Res 028-2024 Potable Water Purchase Contract with City of Holliday 03/19/2024 Resolution No. 28-2024
Resolution authorizing the City Manager to execute a new Potable
Water Purchase Contract with the City of Holliday
WHEREAS, the City of Holliday is organized and established under provisions of
the laws of the State of Texas. One of the duties of the City of Holliday is the operation of
a water distribution system serving water users within its authorized service area, and to
accomplish this purpose, it requires a supply of potable water; and,
WHEREAS, the City owns several water reservoirs and a treatment and
distribution system (the "City System") with capacity capable of serving the present
customers of the City System and the estimated number of water users to be served by
the City of Holliday; and,
WHEREAS, the City and City of Holliday entered into a Water Purchase Contract
on December 1 , 1968, and subsequently agreed to multiple modifications to the contract,
and this Contract replaces all prior contracts between the Parties relating to the purchase
of potable water ("Water"); and,
WHEREAS, immediately prior to the effective date of this Contract, the City of
Holliday was not obligated to purchase Water from City and City was not obligated to sell
Water to the City of Holliday; and,
WHEREAS, by resolution of the City Council of the City of Holliday enacted on the
12th day of February 2024, it authorized the continued purchase of Water by the City of
Holliday under the terms of this new, mutually agreed upon Contract; and,
WHEREAS, the City of Holliday is responsible for operating its water distribution
system, and providing Water to its authorized service area as described herein; and,
WHEREAS the City of Holliday is required by Texas Commission on
Environmental Quality regulations to implement and enforce City's Water Conservation
and Drought Contingency Plan through all subsequent sales of Water and shall include
such obligation in any subsequent contract for sale that the City of Holliday may execute
with any third-party purchaser of Water.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
WICHITA FALLS, TEXAS, THAT:
The Potable Water Purchase Contract between the City of Wichita Falls and the
City of Holliday is hereby approved, and the City Manager is authorized to execute the
same for the City of Wichita Falls.
PASSED AND APPROVED this the 19th day of March, 2024.
MAYOR
ATTEST:
Deputy City Clerk
Potable Water Purchase Contract
THIS CONTRACT for the sale and purchase of potable water(the"Contract")is entered into as of the l Jh day of
vet run 2024,between the City of Wichita Falls,Texas,hereinafter referred to as"City,"and City
of Holliday,hereinafter referred to as"Customer"(City and Customer are collectively the"Parties").
WHEREAS,Customer is organized and established under provisions of the laws of the State of Texas. One of the
duties of Customer is the operation of a water distribution system serving water users within Customer's authorized
service area,and to accomplish this purpose,Customer requires a supply of potable water;
WHEREAS, City owns several water reservoirs and a treatment and distribution system(the "City System")with
capacity capable of serving the present customers of the City System and the estimated number of water users to be
served by Customer;
WHEREAS, City and Customer entered into a Water Purchase Contract on December 1, 1968, and subsequently
agreed to multiple modifications to the contract, and this Contract replaces all prior contracts between the Parties
relating to the purchase of potable water("Water");
WHEREAS,immediately prior to the effective date of this Contract,Customer was not obligated to purchase Water
from City and City was not obligated to sell Water to Customer;WHEREAS,by resolution of the City Council of Customer enacted on the 1 a Y y,I day of Velo n] a
2024,it authorized the continued purchase of Water by Customer under the terms of this new,mutually agreed u n
Contract;
WHEREAS,Customer is responsible for operating its water distribution system("Customer System"),and providing
Water to its authorized service area as described herein;and
WHEREAS, Customer is required by Texas Commission on Environmental Quality ("TCEQ") regulations to
implement and enforce City's Water Conservation and Drought Contingency Plan through all subsequent sales of
Water and shall include such obligation in any subsequent contract for sale that Customer may execute with any third
party purchaser of Water.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for value received, City and Customer
mutually agree to the following,to wit:
1.0. Delivery of Water. City agrees to sell and to deliver Water under this Contract to Customer at the delivery
point(s)specified herein, and Customer agrees to take at the delivery point(s)all Water required for use during the
term of this Contract,not to exceed the annual quantity of Water. The monthly quantity of Water to be furnished by
City to Customer shall not exceed 8,500,000 gallons per month("Monthly Quantity")not to exceed a maximum of
80,000,000 gallons per year("Annual Quantity")in any Water Year unless a greater amount is approved in writing
by City."Water Year"means the period October 1 of each calendar year through September 30 of the next following
calendar year. Customer shall not take more than the Annual Quantity without prior written consent of City.
Customer agrees that City is under no obligation to provide Customer with a sufficient amount of Water for
Customer to meet its minimum production, storage, service pump, or pressure maintenance requirements, or any
other requirements imposed on Customer under Texas Administrative Code, Chapters 290 or 291, or any other
requirement of law. Customer also agrees that City is under no obligation to increase any of its water utility
infrastructure or capacity in order to satisfy any of the provisions of this Contract.
1.1 Delivery Point. The delivery point(s) shall be located on a 10 inch(10")main on the south side of Seymour
Highway, approximately 750 feet inside the city limits of City, or another satisfactory delivery point with the
approval of City.
1.2 Quality of Water. City will exercise due diligence and follow best management practices to meet the applicable
drinking water quality standards for Water and any requirement of law for Water furnished to Customer pursuant to
this Contract.
1.3 Customer System Requirements. Once Customer takes Water from the delivery point(s),Customer is solely
responsible for complying with the requirements under Texas Administrative Code, Chapters 290 or 291, or any
other requirement of law. Customer shall have the responsibility to transport the Water from the delivery point(s)to
its consumers,including imparting additional pressure to adequately serve Customer's consumers.
1.4.Metering.Customer shall furnish, install, operate and maintain at its own expense at the delivery point(s),the
necessary metering equipment, including a meter house or pit, and required devices of standard type for properly
measuring and recording the quantity of Water delivered. City and Customer shall agree on the type of any
replacement meter before purchase by Customer. Metering equipment shall be calibrated by Customer whenever
requested by City, but not more frequently than once every 12 months. Within 30 days after such calibration,
Customer shall furnish a certification of such calibration to the Director of Public Works of City,or his designee.A
meter registering not more than 2%above or below the rated capacity of the meter shall be deemed accurate.The
previous reading of any meter disclosed by test to be inaccurate shall be corrected for the 12 months previous to such
test in accordance with the percentage of inaccuracy found by such tests and existing records.If any meter fails to
register for any period,the amount of Water furnished during such period shall be deemed to be the amount of Water
diverted in the corresponding period immediately prior to the failure, based on existing records unless City and
Customer shall agree in writing upon a different amount.If Customer's measuring equipment is out of service for 30
days or more,City may purchase,install and maintain any required measuring equipment,as determined by City,and
charge the expense therefore to Customer.
During any reasonable hours,City shall have access to the metering equipment.City shall further have access to all
records pertinent to determining the measurement and quantity of Water actually delivered. Customer agrees that
City may furnish, install,operate and maintain check meters, should City so choose. Customer also agrees that the
design and construction of its metering equipment will facilitate City's installation and operation of check meters.
City will read the Customer water meter on the first normal work day of each month during the term of this Contract.
Customer and City shall have free access to read meters daily if they so desire.City will provide Customer,no later
than the 10th day of each month, with an itemized statement showing the amount of Water metered to Customer
during the preceding month and the resulting charges. Customer shall pay to City the amount of the itemized
statement no later than the 20th day of the month in which the charges are billed.
All services on Customer's System shall be separately metered.
2.0. Water Rates. Until changed by City, the cost of Water purchased by Customer shall be $5.6778 per 1,000
gallons or$4.2470 per 100 cubic feet. The rates to Customer for Water shall be subject to change each year as a
result of a cost-of-service study using the rate principles in section 2.1.When a cost-of-service study is conducted,
City will provide the results and the new rates to Customer.The new rates will become effective at the beginning of
each Water Year. Adjustments to rates does not constitute an amendment to the Contract. If Customer exceeds
either the Monthly Quantity or the Annual Quantity, the City shall be entitled to bill for such exceedance and
Customer hereby agrees to pay for such exceedance at 2.0 times the water rate.
2.1.Annual Changes to Water Rates.Customer authorizes the rates for Water to be changed annually,based on the
following rate setting principles:
a. Revenue requirements to be determined on utility basis at an agreed test year's original Cost adjusted
30%toward current cost to cover its cost and as compensation for ownership.
b. The test years shall be the average of the City's previous three year's consumption of retail customers of
the City of Wichita Falls and all the wholesale customers. The peaking factor will be calculated
similarly using an average of the max month for the last three years divided by the average monthly
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consumption. The consumption and peaking share play a large role in assigning costs between the
wholesale and retail classes..
c.City to receive a Rate of Return on the agreed adjusted value Rate Base equal to a composite of the utility's
test year embedded cost of money weighted on the debt portion of capital invested in plant in service and the
utility's latest cost of money weighted on the remaining equity portion of plant in service to cover its risks.
d.All existing reservoirs and associated facilities to be included in common rate base. Wholesale customers
as class(either raw water only,raw water transmitted,treated water only and transmitted treated water)will
pay their proportionate share of all costs based on current use.
e.A flat rate(volume only),shall be charged,with allocation of 100%current use to encourage conservation
and thereby resulting in efficient utilization of the water system; provided,however,that the amount billed
each month shall never be less than any agreed monthly minimum charge.
f. The risk of financing all future raw water transmission lines and reservoirs must be borne by the City
Water utility,and all costs will be allocated to all wholesale customers on current use basis.
The rates will be considered changed on the later of(1)the date the City's Director of Public Works sends a written
Notice of Rate Modification to Authority's address as provided in this agreement or(2)the effective date of the
aforementioned Notice of Rate Modification.
2.2.Disputed Rates.Customer stipulates and agrees that the rate,rate setting methods,and policies specified in this
Contract are fair,just,and reasonable,and without discrimination.Further,if Customer believes that rates have been
modified in a manner that fails to conform to the aforementioned principles or are otherwise established in a manner
that is not just or reasonable,then Customer must send a written Notice of Appeal,containing the written approval of
the Directors, to City's City Manager, 30 calendar days after City's written issuance of the new rates to the
Customer. To be effective,such Notice of Appeal must contain a statement,sworn to by all directors of Customer
and all experts the Customer intends to use to assert the improper,unjust,or unreasonable manner of the rates,that
entirely states the full and complete basis upon which the Customer believes that the rates were improperly,unjustly
or unfairly established. Upon receipt of the Notice of Appeal, City's City Manager will consider the appeal and
examine the rate determination process and result. If City's City Manager determines the appeal is well founded,
he/she may reconsider the rates and issue new,higher or lower rates based on the information submitted and other
information determined by subsequent investigation thereof.
If Customer at any time disputes the amount to be paid by it to City,Customer shall nevertheless promptly make the
disputed payment or payments. If it is subsequently determined by or agreed that the disputed amount paid by
Customer should have been less or more, City shall revise and reallocate Customer's payments in a manner that
Customer or City will recover the amount properly due.
If a court,the Commission,or any federal or state regulatory authority finds that City's rates or policies for delivering
Water to Customer under this Contract are unreasonable or otherwise unenforceable,City may immediately terminate
this Contract without liability to Customer.By signing this Contract,Customer stipulates and agrees that City and its
other customers will be prejudiced if Customer avoids the obligation to pay the rates for Water specified in this
Contract while accepting the benefits of obtaining Water from City.Nothing in this Contract shall be construed as
constituting an undertaking by City to furnish Water to Customer except pursuant to the terms of this Contract. If
Customer initiates or participates in any proceeding regarding City's rates and policies under this Contract and
advocates a position that is adverse to City and City prevails, Customer shall pay City for its expenses, including
attorneys' fees and expert witness fees, in the proceeding within 30 days after City's demand for payment.
Notwithstanding,City shall never have any obligation to pay the attorneys'fees or expert fees of Customer as a result
of any fee determination or proceeding relating to this Contract.
2.3.Additional Charges. In the event that any sales or use taxes,or taxes,assessments,or charges of any similar
nature are imposed on diverting,storing,delivering,gathering,impounding,taking,selling,using,or consuming the
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Water received by Customer from the Delivery Point,the amount of the tax,assessment,or charge shall be borne by
Customer, in addition to all other charges, and whenever City shall be required to pay, collect, or remit any tax,
assessment,or charge on Water received by Customer,then Customer shall promptly pay or reimburse City for the
tax,assessment,or charge in the manner directed by City.
2.4.Default in Payments.All amounts due and owing to City by Customer shall,if not paid when due,bear interest
at the Texas post judgment interest rate set out in Tex.Finance Code. § 304.003,or any successor statute,from the
date when due until paid.If any amount due and owing by Customer to City is placed with an attorney for collection,
Customer shall pay to City,in addition to all other payments provided for by this Contract,including interest,City's
collection expenses, including court costs and attorneys' fees. City shall, to the extent permitted by law, suspcnd
delivery of Water from the Delivery Point to Customer if Customer remains delinquent in any payments due
hereunder for a period of 60 days and shall not resume delivery of Water while Customer is so delinquent and may,
at its option,terminate this Contract without further liability to Customer.City shall pursue all legal remedies against
Customer to enforce and protect the rights of City,City's customers,and the holders of City's bonds.It is understood
that the foregoing provisions are for the benefit of the holders of City's bonds.
3.0.Purpose and Place of Use.Customer shall not be required to furnish Water to any resident of City.The Parties
hereby agree that City shall continue to serve these areas.If City extends its City limits,Customer will continue to
provide Water to any consumer of Water from Customer until City is able to extend its own distribution system to
provide such customers with City's Water. The Water will be used for municipal use, including residential and
commercial uses, by Customer within the authorized service area of the Customer. Customer's authorized service
area is [the area located within Customer's Extraterritorial Jurisdiction("ETJ")boundary]/ [the area authorized in
Customer's certificate of convenience and necessity("CCN")]. Unless written permission is obtained from City,
Water shall not be provided to other municipalities and/or residential and/or commercial subdivisions outside the
authorized service area. Such permission will not be given to serve a subdivision within the City's Extraterritorial
Jurisdiction("ETJ")unless the subdivision complies with the Subdivision Regulations of the City of Wichita Falls.
Customer shall not sell any Water to any private party for resale by such private parties to third parties. Customer
shall be allowed to make single connections to Customer system with notification to City of such action,provided the
Annual Quantity allowable as set out in the Contract is not exceeded. Customer shall not sell Water to any consumer
outside of the Customer's authorized service area without the approval of City.
3.1.Subsequent Sales of Water/Connections.City and Customer agree that for any area of service being provided
by Customer that Customer will comply with applicable City procedures for purposes of connection and connection
approvals in any area lying within City's ETJ boundary(or within the city limits). Further,it is agreed by City and
Customer that in the event of a prospective customer's application for service outside of City's ETJ boundary,no pre-
conditions are to be established or enforced by City in connection with any request for service made by any applicant
for water service.
Customer expressly agrees that it will not furnish Water to any user without first requiring proof from the applicant
that the property to be serviced has been platted in accordance with Texas Local Government Code Chapter 212,as it
may be amended from time to time, within the Contract term. When a meter is approved by the Customer, such
approval shall be tied to the land and automatically approved to the current owner of the land.
4.0.Water Shortages. In the event of an extended shortage of Water, or the supply of Water available to City is
otherwise diminished over an extended period of time so that it becomes necessary to ration the Water sold to
citizens of City,the supply of Water to Customer shall be reduced or diminished in the same ratio or proportion as
the supply to the citizens of City is reduced or diminished. The Water to be distributed shall be further divided in
accordance with Texas Water Code§ 11.039.
4.1.Water Conservation and Drought Contingency Plan.The Customer agrees to implement and enforce City's
Water Conservation and Drought Contingency Plan through all subsequent sales of Water and shall include such
obligation in any subsequent contract for sale that Customer may execute with any third party purchaser of Water.
Further, the Customer agrees to initiate at least the restrictions of said Drought Contingency Plan that are being
implemented within the City. The Customer may implement more severe restrictions than City, but shall not enact
less severe restrictions than are currently in effect in the City.If Customer fails to implement a drought contingency
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plan with restrictions that emulate or exceed City's Drought Contingency Plan when trigger conditions occur,then
City's City Manager is authorized to institute rationing pursuant to any applicable wholesale water contracts,
including this Contract, as well as enforce any contractual, statutory, or common law remedies available to City
necessary to protect the public welfare. City's Water made available to Customer when Customer is not in
compliance with City's Water Conservation and Drought Contingency Plan will be reduced to the amount of Water
that City's City Manager estimates would be necessary to satisfy Customer's demand if Customer was operating in
compliance with both City's and Customer's Drought Contingency Plans.
5.0. Rules and Regulations. To the extent permitted by applicable law, Customer's tariff and applicable TCEQ
regulations, Customer expressly agrees that it will not furnish Water to any user without first requiring proof from
the applicant that any wastewater generated from the use of Water supplied will be disposed of in a manner
consistent with current TCEQ regulations. Customer agrees to terminate water service to any user with a continuing
unabated public nuisance,as defined in the Texas Health and Safety Code,upon receiving written notice requesting
such termination from TCEQ or its designated representatives.
5.1.Backflow Protection.Customer and City shall have the authority and responsibility of inspection to determine
that no cross connections or conditions of backflow or back-siphonage exist on that portion of the system receiving
Water under pressure from City's water mains.City shall have the authority to disconnect the Water until correction
within the Customer System is made. City shall also have the right to suspend delivery of Water in the event
Customer fails to construct, maintain and operate City's portion of the water distribution system in substantial
compliance with such standards referred to hereinabove. Provided, however, unless substantial noncompliance
constitutes a safety and/or health hazard, City shall not suspend the delivery of Water without first notifying
Customer in writing of such noncompliance and affording Customer a reasonable opportunity to correct such
noncompliance. Provided, further, in no event shall City suspend delivery of Water to any portion of Customer's
system not necessary in isolating the location of such noncompliance.
6.0.Term.This Contract shall extend for a term of 20 years from the date of Contract execution.Unless a written
notice of non-renewal is sent by either party prior to expiration hereof,at the end of the original term, it shall then
automatically renew on a year-to-year basis. Either party may cancel prior to expiration of a term for breach or non-
performance.City may cancel this Contract at any time during any term of the Contract in the event Customer fails to
make any payment due hereunder within 60 days after same becomes due or,if the Customer breaches any covenant
herein other than payment of the monthly statement,and such breach continues for 60 days after City gives Customer
written notice thereof.
7.0.No Assignment or Discrimination.This Contract shall not be assignable by either party without the approval of
the other party. The Parties hereto shall not discriminate against any employee or applicant for employment or
service because of race,religion,color,sex,national origin,age,or handicap.
8.0. Independent Contractor. This Contract is intended to create an independent contractor relationship, and the
employees of each party shall never be considered the employees of the other party.
9.0.Notices to Customer.Notices from City representatives to Customer issued pursuant to this Contract shall be
effective when sent to the Customer at the following address:
City of Holliday
Attention:Director of Public Works
P.O.Box 508
Holliday,Texas 76366
If a document is sent to Customer via certified mail, notice shall be considered received by the Customer if a
representative of the Customer fails to sign for or accept said document within 5 days after receipt thereof.
10.0.Title to Water.Title for liability purposes to all Water supplied hereunder to Customer shall be in City up to
the Point(s)of Delivery,at which point title shall pass to Customer.Notwithstanding,Customer will not obtain any
water rights in any wastewater effluent flows or the continuation thereof.
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11.0 City Right to Execute other Water Supply Contracts. City maintains its right to enter into any other water
supply contracts without restriction.
12.0.No Third-Party Beneficiaries.
This Contract shall inure only to the benefit of the Parties hereto,and third persons not privy hereto shall not,in any
form or manner,be considered third-party beneficiaries of this Contract.Each party hereto shall be solely responsible
for the fulfillment of its customer contracts or commitments, and City shall not be construed to be responsible for
Customer's contracts or commitments by virtue of this Contract or any provision contained herein.
13.0.Choice of Venue.
All acts performable under the terms of this Contract and all amounts due under this Contract, including, but not
limited to,payments due under this Contract or damages for the breach of this Contract,shall be paid and be due in
Wichita County,Texas,said Wichita County,Texas,being the place of performance agreed to by the Parties to this
Contract.In the event that any legal proceeding is brought to enforce this Contract or any provision hereof,the same
shall be brought solely in Wichita County,Texas.
14.0.Pledge of Revenue.
Customer represents and covenants that all payments to be made by it under this Contract shall constitute reasonable
and necessary operating expenses of its system, and that all such payments will be made from the revenues of its
water system. Customer represents and has determined that the water supply to be obtained from City is absolutely
necessary and essential to the present and future operation of its water system and is the only available and adequate
source of supply of Water therefore, and, accordingly, all payments required by this Contract to be made by
Customer shall constitute reasonable and necessary operating expenses of Customer's system or systems as described
above with the effect that the obligation to make such payments from revenues of such system or systems shall have
priority over any obligation to make any payments from such revenues,whether of principal, interest,or both,with
respect to all bonds heretofore or hereafter issued by Customer with the exception of any loan to Customer from the
United States of America for financing Customer's water system. With respect to Customer's obligations to the
United States of America for financing Customer's water system,the City and the United States of America shall
have equal priority. Customer agrees throughout the term of this Contract to continuously operate and maintain its
water system and to fix and collect such rates and charges for water services to be supplied by its water system as
will produce revenues in an amount equal to at least(i) all of its payments under this Contract and (ii) all other
amounts as required by the provisions of the ordinances or resolutions authorizing its revenue bonds or other
obligations now or hereafter outstanding.Unless otherwise specifically provided in writing by subsequent Contract
between City and Customer, all payments due by Customer are to be made from the revenues and income received
by Customer from the ownership and operation of its water system.
15.0. Indemnity. Customer shall defend, indemnify and hold harmless City and City's officers, agents, and
employees from all suits, actions, or claims of any character, name and description including attorneys' fees and
expenses brought for any injuries to persons or damages to property in connection with the performance or attempted
performance of this Contract. Customer expressly agrees to defend, indemnify and hold harmless City and City's
officers,agents,and employees in accordance with this clause regardless of whether the injury or damage is caused
in whole or in part by the acts,or omissions,including negligence,of City or its officers,agents or employees or any
condition of City's property.
16.0. Amendments to be in Writing. The Parties to this Contract agree that they have read all provisions of this
Contract and any exhibits hereto.This Contract and any exhibits hereto are the complete and exclusive statements of
the terms agreed upon, superseding all prior Contracts or statements, either written or oral. No modification,
amendment,or addition to this Contract is valid unless in writing and signed by all Parties hereto,except that rates
may be established by City as provided above.
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Kinley Hegglund,City Attorney
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