2003-046ORDINANCE NO. 2003- 0 ~(~
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,
EXECUTED BY THE MAYOR; AUTHORIZING THE CITY MANAGER, OR IN THE
EVENT OF HIS ABSENCE THE ACTING CITY MANAGER TO EXECUTE AND
APPROVE THE "CONSENT AND AGREEMENT" ENTERED INTO BY AND
BETWEEN THE CITY OF DENTON, TEXAS, THE CITY OF GARLAND, TEXAS,
AND SPENCER STATION GENERATING COMPANY, L.P., A DELAWARE
LIMITED PARTNERSHIP; AUTHORIZING THE CITY MANAGER, OR IN THE
EVENT OF HIS ABSENCE THE ACTING CITY MANAGER TO EXECUTE AND
APPROVE THE "SPECIAL WARRANTY DEED" EXECUTED BY SPENCER
STATION GENERATING COMPANY, L.P. AS GRANTOR TO THE CITY OF
GARLAND, TEXAS AS GRANTEE; AUTHORIZING THE CITY MANAGER, OR IN
THE EVENT OF HIS ABSENCE THE ACTING CITY MANAGER TO EXECUTE
AND APPROVE THE "GENERATION INTERCONNECTION AGREEMENT" BY
AND BETWEEN THE CITY OF DENTON, TEXAS AND THE CITY OF GARLAND,
TEXAS; AUTHORIZING THE CITY MANAGER, OR IN THE EVENT OF HIS
ABSENCE THE ACTING CITY MANAGER TO EXECUTE AND APPROVE
WITHDRAWAL LETTERS OR OTHER APPROPRIATE WRITTEN AUTHORITY
TO THE FEDERAL ENERGY REGULATORY COMMISSION REGARDING
PREVIOUS REQUESTS TO TRANSFER HYDROELECTRIC PROJECT LICENSES;
AUTHORIZING THE CITY MANAGER, OR 1N THE EVENT OF HIS ABSENCE
THE ACTING CITY MANAGER TO EXECUTE AND APPROVE THE "NOTICE OF
ASSIGNMENT AND CONSENT TO ASSIGNMENT" ENTERED INTO BY AND
BETWEEN THE CITY OF DENTON, TEXAS, THE CITY OF GARLAND, TEXAS,
AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING THE
CITY MANAGER, OR 1N THE EVENT OF HIS ABSENCE THE ACTING CITY
MANAGER TO EXECUTE ANY AND ALL OTHER DOCUMENTS WHICH ARE
NECESSARY AND APPROPRIATE TO EFFECT THE COMPLETION OF THE
"CONSENT AND AGREEMENT" TRANSACTION BY AND BETWEEN THE CITY
OF DENTON, TEXAS, THE CITY OF GARLAND, TEXAS, AND THE SPENCER
STATION GENERATING COMPANY, L.P.; CONFIRMING AND RATIFYING
THAT THE CITY OF DENTON, TEXAS, ITS MAYOR, ITS CITY COUNCIL, ITS
CITY MANAGER, AND ITS CITY ATTORNEY SHALL BE AUTHORIZED AND
EMPOWERED TO PERFORM SUCH ACTS AS ARE REASONABLY REQUIRED
TO EFFECTUATE THIS TRANSACTION; RATIFYING ALL PRIOR ACTIONS
TAKEN BY THE CITY COUNCIL IN FURTHERANCE OF THE FOREGOING
TRANSACTIONS; FINDING AND DETERMINING THAT THE "CONSENT AND
AGREEMENT" AND THE "GENERATION INTERCONNECTION AGREEMENT"
REFERENCED HEREINABOVE AND POSSIBLY OTHER DOCUMENTS, PERTAIN
TO A COMPETITIVE ELECTRIC MATTER AS SET FORTH UNDER THE
PROVISIONS OF §551.086 AND §552.133 OF THE TEXAS GOVERNMENT CODE,
AS AMENDED; FINDING AND DETERMINING THAT §252.022(a)(15) OF THE
TEXAS GOVERNMENT CODE APPLIES; ADOPTING SIGNIFICANT FINDINGS,
CONCLUSIONS, AND RECITATIONS AS ARE SET FORTH IN THE PREAMBLE
OF THIS ORDINANCE; AUTHORIZING THE EXPENDITURE OF FUNDS
THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on June 12, 2001, the City Council of the City of Denton, Texas
considered and approved Ordinance No. 2001-216, and executed same following its
adoption in the Open Meeting on June 12, 2001; which provided authority for the City of
Denton, Texas ("Denton") to sell and assign a portion of its electric generation assets to
various PG&E-entities; and
WHEREAS, on June 29, 2001 the City of Denton, Texas ("Denton") duly
executed a Transition Power Agreement ("TPA") with PG&E Energy Trading - Power,
L.P. ("PG&E") pertaining to Denton's purchase of electric capacity and energy for its
consumption, which TPA appointed PG&E as Denton's energy manager, which TPA
contained other mutual covenants and promises as set forth therein; and which document
is protected by law fi:om public disclosure under the Public Power Exception; and
WHEREAS, on June 29, 2001 the City of Denton, Texas and Spencer Station
Generating Company, L.P. executed an Asset Purchase Agreement ("APA") pertaining to
the sale of a part of Denton's generation assets; and which document is protected by law
fi'om public disclosure under the Public Power Exception; and
WHEREAS, PG&E, in November 2002 reported to Denton Staff that because of
credit and business considerations, that it desired to assign the TPA to Constellation
Power Source, Inc., a Delaware corporation ("Constellation") which is an affiliate of
Constellation Energy Group, Inc., the parent corporation; and meaningful negotiations
occurred between Denton Staff and Constellation preparatory to Denton formally
considering or approving any possible assignment of the TPA to Constellation; and
WHEREAS, on December 10, 2002, in Closed Meeting, duly notified, the City
Council first approved the execution, by the City Manager of a First Supplement to
Transition Power Agreement ("First Supplement") that changed only certain electrical
operations and procedures which had become necessary and appropriate because of the
passage of time since the signing of the TPA; this action was authorized by Ordinance
No. 2002-415; and which First Supplement is protected by law fi'om public disclosure
under the Public Power Exception; and
WHEREAS, the TPA entered into by Denton and PG&E, by its terms is
assignable, provided however, that any third-party seeking approval to succeed to
PG&E's rights for the remainder of the term of said TPA, be consented to in writing by
Denton, which consent shall not be unreasonably be withheld or delayed; and
WHEREAS, Denton Staff then recommended to the City Council in its December
10, 2002 Closed Meeting, the terms contained in the "Transition Power Agreement
Assignment and Assumption Agreement" ("Agreement"), under a separate ordinance,
which has been provided to the City Council under the Public Power Exception; and the
City Council approved said separate ordinance on December 10, 2002, as evidenced by
Ordinance No. 2002-416; and
WHEREAS, Denton Staff also reported to the City Council in its December 10,
2002 Closed Meeting, that Spencer Station Generating Company, L.P. and the other
PG&E-related entities involved as acquiring parties in the June 29, 2001 partial
divestiture transaction (including without limitation, PG&E Generating Company, LLC),
had also expressed their intent to withdraw wholly from the Texas electric market, and
accordingly were desirous of selling the remaining assets which they had purchased fi.om
Denton on June 29, 2001; and
WHEREAS, the PG&E-related entities disclosed to Denton that they had located
a purchaser of the remaining assets, the City of Garland, Texas, subject to approvals by
and between the PG&E-related entities and the City of Garland, Texas; and subject to, in
connection with such transaction, Denton's consent to the assignment to the City of
Garland or termination and replacement of certain agreements between Denton and
Spencer Station Generating Company, L.P. and the modification of certain provisions of
the Asset Purchase Agreement dated June 29, 2001 among Denton, Spencer Station
Generating Company, L.P. and PG&E Generating Company, LLC; and each of the three
parties, Denton, the City of Garland, Texas and the PG&E-related entities, having been
represented by legal counsel at all times pertinent; and
WHEREAS, the City of Denton, Texas is a home-rule city governed by the
constitution and laws of the State of Texas; and
WHEREAS, the City Council finds that the transaction being consented to by the
City of Denton, Texas, entered into by and between the City of Denton, Texas (as the
approving/consenting authority), the City of Garland, Texas, and Spencer Station
Generating Company, L.P. involves only some, but not all, of the former generation
resources of the City's electric utility, which was approved by the City Council in
Ordinance No. 2001-216; and this transaction is therefore, not a sale by the City of
Denton, Texas of any assets of the City's electric utility, as said partial divestiture of
electric generation assets had already occurred on June 29, 2001; and
WHEREAS, the City Council finds that the City is entitled to, and shall continue
to receive replacement power, energy capacity, and energy management services, through
Constellation Power Source, Inc. ("Constellation"), Denton's qualified scheduling entity
("QSE") as provided under a separate Transition Power Agreement, approved by~
Ordinance No. 2003-416, enacted on December 10, 2002, that is advantageous, reliable,
and cost-effective; and finds that the performance of the obligations of Constellation
under the agreement to the City is adequately secured; and
WHEREAS, the City Council finds that continuation of the Transition Power
Agreement by Constellation will not impair the ability of the City to comply with the
provisions of any of its utility revenue bonds, as amended, which are issued and
outstanding; and
WHEREAS, the City Council is of the conclusion that no essential portion of its
electric utility, Denton Municipal Electric, is being conveyed, by either the new TPA
transaction approved as to Constellation, nor the Garland/PG&E-entity sale to which
Denton is hereby consenting; and that the effect of the two separate sales is lawful, and in
each case, merely substitutes one creditworthy electric provider for another, with no
detriment to the electric service ratepayers of the City of Denton resulting; and
WHEREAS, the City Council finds that §252.022(a)(15) of the Texas
Government Code is applicable to the Garland/PG&E-related entity sales transaction and
that competitive bidd'mg law is not applicable to this transaction, calling for the City to
purchase electricity; and
WHEREAS, the City Council finds that it is appropriate to execute and deliver a
"Consent and Agreement" ("Consent") by and between the City of Denton, Texas, the
City of Garland, Texas ("Garland'), and Spencer Station Generating Company, L.P.
("Spencer") respecting the sale by Spencer to Garland of certain electric generation assets
formerly owned by Denton, known as the Spencer Station Generation Plant and the Lake
Lewisville Hydroelectric Plant, both being situated in Denton County, Texas; and the
City Council hereby authorizes the City Manager, or in his absence the Acting City
Manager, to take such action and to execute and approve such Consent; and
WHEREAS, the City Council further hereby authorizes the City Manager, or in
his absence the Acting City Manager of the day, to execute the following documents to
effectuate the above transaction: (1) Special Warranty Deed (Spencer to Garland); (2)
Notice of Assignment of Easement; (3) Generation Intercounection Agreement (Denton
and Garland); (4) Written authorization regarding withdrawal of the Federal Energy
Regulatory Commission applications as to Spencer to transfer the hydroelectric facilities;
and such actions are hereby ratified, confirmed and approved by the City Council; and
WHEREAS, the City Council further hereby authorizes the City Manager, or in
his absence the Acting City Manager of the day, to enter into any other documents which
the City Attorney or his designee believe is necessary and appropriate to consummate the
"Consent and Agreement" transaction; and such actions are hereby ratified, confirmed,
and approved by the City Council; and
WHEREAS, in accordance with the provisions of §551.086 of the Texas
Government Code, after due public notice being given as required by applicable law, the
City Council, a "Public Power Utility Governing Body" under Senate Bill 7, has
discussed, deliberated, and considered the matter, the subject of this ordinance, in Closed
Meetings of the City Council on the l0th day of December, 2002, the 21st day of January,
2003, and the 4th day of February, 2003 and after determining by a preliminary majority
vote of its members on each of said dates, that the consideration of the items which were
the subject of this ordinance are related to the competitive activity of Denton Municipal
Electric ("DME"), including commercial information, which if disclosed, would give
advantage to its competitors or prospective competitors; and
WHEREAS, thereafter, the City Council, proceeded to discuss, deliberate, and
consider the matter of the transaction which is the subject of this Ordinance, and voted, in
its Closed Meeting, on both the 21st day of January, 2003 and the 4th day of February,
2003 in favor of authorizing and approving, subject to Denton reaching agreeable and
acceptable legal terms, the "Consent and Assignment" referenced hereinabove;
delegat'mg the broad managerial authority vested in the City Manager, or in his absence,
the Acting City Manager; and it approved the following Ordinance; NOW THEREFORE
4
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the above Preamble to this Ordinance be, and it is, hereby
ratified, confirmed, and incorporated as being the tree and correct factual background for
the transaction proposed by and between the City of Garland, Texas and Spencer Station
Generating Company, L.P. the related transactions to which the City of Denton, Texas is
being asked to consent and agree to, by executing the above-referenced "Consent and
Agreement," which recitals are set forth and are included as a part of and the subject of
this Ordinance.
SECTION 2. That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day) and the City
Secretary, to execute and attest respectively, the "Consent and Agreement" by and among
the City of Denton, Texas, the City of Garland, Texas, and Spencer Station Generating
Company, L.P. under the terms and conditions being contained in the form which is
attached hereto as Exhibit A and made a part hereof; and the execution and delivery
thereof on behalf of the City of Denton, Texas by or at the direction of the City Manager
shall constitute such approval.
SECTION 3. That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day) and the City
Secretary, to execute and attest respectively, the "Special Warranty Deed" by and among
Spencer Station Generating Company, L.P. as Grantor, and the City of Garland, Texas, as
Grantee, under the terms and conditions being contained in the form which is attached
hereto as Exhibit B and made a part hereof, and the execution and delivery thereof on
behalf of the City of Denton, Texas by or at the direction of the City Manager shall
constitute such approval.
SECTION 4. That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day) and the City
Secretary, to execute and attest respectively, the "Notice of Assignment of Easement" by
and among the City of Denton, Texas, the City of Garland, Texas, and Spencer Station
Generating Company, L.C. under the terms and conditions being contained in the form
which is attached hereto as Exhibit C and made a part hereof, and the execution and
delivery thereof on behalf of the City of Denton, Texas by or at the direction of the City
Manager shall constitute such approval.
SECTION 5. That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day) and the City
Secretary, to execute and attest respectively, the "Generation Interconnection
Agreement" by and among the City of Denton, Texas and the City of Garland, Texas
under the terms and conditions being contained in the form which is attached hereto as
Exhibit D and made a part hereof, and the execution and delivery thereof on behalf of the
City of Denton, Texas by or at the direction of the City Manager shall constitute such
approval.
SECTION 6. That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day) to execute
written authorization, no later than five (5) business days following the effective date of
this Ordinance, to provide Spencer Station Generating Company, L.P.'s attorneys with
general authority to file (or in the alternative to authorize counsel to the City of Denton to
prepare, execute and file) Federal Energy Regulatory Commission letters of withdrawal
regarding the pending applications for transfer of the Ray Roberts and Lewisville
hydroelectric facilities; and the execution and delivery thereof on behalf of the City of
Denton, Texas by or at the direction of the City Manager shall constitute such approval.
SECTION 7 That the City Council, hereby approves and authorizes the City
Manager (or in the event of his absence, the Acting City Manager of the day), and the
City Secretary to execute and attest, respectively, to execute any and all other documents
which are necessary and appropriate to effect the completion of the "Consent and
Agreement" transaction by and between the City of Denton, Texas, the City of Garland,
Texas, and Spencer Station Generating Company, L.P.;
SECTION 8. That all prior actions taken by the Mayor, the City Manager, the
Assistant City Manager of the day, the City Attorney or their designees in furtherance of
the foregoing matters as set forth in Sections 1 through 7 hereinabove, be and they are
hereby ratified, approved and authorized by the City Council in all respects as of the
dates and times such actions were taken.
SECTION 9. That immediately following the execution and delivery of those
documents executed fi.om time-to-time, described hereinabove in the Preamble to this
Ordinance, the City Attorney, or his delegate, shall prepare a sworn list, or lists of the
applicable documents to be sealed and protected by the City Secretary fi.om public
disclosure, and shall immediately deliver such sworn list and applicable documents to the
City Secretary; and such other related documents which are provided for by this
ordinance, as being subject to the "Public Power Exception," the City Secretary is hereby
directed to seal and maintain said documents under her custody and control, as
documents excepted fi.om public disclosure under the provisions of §552.133 of the
Texas Government Code (the "Public Power Exception"); unless otherwise lawfully
ordered to disclose said documents by a court of competent jurisdiction.
SECTION 10. The expenditure of funds as set forth in the Ordinance is hereby
authorized.
SECTION 11. This Ordinance shall become effective immediately upon its
passage and approval.
PASSED AND APPROVED this the 4th day of February, 2003.
EULINEBROCK, MAYOR
6
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinances\03\DME Consent to Garland and Spencer Station 2003 D2.doc
STATE OF TEXAS §
COUNTY OF DENTON §
KNOW ALL MEN BY THESE PRESENTS:
SPECIAL WARRANTY DEED
THAT the City of Denton, Texas, a municipal corporation of the State of Texas and a
home role city ("Grantor"), for and in consideration of the sum of $10.00 and other good and
valuable consideration to it paid by the City of Garland, Texas, a municipal corporation of the
State of Texas and a home role city ("GranteeY) has GRANTED, SOLD AND CONVEYED, and
by these presents does GRANT, SELL AND CONVEY unto Grantee the fee simple interest of
that certain land situated in Denton County, Texas, more particularly described in Exhibit "A"
attached hereto and incorporated herein by reference for all purposes, together with all right, title
and interest of Grantor in and to (i) any and all buildings, facilities and other improvements
situated thereon, (ii) all adjacent strips and gores of land, and (iii) all rights and appurtenances in
any wise belonging unto Grantor in connection with the foregoing (collectively, the "Property").
TO HAVE AND TO HOLD the Property unto the said Grantee, its successors and
assigns forever, and Grantor does hereby bind itself, and its successors to WARRANT AND
FOREVER DEFEND all and singular the said Property unto the said Grantee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the same or any part
thereof, by, through or under Grantor, but not otherwise.
Grantor makes no representations or warranties whatsoever, express, implied or arising
by operation of law, with respect to the Property or the condition of the Property, other than the
special warranty of title in this Deed. The Property is being sold and conveyed to (and is
accepted by) Grantee in its present condition, AS IS, WITH ALL FAULTS, AND WITHOUT
ANY WRITTEN OR ORAL REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS, IMPLIED OR ARISING BY OPERATION OF LAW, other than the special
warranty of title contained in this Deed. Except for the special warranty of title in this Deed, this
conveyance is without any statutory, express or implied warranty, representation, statement or
expression of opinion of or with respect to (i) the condition of the Property or any aspect thereof
including, without limitation, any and all statutory, express or implied representations or
warranties related to suitability for habitation, merchantability or fitness for any particular use or
purpose or any activity Grantee may conduct or contemplate conducting thereon; (ii) the soil
conditions, drainage, topographical features or other conditions of or which affect the Property;
(iii) any conditions at or which affect the Property with respect to any particular use, ptmpose,
development potential or otherwise; (iv) any environmental, hydrological, geological, structural
or other condition or hazard or the absence thereof affecting in any manner any of the Property;
and (v) all other statutory, express or implied representations and warranties by Grantor
whatsoever.
EXECUTED this ther~~ day of March, 2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY:
By: ~~b~~
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
BY:~Mi( h~d A. C~onY
City Manager
Corporate Acknowledgement
STATE OF TEXAS §
COUNTY OF DENTON §
Tiffs instrument was acknowledged before me on this ~'~ay of March, 2003, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a municipal corporation and home-rule
municipality, on behalf of the City of Denton, Texas.
notary Public, State of Texas
My Commission Expires
December 19, 2006
My Commission Expires:
~stOtary P)t~lic in and for the ate of Texas
Notary's Printed Name
After Recording Return to:
City of Garland, Texas
200 N. Fifth St., 4th Floor
P.O. Box 469002
Garland, Texas 75046-9002
Attention: City Attorney
S:\Our Documents~FORM S~P ROPERTY~Special Warranty Deed-Denton to Garland-Spencer Tract 030603.doc
EXHIBIT "A"
LEGAL DESCRIPTION
For a 0.876 acre Tract out of Lot 1, Block 2
MUNICIPAL UTILITY ADDITION
City of Denton, Denton County, Texas
BEING all that certain tract, or parcel of land out of Lot 1, Block 2, MUNICIPAL UTILITY
ADDITION, an addition to the City of Denton, Denton County, Texas according to the plat thereof
recorded in Cabinet G, Slide 346, Plat Records of Denton County, Texas and more particularly
described as follows:
BEGINNING at an iron rod found for comer in the northeast right-of-way line of Spencer Road having
Texas Coordinate System, North Central Zone, 1983-1999 coordinates of x -- 2394500.20 and y =
7121259.27 feet, and further being 700.95 feet, S 50° 11' E from the southwest comer of Lot I, Block 2
MUNICIPAL UTILITY ADDITION;
THENCE: with the said northeast fight-of-way line of Spencer Road, N 50° 10' 54" W, a distance of
122.58 feet to a five-eights inch iron rod set for a comer;
THENCE: leaving the said right-of-way line, N 0° 52' 33" E, passing a 4" steel fence post at 31.2 feet;
in all a distance of 260.40 feet to a 4" steel fence post for comer;
THENCE: generally with a chain link fence, N 89° 32' 54" E, a distance of 125.41 feet to a 4" steel
fence post for a comer in the west line of the tract described by deed recorded in Volume 4870, Page
1319, Real Property Records of Denton County, Texas;
THENCE with the said line and generally with a chain link fence, S 0° 02' 46" W, a distance of 254.82
feet to a 4" steel fence post for an angle point;
THENCE continuing with the said line, S 22° 23' 30" W, a distance of 91.96 feet to the place of
beginning and containing 0.876 acres of land more or less as surveyed byjnj during the month of March
& April 2002. All beatings, distances and coordinates are grid per the Texas Coordinate System. To
obtain surface distances, multiply by 1.0001456 the distances shown. Bearing base from existing deed
is -02025'06" clockwise.
S:\Our DocumentsXFORMS~PROPERTYXSpencer Tract Legal Description-City of Garland 030603.doc