R2010-045 - 2010-03-31 RESOLUTION NO. R2010 -45
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AUTHORIZING THE MAYOR TO SUBMIT A LETTER TO THE
GULF COAST WATER AUTHORITY EXPRESSING THE CITY'S DESIRE
TO EXTEND A WATER PURCHASE OPTION AGREEMENT FOR THE
PURCHASE OF 10 MILLION GALLONS PER DAY.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That the Mayor is hereby authorized to submit a letter to the Gulf
Coast Water Authority expressing the City's desire to extend a Water Purchase Option
Agreement for the purchase of 10 million gallons per day.
PASSED, APPROVED and ADOPTED this the 29 day of March, A.D., 2010.
C
TOM REID
MAYOR
ATTEST:
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APPROVED AS TO FORM:
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DARRIN M. COKER
CITY ATTORNEY
TOM REID
MAYOR
March 26, 2010
Robert Istre
General Manager
Gulf Coast Water Authority
3630 Highway 1765
Texas City, Texas 77591
Re: Option to Exercise Water Contract
Dear Robert:
The City of Pearland desires an extension of the current Option Water Contract
with the Gulf Coast Water Authority (GCWA) that was originally executed on April 1,
1998, and which is set to expire on April, 1, 2010. The Option Contract allows the City
of Pearland to buy Ten (10)million gallons of surface water per day from GCWA's canal
system.
The agreement between the City of Pearland and GCWA outlines the price per
million gallons of water per day the City is to pay for the surface water and provides for a
"Change Percentage" in price the City shall pay for water over the life of the agreement.
Please allow this letter to serve as notice that the City of Pearland desires an extension of
the current Option Water Contract while the parties negotiate a new Option Water
Contract.
Should you have any questions or require additional information regarding this
matter,please do not hesitate to contact me at your convenience.
Sincerely,
Tom Reid,
Mayor
Cc: Bill Eisen, City Manager
EXHIBIT
OPTION AGREEMENT -
THIS OPTION AaWEMENT (herein the "Agreement") dated the 1st day of
April, 1998 , 9 by and between GULF COAST WATER AUTHORITY, a Texas
conservation and reclamation district ("GCWA"), and the CITY OF PEARLAND, a city
("Purchaser").
WJTNESSETH:
PREMISES,
Purchaser is located in 13razoria County;.Texas, and needs to assure the availability of a
reliable supply of surface water.
GCWA is a conservation and reclamation district authorized to supply water both inside
and outside the district pursuant to Article 8280-339, Vernon's Texas Civil Statutes, as amended.
GCWA represents that, pursuant to water rights it now owns, a supply of surface water is
available to GCWA through its Canal Division for use by Purchaser and others. The purpose of
this Agreement is to provide an option for Purchaser to buy surface water from GCWA.
GCWA and Purchaser each, for and on behalf of itself, represents to the other that it is
authorized to enter into this Agreement under the Constitution and Iaws of the State of Texas
AGREEMENT
NOW, THEREFORE, PURCHASER AND GCWA do hereby agree to the Agreement as
follows:
1. OPTION. For and in consideration of the payments described herein, GCWA agrees that
Purchaser shall have the Option, exercisable as set out herein, to buy from GCWA Ten
( 10 ) million gallons per day of surface water, from GCWA's canal system." .
2. PRICE. Purchaser agrees to pay monthly in advance to GCWA, at its offices in Texas
City, Texas, the sum of $18.53 per million gallons per day ($185.30 per day) during
the remaining term of this Agreement. The first such payment shall be due on the date of
the execution of this Agreement and subsequent payments shall be made monthly in
advance on the first day of each month.
At the end of each three year period during the term of this Agreement, the price
to be paid by Purchaser hereunder shall be adjusted as follows. On the date of this
Agreement and each three years thereafter, GCWA shall ascertain the U.S. Department of
Labor Utilities Index for Industries (all urban industrial consumers, all utilities = 100)
(the "Index") for the closest full month for which the Index is published (I) prior to the
date of this Agreement and (2) prior to the end of such 3 year period. Every three years,
on the anniversary of the date of this Agreement GCWA will determine the percentage by
which the index changed over the previous three year period (the "Change Percentage")
and furnish Purchaser with copies of the calculations. The price to be paid by Purchaser
for the next three year period will be adjusted by an amount equal to the Change
Percentage.
If the Index is discontinued or substantially modified, the parties shall select
another index for the purpose of price adjustment. If the present or future interpretation,
or the future imposition of any law, governmental decree, order, or regulation, prevents
changing the price as set out herein the parties shall promptly meet to determine a
mutually agreeable price conforming to such interpretation or imposition, and if they are
unable to agree within 60 days, either shall have the right to have the issue resolved by
arbitration in accordance with the rules of the American Arbitration Association.
3. EXERCISE. At any time during the term of the Agreement, Purchaser may exercise its
option to buy surface water by giving GCWA 90 days' written notice. Such notice shall
state the amount of surface water, in million gallons per day, which Purchaser wishes to
purchase, and the point on GCWA's canal. system at which it wishes to take such water.
Such amount may be less than, but not be more than, Ten (10) million gallons per day.
If such notice is for less than Ten (IQ) million gallons per day, Purchaser's option to
buy water shall terminate as to the unexercised portion.
4. PURCHASE AND SALE. If Purchaser notifies GCWA of the exercise of its option as
set out above, 90 days after the date of such notice, or such earlier date as may be agreed
to, GCWA shall be obligated to sell and deliver, and Purchaser shall be obligated to take
and pay for, or pay for whether taken or not, the amount of water specified in such notice
at the point of delivery so specified. The price for such water shall be GCWA's then
existing price for water delivered through and on its canal system, payable monthly in
advance. Other provisions relating to such purchase and sale shall be as may be agreed
upon.
5. REMEDIES. If GCWA fails for any reason to provide surface water to the Purchaser in
accordance with the provisions of paragraph 4 above, GCWA shall reimburse to the
Purchaser any funds paid by the Purchaser to the GCWA as option payments pursuant to
the terms of this Agreement.
6. TERM AND TERMINATION. This Agreement shall be for a term of 6 years from its
date. GCWA may terminate this Agreement for any nonpayment which continues for 20
days after written notice to Purchaser. Purchaser may terminate this Agreement on 6
month's written notice to GCWA.
7. RENEWAL. If this Agreement remains in force for the entire six year term, Purchaser
shall have the right, at its option, to extend this Agreement for an additional six years,
, ! 5
•
such right to be exercised by written notice to GCWA not later than 90 days prior to the
expiration of the original six year term.
8. ASSIGNMENT. The Purchaser may assign any or all of its option to purchase surface
water or its right to purchase surface water from the GCWA under this Agreement at any
time during the term of this Agreement to any entity or entities. However, an assignment
by the Purchaser hereunder shall not release the Purchaser from any of its obligations to
GCWA pursuant to this Agreement, unless the Purchaser's assignee assumes the
Purchaser's obligations under this Agreement and the GCWA expressly consents to such
assignment and assumption. This Agreement shall be binding upon the Purchaser and the
GCWA, as well as their respective successors and permitted assigns.
9. NOTICES. Notices hereunder shall be sufficient if in writing and if actually delivered or
sent by U.S. Mail, first class postage prepaid to the parties at the following addresses, or
such other address as a party may designate from time to time by notice.
Gulf Coast Water Authority
3630 Highway 1765
Texas City, Texas 77591
Attention: General Manager
City of Pearland
3519 Liberty
Pearland, Texas 77581
Attention: Tom Reid, Mayor
10. In the event Purchaser exercises its option to purchase surface water, the water supply
agreement shall include, among other terms, a force majeure provision substantially as
follows:
"Force Majeure. In the event either party is rendered
unable, wholly or in part, by force majeure to carry out any
of its obligations under this Contract, then the obligations
of such party, to the extent affected by such force majeure
and to the extent that due diligence is being used to resume
performance at the earliest practicable time, shall be
suspended during the continuance of any liability so caused
to the extent provided but for no longer period. As soon as
reasonably possible after the occurrence of the force
majeure relied upon, the party whose contractual
obligations are affected thereby shall give notice and full
particulars of such force majeure to the other party. Such
cause, as far as possible, shall be remedied with all
reasonable diligence. The term "force majeure," as used
herein, shall mcan 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 the State
of Texas or any civil or military authority other than a party
to this Contract, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, hurricanes, storms, floods,
•
washouts, droughts, arrests, civil disturbances, explosions,
breakage or accidents to machinery, pipelines or canals,
partial or entire failure of water supply, and any other
inabilities of either party, similar to those enumerated,
which are not within the control of the party claiming such
inability. It is understood and agreed that the settlement of
strikes and lockouts shall be entirely within the discretion
of the party having the difficulty and that the above
requirement that any force majeure shall be remedied with
all reasonable dispatch, but shall not require the settlement
of strikes and lockouts by acceding to the demands of the
opposing party or parties when such settlement is
unfavorable to it in the judgment of the party having the
difficulty."
EXECUTED as of the date first above written.
GULF COAST WATER AUTHORITY
By: WIL)--
President, Board of Directors
W. W. Latimer, Jr.
ATTEST:
cretary—Treasure `+�1lflll//j
John W. Knust \\i WAT 4/
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pP, ,.• •.,•qlr,,'�� CIT RLAND
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` Paul Grohman, City Manager
ATTEST: /1/4/1!*11t0\\\
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