1993-076kL-L002D7
ORDINANCE NO. ! 'U /
AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE MAYOR TO EXECUTE
AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE UPPER TRINITY
REGIONAL WATER DISTRICT FOR THE CONSTRUCTION OF A TRANSMISSION LINE
FROM DENTON'S EXISTING WATER DISTRIBUTION SYSTEM TO OLD ALTON ROAD;
AUTHORIZING THE EXPENDITURE OF FUNDS AS PROVIDED IN SAID AGREEMENT;
AND PROVIDING AN EFFECTIVE DATE.
SECTION I. That the Mayor is authorized to execute an Agree-
ment between the City of Denton and Upper Trinity Regional Water
District for the construction of a transmission line from Denton's
existing water distribution system to old Alton Road, under the
terms and conditions set forth in the Agreement, a copy of which is
attached hereto as Exhibit A.
SECTION II. That the City Council authorizes the expenditure
of funds as provided in the attached Agreement.
SECTION III. That this ordinance shall become effective immedi-
ately upon its passage and approval.
PASSED AND APPROVED this the day of , 1993.
61
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
BY:
~~L' (ALL L
CASTLEBERRY,
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
UPPER TRINITY REGIONAL WATER DISTRICT
REGIONAL TREATED WATER SYSTEM
CONTRACT FOR ADDITIONAL PARTICIPATING MEMBER
WITH CITY OF DENTON
JOINT TRANSMISSION LINE
THE STATE OF TEXAS §
COUNTY OF DENTON §
THIS JOINT OWNERSHIP AND OPERATIONS CONTRACT (the "Contract") made and
entered into as of the day of Q 19 (the "Contract Date"), by and between
UPPER TRINITY REGIONAL WATER DISTRICT, (the "District"), a conservation and
reclamation district created pursuant to Article XVI, Section 59 of the Constitution of the State of
Texas, and the CITY OF DENTON ("Denton"), which party may be referred to herein as "Additional
Participating Member" (or Member).
WITNESSETH:
WHEREAS, Denton is a duly incorporated city of the State of Texas operating under the
Constitution and laws of the State of Texas; and
WHEREAS, Denton is a governmental entity in Denton County that provides retail utility
service to customers within its service area; and
WHEREAS, one of the purposes for which the District was created was to provide water
transmission service to cities and water distribution utilities of the Denton County area; and
WHEREAS, the District proposes to develop a regional treated water system for Participating
Members and Customers, which system is planned to include raw water transmission lines, water
treatment plants, pump stations, treated water transmission lines, storage tanks and metering facilities;
and
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WHEREAS, the District proposes to develop the regional treated water system for
Participating Members either by constructing and owning such facilities, or through contracts with
others; and
WHEREAS, Denton desires to participate in one of the transmission lines being built as part
of the regional treated water system, which transmission line is referred to herein as the "Joint
Transmission Line% and
WHEREAS, District has entered into prior contracts with Participating Members (Contract
dated November 13, 1990) and with Participating Utilities (Contract dated November 2, 1990), under
which contracts the District is authorized to enter into contracts with additional parties such as this
Contract; and
WHEREAS, the District will manage and operate, or contract with others for the
management and operation of the Joint Transmission Line; and
WHEREAS, District proposes to construct or develop Phase I of its regional treated water
system in general accordance with the engineering reports prepared by Alan Plummer and Associates,
Inc. in 1992 and prior years, herein referred to as the "Project"; and
WHEREAS, Denton has heretofore executed a Raw Water Supply Contract dated June 10,
1991 with the District, is a Participating Member of the District; and
WHEREAS, Denton desires to become an "Additional Participating Member" for the Joint
Transmission Line as defined in this Contract; and
WHEREAS, Denton will provide for its own treated water service from its own sources which
are independent of the District; and
WHEREAS, the District and Denton are authorized to enter into this Contract pursuant to
the District's enabling statute, H.B. 3112 (1989 regular session of the Texas Legislature) (the "Act")
and Vernon's Ann. Tex. Civ. St. Article 4413 (32c) (the "Interlocal Cooperation Act"), and other
applicable laws; and
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WHEREAS, the Initial Participating Members heretofore agreed that the District may enter
into such a contract as this Contract with Additional Participating Members and other Customers;
and
WHEREAS, it is expected that as soon as practicable after the execution of this Contract,
the District will issue an installment of Bonds to provide part of the money to acquire and construct
the Project, including the Joint Transmission Line, and thereafter will issue a subsequent installment
or installments of Bonds to complete the acquisition and construction of the Project, including the
Joint Transmission Line, with all of said Bonds to be payable from and secured by Annual Payments.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the District agrees to provide transmission service of the Project to Denton under this
Contract, and use its best efforts to issue its Bonds and to acquire, construct and complete the
Project, including the Joint Transmission Line, upon and subject to the terms and conditions
hereinafter set forth, to-wit:
ARTICLE I
Definitions
Section 1.1. The following terms and expressions as used in this Contract, unless the
context clearly shows otherwise, shall have the following meanings:
1. "Act" means H.B. 3112 adopted by the Legislature of the State of Texas in the 1989
regular session, which was signed by the Governor and became effective June 16, 1989.
2. "Additional Participating Member" means Denton and any party other than the Initial
Participating Members listed herein with which the District makes a contract similar to this Contract
for supplying treated water from the Project, provided that after execution of any such contract such
party shall become one of the Participating Members for all purposes of this Contract. Additional
Participating Members also include Town of Flower Mound and Denton County Fresh Water Supply
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District No. 1, both of whom executed contracts with the District after the contract with Initial
Participating Members.
3. "Administrative Payment" means the amount of money to be paid to the District by
each of the Participating Members, Participating Utilities, Additional Participating Members, Contract
Members and Contract Utilities during each Annual Payment Period as their proportionate share of
Administration and Planning Expenses of the District.
4. "Adjusted Annual Payment" means the Annual Payment as adjusted by the Board
during or after such Annual Payment Period, as provided by this Contract.
5. "Administrative and Planning Expenses" means the general overhead cost and expenses
of managing the District, but not including expenses related to capital projects financed by the
District; such expenses shall include the administration of the District's general office, the activities
and meetings of the Board and the planning activities of the District, to the extent such programs and
activities shall be for the general welfare of the District; activities and programs for the benefit of
specific parties and for specific capital projects shall, unless otherwise authorized, be the responsibility
of the benefitting parties.
6. "Annual Payment" means the amount of money to be paid to the District by Denton
during each Annual Payment Period as its proportionate share of the Annual Requirement, which
proportionate share will be limited to the Joint Transmission Line.
7. "Annual Payment Period" means the District's fiscal year, which currently begins on
October 1 of each calendar year and ends on September 30 of the next following calendar year, but
which may be any twelve consecutive month period fixed by the District; and the first Annual
Payment Period under this Contract is estimated to be the period of October 1, 1991, through
September 30, 1992.
8. "Annual Requirement" means the total amount of money required for District to pay
all Operation and Maintenance Expenses of the Joint Transmission Line, and to pay the Bond
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Service Component of the Annual Requirement as described hereinafter including debt service on
its Bonds, and any sums required to pay or restore any amounts required to be deposited in any
special or reserve funds required to be established and/or maintained by the provisions of the Bond
Resolutions.
9. "Board" means the governing body of the District.
10. "Boardmember" means a member of the Board.
11. "Bond Resolution" means any resolution of the District which authorizes any Bonds.
12. "Bonds" means all bonds hereafter issued by the District, whether in one or more
series or issues, and the interest thereon, to acquire, construct and complete the Project, and any
bonds issued to refund any bonds or to refund any such refunding bonds.
13. "Contract Member" means an entity that provides retail utility service or is taking
definitive steps to provide retail utility service to customers within its boundaries, that contracts with
the District to preserve the option to become a Participating Member prior to June 16, 1999, and
that agrees to pay an annual pro rata share of the Administrative and Planning Expenses of the
District.
14. "County" means Denton County, Texas.
15. "Customer" means any wholesale user of the water services provided by the District
which user provides retail utility service within its boundaries.
16. "Customer Advisory Council" or "Council" means the committee to be created to
consult with and advise the District with respect to the Project as provided in this Contract.
17. "District" means the Upper Trinity Regional Water District, a conservation and
reclamation district pursuant to Article XVI, Section 59 of the Constitution of the State of Texas
created in accordance with the Act.
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18. "Initial Participating Member(s)" means those governmental entities who executed a
contract dated November 13, 1990, as amended, namely, City of Corinth, City of Highland Village,
Lake Cities Municipal Utility Authority, and City of Sanger.
19. "Joint Transmission Line" means the proposed water transmission line and related
facilities (including associated easements and rights of way) that will connect to Denton's existing
water distribution system near Interstate Highway 35E and will be extended generally along Lillian
Miller Parkway to the vicinity of Old Alton Road as set forth in Exhibit A to this Contract.
20. "MGD" is an abbreviation for "million gallons of water per day".
21. "Operation and Maintenance Expenses" means all administrative and planning
expenses and all costs and expenses of operation and maintenance of the Joint Transmission Line,
including (for greater certainty but without limiting the generality of the foregoing) repairs and
replacements, operating personnel, the cost of utilities, the costs of supervision, engineering,
accounting, auditing, legal services, insurance premiums, supplies, services, administration of the Joint
Transmission Line, Administrative and Planning Expenses, and equipment necessary for proper
operation and maintenance of the Joint Transmission Line, and payments made by District in
satisfaction of judgments resulting from claims not covered by District's insurance arising in
connection with the acquisition, construction, operation, and maintenance of the Joint Transmission
Line. The term also includes the charges of the bank or banks acting as paying agents and/or
registrars for any Bonds. The term does not include depreciation expense.
22. "Participating Member" means a governmental entity that provides retail utility service
or is taking definitive steps to provide retail utility service to customers within its boundaries that
contracts with the District for the acquisition, construction, improvement, enlargement, and payment
for the water projects to be financed from time to time by the District, and specifically includes
Denton and those entities identified as Initial Participating Members in this Contract.
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23. "Project" means Phase I of the District's regional treated water system, generally as
outlined in the engineering report prepared by Alan Plummer and Associates, Inc. dated June 1992.
24. "State" means the State of Texas.
25. "Water Year" means the period of June I of each calendar year through May 31 of
the next following calendar year.
ARTICLE II
Board of Directors
Section 2.01. Board Representation. The governing body of each Contract Member, each
Participating Member and the County are entitled to appoint a qualified person to serve on the
Board. Denton is specifically included in this provision.
Section 2.02. Board Votes. Boardmembers appointed by the governing body of Participating
Members shall be entitled to vote on all matters coming before the Board. Boardmembers appointed
by the governing body of Contract Members shall be entitled to vote on all matters before the Board
except those matters that require a weighted vote. The Board has established rules for weighted
votes in accordance with the Act for matters concerning authorization of and financial commitments
for capital projects.
Section 2.03. Terms. Boardmembers shall serve staggered four (4) year terms in accordance
with procedures established by the Board. Boardmembers may serve consecutive terms. A
Boardmember may be removed at any time by the governing body of the entity that appointed that
Boardmember.
Section 2.04. Board Compensation. The District will not compensate Boardmembers for
serving on the Board, but may reimburse Boardmembers for actual reasonable expenses necessarily
incurred on behalf of the District or in the discharge of official duties.
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Section 2.05. Board Member Qualifications. A Boardmember must be a qualified voter who
resides in the District and may not be an elected official of any governmental entity that has the
authority to appoint a member of the Board.
ARTICLE III
Construction and Issuance of Bonds
Section 3.01. Consulting Engineers. The Board will choose the Consulting Engineers for the
Project and Joint Transmission Line and may change Consulting Engineers at the option of the
Board.
Section 3.02. Construction of Project and Joint Transmission Line. The District agrees to
use its best efforts to issue its Bonds, payable from and secured by Annual Payments made under this
Contract, to acquire and construct the Project, including the Joint Transmission Line, when and as
needed, as determined by the District, to supply transmission service to Denton and treated water
to other Participating Members and other Customers. It is anticipated that such acquisition and
construction of the Project will be in phases and that each phase will be financed by the District
through the issuance of one or more series or issues of its Bonds; and the District agrees to use its
best efforts to issue its Bonds for such purpose. Bonds also may, at the discretion of the District, be
issued to refund any Bonds, and be issued to extend, enlarge, repair, renovate, equip, operate,
maintain and otherwise improve the Project. District agrees that such improvements will be made
in accordance with generally accepted engineering practices. It is anticipated that such improvement
will be financed by the District through the issuance of one or more series or issues of its Bonds
payable from and secured by Annual Payments made under this Contract.
District and Denton agree that Denton is participating only in that part of the Project
referred to herein as the Joint Transmission Line and accordingly, Denton shall have no financial
RS-HBBA.002.1
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responsibility under this Contract for Bonds or for other expenses of the District other than those
related to the Joint Transmission Line.
Section 3.03. Bond Proceeds. The proceeds from the sale and delivery of such Bonds may
be used to fund to the extent deemed advisable by the District a debt service reserve fund, a
contingency fund, and interest on the Bonds during construction; and such proceeds also will be used
for the payment of the District's expenses and costs in connection with the Project (including all
engineering and design costs and expenses, and the cost of the land and interests therein related to
the Project) and the Bonds, including, without limitation, all financing, legal, printing, and other
expenses and costs related to the issuance of such Bonds and the Project.
Section 3.04. Bond Resolution. Each Bond Resolution of the District shall specify the exact
principal amount of the Bonds to be issued thereunder, which shall mature within the maximum
period, and shall bear interest at not to exceed the maximum rates then permitted by law, and each
Bond Resolution shall create and provide for the maintenance of a revenue fund, an interest and
sinking fund, a debt service reserve fund, and any other funds deemed advisable, all in the manner
and amounts as provided in such Bond Resolution. Denton agrees that if and when such Bonds are
actually issued and delivered to the purchaser thereof, for the purpose of acquiring and constructing
the Joint Transmission Line, the Bond Resolution authorizing the Bonds shall for all purposes be
deemed to be in compliance with this Contract in all respects, and the Bonds issued thereunder will
constitute Bonds as deemed in this Contract for all purposes.
Section 3.05. Joint Transmission Line. District and Denton agree that Denton's
participation in Project is limited to the Joint Transmission Line planned by the District to connect
to the Denton water distribution system at Lillian Miller Parkway and Interstate 35E. Denton will
participate on a pro rata basis in oversizing the line in accordance with the limit, size and capacity
outlined in Exhibit "A", which is attached hereto and incorporated into this Contract for all purposes.
The Joint Transmission Line delineated in Exhibit A hereof shall be constructed and financed by
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District. During design and construction, District shall have sole possession and control of the Joint
Transmission Line.
ARTICLE IV
Operating Requirements
Section 4.01. Water Sales. In separate contracts, District has agreed to deliver potable water
to Customers other than Denton. However, no sales of water by District to Denton are
contemplated in this Contract.
Section 4.02. Limits of Pipeline. District agrees to provide for the Joint Transmission Line
between the points and along the general route and with the capacity delineated in Exhibit A
attached hereto. Denton may transport water owned by Denton through the Joint Transmission Line
up to the peak day capacity provided for in Exhibit "A".
Section 4.03. Metering Equipment.
(a) Denton will furnish, install, operate, and maintain at its expense the necessary
equipment and devices of standard type required for measuring the total quantity of treated water
delivered through the Joint Transmission Line for Denton's benefit. The District will furnish, install,
operate, and maintain at its expense the necessary equipment and devices of standard type required
to measure the quantity of water delivered to Customers other than Denton. Such meters and other
equipment so installed by Denton or District shall remain the property of Denton and the District
respectively. Each Party shall inspect, calibrate, and adjust its meters at least annually as necessary
to maintain accurate measurements of the quantity of treated water being delivered. Each Member
shall have access to the metering equipment for measurement of its water at all reasonable times for
inspection and examination, but the reading, calibration, and adjustment thereof shall be done only
by employees or agents of the owner of the meter. If requested, the affected party may witness such
reading, calibration and adjustment of meters. All readings of meters will be entered upon proper
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books of record maintained by Denton and the District. Either party may have access to said record
books during normal business hours.
(b) Either Denton or the District may request, in writing, that the other party calibrate
any meter or meters affecting its cost or charges under this Contract in the presence of the requesting
party. Either party will make up to one (1) such calibrations in any fiscal year at no charge to the
requesting party. All requested calibrations in excess of one (1) will be made at the expense of the
requesting party, except when the accuracy of the meter is beyond the limits of commercial accuracy
in which case the owner shall bear such expense. If, for any reason, any meter is out of service or
out of repair, or if, upon any test, the percentage of inaccuracy of any meter is found to be in excess
of commercial accuracy (which unless otherwise agreed to shall be considered to be plus or minus two
2%) percent, registration thereof shall be corrected for a period of time extending back to the
time when such inaccuracy began, if such time is ascertainable,
and if not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the
date of the last calibration, but in no event further back than a period of six (6) months.
(c) If either party at any time observes an apparent error in meter registration or readings,
such party will promptly notify the other party. When agreed, the parties hereto shall then cooperate
to procure an immediate calibration test and joint observation of any adjustment and the same meter
or meters shall then be adjusted to accuracy. Each party shall give the other party forty-eight (48)
hours' notice of the time of all tests of meters so that the other party may conveniently have a
representative present.
(d) If for any reason any meters are out of repair so that the amount of water delivered
cannot be ascertained or computed from the reading thereof, the water delivered through the period
such meters are out of service or out of repair shall be estimated and agreed upon by the parties
hereto upon the basis of the best data available. For such purpose, the best data available shall be
deemed to be the registration of any check meter or meters if the same have been installed and are
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accurately registering. Otherwise, the amount of water delivered during such period may be estimated
(i) by correcting the error if the percentage of the error is ascertainable by calibration tests or
mathematical calculation, or (11) estimating the quantity of delivery by deliveries during the preceding
periods under similar conditions when the meter or meters were registering accurately.
Section 4.04. Unit of Measurement. The unit of measurement for treated water delivery
from the Joint Transmission Line hereunder shall be 1,000 gallons, U.S. Standard Liquid Measure.
Section 4.05. Access.
(a) Denton agrees to provide ingress and egress for District employees and agents to all
its premises inside Denton's boundaries to install, operate, inspect, test, and maintain facilities owned
or maintained by District within corporate or jurisdictional limits of Member.
(b) District agrees to provide ingress and egress for Denton's employees and agents to
all premises under control of the District to install, operate, inspect, test, and maintain facilities, and
read meters owned or maintained by Denton.
Section 4.06. Customer Advisory Council.
(a) The governing body of each Customer annually may appoint one of the members of
its governing body or one of its employees as a member of the Customer Advisory Council for the
District, which Council is hereby created and established. The Council shall elect a Chairman, a Vice
Chairman, and a Secretary. The Council may establish bylaws governing the election of officers,
meeting dates and other matters pertinent to its function. The Council shall consult with and advise
the District with regard to the following matters pertaining to the District:
(i) The issuance of Bonds;
(ii) The operation and maintenance of the Project, including Joint Transmission Line;
(iii) Contracts for services to Customers;
(iv) The District's Annual Budget, prior to its submission to the Board; and
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(v) Improvements and extensions of the Project. The Council shall have access to and
may inspect at reasonable times all physical elements of the Project and all records
and accounts of the District pertaining to the Project.
(b) The term of membership on the Council shall be at the pleasure of each governing
body represented, respectively, and each member shall serve until replaced by such governing body.
All expenses of the Council in discharging its duties under this Section shall be considered as an
Operation and Maintenance Expense of the Project.
Section 4.07. Water Conservation Plan and Drought Contingency Plan.
(a) Denton and District agree that water transmission services may be limited or curtailed
by either Party in its respective share of Joint Transmission Line in the event of an emergency or
drought. Denton and District agree to coordinate the implementation of any action to limit
transmission services to minimize adverse impact on either party's operation, and on adequacy of
service, and to promote public understanding of the need for and terms of such limitation or
curtailment.
(b) It is the policy of the District to prepare, adopt and maintain a regional water
conservation plan which incorporates loss reduction measures and demand management practices
which insure that the available supply of water is used in an economically efficient and
environmentally sensitive manner. Similarly, it is the policy of the District to prepare, adopt and
maintain a drought and emergency contingency plan for water supply to Customers. Each Member
that purchases treated water from the Project agrees to cooperate in the implementation of both
plans and to adopt and enforce such or similar plans for use within their respective jurisdictions.
Section 4.8. Cross Connections. Denton and District agree to provide for and to include in
the Joint Transmission Line and facilities connected thereto, adequate cross connection control
measures as necessary to meet regulatory requirements, to protect the health of customers and to
conform to generally accepted industry standards.
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ARTICLE V
Fiscal Provisions
Section 5.01. Annual Requirements. Subject to the terms and provisions of this Contract,
the District will provide and pay for the cost of the acquisition, construction and improvement of the
Joint Transmission Line, by issuing its Bonds in amounts which will be sufficient to accomplish such
purposes. It is acknowledged and agreed that payments to be made under this Contract and similar
contracts with other customers and Additional Participating Members, if any, will be the primary
source available to the District to provide the Annual Requirement. In compliance with the District's
duty to fix and from time to time to revise the rates and charges for services of the Joint Transmission
Line, the Annual Requirement may change from time to time. Each such Annual Requirement shall
be allocated between Denton and other Customers of the District as hereinafter provided, and the
Annual Requirement for each Annual Payment Period shall be provided for in each Annual Budget
and shall at all times be not less than an amount sufficient to pay or provide for the payment of:
(a) An "Operation and Maintenance Component" equal to the amount paid or payable
for all Operation and Maintenance Expenses of the Joint Transmission Line; and
(b) A "Capital Component" related to the Joint Transmission Line equal to:
(1) the principal of, redemption premium, if any, and interest on, its Bonds, as
such principal, redemption premium, if any, and interest become due, less
interest to be paid out of Bond proceeds or from other sources if permitted
by any Bond Resolution, and all amounts required to redeem any Bonds prior
to maturity when and as provided in any Bond Resolution, plus the fees,
expenses and charges of each paying agent/registrar for paying the principal
of and interest on the Bonds, and for authenticating, registering and
transferring Bonds on the registration books; and
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(2) the proportionate amount of any special, contingency or reserve funds
required to be accumulated and maintained by the provisions of any Bond
Resolution; and
(3) an amount in addition thereto sufficient to restore any deficiency in any of
such funds required to be accumulated and maintained by the provisions of
any Bond Resolution; and
(c) An amount deemed appropriate and necessary by the Board to be required as a
special reserve for operation and maintenance expenses of the Joint Transmission
Line or for capital improvements. Any such reserve shall be used as operating capital
for Operation and Maintenance Expenses and for emergency expenses. The normal
level of such reserve shall not exceed 25% of the annual Operation and Maintenance
Expenses (estimated to be approximately three (3) months expenses).
It is specifically agreed that Denton's Share of Annual Requirement shall be limited to that
portion applicable to Denton's share of Joint Transmission Line.
Section 5.02. Annual Budget. Each Annual Budget of the District shall always provide for
amounts sufficient to pay the Annual Requirement. The Annual Budget for the Joint Transmission
Line for all or any part of the Annual Payment Period during which the Joint Transmission Line is
first placed into operation shall be prepared by the District based on estimates made by the District.
On or before June 15 of each year after the Joint Transmission Line is first placed in operation, the
District shall furnish to Denton a preliminary estimate of the Annual Payment required from each
Member for the next following Annual Payment Period. Not less than forty days before the
commencement of the Annual Payment Period after the Joint Transmission Line is fast placed into
operation, and not less than forty days before the commencement of each Annual Payment Period
thereafter, the District shall cause to be prepared as herein provided its preliminary budget for the
Joint Transmission Line and the Project for the next ensuing Annual Payment Period. A copy of
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such preliminary budget shall be filed with each Participating Member for review before action by
the Board. Any Participating Member may submit comments about the preliminary budget directly
to the Board. The Board may adopt the preliminary budget or make such amendments thereto as
the Board may deem proper. The budget thus approved by the Board shall be the Annual Budget
for the next ensuing Annual Payment Period. The Annual Budget (including the first Annual
Budget) may be amended by the District at any time to transfer funds from one account or fund to
another account or fund so long as such transfer will not increase the total budget. The amount for
any account or fund, or the amount for any purpose, in the Annual Budget may be increased through
formal action by the Board even though such action might cause the total amount of the Annual
Budget to be exceeded; provided that such action shall be taken only in the event of an emergency
or special circumstances which shall be clearly stated in a resolution at the time such action is taken
by the Board.
Section 5.03. Payments by Denton. For the services to be provided to Denton under this
Contract, Denton agrees to pay, at the time and in the manner hereinafter provided, its proportionate
share (Annual Payment) of the Annual Requirement. Denton shall pay its part of the Annual
Requirement for each Annual Payment Period directly to the District, in monthly installments in
accordance with the schedule of payments furnished by the District, as hereinafter provided.
Section 5.04. Fiscal Policv. It is provided that in estimating costs for services, the District is
specifically authorized, in its discretion, to include in such estimate of costs reasonable contributions
to Reserve Funds or to assume that the Annual Payment Period may entail above average operation
and maintenance expense due to weather or other factors affecting costs. This fiscal policy is
expressly approved by the Participating Members and is deemed by the parties hereto to be beneficial
in the fiscal management of the Project, and will assure the timely availability of funds even under
unexpected circumstances. Upon receipt during any Annual Payment Period of an amount sufficient
to meet the then current Annual Budget of the Project for the remainder of the then current Annual
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Payment Period, the District shall deposit subsequent revenues received into appropriate reserve or
contingency accounts, unless otherwise specifically hereinafter provided in the event of unexpected
or additional Annual Budget requirements. If there is a shortfall in revenues, the District may
withdraw from the reserves, adjust the Annual Requirement, revise the payment schedule or do any
combination thereof.
Section 5.05. Redetermination of Annual Requirements. The Annual Requirement, and each
Member's share thereof (Annual Payment), shall be redetermined, after consultation with each
Member, at any time during any Annual Payment Period, to the extent deemed necessary or advisable
by the District, if-
(i) The District commences furnishing services of the Project to an Additional
Participating Member or Customer;
(ii) Unusual, extraordinary, or unexpected expenditures for operation and maintenance
expenses are required which are not provided for in the District's Annual Budget or
reserves for the Project;
(iii) Operation and maintenance expenses of the Project are substantially less than
estimated;
(iv) District issues Bonds which require an increase in the capital component of the
Annual Payment; or
(v) The District receives either significantly more or significantly less revenues or other
amounts than those anticipated.
If the Annual Requirement is redetermined, Member will be advised of the Adjusted Annual
Payment.
Section 5.06. Prompt Pavment/Disputed Bills. Denton hereby agrees that it will make
payments to the District required by this Contract within 20 days of the date a bill for service is
rendered. If Denton at any time disputes the amount to be paid by it to the District, Denton shall
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nevertheless promptly make such payment or payments; but if it is subsequently determined by
agreement or court decision that such disputed payments should have been less, or more, the District
shall promptly revise and reallocate the charges in such manner that Denton will recover its
overpayment or the District will recover the amount due it. All amounts due and owing to the
District by Denton or due and owing to Denton by the District shall, if not paid when due, bear
interest at the rate of ten (10) percent per annum from the date when due until paid.
Section 5.07. Delinguent Bills. The District shall, to the extent permitted by law, suspend
the delivery of services under this Contract to any Member which remains delinquent in any payments
due hereunder for a period of sixty days, and shall not resume delivery of services while such Member
is so delinquent. However, the District shall pursue all legal remedies against any such delinquent
Member to enforce and protect the rights of the District, the other Members, and the holders of the
Bonds. The delinquent Member shall not be relieved of the liability to the District for the payment
of all amounts which would have been due hereunder had no default occurred or the percentage had
not been redetermined as provided in this Section. It is understood that the foregoing provisions are
for the benefit of the holders of the Bonds so as to insure that all of the Annual Requirement will
be paid by the non-delinquent Members during each Annual Payment Period regardless of the
delinquency of a particular Member. If any amount due and owing the District by any Member is
placed with an attorney for collection, such Member shall pay to the District all attorneys fees, in
addition to all other payments provided for herein, including interest.
Section 5.08 Updated Schedule of Payments. If, during any Annual Payment Period, any
member's Annual Payment is redetermined in any manner as provided or required in the foregoing
sections, the District will promptly furnish such member with an updated schedule of monthly
payments reflecting such redetermination.
!FB-HBBF.002-1
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ARTICLE VI
Miscellaneous Provisions and Special Conditions
Section 6.01. Operation and Maintenance of Project. The District will continuously operate
and maintain the Project in an efficient manner and in accordance with good business and
engineering practices, and at reasonable cost and expense. The District recognizes its right and duty
to operate the various facilities of the Project in the most prudent and economical manner for the
benefit of all Customers.
Section 6.02. Project Schedule. It is the intent of the parties that the Project, including the
Joint Transmission Line, will be placed in operation as soon as practicable, and the District agrees
to proceed diligently with the design and construction of the Project to meet such schedule, subject
to the other terms and conditions of this Contract.
Section 6.03. Permits. Financing and Applicable Laws. It is understood that any obligations
on the part of the District to acquire, construct and complete the Project and to provide treated
water from the Project to the Members shall be: (i) conditioned upon the District's ability to obtain
all necessary permits, material, labor, and equipment; (ii) conditioned upon the ability of the District
to finance the cost of the Project through the actual sale of the District's Bonds; and (iii) subject to
all present and future valid laws, orders, rules, and regulations of the United States of America, the
State of Texas, and any regulatory body having jurisdiction.
Section 6.04. Title to Water: Indemnification. Title to all water in the Joint Transmission
Line shall be in the District and Denton respectively in the proportions ultimately delivered to
Denton and to other Customers out of water carved in the Joint Transmission Line. The District
and Denton shall save and hold each other harmless from all claims, demands, and causes of action
which may be asserted by anyone on account of the transportation and delivery of said water while
title remains in such party.
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Section 6.05. Payments Solely From Revenues. The District shall never have the right to
demand payment by Denton of any obligations assumed by it or imposed on it under and by virtue
of this Contract from funds raised or to be raised by taxes, and the obligations under this Contract
shall never be construed to be a debt of such kind as to require Denton to levy and collect a tax to
discharge such obligation. Nonetheless, Denton may make payments from its water and wastewater
(sewer) system revenues, or from any other lawful source.
Section 6.06. Operating Expenses. Denton represents and covenants that all payments to
be made by it under this Contract shall constitute reasonable and necessary "operating expenses" of
its combined waterworks and sewer system, as defined in Vernon's Ann. Tex. Civ. St. Article 1113,
and that all such payments will be made from the revenues of its combined waterworks and sewer
system or any other lawful source. Denton represents and has determined that its participation in
the Joint Transmission Line is absolutely necessary and essential to the present and future operation
of its water system, and, accordingly, all payments required by this Contract to be made by Denton
shall constitute reasonable and necessary operating expenses of its respective system as described
above, with the effect that the obligation to make such payments from revenues of such systems shall
have priority over any obligation to make any payments from such revenues (whether of principal,
interest, or otherwise) with respect to all bonds or other obligations heretofore or hereafter issued
by Denton.
Section 6.07. Rates for Water and Wastewater Services. Denton agrees throughout the term
of this Contract to continuously operate and maintain its waterworks system, its wastewater (sewer)
system or both, and to fix and collect such rates and charges for water services, wastewater (sewer)
services or both to be supplied by its system or systems as aforesaid as will produce revenues in an
amount equal to at least (i) all of the expenses of operation and maintenance expenses of such system
or systems, including specifically, its payments under this Contract, and (ii) all other amounts as
required by law and the provisions of the ordinance or resolutions authorizing its revenue bonds or
JFB-HBBF.002.1
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other obligations now or hereafter outstanding, including the amounts required to pay all principal
of and interest on such bonds and other obligations.
Section 6.08. Use of Funds and Project The District covenants and agrees that neither the
proceeds from the sale of the Bonds, nor the moneys paid it pursuant to this Contract, nor any
earnings from the investment of any of the foregoing, will be used for any purposes, except those
directly relating to the Project, including the Joint Transmission Line, and the Bonds as provided in
this Contract; provided that the District may rebate any excess arbitrage earnings from such
investment earnings to the United States of America in order to prevent any Bonds from becoming
"arbitrage bonds" within the meaning of the Internal Revenue Code of 1986 (the "Code") or any
amendments thereto in effect on the date of issue of such Bonds. Denton covenants and agrees that
it will not use or permit the use of the Joint Transmission Line in any manner that would cause the
interest on any of the Bonds to be or become subject to federal income taxation under the Code or
any amendments thereto in effect on the date of issue of such Bonds.
Section 6.09. Rights-of-Way. Denton hereby grants to the District without additional cost
to the District, the perpetual use of the streets, easements, and rights-of-way under its control for the
construction, operation, and maintenance of the Joint Transmission Line pursuant to attached Exhibit
"A", plus the line proposed to be connected thereto to serve the City of Corinth and Lake Cities
Municipal Utility Authority. As a condition of use of such streets, easements and rights-of-way,
District shall make the necessary repairs to restore the streets, alleys or public rights of way to their
original condition.
Section 6.10. Unconditional Obligation to Make Payments. Recognizing the fact that Denton
desires the facilities and services of the Joint Transmission Line, and that such facilities and services
are essential and necessary for actual use and for standby purposes, and recognizing the fact that the
District will use payments received from Denton to pay and secure its Bonds, it is hereby agreed by
Denton that it shall be unconditionally obligated to pay, without offset or counterclaim, its
JFB-HBBF.002-1
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proportionate share of the Annual Requirement, as provided and determined in this Contract
regardless of whether or not the District actually acquires, constructs or completes the Project,
including the Joint Transmission Line, or whether or not the District or Denton is able to deliver
water through the Joint Transmission Line, whether due to Force Majeure or any other reason
whatsoever, regardless of any other provisions of this or any other contract or agreement between
any of the parties hereto. This covenant by Denton shall be for the benefit of and enforceable by
the holders of the Bonds as well as the District.
Section 6.11. Insurance. The District agrees to carry and arrange for fire, casualty, public
liability, and/or other insurance, including self insurance, on the Project for purposes and in amounts
which, as determined by the District, ordinarily would be carried by a privately owned utility company
owning and operating such facilities, except that the District shall not be required to provide liability
insurance except to insure itself against risk of loss due to claims for which it can, in the opinion of
the District's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial
decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of
damaged or destroyed properties and equipment, to minimize the interruption of the services of such
facilities. All premiums for such insurance shall constitute an Operation and Maintenance Expense
of the Project.
Section 6.12. Special Provisions. The parties hereto acknowledge and agree to the Special
Provisions which are set forth in Exhibit B hereto which Exhibit is incorporated herein for all
purposes. The Special Provisions for this Contract reflect circumstances or issues for Denton which
may be different from those of other Customers and therefore constitute a modification of or
requirement in addition to the standard provisions otherwise contained in this Contract.
ARTICLE VII
Section 7.01. Force Majeure. If by reason of force majeure any party hereto shall be
rendered unable wholly or in part to carry out its obligations under this Contract, other than the
H13-HBBA.002-1
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obligation of each Participating Member to make the payments required under this Contract, then
if such party shall give notice and full particulars of such force majeure in writing to the other parties
within a reasonable time after occurrence of the event or cause relied on, the obligation of the party
giving such notice, so far as it is affected by such force majeure, shall be suspended during the
continuance of the inability then claimed, but for no longer period, and any such party shall endeavor
to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as
employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of
public enemy, orders of any kind of the Government of the United States or the State of Texas, or
any Civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires,
hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil
disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire
failure of water supply, or on account of any other causes not reasonably within the control of the
party claiming such inability.
Section 7.02. Term of Contract. This Contract shall be effective on and from the Contract
Date, and shall continue in force and effect for thirty (30) years or for such period of time that Bonds
issued by the District for the Joint Transmission Line remain outstanding, whichever is greater;
provided, however, the term of the Contract and the expiration date may be extended for a period
not to exceed 20 years at the option of the Participating Member, upon the mutual agreement of the
Participating Member and the District as to the terms and conditions. The District's obligation to
provide the contracted for services shall commence from the date that the District, in writing, deems
the Joint Transmission Line to be operational and functional. This Contract constitutes the sole
agreement between the parties hereto with respect to the Joint Transmission Line.
Section 7.03. Modification. No change, amendment or modification of this Contract shall
be made or be effective which will affect adversely the prompt payment when due of all moneys
MI-HUR002-1
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required to be paid by Denton under this Contract and no such change, amendment or modification
shall be made or be effective which would cause a violation of any provisions of any Bond Resolution.
Section 7.04. Addresses and Notice. Unless otherwise provided herein, any notice,
communication, request, reply or advice (herein severally and collectively, for convenience, called
"Notice") herein provided or permitted to be given, made or accepted by any party to any other party
must be in writing and may be given or be served by depositing the same in the United States mail
postpaid and registered or certified and addressed to the party to be notified, with return receipt
requested, or by delivering the same to an officer of such party, or by prepaid telegram when
appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner
hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein,
from and after the expiration of three days after it is so deposited. Notice given in any other manner
shall be effective only if and when received by the party to be notified. For the purposes of notice,
the addresses of the parties shall, until changed as hereinafter provided, be as follows:
If to the District, to:
Upper Trinity Regional
Water District
396 W. Main Street
P. O. Drawer 305
Lewisville, Texas 75067
If to City of Denton, to:
Executive Director of Utilities
City of Denton
215 East McKinney Street
Denton, Texas 76201
The parties hereto shall have the right from time to time and at any time to change their
respective addresses and each shall have the right to specify as its address any other address by at
least fifteen (15) days' written notice to the other parties hereto.
Section 7.05. State or Federal Laws. Rules. Orders or Regulations. This Contract is subject
to all applicable Federal and state laws and any applicable permits, ordinances, rules, orders and
IMHBBA.002.1
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regulations of any local, state or federal governmental authority having or asserting jurisdiction, but
nothing contained herein shall be construed as a waiver of any right to question or contest any such
law, ordinance, order, rule or regulation in any forum having jurisdiction.
Section 7.06. Remedies Upon Default. It is not intended hereby to specify (and this Contract
shall not be considered as specifying) an exclusive remedy for any default, but all such other remedies
(other than termination) existing at law or in equity may be availed of by any party hereto and shall
be cumulative. Recognizing however, that the District's undertaking to provide and maintain the
Project is an obligation, failure in the performance of which cannot be adequately compensated in
money damages alone, the District agrees, in the event of any default on its part, that each
Participating Member shall have available to it the equitable remedy of mandamus and specific
performance in addition to any other legal or equitable remedies (other than termination) which may
also be available. Recognizing that failure in the performance of any Participating Member's
obligations hereunder could not be adequately compensated in money damages alone, each
Participating Member agrees in the event of any default on its part that the District shall have
available to it the equitable remedy of mandamus and specific performance in addition to any other
legal or equitable remedies (other than termination) which may also be available to the District.
Notwithstanding anything to the contrary contained in this Contract, any right or remedy or any
default hereunder, except the right of the District to receive the Annual Payment which shall never
be determined to be waived, shall be deemed to be conclusively waived unless asserted by a proper
proceeding at law or in equity within two (2) years plus on (1) day after the occurrence of such
default. No waiver or waivers of any breach or default (or any breaches or defaults) by any party
hereto or of performance by any other party of any duty or obligation hereunder shall be deemed a
waiver thereof in the future, nor shall any such waiver or waivers be deemed or construed to be a
waiver of subsequent breaches or defaults of any kind, character or description, under any
circumstance.
nT-HBBF.W2.1
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Section 7.07. Severabilitv. The parties hereto specifically agree that in case any one or more
of the sections, subsections, provisions, clauses or words of this Contract or the application of such
sections, subsections, provisions, clauses or words to any situation or circumstance should be, or
should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of
the State or the United States of America, or in contravention of any such laws or constitutions, such
invalidity, unconstitutionality or contravention shall not affect any other sections, subsections,
provisions, clauses or words of this Contract or the application of such sections, subsections,
provisions, clauses or words to any other situation or circumstance, and it is intended that this
Contract shall be severable and shall be construed and applied as if any such invalid or
unconstitutional section, subsection, provision, clause or word had not been included herein, and the
rights and obligations of the parties hereto shall be construed and remain in force accordingly.
Section 7.08. Venue. All amounts due under this Contract, including, but not limited to,
payments due under this Contract or damages for the breach of this Contract, shall be paid and be
due in Denton County, Texas, which is the County in which the principal administrative offices of the
District are located. It is specifically agreed among the parties to this Contract that Denton County,
Texas, is the place of performance of this Contract; and in the event that any legal proceeding is
brought to enforce this Contract or any provision hereof, the same shall be brought in Denton
County, Texas.
IN WITNESS WHEREOF, the parties hereto acting under authority of their respective
governing bodies 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 written, which is the date of this
Contract.
J2B-HBBF.M2-1
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UPPER TRINITY REGIONAL WATER
DISTRICT
BY:
President, Board of Directors
ATTEST:
S retary, oard of rectors
(AUTHORITY SEAL)
APPROVED AS TO FORM AND LEGALITY:
LE-u-nsel for the Dist
r'
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By. W 77
AP OVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
By
JFB-HBBF.002-1
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EXHIBIT B
TO CONTRACT BETWEEN CITY OF DENTON AND UPPER TRINITY
REGIONAL WATER DISTRICT FOR PARTICIPATION IN A
JOINT TRANSMISSION LINE
SPECIAL PROVISIONS
The provisions of this Exhibit B form a part of the Contract and are applicable to the Upper
Trinity Regional Water District (the "District") and to the City of Denton ("Denton") as if set forth
in their entirety in the body of the Contract.
1. The District will construct the Joint Transmission Line as a part of the Project as
defined in this Contract. The District will own the Joint Transmission Line, including the right-of-
way, except as otherwise provided herein. The District will coordinate routing, design and right-of-
way acquisition with Denton. Within the City Limits of Denton, the District's improvements shall
not unduly conflict with any Denton master plan for land development. District and Denton agree
to coordinate future joint use of said rights-of-way within Denton for underground utilities. District
and Denton agree to coordinate arrangements for parallel or adjoining easements and other rights-of-
way, including reciprocal use of such easements for temporary use during construction and for other
mutually beneficial purposes.
2. The District will provide the funds to design and construct the Joint Transmission
Line, including rights-of-way. The Annual Payment by Denton to District will be based on Denton
participating in the Joint Transmission Line on a proportionate basis of rated capacity of the pipeline
according to Exhibit A. The balance of the Annual Requirement related to the Joint Transmission
Line will be paid by other Customers of the District.
3. Capital costs will be assigned to Denton and the other Customers in proportion to
respective shares of rated capacity of the pipeline according to Exhibit A.
4. In accordance with the contract between Denton and District dated July 21, 1992,
providing for "Water Treatment and Transmission Services," the cost of transporting water through
the Joint Transmission Line during the Initial Period (as defined in said contract) shall be included
in the cost of water charged to District. No additional costs associated with this Joint Transmission
Line will be included in said cost charged to District.
5. After the Initial Period, District shall compensate Denton for transporting water
through the Joint Transmission Line in accordance with said July 21, 1992 contract.
6. If requested in writing by the District and agreed to by Denton, Denton may acquire
or purchase easements or rights-of-way within the City Limits of Denton on behalf of the District for
the Joint Transmission Line. The District will reimburse Denton for all direct cost associated with
Denton's efforts to acquire the easement regardless of whether the easement is actually purchased
by either party. If requested by District and agreed to by Denton, Denton may exercise its power
of eminent domain on behalf of the District.
7. On behalf of Denton and District, Denton agrees to operate the Joint Transmission
Line and to be responsible for normal and routine maintenance of the Joint Transmission Line •
according to the standards of Denton's own water transmission and distribution system. Denton will
maintain records of the actual cost of such maintenance and will send periodic reports of cost to
District for reimbursement of cost in proportion to respective share of rated capacity of the pipeline
IM-HBBP.002-1
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according to Exhibit A. District shall have reasonable access to Denton's records to verify such costs.
District hereby agrees that it will make payments to Denton according to the provisions of Sections
5.06 and 5.07 of this contract, which sections are otherwise applicable to Denton. If, in the opinion
of Denton, extraordinary maintenance such as pipeline replacement exceeding 1% of the length of
the pipeline is required, Denton shall give written notice of such to District and District and Denton
shall mutually determine which party shall take appropriate steps to accomplish such extraordinary
maintenance.
8. Prior to completion of construction of the Joint Transmission Line, Denton's
Executive Director shall develop a mutually satisfactory written procedure for coordinating the
operation and maintenance of the Joint Transmission Line and for notifying each other of any
activities which may affect the operations of the other party's system.
9. Until approximately 1998, Denton expects to deliver treated water to District through
the Joint Transmission Line for the benefit of other Customers of District. Thereafter, the District
expects to deliver treated water to Denton for transmission through Denton's transmission and
distribution system to City of Corinth, Lake Cities Municipal Utility Authority, and other Customers
of District. In either case, the point of delivery of such water shall be at a mutually agreeable
location at the south end of the Joint Transmission Line at the approximate location shown on
Exhibit A.
10. Through the useful life of the Joint Transmission Line, Denton and District agree to
make the capacity of the pipeline available for emergency exchange of water for the mutual benefit
of both parties. To implement arrangements for emergency exchange of water, Denton's Executive
Director of Utilities and District's Executive Director shall develop a mutually satisfactory written
protocol for such emergency exchange of water.
11. Until the original capital costs are fully retired, Denton shall pay its share of the
Capital Component (as defined in Section 5.01 of this Contract) of the Joint Transmission Line,
including future capital improvements or replacements related thereto. After such capital costs are
fully paid, Denton shall thereafter continue to pay its share of all other costs defined to be part of
the Annual Requirement.
12. Denton may purchase the District's rights in the Joint Transmission Line according
to the following circumstances and conditions:
(a) Upon receiving notice from District at any future time that its share of the
Joint Transmission Line is no longer needed for District purposes; or
(b) After the District completes construction of its own water treatment plant, and
the District is no longer purchasing treated water from Denton. In such case, Denton must
give notice of its desire to purchase the District's share of the Joint Transmission Line from
District.
13. Denton shall purchase the rights of the District in the Joint Transmission Line
according to the following circumstances and conditions:
(a) When Denton needs or uses more capacity in the Joint Transmission Line
than its share according to Exhibit A, it shall purchase the District's entire share of the
pipeline, unless otherwise agreed to by Denton and District.
RS-HBBP.002.1
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(b) At the end of the initial term of this Contract, Denton shall purchase the
District's entire share of the Joint Transmission Line.
14. The price to be paid to District by Denton to purchase the District's share of the Joint
Transmission Line under paragraphs 12 or 13 above shall be equal to the original cost thereof for the
District's share, less accumulated depreciation plus a credit (not to exceed said purchase price) for
revenues received by District from Denton and other public utilities for use of the rights-of-way
included in the Joint Transmission Line. Depreciation expense will be computed on a straight line
basis over a period not to exceed thirty (30) years. For that portion of the pipeline owned by
District, devoted to public service. For that portion of the pipeline owned by TWDB under a
participation agreement, depreciation expense shall start when the District purchases the TWDB's
interest or five (5) years from date pipeline was first used for public service, whichever date occurs
fast.
15. If Denton purchases the District's share of the Joint Transmission Line under any of
the provisions of this Exhibit B, District shall continue to enjoy the rights provided in this contract
or as provided in other contracts between Denton and District: (1) to receive water from Denton;
(2) to deliver water to Denton; and (3) to have the right of emergency exchange of water through
the pipeline.
16. If Denton desires and requests the District to construct improvements or install
appurtenances for Denton as part of the Joint Transmission Line, which improvements or
appurtenances are not otherwise needed by District, the District shall issue its Bonds to finance such
improvements; and, Denton shall pay the entire Annual Requirement associated with such
improvements or appurtenances installed for the sole benefit of Denton.
17. Notwithstanding any provision in this Contract, Denton shall have no responsibility
for any portion of the Project other than the Joint Transmission Line.
HS-HBBROM-I
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