2002-375O IN CE NO. dO0 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
APPROVING A BENEFICIAL REUSE WATER CONTRACT BY AND BETWEEN THE
CITY OF DENTON, TEXAS AND COLUMBIA MEDICAL CENTER OF DENTON
SUBSIDIARY, L.P., DOING BUSINESS AS THE DENTON REGIONAL MEDICAL
CENTER; PROVIDING FOR THE CITY MANAGER'S EXECUTION THEREOF;
PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN
EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS:
SECTION 1. That the City Manager is hereby authorized to execute a Beneficial Reuse
Water Contract (the "Contract") by and between the City of Denton, Texas and Columbia
Medical Center of Denton Subsidiary, L.P., d/b/a The Denton Regional Medical Center, in
substantially the form of the Contract which is attached hereto and made a part of this ordinance
for all purposes.
SECTION 2. That the expenditure of funds as provided for in said Contract is hereby
authorized.
SECTION 3.
and approval.
PASSED AND APPROVED this the
That this ordinance shall become effective immediately upon its passage
/~ dayof ~_~~ ,2002.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinanc~sX0~eneficial Reuse Water Contract - DP, MC 2002.doc
THE STATE OF TEXAS
COUNTY OF DENTON
BENEFICIAL REUSE WATER CONTRACT
THIS CONTRACT for beneficial reuse of water is made and entered into on this the
/~/~- day of ~/~./~P~ ,2002, by and between the CITY OF DENTON, TEXAS, a
Texas Municipal Corporation, 215 East McKinney Street, Denton, Texas 76201 (hereat~er"CITY");
and the COLUMBIA MEDICAL CENTER OF DENTON SUBSIDIARY, L.P., DOING
BUSINESS AS THE DENTON REGIONAL MEDICAL CENTER, acting herein by and through
its duly authorized officers and directors, of 3535 South 1-35, Denton, Texas 76210 (hereafter
"PURCHASER").
WITNESSETH
WHEREAS, the PURCHASER has identified a use for treated wastewater effluent, for
beneficial reuse, hereinafter sometimes alternatively referred to as the "reclaimed water," or "reuse
water" in order to maintain its general landscaping at the Denton Regional Medical Center in Denton,
Texas and to be a more viable and cost-effective alternative than purchasing potable irrigation water;
and
WHEREAS, the City of Denton, Texas, through its Pecan Creek Water Reclamation Plant,
expects to be able to supply to the PURCHASER treated wastewater effluent, for the purpose of its
reuse; and
WHEREAS, in connection with this Wastewater Effluent Transmission Line Project
("Project") the CITY shall construct a transmission line for the purpose of serving several entities
with treated wastewater effluent, which line extends by and is contiguous to the Denton Regional
Medical Center, the Denton State School property, with its South terminus at the Oakmont Country
Club in Corinth, Texas; and
WHEREAS, this Project generally involves a water-recycling project, and the quality of
effluent produced from the Pecan Creek Water Reclamation Plant presently meets the highest
standard for effluent reuse (Type I); and
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WHEREAS, because this Contract involves the sale of treated wastewater effluent, as
distinguished from treated potable water suitable for human consumption, the ordinances of the City
of Denton, Texas concerning potable water rates do not apply to this Contract; and
WHEREAS, the Texas Natural Resource Conservation Commission (hereafter "TNRCC")
has adopted the 30 TAC Chapter 210 Rules which regulate the use of reclaimed water, and
WHEREAS, the City of Denton, Texas has incorporated the 30 TAC Chapter 210 Rules in the
"Beneficial Reuse Water User's Handbook;" and
WHEREAS, on the 8th day of November, 2000, PURCHASER and the CITY entered into
a "Letter of Subscription and Commitment" ("Commitment Letter") providing for PURCHASER'S
purchase of treated wastewater effluent from the CITY; specifying a monthly base payment, as in a
"take or pay" agreement utilized in the water industry, plus a volume rate per thousand gallons of
treated wastewater effluent, over a certain usage level; the Commitment Letter further provided for
delivery of the treated wastewater effluent by the CITY to the pURCHASER'S individual meter
point; made the delivery of treated wastewater effluent not subject to rationing; and provided for the
PURCHASER to increase its minimum monthly base mount of treated wastewater effluent in order
to meet its increased needs; and other relevant provisions; and
NOW THEREFORE, for and in consideration of the terms and conditions contained herein;
the promises and covenants made herein; the terms and provisions of the Letter of Subscription and
Commitment hereinabove referred to, and the consideration paid and to be paid by the Denton
Regional Medical Center, the owner of the described Property, hereafter called "PURCHASER", to
the City of Denton, Texas, hereafter called "CITY", the parties do hereby CONTRACT and AGREE
as follows:
ARTICLE 1.
PURCHASE, TRANSPORTATION AND DELIVERY OF REUSE WATER
§ 1.1 OBLIGATIONS. PURCHASER has previously signed a Letter of Commitment and
Intent (hereafter the "Commitment Letter") attached hereto and incorporated herewith by reference as
Exhibit "A". The Letter provides that the PURCHASER will purchase reuse water from the CITY.
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PURCHASER hereby agrees to take and pay for the quantity of reuse water that PURCHASER has
made a commitment per the Letter, for the purpose of on-site irrigation of the property owned or used
by PURCHASER at the point of delivery hereinafter described in Exhibit "B," attached hereto and
incorporated herewith by reference. If the PURCHASER at any time during the term of this Contract
needs, and can beneficially use reuse water in excess of the volume of re-use water set forth in
Exhibit "A", PURCHASER may request an additional supply of reuse water, which shall be made
available by CITY, in good faith, subject however, to product availability and transmission
considerations.
§ 1.2 DELIVERY OF REUSE.WATER. CITY agrees to deliver, under the limitations and
conditions hereafter set forth in this Contract, the reuse water which PURCHASER needs on a
continuous basis at the delivery/individual meter point shown on Exhibit "B" attached hereto.
PURCHASER shall be responsible for construction and maintenance of all distribution lines on
PURCHASER'S property from the existing CITY reuse lines. PURCHASER shall pay all associated
costs for tapping fees, meters, batching stations, and any other reasonable costs incurred by the CITY
to provide the reuse water to the PURCHASER. Each treated wastewater effluent customer of the
CITY along the Project, shall have its own reinforced concrete buried meter station. Title to,
possession, and control of the reuse water shall remain with the CITY until it passes through the
PURCHASER'S meter and control valve at the point or points of delivery as herein described; where
title to, possession, and control of the reuse water shall pass from the CITY to the PURCHASER.
The CITY does not guarantee its ability to furnish any reuse water supplied under this Contract at any
particular pressure, but rather the pressure delivered shall be such pressure as the CITY'S system will
render at the PURCHASER'S point of delivery.
§ 1.3 NO RATIONING OF WATER. The treated wastewater effluent sold by the CITY to
the PURCHASER shall not be subject to rationing during any period of drought, or during any period
of time that the use of potable water is curtailed or otherwise restricted pursuant to any drought
contingency plan, then in force and effect.
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ARTICLE II.
QUALITY AND USE OF REUSE WATER
§2.1 QUALITY OF REUSE WATER. The quality of the reuse water to be supplied by CITY to
PURCHASER under this Contract shall meet the quality requirements established in 30 TAC Chapter
210 for "Type I," as they may be amended from time-to-time, which quality requirements are
currently as shown below:
BOD5 or CBOD5 5mg/L
Turbidity 3 NTU
Fecal Coliform 20 CFU/100 ml*
Fecal Coliform 75 CFU/IO0 ml**
* Geome~ic mean
** Single grab sample (not to exceed)
The CITY shall perform required sampling and analysis on the reuse water as prescribed by
applicable regulatory agencies.
§2.2 USE OF REUSE WATER BY PURCHASER. PURCHASER SHALL USE THE WATER
RECEIVED BY AND UNDER THIS CONTRACT FOR ON-SITE IRRIGATION PURPOSES
ONLY AND IN COMPLIANCE WITH ALL REQUIREMENTS OF 30 TAC CHAPTER 210.22,
210.23 AND 210.24. "On-site irrigation" refers to the use of water for maintenance and
beautification of the landscaping and facilities of the PURCHASER. THE REUSE WATER
SUPPLIED UNDER THIS CONTRACT IS NOT SUITABLE FOR HUMAN CONSUMPTION
AND SHALL NOT BE USED BY PURCHASER OR ANY THIRD PARTY FOR ORDINARY
DOMESTIC USE. PURCHASER shall take all necessary precautions to prevent consumption of the
subject reuse water by its employees or other persons, including the posting of warning signs in both
English and Spanish, in large and conspicuous printed letters at least four (4") inches high, at all
places where employees or other persons are likely to have access to the reuse water. The actual
establishment, maintenance, and enforcement of such safety precautions shall be under the exclusive
dominion and control of PURCHASER. PURCHASER assumes full legal responsibility for any and
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all damages resulting from human consumption of the subject reuse water after it reaches the
PURCHASER'S point of delivery. PROVIDED HOWEVER, PURCHASER does not hereby waive
any defense that may be available under the laws and the Constitution of the State of Texas, or
otherwise, in the event of any suit or action brought against it by any third-party for damages.
{}2.3 USE OF REUSE WATER BY THIRD PARTIES. PURCHASER shall not sell, trade,
exchange, donate, or otherwise transfer the reuse water provided by this Contract to any third party,
and shall not permit or allow the reuse water to be used in any manner by any third parties.
§2.4 COMMINGLING OF REUSE WATER. PURCHASER shall construct or cause to be
constructed supply lines such that it is not possible for any reuse water supplied to PURCHASER
under this Contract from PURCHASER to re-enter any potable water system. However, this shall
not prevent the commingling in water storage facilities of PURCHASER'S reuse water with other
water obtained by PURCHASER from another system or source for irrigation purposes. All such
commingling shall be subject, however, to applicable City of Denton regulations and ordinances, or
those of other governmental agencies governing the use of reuse water.
§2.5 DISCHARGE OF REUSE WATER PURCHASER shall use its reasonable best efforts
not to cause or permit the discharge of reuse water off-site, either airborne or by surface runoff,
unless permitted by the TNRCC.
§2.6 EXCESS AMOUNTS OF REUSE WATER PURCHASER shall use its reasonable best
efforts to ensure that excess reuse water is returned to the wastewater collection system.
§2.7 WET GRASS CONDITIONS. PURCHASER shall apply reuse water in such manner as
to minimize wet grass conditions in unrestricted landscaped areas during the periods that the area
should be in use.
§2.8 EFFECT ON GROUND WATER. PURCHASER shall use its reasonable best efforts
to utilize reuse water in a manner that does not threaten or adversely affect ground water.
§2.9 CONDITION OF SOIL. PURCHASER shall not apply any reuse water to the ground
when the ground is either saturated or frozen.
§2.10 NUISANCE. PURCHASER shall be solely responsible for the prompt clean-up of any
nuisance conditions that exist on PURCHASER'S real property, which result from storage or the use
of reuse water received from the CITY.
§2.11 BENEFICIAL REUSE WATER USERS' HANDBOOK. PURCHASER confirms its
receipt of the "Beneficial Reuse Water Users' Handbook" (hereafter the "Handbook") published by
the City of Denton, Wastewater Utilities, and which Handbook was approved by the City of Denton
Public Utilities Board on the 7~ day of January, 2002. The CITY confirms that it will promptly issue
PURCHASER a copy of any new or amended Handbook that it may issue in the future.
PURCHASER is fully responsible for knowing the contents of the Handbook and fully complying
with it.
§2.12 RESPONSIBILITY OF THE PARTIES. CITY shall not be responsible, nor liable for any
contamination of the reuse water or the inappropriate use or application of the reuse water supplied
under this Contract after it passes through the PURCHASER'S described point of delivery (Exhibit
"B" hereto). PURCHASER shall fully and absolutely indemnify the CITY for any and all damages
and claims for damages arising from any contamination of the reuse water supplied under this
Contract after it passes through the PURCHASER'S point of delivery; except regarding any damages
resulting fi'om the CITY'S failure to deliver the quality of reuse water required by State law and by
the failure by City to abide by and fulfill its obligations under the terms and conditions of this
Contract.
ARTICLE HI.
RATE AND METERING
§3.1 RATE CHARGED FOR REUSE WATER. The rate for reuse water based on the
Commitment Letter (Exhibit "A"), and this Contract, for a period of five (5) years from the effective
date of this Contract shall be two-fold:
(A) A monthly base charge of $2,000 per month, which covers up to 1,500,000 gallons per
month of treated wastewater effluent. This monthly base rate provision is similar to a "take or pay"
provision used in the water industry. The monthly base charge shall be due and payable by
PURCHASER for each and every month that the Contract is in effect, whether or not PURCHASER
has utilized any treated wastewater effluent for that month or not. There shall also be no carryover of
surplus wastewater effluent from year to year, based on the fiscal year October 1 through September
30.
(B) If applicable, a volume rate of $1.35 per thousand gallons of treated wastewater effluent,
plus a facility charge of $16.20, per thirty- (30) days. This rate, however, shall apply only to
monthly quantities of treated wastewater effluent metered to PURCHASER in excess of 1,500,000
gallons.
§3.2 RATES AFTER FIVE YEARS. After five (5) years from the effective date of this
Contract, the terms may be adjusted by negotiation of the parties, and the rates for reuse water shall
be subject to change by the CITY on each October 1, thereafter, effective with the CITY'S fiscal year
rate ordinance beginning effective October 1, 2007. The revised rates, if any, will be based on water
reclamation plant operation and maintenance and non-operating expenses and wastewater treatment
volumes from the most recently completed fiscal year.
§3.3 METERING. CITY shall operate, maintain and read the reuse meter/meters and shall bill
PURCHASER monthly based on such meter reading. If for any reason the meter shall fail to register
for any period, PURCHASER shall be billed for the amount of reuse water delivered for the
corresponding month of the year immediately preceding the failure, if such record is available. If
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these records are not available, CITY shall reasonably estimate the amount of the consumption during
the period in question and bill PURCHASER on the basis of such estimate. In determining the
estimate of PURCHASER'S consumption, CITY shall average the applicable month for the past
three years. If there is not a three-year history, the CITY shall consider as a factor the rain or drought
conditions for the applicable period. Further PURCHASER agrees that it shall not in any manner
interfere, tamper, or attempt to do anything with regard to the operation or functioning of such
meter/meters.
§3.4. PURCHASER'S OPTION. Purchaser may increase its minimum monthly base amount of
treated wastewater effluent purchased during the term of this Contract in order to meet its increased
needs by notifying the CITY, in writing, who will then determine a new monthly minimum monthly
base charge in light of the increase of the monthly base amount of treated wastewater effluent
purchased. The CITY shall be obligated to increase such monthly minimum base amount, subject
only to the condition that the CITY must be able to transport the increased volume of treated
wastewater effluent to PURCHASER through the existing treated wastewater effluent transmission
line.
ARTICLE IV.
TERM
§4.1 TERM AND RENEWAL OF CONTRACT. This Contract shall be for a term beginning
with the effective date, and ending five (5) years after that date. This Contract may then be re-
negotiated by CITY and PURCHASER for subsequent minimum five (5) year term(s) with the
concurrence of both parties. The Purchaser shall provide written notice to the CITY at least six
months in advance of expiration of the Contract stating that the PURCHASER desires to re-negotiate
this Contract.
§4.2 EFFECTIVE DATE. This Contract shall be effective upon PURCHASER'S and
CITY'S execution of this Contract; and upon the date that CITY has connected its treated wastewater
effluent transmission line to the PURCHASER'S delivery point and the same is operational; and
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upon the CITY'S issuance of a written "Notice to Proceed" to PURCHASER.
§4.3 TERMINATION OF CONTRACT. This Contract shall be terminated if either party
is prevented from fulfilling an obligation under this Contract by any final judgment of a court of
competent jurisdiction, legislation, or other fome majeure. PURCHASER may terminate the
Contract if PURCHASER is of the opinion that the reuse water quality is such as to prevent the
PURCHASER from using it for the purpose of irrigation. In that event, PURCHASER shall provide
the CITY at least sixty (60) days written notice of its intention to terminate the Contract. CITY may
terminate this Contract if monies required to be paid by PURCHASER pursuant to this Contract are
not paid within thirty (30) days of written notification issued by the CITY to PURCHASER at
PURCHASER'S billing address according to the CITY'S records. Either party may terminate this
Contract upon the failure of the other party to abide by the provisions of this Contract and to cure the
alleged default, after being provided thirty (30) days written notice to do so by the other party. This
Contract also may be terminated by the mutual agreement of PURCHASER and CITY.
ARTICLE V.
FACILITIES
§5.1 ON-SITE FACILITIES. PURCHASER shall construct and pay for all necessary facilities
to deliver, store, use and discharge or dispose of the reuse water from the point of delivery onto
Purchaser's property, until such re-use water is used, discharged, or disposed of, which facilities shall
be described for purposes of this Contract, as on-site facilities. Design and construction must meet
criteria established by CITY regulation and ordinance as well as those established by 30 TAC §210,
as determined by CITY in its reasonable judgment.
{}5.2 SECURITY OF PURCHASER'S SERVICE SYSTEM. PURCHASER'S service system
shall be installed by PURCHASER so as to prevent operation by unauthorized personnel pursuant to
30 TAC §210.25.
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§5.3 REQUIRED PIPING. PURCHASER shall use an existing separate non-potable, or shall
design and construct a separate non-potable water distribution system in compliance with 30 TAC
§210.25 and any other applicable local and state regulations.
§5.4 STORAGE PURCHASER shall comply with storage as required by 30 TAC §210.23
and any other applicable local and state requirements.
§5.5 TAILWATER WATER CONTROLS. PURCHASER shall construct any required tail water
controls, as required by applicable local and state regulations.
§5.6 COST OF PURCHASER'S ON-SITE FACILITIES. PURCHASERshallhavetitleandbear
all responsibilities including the costs of installing, operating, maintaining, permitting, licensing, and
repairing any and all of PURCHASER'S on-site facilities, other than those facilities owned by the
CITY unless provided for by other mechanisms.
§5.7 ACCESS TO PURCHASER'S PROPERTY. PURCHASER shall allow the CITY 24-
hour access onto PURCHASER'S property (only that property which is the subject of this Contract)
as necessary to operate, maintain, and inspect facilities owned by the CITY. CITY shall use its best
efforts to minimize interruption with PURCHASER'S use and operation of its property.
ARTICLE VI.
GENERAL PROVISIONS
§6.1 GOVERNING LAW; VENUE; LEGAL CONSTRUCTION. This Contract shall be
governed by and construed in accordance with the laws of the State of Texas. The obligations of the
parties to this Contract are performable in Denton County, Texas, and if legal action is necessary to
enforce same, exclusive venue shall lie in Denton County, Texas. In case any one or more of the
provisions contained in this Contract shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other
l0
provision of this Contract, and this Contract shall be considered as if such invalid, illegal, or
unenforceable provision had never been contained in this Contract.
{}6.2 ASSIGNMENT OF CONTRACT.
written consent of the other party.
This Contract cannot be assigned without the prior
{}6.3 COMPLIANCE WITH APPLICABLE LAWS. This Contract is subject to all legal
requirements of the City Charter of the City of Denton, Texas, the Denton Code of Ordinances, and
other laws and regulations both state and federal; and PURCHASER agrees that it will promptly
comply with all applicable laws, regulations, orders, and rules of the Federal, State, County, City, and
all other applicable governmental agencies. Specifically, PURCHASER will comply with all
provisions of 30 TAC {}210 as it is currently adopted or as it may be hereafter amended. These
regulations are included in the above-referenced "Beneficial Reuse Water Handbook."
{}6.4 FORCE MAJEURE. Neither CITY nor PURCHASER shall be required to perform any
term, condition, or covenant in this Contract, so long as such performance is delayed or prevented by
force majeure, which shall mean acts of God, civil riots, floods, and any other cause, not reasonably
within the control of CITY and/or PURCHASER and which by the exercise of due diligence, CITY
or PURCHASER is unable, wholly or in part, to prevent or overcome.
{}6.5 ENTIRE AGREEMENT. This Contract embodies the complete agreement of the parties
hereto, superseding any and all oral or written previous and contemporary contracts or agreements
between the parties and relating to matters contained in this Contract, except as otherwise provided
herein. This Contract may not be modified without the written agreement of both parties hereto.
{}6.6 HOLD HARMLESS. PURCHASER, only to the extent permitted by applicable law,
agrees to protect, defend, and save the CITY, its representatives, officers, agents, employees, and
attorneys harmless from and against any and all claims, demands, and causes of action of every kind
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and character, losses, costs, expenses, attorney's fees, and damages of every kind and character, for
injury to, or death of any person or damage to any property arising out of or in connection with the
construction, use, storage, maintenance, disposal, or discharge of reuse water of or from
PURCHASER'S on-site facilities. However, this provision shall not apply if any claim arises and is
proximately caused by the CITY'S failure to deliver the quality of reuse water required by State law;
or by the City's failure to comply with the provisions of this Contract. The provisions of this
Subsection 6.6 shall not apply to any liability resulting from the sole negligence of CITY, its
representatives, officers, agents, employees, or attorneys.
§6.7. HOLD HARMLESS - GOVERNMENT REGULATION. Initspcrformanceofthis
Contract, PURCHASER shall comply with all applicable federal, state, and local laws or regulations
related to the use or reuse of reuse water, or the environment, and will hold the CITY, its
representatives, officers, agents, employees, and attorneys harmless from and against any and all
claims, demands, suits, causes of action, losses, damages, costs, attorney's fees, and expenses arising
out of any noncompliance violation or alleged noncompliance violation by PURCHASER of any
such laws; PROVIDED HOWEVER, only to the extent provided by applicable law.
§6.8 REMEDIES. In the event that CITY is unable in good faith to comply with the delivery
of reuse water requirements to PURCHASER in this Contract, then PURCHASER'S sole remedy
shall be to take CITY potable water and to pay for the potable water so taken at the rates established
for the potable water used. It is expressly understood that so long as the CITY is unable, in good
faith to produce reuse water for PURCHASER under this Contract, that the obligation ofthe
PURCHASER to pay City the monthly "take or pay" payment(s) as set forth in §3.1 of this
Contract shall abate, and PURCHASER shall only pay CITY for the potable water which it
uses on a monthly basis, until such time as reuse water is restored to delivery by the CITY. The
exercise of this remedy by PURCHASER shall require ten (10) days prior written notice by
PURCHASER to the CITY.
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§6.9 REQUIRED PERMITS AND LICENSES. The parties shall each maintain in effect
during the term of this Contract, any and all federal, state, and/or local licenses and permits which
may be required of parties generally regarding the subject of reuse water.
§6.10 REQUIRED RECORDS. Both CITY and PURCHASER shall maintain such records as
are required by state regulations and shall notify the TNRCC in writing within five (5) days of
obtaining knowledge of reuse water use not specified and approved by the Executive Director of the
TNRCC.
{}6.11 POLICE POWERS NOT AFFECTED. This provision does not affect the police powers
of the CITY of Denton, Texas or of any other governmental agency.
§6.12 BINDING EFFECT ON SUCCESSORS AND ASSIGNS. This Contmct shall be binding
upon and shall inure to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors, and their assigns.
§6.13 CAPTIONS AND COUNTERPARTS. The captions to the various Articles and
Subsections of this Contract are for informational purposes only and shall in no way alter the
substance or meaning of the terms and conditions of this Contract. This Contract shall be executed in
duplicate original counterparts, each of which shall be deemed an original and constitute one and the
same instrument.
EXECUTED by the City of Denton, Texas ("CITY") and the DENTON REGIONAL MEDICAL
CENTER (hereafter the PURCHASER), acting by and through th,~ir respective duly authorized and
empowered officers, officials, and representatives, on this the/¥~day of c~/~ ~ ,2002.
13
"CITY"
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
C..'"MtCH L .
City Manager
ATTEST:
JENNIFER WALTERS, CITY SECRETARY:
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
"PURCHASER"
COLUMBIA MEDICAL CENTER OF DENTON, SUBSIDIARY, L.P., DOING BUSINESS AS
DENTON REGIONAL MEDICAL CENTER
Title: ~,/o
ATTEST
By: ~/~
APPROVED AS TO LEGAL FORM:
S:\Our Documents\Con~racts\0 2~B eneficial Reuse Water Contract- Denton Rgnl Med Cfr.doc
14
215 E. McKI~NNEY DENTON, TX 76201 · (940) 349-8230 · FAX (940) 349-8120
UTILITY ADMINISTRATION
October 30, 2000
Bob Haley
Chief Executive Officer
Denton Regional Medical Center
3535 S. 1-35
Denton, Texas 76210
Re:
Letter of Subscription and Commitment
Purchase of Treated Wastewater Effluent from Denton Municipal Utilities
Wastewater Effluent Transmission Line Project
Dear Mr. Haley:
The purpose of this letter is to memor/ali2e and secure Denton Regional Medical
Center's ('~ustomef') written subscription and firm commitment to participate as a
customer of Denton Municipal Utilities ("City") to purchase treatment wastewater
effiuem from the City's Pecan Creek Water Reclamation Plant ('?lant"), in connection
with the Wastewater Effluent Transmission Line Project extending Southerly fi-om the
Plant along Mayhill Road, and along State School Road, with its terminus at Oakmom
Country Club, in Corinth, Texas ("Project").
Generally speaking, the Project is a water-recycling project. The effluent quality
fi-om the City's Plant meets the highest standard for effluent reuse (Type I). The City
intends to offer the sale ofwastewater effluent from the Project as a viable and more cost-
effective alternative than some of its customers purchasing irrigation water.
The wastewater effluent transmission line ("line") will be approximately 13,600
linear feet in length, and consists of 18" diameter, and a small amount of 8" diameter
PVC line. Each treated wastewater effluent customer of the City along the line will have
its own reinforced concrete buried meter station. The City's estimated cost to construct
and install the Project is $1.6 million.
The City, after careful analysis, has determined that the concentration of potential
treated wastewater effluent customers in the area of your business makes the constmction
and installation of a wastewater effluent transmission line economically viable. The
Denton Public Utilities Board ("PUB") has indicated its support for the general concept
"Dedicated to Quality Service"
www. cityofclenton, corn
EXHIBIT A
of the Project, but has expressed a concern regarding the City's ability to recover its costs
to be expended on the Project over a reasonable period of time.
Accord'mgly, in order for the City to proceed and move forward with this Project and in
order to jusfffy the expenditure of funds on this Project, City Staff has been instructed to
obtain firm written letters of subscription and commitment from the four targeted
potential wastewater effluent customers along the proposed route of the line in order to
justify the City's financial commitment to the Project. These four customers are:
Oakmont Country Club, Denton State School, Denton Regional Medical Center, and the
Professional Office Building. City Staff expects that before final approval of this Project
is sought fi-om the PUB and the Denton City Council, that letters of subscription and
commitment will have to be obtained from all four of the targeted customers idenfffied
above.
The basic concepts and general terms of the final separate Agreement to be
entered into by and between the City and Customer in the near future are as follows:
I. The City requires a commitment from Customer to pay at a minimum, a monthly
base charge of $2,000/month with access to 1.5 million gallons/month of treated
wastewater effluent for a minimum term of five years. The final Agreement shall be
drafted so that this provision is s'unilar to a "take-or-pal' agreement used in the water
industry. The monthly base charge shall be due and payable by Customer for each and
every month that the Agreement is in effect, whether or not Customer has utilized any
effluent or not for that month. There shall be no carryover or any allowance for any
unused effluent to any other month.
2. The City shall charge Customer the rate of $1.35/1000 gallons for treated
wastewater effluent for any quantity of effluent that exceeds the monthly base. This rate
is the contractual rate of service established by and between the City and Customer that
shall remain constant throughout the five year term of the Agreement, irrespective of the
amount of the City's published rate, if any, for the sale of treated wastewater effluent.
3. The Customer may increase its minimum monthly base mount of treated
wastewater effluent purchased during the term of the Agreement in order to meet its
increased needs by notifying the City, who will then determine a new monthly minimum
monthly base charge in light of the increase of the monthly base amount of effluent
purchased. The City shall be obligated to increase such monthly minimum base amount,
subject only to the condition that the City must be able to transport the increased volume
of effluent to Customer through the line.
4. The treated wastewater effluent sold by the City to Customer shah not be subject
to rationing during any period of drought, or during any period of time that the use of
water is curtailed or otherwise restricted pursuant to any drought confmgency plan, then
in force and effect.
"Dedicated to Quality Service"
www. ci tyofclenton, com
5. The treated wastewater effluent shall be delivered by the line by the City to
Customer's individual meter point.
6. The City reasonably projects that the Project will be substantially complete and
that it will be able to transport and sell treated wastewater effluent to Customer by June
2001, in the absence of any catastrophe, force majeure, or problems with easement
acquisitions.
By signing this letter of subscription and commitment, you are stating your
intention to subscribe as a City treated wastewater effluent purchaser under the above
basic terms and provisions. The City will rely on your commitment remaining firm, and
will expect you to enter into a final, more detailed Agreement encompassing all terms,
conditions, and covenants, at a time in the near future; all subject to the approval of the
PUB and the final approval of the Denton City Council.
We appreciate you interest and your desire to participate in this Project. The City
Staff looks forward to working with you on the Project and serving your treated
wastewater effluent needs.
Please contact me at the above address or telephone number if you have any
questions.
Sincerely,
Assistant City Manager/Utilities
Hm]~c
APPROVED AND AGREED:
Denton Regional Medical Center
Bob Haley ~
Chief Executive Officer
Dated: / t ~ ~ -:2. ooo
"Dedicated to Quality Service"
www. ci~yofdenton, corn