2004-137ORDINANCE NO. 2004-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
APPROVING A FURTHER AMENDMENT TO THE CONTRACT FOR WATER
TREATMENT AND TRANSMISSION SERVICES - DATED JULY 21, 1992, WHICH
CONTRACT WAS EXECUTED BY AND BETWEEN THE CITY OF DENTON,
TEXAS AND THE UPPER TRINITY REGIONAL WATER DISTRICT RESPECTING
THE SALE OF WATER ON A WHOLESALE BASIS TO SANGER, TEXAS; WHICH
AMENDED CONTRACT PERTAINS TO THE SALE OF WATER ON A
WHOLESALE BASIS FROM THE CITY OF DENTON, TEXAS TO THE UPPER
TRINITY REGIONAL WATER DISTRICT FOR AN INTERIM PERIOD OF TIME
FOR THE RESALE AND DEL1VERY THEREOF TO THE CITY OF KRUM, TEXAS
AND FOR THE PARTICIPATION OF THE CITY OF DENTON, TEXAS IN THE
KRUM TRANSMISSION LINE TO BE CONSTRUCTED BY UPPER TRINITY
REGIONAL WATER DISTRICT; AUTHORIZING THE CITY MANAGER TO
EXECUTE SAID AMENDMENT TO CONTRACT FOR WATER TREATMENT AND
TRANSMISSION SERVICES; AUTHORIZING THE EXECUTION BY THE CITY
MANAGER OF ANY AND ALL ANCILLARY AND FURTHER DOCUMENTS
NECESSARY TO EFFECT THE TERMS OF THIS ORDINANCE; AUTHORIZING
THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE
DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the City Manager is hereby authorized to execute on behalf of
the City, a further "Amendment to the Contract for Water Treatment and Transmission
Services" (the "Amended Contract") respecting the agreement of the City and the Upper
Trinity Regional Water District (the "District") for the interim sale of water on a
wholesale basis to the District for the resale and delivery thereof to the City of Kmm,
Texas, and further providing for the participation of the City in the Krum Transmission
Line to be constructed by the District; substantially in accordance with the Amended
Contract which is attached hereto and incorporated by reference herein.
SECTION 2. That the expenditure of rinds as set forth in the Amended Contract
is hereby authorized.
SECTION 3. That the City Manager is hereby empowered to execute and deliver
any and all ancillary and further documents necessary to effect the terms of this
ordinance.
.SECTION 4. That this ordinance shall become effective immediately upon its
passage and approval.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
B _ lox
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinances\04\UTRWD-Amendment to K-Krum-lntefim Sale of Wholesale Water to UTRWD.doc
UPPER TRINITY REGIONAL WATER DISTRICT
CITY OF DENTON
AMENDMENT TO CONTRACT
FOR WATER TREATMENT AND TRANSMISSION SERVICES
THE STATE OF TEXAS §
COUNTY OF DENTON §
This AMENDMENT ("Amendment") to the Contract for Water Treatment and Transmission
~.~Lrv~es dated JuLv j~;I,, 1992, as amended, (the "Contract") is made and entered into as of the
day of L//'//~X~/.'~ , 2004 ("Effective Date"), by and between UPPER TRINITY
REGIONAL WATER(-DIEifFRICT (the "District"), a conservation and reclamation district created
pursuant to Article XVl, Section 59 of the Constitution of the State of Texas, and the CITY OF
DENTON ("Denton"), a municipal corporation, which Contract provides for the District to
purchase treated water on a wholesale basis from Denton.
WHEREAS, Denton and the District entered into the Contract to provide for the sale of
treated water on a wholesale basis by Denton to the District, and for transmission and delivery
by Denton of limited amounts of treated water from specified points to certain customers of the
District; and
WHEREAS, Denton is currently selling water on a wholesale basis to the District for
resale to the City of Sanger, pursuant to the Contract; and
WHEREAS, the District has entered into a Participating Member Contract with the City
of Krum ("Krum") for its participation in the District's Regional Treated Water System
("System"),under which contract Krum agrees to purchase treated water on a wholesale basis
from District for service to its retail customers; and
WHEREAS, the District desires to purchase water on a wholesale basis from Denton for
resale and delivery to Krum for an interim period of time until the District can provide direct
service from its water transmission system to Krum; and
WHEREAS, Denton has constructed a new-elevated storage facility in the northwest
portion of its service area, and has determined there to be sufficient capacity in Denton's water
distribution system, including said storage facility, for water service to District for resale to Krum;
and
WHEREAS, the District is planning to construct a water transmission line (the "Krum
Transmission Line") from Denton's new-elevated storage facility to the delivery point for Krum
on Masch Branch Road, as illustrated in Exhibit A, generally in accordance with the April 2002
"Feasibility Study for Water Service to Cities of Justin, Northlake, Ponder and Krum" prepared
by Biggs and Mathews, Inc, together with other facilities determined by the District to be
necessary to provide said services to Krum; and
Upper Trinity Regional Water District
City of Denton
Amendment to Contract for Water Treatment and Transmission Services
Page 2 of 10
WHEREAS, up to the limits of Denton's ETJ boundary agreement with Krum (Krum's
delivery point on Masch Branch Road, as illustrated in Exhibit A), Denton desires to participate
in the capacity and proportionate cost of the Krum Transmission Line to be constructed by the
District; and
WHEREAS, Denton and the District desire to enable such participation in the Krum
Transmission Line by this Amendment and for the District to purchase treated water on a
wholesale basis from Denton at the established wholesale rates, as such published rates may
fluctuate from time to time, as provided in the Contract; and
WHEREAS, the services herein described to be provided by Denton, including the
additional Delivery Point, for the District are authorized by Section 6.2 of the Contract.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the District agrees to use its best efforts to design, construct and complete the Krum
Transmission Line upon and subject to the terms of the Contract and this Amendment as
hereinafter set forth, to-wit:
AGREEMENT
Section t. Adoption of Preamble. All of the matters stated in the preamble of this
Amendment are true and correct and are hereby incorporated into the body of the Amendment
as though fully set forth in their entirety herein.
Section 2. Sale of Treated Water. Denton hereby agrees to deliver treated water through
the Krum Transmission Line to the District at a mutually agreeable location on the Krum
Transmission Line (herein "Delivery Point"), as illustrated in Exhibit A hereto, for resale to Krum.
Such sale of water by Denton to the District shall be on a wholesale basis in accordance with
the Contract, as amended or supplemented, and this Amendment.
Section 3. Quantity to be Delivered. For the first Water Year of operation during which
water is delivered under this Amendment to the Delivery Point, the initial amount of treated
water to be delivered by Denton shall not exceed four hundred thousand gallons per day (0.40
MGD). After the first Water Year of operation, District may request increased quantity up to a
maximum of 2.0 MGD to be delivered by Denton. District shall give written notice to Denton at
least one hundred twenty (120) days prior to the beginning of a Water Year concerning the Peak
Daily Volume of treated water being requested. Denton may, at its sole discretion, waive the
written notice requirement upon written request of District.
If the requested peak Daily Volume exceeds four hundred thousand gallons per day (0.40 MGD)
for all years of this amendment other than the first, Denton shall determine if such additional
water and such capacity to deliver the water are available. If, for the second and subsequent
Water Years, Denton determines there is sufficient additional capacity and sufficient additional
water to provide the District with the requested Peak Daily volume, Denton may, under terms of
this Amendment and the Contract, provide such additional volume (or any portion thereof) for
that Water Year. Denton will not unreasonably deny District's request for additional water up to
the maximum amount provided for in this Section. However, the District understands, and
Denton expressly reserves the right to implement its drought plan, as filed with the TCEQ,
should the need arise, and such implementation of the plan might result in a pro-rata cut-back of
water supply to both retail and wholesale water customers of Denton.
Upper Trinity Regional Water District
City of Denton
Amendment to Contract for Water Treatment and Transmission Services
Page 3 of 10
Section 4. Participation in the Krum Transmission Line. Denton agrees to participate on
a pro rata basis in the Krum Transmission Line up to the Delivery Point in accordance with the
limits, size and capacities specified in Exhibit A and with cost participation as specified in Exhibit
B, hereto, which Exhibits are incorporated into this Amendment and the Contract for all
purposes. The Krum Transmission Line shall be designed and constructed by the District.
Section 5. Extent of Participation. District agrees to provide for the Krum Transmission
Line between the points and along the general route and for the capacities delineated in Exhibit
A. Denton may transport water for its own use through the Krum Transmission Line up to the
peak day capacities provided for in Exhibit A.
Section 6. Special Provisions. Denton and the District acknowledge and agree to the
special provisions related to the Krum Transmission Line which are set forth in the Exhibit B.
Section 7. Contract Provisions. All other provisions of the Contract, as amended, shall
continue in full fome and effect.
Section 8. Notice to Denton. Under its participation contract with the District, Krum agrees
that it will not sell water purchased from the District to any person or entity outside its service
area unless Krum has received prior written approval from the District. Since the District is
providing Krum with water purchased from Denton, District agrees to obtain written permission
from Denton prior to the District's consideration of approval of such resale request by Krum;
likewise, the District shall obtain Denton's approval prior to resale by the District to parties other
than Krum. Failure by the District to obtain written permission from the Denton shall constitute a
breach of the terms and conditions of this Amendment and shall remove any obligation by the
Denton to provide treated water supply under this Amendment. The preceding sentence
notwithstanding, no such denial by Denton or no such failure by District shall act as a waiver of
Denton's obligation to pay for its share of the Krum Transmission Line pursuant to this
Amendment and specifically Exhibit B hereto.
Section 9. Term. This Initial Term of this Amendment shall be for a period of nine (9) years.
It shall be effective on and after the Effective Date. The terms of any renewal shall be
negotiated in good faith by Denton and the District. If timely requested in writing by District, as
specified below, Denton agrees to continued service under this amendment beyond the Initial
Term subject to negotiation of all material terms of such service. However, the parties
understand that any additional renewal term following the initial nine-year term, is expressly
subject to there being water treatment plant capacity available. The District must provide Denton
with written notice of its desire and intention to negotiate a continuation of the term of this
Amendment once this Amendment has been in effect for seven and one-half years. Otherwise,
if no written notice of the District's desire to negotiate a continuation of the term is delivered to
Denton before the eighth anniversary of the Effective Date of this Amendment, this Amendment
shall cease on the ninth anniversary of its Effective Date.
The District recognizes that the City of Denton has adopted impact fees to help finance water
and wastewater system improvements for providing service to their new customers. The District
recognizes that that the prior wholesale contracts between the City of Denton and the District
were negotiated and entered into prior to the City of Denton's adoption of impact fees
(September 14, 1998). Further, Denton has entered into wholesale wastewater contracts with
other parties subsequent to the adoption of impact fees, and has required the contracting party
Upper Trinity Regional Water District
City of Denton
Amenriment to Contract for Water Treatment and Transmission Sen/ices
Page 4 of 10
to make payments of impact fees to the City of Denton for all new connections at a cost per
connection compatible with current impact fees charged for all new connections to the City of
Denton's retail service lines.
The City of Denton recognizes that the District has entered into a contract with Krum to supply
treated water on a wholesale basis, consistent with the District's wholesale service contracts
and rates that do not require impact fees to be paid for new connections within the retail service
area of their wholesale customers. The City of Denton also recognizes that impact fees are
appropriate for new wholesale customers that are long term customers but may not be
appropriate for wholesale customers that are temporary; provided that the City of Denton is able
to provide such temporary service from excess capacity that may exist in Denton's system The
current planning forecast by Denton projects that excess water treatment plant capacity will be
available to provide water service to the District until the summer of 2013.
Denton also agrees to provide a minimum advanced written notice of eighteen months of their
intention to terminate water service under this Amendment after the Initial Term to allow the
District sufficient time to plan alternative water service arrangements to serve Krum or any other
customer served directly or indirectly under this Amendment. Denton may provide the District
with such advance written notice of eighteen months after the expiration of seven and a half
years of the nine-year term hereof. The District's ownership in and right to beneficially use the
Krum Transmission Line shall survive the Contract and this Amendment, subject to Denton's
right to purchase the District's share thereof pursuant to Exhibit B hereto.
Upper Trinity Regional Water Dlstdct
City of Denton
Amendment to Contract for Water Treatment and Transmission Services
Page 5 of 10
IN WITNESS WHEREOF, the parties hereto acting under the authority of their respective
governing bodies have caused this Amendment to be duly executed in several counterparts,
each of which shall constitute an original, all as of the day and year first written above, which is
the Effective Date.
UPPER TRINITY REGIONAL WATER DISTRICT
Oscar Burchard, President, Board of Directors
ATTEST:
Marth~ Mason, Secretary, Board of Directors
(District Seal)
APPROVED AS TO FORM:
John F. Boyle, J
CITY OF DENTON
Euline Brock, Mayor
ATTEST:
~. \ 5-~ ~. ~..,~¢ ~(L\~-~ ~ ~ , C ty Secretary
(City Seal)
APPROVED AS TO FORM:
, Counsel to Denton
UpperTdni~ Regional Water Di~ri~
Ci~ of DenOn
Amendment toContra~forWa~r Treatmentand Transmission Se~ices
Page 6of10
EXHIBIT A
Point of Delivery
To be inserted later to illustrate
(1) The proposed route of the Krum Transmission Line
(2) The delivery point from Denton to the District
(3) Proportionate capacity share ofthe transmission line
Upper Trinity Regional Water District
City of Denton
Amendment to Contract for Water Treatment and Transmission Services
Page 7 of 10
EXHIBIT B
AMENDMENT BETWEEN CITY OF DENTON AND UPPER TRINITY
REGIONAL WATER DISTRICT FOR PARTICIPATION IN
THE KRUM TRANSMISSION LINE
SPECIAL PROVISIONS REGARDING PARTICIPATION
The provisions of this "Exhibit B" regarding construction of the Krum Transmission Line form a
part of the Amendment 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
Amendment.
1. Participation I Construction Cost. Denton agrees to participate in the construction of
the Krum Transmission Line up to the Delivery Point on a capacity shared basis, generally in
accordance with Exhibit A. The Krum Transmission Line shall be designed and constructed by
the District; and the District agrees to design and construct said line between the points and
generally along the general route and for the nominal capacities and sizes delineated in Exhibit
A. District agrees to coordinate the routing, design and rights-of-way acquisition of the Krum
Transmission Line with Denton. Within the retail service area of Denton, as defined by Denton's
existing Certificate of Convenience and Necessity (CCN), the District's improvements shall not
conflict with Denton's master plan for land development. The District agrees to coordinate any
and all plan reviews and approvals with the City of Denton and will obtain written concurrence of
plan approval from Denton, prior to the District's advertisement for bids for construction.
However, if the District has not received written approval from Denton within thirty (30) days of
Denton's first receipt of final draft of plans, the plans shall be considered approved and District
may advertise for construction bids.
2. RiRhts-of-Way. The District agrees to purchase or acquire easements or rights-of-way
within the Extra Territorial Jurisdiction (ET J) and/or CCN of Denton for the Krum Transmission
Line up to the Delivery Point. Since the City of Denton is legally authorized to provide retail
water service from the Krum Transmission line along this route, the District agrees that the
ownership of these easements will be jointly with the City of Denton and the District. Denton
hereby agrees that the District may exercise its power of eminent domain if necessary to obtain
the needed rights-of-way for the Krum Transmission Line within Denton city limits; alternatively,
if requested by the District and agreed to by Denton, Denton may exercise its power of eminent
domain on behalf of the District. Further, District and Denton agree to coordinate future joint
use of said rights-of-way for the Krum Transmission Line 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 and rights-of-ways for
temporary use during construction, routine operational maintenance and for other mutually
beneficial purposes. It is mutually agreed that, within its share of the easement or rights-of-way
for the Krum Transmission Line, Denton shall have the right to install and maintain other water
lines, as well as sewer, underground electric and telecommunication facilities owned by Denton.
3. Determination of Cost Share. After preparation of final design and prior to construction
of the Krum Transmission Line, the parties will finalize the respective share of costs for said
Line, which costs will be based on the general concept outlined in Exhibit A. The final cost to be
shared by the parties will include cost of design, construction cost, construction inspection and
management, rights-of-ways and a reasonable share of the overhead cost of the District
Upper Trinity Regional Water District
City of Denton
Amendment to Contract for Water Treatment and Transmission Services
Page 8 of 10
applicable to the Krum Transmission Line. Upon completion of construction, District will prepare
a report of total costs and respective shares thereof pursuant to each party's pro rata share of
the Krum Transmission Line. District agrees that overhead and management charges of the
District applicable to the project will not exceed 6% of the construction contract amount.
However, District agrees that Denton may elect to perform inspection of construction for the
project and if so performed, the District will not allocate any overhead charges of the District to
Denton's portion of the costs.
4. Internal Usage. Denton may transport, deliver and meter water'for its own use along
and through the Krum Transmission Line within its service area up to its respective capacity in
said line according to Exhibit A.
5. Payment for Construction Cost. After design of the Krum Transmission Line has been
completed and after concurrence by Denton, the District shall take competitive bids for
construction. After receipt of bids and before a contract (or contracts) for construction is
awarded, the District shall give Denton written notice of the District's intention for award of
contract(s) and of Denton's share of the proposed contract to be awarded. Unless Denton
elects the financing option described in Paragraph 6 following, Denton shall deposit with the
District, within forty-five (45) days, its pro rata share of the proposed construction cost for the
Krum Transmission Line, plus the cost of special appurtenances, if any, requested by and for
Denton. The funds so deposited by Denton for construction shall be placed in an interest
bearing construction account by District. The District may only withdraw funds from the
construction account as required to make progress and final payment according to the
construction contract awarded for the Krum Transmission Line. The District shall maintain an
accounting of all direct expenditures for rights of way and for design and construction of the
Krum Transmission Line, including engineering and geotechnical services during construction.
Upon completion of construction, Denton agrees to pay its share, if any, of the contract change
orders, direct services during construction, or extra costs required to complete the Krum
Transmission Line. After payment for change orders, services during construction or extra
costs, any surplus funds remaining in the interest bearing account shall be returned to Denton at
completion of the contract(s).
6. Payment Option. If Denton elects not to deposit its share of the construction cost as
required in the above paragraph, District will provide the necessary funds for construction of the
project. Denton agrees to pay the debt service, applicable fees and other charges for its pro
rata share of the Krum Transmission Line according to a payment schedule to be prepared by
the District at the completion of the project, which payment schedule shall be attached hereto
and incorporated herein as Exhibit C. The District agrees that the initial payment schedule shall
not exceed the Initial Term of this Amendment and the annual payments will not exceed the
total amount of water sold by Denton to the District. If the District fails to provide the City of
Denton with sufficient water sales revenue as a result of their contract agreement with Krum to
make the financing payments for Denton's share of the Krum Transmission Line, the District
agrees to limit billing to Denton to the total amount of water sales revenue provided to Denton
under this Amendment. Recognizing the foregoing limitations on annual payments, Denton
agrees that it will continue to make payments to the District for as long as necessary to fully
amortize its share of the cost of the Krum Transmission Line, even if water sales to District are
discontinued or limited for any reason.
7. Appurtenances and Facilities for Either Party. If Denton desires and requests the
District to construct improvements or install appurtenances such as fittings for connection to
Upper Trinity Regional Water Distdct
City of Denton
Amendment to Contract for Water Treatment and Transmission Selvices
Page 9 of 10
Denton's distribution system as part of the cost of the Krum Transmission Line, which
improvements or appurtenances are not otherwise needed by the District, Denton shall be
responsible for the entire cost of such improvements or appurtenances installed for the sole
benefit of Denton. The District agrees to provide appropriate isolation valves and terminal
flushing hydrants as requested by Denton for proper operation and maintenance of the pipeline
recognizing that the City of Denton's participation in the pipeline project with the District results
in a lower transmission line cost than would be available to the District if the City of Denton was
not participating in the project. Likewise, if the District requests the construction of facilities,
solely needed for District purposes, then District shall be responsible for the entire costs of such
improvements installed for the sole benefit of District.
8. Operating Responsibility. On behalf of Denton and District, Denton agrees to operate
the Krum Transmission Line up to the Delivery Point and to be responsible for normal and
routine maintenance of said Krum 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 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 for its proportionate share of the operation and
maintenance costs within forty-five (45) days after receipt of invoice from Denton. If, in the
opinion of Denton, extraordinary maintenance such as pipeline replacement exceeding five
percent (5%) of the length of the pipeline is required, Denton shall give written notice of such
needed replacement to District, and District and Denton shall mutually determine which party
shall take appropriate steps to accomplish such extraordinary maintenance.
9. Coordination Procedure. Prior to completion of construction of the Krum Transmission
Line, Denton's Assistant City Manager, Utilities shall develop a mutually satisfactory written
procedure for coordinating the operation and maintenance of the Krum Transmission Line and
for each party to notify the other party of any activities which may affect the operations of the
other party's system. The parties agree to review said procedures for coordination and
operation from time to time and to make appropriate revisions to the written procedures.
10. Delivery Point. The Delivery Point for water by Denton to District shall be at the
Delivery Point to Krum on Masch Branch Road as shown on Exhibit A. Further, the District shall
pay for and install appropriate meter facilities, including rate of flow controller and approved
back-flow prevention device (air gap into Krum's Ground Storage Tank ) at the end of the Krum
Transmission Line. District will own the metering facilities and Denton will provide normal
maintenance and calibration according to Section 4.2 of the Contract, the costs of which are
eligible for inclusion in service rates.
'1'1. Repurchase of District's Share of Line. Denton may purchase the District's rights, in
whole or part, in the Krum Transmission Line if District, at any future time, gives notice that its
share of the line is no longer needed for District purposes. The price to be paid by Denton if it
elects to exercise it's option to purchase any portion of the District's share of the Krum
Transmission Line shall be equal to the original cost thereof for the District's share, less
accumulated depreciation. 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. If
Denton purchases the District's share or any portion thereof of the Krum Transmission Line
under the provisions of this Exhibit, District shall continue to have access to emergency
Upper Trinity Regional Water District
City of Denton
Amenriment to Contract for Water Treatment and Transmission Services
Page 10 of 10
exchange of water between Denton and District through the pipeline subject to mutual
agreements by both parties.
12. Early Payment. Denton, without penalty, may pay or prepay the entire remaining
balance, or any portion thereof, of its share of capital cost participation in the Krum
Transmission Line at any time. The amount of such early payment will be equal to the unpaid
principal, or portion thereof, including any deferred amounts.