1997-035J \WPDOCS\0RD\UTRWD ORD
ORDINANCE NO ~-~--
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY
MANAGER TO EXECUTE AN INTERLOCAL ADDENDUM TO CONTRACT BETWEEN THE
CITY OF DENTON AND UPPER TRINITY REGIONAL WATER DISTRICT FOR WATER
TREATMENT AND TRANSMISSION SERVICES, AUTHORIZING THE EXPENDITURE OF
FUNDS THEREFOR, AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, the City of Denton ("the City") and the Upper Trinity
Regional Water Dlstrmct ("the UTRWD") entered into a July 21, 1992
Contract for Water Treatment and Transmission Services ("the
Contract") to provide for sale of treated water by City to UTRWD
and for transmission and delivery by City of limited amount of
UTRWD treated water from specified points to certamn customers of
UTRWD, ~ncludmng the C~ty of Sanger ("Sanger"), and
WHEREAS, said Contract provides in Section 6 4 thereof that
"To provide such service to Sanger, UTRWD shall have the
option to purchase treated water from Cmty at its posted
price for wholesale treated water, zf such rate exists, or
at City's rate for large ~ndustrlal customers, or to
request City to transport UTRWD's water according to the
provisions of this Agreement", and
WHEREAS, ~n lmeu of City transporting UTRWD water for delivery
to Sanger, UTRWD desires to purchase water on a wholesale basis
from City for resale and delivery to Sanger, and City agrees to
develop a wholesale rate for treated water, and
WHEREAS, said Contract provides for transmission of UTRWD water
by City not only to Sanger, but also to the City of Corinth
("Corznth") and to the Lake Cities Munmclpal Utility Authority
("LCMUA") for UTRWD, and
WHEREAS, in general, City and UTRWD agree that direct delmvery
by UTRWD of its own water zs to be preferred over any such
transmission of UTRWD water by City, and
WHEREAS, City and UTRWD agree to cooperate on an alternative
strategy that w~ll enable UTRWD to deliver its treated water
d~rectly to Corinth and LCMUA without transmmsszon by City through
its water system, and
WHEREAS, City and UTRWD wish to supplement the July 21, 1992
Contract For Water Treatment And Transmission Services, NOW
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the Cmty Manager is hereby authormzed to
execute an "Addendum to Contract between the City of Denton and the
Upper Trinity Regional Water Dlstr~ct For Water Treatment and
Transmlsszon Services", a copy of which addendum to contract
attached hereto and zncorporated by reference herezn
SECTION II That the expenditure of funds as required ~n the
attached addendum is hereby authorized
SECTION III That thms ordinance shall become effectzve
immediately upon ~ts passage and approval
PASSED AND APPROVED th~s the ~A~ day of ~3/~'', 1997
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
ADDENDUM
TO CONTRACT
BETWEEN
CITY OF DENTON
AND
UPPER TRINITY REGIONAL WATER DISTRICT
FOR WATER TREATMENT AND TRANSMISSION SERVICES
THE STATE OF TEXAS
COUNI~Y OF DENTON
This Addendum (the 'Addendum') to an exi~ng c~act styled as CONTRACT FOR WATER
TREATMENT AND TRANSMISSION SERVICES, dated July 21. 1992. (the 'Contract') by and
between UPPER TRINITY REGIONAL WATER DISTRICT, (the *DIstnct'). a conservatmn and
reclamatlott district created pursuant to A~ticle XVl, Section 59 of the Constitutm~ of the State of
Texas, and the CITY OF DENTON ('Denton'), a mun=pal corporm~n, ts made and approved as of
the J-/'~ day of ~~/, 199~7(the 'Date of Addendum')
WHEREAS. Denton and ~ entered ~nto the July 21, 1992 Contract for Water Treatment
and Transm.ssion Servmas to prowde for sale of treated water by Dantan to D~stnct and for
transmission and delivery by Denton of limited amount of D~stnct treated water from specified points
to certain customers of D~stnct, ~ncludlng C~y of Sanger ('Sanger'). and
WHEREAS, said Contract provides in Section 6 4 thereof that
To provide such sew~ce to Sanger, D~stnct shall have the opbon to purchase treated
water from Denton at its posted pnce for wf'olesale treated water. ~f sc~h rate exists,
or at Denton's rate for large ~ndustnal customers, or to request Denton to transport
D~stnct's water according to the provisions of this Agreement ', and
WHEREAS, in lieu of Denton transporting Distnct Water for dehvery to Sanger, District
desires to pumhase water on a wholesale bas~s from Denton for resale and delrven/to Sanger, and
Denton agrees to develop a wholesale rate for treated water, and
WHEREAS, said Contract provides for transmission of Oistnct water by Denton not only to
Sanger but also to C_~ of Connth ('Connth') and to Lake C~tles Mumc~pal UtdRy Authority ('LCMUA')
for D~stnct, and
WHEREAS, in general, DeNon and D;stnct agree that direct delivery by I~stnct of ~s own
water is to be preferred over any such transmission of ~stnot water by Denton, and
WHEREAS, Denton and District agree to cooperate on an altematwe ~,d. egy that mil enable
Dtstnct to deliver ~s treated water d,reotly to Connth and LCMUA w~thout transmlsston by Denton
through its water system
NOW, THEREFORE, in conslderabon of the mutual covenants and agreements herein
contanad, the ~ agree to supplement the Contract ruth this Addendum as heramafter set forth,
to-vat
8egdon I 0. Preamble Inooroorated
That the matters stated In the preamble hereof are tree and correct and are tncoqx)rated ~nto
the body of thts Addendum as ;f copied tn thetr entirety
Seet3on 1 I Scope of Addendum
That the provisions of the Contract shall remmn ~n full force and effect as supplemented by
thru Addendum Further, Denton and D~stnct agree to add the provisions hereto to prowde for
continued purchase of treated water by D~stnct from Denton on a wholesale bas~s and to fac~htate
the provision of direct treated water service by D~stnct to Connth and LCMUA
8eobon 1.2 Exeroise of ODbon to Purchase Treated Water
As provided in Section 6 4 of the Contract, Distnct does hereby elect to exero~se its
op~n to purchase treated water from Denton at its posted pnce for wholesale treated water
for resale to Sanger Further, Denton agrees to make avadable such treated water for delivery and
sale to Distnct at the agreed delwery point (spemfled in separate contract) for the Sang~
Transmission L~ne Denton vail make reasonable capacity avmlable and will deliver water to said
dehvery point at Denton's oparet~ng pressure normally maintained for that sector of As trensm~ss~on
and dlstnbuhon system
8eotion 1.3 Quantflv t~ be Delivered
For the first Water Year of o0eraben dunng whK:h water ~s delivered under the contract to
the designated delrvery p~nt for the ~anger Transmission lane, the ,nttml amount of treated water
to be delivered by Denton shall no~ exceed one-half mlll~on gallons per day (0 50 mgd) After the
first Water Yem' of operations, D~strict may request mc~'eased quantity up to a maximum of one and
one-quarter (1 25) mod to be delrvered by Denton [:hstnct shall give written nohce to Denton at
least one hundred twenty (120) days ;)nor to the beginning of a Water Year concerning the Peak
Dmly Volume of treated water being requested Denton may, at its sole d~sorebon, waive the written
not~ce requirement upon written request of D~stnct
If the requested Peak Daily Volume exceeds one-half mlll~on gallons per day (0 50 mgd),
Denton shall determine ~' such eddit~nal water and such capacKy to deliver the wsLer are available
If, for the upcoming Water Year, Denton determines there is suffk3ont addKK)nal capac3ty and
suffi=ent eddlbonal water to I:XOWde the D~stnct w~th the requested Peak Daily volume. Denton may,
under terms of th~s Addendum and the Contract, provide such additional volume (or any portion
thereof) for that Water Year
Seotmn I 4 Rates for Wholessle Treated Water Serv,oe
The posted rates for wholesale treated water service prowded under this Addendum may be
expressed as a volum,~ charge per thousand gallons plus a facility charge and an annual demand
charge per unit of peak day usage, or may be expressed as a total unit pnce per thousand gallons
of water delrvered and metered for each F~scal Year The posted rates for wholesale treated water
service shall ~nclude the cost of raw water, the cost of treatment, operation and maintenance
expenses of the Tmnsmmslon System, pumping and energy costs, deprec~abon expense, and a
return on Danton's appl~able rate base The rate base shall be Denton's actual net ~nvestmant ~n
that port~on of Rs water system reasonably allocated to wholesale sarv~ce, which net ~nvestment
shall be equal to ong,nal cost less depre~at~on reserve The authonzed ratum shall be equal to the
weighted average ~nterest rate on ell outstandm~ debt for Denton's Water UtdRy System plus one
and one-half percent (1 5%) A street rental fee equal to four percent (4%) of total operation and
maintenance cost may be included in opembon and maintenance expenses Deprec. at~n expense
w~ll be based upon the original cost of all cep~tal facilities, both invested and contributed capital.
wh,:h fael(0es are expected to be replaced by Denton at a future date in order to rnmntmn servtce
Pipelines and other factlitms paid for by the ~stnct. Conhth, LCMUA or others shall not be included
~n Denton's investment cx~t for calculating a return but may be included when calculating operating
and maintenance expense Costs to transport water shall be calculated on a system-wide has~s,
excluding distribution faclbties, and shall be hm~ted to the Transmission System which shall not
~nclude the cost of transporting water through lines smaller than twelve (12) ~nches in dmmeter
The test year for establishing the rate for wholesale treated water service shall be the
projected year for whK:h the rate is proposed to be applicable Test year data shall be obtmned from
actual dlata of the second year prior to the test year w~th adjustments made for known or venfiable
changes
8anlton 1.E. Notioe/O_aeortunitv to Comment
Denton shall g~ve timely notice to D~stnct w~th opportumty to comment on Denton's cost
analysis ~n each year that ~t proposes to rewse rates for sarv~ce provided here~n Such not~.e and
such opportumty to comment on the cost analys~s prowded shall conform to the prowsions of
Section 7 4 and 7 5 of the Contract
Seobon 1 6 Transm,sslon Lmne to LCMUA/Connth
Dtstnct desires to construct a transmission pipeline to allow District to deliver treated water
directly to LCMUA and Coflnth vathout relying on D )nton to transport District water through Denton's
Transmms~on System A certain transmission hne being used by Denton to dehver treated water to
LCMUA and Connth was pa~d for by the users, was dedicated to Denton, and ~s now the property
of Denton Denton agrees to convey to Dlstnct satd pipel.ne fac~l~bes and related appurtenances
The property to be conveyed shall be that porben of the transmission line and related faclhbes shown
on Exhibit C, which Exhibit Is attached hereto and incorporated hereto for all purposes As
consideration, D~stnct agrees to grant to Denton an ~ncreased interest m the Joint Transmission L~ne
pursuant to the May 6, 1993 Joint Ownership and Operations Contract (as supplemented) As
add~bonal consideration for the faCllltmS being conveyed, D~stnct agrees to relieve Denton of ~t5
obhgatmn to prowde long-term Transmission Service for Distnct water to LCMUA and Connth
Denton and D~stnc~ agree to cxx)rdmate and cooperate on necessary pipeline improvements by
D~stnct to enable the Ekstnct to use smd 13palina being conveyed for direct delivery of Distnct treated
water to LCMUA and Connth The effective date for transfer of ownership of said pipeline from
Denton to I)stnct shall be the day that I)stnct first uses the i~pelme to deliver As water to LCMUA
or Connth Said date shall be confirmed by D~stnct to Denton by written notme
8action 1,7. ~
In conjunctmn vath the conveyance of the LCMUA/Connth p~pellne as provided in Sectmn t 6
hereof, Distnct shall pay for and arrange for improvements approved by Denton to enable an
Emergency Connection at the approximate location shown on Exhibit C The Emergency
Connecbon shall be establIshed by and maintained for the mutual benefit of Denton and D~stnct for
the Primary Term of the Contract The Emergency Connection normally shall be closed In the
event of a water system ¢ondaon wh~h generally would be regarded as an emergency ~n the water
utility industry, and upon the request of e~her party, the parties may mutually agree to open the
emergency connectmn
Examples of a system cond~on to be considered an emergency shall include (w~thout
hm~mg the scope of such cond,~ons)
A d~srupt~on ~n whole, or ~n part, of either party's water supply,
An electncal outage, whmh adversely affects water servme,
· Contamination of e~ther party's water supply, or
Failure of a major system component such as a p~pehne or pump
Failure to plar~ 'or an adequate water supply does not consbtute an emergency Dunng the t~me of
such emergency, the requesting party w~ll expedite efforts to overcome the emergency, and, the
other party w~ll supply water to the extent reasonably available and prudent under the c~rcumstance
ADDENDUM TO CONTRACT BETWEEN CITY OF DENTON AND UTRIA~O
FOR WATER TREA'II~ENT/~ND TRAN&MI~8tON SER~/tCF.~
pAGE 6
W~th approval of the supplying party, the benefitting party w~ll be responsible for any necessary
~mprovements, arrangements or facilities to delrver and receive the water
The pa~y supplytng the water under emergency cond~tmns provided for ~n th~s Section shell
be compensated for the water delrvered If the volume of water delivered dunng the emergency
cond~ons is r~ deten~lned by rc:)ter, the part~es shall use the best information readily available to
develop an estimate of such volume The benef'~lng party shall compensate the supplying party
as mutually agreeable
The Contract ixov~es for Denton to sell treated water to D~stnct for resale to certan parties
dunng the InR~al Penod of the Co.b~ (through Water Year 1998) Other pro~s~ons of the Contract
nob~thstandlng, Denton agrees that D~stnct may reduce or discontinue purchase of treated water
from Denton dunng the Imtial Penod If such reductmn or d~scontlnuance is related to the ~stnct's
own water treatment plant and del;very fac#~tlea beoom~ng oparatmnal, there shall be no impos~on
of the Mimmum Water Volume provisions of Sectmn 3 3, ixovlded that the total revenue recerved
by Denton from D~strict for purollase of both treated water and untreated mw water shall be equal
to or greater than the revenue (not including Vanable Costs) that Denton would o~bentaea have
received ~1' D~st~ct had continued purchasing only treated water through the 1997 Water Year
pursuant to the Contract
Section 1.~ Term of Addendum
This Addendum shall be effectNe on and from the Date of Addendum The Addendum shall
continue for the Pnmary Term of the Contract and for any renewals thereof
ADDENDUM TO CONTRACT BEI'W~EN CITY OF DENTON AND UTRWO
FOR WATER TREATNE NT AND TRANSMISSION SERVICES
PAGE ?
IN WITNESS WHEREOF, the part~es hereto acbng under authonty of their respecbve
govemtng bodies have caused th~s Addendum to be duly executed ~n several counterparts, each of
which shall const~ute an ong~nal, all as of the day and year first above written, which ~s the Date of
Addendum
UPPER TRINITY
REGIONAL WATER DISTRICT
R~chard Huckaby
President, Board of D~rectors~
ATTEST
APPROVED AS TO FORM AND LEGALITY
John F Boyle, Jr, Counsel for the Distnct
CITY OF DENTON. TEXAS
Tod Bonav~dos Ctty Mana§~r
ATTEST
(~r~r[~fe'r Writers, City Secretary
APPROVED AS TO LEGAL FORM
Herb
Prou~Y,
"~ -~-~tto.,ey c~ DEaTON,CO.T~CT~DD WT&T
EXHIBITS A and B
E.xh ~_ ,, __~ r~ ..,o ,..-.,,~-ined in ~ original Contract remain .v~. IKI..a .m:l..,n,e?.,_e~t._~..S~id
II:)K~ ~ ~r~ u ~o .... __ -- to the exteflt provicled lil IRis/~K3~" "Ju"L
Exhib~s are modit'~l or supplemented ofl~/
REGIONAL WATER DISTRICT
TO' Howard Martin
D~of Enviro~t'Operat,ons, C~ of Denton
FROM: Thom~~ Ex~utlve Director
DATE: No,/ember 12, 1996
RE: Contract Addendums
On November 7, the Board of Directors approved both Contract Addendums Enclosed are 3
executed originals of each Addendum Your scheduling the Addendums for consideration by
the City Council will be appreciated Upon approval, please execute the documents end return
2 originals of each document to me
Based on my discussion with both you end Tim F~sher, I understand that one issue is still being
discussed - the matter of how Denton's share of the Senger Transmission Une will be
reimbursed The provisions of the Addendum provide for flexibility, however, If you desire a
different method of repayment to be specified, please let me know as soon a~ possible I can
provide a substitute page for Insertion In the Addendum
Howard, I appreciate your help end cooperation In prepenng these decuments This is another
example of how cooperation end creativity produce good benefits for both Denton end the
District Call me If you have any questions
c Mr Robert E Nelson, Executive Director of Utd~t~es, C~ty of Denton
Encl (1) Addendum to Joint Ownership and Operations Contract Between C~y of Denton
and UTRWD - Regarding Participation ~n Sanger Transmission Une
(2) Addendum to Contract Between C~ty of Denton and UTRWD - For Water
Treatment and Transmission Services