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Sample Water Purchase
Agreement
WATER PURCHASE
AGREEMENT
THIS CONTRACT, for the purchase of
water is entered into as of the __________ day of _______________, by and
between the City of _____________, Minnesota, whose address is
__________________________________, hereinafter referred to as “Seller”,
and _______________________, a public body under the laws of Minnesota, with its
principal place of business in the City of _______________, _______________
County, Minnesota, whose address is ______________________, hereinafter referred
to as “Purchaser”.
WITNESSETH:
WHEREAS, Seller is a municipal corporation under the laws
of Minnesota and is established in part for the purpose of operating water
supply systems serving water users within and about the incorporated city limits
of the City of ______________; and
WHEREAS, Purchaser currently owns and operates a water
supply transmission and distribution system in areas of _________ Minnesota
abutting the City of ______________; and
WHEREAS, Purchaser anticipates the extension of its water
supply transmission and distribution system for the servicing of additional
users necessitating access to large water sources; and
WHEREAS, Purchaser, in order to service said additional
water users, will require a supply of treated water as herein defined in
paragraph A. hereof, and
WHEREAS, by Resolution No. __________ of the City Council
of Seller enacted on the __________ day of _______________, the sale of water to
Purchaser, in accordance with the provisions of said Resolution, was approved in
the execution of this contract by the Mayor of Seller and attested to by the
City Administrator, was duly authorized; and
WHEREAS, by Resolution ___________ enacted on the
___________ day of ________________, by Purchaser, the purchase of water from
Seller in accordance with the terms hereinafter set forth, was approved and
execution of this contract carrying out said Resolution by its chairman and
attested to by its secretary, was duly authorized.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants hereinafter set forth,
A. WATER SALES:
1. Quality and Quantity. Seller hereby agrees to
provide to Purchaser during the term of this contract or any renewal or
extension thereof, potable treated water meeting applicable purity standards for
the State of Minnesota and the United States of America, necessary for rural
water users petitioning for service in the current extension of
_____________________ and more specifically to the volumes of water set forth on
Exhibit “A” which is attached hereto.
2. Rate. Seller hereby agrees to provide to
Purchaser at the rate of One Dollar and 20/100 ($1.20) per one thousand (1,000)
gallons of water as measured through the water meter to be installed by Seller.
It is mutually agreed that said rate shall be guaranteed for a period of one (1)
year from the date Seller begins supplying water to Purchaser for the use of
Purchaser’s water users.
3. Rate Adjustments. It is further agreed that
water rates may be adjusted after the guaranteed period specified in paragraph 2
above, with the condition that any rate increase shall be made in conjunction
with general rate increases made by Seller to its other water users. Rate
increases to Purchaser shall reflect the increased costs of City’s water
production, including increased cost of power, water treatment chemicals, and
other direct costs related to the production of water for Purchaser over the
present costs thereof Rate increases to Purchaser shall further reflect overall
increases in direct and administrative costs of water production (costs
including but not limited to labor, supplies, repair, fuel, power,
transportation, employee benefits, contractual services, well repairs,
replacement and treatment plant upkeep, and general allocable administrative
expenses).
4. It is mutually
agreed by and between the parties that in the event of a water shortage
requiring restriction of the volume of water usage by the various persons or
entities served by both Seller’s and Purchaser’s systems, that Seller and
Purchaser shall he required to reduce their water usage proportionally with the
proportion of reduction resting with Seller with the understanding that Seller
will reduce Purchaser and its other commercial users at the same rate of
restriction.
B. SELLER’S CAPITAL
IMPROVEMENTS TO EXISTING
WATER SYSTEM
It is understood between the
parties that Seller, City of _________________, anticipates proceeding with
certain capital improvements necessary to supply the water volume being
requested in this Agreement. The parties understand that in order for Seller to
fulfill its obligations and responsibilities under their contract, it will be
necessary for them to dedicate financial improvements to their water system:
1. 500 gpm filter and plant modifications,
2. 400 gpm well, meter and transmission, and
3. distribution improvements.
Therefore, the parties understand that this contract is
contingent upon completion of said capital improvements necessary to fulfill the
water requested in this Purchase Agreement.
C. PURCHASER PARTICIPATE IN SELLER’S CAPITAL
IMPROVEMENTS:
The parties understand that by this Agreement, Purchaser
agrees to participate in Seller’s capital improvements set forth in paragraph B
above, and that Purchaser will be required to pay on or before ___________, a
one-time connection fee of $514,000.00 based upon current engineer’s projected
costs as follows:
1. 500 gpm filer and plant
modifications
@ 40% of $750,000.00
$300,000.00
2. 400 gpm well, meter and transmission
@ 50% of $400,000.00
$200,000.00
3. distribution improvements
@ 20% of $120,000.00
$ 24,000.00
Less meter pit costs
-$ 10000.00
TOTAL PROPOSED CONNECTION FEE
$514,000.00
The parties also understand that the above-referenced meter
pit will be located upon Purchaser’s service line approximately one (1) mile
west of Seller’s corporate limits and either in the southwest corner of
___________________, or the northwest corner of ___________________. Although
Purchaser shall retain the ownership of the easement upon which the meter pit is
located, Seller shall have an access easement across said meter pit during the
original term of this Agreement and any extension thereto. Notwithstanding the
existence of the above-referenced meter pit, Seller shall supply Purchaser the
contracted water at a hook-up located on the ______________________, with
the understanding that Seller shall continue to own the valve at that junction.
The parties further understand that in order for Purchaser
to generate the desired request for water, Purchaser will have to expand it
current system to an expansion area and existing water source improvements will
be necessary requiring both successful funding and successful legal proceedings.
Therefore, the parties understand that this Agreement is contingent upon
successful funding of the expansion project and the successful legal completion
of the expansion project.
D. TERM:
1. Original Term. The original term of this
Agreement shall commence with the execution and end with the final bond payment
made to the USDA, Rural Development, or any refinancing thereof, for bonds
issued relative to the anticipated loan of Purchaser, _____________________,
shall be made for the purpose of the extension of the distribution system for
the new rural users. It is understood that this term shall be for a period of
thirty (30) years.
2. Extension. It is further understood and
agreed that the intention of the parties is to have this Agreement perpetual,
except that after the original term, it is agreed that either party may
terminate the Agreement by giving to the other party twenty-four (24)
months written notice of its intention to terminate.
F. WATER USAGE:
1. Anticipated Usage. The volumes of water
Seller will provide during the term of this Agreement will be restricted to
those volumes shown on Exhibit “A” attached hereto and incorporated by
reference.
2. Request for Increased Usage. In the
event Purchaser needs water in excess of that anticipated as maximum levels in
Exhibit “A”, Seller shall have the option of either providing the excess water
at the rate in effect at the time, or surcharging ten percent (10%) for the
excess amounts of water at a rate in excess of the prevailing rate, or refusing
to provide additional water requested by Purchaser. It is agreed that the
maximum levels shall be computed by utilizing the amounts of water used by
Purchaser for any preceding three (3) month period for the purpose of this
Agreement. It is understood and agreed that the maximum annual consumption level
by Purchaser shall be 65 million gallons of water, and in the event that
consumption is in excess of that amount, the Seller shall have the right to
increase the rate in effect hereunder so that Seller shall recoup its production
costs of water produced and consumed by Purchaser in excess of that maximum
level. Production costs shall be the cost of production determined and agreed
upon mutually by the parties’ respective accountants, productions costs to be
computed by utilizing Seller’s cost of power, water treatment chemicals and
other direct costs of production along with increased costs of labor, supplies,
repair, power, fuel, transportation, employee benefits, contractual services and
general allocable administrative expenses.
3. Access to Metering. It is further agreed that
Purchaser shall provide to Seller the necessary access upon reasonable request
to the meter facility measuring the amounts of water provided by Seller to
Purchaser.
F. The parties understand that, during the term of
this contract, the service provided or made available through Purchaser shall
not be curtailed or limited by inclusion of the areas served by Purchaser within
the corporate limits of Seller, or by the granting of any private franchise for
similar services within that area; nor shall Seller, upon the happening of any
event, be the basis for requiring Purchaser to secure any franchise, license, or
permit as a condition of continuing to serve the area served by Purchaser at the
time of the occurrence of any such event. For the purpose of this paragraph, the
phrase “area served” shall be defined as those hook-ups/users currently being
served by Purchaser and those hook-ups/users contracted to be served by
Purchaser at the time Seller provides Purchaser with Seller’s accepted Petition
of Annexation or Joint Resolution of Annexation of the area to be annexed.
G. This Agreement shall he binding upon the parties,
their successors, heirs and assigns.
IN WITNESS WHEREOF, the undersigned have set their hands
the above date written.
SELLER:
City of ________________
By ___________________
Its Mayor
Attested:
______________________
Its City Administrator
PURCHASER:
______________________
By ___________________
Its Chairman
By __________________
Its Secretary
EXHIBIT “A”
_________________________ VOLUME OF WATER PURCHASED
The following volumes of water are anticipated to be
purchased under a Water Purchase Agreement to which this is attached.
| Maximum Yearly Volume |
65,000,000 gallons |
| Initial Average Daily Usage |
75,000 gallons |
| Initial Peak Daily Usage |
105,000 gallons |
| Maximum Peak Flow Rate |
200 gallons/minute |
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