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Home My WebLink AboutPR 17062: EXECUTE FORST AMENDMENT TO THE WATER SERVICE AGREEMENT BETWEEN SABINE PASS LIQUEFACTION, LLC AND THE CITY OF PORT ARTHUR Interoffice MEMORANDUM To: Mayor, City Council, and Acting City Manager ' From: Valecia R. Tizeno, City Attorney , Date: May 10, 2012 Subject: P. R. No. 17062; Council Meeting May 15, 2012 Attached is P. R. No. 17062 authorizing the City Manager to execute the First Amendment to the Water Service Agreement between Sabine Pass Liquefaction, LLC and the City of Port Arthur. VRT:gt Attachment s.pr17062 memo P. R. NO. 17062 05/10/12 gt RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE THE FIRST AMENDMENT TO THE WATER SERVICE AGREEMENT BETWEEN SABINE PASS LIQUEFACTION, LLC AND THE CITY OF PORT ARTHUR WHEREAS, on December 13, 2011, the City Council authorized the City Manager to enter into a Water Service Agreement with Sabine Pass Liquefaction, LLC; and WHEREAS, Sabine Pass Liquefaction, LLC, has requested that the City modify the terms of the agreement whereby Sabine Pass Liquefaction, LLC, will hire an engineering firm to prepare the proposed design, engineering plans, and detailed cost estimate; and WHEREAS, there is also a proposed change in the time frame which would allow the Notice to Proceed to be issued by December 31, 2012. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City Manager is hereby authorized and instructed to execute the First Amendment to the Water Service Agreement with Sabine Pass Liquefaction, LLC, in substantially the same form as attached hereto as Exhibit "A ". s. P r17062 Section 3. That a copy of the caption of this Resolution shall be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED, this day of 2012 AD, at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: Councilmembers: NOES: Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: k tyAttorney APPROVED FOR ADMINISTRATION: John A. Comeaux, P.E., Acting City Manager s.pr17062 EXHIBIT "A" s.pr17062 FIRST AMENDMENT TO WATER SERVICE AGREEMENT This FIRST AMENDMENT TO WATER SERVICE AGREEMENT (this "Amendment "), dated as of this day of , 2012, is made by and between Sabine Pass Liquefaction, LLC, a Delaware limited liability company with offices at 700 Milam Street, Suite 800, Houston, Texas 77002 ( "Sabine Pass Liquefaction ") and City of Port Arthur, a home rule municipality located at 444 4 Street, Port Arthur, TX 77640 ( "City "). Sabine Pass Liquefaction and the City may be referred to herein together as the "Parties" and each may be referred to individually as a "Party ". RECITALS WHEREAS, Sabine Pass Liquefaction and the City are parties to that certain WATER SERVICE AGREEMENT (the "Agreement ") dated December 21, 2011, under which Sabine Pass Liquefaction will purchase potable water for the Sabine Liquefaction Facility; WHEREAS, the City and Sabine Pass Liquefaction desire to amend the Agreement in the manner set forth herein; NOW THEREFORE, for good and valuable consideration and for the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged by the Parties, Sabine Pass Liquefaction and the City hereby agree as follows: OPERATIVE PROVISIONS: 1. Defined Terms. Capitalized terms used in this Agreement and not otherwise defined herein shall have the same meanings given them in the Agreement. AMENDMENTS: 1. Subsection 3.2 of Section 3 (City Water System Enhancements) of the Agreement is hereby amended and restated to read in its entirety as follows: 3.2 Construction of Facility Enhancements. Promptly following the execution of this Agreement, Sabine Pass Liquefaction shall hire at Sabine Pass Liquefaction's cost an engineering firm to prepare and deliver to the City the proposed design, engineering plans and detailed cost estimate for the Facility Enhancements ( "Engineering Study "). The engineering firm will provide both the City and Sabine pass Liquefaction a copy of the Engineering Study promptly following its completion. Upon receipt of a notice to proceed with the construction of the Facility Enhancements from Sabine Pass (the "Notice to Proceed "), the City shall select an engineering firm to provide construction administration, and select the contractor for the construction of the Facility Enhancements based upon the City's standard procurement process as stated in Chapter 252 of the Texas Local 1of3 DRAFT 5/10/12 Government Code.. The City shall also obtain all required permits, rights of way, authorizations and other rights related to the construction and operation of the Facility Enhancements and the delivery of Water to the Delivery Point. The current cost estimate for the Facility Enhancements is $20.6 million. This is a preliminary scope and estimate. Sabine Liquefaction will pay for the costs for the construction of the Facility Enhancements as delineated in the resolutions approved by the City Council awarding the construction contract and the construction administration contract; provided however, the City will not award these contracts until Sabine Pass Liquefaction has had the opportunity to review and approve theselections. Said payments shall be provided to the City prior to the commencement of construction. Said payments are non - refundable once the contracts have been awarded by the City. Any change orders to the above referenced contracts shall be reviewed and approved by Sabine Pass Liquefaction prior to approval and execution by the City, with payment to be made upon execution. 2. Subsections 7.1 and 7.2 of Section 7 (Termination and Termination Rights) of the Agreement are hereby amended and restated to read in their entirety as follows: 7.1 Sabine Pass Liquefaction's Termination Rights. Sabine Pass Liquefaction shall have the right to terminate this Agreement for any reason including the convenience of Sabine Pass Liquefaction by giving written notice to the City at any time prior to December 31, 2012. In addition, Sabine Pass Liquefaction shall have the right to terminate this Agreement by giving written notice to the City if at any time the City is in material breach of this Agreement and the City has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from Sabine Pass Liquefaction. 7.2 City's Termination Rights. The City shall have the right to terminate this Agreement if Sabine Pass Liquefaction has not provided the Notice to Proceed by December 31, 2012. In addition, the City shall have the right to terminate this Agreement by giving written notice to Sabine Pass Liquefaction if at any time Sabine Pass Liquefaction is in material breach of this Agreement and Sabine Pass Liquefaction has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from the City. Furthermore, the City may terminate this agreement by providing to Sabine Pass Liquefaction a five (5) year written notice of such termination. In the event of termination, the City will provide Sabine Pass Liquefaction with a 1130 pro -rata reimbursement of the costs of construction, based upon the number of years remaining in the contract at the time of termination. Upon termination of this Agreement, all of the City's rights, title, and interest in and its obligations under this agreement shall terminate effective upon the expiration of 180 days. 2 of 3 1 MISCELLANEOUS: Governing Law; Entire Agreement. This Agreement shall be enforced, in accordance with the laws of the state of Texas without giving effect to principles of conflicts of law. The venue of any claims, causes of action or litigation arising out of this agreement shall be Jefferson County, Texas. No Other Amendment. Except as amended by this Amendment, all other terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by their respective, fully authorized representatives as of the date first written above. Sabine Pass Liquefaction: City: Sabine Pass Liquefaction, LLC City of Port Arthur By: By: Name: Name: Title: Title: 3of3 1