall be binft upon the Secretary. Upon such termination. Reclamation is under no obligation to caVlete its snare of the project as a nonrefid=able dcvrlopment C. This agreement may be modified, in writing by mutual agreement of al parties. X GenaW Provisions A. lbs agreement is subject to and in accordance with the following rules and regulations, exhibits, and provisions: 1. The parties to this agreement shall comply with all local, State, and Federal laws, including the National Environmental Policy Act, and cultural resource laws and regulations while implementing the terms of this agreemem. 2. OMB Circular No. A-87, incorporated herein by reference. 3. OMB Circular No. A-102, revised, incorporated herein by 4. OMB Circular No. A 128 A-133, incorporated herein by reference. 5. Reclamation's General Provisions, attached to this agreement and hereby incorporated by full text. XI. Indemnification SUBJECT TO TBE LBGTATIONS OF APPLICABLE LAW, The Authority and the Board shall hold the United States, its officers, agents, and employees harmless as against any and all claims for damage which may in any manner accrue out of the work to be performed by the Board and the Authority under this agreement. City Secretary January 5, 1999 Thomas M. Pollan 1700 Frost Bank Plaza 816 Congress Avenue Austin, Texas 78701-2443 Dear Mr. Pollan: P.O. Box 2000 • 1625 13th Street • Lubbock, TX 79457 (806) 775-2026 f Fax: (806) 775-3307 Enclosed please find the seven (7) signed and dated copies of the certificate as requested. If you need further assistance or have any questions, please contact our office.. S' ely, Ka*ctary Cit A Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, LLT 1700 Frost Bank Playa 816 Congress Avenue Austin, Texas 78701-2443 (512)472-8021 Fax (512)320-&338 wwwbickerstaII.c.:m December 30, 1998 Ms. Kaythie Darnell City Secretary City of Lubbock P.O. Box 2000 Lubbock, Texas 79401 Dear Ms. Darnell: have enclosed 7 copies of a certificate to replace the certificate that was originally issued concerning the resolution adopted by the City Council on November 12, 1998. The only change is the specification that the meeting was a regular meeting of the City Council. Thank you for your assistance. If you have any questions, please do not hesitate to call. TMP:ea C"WA 0ft8 ,"*n%CRMWA 044 h to Myth* ftffwll-" wN Enclosures Very truly yours, Thomas M. Pollan JAN 1180° (,I1t' Jc'..rtcar LUsaZZK. TEs . i THE STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § I, the undersigned City Secretary of said City, hereby certify as follows: 1. That on the 12th day of November, 1998, a regular meeting of the City Council of the City of Lubbock, Texas, was held at the regular meeting place in the City Council Chambers in City Hall; the duly constituted members of the City Council being as follows: Windy Sitton Victor Hernandez T. J. Patterson David Nelson Max L. Ince Mark McDougal Alex "Ty" Cooke Mayor Councilmember Councilmember Councilmember Councilmember Councilmember Councilmember and all of said persons were present, except for the following: Victor Hernandez and Max Ince; thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written Resolution entitled RESOLUTION BY THE CITY OF LUBBOCK, TEXAS, PRESCRIBING THE FORM AND SUBSTANCE OF A CONTRACT FOR THE DESALINIZATION OF THE MUNICIPAL WATER SUPPLY BETWEEN THE CITY OF LUBBOCK, TEXAS AND THE CANADIAN RIVER MUNICIPAL WATER AUTHORITY, AND AUTHORIZING THE MAYOR AND CITY SECRETARY TO EXECUTE SAID CONTRACT ON BEHALF OF THE CITY COUNCIL was duly introduced for consideration of said City Council and read in full. It was then duly moved and seconded that said Resolution be passed; and, after due discussion, said motion, carrying with it the passage of said Resolution, prevailed and carried by the following vote: AYES: _5 NOES: 0_ ABSTENTIONS: 2. A true, full and correct copy of the aforesaid Resolution passed at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate; said Resolution has been duly recorded in the official minutes of said City Council; the above and foregoing paragraph is a true, full and correct excerpt from said minutes of said meeting pertaining to the passage of said Resolution; the persons named in the above and foregoing paragraph, at the time of said meeting and the passage of said Resolution, were the duly chosen, qualified and acting officers and members of said City Council as indicated therein; each of said officers and members was duly and sufficiently notified officiallyand personallyin advance, of the time, place and purpose of the aforesaid meeting and that said Resolution would be introduced and considered for passage at said meeting, and each of said members consented in advance to the holding of said meeting for such purpose; and said meeting was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. SIGNED AND SEALED this 18th day of November , 199 1"4411u� City Seretary City of%Lubbock, Texas [CITY SEAL] CRMWA onW Lubbod cwt-4mo v Page 2