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EXHIBIT 10.20
CAWCD Revised 5/84
Contract No. 5-07-30-W0067
UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION
SUBCONTRACT AMONG THE UNITED STATES,
THE CENTRAL ARIZONA WATER CONSERVATION DISTRICT,
AND THE CHAPARRAL CITY WATER COMPANY
PROVIDING FOR WATER SERVICE
CENTRAL ARIZONA PROJECT
Table of Contents
Article Title Page
- ------- ----- ----
1. PREAMBLE..................................... 1
2. EXPLANATORY RECITALS......................... 2
3. DEFINITIONS.................................. 3
4. DELIVERY OF WATER............................ 3
.1 Obligations of the United States............ 3
.2 Term of Subcontract......................... 4
.3 Conditions Relating to Delivery and Use..... 4
.4 Procedure for Ordering Water................ 7
.5 Points of Delivery--Measurement and
Responsibility for Distribution of Water.... 10
.6 Temporary Reductions........................ 11
.7 Priority in Case of Shortage................ 12
.8 Secretarial Control of Return Flow.......... 13
.9 Water and Air Pollution Control............. 15
.10 Quality of Water............................ 15
.11 Exchange Water.............................. 15
.12 Entitlement to Project M&I Water............ 16
.13 Delivery of Project Water Prior
to Completion of Project Works.............. 17
5. PAYMENTS..................................... 16
.1 Water Service Charges for Payment
of Operation, Maintenance, and Replacement
Costs....................................... 17
2
.2 M&I Water Service Charges...................... 19
.3 Loss of Entitlement............................ 22
.4 Refusal to Accept Delivery..................... 22
.5 Charge for Late Payments....................... 22
6. GENERAL PROVISIONS............................... 23
.1 Repayment Contract Controlling................. 23
.2 Effluent Exchanges............................. 23
.3 Notices........................................ 24
.4 Water Conservation Program..................... 24
.5 Rules, Regulations, and Determinations......... 25
.6 Officials Not to Benefit....................... 25
.7 Assignment Limited -- Successors and Assigns
Obligated...................................... 26
.8 Judicial Remedies Not Foreclosed............... 26
.9 Books, Records, and Reports.................... 26
.10 Equal Opportunity.............................. 26
.11 Title VI, Civil Rights Act of 1964............. 28
.12 Confirmation of Subcontract.................... 28
.13 Contingent on Appropriation or
Allotment of Funds............................. 29
.14 Addendum A..................................... 29
Signatory Page................................. 29
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CAWCD Revised 5/84
Contract No. 5-07-30-W0067
UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION
SUBCONTRACT AMONG THE UNITED STATES,
THE CENTRAL ARIZONA WATER CONSERVATION DISTRICT,
AND THE CHAPARRAL CITY WATER COMPANY
PROVIDING FOR WATER SERVICE
CENTRAL ARIZONA PROJECT
1. PREAMBLE:
THIS SUBCONTRACT, made this 6th day of December, 1984, in pursuance
generally of the Act of June 17, 1902 (32 Stat. 388), and acts amendatory
thereof or supplementary thereto, including but not limited to the Boulder
Canyon Project Act of December 21, 1928 (45 Stat. 1057), as amended, the
Reclamation Project Act of August 4, 1939 (53 Stat. 1187), as amended, the
Reclamation Reform Act of October 12, 1982 (96 Stat. 1263), and particularly
the Colorado River Basin Project Act of September 30, 1968 (82 Stat. 885), as
amended, all collectively hereinafter referred to as the "Federal Reclamation
Laws," among the UNITED STATES OF AMERICA, hereinafter referred to as the
"United States" acting through the Secretary of the Interior, the CENTRAL
ARIZONA WATER CONSERVATION DISTRICT, hereinafter referred to as the
"Contractor," a water conservation district organized under the laws of
Arizona, with its principal place of business in Phoenix, Arizona, and the
CHAPARRAL CITY WATER COMPANY, hereinafter
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referred to as the "Subcontractor," with its principal place of business in
Fountain Hills, Arizona;
WITNESSETH, THAT:
2. EXPLANATORY RECITALS:
WHEREAS, the Colorado River Basin Project Act provides, among other
things, that for the purposes of furnishing irrigation and municipal and
industrial water supplies to water deficient areas of Arizona and western New
Mexico through direct diversion or exchange of water, control of floods,
conservation and development of fish and wildlife resources, enhancement of
recreation opportunities, and for other purposes, the Secretary of the Interior
shall construct, operate, and maintain the Central Arizona Project; and
WHEREAS, pursuant to the provisions of Arizona Revised Statutes
Sections 45-2601 et seq., the Contractor has been organized with the power to
enter into a contract or contracts with the Secretary of the Interior to
accomplish the purposes of Arizona Revised Statutes, Sections 45-2601 et seq.;
and
WHEREAS, pursuant to Section 304(b)(1) of the Colorado River Basin
Project Act, the Secretary of the Interior has determined that it is necessary
to effect repayment of the cost of constructing the Central Arizona Project
pursuant to a master contract and that the United States, together with the
Contractor, shall be a party to contracts that are in conformity with and
subsidiary to the master contract; and
WHEREAS, the United States and the Contractor entered into Contract
No. 14-06-W-245 dated December 15, 1972, hereinafter referred to as the
"Repayment Contract," a copy of which is
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attached hereto as Exhibit "A" and by this reference made a part hereof,
whereby the Contractor agrees to repay to the United States the reimbursable
costs of the Central Arizona Project allocated to the Contractor; and
WHEREAS, the Subcontractor is in need of a water supply and desires to
subcontract with the United States and the Contractor for water service from
water supplies available under the Central Arizona Project; and
WHEREAS, upon completion of the Central Arizona Project, water shall be
available for delivery to the Subcontractor;
NOW THEREFORE, in consideration of the mutual and dependent covenants
herein contained, it is agreed as follows:
3. DEFINITIONS:
Definitions included in the Repayment Contract are applicable to this
subcontract; Provided, however, That the terms "Agricultural Water" or
"Irrigation Water" shall mean water used for the purposes defined in the
Repayment Contract on tracts of land operated in units of more than 5 acres.
The first letters of terms so defined are capitalized herein. As heretofore
indicated, a copy of the Repayment Contract is attached as Exhibit "A."
4. DELIVERY OF WATER:
4.1 Obligations of the United States. Subject to the terms,
conditions, and provisions set forth herein and in the Repayment Contract,
during such periods as it operates and maintains the Project Works, the United
States shall deliver Project Water for M&I use by the Subcontractor. The United
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States shall use all reasonable diligence to make available to the
Subcontractor the quantity of Project Water specified in the schedule submitted
by the Subcontractor in accordance with Article 4.4. After transfer of OM&R to
the Operating Agency, the United States shall make deliveries of Project Water
to the Operating Agency which shall make subsequent delivery to the
Subcontractor as provided herein.
4.2 Term of Subcontract. This subcontract shall become effective upon
its confirmation as provided for in Article 6.12 and shall remain in effect for
a period of 50 years beginning with the January 1 of the Year following that in
which the Secretary issues the Notice of Completion of the Water Supply System;
Provided, That this subcontract may be renewed upon written request by the
Subcontractor upon terms and conditions of renewal to be agreed upon not later
than 1 year prior to the expiration of this subcontract; and Provided, further,
That such terms and conditions shall be consistent with Article 9.9 of the
Repayment Contract.
4.3 Conditions Relating to Delivery and Use. Delivery and use of
water under this subcontract is conditioned on the following, and the
Subcontractor hereby agrees that:
(a) All uses of Project Water and Return Flow shall be consistent
with Arizona water law unless such law is inconsistent with the Congressional
directives applicable to the Central Arizona Project.
(b) The system or systems through which water for Agricultural,
M&I, and Miscellaneous (including ground water recharge) purposes is conveyed
after delivery to the
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Subcontractor shall consist of pipelines, canals, distribution systems, or
other conduits provided and maintained with linings adequate in the Contracting
Officer's judgment to prevent excessive conveyance losses.
(c) The Subcontractor shall not pump, or within it legal
authority, permit others to pump ground water from within the exterior
boundaries of the Subcontractor's service area, which has been delineated on a
map filed with the Contractor and approved by the Contractor and the
Contracting Officer, for use outside of said service area unless such pumping
is permitted under Title 45, Chapter 2, Arizona Revised Statutes, as it may be
amended from time to time, and the Contracting Officer, the Contractor, and the
Subcontractor shall agree, or shall have previously agreed, that a surplus of
ground water exists and drainage is or was required; Provided, however, That
such pumping may be approved by the Contracting Officer and the Contractor, and
approval shall not be unreasonably withheld, if such pumping is in accord with
the Basin Project Act and upon submittal by the Subcontractor of a written
certification from the Arizona Department of Water Resources or its successor
agency that the pumping and transportation of ground water is in accord with
Title 45, Chapter 2, Arizona Revised Statutes, as it may be amended from time
to time.
(d) The Subcontractor shall not sell or otherwise dispose of or
permit the sale or other disposition of any Project Water for use outside of
Maricopa, Pinal, and Pima Counties; Provided, however, That this does not
prohibit exchanges of Project Water covered by separate agreements; and
Provided,
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further, That this does not prohibit effluent exchanges with Indian tribes
pursuant to Article 6.2.
(e) (i) Project Water scheduled for delivery in any Year under this
subcontract may be used by the Subcontractor or resold or exchanged by the
Subcontractor pursuant to appropriate agreements approved by the Contracting
Officer and the Contractor. If said water is resold or exchanged by the
Subcontractor for an amount in excess of that which the Subcontractor is
obligated to pay under this subcontract, the excess amount shall be paid
forthwith by the Subcontractor to the Contractor for application against the
Contractor's Repayment Obligation to the United States; Provided, however, That
the Subcontractor shall be entitled to recover actual costs of transportation,
treatment, and distribution, including but not limited to capital costs and OM&R
costs.
(ii) Project Water scheduled for delivery in any Year under
this subcontract that cannot be used, resold, or exchanged by the Subcontractor
may be made available by the Contracting Officer and Contractor to other users.
If such Project Water is sold to or exchanged with other users, the
Subcontractor shall be relieved of its payments hereunder only to the extent of
the amount paid to the Contractor by such other users, but not to exceed the
amount the Subcontractor is obligated to pay under this subcontract for said
water.
(iii) In the event the Subcontractor or the Contracting Officer
and the Contractor are unable to sell any portion of the Subcontractor's Project
Water scheduled for delivery and not required by the Subcontractor, the
Subcontractor
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shall be relieved of the pumping energy portion of the OM&R charges associated
with the undelivered water as determined by the Contractor.
4.4 Procedure for Ordering Water.
(a) At least 15 months prior to the date the Secretary expects
to issue the Notice of Completion of the Water Supply System, or as soon
thereafter as is practicable, the Contracting Officer shall announce by written
notice to the Contractor the amount of Project Water available for delivery
during the Year in which said Notice of Completion is issued (initial Year of
water delivery) and during the following Year. Within 30 days of receiving such
notice, the Contractor shall issue a notice of availability of Project Water to
the Subcontractor. The Subcontractor shall, within a reasonable period of time
as determined by the Contractor, submit a written schedule to the Contractor
and the Contracting Officer showing the quantity of water desired by the
Subcontractor during each month of said initial Year and the following Year.
The Contractor shall notify the Subcontractor by written notice of the
Contractor's action on the requested schedule within 2 months of the date of
receipt of such request.
(b) The amounts, times, and rates of delivery of Project Water
to the Subcontractor during each Year subsequent to the Year following said
initial Year of water delivery shall be in accordance with a water delivery
schedule for that Year. Such schedule shall be determined in the following
manner:
(i) On or before June 1 of each Year beginning with the
Year following the initial Year of water
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delivery pursuant to this subcontract, the Contracting Officer shall announce
the amount of Project Water available for delivery during the following Year
in a written notice to the Contractor. In arriving at this determination, the
Contracting Officer, subject to the provisions of the Repayment Contract, shall
use his best efforts to maximize the availability and deliver of Arizona's full
entitlement of Colorado River water over the term of this subcontract. Within
30 days of receiving said notice, the Contractor shall issue a notice of
availability of Project Water to the Subcontractor.
(ii) On or before October 1 of each Year beginning with the Year
following said initial Year of water delivery, the Subcontractor shall submit
in writing to the Contractor and Contracting Officer a water delivery schedule
indicating the amounts of Project Water desired by the Subcontractor during
each month of the following Year along with a preliminary estimate of the
Project Water desired for the succeeding 2 years.
(iii) Upon receipt of the schedule, the Contractor and Contracting
Officer shall review it and, after consultation with the Subcontractor, shall
make only such modifications to the schedule as are necessary to ensure that
the amounts, times, and rates of deliver to the Subcontractor are consistent
with the deliver capability of the Project, considering, among other things,
the availability of water and the delivery schedules of all subcontractors;
Provided, That this provision shall not be construed to reduce annual
deliveries to the Subcontractor.
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(iv) On or before November 15 of each Year beginning with the Year
following said initial Year of water delivery, the Contractor shall determine
and furnish to the Subcontractor and the Contracting Officer the water delivery
schedule for the following Year which shall show the amount of water to be
delivered to the Subcontractor during each month of that Year, contingent upon
the Subcontractor remaining eligible to receive water under all terms contained
herein.
(c) The monthly water delivery schedules may be amended upon the
Subcontractor's written request to the Contractor. Proposed amendments shall be
submitted by the Subcontractor to the Contractor no later than 15 days before
the desired change is to become effective, and shall be subject to review and
modification in like manner as the schedule. The Contractor shall notify the
Subcontractor and the Contracting Officer of its action on the Subcontractor's
requested schedule modification within 10 days of the Contractor's receipt of
such request.
(d) The Contractor and the Subcontractor shall hold the United States, its
officers, agents, and employees, harmless on account of damage or claim of
damage of any nature whatsoever arising out of or connected with the actions of
the Contractor regarding water delivery schedules furnished to the
Subcontractor.
(e) In no event shall the Contracting Officer or the Contractor be required
to deliver to the Subcontractor from the Water Supply System in any one month a
total amount of Project Water greater than 11 percent of the Subcontractor's
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maximum entitlement; Provided, however, That the Contracting Officer may deliver
a greater percentage in any month if such increased delivery is compatible with
the overall delivery of Project Water to other subcontractors as determined by
the Contracting Officer and Contractor and if the Subcontractor agrees to accept
such increased deliveries.
4.5 Points of Delivery -- Measurement and Responsibility for
Distribution of Water.
(a) The water to be furnished to the Subcontractor pursuant to
this subcontract shall be delivered at turnouts to be constructed by the United
States at such point(s) on the Water Supply System as may be agreed upon in
writing by the Contracting Officer and the Contractor, after consultation with
the Subcontractor.
(b) Unless the United States and the Subcontractor agree by
contract to the contrary, the Subcontractor shall construct and install, at its
sole cost and expense, connection facilities required to take and convey the
water from the turnouts to the Subcontractor's service area. The Subcontractor
shall furnish, for approval of the Contracting Officer, drawings showing the
construction to be performed by the Subcontractor within the Water Supply System
right-of-way 6 months before starting said construction. The facilities may be
installed, operated, and maintained on the Water Supply System right-of-way
subject to such reasonable restrictions and regulations as to type, location,
methods of installation, operation, and maintenance as may be prescribed by the
Contracting Officer.
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(c) All water delivered from the Water Supply System shall be
measured with equipment furnished and installed by the United States and
operated and maintained by the United States or the Operating Agency. Upon the
request of the Subcontractor or the Contractor, the accuracy of such
measurements shall be investigated by the Contracting Officer or the Operating
Agency, Contractor, and Subcontractor, and any errors which may be mutually
determined to have occurred herein shall be adjusted; Provided, That in the
event the parties cannot agree on the required adjustment, the Contracting
Officer's determination shall be conclusive.
(d) Neither the United States, the Contractor, nor the Operating
Agency shall be responsible for the control, carriage, handling, use, disposal,
or distribution of Project Water beyond the delivery point(s) agreed to pursuant
to Subarticle 4.5(a). The Subcontractor shall hold the United States, the
Contractor, and the Operating Agency harmless on account of damage or claim of
damage of any nature whatsoever for which there is legal responsibility,
including property damage, personal injury, or death arising out of or connected
with the Subcontractor's control, carriage, handling, use, disposal, or
distribution of such water beyond said delivery point(s).
4.6 Temporary Reductions. In addition to the right of the United
States under Subarticle 8.3(a)(iv) of the Repayment Contract temporarily to
discontinue or reduce the amount of water to be delivered, the United States or
the Operating Agency may, after consultation with the Contractor, temporarily
discontinue or reduce the quantity of water to be furnished to the
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Subcontractor as herein provided for the purposes of investigation, inspection,
maintenance, repair, or replacement of any of the Project facilities or any part
thereof necessary for the furnishing of water to the Subcontractor, but so far
as feasible the United States or the Operating Agency shall coordinate any such
discontinuance or reduction with the Subcontractor and shall give the
Subcontractor due notice in advance of such temporary discontinuance or
reduction, except in case of emergency, in which case no notice need be given.
Neither the United States, its officers, agents, and employees, shall be liable
for damages when, for any reason whatsoever, any such temporary discontinuance
or reduction in delivery of water occurs. If any such discontinuance or
temporary reduction results in deliveries to the Subcontractor of less water
than what has been paid for in advance, the Subcontractor shall be entitled to
be reimbursed for the appropriate proportion of such advance payments prior to
the date of the Subcontractor's next payment of water service charges or the
Subcontractor may be given credit toward the next payment of water charges if
the Subcontractor should so desire.
4.7 Priority in Case of Shortage. Subject to the provisions of Section
304(e) of the Basin project Act, any Project Water furnished for non-Indians
through Project facilities shall, in the event of shortage thereof, as
determined by the Contracting Officer after consultation with the Contractor, be
reduced pro rata until exhausted, first for Miscellaneous Water uses and next
for Agricultural Water uses
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before water furnished for non-Indian M&I use is reduced. Thereafter, water for
M&I uses shall be reduced pro rata among all non-Indian M&I users. All Project
Water converted from agricultural to M&I use shall be delivered with the same
priority as other Project M&I Water. Pursuant to the authority vested in the
Secretary by the Reclamation Act of 1902 (32 Stat. 388), as amended and
supplemented, the Basin project Act, the Regulations for Implementing the
Procedural Provisions of the National Environmental Policy Act (40 CFR Part
1505), and the Implementing Procedures of the U.S. Department of the Interior
(516 DM 5.4), the relative priorities between Indian and non-Indian uses will
be determined by the Secretary consistent with the allocations published in the
Federal Register on March 24, 1983.
4.8 Secretarial Control of Return Flow.
(a) The Secretary reserved the right to capture all Return
Flow flowing from the exterior boundaries of the Contractor's Service Area as a
source of supply and for distribution to and use of the Central Arizona Project
to the fullest extent practicable. The Secretary also reserves the right to
capture for Project use Return Flow which originates or results from water
contracted for from the Central Arizona Project within the boundaries of the
Contractor's Service Area if, in his judgment, such Return Flow is not being
put to a beneficial use. The Subcontractor may recapture and reuse or sell its
Return Flow; Provided, however, That such Return Flow may not be sold for use
outside Maricopa, Pinal, and Pima Counties; and Provided, further, That this
does not prohibit effluent exchanges with Indian tribes pursuant to Article 6.2
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The Subcontractor shall, at least 60 days in advance of any proposed sale of
such water, furnish the following information in writing to the Contracting
Officer and the Contractor:
(i) The name and address of the prospective buyer.
(ii) The location and proposed use of the Return Flow.
(iii) The price to be charged for the Return Flow.
(b) The price charged for the Return Flow may cover the cost
incurred by the Subcontractor for Project Water plus the cost required to make
the Return Flow usable. If the price received for the Return Flow is greater
than the costs incurred by the Subcontractor, as described above, the excess
amount shall be forthwith returned by the Subcontractor to the Contractor for
application against the Contractor's Repayment Obligation to the United States.
Costs required to make Return Flow usable shall include but not be limited to
capital costs and OM&R costs including transportation, treatment, and
distribution, and the portion thereof which may be retained by the Subcontractor
shall be subject to the advance approval of the Contractor and the Contracting
Officer.
(c) Any Return Flow captured by the United States and
determined by the Contracting Officer and the Contractor to be suitable and
available for use by the Subcontractor may be delivered by the United States or
Operating Agency to the Subcontractor as a part of the water supply for which
the Subcontractor subcontracts hereunder and such water shall be accounted and
paid for pursuant to the provisions hereof.
(d) All capture, recapture, use, reuse, and sale of Return
Flow under this article shall be in accord with Arizona
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water law unless such law is inconsistent with the Congressional directives
applicable to the Central Arizona Project.
4.9 Water and Air Pollution Control. The Subcontractor, in carrying
out this subcontract, shall comply with all applicable water and air pollution
laws and regulations of the United States and the State of Arizona and shall
obtain all required permits or licenses from the appropriate Federal, State, or
local authorities.
4.10 Quality of Water. The operation and maintenance of Project
facilities shall be performed in such manner as is practicable to maintain the
quality of water made available through such facilities at the highest level
reasonably attainable as determined by the Contracting Officer. Neither the
United States, the Contractor, nor the Operating Agency warrants the quality of
water and is under no obligation to construct or furnish water treatment
facilities to maintain or better the quality of water. The Subcontractor waives
its right to make a claim against the United States, the Operating Agency, the
Contractor, or another subcontractor because of changes in water quality caused
by the commingling of Project water with other water.
4.11 Exchange Water.
(a) Where the Contracting Officer determines the Subcontractor is
physically able to receive Colorado River mainstream water in exchange for or in
replacement of existing supplies of water from surface sources other than the
Colorado River, the Contracting Officer may require that the Subcontractor
accept said mainstream water in exchange for or in replacement of said existing
supplies pursuant to the provisions of Section 304(d) of the Basin Project Act;
Provided, however, That a
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subcontractor on the Project aqueduct shall not be required to enter into
exchanges in which existing supplies of water from surface sources are diverted
for use by other subcontractors downstream on the Project aqueduct.
(b) If, in the event of shortages, the Subcontractor has yielded water
from other surface water sources in exchange for Colorado River mainstream water
supplied by the Contractor or the Operating Agency, the Subcontractor shall have
first priority against other users supplied with Project Water that have not
yielded water from other surface water sources but only in quantities adequate
to replace the water so yielded.
4.12 Entitlement to Project M&I Water.
(a) For the Year in which the Secretary issued the Notice of
Completion of the Water Supply System, the Subcontractor's entitlement to
Project Water for M&I uses shall be determined by the Contractor after
consultation with the Subcontractor and the Contracting Officer. Commencing with
the Year following that in which the Secretary issues the Notice of Completion
of the Water Supply System, the Subcontractor is entitled to take a maximum of
6978 acre-feet of Project Water for M&I uses including but not limited to ground
water recharge.
(b) If at anytime during the term of this subcontract there is
available for allocation additional M&I Project Water, or Agricultural Water
converted to M&I use, it shall be delivered to the Subcontractor at the same
water service charge per acre-foot and with the same priority as other M&I
Water, upon execution or amendment of an appropriate subcontract
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among the United States, the Contractor, and the Subcontractor and payment of
an amount equal to the acre-foot charges previously paid by other
Subcontractors pursuant to Article 5.2 hereof plus interest. In the case of
Agricultural Water conversions, the payment shall be reduced by all previous
payments of agricultural capital charges for each acre-foot of water converted.
The interest due shall be calculated for the period between issuance of the
Notice of Completion of the Water Supply System and execution or amendment of
the subcontract using the weighted interest rate received by the Contractor on
all investments during that period.
4.13 Delivery of Project Water Prior to Completion of Project
Works. Prior to the date of issuance of the Notice of Completion of the Water
Supply System by the Secretary, water may be made available for delivery by the
Secretary on a "when available" basis at a water rate and other terms to be
determined by the Secretary after consultation with the Contractor.
5. PAYMENTS:
5.1 Water Service Charges for Payment of Operation,
Maintenance, and Replacement Costs. Subject to the provisions of Article 5.4
hereof, the Subcontractor shall pay in advance for Project OM&R costs estimated
to be incurred by the United States or the Operating Agency. At least 15 months
prior to first delivery of Project Water, or as soon thereafter as is
practicable, the Contractor shall furnish the Subcontractor with an estimate of
the Subcontractor's share of OM&R costs to the end of the initial Year of water
delivery and an estimate of such costs for the following Year. Within a
reasonable time of the
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receipt of said estimates, as determined by the Contractor, but prior to the
delivery of water, the Subcontractor shall advance to the Contractor its share
of such estimated costs to the end of the initial month of water delivery and
without further notice or demand shall on or before the first day of each
succeeding month of the initial Year of water delivery and the following Year
advance to the Contractor in equal monthly installments the Subcontractor's
share of such estimated costs. Advances of monthly payments for each subsequent
Year shall be made by the Subcontractor to the Contractor on the basis of
annual estimates to be furnished by the Contractor on or before June 1
preceding each said subsequent Year and the advances of payments for said
estimated costs shall be due and payable in equal monthly payments on or before
the first day of each month of the subsequent year. Differences between actual
OM&R costs and estimated OM&R costs shall be determined by the Contractor and
shall be adjusted in the next succeeding annual estimates; Provided, however,
That if in the opinion of the Contractor the amount of any annual OM&R estimate
is likely to be insufficient to cover the above-mentioned costs during such
period, the Contractor may increase the annual estimate of the Subcontractor's
OM&R costs by written notice thereof to the Subcontractor, and the
Subcontractor shall forthwith increase its remaining monthly payments in such
Year to the Contractor by the amount necessary to cover the insufficiency. All
estimates of OM&R costs shall be accompanied by data and computations relied on
by the Contractor in determining the amounts of the estimated OM&R costs and
shall be subject to joint review by the Subcontractor and the Contractor.
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5.2 M&I Water Service Charges.
(a) Subject to provisions of Article 5.4 hereof and in addition to
the OM&R payments required in Article 5.1 hereof, the Subcontractor shall, in
advance of the delivery of Project M&I Water by the United States or the
Operating Agency, make payment to the Contractor in equal semiannual
installments of an M&I Water service capital charge based on a maximum
entitlement of 6978 acre-feet per year multiplied by the rate set forth in the
following schedule.
Payment for Payment due for each acre-
the calendar year of foot of purchased capacity
-------------------- --------------------------
1988-1993 $ 5
1994 6
1995 8
1996 10
1997 12
1998 14
1999 15
2000 16
2001 17
2002 18
2003 19
2004 20
2005 21
2006 22
2007 23
2008 24
2009 25
2010 26
2011 27
2012 28
2013 29
2014 30
2015 31
2016 32
2017 33
2018 34
2019 35
2020 36
2021 37
2022 38
2023 39
2024 40
2025 - through the end of the term 40
of this subcontract
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(b) The M&I Water service capital charge may be adjusted
periodically by the Contractor as a result of repayment determinations provided
for in the Repayment Contract and to reflect all sources of revenue, but said
charge per acre-foot shall not be greater than the amount required to amortize
Project capital costs allocated to the M&I function and determined by the
Contracting Officer to be a part of the Contractor's Repayment Obligation. Such
amortization shall include interest at 3.342 percent per annum. If any
adjustment is made in the M&I Water service capital charge, notice thereof shall
be given by the Contractor to the United States and to the Subcontractor on or
before June 1 of the Year preceding the Year the adjusted charge becomes
effective. The M&I Water service capital charge payment for the initial Year
shall be advanced to the Contractor in equal semiannual installments on or
before December 1 preceding the initial Year and June 1 of said initial Year;
Provided, however, That the payment of the initial M&I Water service capital
charge shall not be due until the Year in which Project Water is available to
the Subcontractor after Notice of Completion of the Water Supply System is
issued. Thereafter, for each subsequent Year, payments by the Subcontractor in
accordance with the foregoing provisions shall be made in equal semiannual
installments on or before the December 1 preceding said subsequent Year and the
June 1 of said subsequent Year as may be specified by the Contractor in written
notices to the Subcontractor.
(c) On or before the first anniversary of execution of this
subcontract and on or before each succeeding
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anniversary, the Subcontractor shall pay, in addition to all other payments
required herein, an M&I subcontract charge. The subcontract charge shall be
$2.00 per acre-foot for 6978 acre-feet of M&I Water. Prior to the date of
issuance of the Notice of Completion of the Water Supply System, the
subcontract charge shall be paid each Year by the Subcontractor to the United
States. The Contracting Officer shall advise the Contractor of the amounts and
dates of the Subcontractor's payments. After the date of issuance of the Notice
of Completion of the Water Supply System, the subcontract charge shall be paid
each Year to the Contractor by the Subcontractor and the Contractor shall
credit the revenues obtained from the subcontract charge against the
Subcontractor's water service charges payable to the Contractor that Year.
(d) Funds advanced to the United States by the Subcontractor pursuant
to Article 5.2 (c) as a subcontracting charge shall be credited by the
Contractor against the Subcontractor's initial capital charges for water
deliveries under this subcontract. Credit provided to the Subcontractor shall
include interest from the date the Subcontractor's funds are transferred to the
United States through the effective date of credit for payment of capital costs
as recorded in the Contractor's records. Interest credited to the Subcontractor
shall be at an annual rate of 1 (one) percent less than the weighted rate
received by the Contractor on all investments during the period for which the
Subcontractor's payments earn an interest credit.
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(e) Payment of all M&I Water service capital and corresponding
OM&R charges becoming due hereunder prior to or on the dates stipulated in
Articles 5.1 and 5.2 is a condition precedent to receiving M&I Water under this
subcontract.
5.3 Loss of Entitlement. The Subcontractor shall have no right to
delivery of water from Project facilities during any period in which the
Subcontractor may be in arrears in the payment of any charges due the
Contractor. The Contractor may sell to another entity any water determined to be
available under the Subcontractor's entitlement for which payment is in arrears;
Provided, however, That the Subcontractor may regain the right to use any unsold
portion of the water determined to be available under the original entitlement
upon payment of all delinquent charges plus any difference between the
subcontractual obligation and the price received in the sale of the water by the
Contractor and payment of charges for the current period.
5.4 Refusal to Accept Delivery. In the event the Subcontractor fails
or refuses in any Year to accept delivery of the quantity of water available for
delivery to and required to be accepted by it pursuant to this subcontract, or
in the event the Subcontractor in any Year fails to submit a schedule for
delivery as provided in Article 4.4 thereof, said failure or refusal shall not
relieve the Subcontractor of its obligation to make the payments required in
this subcontract.
5.5 Charge for Late Payments. The Subcontractor shall pay a late
payment charge on installments or charges which are received after the due date.
The late payment charge percentage rate calculated by the Department of the
Treasury and published quarterly in the Federal Register shall be used;
Provided, That the late payment charge percentage rate shall not be less than
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0.5 percent per month. The late payment charge percentage rate applied on an
overdue payment shall remain in effect until payment is received. The late
payment rate for a 30-day period shall be determined on the day immediately
following the due date and shall be applied to the overdue payment for any
portion of the 30-day period of delinquency. In the case of partial late
payments, the amount received shall first be applied to the late charge on the
overdue payment and then to the overdue payment.
6. GENERAL PROVISIONS:
6.1 Repayment Contract Controlling. Pursuant to the Repayment
Contract, the United States has agreed to construct and, in the absence of an
approved Operating Agency, to operate and maintain the works of the Central
Arizona Project and to deliver Project Water to the various subcontractors
within the Project Service Area; and the Contractor has obligated itself for the
payment of various costs, expenses, and other amounts allocated to the
Contractor pursuant to Article 9 of the Repayment Contract. The Subcontractor
expressly approves and agrees to all the terms presently set out in the
Repayment Contract including Subarticle 8.8(b)(viii) thereof, or as such terms
may be hereafter amended, and agrees to be bound by the actions to be taken and
the determinations to be made under that Repayment Contract, except as otherwise
provided herein.
6.2 Effluent Exchanges. The Subcontractor may enter into direct
effluent exchange agreements with Indian entities which have received an
allocation of Project Water and receive all benefits from the exchange. If the
Subcontractor chooses to exchange directly with the Indians, then the
Subcontractor's entitlement to Project Water shall be reduced by the amount of
Project Water received in exchange by the Subcontractor. The
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Subcontractor may also offer raw sewage or effluent to the Contractor for the
purpose of exchanging such sewage or effluent for the benefit of all
subcontractors. If such an exchange is consummated, the Subcontractor's
entitlement to Project Water shall remain at the level specified in Article
4.12. A copy of the above referenced agreements shall be filed with the
Contractor and the Contracting Officer.
6.3 Notices. Any notice, demand or request authorized or required by this
subcontract shall be deemed to have been given when mailed, postage prepaid, or
delivered to the Regional Director, Lower Colorado Region, Bureau of
Reclamation, P. O. Box 427, Boulder City, Nevada 89005, on behalf of the
Contractor or Subcontractor; to the Central Arizona Water Conservation
District, 23636 North 7th Street, Phoenix, Arizona 85024, on behalf of the
United States or Subcontractor; and to the Chaparral City Water Company, P. O.
Box 17030, Fountain Hills, AZ 85268 on behalf of the United States or
Contractor. The designation of the addressee or the address may be changed by
notice given in the same manner as provided in this Article for other notices.
6.4 Water Conservation Program.
(a) While the contents and standards of a given water conservation
program are primarily matters of State and local determination, there is a
strong Federal interest in developing an effective water conservation program
because of this subcontract. The Subcontractor shall develop and implement an
effective water conservation program for all uses of water which is provided
from or conveyed through Federally constructed or Federally financed
facilities. That water conservation program shall contain definite goals,
appropriate water conservation measures, and time schedules for meeting the
water conservation objectives.
(b) A water conservation program, acceptable to the Contractor and the
Contracting Officer, shall be in existence prior to one or all of the following:
(1) service of Federally stored/conveyed water; (2) transfer of operation and
maintenance of the Project facilities to the Contractor or Operating Agency; or
(3) transfer of the Project to an operation and maintenance status. The
distribution and use of Federally stored/conveyed
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water and/or operation of Project facilities transferred to the Contractor shall
be consistent with the adopted water conservation program. Following execution
of this subcontract, and at subsequent 5-year intervals, the Subcontractor shall
resubmit the water conservation plan to the Contractor and the Contracting
Officer for review and approval. After review of the results of the previous 5
years and after consultation with the Contractor, the Subcontractor, and the
Arizona Department of Water Resources or its successor, the Contracting Officer
may require modifications in the water conservation program to better achieve
program goals.
6.5 Rules, Regulations, and Determinations.
(a) The Contracting Officer shall have the right to make, after an
opportunity has been offered to the Contractor and Subcontractor for
consultation, rules and regulations consistent with the provisions of this
subcontract, the laws of the United States and the State of Arizona, to add to
or to modify them as may be deemed proper and necessary to carry out this
subcontract, and to supply necessary details of its administration which are not
covered by express provisions of this subcontract. The Contractor and
Subcontractor shall observe such rules and regulations.
(b) Where the terms of this subcontract provide for action to be
based upon the opinion or determination of any party to this subcontract,
whether or not stated to be conclusive, said terms shall not be construed as
permitting such action to be predicated upon arbitrary, capricious, or
unreasonable opinions or determinations. In the event that the Contractor or
Subcontractor questions any factual determination made by the Contracting
Officer, the findings as to the facts shall be made by the Secretary only after
consultation with the Contractor or Subcontractor and shall be conclusive upon
the parties.
6.6 Officials Not to Benefit.
(a) No Member of or Delegate to Congress or Resident Commissioner
shall be admitted to any share or part of this subcontract or to any benefit
that may arise herefrom. This restriction shall not be construed to extend to
this subcontract if made with a corporation or company for its general benefit.
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(b) No official of the Subcontractor shall receive any benefit
that may arise by reason of this subcontract other than as a water user within
the Project and in the same manner as other water users within the Project.
6.7 Assignment Limited--Successors and Assigns Obligated. The
provisions of this subcontract shall apply to and bind the successors and
assigns of the parties hereto, but no assignment or transfer of this subcontract
or any part or interest therein shall be valid until approved by the Contracting
Officer.
6.8 Judicial Remedies Not Foreclosed. Nothing herein shall be
construed (a) as depriving any party from pursuing and prosecuting any remedy in
any appropriate court of the United States or the State of Arizona which would
otherwise be available to such parties even though provisions herein may declare
that determinations or decisions of the Secretary or other persons are
conclusive or (b) as depriving any party of any defense thereto which would
otherwise be available.
6.9 Books, Records, and Reports. The Subcontractor shall establish and
maintain accounts and other books and records pertaining to its financial
transactions, land use and crop census, water supply, water use, changes of
Project works, and to other matters as the Contracting Officer may require.
Reports thereon shall be furnished to the Contracting Officer in such form and
on such date or dates as he may require. Subject to applicable Federal laws and
regulations, each party shall have the right during office hours to examine and
make copies of each other's books and records relating to matters covered by
this subcontract.
6.10 Equal Opportunity. During the performance of this subcontract,
the Subcontractor agrees as follows:
(a) The Subcontractor shall not discriminate against any employee
or applicant for employment because of race, color, religion, sex, or national
origin. The Subcontractor shall take affirmative action to ensure that
applicants are employed, and that employees are treated during employment
without regard to their race, color, religion, sex, or national origin. Such
action shall include, but not be limited to the following: Employment,
upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff
or termination; rates of pay or other forms of compensation; and selection for
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training, including apprenticeship. The Subcontractor agrees to post in
conspicuous places, available to employees and applicants for employment,
notices to be provided setting forth the provisions of this nondiscrimination
clause.
(b) The Subcontractor shall, in all solicitations or advertisements
for employees placed by or on behalf of the Subcontractor, state that all
qualified applicants shall receive consideration for employment without
discrimination because of race, color, religion, sex, or national origin.
(c) The Subcontractor shall send to each labor union or
representative of workers with which it has a collective bargaining agreement
or other contract or understanding, a notice, to be provided by the Contracting
Officer, advising said labor union or workers' representative of the
Subcontractor's commitments under Section 202 of Executive Order 11246 of
September 24, 1965, and shall post copies of the notice in conspicuous places
available to employees and applicants for employment.
(d) The Subcontractor shall comply with all provisions of Executive
Order No. 11246 of September 24, 1965, as amended, and of the rules,
regulations, and relevant orders of the Secretary of Labor.
(e) The Subcontractor shall furnish all information and reports
required by said amended Executive Order and by the rules, regulations, and
orders of the Secretary of Labor, or pursuant thereto, and shall permit access
to its books, records, and accounts by the Contracting Officer and the Secretary
of Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and orders.
(f) In the event of the Subcontractor's noncompliance with the
nondiscrimination clauses of this subcontract or with any of the such rules,
regulations, or orders, this subcontract may be canceled, terminated, or
suspended, in whole or in part, and the Subcontractor may be declared
ineligible for further Government contracts in accordance with procedures
authorized in said amended Executive Order and such other sanctions may be
imposed and remedies invoked as provided in said amended Executive Order, or by
rule, regulation, or order of the Secretary of Labor, or as otherwise provided
by law.
(g) The Subcontractor shall include the provisions of paragraphs (a)
through (g) in every subcontract or purchase order unless exempted by the
rules, regulations, or orders of the Secretary of Labor issued pursuant to
Section 204 of said amended Executive Order, so that such provisions shall be
binding upon each subcontractor or vendor. The Subcontractor shall take such
action with respect to any subcontract or purchase order as may be directed by
the Secretary of Labor as a means of enforcing such provisions, including
sanctions for
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noncompliance; Provided, however, That in the event a Subcontractor becomes
involved in, or is threatened with, litigation with a subcontractor or vendor as
a result of such direction, the Subcontractor may request the United States to
enter into such litigation to protect the interest of the United States.
6.11 Title VI, Civil Rights Act of 1964.
(a) The Subcontractor agrees that it shall comply with Title VI of
the Civil Rights Act of July 2, 1964 (78 Stat. 241), and all requirements
imposed by or pursuant to the Department of the Interior Regulation (43 CFR 17)
issued pursuant to that title to the end that, in accordance with Title VI of
that Act and the Regulation, no person in the United States shall, on the
grounds of race, color, or national origin be excluded from participation in, be
denied the benefits of, or be otherwise subjected to discrimination under any
program or activity for which the Subcontractor receives financial assistance
from the United States and hereby gives assurance that it shall immediately take
any measures to effectuate this agreement.
(b) If any real property or structure thereon is provided or
improved with the aid of Federal financial assistance extended to the
Subcontractor by the United States, this assurance obligates the Subcontractor,
or in the case of any transfer of such property, any transferee for the period
during which the real property or structure is used for a purpose involving the
provision of similar services or benefits. If any personal property is so
provided, this assurance obligates the Subcontractor for the period during which
it retains ownership or possession of the property. In all other cases, this
assurance obligates the Subcontractor for the period during which the Federal
financial assistance is extended to it by the United States.
(c) This assurance is given in consideration of and for the
purpose of obtaining any and all Federal grants, loans, contracts, property,
discounts, or other Federal financial assistance extended after the date hereof
to the Subcontractor by the United States, including installment payments after
such date on account of arrangements for Federal financial assistance which were
approved before such date. The Subcontractor recognizes and agrees that such
Federal financial assistance shall be extended in reliance on the
representations and agreements made in this assurance, and that the United
States shall reserve the right to seek judicial enforcement of this assurance.
This assurance is binding on the Subcontractor, its successors, transferees, and
assignees.
6.12 Confirmation of Subcontract. The Subcontractor shall promptly
seek a final decree of the proper court of the State of Arizona approving and
confirming the subcontract and
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decreeing and adjudging it to be lawful, valid, and binding on the
Subcontractor. The Subcontractor shall furnish to the United States a certified
copy of such decree and of all pertinent supporting records. This subcontract
shall not be binding on the united States, the Contractor or the Subcontractor
until such final decree has been entered.
6.13 Contingent on Appropriation or Allotment of Funds. The
expenditure or advance of any money or the performance of any work by the United
States hereunder which may require appropriation of money by the Congress or the
allotment of funds shall be contingent upon such appropriation or allotment
being made. The failure of the Congress to appropriate funds or the absence of
any allotment of funds shall not relieve the Subcontractor from any obligation
under this subcontract. No liability shall accrue to the United States in case
such funds are not appropriated or allotted.
6.14 Addendum A. This subcontract shall also include the terms,
conditions, and provisions of Addendum A, which is attached hereto and by this
reference made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this subcontract
No. 5-07-30-W0067 the day and year first above-written.
Legal Review and Approval THE UNITED STATES OF AMERICA
By: /s/ [Signature Illegible] By: /s/ [Signature Illegible]
-------------------------------- --------------------------------
Field Solicitor Regional Director
Phoenix, Arizona Lower Colorado Region
Bureau of Reclamation
CENTRAL ARIZONA WATER
CONSERVATION DISTRICT
Attest: /s/ [Signature Illegible] By: /s/ [Signature Illegible]
---------------------------- --------------------------------
Title: Secretary Title: President
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CHAPARRAL CITY WATER COMPANY
Attest: /s/ HOWARD J. BRESSLER By: /s/ [Signature Illegible]
------------------------------- ---------------------------------
Title: Vice President - Sec. Title: President
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ADDENDUM A
The following is substituted for Article 5.4: "In the event the
Subcontractor fails or refuses in any Year to accept delivery of the quantity of
water available for delivery to and required to be accepted by it pursuant to
this subcontract, or in the event the Subcontractor in any Year fails to submit
a schedule for delivery as provided in Article 4.4 hereof, said failure or
refusal shall not relieve the Subcontractor of its obligation to make the
payments required in this subcontract. The Subcontractor agrees to make payment
for available water which is refused in the same manner as if said water were
scheduled for delivery to and accepted by it in accordance with this subcontract
except as provided in Subarticle 4.3(e) and Article 5.3; Provided, however, That
if the Subcontractor shall require Distribution Works constructed pursuant to
Section 309(b) of the Basin Project Act, as amended, to transport water from the
Central Arizona Project aqueduct to the point of treatment or use, then the
Subcontractor shall not be required to pay capital or OM&R charges until January
1, 1990, or until such time as the Subcontractor begins taking Project Water
through the Distribution Works constructed pursuant to a repayment contract
under the aforementioned Act, whichever comes first."
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EXHIBIT A
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CERTIFICATE OF CORPORATE SECRETARY
I, Howard J. Bressler, do hereby certify that I am the duly elected and
qualified Secretary of Chaparral City Water Company, an Arizona corporation,
(the "Corporation"); that the following is a true and correct copy of
resolutions duly adopted by unanimous written consent of the Board of Directors
of the Corporation on July 27, 1984; and that such resolutions have not been
amended, rescinded or repealed since their adoption and are on the date hereof
in full force and effect:
WHEREAS, the Corporation has previously resolved to obtain a Central
Arizona Project water allocation; and
WHEREAS, Paragraph 27 of the "Contract Between the United States and the
Chaparral City Water Company Providing for Construction of a Water
Distribution System, Central Arizona Project" (the "Repayment Contract")
specifically requires the Board of Directors of the Corporation to approve
certain matters; and
WHEREAS, the "Subcontract Among the Untied States, the Central Arizona
Water Conservation District and the Corporation" (the "Subcontract") and
the Repayment Contract are required to be validated by a proper court of
the State of Arizona.
NOW, THEREFORE, BE IT RESOLVED, that the President, or any other officer
of the Corporation, be and each of them hereby is authorized to execute
the Repayment Contract under which the Central Arizona Project related
facilities will be constructed; and
RESOLVED FURTHER, that the President, or any other officer of the
Corporation, be and each of them hereby is directed to prepare and file
with the Arizona Corporation Commission any rate application which may be
required for the payment of the Corporation's obligations under the
Repayment Contract; and
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RESOLVED FURTHER, that the President, or any other officer of the
Corporation, be and each of them hereby is authorized, subject to the
Arizona Corporation Commission's approval, to establish a $200,000 line of
credit for the purposes of financing any cost overruns which may occur
under the Repayment Contract; and
RESOLVED FURTHER, that the President, or any other officer of the
Corporation, be and each of them hereby is directed to execute the
Subcontract for the purchase of Central Arizona Project water; and
RESOLVED FURTHER, that the proper officers of the Corporation be and each
of them hereby is authorized in the name and on behalf of the Corporation,
to conduct any and all negotiations, to make any and all arrangements, do
and perform any and all acts and things and to execute and deliver any and
all officer's certificates and other documents and instruments as they
may deem necessary or appropriate in order to effectuate the purposes of
each and all of the foregoing resolutions.
IN WITNESS WHEREOF, I have hereto affixed my name as Secretary of the
Corporation and have caused the Corporate Seal of the Corporation to be affixed
this 27th day of July, 1984.
[SEAL] /s/ HOWARD J. BRESSLER
------------------------
Howard J. Bressler
Secretary
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[SERVICE AREA MAP]