2012-094 RES AUTHORIZING/APPROVING AGREEMENT BY AND AMONG COP, NEXTERA ENERGY AND DAISY FARMSRESOLUTION N0. 2012-094
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS,
AUTHORIZING AND APPROVING AN AGREEMENT BY AND AMONG THE
CITY OF PARIS, TEXAS, NEXTERA ENERGY A1VD DAISY FARMS, LLC, FOR
THE USE OF EXCESS RAW WATER FOR IRRIGATIOIV PURPOSES AT DAISY
FARMS COMMERCIAL DAIRY LOCATED O1V SH 19/24 AT FM 2036,
LAMAR COUNTY, TEXAS; AUTHORIZIIVG THE CITY MAIVAGER TO
1VEGOTIATE AND EXECUTE ALL NECESSARY DOCUMEIVTS; MAKING
OTHER FIIVDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Paris, Texas (hereinafter "CITY") has an existing agreement
with NextEra Energy for the sale of raw water for their industrial usage at the NextEra
Power Plant up to 8 MGD; and
WHEREAS, NextEra does not use all of its contracted supply and desires to allow
Daisy Farms to utilize any of NextEra's reserved raw water not needed by its operations.
NextEra retains the priority right to the raw water and Daisy Farms is not guaranteed a
minimum quantity of raw water; and
WHEREAS, the City Staff recommends the sale of raw water to Daisy which is over
and above the actual supply taken by NextEra on a daily basis but which does not exceed
the maximum daily contracted amount of eight (8) million gallons per day; and
WHEREAS, NextEra agrees to amend its agreement with the City of Paris to allow
for this diversion of raw water. NextEra and Daisy Farms would be responsible for all costs
relating to the transmission of the raw water to their facility; and
WHEREAS, the term of the Excess Raw Water Agreement with Daisy Farms is 30
years but can be terminated for failure to perform the terms of the contract; and,
WHEREAS� the City Council of the City of Paris hereby finds that it is in the best
interest of the City of Paris and its citizens to allow City to sell excess raw water to Daisy
Farms and does hereby authorize the City Manager to negotiate and execute an Agreement
with Daisy Farms, in a form similar to the agreement attached hereto as Exhibit "A".
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS, THAT:
Section 1. The findings set out in the preamble to this resolution are hereby in all
things approved.
Section 2. The terms and conditions of the Agreement, having been reviewed by the
City Council of the City of Faris, Texas and found to be acceptable and in the best interests
of the City of Paris and its citizens, are hereby in all things approved.
Section 3. The Ciry Manager be, and is hereby authorized to execute the Agreement
and all other documents in connection therewith on behalf of the City of Paris, Texas
substantially according to the terms and conditions set forth in the Agreement attached
hereto as Exhibit "A".
Section 4. This resolution shall become effective immediately upon its passage.
DULY PASSED AND APPROVED this 10th day of December, 2012.
ATTEST:
r
J nice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McII ar, � Attorne
Y Y
EXCESS RAW WATER SUPPLY AGREEMENT
THE STATE OF TEXAS §
COUNTY OF LAMAR §
THIS EXCESS RAW WATER SUPPLY AGREEMENT (this "Agreement") is made and
entered into by and among the City of Paris, Texas, a Home-Rule Municipal Corporation with its
principal office located at 135 S.E. lst Street, Paris, Lamar County, Texas 75460 (the "CITY"),
Daisy Farms, LLC, a Texas limited liability company with its principal office located at 12750
Merit Drive, Dallas, Texas ("DAISY"), and NextEra Energy Resources, LLC, a Delaware
Limited Liability company with its principal office at 3205 FM 137 Paris, Texas 75460
("NEXTERA").
AGREEMENT
WHEREAS, the City of Paris is the owner of Certificate of Adjudication No. 02-4940,
as amended, authorizing, among other uses, the use of up to 20,000 acre-feet of water per annum
for industrial purposes in the Sulphur River Basin in Lamar County (the "CITY'S Water Right");
and
WHEREAS, on September 16, 1998, the City of Paris entered into a Raw Water Supply
Agreement (the "Original Agreement") with Panda Paris Power, L.P. ("Panda") for a supply of
up to eight (8) million gallons of raw water per day pursuant to the CITY' S Water Right; and
WHEREAS, Panda subsequently assigned or transferred its rights in the Original
Agreement to Lamar Power Partners and then to NEXTERA, the current owner/operator of a
natural gas fired power plant located at CR 21500 and FM 137, City of Paris, Lamar County,
Texas (the "NEXTERA Power Plant"); and
WHEREAS, NEXTERA has been approached by DAISY, a commercial dairy operation
located at FM 2036 and SH 19/24 South, Lamar County, Texas, about contracting with the CITY
for NEXTERA'S excess or unused daily raw water supply from the CITY; and
WHEREAS, the CITY is willing to sell a supply of raw water to DAISY which is over
and above the actual supply taken by NEXTERA on a daily basis but which does not exceed the
maximum daily contracted amount of eight (8) million gallons per day; and
WHEREAS, DAISY and NEXTERA will be responsible for designing and installing the
necessary water lines, pumps, meters, valves, power supply and other improvements ("New
Facilities") necessary to transport and meter a supply of raw water from the NEXTERA Power
Plant to DAISY's facility located at FM 2036 and Highway 19/24 South Lamar County, Texas
(the "DAISY Facility"), subject to review and permitting by the CITY;
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NOW THEREFORE, in consideration of the mutual promises, covenants, obligations
and benefits described in this Agreement and subject to the terms and provisions hereinafter set
forth, the CITY, DAISY and NEXTERA agree as follows:
ARTICLE I
CONDITIONS PRECEDENT
This Agreement is subject to the terms and conditions of the Original Agreement.
This Agreement is not an agreement for a new source of raw water supply, but an agreement
which will allow DAISY to purchase a portion of the unused or excess supply of raw water
contracted for between the CITY and NEXTERA under the Original Agreement for up to a
maximum of eight (S) million gallons per day ("8 MGD").
The CITY agrees that in order to provide the excess supply of raw water to DAISY pursuant to
this Agreement, additional authorization from the Texas Commission on Environmental Quality
("TCEQ") authorizing the use of water diverted pursuant to the CITY'S Water Right, for use by
DAISY for agricultural use purposes, is required. DAISY and the CITY agree to cooperate in
applying for such authorization from TCEQ. DAISY and the CITY agree that this Ageement is
subject to and contingent upon receipt of a permit or other approval from TCEQ authorizing use
of water provided pursuant to this Agreement by DAISY at its facilities for agricultural purposes.
In the event that such permit or approval is not granted by TCEQ, this Agreement shall
automatically terminate.
By executing this Agreement, NEXTERA hereby agrees to amend the Original Agreement to
allow the CITY to sell the excess or unused portion of the 8 MGD raw water supply to DAISY in
accordance with the terms and provisions of this Agreement.
The parties to this Agreement hereby acknowledge and agree that NEXTERA shall retain first
priority to the 8 MGD of raw water supply contracted for with the CITY under the Original
Agreement and that DAISY shall have an exclusive right only to purchase that excess or unused
supply of raw water not used by NEXTERA on a daily or monthly basis in accordance with the
terms provided herein. DAISY's right to purchase is on an "as needed basis," and DAISY is not
obligated to purchase excess or unused NEXTERA water.
ARTICLE II
QUANTITY AND QUALITY
The CITY agrees to sell to DAISY and DAISY agrees to purchase from the CITY that excess
supply of raw water not taken or used by NEXTERA under the Original Agreement up to a
maximum of 8 MGD. DAISY'S right to purchase raw water from the CITY is secondary to
NEXTERA' S priority right to purchase raw water under the Original Agreement. Under no
circumstances will the CITY be obligated to supply more than 8 MGD of Raw Water to
NEXTERA and DAISY. Subject to the Force Majeure provision contained herein in Article XII,
the CITY warrants that it has and will maintain at all times during the term of this Agreement
sufficient rights to and supply of raw water to supply its obligations hereunder.
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Water sold hereunder is non-potable, raw untreated water. The CITY expressly disclaims any
warranty as to the quality or suitability of the water for use by DAISY. DAISY agrees that any
variation in the quality or characteristics of water contemplated for sale hereunder shall not
entitle DAISY to avoid its obligation to make payments provided for herein. THE CITY
MAKES NO WARRANTIES CONCERNING THE QUALITY OF RAW WATER
DELIVERED HEREUNDER OR IT'S SUITABILITY FOR DAISY'S INTENDED USES.
ARTICLE III
DELIVERY
The CITY shall deliver raw water referenced in this Agreement from Lake Pat Mayse to the
CITY'S water treatment plant as further depicted in the aerial photo attached hereto as Exhibit
"A" (hereinafter "Delivery Point"). NEXTERA shall be responsible for pumping and
transporting the raw water from the Delivery Point to the NEXTERA Power Plant.
DAISY and NEXTERA shall be responsible for designing and installing the New Facilities to
transport and meter the excess or unused supply of raw water from the NEXTERA Power Plant
to the DAISY Facility. Design and installation of the New Facilities are subject to review,
approval and permitting by the CITY, provided that such approval shall not be unreasonably
withheld, delayed or conditioned. DAISY shall be responsible for funding the cost of the New
Facilities and shall own and operate the New Facilities once constructed. NEXTERA agrees to
grant to DAISY all reasonable and necessary construction, access, and maintenance easements
that are reasonably required for the New Facilities to be located under and on the surface of
NEXTERA's Power Plant on NEXTERA' property.
ARTICLE IV
MEASUREMENT
DAISY, at its expense, shall install and maintain an appropriate measuring device, such as a
magnetic flow meter or other measuring device capable of ineasurement within two percent (2%)
accuracy, subject to review and approval by CITY, which approval shall not be unreasonably
withheld, conditioned or delayed, at the point where the excess or unused raw water is diverted at
the NEXTERA Power Plant for DAISY's use ("Diversion Point") and is transported or pumped
to the DAISY Facility. All water which passes through the meter at the Diversion Point shall be
considered water purchased by DAISY from the CITY under the terms of this Agreement and
payment shall be made therefor by DAISY as provided below.
The CITY shall have access to the measuring device or flow meter at the Diversion Point at all
reasonable times to inspect operation and to verify water measurements. Both the CITY and
NEXTERA shall have the right to test the measuring device for accuracy at any time by first
giving the other parties to this Agreement reasonable advance notice of such test (no less than 24
hours' notice). If any meter being tested is found to have errors in excess of the permissible
accuracy limit of two percent (2%), such meter shall immediately be repaired, replaced, adjusted
or recalibrated, at DAISY'S sole cost and expense, as necessary to bring such meter into an
accuracy of at least two percent (2%).
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In the event any inspection of ineters reflects an error greater than two percent (2%), DAISY,
NEXTERA, and the CITY shall reasonably determine the point in time the error developed and
adjust applicable statements accordingly. If a point in time cannot be determined and a basis for
adjustment is not agreed upon between the CITY, NEXTERA, and DAISY within thirty (30)
days of the inspection, adjustments to applicable statements shall be made on the basis that the
error has applied to one-half (50%) of the time since the last determination of accuracy.
CITY shall read the meter at the end of every month during the term of this Agreement and shall
invoice DAISY for all water delivered. NEXTERA and DAISY agree to allow authorized
personnel from CITY access to the meter at the Diversion Point to collect monthly flow data.
NEXTERA and DAISY further agree to allow CITY to place an antenna or other communication
device at or near the meter to transmit metered flow information to City Water Utilities
Deparhnent.
ARTICLE V
RATE
DAISY shall pay the CITY the rate set out below for the raw water taken and purchased by
DAISY in accordance with the terms of this Agreement:
Year: Cost per 1000 Gallons:
First 10 years $.50
Second 10 years $.60
Third 10 years $.70
The commencement date of the first 10-year period shall be the date upon which DAISY and
NEXTERA complete the New Facilities required to deliver water to the DAISY Facility.
For the purpose of billing and accounting for water purchased hereunder, the month (hereinafter
"billing month") shall begin at 12:00 midnight on the last day of the calendar month and shall
extend to 12:00 midnight on the last day of the following calendar month. Reading for billing
purposes shall conform as closely as practicable to the period covered by the billing month.
On or before the tenth day of each calendar month, DAISY shall pay the CITY for water
purchased during the preceding billing month plus any surcharge related to debt funding of
contemplated raw water pumping upgrades as set out below.
ARTICLE VI
SURCHARGE
In addition to the volume rate referenced above, DAISY shall also pay a surcharge related to the
debt funding of the contemplated Lake Pat Mayse raw water pumping upgrades. The formula for
this surcharge is as follows:
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AxB=C
C x 8 MGD/D = E
E/(8 MGD x 365 days x 1000) = F
F= the surcharge rate per 1000 gallons
A= Annual debt service related to Lake Pat Mayse raw water pump upgrades
B= Debt Service Coverage required by related Bond Covenant
C= Adjusted Annual Debt Service
D= Total Upgraded Pumping Capacity of Lake Pat Mayse Raw Water Pumps stated in MGD'S
E= Pro Rata share of Adjusted Annual Debt Service Stated in cost per 1000 Gallons
8 MGD represents the contractual commitment to NEXTERA.
The foregoing surcharge shall only be assessed on measured volumes taken by DAISY.
DAISY Monthly Surcharge = DAISY monthly metered volume x F(the surcharge rate per 1000
gallons)
ARTICLE VII
TERM
The term of this Agreement shall commence with the Effective Date and shall continue in effect
for a term of thirty (30) years, unless this Agreement is terminated earlier as provided herein.
ARTICLE VIII
NOTICES
Unless otherwise provided in this Agreement, any notice, communication, request, reply, advice,
approval or consent herein provided or permitted to be given, made, or accepted by any party to
the other, must be in writing and may be given or be served by depositing the same in the United
States Mail postage paid and registered or certified and addressed to the party to be notified with
return receipt requested, or by hand delivering the same to the party as identified in this
Article. Any such notice deposited in the mail in the manner hereinabove described shall be
deemed to be delivered, unless otherwise stated in this Agreement, from and after the earlier of
actual receipt of notice or the expiration of four (4) days after it is so deposited. Any such notice
given in any other manner shall be effective only if and when received by the party to be
notified.
Notice to Paris:
City Manager
City of Paris
P.O. Box 9037
Paris, Texas 75461-9037
With a Copv:
City Attorney
P.O. Box 9037
Paris, Texas 75461-9037
G1
Notice to Daisv Farms:
David Sokolsky, Manager
Daisy Farms, LLC
12750 Merit Drive
Dallas, Texas 75251
Notice to NextEra Energy Resources:
Nextera Energy Resources
3205 FM 137
Paris, Texas 75460
The parties 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 five
(5) days written notice to the other parties.
ARTICLE IX
ASSIGNMENT
Except as expressly permitted in this Agreement, no party shall assign this Agreement or any
portion hereof, or any of the rights or obligations hereunder, whether by operation of law or
otherwise, without the prior written consent of all other parties, which consent shall not be
unreasonably withheld, delayed or conditioned. This Agreement shall inure to the benefit of, and
be biding upon, the successors and permitted assigns of the parties.
ARTICLE X
DEFAULT/TERMINATION
Failure of any party hereto to perform any of the covenants or obligations of this Agreement
shall constitute a default, except where such failure shall be excused under any of the provisions
of this Agreement. In the event of a default by a party of this Agreement, the party not in default
may at its option terminate this Agreement pursuant to the terms of this Article. The party not in
default shall cause a written notice to be served on the party in default stating specifically the
cause of terminating this Agreement and declaring it to be the intention of the party giving the
notice to terminate the same. Upon receipt of said notice, the party in default shall have thirty
(30) days after the service of the aforesaid notice in which to remedy and remove the cause of
causes of default stated in the notice of termination. If within said period of thirty (30) days the
party in default does so remedy and remove said cause or causes, then such notice shall be
nullified and this Agreement shall continue in full force and effect. In the event the party in
default does not so remedy and remove the cause or causes of default within said period of thirty
(30) days, then this Agreement shall become null and void from and after the expiration of said
period.
C�
ARTICLE XI
STATE OR FEDERAL LAWS, RULES, ORDER OR REGULATIONS
This Agreement and all operations hereunder are subject to all applicable federal and state laws
and all applicable ardinances, orders, rules and regulations of any local, state or federal
governmental authority having or asserting jurisdiction.
ARTICLE XII
FORCE MAJEURE
The parties' performance of this Agreement may be suspended and the obligations of
a party excused in the event and during the period that such performance is prevented or
delayed by a Force Majeure occurrence. "Force Majeure" shall mean:
a. An act of God, including hurricanes, tornadoes, landslides, lightning, earthquakes,
extreme weather conditions, fire, flood, explosion, sabotage or similar occurrence, acts of a
public enemy, extortion, war, blockade or insurrection, riot, civil disturbance, strike or other
labor disturbances, governmental actions or regulations, governmental requests or
requisitions for national defense, or any other cause beyond the reasonable control of any
party hereto;
b. The order or judgment of any federal, state, or local court, administrative agency or
governmental body (excluding decisions of federal courts interpreting federal tax laws, and
decisions of state courts interpreting state tax laws) if it is not also the result of the willful
misconduct or negligent action or inaction of the party relying thereon; provided that neither
the contesting in good faith of any such order or judgment nor the failure to so contest shall
constitute or be construed as a measure of willful misconduct or negligent action or inaction
of such party; or
c. The suspension, termination, interruption, denial, or non-renewal of any permit or
approval essential to the operation of any party if it is not the result of willful misconduct or
negligent action or inaction of the party relying thereon.
By reason of Force Majeure, if any party shall be rendered partially or wholly unable
to carry out its obligations under this Agreement, other than an obligation to make payment,
then such party shall give notice in writing of such Force Majeure to the other parties within
a reasonable time after occurrence of the event or cause relied on, so far as it is affected by
such Force Majeure. Such party shall endeavor to remove or overcome such inability with all
commercially reasonable dispatch; and until such inability has been removed, no party shall
be deemed to be in default. Upon the cessation of Force Majeure, the party affected thereby shall
notify the other parties of such fact, and use its commercially reasonable efforts to resume normal
performance of its obligations under this Agreement as soon as possible.
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ARTICLE XIII
GOVERNING LAW/VENUE
This Agreement shall be governed by the applicable laws of the State of Texas and due
performance by each party or any action arising under this Agreement shall lie in Lamar County,
Texas. Jurisdiction and venue for legal actions arising hereunder shall lie exclusively in Lamar
County, Texas, for matters arising under state law and exclusively in the Eastern District of
Texas, Paris Division, for matters arising under federal law.
ARTICLE XIV
WAIVER
No waiver of any party's rights under this Agreement shall be deemed to have been made unless
expressed in writing and signed by an authorized representative of that party.
[Remainder of page left intentionally blank.]
:
IN WITNESS WHEREOF, the parties acting under authority of their respective governing
bodies have caused this Agreement to be executed in several counterparts, each of which is
deemed to be an original, as of the date first written below. This Agreement shall become
effective upon execution by all parties with the effective date being the date that the CITY
executes this Agreement (the "Effective Date").
CITY OF PARIS, TEXAS
:
John Godwin, City Manager Date
ATTEST
By:
Janice Ellis, City Clerk
APPROVED AS TO FORM
:
W. Kent McIlyar, City Attorney
DAISY FARMS, LLC
:
David Sokolsky, Manager Date
NEXTERA ENERGY RESOURCES, LLC
:
Name:
Title:
G�
Date