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Res 195-94 12/6/1994RESOLUTION NO. 195---q4 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, APPROVING A NON- ANNEXATION CONTRACT WITH WICHITA FALLS ENERGY COMPANY; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS DISCUSSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW. WHEREAS, the City of Wichita Falls has previously entered into a non-annexation contract with Wichita Falls Energy Company, said contract to expire December 31, 1994; and, WHEREAS, said company has requested a second seven-year non- annexation agreement with the City, which the City deems to be in the best interests of the citizens of Wichita Falls. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, THAT: SECTION 1. The City Manager be and is hereby authorized to execute a second generation non-annexation contract with Wichita Falls Energy Company, in accordance with its terms and conditions attached hereto, and made a part hereof for all purposes. SECTION 2 . It is hereby officially found and determined that the meeting at which this resolution was passed was open to the public as required by law. PASSED AND APPROVED this the 6th day of December, 1994 . M A Y O R ATTEST: City erk STATE OF TEXAS COUNTY OF WICHITA S NON-ANNEXATION CONTRACT WITH WICHITA FALLS ENERGY CO. , LTD. This contract, made and entered into by and between the City of Wichita Falls, Texas, a municipal corporation, hereinafter called "City, " and Wichita Falls Energy Co. , Ltd. , hereinafter called "Company, " WITNESSETH: WHEREAS, Company is the Lessee of a certain tract of land, hereinafter called "Subject Property, " located in Wichita County, Texas, said land being more fully described in Exhibit A, which is attached hereto and incorporated herein, and which land is located within City's extraterritorial jurisdiction; and WHEREAS, Subject Property is a part of a larger tract of land owned by Vetrotex CertainTeed Corp oration (formerly known as CertainTeed Corporation) , which larger tract of land is described as Lot 1 of Certain-Teed Products Addition to Wichita Falls, according to the plat of said addition recorded in Volume 22, Pages 21-22 of the plat records of Wichita County, Texas; said Lot 1 of Certain-Teed Products Addition was designated as 2 an industrial district by the City Council of City by their Resolution No. 1835; and, WHEREAS, Company has built a cogeneration facility in the immediate proximity of the City, and the City Council has found that such facility will bring a number of economic benefits to City; and, WHEREAS, the City Council, by Resolution No. has authorized and approved this contract, which it deems to be in the best interest of City. NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter contained to be performed by the parties hereto, City and Company do hereby agree as follows: 1. City guarantees the continuation of the extraterritorial status of Subject Property, and its immunity from annexation by City, for a period of seven (7) years from January 1, 1995. 2. City will furnish water service to Company on Subject Property for (i) the production of steam by Company ("Steam Water") for the generation of electricity and sale of steam to Vetrotex CertainTeed Corporation or any successor in interest to the plant located at 4515 Allendale Road in Wichita Falls, Texas, and (ii) domestic uses such as lavatory, toilet and periodic cleaning ("Domestic Water") . The City will charge and Company will pay for both Steam Water and Domestic Water rates equal to 125% of the rates charged to users located within the 3 City limits throughout the term of this contract, unless City's City Council completely eliminates the standard out-of-city additional charge established by ordinance, in which event Company shall thereafter pay the same rates charged to users within the City limits. The use of Steam Water and Domestic Water by Company shall be measured by separate water meters. 3 . City will furnish sanitary sewer service to Company on Subject Property for disposal of wastewater at rates equal to 125% of the rates charged to users located within the City limits computed on the basis of the calculated sewage use by Company as determined by engineering data and certification satisfactory to City as follows: a. Throughout the term of this contract, Company may place an average of 24 gallons per minute of water in the sanitary sewer of City servicing Subject Property. Although the average discharge of Steam Water shall not exceed 24 gallons per minute, the maximum peak discharge of Steam Water shall not exceed 34 gallons per minute. City will furnish sanitary sewer service to Company for disposal of Domestic Water on Subject Property at rates equal to 125% of the rates charged to users located within the City limits throughout the term of this contract, unless City's City Council completely eliminates the standard out-of-city additional charge established by ordinance, in which event 4 Company will thereafter pay the same rates charged to users within the City limits. 4 . City will furnish solid waste collection and removal service to Company on Subject Property at rates equal to 125% of the rates charged to commercial and business establishments within the City limits throughout the term of this contract, unless City's City Council completely eliminates the standard out-of-city additional charge established by ordinance, in which event Company shall be charged the same rates charged to users within the City limits. Company may use this service at its option. 5. The water service, sanitary sewer service and solid waste collection service provided to Company by City shall be subject to the ordinances of City as presently existing and as may be hereinafter amended. 6. City will furnish fire protection service to Company on Subject Property. 7. Company shall not allow the sale of fireworks on Subject Property. 8. Company will pay to City each year during this contract, as payment in lieu of taxes, an amount in cash, or cash equivalents acceptable to City, equal to 40% of that amount that their normal City taxes would have been that year had they been in the City limits. Each annual payment shall be made between October 15 and December 31 of each year; the first such a 5 payment in lieu of taxes shall be payable between October 15 and December 31 of 1995. In computing the amount that their normal City taxes would be each year during this contract, the following rules shall be applied: a. The appraised value of the land shall be determined in the same manner that other land in the City is appraised. b. The appraisal of the buildings shall be determined in the same manner that other buildings in the City are appraised. c. The appraised value of the machinery, equipment and other personal property, except for inventory, shall be appraised in the same manner that machinery, equipment and other personal property are appraised in the City. d. The appraised value of the inventory shall be determined in the same manner as the inventory of other firms in the City are appraised, less the freeport exemption. e. Each year the then-current tax rate as established by the City Council shall be applied to the assessed value (as determined under a. through d. above) to obtain the amount that the normal City taxes would have been that year had the property been located within the City limits. The payment in lieu of taxes shall be 40% of the amount so computed. 9. This contract does not release nor waive any obligation to the City in connection with any paving, curb and 6 gutter, or other improvement liens which may be assessed against Subject Property. 10. Company shall not assign this contract, nor assign nor sublet the lease or any part thereof on Subject Property without the written consent of City; except no consent shall be required for any mortgage or collateral assignment in connection with financing the purchase of improvements located on Subject Property. Company shall not, without written consent of City, construct any improvements on Subject Property which are not related to the cogeneration facility. This contract shall be binding upon and inure to the benefit of the successors and assigns (as permitted) of each party hereto. 11. In the event Company should breach any of the provisions of this contract, and it fails to remedy such breach within thirty (30) days after having been notified in writing by City to do so, then City shall have the right to terminate this contract, and to proceed to annex Subject Property. 12. City shall initiate proceedings to annex Subject Property into the City limits early enough to be able to complete such proceedings by December 31, 2001, and Subject Property shall be included on the tax rolls of City on January 1, 2002 . 13 . This contract shall be effective as of January 1, 1995. 7 IN WITNESS WEEREOP, the parties hereto have caused this contract to be executed by their duly authorized officers on this the /?.- day of December, 1994. Ci chita Palls, Texas By: .r Jaynes Be Ina, "City-MO/lager -. / ATTEST: / C ty er A roved to Fors: y Attorney Wichita Falls Energy Co. , Ltd. By: WPEI, Inc. (i1anacring ge ral artner) By: ald N. Craig, Presi nt ATTEST •Ieeele• ;Ver.)" 1( / Secretary " a 8 WICHITA COGENERATION FACILITY PROPERTY DESCRIPTION COGENERATION SITE AND TESCO SUBSTATION STATE OF TEXAS S COUNTY OF WICHITA S That part of the plat of "CertainTeed Products Addition" described as: Commencing at the intersection of the Northwest right-of-way line of the Fort Worth and Denver Railroad and the North right-of-way line of Farm-Market Highway No. 369 which is the southerly Southeast corner of said plat; Thence North 1,045.34 feet; Thence East 643 .92 feet to the point of beginning; Thence North 330 feet; Thence East 420 feet; Thence South 330 feet; Thence West 188. 15 feet; Thence South 177 feet; Thence West 153 feet; Thence North 177 feet; Thence West 78.85 feet to the place of beginning, containing 3.80 acres, more or less. ASSIGNMENT OF NON-ANNEXATION CONTRACT This ASSIGNMENT OF NON-ANNEXATION CONTRACT ("Assignment") is made and executed this 30th day of September, 1999(the"Closing Date"),between WICHITA FALLS ENERGY CO.,LTD.("Wichita"),and SOUTHERN ENERGY WICHITA FALLS,L.P.(d/b/a SE1 Wichita Falls, L.P.)("Purchaser"). WITNESSETH: WHEREAS,effective as of January 1, 1995,the City of Wichita Falls("City")and Wichita entered into that certain Non-Annexation Contract with Wichita Falls Energy Co., Ltd. ("City Contract"),a copy of which is attached hereto and incorporated herein as Exhibit A; WHEREAS,Wichita has heretofore operated a cogeneration facility("Facility")on the"Subject Property"described in the City Contract pursuant to a lease("Facility Lease")from the Owner Trustee identified below as owner of such Facility, and has occupied said Subject Property under a sublease from the Owner Trustee identified below as lessee under the CertainTeed Lease identified below; WHEREAS,pursuant to a Contract for Sale("Sale Contract")dated September 21, 1998, between Wichita and Purchaser, Wichita has assigned to Purchaser an option ("Purchase Option")granted in the Facility Lease to purchase the cogeneration facility situated on the"Subject Property"described in the City Contract from United States Trust Company ofNew York,as Trustee under a Trust Agreement dated as of June 1, 1987,between United States Trust Company of New York and EDS Financial Corporation ("Owner Trustee"), and to obtain an assignment from the Owner Trustee of the June 1, 1987, lease from CertainTeed Corporation (now known as Vetrotex CertainTeed Corporation),as amended,covering said Subject Property(the"CertainTeed Lease"); WHEREAS, of even date herewith, pursuant to the Purchase Option, Purchaser is purchasing the Facility from Owner Trustee and is receiving an assignment of the CertainTeed Lease covering the Subject Property from Owner Trustee; WHEREAS, Wichita has agreed to assign to Purchaser all of Wichita's rights and interests in,to and under the City Contract; and WHEREAS,as required in Paragraph 10 of the City Contract,the City has consented to the assignment of Wichita's rights and interests in. to and under the City Contract to Purchaser and has consented to the assignment of the CertainTeed Lease covering the Subject Property to Purchaser;and the City has been requested to evident,such consent by signing counterparts of this Assignment as indicated below. NOW,THEREFORE, for good and valuable consideration in hand paid,the receipt and sufficiency of which are acknowledged, Wichita and Purchaser hereby stipulate and agree as follows: 5302045.2 1. Assignment. Effective as of the Closing Date, Wichita hereby assigns and transfers to Purchaser all of the rights and interests of Wichita in, to and under the City Contract. 2. A$samptiQn. Purchaser hereby assumes and agrees to perform and observe all obligations, agreements and duties of Wichita under and in connection with the City Contract. 3. Sale ContractJtegnirementL As provided in Section 3.9 of the Sale Contract, Wichita shall be and remain obligated to pay and shall indemnify and hold Purchaser harmless with respect to all amounts owing or becoming owing by the"Company"to the City under the City Contract attributable to all periods of time prior to the Closing Date or which have been incurred or become owing to the City by reason of evcnts or actions or omissions occurring prior to the Closing Date, and Purchaser shall assume all obligations and agreements of the "Company" under the City Contract attributable to all periods of time on and after the Closing Date and shall be obligated to pay and shall indemnify and hold Wichita harmless with respect to all amounts becoming owing to the City under the City Contract attributable to all periods of time on and after the Closing Date or which are incurred or become owing to the City by reason of events or actions or omissions occurring on or after the Closing Date; provided that, on the Closing Date, Wichita shall pay Purchaser a pro rata share of the payment in lieu of taxes for the year 1999 becoming due under Paragraph 8 of the City Contract, in proportion to the portion of the year 1999 which has expired down to the Closing Date,and Purchaser shall be obligated to pay when due and indemnify and save Wichita harmless with respect to the payment in lieu of taxes for the year 1999 becoming payable to the City under Paragraph 8 of the City Contract;provided, further,that if the amount of the payment in lieu of taxes for the year 1999 to become due under Paragraph 8 of the City Contract is not known as of the Closing Date, the payment to be made by Wichita to Purchaser on the Closing Date pursuant to the foregoing proviso shall be based on the estimated amount of such payment in lieu of taxes for the year 1999(based on the amount of such payment for the year 1998) and Wichita shall make such additional payment or Purchaser shall refund such amount as shall be required to correct such estimated payment promptly after the amount of such payment in lieu of taxes for the year 1999 is determined. WITNESS the execution hereof in multiple counterparts, each of which shall be deemed an original and all of which shall constitute but one instrument,effective as of the Closing Date. WICHITA FALLS ENERGY CO.,LTD. SOUTHERN ENERGY WICHITA FALLS,L.P. BY: WFEI, INC., Its General Partner BY: SOUTHERN ENERGY WICHITA FALLS MANAGEMENT(G.P.), INC., Its General Partner B . • a`Name: itle: -r Title: "WICHITA" "PURCHASER" S3D2045.2 -2- 2. Asaumptioa. Purchaser hereby assumes and agrees to perform and observe all obligations, agreements and duties of Wichita under and in connection with the City Contract. 3. Sale Comet Reauiremeatl. As provided in Section 3.9 of the Sale Contract, Wichita shall be and remain obligated to pay and shall indemnify and hold Purchaser harmless with respect to all amounts owing or becoming owing by the "Company" to the City under the City Contract attributable to all periods of time prior to the Closing Date or which have been incurred or become owing to the City by reason of events or actions or omissions occurring prior to the Closing Date,and Purchaser shall assume all obligations and agreements of the "Company" under the City Contract attributable to all periods of time on and after the Closing Date and shall be obligated to pay and shall indemnify and hold Wichita harmless with respect to all amounts becoming owing to the City under the City Contract attributable to all periods of time on and after the Closing Date or which are incurred or become owing to the City by reason of events or actions or omissions occurring;on or after the Closing Date; provided that, on the Closing Date, Wichita shall pay Purchaser a Fro rata share of the payment in lieu of taxes for the year 1999 becoming due under Paragraph 8 of the City Contract, in proportion to the portion of the year 1999 which has expired down to the Closing Date, and Purchaser shall be obligated to pay when due and indemnify and save Wichita harmless with respect to the payment in lieu of taxes for the year 1999 becoming payable to the City under Paragraph 8 of the City Contract; provided, further, that if the amount of the payment in lieu of taxes for the year 1999 to become due under Paragraph 8 of the City Contract is not known as of the Closing Date, the payment to be made by Wichita to Purchaser on the Closing Date pursuant to the foregoing proviso shall be based on the estimated amount of such payment in lieu of taxes for the year 1999 (based on the amount of such payment for the year 1998)and Wichita shall make such additional payment or Purchaser shall refund such amount as shall be required to correct such estimated payment promptly after the amount of such payment in lieu of taxes for the year 1999 is determined. WITNESS the execution hereof in multiple counterparts, each of which shall be deemed an original and all of which shall constitute but one instrument, effective as of the Closing Date. WICHITA FALLS ENERGY CO.,LTD. SOUTHERN ENERGY WICHITA FALLS, L.P. BY: WFEI,INC.,Its General Partner BY: SOUTHERN ENERGY WICHITA FALLS MANAGEMENT(G.P.), INC., Its General Partner By By Name: Name: O" f��l 60301 F Title: Title: IRG6 drAr "WICHITA" The City of Wichita Falls hereby consents to the assignment from sw:aa.E -2- Wichita Falls Energy Co., Ltd. of the City Contract identified in the foregoing Assignment to, and assumption of such City Contract by, Southern Energy Wichita Falls, L.P., and consents to the assignment of the CertainTeed Lease covering the Subject Property to Southern Energy Wichita Falls, L.P. as described in said Assignment. in each case effective as of September 30, 1999. Ciri OF Wl ITA FALL J �tY 5302O45 1 -3-