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05/13/2008-CC-Agenda Packet-SpecialAGENDA CITY COUNCIL - SPECIAL CALLED TUESDAYI MAY 13, 200$ 6:00 P.M. 201 BOLIVAR 1. Call Meeting to Order. 2. Discussion on Contract Between Upper Trinity Regional Water District, Clear Creek Regional Water Reclamation System and the City of Sanger. 3. Adjournment. I, the undersigned authority, do hereby certify that this Notice of Meeting was posted on the bulletin board, at the City Hall of the City of Sanger, Texas, a plane convenient]and readily ccessible to the ene/rr�Il public at all times, and said Notice was posted on the following date and time:./An CAW , at �U p.m. and shall remain posted until meeting is adjo ed. OF S / /Vc ... i� �..... Cl' Rosalie Chavez, City Secreta 000 City of Sanger, Texas g Thi s notice was removed from the by etif► board, on k� at This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at (940) 45&7930 for further information. CITY OF SANGER s RTICIPATING MEMBER CONTRACT OF DENTON "Contract") made and entered into as of the day of 20Q8 (the "Contract by and among UPPER TRINITY REGIGNAL WATER ®ISTRICT, (the 'District"), a conservation and reclamation district created pursuant to Article XVI, Section 59 of the Constitution of the State of Texas, and the CITY OF SANGER, TEXAS, a Texas Municipality (referred to herein as "Sanger", "Participating Member" or "Member"). WHEREAS, Sanger is a home rule municipality and a duly incorporated political subdivision of the State of Texas operating under the Constitution and laws of the State of Texas; and, WHEREAS, Sanger currently holds a Certificate of Convenience and Necessity issued by the Texas Commission on Environmental Quality ("TCEQ") to provide wastewater services within and without its existing corporate limits; and, Sanger does provide wastewater collection services to retail customers within its service area; and, WHEREAS, Sanger is a Member of the District, specifically a Participating Member in the Regional Treated Water System, pursuant to a contract dated November 13, 1999; and, Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft treatment service for Sanger's local wastewater coilection and transportation system within its service area; and, WHEREAS, the District, in cooperation with Sanger, proposes to develop and construct a regional water reclamation system known as the Clear Creek Regional Water Reclamation System in northwest Denton County that includes an interceptor pipeline to transport wastewater, a treatment plant with associated sludge handling facilities, flood plain protection, effluent discharge, metering facilities and other necessary facilities; and, WHEREAS, the District previously completed a study described in a report enfiitledn Planning Study of Wastewater Service to Norih Denton County"rty of Sanger Area prepared by Alan Plummer Associates, Inc. and dated May 2004, which report outlines steps for the District to take to provide wastewater treatment service for the Clear Creek Service Area; and, WHEREAS, Sanger operates its existing wastewater treatment plant, which plant is near its rated capacity and is not adequately located to serve all of Sanger's service area; and, WHEREAS, Sanger has conducted an engineering evaluation of the alternatives for meeting its future needs for wastewater treatment, which evaluation determined that a new expanded plant with adequate capacity located on a better site for long term needs, which engineering evaluation is herein referred to as the "Preliminary Engineering Design Report", which engineering evaluation, together with the report prepared by Alan Plummer Associates, Inc. referenced above, is herein referred to as the "Engineering Reports'; and, liiiiiiiiiiiiiii application with, and received from, TCEQ a new discharge permit for a wastewater Fage 2 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft treatment plant ("Clear Creek Plant") to be located south of Railroad Avenue and Rector WHEREAS, Sanger and District agree that it is in the mutual interest of both parties for District to own and operate the Glear Creek Plant as a regional water reclamation facility in accordance with the concepts outlined in the Engineering Reports; and, enabling the District to accept Wastewater by gravity flow from Sanger and other potential entities in the Clear Creek Service Area; and, WHEREAS, prior to the start of construction of the Clear Greek Plant, Sanger agrees to transfer its new discharge permit the District; and, after wastewater flows from Sanger's existing wastewater treatment plant have been transferred to the Clear Creek Plant, Sanger agrees to abandon its discharge permit for its existing wastewater treatment plant; and, WHEREAS, Sanger desires to enter into this Contract with the District to participate in the System for wholesale wastewater treatment services for Wastewater collected by Sanger in its service area within and without its corporate boundaries; and, WHEREAS, in the initial phases Sanger is expected to be the only participant; and, WHEREAS, the District and Sanger are authorized to enter into this Contract pursuant to the Act and Chapter 791 of the Texas Government Code (the "Interlocal Cooperation Act"), and other applicable laws; and, WHEREAS, Sanger acknowledges that the District may enter info similar contracts as this Contract with Additional Participating IVlembers and other Customers; and, Page 3 of 72 Upper Trinity Regional water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft WHEREAS, Sanger hereto acknowledges that the District may seek funding for a portion of the cost of the System from the State of Texas through the "State Participation Program", administered by the Texas Water Development Board (TWDB); and if State Participation funds are so provided, the District will be obligated to repurchase said portion in future years from the State; and, WHEREAS, Sanger has requested the District provide Wastewater service in the t and Clear Creek basin, which service vir require construction of the Glear Creek Plan related facilities, interceptor pipeline, sludge handling facilities, metering facilities, flood plain protection and associated improvements in accordance with Sanger's new discharge permit and as generally described in the Engineering Reports, -with an expected initial treatment capacity for Wastewater up to 2.0 MGD; which Clear Creek Plant together with other related facilities and improvements are herein defined as "Project"; all of which are a part of the System; and, WHEREAS, Sanger will continue to own and operate its wastewater collection system for delivery of its Wastewater to the Point of Entry; and, WHEREAS, the parties agree that if the District provides services of the Project or System to future parties who use and benefit from certain facilities of the Project or System previously funded in whole or part by Sanger pursuant to this Contract, the District will require such benefiting party to pay an appropriate share of such prior costs thereof, and the applicable portion of such funds received by District from any such future benefiting party will be credited to Sanger, or on a pro rata basis to participants (if any, other than Sanger) who provided funds for said prior costs; and, WHEREAS, to avoid any adverse effect on the tax exempt status of District Bonds, notes or other obligations, Sanger agrees that the District shall have the right to review and approve any contract by Sanger with another entity, including any Municipal Page � of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Utility Districts (MUD's), to operate any wastewater collection and pumping facilities which discharge Wastewater into the System from within Sanger's service area and, Plant, and agrees to transfer by separate instrument a clear and free title to said property upon execution of this Contract; and, �ll-IEREAS, the District will use its best efforts to issue an installment or installments of Bonds for the Project and for future qualifying expansions of the System, with all of said Bonds to be payable from and secured by Annual Payments made under this Contract and other similar contracts for participation in the Project and System; and, �l01n! TI-IEREP®RE, in consideration of the mutual covenants and agreements herein contained, Sanger agrees to transfer ownership of the site for the Clear Creek Plant anA the associated discharge permit, to pay or deposit funds as provided in this Contract, and the District agrees to take reasonable steps to provide wastewater treatment services of the System to Sanger for its service area and to use its best efforts to issue its Bonds, to acquire, construct and complete the Project and other System facilities upon and subject to the terms and conditions hereinafter set forth, to -wit: Section 1.01. Adoption of Preamble. All of the matters stated in preamble of this Contract are true and correct and are hereby incorporated into the body of this Contract as though fully set forth in their entirety herein. Section 1 A2. Definitions. The following terms and expressions as used in this Contract, unless the context clearly shows otherwise, shall have the follawing meanings: Page 5 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 1. "Act" means H. B. 3112 Chapter 1053, Acts of the 71st Legislature, Regular Session, 1989 (effective June 16, 1989), as amended by Chapter 494, 14t" Legislature, Regular Session, 1995 (which amendment became effective August 28, 1995), and also amended by Chapter 1053, 77t" Legislature, Regular Session 2001 (which amendment became effective May 1, 2001). Participating Members with wham the District makes a contract similar to this Contract far supplying wastewater treatment service from the System, provided that after execution of su any such contract such party shall become one of the Participating Members as defined in this Contract. 3. "Administrative Payment" means the amount of money to be paid to the District by each of the Members during each Annual Payment Period as its proportionate share of Administration and Planning Expenses of the District. 4. "Adjusted Annual Payment" means the Annual Payment as adjusted by the Board during or after such Annual Payment Period, as provided by this Contract. 5. "Administrative and Planning Expenses" means the general overhead cost and expenses of managing the District, but not including expenses related to capital projects financed by the District; such expenses shall include the administration of the District's general office, the activities and meetings of the Board and the planning activities A the District, to the extent such programs and activities shall be for the general welfare of the District. Activities and programs for the benefit of specific parties and for specific capital projects shall, unless otherwise authorized, be the responsibility of the benefiting parties. Page 6 of ?2 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 6. "Annual Payment' means the amount of money to be paid to the District by each of the Customers as its proportionate share of the Annual Requirement. begins on October 1 of each calendar year and ends on September 30 of the next following calendar year, but which may be any twelve consecutive month period fixed by the District; and the first Annual Payment Period under this Contract is estimated to be the period of October 1, 2007 through. September 30, 2008, with the first year to be pro rated according to the Contract Date. 8. "Annual Requirement" means the total amount of money required for District to pay all Operation and Maintenance Expenses of the System, and to pay the Capital Component of the Annual Requirement as described hereinafter, including debt service on its Bonds, and any sums required to pay or restore any amounts required to be deposited in any special or reserve funds required to be established and/or maintained by the provisions of the Bond Resolutions or by action of the Board. 9. "Board" means the governing body of the District. The governing body of each Member of the District and of the County is entitled to appoint a qualified person to serve on the Board. 11. "B.®►.D." (denoting Biochemical Oxygen Demand) means the quantity of oxygen utilized in the biochemical oxidation of organic matter under standard laborafory procedure in five days at 20°G., expressed in milligrams per liter. 12. "Bond Resolution" means any resolution of the District, which authorizes any Bonds. Page 7 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System -City of Sanger Participating Member Contract Draft 13. "Bonds" means all bonds hereafter issued by the District, whether in one or more series or issues, and the interest thereon, to acquire, construct and complete the Project and System, and/or all bonds issued subsequently to improve, extend, operate or maintain the System, and any bonds issued to refund any bonds or to refund any such refunding bonds. 14. "Clear Creek Service Area" means generally the area north of Rector Road, west of Ray Roberts Lake and east of the Wise County line, including that portion of the Clear Creek Basin that would flow by gravity to the Plant; which service area shall be separate from other service areas of the District for purposes of determining the Annual Requirement and for delivery of services, and which area may be modified from time to time by the Board, subject to the provisions of this Contract. 15. "County" means Denton County, Texas. 16. "Customer(s}" means any wholesale user, including the Member, participating in the wastewater services provided by the District from the System, which user provides retail utility services within its boundaries. 17. "Customer Advisory Council" or "Council'° means the committee authorized to be created to consult with and advise the District with respect to the System as provided in this Contract. 18. "®istrict" means the Upper Triniiy Regional Water District, a conservation and reclamation district pursuant to Article XVI, Section 59 of the Constitution of the State of Texas created in accordance with the Act. 19. "Garbage'" means solid wastes from the preparation, cooking, and dispensing of food, and from handling, storage, and sale of produce. Page 8 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 20. "pd" is an abbreviation for "gallons per day". 21. "Grease" means fats, waxes, oils, and other similar nonvolatile materials in Wastewater. 22. "Industrial user ((u)" means any person, including but not limited to, any individual, firm, partnership, corporation, association, or any other group or combination acting as a unit, or any other legal entity, who discharges or desires to discharge Industrial Wastes into the System. 23. "Industrial Waste" means all water -borne solids, liquids, or gaseous substances resulting from an industrial, manufacturing, or food processing operation, or from the development of a natural resource, or any mixture of these with water or domestic sewage. 24. "Infiltration Water" means rainwater or other water which leaks into a sewer that discharges into the System. 25. "NIG®" is an abbreviation for "million gallons per day" 26. "rng/I" is an abbreviation for "milligrams per liter" 27. "®peration and iVlaintenance Expenses" means all costs and expenses of operation and maintenance of the System, including (for greater certainty but without limiting the generality of the foregoing) repairs and replacements; operating personnel; the cost of utilities; fees and charges to be paid to Texas Commission on Environmental Quality or any other federal, state or local agency for regulatory purposes or for services rendered; the costs of supervision, engineering, accounting, auditing, legal services, insurance premiums, supplies and services; administration and equipment necessary for proper operation and maintenance of the System; and, payments made by District in Fage 9 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft satisfaction of judgments resulting from claims not covered by District's insurance arising in connection with the acquisition, construction, operation, and maintenance of the System. The term also includes the charges of the bank or banks acting as paying agents and/or registrars for any Bonds. The term does not include depreciation expense, which is a non -cash expense; nor does it include Administration and Planning Expenses, payment of which is provided for as a separate item. has met the membership requirements of the District, that provides retail utility service to customers within its boundaries, and that contracts with the District for the acquisition, construction, improvement, enlargement, and payment for the Project and System which may be financed in part and from time to time by the District, and specifically includes Sanger. 29. "pH" means the common logarithm of the reciprocal of the weight of hydrogen ions in grams per liter of solution. 30. "Point(s) of Entry" means the points) designated in Exhibit A to this Contract where Wastewater will be received from Member into the System. 31. "PO " means a publicly owned treatment works as defined in 40 CFR 403 of federal code. 32. "Project" means the Wastewater "Project" as defined in the Preamble of this Contract. Unless otherwise provided in this Contract, ownership of the Project shall be vested in the District. Page 10 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 33. "Properly Shredded Garbage" means garbage that has been shredded to such degree that all particles will be carried freely under the flow conditions normally prevailing in public sewers, with no particle greater than 1/2 inch in any dimension. connected or desires to connect to a governmental entity's domestic wastewater collection system and meets at least one of the following criteria: {i) Average Industrial Wastewater discharge rate greater than 25,000 gpd. (ii} B.O.D. and/or suspended solids concentrations in Industrial Wastewater greater than 250 mg/I. (iii) Industrial category regulated by National Pre-treatment Standards as promulgated by the United States Environmental Protection Agency. 35. "Sfiate" means the State of Texas. 36. "Suspended S®lids" means the total suspended matter that either floats on the surface or is in suspension in water, sewage, or other liquids, and which is removable by laboratory filtering, expressed in milligrams per liter. 37. "System" means the Project, the Clear Creek Plant, the outfall and effluent discharge facilities, trunk mains, lift stations, sludge handling facilities, flood protection improvements, metering equipment and other facilities, together with all future improvements, enlargements, extensions, and additions to any of the foregoing which are deemed necessary and feasible by the District to receive, treat, and dispose of Wastewater from any Participating Member or other Customers; and, to comply with the ities requirements of the regulatory agencies of the State and the United States; future facil Pagel 1 of 72 tipper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft which are acquired or constructed with funds provided by Members, Customers, or others, or with proceeds from the sale of any Bonds, or revenues from the System; and, any other related wastewater facilities which are deliberately and specifically, at the option of the District, made a part of the System, subject to the provisions of this Contract; and, all repairs to, or replacements of, the System. Said term does not include any District facilities which provide potable water services; nor does said term include any facilities acquired or constructed by the District as follows: (a) with the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being revenue obligations of the District which are not secured by or payable from payments made under this Contract and similar contracts with Additional Participating Members or Customers, and which are payable solely from sources other than revenues of the System, or (b) for Wastewater services provided by the District for any service area other than the Clear Creek Service Area. 38. "Total Toxic Organic" means the sum of all detected concentrations greater than 'IO micrograms per liter for all organic compounds classified as priority pollutants by the United States Environmental Protection Agency. 39. "Trunk Sewer" means any wastewater line in which sewage (Wastewater) from collecting and lateral sewers is received and conveyed from a Point(s) of Entry to the System or to treatment works of the System. 4Q. "ug/1" is an abbreviation for "micrograms per liter". 41. 'Wastewater" means sewage, Industrial Waste, municipal waste, recreational waste, and agricultural waste, as defined in the Texas Water Cade, together with Properly Shredded Garbage and such Infiltration Water that may be present. Page 12 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Participating Member of the District and of the County are entitled to appoint a qualified person to serve as a Boardmember on the Board. Participating Members shall be entitled to vote on all matters coming before the Board. The Board shall establish rules for the implementation of a system of weighted votes in accordance with the Act for matters concerning authorization of, and financial commitments for, capital projects. Sanger agrees that decisions made by a majority vote of the Board, in accordance with rules adopted by the Board, shall constitute a binding decision of the governing body of the District. Section 2.03. Tereus. Boardmembers shalt serve staggered four (4) year terms in accordance with procedures established by the Board. Boardmembers may serve consecutive terms. A Boardmember may be removed at any time by the governing body A the entity that appointed that Boardmember. Boardmembers for serving on the Board, but may reimburse Boardmembers for actual reasonable expenses necessarily incurred on behalf of the District or in the discharge of official duties. who resides in the District; and, may not be an elected official of any governmental entity that has the authority to appoint a member of the Board. A Boardmember may not be an employee of any other entity that has the authority to appoint a member of the Board. Pace 13 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Sectionis Attendance at Board Meetings. - :•. • of regularly• prepare plans to address - needs of •- of r to condu the business of - District. Memberthe authority to appoint a Boardmember t• Board, and Member recognizes the importance of its Boardmember attending meetings of the Board on a regular basis. To encourage regular attendance, the Board has adopted, and may from time to time revise, an attendance policy for meetings of the Board. Accordingly, Member agrees to comply with said attendance policy, and, if advised by District that Member's Boardmember is not in compliance with said attendance policy, Boardmember. Member agrees to take action to achieve compliance ar #o appoint a new For any period of time that said Boardmember is not in compliance with the Board's attendance policy, Members Boardmember shall not be counted in determining a quorum of the Board or in determining the votes necessary to approve a measure requiring a weighted vote. Secii®n 2.07. Conauiting Engineers. The District and Member agree fihat the District will choose the Consulting Engineers for the Project and the System, and may change Consulting Engineers at the option of the District. treat Wastewater in accordance with the specifications and restrictions of this Article. The District agrees to provide adequate facilities and processes to meet volume and peaking requirements of Member as provided herein. this Contract, the District agrees to use its best efforts to issue its Bonds, payable from and secured by Annual Payments made under this Contract and other similar contracts, to acquire and construct the Project and System facilities when and as needed, as determined by the District, to provide wastewater treatment services to Member, and other Customers. It is anticipated that such acquisition and construction will be in phases; and gage 14 of 72 Jpper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft the District agrees to use its best efforts to issue its Bonds for such purpose. Also, at the discretion of the District, Bonds may be issued to refund any Bonds; and, may be issued to extend, enlarge, repair, renovate, equip, operate, maintain and otherwise improve the System and any System facilities. District agrees that such improvements for the Project and System will be made in accordance with generally accepted engineering practices. It is anticipated that such improvements will be financed by the District through the issuance of one or more series or issues of its Bonds payable from and secured by Annual Payments made under this Contract and other similar contracts. Section 2.10. Bond Proceeds. The proceeds from the sale and delivery of such Bonds may be used to fund, to the extent deemed advisable by the District, a debt service reserve fund, a contingency fund, and interest on the Bonds during construction; and, such proceeds also will be used for the payment of the District's expenses and costs in connection with the System (including all engineering and design costs and expenses, and the cost of the land and interests therein related to the System) and the Bonds, including, without limitation, all financing, legal, printing, and other expenses and costs related to the issuance of such Bonds and the System. Section 2.� 1. Bond Resolution. Each Bond Resolution of the District shall specify the exact principal amount of the Bonds to be issued thereunder, which shall mature within the maximum period, and shall bear interest at not to exceed the maximum rates then permitted by law. Each Bond Resolution shall create and provide for the maintenance of a revenue fund, an interest and sinking fund, a debt service reserve fund, and any other funds deemed advisable, all in the manner and amounts as provided in such Bond Resolution. Member agrees that if and when such Bonds are actually issued and delivered to the purchaser thereof, either for the purpose of initially acquiring and constructing the Project, or subsequently for improving and/or extending the System, the Bond Resolution authorizing the Bonds shall for all purposes be deemed to be in compliance with this Contract in all respects, and the Bonds issued thereunder will constitute Bonds as defined in this Contract for all purposes. Page 15 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft a an • L K Z L LI am L!' ' (a) Member agrees that during each Annual Payment Period while the System is in operation, it shall be obligated to transport and discharge into the System at its Point of Entry, the Wastewater which is generated and collected within the Clear Creek Service Area, subject to the exceptions and restrictions provided herein, including Exhibit D attached hereto. (b) The combined maximum hourly rate at which Wastewater is discharged by Member at its Point of Entry shall not exceed a rate which, if continued for a period of twenty-four hours would equal 3.75 times the estimated average daily contributing flow of Wastewater for the then current Annual Payment Period unless caused by a system defect which can be located and corrected by Member in a reasonable period of time. The total quantity of Wastewater discharged into the System shall never exceed the amount which the System is capable of receiving, treating, and disposing, unless approved by the Board, subject to the terms and conditions established by the District. Notwithstanding the foregoing, Member shall never make any discharge into the System that would cause the System to be overloaded or be in violation of its permits from the State and/or the United States of America. Secti®n 2.'l3. Point of Entry. Wastewater meeting the quality requirements of Section 2.19 of this Contract will be received into the System at the Point of Entry for Member, as shown on Exhibit A hereto, which Exhibit is attached hereto and incorporated herein for all purposes, or at such other Point of Entry that may be established by mutual agreement between the District and Member, if such other Point of Entry is determined by the District to be economical and beneficial to the System, and if Member pays the costs thereof. Page 16 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Section 2.14. Ca act It is the intention of the parties hereto that the System shall be acquired, constructed, extended, and improved so that at all reasonable times it will be capable of receiving, transporting, treating, and disposing of all eligible Wastewater generated within the collection system of, and delivered to the Point of Entry of Member. When the System needs to be expanded, it is anticipated that the District will, from time to time, issue its Bonds in such amounts as are, within its judgment and discretion, sufficient to provide the necessary capacity for then existing Customers or to extend the System to serve other Customers or Additional Participating Members. agrees to accept Wastewater under this Contract from Member at its Point of Entry. Member agrees to deliver to its Point of Entry or to pay for certain minimum quantity of Wastewater specified for Member in Exhibit B hereto to assure adequate funds to the District to fulfill its obligations under this Contract, including Operation and Maintenance Expense. fixed (or capacity cost) portion of each Annual Requirement for which Member is liable, without offset or counterclaim, Member, during each Annual Payment Period, hereby subscribes to, contracts for, and shall be deemed to have taken and used the contracted capacity (regardless of whether or not such amount is or was actually taken or used) specified for Member in Exhibit B hereto. District agrees to design and construct the Project and the System with adequate overall capacity to provide for the capacity so specified in Exhibit B with reasonable additional capacity for future growth. System for future growth, District may receive funds provided by the Texas Water Development Board (TWDB) for State Participation in the System. If State Participation is offered by TWDB and accepted by District, the State, through the Texas Water Development Board will own certain capacity in the System under an agreement with the Page 17 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System -City of Sanger Participating Member Contract Draft District. Under said agreement, District will have an obligation to repurchase the additional capacity when actually used to meet Member's flow requirement, or according to an agreed schedule of repurchase. District may make such additional capacity available to Additional Participating Members or future Customers in accordance with Section 2.18. The purpose of State Participation in the System is to encourage regional wholesale service and to provide capacity for future growth by Participating Members and other future Customers. by State Participation, if any, in the System, Member and future Customers must pay certain costs to District for its use in repurchase of capacity owned by State. The Board will establish and maintain a policy for repurchase of State Participation. Section 2.19. Quali The obligation of the District to receive Member's Wastewater into the System depends upon compliance by Member with the provisions of this Section. In order to permit the District to properly treat and dispose of Member's Wastewater; to protect the public health; to permit cooperation with other agencies which have requirements for the protection of the physical, chemical, and bacteriological quality of public water and water courses; and, to protect the properties of the System; Member hereby agrees to the following provisions concerning quality of Wastewater: (a} Admissible Discharges into District's System. Discharges into the System shall consist only of Wastewater and other waste free from the prohibited constituents listed on Exhibit C, and limited in B.O.D., Suspended Solids, dissolved sulfides, and pH as provided in said Exhibit C, which is attached hereto and incorporated herein for all purposes and, which may be updated by the District from time to time in order to comply with current or future State or federal regulations regarding pollutants. (b) Prohibited Discharge Limitations Sub(ect to Change. Notwithstanding the foregoing provisions of this Sec#ion, the parties to this Contract agree and understand that Page 18 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft the District has a responsibility to operate the System in a cost-effective, environmentally safe manner and that federal and State regulatory agencies periodically modify standards on prohibited discharges; therefore, revisions to, additions to, or deletions from fihe items listed or incorporated in this Section may become necessary in the future to comply with the requirements applicable to the District and such revised standards. It is the intention of this Contract that prohibited discharge requirements be reviewed periodically by the District and revised in accordance with the latest standards of any federal or State regulatory agency having jurisdiction over such standards. Any required revision shall be made and written notice thereof given to each Participating Member and Customer. Each Participating Member and Customer shall be responsible for integrating such changes into their local Industrial Waste ordinance, resolution or regulation and notifying all affected retail users of the change within ninety (90} days following written notice from the District of such changes. Any such change shall be incorporated automatically in Exhibit C hereto, to the extent applicable, unless an objection from a Member or Customer shall be filed with the District within sixty (60} days, in which case the District shall hold a hearing relating to such change or changes prior to incorporating such change or changes in Exhibit C. (c} Norma! Quality/Extra Strength. To determine normal quality of Wastewater, the District may collect samples of Wastewater at Point(s) of Entry and cause same to be analyzed in accordance with testing procedures as set forth in the latest edition of Standard Methods of Examination of Water and Wastewater, published by American Public Health Association, Inc., or by such other procedures as may be established or authorized by the Board. Composite samples may be taken monthly, or at other intervals as necessary to determine Wastewater quality. Such Wastewater shall not exceed the limits of concentration specified in Exhibit C for Normal Wastewater. Should the analysis disclose concentrations higher than those listed, the District immediately will inform the respective Member or Customer of the violation of this Section, and the Member or Customer must take immediate steps to correct such excessive concentration. However, with the approval of the District, Wastewater with concentrations of B.U.D. and T.S.S. greater than specified above may be discharged by Members or Customers into the Page 19 of?2 Upper Trinity Regional Water District Glear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft System on an emergency and temporary basis, subject to the payment of a surcharge which shall be in addition to all other payments required by this Contract. The amount of such surcharge shall be based on analysis of samples of the Wastewater taken by the District or ifs agent. (a) Additional Charge. An additional charge shall be made for excess strength discharges at the Polnt(S) of Entry of Member into the System. A surcharge for each mg/I of B.O.D. in excess of 250 mg/I and for each mg/l of T.S.S. in excess of 250 mg/l shall be assessed by resolution of the Board, which resolution will establish the amount of the surcharge and will specify how it will be applied. Member agrees that the Board, within its judgmenthas the right to raise the allowable discharge strengths; but, the Board may , lower the allowable strength only by amendment to this Contract. Member shall pay the District for concentrations of B.O.D. and T.S.S. exceeding 250 mg/l at a rate which shall be determined by the Board and which shall be in an amount sufficient to cover and pay all additional costs for transportation, treatment and disposal related to such excess concentration discharges. (e) Basis for Billing. Member agrees that the results from analysis of composite samples of the Wastewater taken by the District or its agent shall be the basis for billing purposes related to excess strength. (a) Subject to cost participation provided in Section 2.13, and unless othennrise mutually agreed in writing, District ,agrees to furnish and install, at or near the Pointof Entry, as part of the Project or System, standard type devices and equipment and related facilities for measuring and sampling all Wastewater to be discharged into the System. The District will own, operate and maintain at its expense the measuring equipment and devices so installed. Such meters and other equipment shall remain the property of the District. The District or its designee may from time to time inspect, calibrate, and adjust its Page 20 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft meters as necessary to maintain accurate measurements of the Wastewater entering the System. Member shall have access to its respective metering equipment at all reasonable times for inspection and examination, but the reading, calibration, and adjustment thereof shall be done only by employees or agents of the District. Member may witness such reading, calibration and adjustment of meter. All reading of meters will be entered upon proper books of record maintained by the District. Member may have access to said record books during normal business hours. (b) District shall provide for the calibration of meter at least one time per fiscal year. Upon request, District will make or cause to be made one (1) additional calibration in any fiscal year at no charge to Member. All requested calibrations in excess of one (1) will be made at the expense of Member, except when the accuracy of the meter is beyond the lAmits specified herein, in which case the District shall bear such expense. If, for any reason, any meter is out of service or out of repair, or if, upon any test, the percentage of inaccuracy of any meter is found to be in excess of five (5%) percent of the volume so indicated by the meter, the meter records shall be corrected for a period of time extending back to the time when such inaccuracy began, if such time is ascertainable, and if not ascertainable, then for a period extending back one-half ('h) of the time elapsed since the date of the last calibration, but in no event further back than a period of six (6) months. (c) Member may, at its option and its own expense, install, own and operate a check meter to check each meter installed by the District, but the measurement for the purpose of this Contract shall be solely by the District's meter, except as in this Section specifically provided to the contrary. All such check meters shall be of standard make, shall be installed in a location approved by the District, and shall be subject at all reasonable times to inspection and examination by any employee or agent of the District; but, the reading, calibration, and adjustment thereof shall be the responsibility of the Member owning said check meter, except during any period when a check meter may be used under specific written consent by the District for measuring the amount of Wastewater delivered into the System, in which case the reading, calibration, and Page 21 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft adjustment thereof shall be made by District with like effect as if such check meter or meters had been furnished by the District. (d) if either party at any time observes a variation between the delivery meter and the check meter, if any such check meter shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate calibration test and joint.observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. (e} It for any reason any meter is out of repair so that the amount of Wastewater received cannot be ascertained ar computed from the reading thereof, the Wastewater quantity through the period such meters are out of service or out of repair shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. For such purpose, the best data available shall be deemed to be the registration of any check meter or meters if the same have been installed and are accurately registering. Qtherwise, the amount of Wastewater for such period may be estimated: (1) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (Z) by estimating the quantity during the preceding periods under similar conditions when the meter or meters were registering accurately. (f) Each party shall give the other party forty-eight (48) hours native of the time of al! tests of meters so that the other party may conveniently have a representative present. discharged into the System hereunder. shall be 1,000 gallons, U. S. Standard Liquid Measure. Page 22 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (a) Member agrees to provide ingress and egress for District employees and agents to all Member premises inside its boundaries to install, operate, inspect, tesfi, and maintain facilities owned or maintained by District within corporate or jurisdictional limits of Member, or to make such inspections or tests authorized by this Contract. (b} District agrees to provide ingress and egress for Member's employees and aents to all premises under control of the District to install, operate, inspecfi, test, and g maintain facilities, and read meters owned or maintained by Member. Section 2.23. Resale. Member hereby agrees not #o accept nar transport to its Point of Entry any Wastewater from outside Member's boundaries or authorized service area (as may be adjusted from time to time) unless Member has received prior written approval from the District. ;Approval to provide wastewater collection service on a retail basis to individual customers outside such boundaries may be granted by the Executive Director of the District. Approval to provide wholesale agreements to receive Wastewater or to provide wastewater collection service for other public or utility entities shall require the specific approval of the Board. In granting such authorization, District may establish the terms and conditions for the acceptance and conveyance of such Wastewater including, but not restricted to, the setting of monetary rates for such Wastewater service. Section 2.2�. Reporting Reguirernenfs. Approximately sixty (60) days after the and of each Annual Payment Period, Member shall furnish in writing to the District the following information: (a) The number of active domestic sewer connections in the Member's system being served by the System; Page 23 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (b) The number of commercial and business connections being served by the System; (c) The number of industrial connections being served by the System, with name and lacatian of each; (d) An estimate of the projected annual wastewater flow into the System by Member for the next five (5} years. The purpose of this provision is to permit the District to accumulate statistical data that will enable it to plan for adequate service and to facilitate plans for betterment and future facilities expansion. (a) The effects of certain Types of industrial Waste upon sewers and sewage treatment processes are such as to require that careful consideration be made of each industrial connection. To accomplish the purpose of the National Industrial Waste Control Program, when Member has an industrial customer, Member shall obtain approval by the U. S. Environmental Protection Agency of it's Industrial Waste Pretreatment Program. If Member chooses to administer its own program, it shall regulate by individual permit the discharge of Industrial Waste generated by a SIU into its sewer system. Member will authorize discharge of Industrial Waste into its sewers subject to the general provision that no harm will result from such discharge. Member will require each such industrial user to file an appropriate application, a copy of which shall be forwarded to the District, containing the following information: (1) Name and address of applicant; (2) Type of industry; Page 24 of 72 Upper Trinity Regional Water District Ciear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (3) Total quantity of plant waste produced; (4) Quantity of plant wastes proposed to be discharged; (5) Typical analysis of the waste; and (6) Type of pretreatment proposed by applicant. To facilitate inspection and control of Industrial Waste, Member will require industries to separate Industrial Waste from sanitary sewage until such Industrial Waste has passed through a monitoring portal which shall be located so as to be accessible at all times to inspectors of Member and the District. If inspection indicates that damage might result from the discharge, the permit shall be revoked unless and until the industry promptly establishes acceptable remedial measures. As necessary and indicated, the District may collect and analyze samples of all Wastewater at each Point of Entry. Such Wastewater shall not contain prohibited constituents nor exceed the limits of concentration specified in Section 2.19 of this Contract. Should the analysis disclose prohibited constituents or concentrations higher than those stipulated, the District will inform Member of such unauthorized wastes. It shall be the obligation of Member to require the offending originator of said waste to immediately cease discharge of such unauthorized waste and to initiate and undertake remedial pre-treatment or other legal means before further discharge into Member's sewers. (b) If Member desires that District administer it's Industrial Waste Pretreatment Program, District agrees to contract to provide such service at actual cast thereof. serving any Industrial User, it will enact ordinances, resolutions, or orders, as appropriate, as necessary to include the following provisions: Pab 25 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (a) For each existing and future S1U, Member shall require said user to complete and submit a permit application containing information specified in a sample application form to be furnished by the District. Member shall provide the District with a completed copy of the permit application within thirty (30) days after receipt by Member. The District may provide written comments to Member regarding said application within thirty (30) days of receipt. Failure to comment shall be construed as concurrence by the District. After approval of the permit application by Member, Member shall issue a discharge permit containing standard requirements as specified in a sample permit form to be furnished by the District. Such a discharge permit shall be required of all SIU's before said industrial user will be allowed to discharge Industrial Wastes into the Member's Wastewater collection system. The District reserves the right upon notice to each Member to review each proposed permit before issuance. In the absence of such notice, such review and issuance shall be accomplished by Member without the necessity for District review and approval, except for providing a copy of application to District as required above, subject to periodic inspection of records by the District. It is mutually agreed that unless Member obtains approval by the U. S. Environmental Protection Agency of its Industrial Pretreatment Program that if will contract with the District to administer said Pretreatment Program and will pay the cost of such program, including all monitoring, sampling and testing or will cause said cost to be paid by the affected industry. (b) Member shall require SIUs to comply with applicable Federal Categorical Pretreatment Standards as well as any applicable State and local standards. (c) Member shall maintain certain information contained in permit applications as confidential at SIU's request. (d) Member, shall not allow a user to employ dilution as a means of reducing pollutant concentrations in an SIU's waste stream. Page 26 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (e) Upon notice, Member and the District shall be authorized to enter Slu premises at any time for independent monitoring, inspection, or review of applicable records to determine compliance. (f) Member shall develop and require adherence to S1U compliance schedules. (g) Member shall require self -monitoring and reporting at SIU's expense. (h) Member shall choose ar designate an approved laboratory to analyze Industrial Wastes. (i) Member shall require SIU's to pay applicable fees for: (1) sampling and testing to determine compliance; (2) disconnectionlreconnection of service resulting from noncompliance; (3) excess concentrations above the criteria established for Normal Wastewater; (4} additional costs incurred by Member or the District in transporting or treating wastes; and (5) filing, review, revision, or renewal of permit application (k) Member shall provide prompt notification to the permit holder and the Districfi for instances of violation. Page 27 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (I) Member shall deny/revoke permit, disallow/disconnect service, assess civil or criminal penalties, and seek other available legal and equitable remedies against SIU foI : (1) discharge to Wastewater collection system resulting in violation of applicable POTW discharge permit conditions; {2) hazard to health or fife of POTW personnel or users of receiving waters; (3) violation of any applicable ordinance or regulation; and (4) false information transmitted to Member through permit application, monitoring reports, etc.; Upon request by District, Member shall furnish to the District all documents and records, in addition to those outlined herein, as necessary to demonstrate compliance by all industries with the applicable pretreatment program and this Contract. {a) The District reserves the right to enter into contracts to provide Wastewater services of the System to Additional Participating Members or Customers under contracts similar to this Contract. Each such contract shall comply with the requirements of this Contract, shall substantially restate the essential provisions of this Contract, and shall be structured to be similar hereto to the fullest extent applicable and practicable, with such additions or changes as are necessary to meet the actual circumstances, with the effect that each Additional Participating Member or Customer will substantially adopt the provisions of this Contract, as supplemented and necessarily changed by its contract. However, the District shall not obligate itself to receive Wastewater into the System from a Page 28 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft future Additional Participating Member or Customer if, in the judgment and discretion of the District, such obligation would jeopardize the District's ability to meet its obligation to receive, transport, treat and dispose of Wastewater discharged into the System by Member under this Contract. (b) The parties hereto recognize and acknowledge that it is the policy and practice of the District that any other party that desires to receive service from the System shall contract directly with the District to become a Customer of the District. However, Member may propose, and with the approval of the Board, Member may negotiate and enter into subcontracts with another city or other entity for Wastewater service. Any such Wastewater to be discharged into the System under such subcontract _shall be generated within the planned boundaries of the System, but may be outside the boundaries of Member; such Wastewater would be discharged into Member's sewers, to be transported into the System at Member's Point of Entry along with Member's Wastewater. In such case the additional Wastewater shall be regarded as being Member's Wastewater for all purposes of this Contract. If such arrangement is approved by the District, such transaction shall not relieve Member of its obligations to the District under the terms of this Contract, including payment of the Annual Requirement. (c} If District enters into a contract{s) to provide services of the System to an Additional Participating Member(s) or to a future Customer(s), such contract(s) shall require a pro rata refund of applicable prior costs, if any, paid by Member, not including State Participation costs required by Section 2.18. If State Participation has been repurchased in whole or in part, or if any Customer(s) has paid for System capacity for which said Additional Participating Member(s) or Customer(s) will subscribe or beneficially use, District agrees to provide in said contracts for pro rata reimbursement plus interest thereon to the appropriate Customer(s) for prior cost so paid for said capacity. Page 29 of 72 Upper Trinity Regional Wafer District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (a) Each . participant in the System may appoint a representative to the Customer Advisory Council for the System. The Council shall elect such officers as it deems necessary. The Council shall consult with and advise the District with regard to technical and operational matters, improvements and extensions of the System and other pertinent matters relating to the System. The members of the Council shall play an important role in the efficient functioning of the System, in representing the interest of the Customer and in keeping the Customer well informed. The Council shall have access to and may inspect at reasonable times all physical elements of the System and all records and accounts of the District pertaining to the System. (b} The term of membership on the Council shall be at the p{easure of each Customer represented, respectively, and each member shall serve until replaced by such Customer. All expenses of the Council in discharging its duties under this Section shall be considered as an Operation and Maintenance Expense of the System. Section 2.29. Water Gonservation, Drought Gontingency Ptan. {t is the policy of the District to prepare, adopt and maintain a regional water conservation plan which incorporates loss reduction measures and demand management practices which insure that the District's water supply and the capacity of the regional treated water system are used in an economically efficient and environmentally sensitive manner. Similarly, it is the policy of the District to prepare, adopt and maintain a drought and emergency contingency plan for water supply. Member agrees to cooperate in the implementation of both plans and to adopt and enforce such or similar plans for use within its jurisdictions. water conservation program is reuse of effluent produced by the respective water reclamation plants. Member agrees to support the District's efforts to encourage and increase the reuse of treated effluent, whether such reuse is achieved by sale of treated effluent for direct reuse by individual customers or by use of treated effluent to augment the raw water supply available to the District's Regional Treated Water System. Page 30 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System --City of Sanger Participating Member Contract Draft =111 Section 3.01. Annual Requirement. Subject to the terms and provisions of this Contract, and after accounting for any cost participation by Member, the District will provide and pay for the cost of the acquisition, construction and expansion of System facilities, by issuing its Bonds in amounts that will be sufficient to accomplish such purposes. It is acknowledged and agreed that payment to be made under this Contract and similar contracts with other Customers, if any, will be the primary source available to the District to provide the Annual Requirement. In compliance with the Districts duty to fix and from time to time to revise the rates and charges for services of the System, the Annual Requirement.may change from time #o time. Each such Annual Requirement shall be allocated among the Customers as herein provided; and, the Annual Requirement for each Annual Payment Period shall be provided for in each Annual Budget and shall at all times be not less than an amount sufficient to pay or provide for the payment of: payable for all Operation and Maintenance Expenses of the System; and (1} the principal of, redemption premium, if any, and interest on the Bonds, as such principal, redemption premium, if any, and interest become due, less interest to be paid out of Bond proceeds or from other sources if permitted by any Bond Resolution, and all amounts required to redeem any Bonds prior to maturity when and as provided in any Bond Resolution, plus the fees, expenses and charges of each paying agent/registrar for paying the principal of and interest on the Bonds, and for authenticating, registering Page 31 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft and transferring Bonds on the registration books of the District maintained with the paying agent/registrar; and (2) the proportionate amount of any special, contingency or reserve funds required to be accumulated and maintained by the provisions of any Bond Resolution; and (3) an amount in addition thereto sufficient to restore any deficiency in any of such funds required to be accumulated and maintained by the provisions of any Bond Resolution; and (4) the recovery of any capital funds advanced by the District for planning, development or construction of the Project or System. (c) An "Opera ion and N[aintenance Reserve" in an amount deemed appropriate and necessary by the Board for Operation and Maintenance Expenses of the System and for capital improvements. Any such reserve shall be used as a source of funds for Operation and Maintenance Expenses, for emergency expenses and as a fluctuating reserve for additions to, or shortfalls in, the annual revenues of the System. The normal level of such reserve shall be 25% of the annual on -going Operation and Maintenance Expenses of the System; however, the Board may authorize the reserve to be maintained at a higher level, especially if needed for future capital improvements, to respond to new regulatory requirements, and to facilitate efficient operation and maintenance of the System. (d) Other "Special Reserves" as determined necessary by the Board for such purposes as "Rate Stabilization" or for "Capita( Improvements". Section 3A2. Annual Budget. Each annual budget for the System shall always provide for amounts sufficient to pay the Annual Requirement. The annual budget for the Page 32 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft System for all or any part of the first Annual Payment Period during which the System is placed into operation shall be prepared by the District based on estimates made by the District. On or before June 15 of each year after the Project is first placed in operation, the District shall furnish to Member a preliminary estimate of the Annual Payment required from Member for the next following Annual Payment Period. Not less than forty days before the commencement of the Annual Payment Period after the System is first placed into operation, and not less than forty days before the commencement of each Annual Payment Period ts d thereafter, the District shall cause to be prepared as herein providei preliminary budget for the System for the next ensuing Annual Payment Period. A copy of such preliminary budget shall be filed with Member for review before action by the Board. Member may submit comments about the preliminary budget directly to the Board. The Board may adopt the preliminary budget or make such amendments thereto, as the Board may deem proper. The budget thus approved by the Board shall be the annual budget for the next ensuing Annual Payment Period. The Annual Budget (including the first annual budget) may be amended by the District at any time to transfer funds from one account or fund to another account or fund so long as such transfer will not increase the total budget. The amount for any account or fund, or the amount for any purpose, in the annual budget may be increased through formal action by the Board even though such action might cause the total amount of the Annual Budget to be exceeded; provided that such action shall be taken only in the event of an emergency or special circumstances which shall be clearly stated in a resolution at the time such action is taken by the Board. (a) For the Wastewater services to be provided to Member under this Contract, Member agrees to pay, at the time and in the manner hereinafter provided, its proportionate share (Annual Payment) of the Annual Requirement. Member shall pay the Annual Payment for each Annual Payment Period directly to the District, in monthly installments in accordance with the schedule of payments furnished by the District, as hereinafter provided. Page 33 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (b) Member shall pay its Annual Payment, including a capacity charge for fixed costs, and a volume charge for variable costs of Wastewater flow. The District shall estimate its cost and shall establish a capacity charge and a price per 1,000 gallons of volume for purposes of determining the monthly payment to be made by Member. Member shall pay a capacity charge in approximately equal monthly installments, based on the capacity specified in Exhibit B. Such capacity charge shall be sufficient to cover the fixed cost portion of the Annual Requirement. Member shall pay a volume charge based on the actual volume of Wastewater delivered to the Point of Entry. The volume charge shall be sufficient #o cover the variable cost portion of the Annual Requirement and specifrcaHy the variable costs associated with receiving, pumping, transporting, treating and disposing of the Wastewater and residual bio-solids (sludge). The Board may establish additional fees and charges or different forms of fees and charges as it deems advisable to recover and fairly distribute costs among benefiting parties. Section 3.04. Fiscal Polio. It is hereby provided #hat in estimating costs for services, the District is specifically authorized, in its discretion, to include in such estimate of costs reasonable contributions to reserve funds and to assume that the Annual Payment Period may be a dry year. Such policy could cause revenues to be increased if the year is actually normal or wet instead of dry as assumed. This fiscal policy is expressly approved by Member and is deemed by the parties hereto to be beneficial in the fiscal management of the System, and will assure the timely availability of funds even under unexpected circumstances. Upon receipt during any Annual Payment Period of an amount sufficient to meet the then current Annual Budget of the System for the remainder of the then current Annual Payment Period, the District shall deposit subsequent revenues received into appropriate reserve or contingency accounts; If there is a shortfall in revenues, the District may withdraw from the reserves, adjust the Annual Requirement, revise the payment schedule or do any combination thereof. Pab 34 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (a) It is agreed that if, during any Annual Payment Period, the estimated and/or actual flow of Wastewater delivered by Member to the System is, for any reason whatsoever, less than any minimum amount prescribed by this Contract, Member shall pay its Annual Payment according to such minimum amount. However, if Member's estimated and/or actual metered amount of Wastewater is equal to, or in excess of, such minimum amount, its Annual Payment shall be calculated on the basis of estimated and actual volumes. Any future contracts with Additional Participating Members or- Customers also shall provide for equitable minimum amounts. (b) All such payments for each Annual Payment Period shall be made in accordance with a written schedule of payments for the appropriate Annual Payment Period that will be supplied to each of the Customers by the District. Such schedule of payments may be based on the use of monthly flow volumes as determined by meter readings or estimates of flow or may be based on other factors determined by the District; but, in no case shall a Customer's Annual Payment requirement exceed its pro rata share of the System costs. Section 3.06. Redetermination of Annual Requirements. Notwithstanding the foregoing, the Annual Requirement, and Member's share thereof (Annual Payment), may be redetermined, at any time during any Annual Payment Period, to the extent deemed necessary or advisable by the District, if. (a) The District commences furnishing services of the System to an Additional Participating Member or Customer; (b) Unusual, extraordinary, or unexpected expenditures for Operation and Maintenance Expenses are required which are not provided for in the Districts annual budget or reserves for the System; Page 35 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (c) Operation and Maintenance Expenses of the System are substantially less than estimated; (d) District issues Bonds which require an increase in the Capital Component of the Annual Payment; or (e) The District receives either significantly more or significantly Tess revenues for the S than the amounts that are provided in the District's annual budget ystem. if the Annual Requirement is so redetermined, Member will be advised of the Adjusted Annual Payment. Section 3.07. Other Revenues. All surcharges collected from any Customer or Participating Member under Section 2.19 of this Contract shall be used to cover the extra costs of treating excessive strength Wastewater for the respective Member or Customer. Under any of the provisions of this Section, any revenues, payments and surcharges derived from such extra services shall be devoted to paying for the cost of said extra services and shall not be used to make the Annual Payment that is the obligation of Member under this Contract. wilt make payments required by this Contract to the District within twenty (20) days of the date a bill for service is rendered. If Member, at any time, disputes the amount to be paid by it to the District, Member shall nevertheless promptly make such payment or payments; but, if it is subsequently determined by agreement or court decision that such disputed payments should have been less, or more, the District shall promptly revise and reallocate the charges in such manner that Member will recover its overpayment or the District will recover the amount due it. All amounts due and owing to the District by Member, or due and owing to Member by the District, shall, if not paid when due, bear interest at the rate of ten (10%) percent per annum from the date when due until paid. Page 36 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft participating in the System specifically agrees to make all payments required by the Contract without offset or counterclaim. Nonetheless, if any Customer shall become delinquent in such payments, District shall, to the extent permitted by law, discontinue the services of the System to any Customer which remains delinquent in any payments due ices hereunder for a period of sixty (60) days, and is not obligated to resume such sery while such Customer is so delinquent. It is further provided and agreed that if any Customer should remain delinquent in any payments due hereunder for a period of one hundred twenty (120) days, and if such delinquency continues during any period thereafter, such Customer's minimum amount specified in Exhibit B, shall be deemed to have been zero (0.0) gallons during all periods of such delinquency, for the purpose of calculating and redetermining the percentage of each Annual Requirement to be paid by the non -delinquent Customers; and, the District shall redetermine such percentage in such event on a basis so that the non -delinquent Customers, collectively, shall be required to pay al[ of the Annual Requirement. The Board may authorize the use of available System reserves as a source of funds to help offset said delinquent payments. However, the District shall pursue all legal remedies against any such delinquent Customer to enforce and protect the rights of the District, other Customers, and the holders of the Bonds. The delinquent Customer shall not be relieved of the liability to the District for payment of all amounts which would have been due hereunder had no default occurred or the percentage had not been redetermined as provided in this Section. It is understood that the foregoing provisions are for the benefit of the holders of the Bonds so as to insure that all of the Annual Requirement will be paid by the non -delinquent Customers during each Annual Payment Period regardless of the delinquency of a particular Customer. If any amount due and owing the District by Customer is placed with an attorney for collection, Member shall pay to the District all attorneys' fees, in addition to all other payments provided for herein, including interest. Page 37 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Period, Members Annual Payment is redetermined in any manner as provided or required in the foregoing Sections, the District will promptly furnish Member with an updated schedule of monthly payments reflecting such redetermination. continuing responsibility to maintain adequate capacity in the System to meet the needs of Member over the term of this Contract, and any extension thereof. Member shall have the responsibility to keep the District informed of its projected needs for Wastewater service to allow adequate time for the District to plan and implement necessary improvements to the System. Likewise, the District shall have the continuing responsibility to plan for the needs of Additional Participating Members and Customers and future Customers within the Clear Creek Service Area. continuously operate and maintain the System in an efficient manner and in accordance with good business and engineering practices, and at reasonable cost and expense. The District recognizes its right and duty to operate the various facilities of the System in the most prudent and economical manner for the benefit of all Customers. Section 4.02. Project Schedule. It is the intent of the parties that the Project will be placed in operation as soon as practicable, and the District agrees to proceed diligently with the design and construction of the Project, subject to the terms and conditions in this Contract. In connection herewith, Member agrees to promptly provide any funds to District as required by the provisions in Exhibit D hereto. Page 38 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System - City of Sanger Participating Member Contract Draft Section 4.03. Permits, Financing and Applicable Laws. It is understood that any obligations on the part of the District to acquire, construct, and complete the Project and other System facilities and to provide Wastewater services of the Project and other System facilities to Member shall be: (a} conditioned upon the Dlstrict`0 ability to obtain all necessary permits, material, labor, and equipment; (b) conditioned upon the District receiving Member's and other participants' share of the cost of the Project and other System facilities as specified herein; and (c) conditioned upon the ability of the District to finance its share of the cost, if any, of the System facilities through the actual sale of District Bonds; and (d) subject to all present and future valid laws, orders, rules, and regulations of the United States of America, the State of Texas, and any regulatory body having jurisdiction. l'reatment and Disposal, of Wastewater/Reuse; Indemnification. Liability for damages arising from the transportation, delivery, reception, treatment, and/or disposal of all Wastewater discharged into the System hereunder shall remain with Member to the Point of Entry, and title to such Wastewater shall be in the name of Member to the Point of Entry, and upon passing through Point of Entry, title to such Wastewater and liability for such damages shall pass to the District. The District and Member agree to indemnify to the extent permitted by law and to save and hold the other party harmless from any and all claims, demands, causes of action, damages, losses, costs, fines, and expenses, including reasonable attorneys fees, which may arise or be asserted by anyone at any time on account of the transportation, delivery, reception, treatment, and/or disposal while title to the Wastewater is in such party, or on account of a prohibited discharge by a Page 39 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Participating Member or Customer. their own respective negligent acts Both Member and District agree to be responsible for The District has the responsibility as between the parties for the proper reception, transportation, treatment, and disposal of al! Wastewater discharged into the System, but not for prohibited discharges by any party at any Point(s) A Entry. After such treatment of Wastewater, the District may reclaim, and sell the water, sludge or any other product for reuse. Any net revenues and other benefits of such reclamation, sale and reuse shall be fairly apportioned among the Participating Members and Customers, and other parties participating in such sale and reuse. Section 4A5. Payments Soler Prom Revenues. The District shall never have the right to demand payment by Participating Members of any obligations assumed by said Member or imposed on Member under and by virtue of this Contract from funds raised or to be raised by taxes; and, the obligations under this Contract shall never be construed to be a debt of such kind as to require Member to levy and collect a tax to discharge such obligation. Nonetheless, a Customer may make payments from its water and wastewater (sewer) system revenues, or from any other lawful source, including ad valorem taxes, impact fees and/or connection fees. payments to be made by it under this Contract shall constitute reasonable and necessary "operating expenses" of its combined waterworks and sewer system, and that all such payments will be made from the revenues of its combined waterworks (if any) and sewer system or from any other lawful source. Member represents and has determined that the services to be provided by the System, including the Project and other System facilities, are absolutely necessary and essential to the present and future operation of its wastewater system, and that the System is the best long-term method for discharging, treating and disposing of its Wastewater, and, accordingly, all payments required by this Contract to be made by Member shall constitute reasonable and necessary operating expenses of its respective system as described above, with the effect that the obligation to make such payments from revenues of such systems shall have priority over any Page 40 of �2 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft obligation to make any payments from such revenues (whether of principal, Interest, or otherwise) with respect to all bonds or other obligations heretofore or hereafter issued by Member. throughout the term of this Contract to continuously operate and maintain its waterworks system (if any) and its wastewater (sewer) system, and to fix and collect such rates and charges for water and wastewater services, to be supplied by its systems as will produce revenues in an amount equal to at least: (a) all of the expenses of operation and maintenance of such system or systems, including specifically, its payments under this Contract, and (b} a!1 other amounts as required by law and the provisions of the ordinance or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding, including the amounts required to pay all principal of and interest on such bonds and other obligations. that neither the proceeds from the sale of the Bonds, nor the monies paid it pursuant to this Contract, nor any earnings from the investment of any of the foregoing, will be used for any purposes, except those directly relating to the System, and the Bonds as provided in this Contract; provided that the District may rebate any excess arbitrage earnings from such investment earnings to the United States of America in order to prevent any Bonds from becoming "arbitrage bonds" within the meaning of the Internal Revenue Code of 1986 (the "Code") or any amendments thereto in effect on the date of issue of such Bonds. Member covenants and agrees that it will not use, or permit the use of, the System in any manner that would cause the interest on any of the Bands to be or become subject to federal income taxation under said Code or any amendments thereto in effect on the date of issue of such Bonds. Page t1 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (a) Member hereby grants to the District without additional cost to the District, the perpetual use of the streets, easements, and rights -of --way under its control for the construction, operation, and maintenance of the Project and the System. (b) Member agrees that the District may use streets, alleys and public rights -of - way within Memblug 's boundaries for pipeline purposes to provide Wastewater service to Member or to other Customers without charges or tolls, provided that District makes the necessary repairs to restore to their original condition the streets, alleys or public rights -of- way so used. District agrees to obtain prior approval for each proposed use; but Member hereby agrees not to unreasonably withhold approval for the requested use of streets, alleys or public rights -of --way. (c) Member hereby consents to the District exercising its power of eminent domain, if necessary, to obtain property or rights -of -way within the boundaries of Sanger for the Project and the System. Member agrees that the consent provided within this subsection is in compliance with, and fulfillment of, the "consent" provision of the Act. Recognizing the fact that Member requires the facilities and services of the Project and the System, and that such facilities and services are essential and necessary for actual use and for standby purposes; and, recognizing the fact that the District will use payments received from Member and other Customers to pay and secure its Bonds; it is hereby agreed that Member shall be unconditionally obligated to pay, without offset or counterclaim, its proportionate share of the Annual Requirement, as provided and determined in this Contract (including the obligations to pay for certain "minimums" as described in Section 2.16 hereof,) regardless of whether or not the District actually i acquires, constructs or completes the Project or the System or is actually deliverng Page 42 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft services of the System to Member, or whether or not Member actually receives or uses services of the System (whether due to Force Majeure or any other reason whatsoever), regardless of any other provisions of this or any other contract or agreement between any of the parties hereto. This covenant by Member shall be for the benefit of and enforceable by the holders of the Bonds as well as the District. casualty, public liability, andlor other insurance, including self insurance, on the System for purposes and in amounts which, as determined by the District, ordinarily would be carried by a privately owned utility company owning and operating such facilities, except that the District shall not be required to provide liability insurance except to insure itself against risk of loss due to claims for which it can, in the opinion of the District's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of damaged or destroyed properties and equipment, to minimize the interruption of the services of such facilities. All premiums for such insurance shall constitute an Operation and Maintenance Expense of the System. (a) The Project and System will include capacity in pipelines and certain other facilities for future needs of Participating Member, Additional Participating Members and other Customers. Member agrees that it is in the best interest of both the District and Member respectively, to plan, acquire and construct the Project and System with excess capacity in anticipation of future increases in Member's requirements and in anticipation of future Customers, if any. Further, Member agrees that if District executes a financial plan for the Project or System that includes participation by the State in future capacity costs and the deferral of a portion of the capital costs to a future date, Member agrees that it will assume its respective share, when due, of such System cost if any, so deferred as if Bonds had been issued during the initial construction of the Project. Subject to the terms Page 43 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft of this Contract, the District reserves the right to contract with Additional Participating Members and other Customers for equitable participation (on a pro rata basis) in such future capacity. (b) This Contract includes a definition of the Clear Creek Service Area, which area is considered the maximum long-term service area for the System.However, the District reserves the right to expand the service area and the System if required by public interest; but, in the unlikely event of the need for such expansion, the District will be obligated to protect water quality in the receiving stream and lake and to protect environmental quality in the affected areas. Sec#ion 4.13. Special Provisions. The parties hereto acknowledge and agree to the Special Provisions which are set forth in Exhibit D attached hereto, which Exhibit is incorporated herein for all purposes. The Special Provisions in Exhibit D of this Contract reflect circumstances or issues for Member which may be different from those of other Customers and therefore constitute a modification of, or a requirement in addition to, the standard provisions otherwise contained in this Contract. If any provision of Exhibit D is different from or conflicts with the provisions set forth in the main body of this Contract, the provisions of Exhibit D shall prevail. Sec#ion 4.14, Exhibi#s. Several special Exhibits styled Exhibit A through Exhibit D are referenced elsewhere in this Contract and attached hereto as part of this Contract. Exhibit A This Exhibit identifies the Mernber's service area and boundaries for service by System and proposed Point of Entry to the System. Exhibit B This Exhibit indicates the quantities subscribed by Member. Fage 44 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System -City of Sanger Participating Member Contract Draft Exhibit C This Exhibit describes Prohibited Discharges and Requirements for Normal Wastewater for all Customers. Exhibit D This Exhibit contains special provisions applicable to Prosper. Section 4.15. WARNNtt Permit Compliance. The Project and System must operate under the terms and conditions of applicable State and federal permits. Accordingly, the District agrees to use its best efforts to operate and maintain the System in an efficient and professional manner, endeavoring to provide satisfactory service to Customers while complying with applicable permits. If the District becomes aware of a condition, an action or inaction, that could cause the System to be in violation of such permits, the District will take immediate steps to remedy the potential violation. If the condition, action or inaction appears to be the responsibility of one or more specific Customer, the District will give notice to the respective Customer to take timely steps to remedy the potential violation. If the District receives a fine or penalty for a violation of an applicable permit, and if the cause of such fine or penalty is determined, after investigation, to have been the responsibility of Member, the District shall require Member to reimburse the District for actual cost thereof, in addition to taking the necessary steps to remedy the circumstance causing the violation. ARTICLE V Standard Provisions Section 5.01. Force Maieure. If by reason of force majeure, any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Contract, other than the obligation of Member to make the payments required under this Contract, then if such party shall give notice and full particulars of such force majeure in writing to the other parties within a reasonable time after occurrence of the event or cause relied on, Page 45 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force majeure" as employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 5.02. Term of Contract. This Contract shall be effective on and from the Contract Date, and shall continue in force and effect for thirty (30) years, or for such period of time that Bonds issued by the District for the System remain outstanding, whichever period is greater; provided, however, the term of the Contract and the expiration date may be extended for a period of time not to exceed twenty (20) years by mutual agreement of the Member and the District as to the terms and conditions. The District's obligation to provide the contracted services shall commence from the date that the District gives written notice that the Project is operational and functional to provide Wastewater services to Member. This Contract and its attachments constitute the sole agreement between the parties hereto with respect to the Project and System. Section 5.03. modification. Rlo change, amendment or modification of this Contract shall be made or be effective which will affect adversely the prompt payment when due of all moneys required to be paid by Member under this Contact or any similar contract; and, no such change, amendment or modification shall be made or be effective which would cause a violation of any provisions of any Bond Resolution. Page 46 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Section 5,04. Addresses and Notice. Unless otherwise provided herein, any notice, communication, request, reply or advice (herein severally and collectively, for convenience, called "Notice") herein provided or permitted to be given, made or accepted by any party to any other party must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to the District, to: Executive Director Upper Trinity Regional Water District P. O. Drawer 305 Lewisville, Texas 75067 If to Sanger, to: City Manager City of Sanger P. O. Box 1729 Sanger, TX 76266 The parties hereto shall have the right from time to time and at any time to change their. respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15) days written notice to the other parties hereto. Contract is subject to all applicable Federal and State laws and any applicable permits, Page 47 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule or regulation in any forum having jurisdiction. Section 6.06, Remedies lJeon ®efault, It is not intended hereby to specify (and this Contract shall not be considered as specifying) an exclusive remedy for any default, but all such other remedies (other than termination) existing at law or in equity may be availed of by any party hereto and shall be cumulative. However, recognizing that the District's undertaking to provide and maintain the services of the System is an obligation, failure in the performance of which cannot be adequately compensated in money damages alone, the District agrees, in the event of any default on its part, that Member shall have available to it the equitable remedy of mandamus and specific performance in addition to any other legal or equitable remedies (other than termination) which may also be available. Recognizing that failure in the performance of Member's obligations hereunder could not be adequately compensated in money damages alone, Member agrees in the event of any default on its part that the District shall have available to it the equitable remedy of mandamus and specific performance in addition to any other legal or equitable remedies (other than termination) which may also be available to the District. Notwithstanding anything to the contrary contained in this Contract, any right or remedy or any default hereunder, except the right of the District to receive the Annual Payment which shall never be determined to be waived, shall be deemed to be conclusively waived unless asserted by a proper proceeding at law or in equity within two (2) years plus one (1) day after the occurrence of such default. No waiver or waivers of any breach or default (or any breaches or defaults) by any party hereto or of performance by any other party of any duty or obligation hereunder shall be deemed a waiver thereof in the future, nor shall any such waiver or waivers be deemed or construed to be a waiver of subsequent breaches or defaults of any kind, character or description, under any circumstance. Page 48 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Section 5.07. Severrability. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses or words of this Contract or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or - unconstitutional, under the laws or constitutions of the State or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Contract or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Contract shall be severable and shall be construed and applied as if any such invalid or unconsti#utional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. Section 5.08. iienue. 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 Denton County, Texas, which is the County in which the principal administrative offices of the District are located. It is specifically agreed among the parties to this Contract that Denton County, Texas is the place of performance of this Contract; and, in the event that any legal proceeding is brought to enforce this Contract or any provision hereof, the same shall be brought in Denton County, Texas. IN �iITNESS 1dVFlEREOP, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the Contract Date. Kevin Mercer, President, Board of Directors Page 49 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Tim Fisher, Secretary, Board of Directors [District Sealj John F. Boyle, Jr., Counsel for the District Joe Higgs, Mayor Rose Chavez, City Secretary Robert Dillard, Counsel for City of Sanger Page St) of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 1. The approximate location of Sanger's Point of Entry is shown on Page 2 of this Exhibit A. 2. The boundaries of Sanger's service area, generally for the drainage basin of Clear Creek, are noted on the attached map in this Exhibit A. The District, and Sanger agree that Sanger may expand or reduce its service area in the future. Note: Upon mutual agreement of Member and District, an updated or corrected Exhibit A may be substituted for this Exhibit A. Page S t of 72 Upper Trinity Regional Water District Cfear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft [Map of Sanger's Point of Entry to be inserted herej Page 52 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft l �� � ,< •.: . X � l r � i 1. • Contract The provisions of this Exhibit B form a part of the Contract and are applicable to the District and to Sanger as if set forth in their entirety in the body of the Contract. The following quantities are mutually agreed to for the purposes noted. Phased Construction. Construction of Clear Creek treatment plant capacity is expected to be accomplished in phases. When Sanger desires additional capacity to provide for future growth requirements, Sanger shall give appropriate notice to the District to allow adequate time for coordination with other participants in the System and Page 53 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft for financing, design and construction. The District then will use such increased capacity as the new subscribed capacity for allocation of cost to Sanger as provided in the Contract. It is mutually agreed that other Members and Customers may participate in the System to allow the District to fulfill its responsibility of providing adequate service to the region. Page 54 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft I= III DII' C The provisions of this Exhibit C form a part of the Contract and are applicable to the District and City of Sanger as if set forth in their entirety in the body of the Contract. �/astes Not Admissible: Gasoline; cleaning solvents; non emulsified oils and greases; mineral oils; ashes; cinders; sand; gravel; tar; asphalt; ceramic wastes; plastics; other viscous substances; feathers; hair; rags; metal; metal filings; glass; wood shavings; sawdust; unshredded garbage; toxic, corrosive, explosive or malodorous gases; acetylene generation sludge; cyanides or cyanide or cyanogen compounds capable of liberating hydrocyanic gas on acidification in excess of 2 mg/l by weight as CN; radioactive materials which will permit a transient concentration higher than 100 microcuries per liter; emulsified oil and grease, exclusive of soaps, exceeding on analysis an average of 100 mg/l of ether - soluble matter; acids or alkalis having a .pH value lower than 6.0 or higher than 10.0; other similar substances as those named in this paragraph in quantities capable of causing obstruction to the flow of Wastewater in mains or interfere with the operation of the system; and, Wastewater containing specific pollutant concentrations in excess or any of the numerical limitations named hereunder shall be prohibited from discharge to the System: Page 55 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft Pollutant Concentration (ugll) Arsenic 100 Barium 1,000 Cadmium 50 Chromium 500 Copper 500 Lead 500 Manganese 11000 Mercury 5 Nickel 11000 Selenium 50 Silver 50 Zinc 1,000 Total Toxic Organics 13000 (a) Biochemical Oxygen Demand (B.O.D.�. B.O.D. of Wastewater delivered to the System, as determined by standard methods, shall not exceed 250 mg/l. (b) Total Suspended Solids. Total Suspended Solids delivered to the System as determined by Standard Methods, shall not exceed 250 mg/l. (c) Hydrogen Ion Concentration (pH). The pH of Was#ewater delivered to the System shall not be lower than 6.0 nor higher than 10.0. No acids shall be discharged into the System unless neutralized to a pH of 6.0 or more. Page 56 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (d) Hydrogen Sulfide Concentration. Dissolved sulfides in Wastewater at the point of delivery to the System shall not exceed 0.1 mg/l. (a) In the event there is any conflict between this Exhibit C and applicable regulations of the Texas Commission on Environmental Quality or of the United States Environmental Protection Agency, the applicable regulations shall govern. (b) This Exhibit C is subject to revision as necessary to correlate with, to camp{y with and to remain current with future regulations and requirements of Texas Commission on Environmental Quality and United States Environmental Protection Agency. If the District determines that a change in this Exhibit C is necessary to respond to such revised regulations pursuant to the Contract, including this Exhibit C, District shall furnish a revised Exhibit C to Member according to the provisions of the Contract. Page 57 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft EANII`I D w 111111111111 11 ll;; I y " j xi I I i I Ill The provisions of this Exhibit D form a part of the Contract and are applicable to the District and Sanger as if set forth in their entirety in the body of the Contract. If any provision of this Exhibit D conflicts with the provisions in the main body of the Contract, the provisions of this Exhibit D shall prevail. 1. Was#ewa#er Collec#ion Sys#ems. Sanger agrees to expand, install, own, operate and maintain (or contract with others for operation and maintenance) its wastewater collection system to serve the Wastewater needs within Sanger's service area that can be served reasonably by the System. Unless otherwise agreed in writing by bath parties, Sanger agrees to collect and to deliver to the System all. of its Wastewater from its service area that lies within the Clear Creek Service Area. If a Municipal Utility District (MUD) or similar entity is authorized within Sanger's service area, Sanger will use its best efforts to assure that Sanger is the wastewater service provider for each such entity. Sanger's wastewater collection system shall be designed, constructed, and operated in accordance with generally accepted municipal standards and applicable specifications published by the North Central Texas Council of Governments. All wastewater collection lines shall be minimum six (6) inch diameter with sufficient capacity for the build -out of each respective portion of the applicable Page 58 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft service area, including upstream or adjacent areas anticipated to be served. Further, pipes, fittings and manholes shall conform to generally accepted specifications of typical municipal wastewater utilities. 2. Master Plans. Sanger agrees to maintain master plans for the wastewater system within its service area. To that end, Sanger agrees to provide the District with an initial copy of such plan and updated master plans for its wastewater system at least every five years, unless no change in the Master Plan is warranted and is so stated in writing by Sanger. (a) Said master plans shall provide for collection of Wastewater from throughout the Clear Creek Service Area and for delivery at the appropriate Point of Entry into the System. (b) This Contract provides for delivery of Wastewater into the System at a Point of Entry in the Clear Creek drainage basin for treatment at the Clear Creek Water Reclamation Plant. 3. titiaste�nrater Control Plans. The District and Sanger agree that the public health and safety require that plans for control of Wastewater be prepared and implemented in conjunction with development of the District's Regional Treated Water System. Accordingly, pursuant to the Contract, Sanger agrees to participate in the Clear Creek Regional Water Reclamation System, and will prepare plans to extend Sanger's wastewater collection system to connect to the System on a schedule to be coordinated with the District. 4. Required to Connect. Sanger will require future retail customers and future developments within the Clear Creek Service Area to connect to its wastewater collection system, when feasible and appropriate, under reasonable rules as Sanger's wastewater collection system is installed and expanded. Approval of any new Page 59 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft subdivision or development by Sanger without wastewater collection facilities being required therein shall be considered an exception, requiring compelling evidence that the public health and safety, as well as the environment will otherwise be protected for the long term. 5. Infiltration and Inflow. Sanger agrees fo design, construct and maintain its wastewater collection system to reasonably limit infiltration of ground water and inflow of surface water. This requirement is intended to keep the peak flow of Wastewater entering the System at levels below the maximum amount provided in the Contract and to reduce the quantity of Wastewater being metered for, and charged to, Sanger. 6. Cost Elements, Sanger's portion of the capital costs for the Project steal( be funded in accordance with this Contract, including certain upfront costs.. Sanger agrees to pay for the Preliminary Engineering Design Report it authorized and all costs to apply for and to secure the discharge permit for the proposed new Clear Creek Plant. Generally, operating expenses of the System will be based on flow. However, certain operating expenses are somewhat fixed in nature and may be billed as "Minimum Flow (MGD) for Financial Purposes" according to subscribed capacity. Sanger and the District acknowledge and agree that Sanger will be the initial participant in the Project and System. Accordingly, except as otherwise provided herein, Sanger agrees that it will be responsible for all ongoing costs associated with the service to be provided by District pursuant to this Contract. The costs for which Sanger agrees to be responsible for and to pay, as its share of the Annual Requirement are as follows: (a) Gapital Costs of Treatment Plant and the Trunk Main. Unti{ there are other participants in the System, Sanger shall be responsible for all capital costs. Thereafter, such capital costs shall be shared on a pro rata basis between participants based on their respective capacities as may be subscribed from time to time. Sanger shall also be responsible for a full pro rata share of cost of future replacement or rehabilitation of capita{ facilities. Page 60 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft (b) Common -To -All Facilities. All facilities that are installed and intended for the general benefit of participants in the Project and System are considered to be "Common -to -All Facilities". Such facilities may include the plant site, treatment works and other facilities on the plant site, certain major trunk lines, lift stations, metering facilities, etc. The capital cost of the Common-to-AII Facilities shall be shared among all participants according to respective subscribed capacities. Delivery and Treatment Facilities are typically designed with extra capacity or "oversize" to accommodate future growth and future Customers. Each participant is responsible for the costs of providing adequate capacity of facilities to accommodate the build -out of its respective service area. Any extra capacity or oversize capacity in pipelines and other such facilities, which capacity is intended for future Customers in the System shall be considered to be Common -to -All Facilities. However, since Sanger is the only initial participant in the System, application of the provisions of this paragraph concerning any Common -To -All Facilities will not apply initially. (c) DeGvery Facilities. Sanger shall be responsible for the design and construction of its facilities for delivery of Wastewater to the Point of Entry and all costs (capital as well as operation and maintenance) related thereto. (d) Oversize for Future. To provide capacity for future growth of Sanger and for service to other Customers in the future, elements of the Project and System may be oversized as required by District in conformance with the Contract. The District reserves the right to apply for certain State Participation Funds as provided in this Contract to help pay for future capacity. (e) Treatment Plant Operation and Maintenance Expense. Sanger shall be responsible for such expenses as part of its Annual Requirement, subject to the minimum amount specified in Exhibit B, including any fixed portion thereof. Page 61 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System -City of Sanger Participating Member Contract Draft (f) Other Operation and Maintenance Expenses. Other expenses related to operation and maintenance of the Project and System, such as Common -to -All facilities, trunk lines, lift stations, meter facilities, transportation of biosolids, wastewater pumping, fees for use of lines, including any fixed costs, etc., shall be shared according to this Paragraph 6 and common utility practice. (g} Prior System Costs. The District has incurred $28,066 in prior costs related to its feasty study concerning regional wastewater service for the Sanger area and certain other costs related to the development of the Project. Sanger agrees to reimburse the District for said prior costs within sixty (60) days of the Effective Date of this Contract. (h) Engineering Cost for the Proiiect. Sanger and the District agree to proceed with the final engineering design and preparation of construction documents for the Project. Sanger and District shall jointly participate in selection of the consulting engineers for the Project. The District shall engage the consulting engineers so selected by contracting directly with the selected firm(s). Until a construction contract is awarded for the Project, Sanger and the District agree to share the actual cost of such engineering service on a 50/50 basis. District shall submit periodic statements to Sanger for its pro rata share of such costs. The District's share of such engineering costs, including the cost of engineering services after award of the construction contract(s), shall be included as overall capital costs of the Project to be funded through the issuance of Bonds by the District. 7. Assignment or Sale. Sanger hereby agrees that it will not assign, sell, or convey its retail wastewater collection system to any party without the prior written approval of the District, which approval will not be unreasonably denied. Any such approval of a proposed sale to a Customer of the District will be denied only if the requested sale, assignment or conveyance would cause the interest on any of the Bonds to be or become subject to federal income taxation under the Internal Revenue Code of 1986, as amended. Further, any such assignment, sale or conveyance, if Page 62 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft approved, would require the benefiting party to assume the appropriate obligations of the Contract. 8. Capacity for Adiacent Areas. Sanger is required to provide for future Wastewater flows from adjacent areas that, by reason of topography or sound engineering practices should flow into and through the participant's facilities and service area. Accordingly, Sanger agrees to plan, design and construct its facilities with adequate capacity to serve property within the drainage basin(s) within Sanger's planning area that flows into or through each particular portion of Sanger's service area. The areas and flows to be so provided for by Sanger shall be certified by a Registered Professional Engineer selected by Sanger in conjunction with planning and design of each phase of Sanger's wastewater collection system. 9. Future Customers !Prior Costs. In the fu#ure, any utility entity other than Sanger that desires to discharge Wastewater into the System through Sanger's wastewater collection system or directly into the System owned and operated by the District shall first contract with the District for participation in the System. Prior to authorization for any such entity to discharge Wastewater into Sanger's collection system District shall verify with Sanger that capacity is available pursuant to Paragraph 8 above, and shall prescribe means for measurement of or estimating the flow. With Sanger's written consent, the District may authorize such discharge. Further, any such participating entity shall pay appropriate prior costs paid by Sanger and other participants (if any) as determined by the District pursuant to the Contract for previously constructed facilities to be used to receive and transport the new entity's Wastewater. In addition to reimbursement of costs related to District facilities, the District will reimburse to Sanger any such funds collected from said participating entity for use of Sanger's internal wastewater collection system, if Sanger's facilities are authorized by District to be used to serve said participating entity. Said prior costs shall be equal to a pro rata share of actual original cost for the amount of capacity to be contracted to the participating entity. Considering the capacity contracted for by any such participant, the Page 63 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft District will make appropriate adjustment in Sanger Is share of the Annual Requirement, and thereafter will require the new participant or Customer to pay its share of the Annual Requirement for the System. 10. Modification of Service Area. Under the Contract, Sanger has the right to receive wholesale wastewater treatment service directly from the District for its service area as such service area may be modified from time to time, subject to a mutual determination of feasibility for the service being requested. 11. Project Capital Funds. Except as otherwise provided in the Contract, the District hereby agrees to use its best efforts to provide the necessary funds to design and construct the Project. For future expansions of, or improvements to, the Project or System, District hereby agrees to use its best efforts to issue its Bonds. In the unlikely event that the District were unable to issue its Bonds in sufficient amount to finance the entire cost of a future improvement desired by Sanger or determined by District to be necessary, it is mutually agreed that Sanger will deposit the remaining funds (if any) required for Sanger's share of the proposed capital improvement. (a} After design of one or more Project elements has been completed, the District will advertise and take competitive bids for construction, which construction may be in phases. Concerning any element of the Project or System, Sanger shall have a continuing option to prepay portions of the Project or System cost and to receive corresponding reduction in future rates and charges. (b) !f District applies for and receives State Participation funds for the Project from Texas Water Development Board, such funds will be deducted from the amount of funds otherwise required for construction. Paae 64 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System -City of Sanger Participating Member Contract Draft (c) The District agrees to use its best efforts to construct the Project when and as needed, as jointly determined by the District and Sanger. The District agrees that design and construction of the Project will be made in accordance with generally accepted engineering practices. The District's ability to complete the Project may be dependent in part on receiving timely approval from other governmental bodies, including Corps of Engineers, Texas Water Development Board and TCEQ. 12. Transfer of Plant Site and New Discharge Permit to District, Sanger has previously purchased land for the site and acquired a wastewater discharge permit from TCEQ for the proposed Clear Creek Plant. Sanger hereby agrees to transfer the plant site to the District and to take the necessary steps with TCEQ to have the discharge permit transferred to the District according to the provisions set forth below: (a) Sanger does hereby seN, convey, transfer and assign all of its interest in an approximate acres of land to the District for the site of the proposed Clear Creek Plant. Ownership and title to the land will be conveyed by separate instrument for ten dollars ($10.00) and other good and sufficient consideration. As part of the consideration, District hereby agrees to construct, own, expand and operate the Clear Greek Plant and to accept and treat Wastewater generated in the Clear Creek Service Area, which Wastewater will be collected by Sanger and transported to the Plant. b} The form of legal instrument to accomplish final conveyance of the land for the site shall be developed by the District with assistance from and mutual agreement of Sanger; and, District shall pay the costs of completing and closing said conveyance, which costs shall be included in the Project's cost. Said transfer of the Plant Site to the District shall be accomplished prior to advertising for bids for construction of the Project. On a mutually agreed date, Sanger and District agree to execute a suitable conveyance document to close the transaction, conveying ownership of the Plant site to the District. On the date indicated in the conveyance documents, the District will assume its Paae 65 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft obligations to own and maintain the Plant site and to provide the services provided in this Contract. c} As part of the consideration for transfer of ownership of the Plant site and for the services to be received by Sanger under this Contract, Sanger hereby agrees to pay and retire all outstanding indebtedness, if any, on the land prior to transfer to the District, such that the District will have no responsibility to pay any cost thereof. d} Sanger currently holds a wastewater discharge permit from TCEQ for a future wastewater treatment plant to be constructed, operated and maintained on the site of the proposed Clear Creek Plant (TPDES No. . Sanger has requested the District to construct, operate and maintain the Clear Creek Plant; and, therefore agrees to file the necessary documents with TCEQ to transfer said discharge permit to the District. Said request for transfer shall be filed within thirty (30) days of the Contract Date. The District agrees to operate and maintain the Clear Creek Plant within the perimeters set forth in said discharge permit. Further, Sanger agrees to support any future discharge permit renewals filed by the District. 1 �. Phased Construction. It is hereby recognized that the initial capacity in the System being subscribed herein by Sanger is based on Sanger's expected needs over a five (5) -year period from the date that service is first available.. The initial capacity of the plant will be determined by the District in coordination with Sanger based on the City's current and future wastewater needs. Thereafter, the plant will be expanded in phases on a timely basis to meet Sanger's needs and according to subsequent engineering studies, consistent with the discharge permit issued for the plant by TCEQ. 14. Bonds Not Subject to Federal Income Tax. Sanger hereby covenanfis and agrees that it will not use or operate its retail collection system, or permit the use or operation of said system or of the District's System in any manner that could cause the interest on any of the District's Bonds to be or to become subject to federal income Fage b6 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft taxation under the Internal Revenue Code of 1986 or any amendments thereto in effect on the date of issue of such Bonds. 15. Eminent omain. In obtaining easements and property for the Project, the District and Sanger acknowledge that the use of the power of eminent domain may be required, if and when negotiations are not successful. Sanger hereby confirms and agrees that it has the power of eminent domain, which may be exercised within and without Sanger's boundaries. Accordingly, Sanger is agreeable to use its power of eminent domain if requested by the District concerning the acquisition of any specific parcel of property or easement required for the Project or System. 16. State Participation Proctram /Equity Fee. Sanger acknowledges that a portion of the System may be funded through the State Participation Program; and, if so, the State will have an equity ownership interest in the System. In such case, the District's policy is to purchase (buy-back) the State's interest over a reasonable period of time; and, to that end, District requires that any entity contracting for new or additional wastewater service capacity to pay an "Equity Fee" established by District. The "Equity Fee" is generally based on the amount of accrued interest cost on that portion of the System owned by the State and upon the amount of System capacity that would be contracted to Sanger or any other party requesting such capacity. Accordingly, Sanger agrees to pay any applicable "Equity Fee" for System capacity requested by Sanger pursuant to this Contract according to the terms established by the District. 17. Building Activity Fees. As part of the District's rate structure for the System, Sanger agrees to pay a fee for building activity ("Building Activity Fee") within its service area to provide a portion of the cost of wastewater treatment capacity, Delivery Facilities and other associated elements of the System. Beginning within sixty (60) days after the District awards the first contract for construction of the Project, Sanger shall pay a Building Activity Fee as determined by the District as part of the District's rate structure for each residential connection (or equivalent thereof for other types of connections) to Page 67 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft be served by Sanger pursuant to this Contract . Sanger may choose to collect said fee from developers or from builders as part of its development code, or as part of its retail rate schedule or as part of "impact Fees" otherwise being collected for development activity within Sanger. Said fee to be established by the District initially shall be five hundred dollars ($500) per connection; and, shall be due and payable by Sanger to District at the time that Sanger commits to provide a connection for wastewater service for a retail customer's new premise. On a quarterly basis, said Building Activity Fees shall be remitted to the District with an appropriate accounting thereof. The intended use of funds generated by said fees is: (1) to provide a portion of permanent funding of the Project and System, (2) to reduce the amount of, or to pay principal and interest on, District Bonds otherwise needed to be issued for permanent funding of the Project and System, and (3) to pay any other costs of the System. Funding from said fees will enable a reduction in rates, and a reduction in funds that otherwise will need to be generated annually through rates and charges to Sanger. All fees collected and remitted to District pursuant to this paragraph will be considered to be Customer contributions and shall be applied to permanent funding of the Project and System. All such fees remitted to District after the initial funding for the Project and System is retired shall be used by the District for Sanger's share of cost for expansion, extensions, improvements and replacement thereof or to pay principal and interest on bonds sold by District for the Project and System, and may be used for any costs of the System. 18. Initiation of Capital Improvement Proiects. Two major capital improvement projects are contemplated for initial construction under this Contract: (1) a major trunk main to deliver wastewater to the Plant; and (2) construction of the Clear Creek Water Reclamation Plant. Construction may be at different times for the trunk main and the Plant. 19. Watershed Protection. To help protect the quality of the District's water supply in Lewisville Lake: Paae 63 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft a) Sanger agrees to participate in and support the District's efforts to implement activities for a regional watershed protection program. Elements of a program may include methods to reduce the amount of pollutants from entering the watershed, ways to limit the amount of sediment being transported to local water supply sources, and public education. As part of the public education element, Sanger agrees to assist the District in installing the District's watershed signs along roadways near creeks and streams within the City's service area. b) Specifically, as part of the watershed protection program identified above, Sanger agrees to adopt reasonable requirements for local developers within its service area to set aside natural riparian lands to be used as greenbelts in those developments. Pursuant to such "reasonable requirements" adopted by Sanger, Sanger will require or seek dedication of said greenbelts in perpetuity, which greenbelts shall be under the control of and administered by the City or a local homeowners association. Such greenbelts shall be left largely in their natural state, but may be used for multiple purposes such as buffer zones, hiking or jogging trails, wetlands, stormwater retention or playgrounds. 20. I�Vastewater Operators. District agrees that the existing employees of Sanger currently operating the existing plant are welcome to become employees of the District. A list of the existing employees is included as Attachment 1 to this Exhibit D. The District agrees to hire said employees and to continue comparable compensation and benefits as present, both elements (compensation and benefits) considered collectively. District agrees to retain said employees for one year, subject to the District's personnel rules and regulations. Thereafter, compensation, benefits and positions of said employees will be based on merit in like manner as other employees of District. District and Sanger agree to coordinate the transition of employment to assure no interruption in medical insurance and to protect retirement benefits of the employees. Page 69 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 21. Sanger's Existing Wastewater Treatment Plant and Existing Discharge Permit. Sanger currently owns, operates and maintains a wastewater treatment plant, lift stations, and other facilities associated with providing wastewater collection and treatment services to its retail customers. In addition, the City has a wastewater discharge permit issued by TCEQ for said wastewater treatment plant (TPDES No. ). Under this Contract, the District has agreed to construct, own, operate and maintain the Clear Creek Plant, a new regional wastewater treatment plant, to provide, in phases, Wastewater treatment service to the Clear Creek Service Area. Both parties agree that once the Clear Creek Plant is fully operational, all Wastewater flow from the City's existing plant will be diverted to the Clear Creek Plant. Thereafter, Sanger agrees not to treat any wastewater at its existing plant. a} Qwnership of the existing wastewater treatment plant, its associated facilities and property, will remain vested with Sanger. However, if it is deemed beneficial for the operation of the Clear Creek Plant, both parties may agree to transfer ownership of the existing plant, facilities and property to the District. The procedures set forth in Paragraph 12(b) of the Exhibit D shall be followed if the ownership of the existing plant, its facilities and property are to be transferred to the District. b) Sanger currently holds a wastewater discharge permit issued by TGEQ for the existing wastewater treatment plant. Upon transfer of the Wastewater flows to the Clear Creek Plant, Sanger agrees to abandon said discharge permit. Within thirty (30) days after the flows have been transferred, Sanger shall file all the necessary documents with TCEQ to abandon said permit. All the cost associated with the transfer, if any, shall be included as part of the Project costs. 22. Future Purchase of Svstem by Sanger. This Contract includes a limited option for Sanger to possibly repurchase the Plant, Project and System from the District.,_ I after at least ten (10) years from Contract Date, Sanger desires to purchase the System from the District, and assume all costs (capital, as well as operation and maintenance) Page 70 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft and the operation thereof, Sanger shall give written notice to the District. Within a six (6)-month period thereafter, District shall conduct a due diligence evaluation of feasibility of Sanger's request according to the following considerations. As a minimum, for a determination to be made that such transfer is feasible, the following findings must be made: '(. Such transfer would not adversely affect any significant contemporaus permit issue then pending with state or federal regulatory bodies concerning the System. 2. All outstanding Bond issues must be within the "callable" period (typically at least ten (10) years after the most recent bond issue). 3. At the time of such request, Sanger must be the only participant in the 4. Sanger must repurchase any outs#ending S#ate Participa#ion in the System. 5. Subject to transferability of any outstanding loans or other debt instruments, Sanger would have to assume all remaining payments or debt service. 6. At least fifty percent (50%) of all employees them employed by District and primarily engaged in operation of the Plant would have to agree in writing to support the requested transfer. 7. The District must be made whole as to any unreimbursed expenditures aut of District funds. Page 71 of 72 Upper Trinity Regional Water District Clear Creek Regional Water Reclamation System —City of Sanger Participating Member Contract Draft 8. As consideration for the risks taken by the District on behalf of Sanger, for the District's credit and goodwill, for the value received for regional governance and service of the System, Sanger would agree to pay the District a severance fee equal to one percent (1 %) of the original capital cost of all System elements. Subject to a final determination by both parties that the requested transfer is feasible, District and Sanger agree to use their best efforts to expedite the transfer of all affected facilities, property, permits and operational responsibilities to Sanger, subject to approval by applicable regulatory authorities. Page 72 of 72