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2002-377OPd)m CE NO. R0 7- 7 7 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 OAKMONT MANAGEMENT CORP.jPROVIDING FOR THE CITY MANAGER'S EXECUTION THEREOF; PROVDING 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 the Oakmont Management Corp., 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 fimds as provided for in said Contract is hereby authorized. SECTION 3. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the /~'g,~c day of ~ff~r/~,~ ,2002. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY S:\Our Documents\Ordinances\02~B~cial Re~se Water Contract - Oakmont 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 /7¢/{ day of ~Jff_ff~_Ae_l ,2002, by and between the CITY OF DENTON, TEXAS, a Texas Municipal Corporation, 215 East McKinney Street, Denton, Texas 76201 (hereafter "CITY"); and OAKMONT MANAGEMENT CORP., a Texas Corporation, acting herein by and through its duly authorized Board of Directors, of 1200 Club House Drive, Corinth, 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 Oakmont Country Club (hereinafter "OAKMONT") 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 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 WHEREAS, because this Contract involves the sale of treated wastewater effluent, as distinguished t~om treated potable water suitable for human consumption, the ord'mances 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 10th 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; 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 containing 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 OAKMONT MANAGEMENT CORP., hereafter called "PURCHASER", to the City of Denton, Texas, hereafter called "CITY", the parties do hereby CONTRACT and AGREE as follows: ARTICLE I. 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 f~om the CITY. HOWEVER, PURCHASER shall purchase such reuse water from CITY, subject to terms other than as provided for in said Commitment Letter. In each month during the Term (as defined herein), CITY agrees to produce, and PURCHASER agrees to take, an mount of reuse water which is sufficient to 2 meet PURCHASER's on-site irrigation needs for all of PURCHASER'S property for that month. The parties acknowledge and agree that the exact mount taken by PURCHASER may vary from month to month. However, so long as CITY is not in default hereunder, PURCHASER agrees to pay CITY the sum of $4,000 for each and every month during the Term, regardless of the exact amount taken by PURCHASER. The parties agree that this is consistent with a "take or pay" arrangement. PURCHASER will accept reuse water from CITY at the point of delivery hereinafter described in Exhibit "B," attached hereto and incorporated herewith by reference (hereinafter referred to as "PURCHASER'S delivery point"). §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 from the existing CITY reuse lines. PURCHASER shall'not be responsible for associated costs for tapping fees, meters, and any other 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 bur/ed 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 dehvery as herein described; where title to, possession, and control of the rouse water shall pass from the CITY to the PURCHASER. The CITY shall fin'nish all reuse water supplied under this Contract at sufficient volumes to allow PURCHASER to properly irrigate its property. If CITY should fail to furnish water at such sufficient volumes, as determined in the good faith discretion of PURCHASER, then PURCHASER shall, if the situation is not remedied within fifteen (15) days after written notice is received by CITY, be entitled to terminate this Contract immediately with no further obligation to CITY. § 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. .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 Turbidity Fecal Coliform Fecal Coliform * Geometric mean 5mg/L 3 NTU 20 CFU/100 ml* 75 CFU/100 ml** ** 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 15LRIGATION 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 4 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 foux (4") inches high, at ail places where employees or other persons are likely to have access to the reuse water. The actual establishment, maintenance, and enfomement of such safety precautions shall be under the exclusive dominion and control of PURCHASER. PURCHASER assumes full legal responsibility for any 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 apphcable City of Denton regulations and ordinances, or those of other governmental agencies governing the use of reuse water. §2.5 DISCHARGE OF REUSEWATER PURCHASER shall not cause or permit the discharge of reuse water off-site, either airborne or by surface runoff, unless permitted by the TNRCC. 5 §2.6 DRIFT OR SPRAY OF REUSE WATER PURCHASER shall not use reuse water in any manner where the result would be any drift or spray to areas where the general public would be exposed. §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 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 7th 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 futnre. 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 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 from the CITY'S failure to deliver the quality of reuse water required by State law and by the terms and conditions of this Contract. CITY shall indemnify the PURCHASER, to the extent provided by applicable law, for any and all damages and claims for damages arising from any contamination of the reuse water supplied under this Contract before it passes through the PURCHASER'S point of delivery. ARTICLE IlL RATE AND METERING §3.1 RATE CHARGED FOR REUSE WATER. During the Term, the rate of payment for reuse water provided hereunder shall be as follows.: A. A monthly base charge of $4,000 for each month during the Term of this Contract, take or pay. This monthly base rate provision is similar to a "take or pay" provision used in the water industry. In other words, so long as the CITY is not in default hereunder, the monthly base charge shall be due and payable by PURCHASER to CITY 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, and regardless of the amount of treated wastewater effluent taken by and used by PURCHASER; and B. A monthly facility charge of $16.20, per thirty days. §3.2 METERING. CITY shall operate, maintain and read the reuse meter/meters and shall record monthly usage, based on such meter readings. This shall be for the purpose of research and data gathering by CITY, and shall have no effect on the rates to be charged hereunder for reuse water. 7 CITY shall provide to PURCHASER copies of any and all readings, data and other information obtained from such readings, which in any way relates to usage or consumption by PURCHASER, at PURCHASER'S request. 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. §3.3. PURCHASER'S OPTION. The CITY shall be obligated to increase the reuse flow to PURCHASER, subject however, 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. If the CITY cannot transport a volume of reuse water or supply potable water at the rate charged herein for reuse water until the supply of reuse water is resumed through the existing treated wastewater effluent transmission line, which is sufficient to meet PURCHASER'S on-site irrigation needs, then CITY will be in default of this Contract. 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 (the "Term"). This Contract may then be re-negotiated by CITY and PURCHASER upon mutually agreeable terms and conditions. §4.2 EFFECTiVE DATE. This Contract shall be effective upon the occurrence of all of the following: PURCHASER'S and CITY'S execution of this Contract; connection by the CITY of its treated wastewater effluent transmission line to the PURCHASER'S dehvery point; issuance by the CITY of a written "Notice to Proceed" to PURCHASER. For purposes of this Contract, the "Effective Date" will be the date on which the final necessary condition occurs. §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 force majeure. PURCHASER may terminate the Contract if PURCHASER is of the opinion that the reuse water quality or volume 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 r~gulation and ordinance as well as those established by 30 TAC §210, despite the fact that the facilities are situated in the City of Corinth, Texas. §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. §5.3 REQUIRED PIllING. PURCHASER shall use an existing separate non-potable water distribution system, 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 tailwater water controls, as required by applicable local and state regulations. §5.6 COST OF PURCHASER'S ON-SITE FACILITIES. PURCHASER shall have title and bear 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. 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 10 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 caimot 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 apphcable laws, regulations, orders, and roles 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 C1TY 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. (a) PURCHASER, only to the extent allowed by applicable law, agrees to protect, defend, and save the CITY, its representatives, officers, agents, employees, and attorneys harmless t~om 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. Also, 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, and by the provisions of this Contract. The provisions of this Subsection 6.6(a) shall not apply to any liability resulting from the sole negligence of CITY, its representatives, officers, agents, employees, or attomeys. (b) CITY, only to the extent allowed by applicable law, agrees to protect, defend, and save the PURCHASER, its representatives, officers, agents, employees, and attorneys harmless from and against any and all claims, demands, and causes of action of every kind 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 CITY'S on-site facilities, which arise prior to delivery of such water to PURCHASER'S delivery point. The provisions of this Subsection 6.6(b) shall not apply to any liability resulting from the sole negligence of PURCHASER, its representatives, officers, agents, employees, or attorneys. §6.7. HOLD HARMLESS - GOVERNMENT REGULATION. In its performance of this 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. 12 §6.8 REMEDIES. In the event that CITY is unable in good faith to comply with the delivery of reuse water requkements to PURCHASER in this Contract within the first year from the Effective Date, then PURCHASER, at its option, shall be entitled to take CITY potable water and to pay for the potable water so taken at the contract rates established for reuse water herein, until such time as CITY is able to comply with PURCHASER'S requirements or for a period of three (3) years, whichever is less. In the event that CITY is unable in good faith to comply with the delivery of reuse water requirements to puRCHASER in this Contract at any time atter the first year of this Contract, then PURCHASER, at its option, shall be entitled to take CITY potable water and to pay for the potable water so taken at the contract rates established for reuse water herein, until such time as CITY is able to comply with PURCHASER'S requirements or for a period of two (2) years, whichever is less. The exercise of this remedy by PURCHASER shall require three (3) days prior written notice by PURCHASER to the CITY. This remedy is intended to be inclusive of any other remedies provided to PURCHASER herein. In the event that the CITY is unable to furnish reuse water because of any change of legal status by the TNRCC or other government agency, it shall be excused from further performance of this Contract. In the even that PURCHASER is unable to accept reuse water because of any change of legal status by the TNRCC or other government agency, it shall be excused from further performance of this Contract. §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 13 of the CITY of Denton, Texas or of any other governmental agency. §6.12 BINDING EFFECT ON SUCCESSORS AND ASSIGNS.This Contract 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 OAKMONT MANAGEMENT CORP., acting by and through its Board of Directors (hereafter the "PURCHASER") acting by and through their respective duly authorized and empowered officers and representatives, on this the/(~_L day . of ~ ~,{U]/~/~ ,2002. "CITY" CITY OF DENTON, TEXAS C~' MICHAEE CONDUF ,~y Manager ATTEST: JENNIFER WALTERS, CITY SECRETARY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY 14 BY: "pLrRCHASER" OAKMONT MANAGEMENT CORP. MONTY BECTON, Vice President ATTEST APPROVED AS TO LEGAL FORM: BY': W:\Oakmont238\GENERAL.0kReuse Water agr3.dce 15 215 E. McKINNEY DENTON, TX 76201 · (940) 349-8230 · FAX (940) 349-8120 UTILITY ADMINISTRATION October 30, 2000 David Gardner General Manager Oakmont Country Club 1200 Club House Drive Corinth, Texas 76210 Letter of Subscription and Commitment Purchase of Treated Wastewater Effluent from Denton Municipal Utilities Wastewater Effluent Transmission Line Project Dear Mr. Gardener: The purpose of this letter is to memorialize and secure Oakmont Country Club's ("Customer") written subscription and firm commitment to participate as a customer of Denton Municipal Utilities ("City") to purchase treatment wastewater effluent from the City's Pecan Creek Water Reclamation Plant ("Plant"), in connection with the Wastewater Effluent Transmission Line Project extending Southerly from the Plant along Mayhill Road, and along State School Road, with its terminus at Oakmont Country Club, in Corinth, Texas ("Project"). Generally speaking, the Project is a water-recycling project. The effluent quality from the City's Plant meets the highest standard for effluent reuse (Type I). The City intends to offer the sale of wastewater 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 CityTs 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 construction and installation of a wastewater effluent transmission line economically viable. The "Dedicated to Quality Service" www. cityofdenton, corn EXHIBIT A Denton Public Utilities Board ("PUB") has indicated its support for the general concept 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. Accordingly, in order for the City to proceed and move forward with this Project and in order to justify 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 from 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 identified 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: 1. The City requires a commitment fi'om Customer to pay at a minimum, a monthly base charge of $4,000/month for a minimum term of five years. The final Agreement shall be drafted so that this provision is similar to a "take-or-pay" 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 can be no carryover of surplus effluent from year to year-based on fiscal year October 1 through September 30. 2. The Customer may increase its minimum monthly base amount 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. 3. The treated wastewater effluent sold by the City to Customer shall 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 contingency plan, then in force and effect. 4. The treated wastewater effluent shall be delivered by the line by the City to Customer's individual meter point. 5. 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 "Dedicated to Quality Service" www. ciO~ofdenton, com 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; ail 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. SinDerely, ~ Assistant City Manager/Utilities Hm]msc APPROVED AND AGREED: Oakmont Country Club David Gardner General Manager Oakmont Management Corp., a/k/a Oakmont Country Club, reserves the right to rescind this Letter of Subscription and Committment upon review of projected cost per unit information, when such in- formation is made available by the City. "Dedicated to Quality Service" www. cityofdenton, corn ! !t,l* ,, ~ ~ '.~.._ :::.:: :::::::::::::::::::::::::::::::::::::::::: ~::. ::::.::,1~::.:. - ~ ~ -~ iZ::i i:::.: :.ii.:: ::ii.i .::.::.::.:: i.ii.:: .i.:::. ::.::::.:: ::.i.::.i. ::::i i~ii ~:::::.::: :.ii. ii:: ii.i:!:i.: i:.ii'i :.:.:...:.: :.:.::. :::.: .:.:..... .... 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