R98-15 01-26-98 RESOLUTION NO. R98-15
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO
EXECUTE OPTION AGREEMENTS WITH GULF COAST WATER
AUTHORITY AND THE CITY OF HOUSTON FOR THE PURCHASE OF
RAW WATER.
WHEREAS, Gulf Coast Water Authority owns rights to water in the
Brazos River, a portion of which flows through Pearland's extraterritorial jurisdiction
via the American Canal; and
WHEREAS, the City of Houston has raw water resources of which the City may
choose to purchase; and
WHEREAS, execution of option contracts will reserve for the City future
alternative water resources; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain Option Agreement by and between the City of
Pearland and Gulf Coast Water Authority, a copy of which is attached hereto as
Exhibit "A" and made a part hereof for all purposes, is hereby authorized and
approved.
Section 2. That the City Manager or his designee is hereby authorized to
execute and the City Secretary to attest the original of the attached Option Agreement
and similar agreements with the City of Houston for and on behalf of the City of
Pearland, to reserve water resources necessary to meet future capacity requirements
of the City.
RESOLUTION NO. R98-15
PASSED, APPROVED, and ADOPTED this 26th day of January ,
A.D., 1998.
TOM REID
MAYOR
ATTEST:
APPROVED AS TO FORM:
AM? IVI~TTES McCULL(~OG~-
CITY ATTORNEY
2
OPTION AGREEMENT
THIS OPTION A~C~E~EMENT (herein the "Agreement") dated the 1st day of
g-pr±l, 1998 , t'997 by and between GULF COAST WATER AUTHORITY, a Texas
conservation and reclamation district ("GCWA"), and the CITY OF PEARLAND., a city_
("Purchaser").
WITNESSETH:
PREMISES
Purchaser is located in Brazoria 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 Pumhaser 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 laws 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 = I00)
(the "Index") for the closest full month for which the Index is published (1) 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
Pementage.
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 (10) 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,
such right to be exemised 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 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 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: ~nt, ard olD,rectors
W~ ~. Latimer, Jr.'
ATTEST:
.......
~/z '""" ........... "° '" x~ ?au] Crohman, City Manager
ATTEST:
Or%7
.... %%% c
Ag[iculture ~k ~ ~ W
GULF COAST WATER AUTHOFtlTY
3630 Highway 1765 Texas City, Texas 77591 409-935-2438 281-337-3403 FAX 409-935-4156
July 11, 2001
The Honorable Tom Reid
Mayor of City of Pearland
3519 Liberty
Pearland, TX 77581
RE: 1998 Water Supply Contract between Gulf Coast Water Authority and City of
Pearland . _
Dear Mr. Mayor:
The Gulf Coast Water Authority has reviewed your option water contract to establish
your new water rate Effective April 1, 1998.
Under the Option Water Agreement, item number 2, of your 1998 Contract, the price of
water can be increased by using the U.S. Department of Labor Utilities Index for Urban
Consumers ("Index") for the month of April, 2001.
EXAMPLE:
A- $18.53 perMGD
X- 162.5 March 2001
Y 176.9 CPI April 2001 Preceding Adjustment
Y = 176.9
X = 162.5= (1.08862) (18.53) = $20.17 per MG
$20.17 X 10 MGD = $201.70 per day
CiTY OF PEARLANO
CiTY SECRETARY'S OFFICE
1500 West Highway 6 Alvin, Texas 77511 CANAL DIVISION 281-331-3137 Fax 281-585-3035
4001 5th Avenue North Texas City, Texas 77591 WATER TREATMENT PLANT 409-948-6415 Fax 409-943-4522
Page 2
City of Pearland
Water Contract
In accordance with the Option Water Agreement, item number 2, of your contract, your
new water rate effective April 1, 2001 will be $20.17 per million gallons, instead of
$18.53 per million gallons.
if you agree with the-calculations~f the prieeset out aboveplease-indicate~by~ signing in
the space provided below and return one for our files. A second copy is enclosed for
your files.
We have enclosed an invoice, which corrects the cost of water from April 1, 2001
through August 31, 2001. If you have any questions or you need additional information,
please call Robert Istre (409) 935-2438 #17.
Sincerely,
Robert Istre
General Manager
RI/sgp
I agree with the calculations of price for the new water rate under the 1998 Option Water
Contract.
Attest: Agreed
City of Pearland