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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 1 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. 2 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. 3 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 4 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 7 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 8 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. 9 §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 11 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. 12 §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