WATER PROVISION AGREEMENT

Transcription

1 WATER PROVISION AGREEMENT This Water Provision Agreement (this Agreement ) is entered into by and among the San Antonio Water System, a wholly owned municipal utility of the City of San Antonio (the System ), Lumbermen s Investment Corporation (the Developer ), and the Cibolo Canyon Conservation and Improvement District No. 1 (the District ), subject to the execution and ratification of this Agreement by the District s board, the confirmation election for the District, and the expiration of the election contest period for such election, together the Parties. WHEREAS, the 77 th Legislature enacted Senate Bill 1629 to authorize the creation of the District; and WHEREAS, the Developer owns the land located within the boundaries of the District and within the System s certificated service area and desires to develop a high quality, master-planned community; and WHEREAS, the Developer, the District and the City of San Antonio ( City ) entered into a development agreement (the Development Agreement ) concerning the development and annexation of the property within the District; the amount, timing and purpose of the District s debt; and the operation of the District; and WHEREAS, such Development Agreement was also entered into subject to the confirmation election for the District, the expiration of the election contest period for such election, and the subsequent execution of the Development Agreement by the District; and WHEREAS, Article 5 of such Development Agreement references the execution of a Water Contract with the System, which, in part, refers to the execution of this Water Provision Agreement. NOW THEREFORE, for and in consideration of the mutual agreements, covenants and conditions contained herein, and other good and valuable consideration, the parties hereto agree as follows: Article I. Purpose The purpose of this Agreement is to set forth the terms and conditions pursuant to which the System shall provide up to nine-hundred (900) acre feet of water per year for golf course and golf learning center irrigation purposes within the boundaries of the District. This Agreement is in addition to that certain Water Service Agreement letter granted to Developer in conjunction with the District pursuant to the San Antonio Water System Board Resolution No which relates to the proposed residential and commercial development within the District. The water to be provided pursuant to this Agreement shall be used solely within the boundaries of the District and shall be used for 1

2 irrigation of the golf course(s) and/or golf learning center only, and uses reasonably related thereto. Article II. Obligations of Developer 2.01 Service Request. During the term of this Agreement, the Developer shall provide a written request to the System for irrigation water under this Agreement at least one hundred eighty (180) days prior to the requested date of service (the Service Request ). The Service Request shall set forth the amount of irrigation water (described in acre feet per year) desired for a specific golf course or courses and/or learning center to be developed on lands designated for golf purposes pursuant to that certain Development Plan attached as Exhibit B to the Development Agreement, as amended (the Development Plan ). Each Service Request shall specify the golf course and/or golf learning center for which the requested irrigation water shall be used Limitations. During the term of this Agreement, the Developer shall be entitled to submit a Service Request to the System on not more than three (3) separate occasions as development of the golf courses and golf course learning center progresses. In no event shall the total amount of irrigation water requested from all the Service Requests be in excess of nine hundred (900) acre feet per year. The Developer and the District hereby agree not to irrigate in any one (1) year from water provided pursuant to this Agreement, more than the total volume indicated in the Service Request(s) submitted to the System as provided herein; provided, however, only those Service Requests for which the Edwards Aquifer Authority (the EAA ) permitted water rights (or other water rights pursuant to Section 2.03(e)) have been conveyed to the System in accordance with this Agreement shall be used to calculate the volume of irrigation water available to the Developer and the District hereunder Edwards Permits. (a) As a condition precedent to irrigation water service in the amount requested by the Developer in each Service Request, the Developer shall convey ownership of transferable EAA permitted water rights (the EAA permitted water rights ) to the System in an amount equal to twice the amount of irrigation water requested by the Developer in such Service Request. Conveyance of the EAA permitted water rights shall be made no later than thirty (30) days following the date of submission of the Service Request and shall be made by instrument(s) in a form approved by the System, which approval shall not be unreasonably withheld. The conveyed EAA permitted water rights shall be final permits to withdraw groundwater from the Edwards Aquifer, which are uncontested. Developer must execute all documents required by the EAA to effectuate the transfer of such EAA permitted water rights and shall be responsible for all costs associated with the conveyance of such rights including but not limited to recordation and filing fees. Except as expressly provided in 2

3 Section 2.03(b) hereof, the System shall not provide irrigation water service to the golf courses or golf learning center prior to the System s receipt of such EAA permitted water rights. (b) (c) Pursuant to the conditions set forth in this Section 2.03(b) and Section 2.03(c), the Developer may temporarily provide to the System valid leased water rights to pump water from the Edwards Aquifer (the leased water rights ) in a quantity equal to the amount of EAA permitted water rights required to be conveyed to the System under Section 2.03(a) above, for a period which shall terminate upon the earliest to occur of the following (the Termination Event ): (i) the Service Request for irrigation water to the third golf course is delivered to the System; (ii) the date which is the eighth (8 th ) anniversary of the Hotel Completion Date (as such term is defined in the Development Agreement); (iii) the annexation of property within the District by the City; or (iv) termination of the Development Agreement according to its terms. The conveyance of EAA permitted water rights shall occur on or before the occurrence of the Termination Event. The leased water rights that may be transferred to the System for a temporary period hereunder shall be final permitted and uncontested water rights, approved by EAA, and authorized for use by the System for municipal purposes. The point of withdrawal shall be the System s existing well production facilities. The System shall approve any and all leases for the leased water rights to be transferred hereunder prior to execution thereof by Developer to ensure compliance with the purposes and intent of this Agreement. Similarly, the form of instrument transferring the leased water rights to the System shall be subject to the System s review and approval, which will not be unreasonably withheld or delayed. The Developer shall execute all documents required by the EAA to effectuate the transfer of the leased water rights to the System, and shall be responsible for all costs associated with the acquisition of the leased water rights, transfer thereof to the System, and receipt of all EAA approvals required in connection therewith. The authorization for the Developer to provide leased water rights to the System for a temporary period of time pursuant to Section 2.03(b) is intended to temporarily postpone certain financial obligations of the District and the Developer because of the infrastructure expenses in the early term of the development of the land within the boundaries of the District, and shall in no manner be construed to relieve the Developer of its obligation to timely convey the EAA permitted water rights to the System in accordance with the terms of this Agreement. The Developer agrees that its obligation to convey the EAA permitted rights to the System is of the utmost importance to the System and, without such requirement, the System would not have entered into this Agreement. Therefore, the Developer and the District hereby agree and acknowledge that in the event that EAA permitted water rights are not transferred to the System prior to the Termination Event, the System shall be authorized to 3

4 exercise any one or more of the following rights: (i) the System shall be entitled to specific performance to require the conveyance of EAA permitted water rights to the System; and (ii) the System may exercise any other remedy that it may have available in law or equity. (d) (e) (f) The Developer and the District acknowledge and agree that the failure to timely transfer the EAA permitted water rights or leased water rights to the System in accordance with the terms of this Agreement shall constitute an event of default under this Agreement, the Development Agreement and the Golf Course Management Plan (as defined in Development Agreement). Upon the occurrence of such event of default, the City and/or the System shall be entitled to exercise any or more of the following rights or remedies: (i) any remedy available at law or in equity; and (ii) any remedy or right of enforcement set forth under this Agreement, the Development Agreement or the Golf Course Management Plan. Notwithstanding anything to the contrary contained in this Agreement, the System and the Developer may agree, in their independent discretion, pursuant to a written agreement, that the Developer may convey ownership of permanent water rights to the System from an alternative source approved by the System, other than the Edwards Aquifer, in a quantity equal to that required herein in order to fulfill the obligation to convey the EAA permitted water rights in accordance with Section 2.03(a). This Section 2.03 shall survive the termination or expiration of this Agreement Impact Fees. The Developer hereby agrees to pay to the System the amount of impact fees determined by meter size as a representation of Equivalent Dwelling Units ( EDU s ). The term impact fee includes the flow impact fee, the system development impact fee, water supply impact fees, as well as any other impact fees assessable at the time of meter set, each as amended from time to time. The impact fees will be paid at meter set. The Developer and the District each further agree that it will not seek a credit against impact fees for the EAA permitted water rights (or other water rights) to be conveyed by Developer pursuant to Section 2.03 herein, such agreement to survive the termination of this Agreement Infrastructure. The Developer and the District recognize that the water delivery infrastructure for the golf course and golf learning center irrigation has been sized to accommodate nine hundred (900) EDUs. Therefore, the Developer and the District acknowledge and agree that the demand on the infrastructure system located within the boundaries of the District shall not exceed nine hundred (900) EDUs or otherwise adversely affect service to the System s other customers. 4

5 2.06 Conservation Requirements. The Developer agrees to comply with the water conservation measures set forth in the Development Agreement, the Golf Course Management Plan and this Agreement, including the following: (i) (ii) (iii) (iv) (v) Irrigation of the golf courses shall be limited to no more than an average of ninety (90) acres of land per golf course; Best management practices shall be utilized for all golf course irrigation; An on-site weather station and computer-controlled irrigation systems which automatically control irrigation based on actual weather conditions shall be used for all irrigation; The Developer shall ensure that the golf courses and golf learning center will only use the amount of irrigation water actually needed, a management practice known as weather dependent irrigation. (Water needs will be determined by scientific-based calculations which include soil moisture, plant intake, evaporation, temperature and other weather conditions which is commonly known as evapotranspiration); and The Developer shall convey EAA permitted water rights (or other water rights pursuant to Section 2.03(e)) to the System in a quantity not less than twice the quantity of irrigation water sought for the golf courses and golf learning center, as set forth in the Service Requests in accordance with Article II of this Agreement. The Developer shall comply with the water conservation practices required in the Development Agreement, the Golf Course Management Plan and this Agreement on a year-round basis. In consideration of the permanent water conservation practices, the System agrees not to limit the quantity of irrigation water made available to the golf course and golf learning center to an amount which is less than one-half (1/2) of the quantity of water permitted to be pumped from the Edwards Aquifer pursuant to the EAA permitted water rights (or, for the period up to the Termination Event, the leased water rights) conveyed by the Developer to the System under Article II of this Agreement; provided, however, that such lands will be subject at all times to any water use restriction measures imposed by the City and/or the System pursuant to Section of the City Code of San Antonio, Texas as it may be amended or superceded ( City Code Section ). Article III. Obligations of the System The System understands and agrees to provide the Developer and the District, subject to the terms and conditions provided herein, an irrigation water supply in a quantity not to exceed nine hundred (900) acre feet per year for the purposes stated in this Agreement. The System shall, subject to the terms and conditions set forth herein, provide the Developer and the District with the amount of water specified in each Service 5

6 Request pursuant to Section 2.01 hereof within one hundred eighty (180) days of receipt of such Service Request, subject to the prior conveyance to the System of the EAA permitted water rights (or leased water rights or other water rights pursuant to Section 2.03(e)) as provided herein, the payment of all applicable impact fees and other charges, and compliance with all terms and conditions of the System s rules and policies as amended from time to time. Article IV. Water Service The water, if any, provided pursuant to this Agreement shall be made available in accordance with the terms and conditions of this Agreement, the Development Agreement and all applicable regulations adopted by the System concerning the provision of water service, as amended from time to time. Without limiting the generality of the foregoing sentence, during the period the territory comprising the District is located outside the corporate boundaries of the City, the water service provided hereunder, if any, shall be made available in substantially the same manner and at the same rates as water service provided to the System s other customers located outside the City s corporate boundaries. Article V. Effective Period 5.01 Conditional Effectiveness. This Agreement shall become effective simultaneously with the effectiveness of the Development Agreement. In the event that the Development Agreement does not become effective according to its terms, then this Agreement shall also not become effective, and shall be null and void for all purposes. In no event shall this Agreement become effective prior to the last date of execution by any Party hereto Expiration of Term. This Agreement shall terminate upon termination of the Development Agreement Effect of Expiration or Termination. Upon the expiration or termination of this Agreement, provided the Developer and District have remained in good standing through the term of this Agreement, the Parties, their successors and/or assigns shall enter into a new agreement for the continued provision of irrigation water service to the golf courses and golf learning center (as they are described herein). The System acknowledges and agrees that the quantity of irrigation water to be made available pursuant to the new agreement, upon termination of this Agreement, shall not be less than one-half (1/2) of the volume of water permitted to be pumped from the Edwards Aquifer pursuant to the EAA permitted water rights conveyed to the System pursuant to Section 2.03(a) during the term of this Agreement (or other water rights conveyed pursuant to Section 2.03(e)); provided, however, in no event shall such volume exceed nine-hundred (900) acre-feet per year, and, provided further, that such water service will be subject to restrictions for severe drought periods and public health and safety concerns pursuant to City Code Section Notwithstanding the foregoing, the minimum level of irrigation water service of the System to be made available following the term of 6

7 this Agreement shall be adjusted downward to reflect the relative curtailment of the conveyed EAA permitted water rights by the EAA (or its successor), or any relative curtailment of other water rights conveyed pursuant to Section 2.03(e), which occur in the time period from the date of conveyance of such water rights to the System through the date of termination of this Agreement. The adjustment to be made pursuant to the previous sentence shall reflect the limitations, if any, imposed on the conveyed water rights such that the System shall not be obligated to provide a volume of irrigation water for the golf courses and golf learning center in an amount greater than one-half (1/2) of the volume of water permitted to be pumped from the Edwards Aquifer pursuant to the particular conveyed EAA permitted water rights, or other water rights conveyed pursuant to Section 2.03(e), at the time of such negotiation. In this manner, the risks associated with the value of the conveyed EAA permitted water rights (or other water rights conveyed pursuant to Section 2.03(e)) shall be shared equally among the Developer and the System over the term of this Agreement. Nothing in this Section 5.03 shall be deemed to limit the volume of water able to be requested by Developer following the termination of this Agreement and any such additional volume of water (above the one-half (1/2) of the adjusted volume of rights as described herein) requested at such time shall be made available to the Developer upon substantially the same terms and conditions as other System customers. The Parties, their Successors and/or assigns further agree to negotiate in good faith any additional terms regarding the provision of irrigation water services to the golf courses and golf learning center not otherwise addressed in this Section Article VI. Miscellaneous Provisions 6.01 Assignment. No assignment of this Agreement, in whole or in part for any purpose shall be made by either the Developer or the District (or their permitted assignee as indicated herein) without the prior written consent of the System. The prior sentence notwithstanding, the District and the Developer may assign their rights and obligations hereunder to the Professional Golfers Association. Subject to the limitations contained herein, this Agreement shall bind and inure to the benefit of the successors and assigns of the Parties Notices. All written notices required by the terms of this Agreement shall be in writing and deposited in the United States mail addressed to such Party at the address set forth below: If to the Developer: Lumbermen s Investment Corporation 5495 Beltline Road, Suite 225 Dallas, Texas Attention: President If to the System: 7

8 San Antonio Water System Eugene E. Habiger, General, USAF (Ret.) President/Chief Executive Officer P.O. Box 2449 San Antonio, Texas If to the District: Cibolo Conservation and Improvement District No. 1 c/o Akin, Gump, Strauss, Hauer & Feld, L.L.P. 300 Convent, Suite 1500 San Antonio, Texas Attention: Paul Martin Each Party s address may be changed by such Party by notice in writing to the other Parties hereto Interpretation of Agreement. This Agreement or any portion hereof shall not be interpreted by a court of law to the detriment of a Party based solely upon that Party s authorship of the Agreement or any portion hereof. The use of the word including shall not be interpreted to mean a limitation of the terms following such word Severability. If for any reason, any one or more paragraphs of this Agreement are held legally invalid, such judgment shall not prejudice, affect, impair or invalidate the remaining paragraphs of the Agreement as a whole Entire Agreement. This Agreement constitutes the entire agreement between the Parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the Parties with respect to the subject matter hereof Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to one and the same instrument Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. The waiver by any party hereto of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. 8

9 6.09 Authority to Agreement. The signatory below for the Developer has the authority to execute this Agreement on behalf of the Developer. The System has the authority to enter into this Agreement pursuant to a duly adopted resolution of its Board of Trustees and its President/Chief Executive Officer has the authority to execute this Agreement. The signatory below for the District has the authority to execute the Agreement on behalf of the District. ACCEPTED AND AGREED to in all things by the Parties. LUMBERMEN S INVESTMENT CORPORATION By: Date: Name: Title: SAN ANTONIO WATER SYSTEM By: Date: Name: Eugene E. Habiger, General USAF (Ret.) Title: President/Chief Executive Officer CIBOLO CANYON CONSERVATION AND IMPROVEMENT DISTRICT NO. 1 By: Date: Name: Title: 9

10 STATE OF TEXAS COUNTY OF BEXAR ACKNOWLEDGMENTS This instrument was acknowledged before me on, 2002, by, in his position as of LUMBERMEN S DEVELOPMENT CORPORATION, a Delaware corporation, on behalf of said corporation. Notary Public, State of Texas STATE OF TEXAS COUNTY OF BEXAR This instrument was acknowledged before me on, 2002, by Eugene E. Habiger, General USAF (Ret.), in his position as President/Chief Executive Officer of the SAN ANTONIO WATER SYSTEM, a Texas municipal water utility, on behalf of said utility. Notary Public, State of Texas STATE OF TEXAS COUNTY OF BEXAR This instrument was acknowledged before me on, 2002, by in his position as of CIBOLO CANYON CONSERVATION AND IMPROVEMENT DISTRICT NO. 1, a conservation and reclamation district created by Senate Bill 1629, Acts of the 77 th Legislature of the State of Texas, Regular Session 2001, on behalf of said conservation district. Notary Public, State of Texas AUSTIN_1\189391\ /14/