Res 082-2015 8/18/2015Resolution No. _82-2015__
Resolution authorizing the City Manager to execute a Raw Water
Purchase Contract with the City of Olney, Texas
WHEREAS, the City of Wichita Falls has an existing Raw Water Purchase
Contract with the City of Olney Texas; and,
WHEREAS, the current raw purchase contract is set to expire ; and,
WHEREAS, in order to maintain a reliable water supply the City of Olney must
have a new raw water contract; and,
WHEREAS, the City of Wichita Falls finds no impact to the overall reliability of
its water supply.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
The City Manager is authorized to execute a Raw Water Purchase Contract with
the City of Olney, Texas
PASSED AND APPROVED this the 18th day of August, 2015.
______________________________
M A Y O R
ATTEST:
____________________
City Clerk
Raw Water Purchase Contract
THIS CONTRACT for the sale and purchase of water is entered into as of the ____ day of
_____________________, 2015, between the City of Wichita Falls, Texas, hereinafter referred to as
"City", and the City of Olney, Texas, hereinafter referred to as "Customer.”
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 raw
water;
WHEREAS, City owns water reservoirs 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 initially entered into a Water Purcha se Contract on January 24, 1984, and
subsequently agreed to multiple modifications to the contract and new contracts, and this contract replaces
all prior contracts between the parties relating to the purchase of raw water (“Water”) from Lake
Kickapoo .
WHEREAS, immediately prior to the effective date of this contract, Customer was not obligated to
purchase water from the City and the City was not obligated to sell water to Customer;
WHEREAS, by resolution of the City Council of Customer enacted on the ___ day of ________________,
2015, it authorized the continued purchase of water by Customer under the terms of this new, mutually
agreed upon Water Purchase Contract;
WHEREAS, Customer will operate a water treatment and distribution system, and serve the area described
in the aforementioned;
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. Diversion Authorized. City will sell and Customer will purchase raw water pursuant to the terms and
provisions of this contract.
1.1. Diversion Point. The diversion point and point of delivery of the water from the City shall be at t he
Customer-owned raw water Intake Structure at Lake Kickapoo, Any change in the existing Intake
Structure and location of the raw water line shall be with the approval of City Public Works Director and
at the sole expense of the Customer.
1.2. Customer acknowledges that the purpose of this Agreement is to provide an emergency water supply
and is meant to provide a supplemental water source only and is not intended to be a primary source of
water to Customer. Customer is only authorized to purchase raw wa ter when Customer’s lake levels have
reached a combined capacity of less than 50%. Customer is permitted to take a nominal amount of water
daily so as to ensure the normal maintenance of Customer’s raw water transmission system.
1.3 Maximum Delivery Obligation. The Maximum Annual Quantity of raw water to be diverted from the
water supply system by Customer from Lake Kickapoo shall not exceed 31,000,000 gallons per month
(“Monthly Quantity”) not to exceed a maximum of 360,000,000 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. The Monthly
Quantity is calculated as the amount of water Customer consumes in a monthly billing cycle. 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 30 Texas Administrative Code, Chapters 290 or 291, or any
other requirement of law except as provided herein. 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.
1.4. Metering.
a. Customer shall furnish, install, operate and maintain at its own expense at the diversion point, the
necessary metering equipment, including a meter house or pit, and required devices of standard type for
properly measuring and recording the quantity of raw water diverted. 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. 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 inaccur ate 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.
b. During any reasonable business 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 diversion facility and metering
equipment will facilitate City’s installation and operation of check meters.
c. City will read the Customer raw water meter on the first normal work day of each month during the ter m
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 raw 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.
d. “Business hours” are defined as between the hours of 8:00 a.m. and 5:00 p.m. CST. “Business work
day” is defined as week days that exclude federal and state holidays, and Saturdays and Sundays. Any day
specified for performance under the terms of this contract that falls on a weekend or holiday shall be
performed not later than the conclusion of the next successive business day.
1.5. Locations and Easements. The location of the Customer pump station, intake structure, shall be
maintained and contained within the property currently leased to Customer by the City pursuant to the
attached Lease Agreement. The location of any facility constructed subsequent to the date of this contract
shall be approved by the city and an easement or long term lease executed before detailed plans and
specifications are made or any construction begins.
1.6. Plans and Specifications Approval. Plans and Specifications for new or additions to existing intake
structure and pumping facilities shall be approved by the city before advertising for construction, such
approval being for location and configuration in relation to leases and easements, and for other factors that
may affect the City operation and use of the reservoir and environs.
2.0. Water Rates. Until changed by City, the cost of raw water purchased by Customer shall be $0.3101
per 1,000 gallons. 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. Adjustment 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 applicable monthly unapproved exceedance and Customer hereby agrees to pay for such exceedance
at 2.0 times the water rate for the period of exceedance.
2.1. Annual Changes to Water Rates. Customer authorizes the rates for raw 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. The test
year shall be the most recent audited City fiscal year.
b. 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.
c. 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.
d. 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.
e. 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.
Effective Date for New Rates: The rates will be considered changed on the monthly billing cycle for water
consumed within the first full monthly billing cycle following the Notice of Rate Modification.
2.2. Disputed Rates. Customer shall be governed by the provisions of the Texas Water Code § 12.013(c)
and Chapter 291 of the Texas Administrative Code and applicable law, as they may be amended by the
Texas Legislature from time to time. Customer stipulates and agrees that the rate, rate setting methods, and
policies specified in this Agreement are just, 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 a majority of the Directors, to the City’s City
Manager, within 30 calendar days after the City’s written issuance of the new rates to the Customer.
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 water received by Customer from the Diversion 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 Agreement, including interest, City's collection expenses, including court costs and
attorneys' fees. City shall, to the extent permitted by law, suspend delivery of Water from the Diversion
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 Agreement 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. The water will be used is restricted to municipal use within the service
area of Customer.
3.1. Subsequent Sales of Water/Connections. The 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 the City's ExtraTerritorial Jurisdiction (ETJ)
boundary, within the City limits, or within property owned by the City. Customer expressly agrees that it
will not furnish water to any property with a structure that is not used solely for agricultural purposes
without first requiring proof from the applicant that the property to be serviced has been platted to the
extent platting is required by Texas Local Government Code Chapter 212. When a meter is approved by
the Customer, such approval shall be tied to the land where installed.
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 raw 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 pro rata in
accordance with Texas Water Code § 11.039. As Customer’s ability to utilize water from the City is
limited only to those times when Customer’s reservoirs are below 50% capacity, the City will
calculate the pro-rata reduction using only years of normal climatic conditions and normal
consumption.
4.1. Drought Contingency Plan.
The Customer agrees to implement and enforce the 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. In addition, as a minimum, the
Customer agrees to initiate Stage 2 or above restrictions of the aforesaid Drought Contingency Plan when
the level of the reservoir from which this water is being drafted is below 50% of the reservoir’s capacity.
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 the City,
but shall not enact less severe restrictions than are currently in effect in the City. If Customer fails to
implement a drought contingency 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
this Agreement, 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 Cus tomer 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 City’s Drought Contingency Plans.
5.0. Rules and Regulations. This contract is subject to such rules, regulations, or laws as may be
applicable to agreements in the State of Texas; city and Customer will collaborate in obtaining such
permits, certificates, or the like, as may be required to comply herewith. In the event there is a future direct
physical connection between the water supply distribution systems of City and Customer, Customer shall
operate and maintain its portion of the water supply distribut ion system in accordance with the standards of
the Texas Department of Health, Texas Commission on Environmental Quality, Texas Health & Safety
Code Section 341, Subchapter C, and applicable revisions of the Plumbing Code of City as it may be
amended from time to time.
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. Upon written notice and opportunity to
cure of not less than 20 business days, either party may cancel prior to expiration of a term for breach or
non-performance. The 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 a pplicant 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 by the parties to each other shall be written and be provided to:
City of Olney City of Wichita Falls
P.O. Box 546 Director of Public Works
Olney Texas 76374 1300 7th Street
Wichita Falls, Texas 76307
If a document is sent 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 Diversion Point, at which point title shall pass to Customer. Notwithstanding, Customer will
not obtain any water rights in any wastewater effluent flows resulting from the water supplied pursuant to
this contract or the continuation thereof.
11.0. Compliance with Rules of Texas Commission on Environmental Quality (TCEQ). The
effectiveness of this Agreement is dependent upon City and Customer complying with the rules of the
TCEQ (or its successor agency), specifically including the rules codified as Texas Administrative Code,
Title 30, §§ 295.101 and 297.101-.108 as of the effective date of this Agreement. Within 3 business days
of the effective date of this Agreement, City will file a signed copy of this Agreement with the Executive
Director of the Commission as required by the rules of the Commission. Customer may continue diverting
water from the Diversion Point unless City notifies Customer that City has received written notification
from the Commission that a copy of this Agreement has been received by the Commission but not accepted
for filing. Customer shall submit written reports annually to the Commission, with a copy to City, on forms
provided by the Commission.
12.0 City and Customer Right to Execute other Water Supply Contracts. Each Party maintains its
right to enter into any other water supply contracts without restriction.
13.0. Location and Quantity of Water. Water supplied by City to Customer under this Agreement shall
be water stored by City in Lake Kickapoo and from no other source, unless City, at its sole discretion,
decides to supply water from another source available to City. City and Customer hereby agree that
Customer shall have no right or entitlement to any portion of City’s water in Lake Kickapoo after the
expiration of the term of this Agreement. City will use its best efforts to remain in a position to furnish raw
water sufficient for the reasonable demands of Customer. City's agreement to provide water to Customer
shall not be deemed a guarantee on City's part that any particular quantity of water will be available, and
the quantity of water taken shall at all times be subject to the right of City to reduce said quantity of water
as City, in its sole judgment, may deem necessary in order to meet City's commitments under its existing
contracts, comply with any order of any court or administrative body having appropriate jurisdiction,
reduce flooding, or prevent injury.
Customer recognizes City's rights to maintain and operate the reservoirs owned or used by City and its
water transportation facilities and at any and all times in the future to impound and release waters thereby
in any lawful manner and to any lawful extent City may see fit, and, except as otherwise provided herein,
there shall be no obligation hereunder upon City to release or not to release any impounded waters at any
time or to maintain any waters at any specified level. Further, if the permitted yield of Lake Kickapoo or
the diversion point is reduced by the TCEQ, City reserves the right to decrease the contract quantity by a
like percentage.
Customer is solely responsible for all losses from transportation and evapotranspiration after the water
passes through the diversion point from Lake Kickapoo.
14.0. RAW WATER QUALITY. THE WATER WHICH CITY OFFERS TO SELL TO CUSTOMER
IS NON-POTABLE, RAW, AND UNTREATED. CUSTOMER HAS SATISFIED ITSELF THAT
SUCH WATER IS SUITABLE FOR ITS NEEDS. CITY E XPRESSLY DISCLAIMS ANY
WARRANTY AS TO THE QUALITY OF THE RAW WATER OR SUITABILITY OF THE RAW
WATER FOR ITS INTENDED PURPOSE. CITY EXPRESSLY DISCLAIMS THE WARRANTIES OF
MERCHANTABILITY AND FITNESS. CUSTOMER AGREES THAT ANY VARIATION IN THE
QUALITY OR CHARACTERISTICS OF THE RAW WATER OFFERED FOR SALE AS PROVIDED
BY THIS AGREEMENT SHALL NOT ENTITLE CUSTOMER TO AVOID OR LIMIT ITS
OBLIGATION TO MAKE PAYMENTS PROVIDED FOR BY THIS AGREEMENT. THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION CONTAINED IN THIS
AGREEMENT. CUSTOMER ASSUMES FULL RESPONSIBILITY WITH RESPECT TO THE
TREATMENT OF THE WATER PRIOR TO ITS DISTRIBUTION FOR HUMAN CONSUMPTION
OR ANY OTHER USES.
15.0. No Third-Party Beneficiaries.
This Agreement shall inure only to the benefit of the pa rties hereto, and third persons not privy hereto shall
not, in any form or manner, be considered third-party beneficiaries of this Agreement. 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 Agreement or any
provision contained herein.
16.0. Choice of Venue.
All acts performable under the terms of this Agreement and all amounts due under this Agreement,
including, but not limited to, payments due under this Agreement or damages for the breach of this
Agreement, 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 Agreement. In the event that any legal proceeding is
brought to enforce this Agreement or any provision hereof, the same shall be brought solely in Wichita
County, Texas.
17.0. Pledge of Revenue.
Customer represents and covenants that all payments to be made by it under this Agreement shall constitute
reasonable and necessary “operating expenses” of its system as defined in Tex. Gov’t. Code Ann. §§
1502.056-.058, 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 Lake Kickapoo 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 Agreement 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 f rom 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 or State of Texas for
financing Customer’s water system. With respect to Customer’s obligations to the United States of
America or State of Texas for financing Customer’s water system, the City and the United States of
America and State of Texas shall have equal priority. Customer agrees throughout the term of this
Agreement 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 Agreement and (ii) all other amounts as required by the
provisions of the ordinances or resolutions authorizing its revenue bonds or other obliga tions now or
hereafter outstanding. Unless otherwise specifically provided in writing by subsequent agreement 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.
18.0. Insurance and Indemnity. Customer shall continuously maintain valid liability insurance covering
all of its operations of at least $500,000 per incident and $1,000,000 in the aggregate, naming the City as
an additional insured and providing a waiver of subrogation in favor of the City. Customer shall provide
the City with copies of the policy and certificate of insurance within 72 hours of the City’s demand for a
copy of said policy and/or certificate. The Customer’s failure to maintain such insurance and
endorsements as required above shall constitute a breach of this contract, and if Customer fails to maintain
such insurance, then 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 contr act. Customer shall further indemnify the City for any
liability to the City occurring as a result of the Customer’s negligent or wrongful acts or omissions.
19.0. 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 agreements 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 the City as provided above.
20.0. Severability. If any of the provisions of this contract (other than the rates and obliga tion to pay for
the water) shall be invalid or unenforceable, same shall not invalidate or affect the validity and
enforceability of any other provision, which provisions shall remain in force and effect.
21.0. No City Liability. City shall never be liable to Customer for any shortage of water, failure of any
part of system, condition of the water, strike, disaster, government action, or any other condition that
affects water supply or usefulness for any purpose. City disclaims any and all warranties wit h respect to
the water supplied pursuant to this contract.
22.0. No Waiver. Failure of either party to enforce a provision of this contract shall not waive any future
right to enforce that provision.
23.0. Interpretation and Recitals. This contract shall be considered to be mutually drafted in accordance
with negotiation between the parties hereto. Accordingly, it shall not be interpreted against either party on
the basis that said party supplied its language.
IN WITNESS WHEREOF, the parties hereto, acting under Customer of their respective governing bodies,
have caused this contract to be duly executed in three counterparts, each of which shall constitute an
original.
City of Olney, Texas City of Wichita Falls
________________________________ ________________________________
________________________________ Darron Leiker, City Manager
(seal) (seal)
ATTEST: ATTEST:
________________________________ ________________________________
Tracy Norr, City Clerk
APPROVED AS TO FORM:
________________________________
R. Kinley Hegglund, Jr., City Attorney