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Exhibit 10.3
 
 

AMENDED AND RESTATED
WISE Partnership - Water Delivery Agreement between
Denver Water, the City of Aurora, acting by and through its Utility Enterprise,
and the
South Metro WISE Authority
 
This Water Delivery Agreement ("Agreement") is entered into by the City and
County of Denver, acting by and through its Board of Water Commissioners
("Denver Water"), the City of Aurora acting by and through its Utility
Enterprise ("Aurora"), and the South Metro WISE Authority  ("Authority")
(individually, a "Party" and collectively, the "Parties").
 
Recitals

A.           Denver Water owns and operates a municipal water supply system that
provides water to the inhabitants of the City and County of Denver and by
contract to certain areas outside the boundaries of the City and County of
Denver.
 
B.           Aurora owns and operates a municipal water supply system that
provides water for inhabitants of the City of Aurora and by contract to certain
areas outside the City of Aurora.
 
C.          The Authority is comprise of ten (10) governmental or
quasi-governmental water providers seeking to develop through cooperation
between its Members new surface water supplies that will decrease reliance on
nontributary groundwater.supplies. The Authority Members are also members of the
South Metro Water Supply Authority ("SMWSA").
 
D.          Denver Water and SMWSA entered into an agreement in 1999 to
investigate the feasibility of potential future cooperative water operations
between the Board and the SMWSA.
 
E.           Denver Water and Aurora entered into an Intergovernmental Agreement
dated April 12, 2006, committing to explore opportunities for mutually
beneficial arrangements that could include shared use of water resources and
water facilities.
 
F.           Denver Water and SMWSA entered into the Pilot Project Agreement
dated February 14, 2007, committing to investigate the feasibility of potential
future cooperative water operations, water efficiency, and delivery of water to
SMWSA.
 
G.           Denver Water, Aurora, and SMWSA previously executed a Memorandum of
Understanding (MOU) dated November 20, 2008, as amended by that certain
amendment dated July of 2009, to implement a cooperative study to identify water
resources, including infrastructure, that might be available for a joint water
supply project to facilitate efficient and cost-effective delivery of water.
 
H.          These combined investigations have shown the potential for regional
water resource operations that may significantly benefit all members of the
Partnership.
 
I.           These combined investigations have identified both periodic
available capacity in Aurora's existing Prairie Waters Project (PWP) and
periodic available water supplies that can be utilized by the Authority and
Denver Water.
 
 
 
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J.           Denver Water and Aurora entered into an Intergovernmental Agreement
dated August 16, 2012 that governs their operations under the WISE Project.
 
K.          Denver Water's participation in this Agreement includes providing
water from reusable return flows, which originate on the West Slope.  To resolve
longstanding disputes with the West Slope, Denver Water has entered into the
Colorado River Cooperative Agreement (CRCA), which authorizes use of Denver
Water's reusable return flows in the WISE Partnership under certain terms and
conditions.
 
L.           The Authority and its Members have entered into the SM WISE IGA
defining the Members' participation in the WISE Project.
 
M.          Colorado law, C.R.S. § 29-1-201 et seq., authorizes and encourages
local governments to contract with one another to provide any function, service,
or facility, including the sharing of costs.  Governments are specifically
authorized by C.R.S. § 31-35-402(1)(h) to enter into agreements for planning,
construction and operation of water facilities.  All the Parties to this
Agreement are political subdivisions of the State of Colorado, and each is
authorized to acquire infrastructure and to operate water facilities.
 
N.          The Parties now wish to enter into this Agreement for water
deliveries pursuant to the WISE Partnership.  The Parties' intend that this
Agreement result in a permanent supply of water to the Authority, subject to
this Agreement's terms and conditions.  This Agreement
should be construed in such a manner as to further the Parties' intent.
 
0.           Engineering studies based on historic hydrology have suggested that
in the future additional water may be available under the WISE Partnership,
assuming significant new infrastructure, and significant additional unused
return flows resulting from growth in Denver Water's and Aurora's customer base.
While changes in future hydrology, demands, or water administration will affect
the volume of potential future deliveries, the Parties intend to cooperate with
each other to determine if increased WISE deliveries would be feasible. If the
Parties decide that increased WISE Deliveries are in their collective interests,
that additional water would be subject to a separate agreement.
 
P.           The Parties are currently negotiating a Memorandum of Understanding
with Douglas County, Colorado that would create an option for the County to
acquire additional deliveries of water under the WISE Project in an amount up to
27,750 AF over a Ten-Year Block, as defined below.  Such deliveries would be
provided under terms substantially similar to the terms of this Agreement, and
for the purpose of reducing reliance on nonrenewable groundwater by current and
future customers within existing service areas in Douglas County.
 
NOW, THEREFORE, Denver Water, Aurora, and the Authority agree as follows:
 
 
 
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Article 1
Intent of the WISE Partnership
 
1.1           The Parties have been engaged in the development of a regional
water supply project, now known as the WISE Partnership (WISE).  A fundamental
concept of WISE is to reduce the reliance of Authority Members on nonrenewable
groundwater and to create a dependable, albeit interruptible, surface water
supply for Authority Members.  WISE would accomplish these goals by utilizing
the periodic unused or underused capacity in Aurora's PWP, and the construction
or acquisition of additional infrastructure, combined with the beneficial use by
the Authority of water supplies to be made available by Aurora and Denver
Water.  Engineering studies conducted by the Parties have demonstrated a
potential for a dependable supply of water for the Authority utilizing such
periodic unused capacity and available water supplies.
 
1.2           The Parties have determined that the joint use of infrastructure,
the delivery of water, and the financial arrangements in this Agreement will
benefit the health, safety and welfare of their respective citizens and
customers, enhancing water supplies while minimizing costs.
 
1.3           Denver Water and Aurora acknowledge that the Members of the
Authority will depend upon the water deliveries provided under this Agreement to
partially meet their future long-term water demands.  The Members of the
Authority acknowledge that they cannot rely upon WISE deliveries as their sole
source of water supply.  The water supply being made available to the Authority
by Aurora and Denver Water is permanent, variable, and interruptible under the
conditions described in this Agreement.  The Authority agrees to require the
Members to acknowledge in the SM Wise IGA the need to maintain existing water
supplies, develop new water supplies, or have adequate storage available to meet
their demands when WISE deliveries are interrupted under the terms of this
Agreement.
  
Article 2
Definitions
 
"Abstention Provisions" shall mean those restrictions on the acquisition of new
supplies of water from the Colorado River Basin by the Authority and the Members
as set forth in the Colorado River Cooperative Agreement, effective as of the
date of this Agreement.
 
"AF" means acre-feet.
 
"Authority Service Area" means the aggregate water delivery service area within
Douglas County and Arapahoe County to which the Members are authorized to
provide water service.  The Authority Service Area within Douglas County and
Arapahoe County may be modified through inclusion, annexation, or contract in
the future.  Any expansion of the Authority Service Area beyond Douglas County
and/or Arapahoe County is subject to the prior written approval of the Parties.
 
"Binney Plant" shall mean the Binney Water Purification Facility located north
of the Aurora Reservoir.
 
"Binney Plant Connection" shall have the meaning set forth in Paragraph 3.3.4.
 
 
 
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"Colorado River Cooperative Agreement" or "CRCA" shall have the meaning set
forth in Recital K of this Agreement.
 
"Corps" shall mean the United States Army Corps of Engineers.
"Delivery Location" shall have the meaning set forth in Paragraph 4.1.1.
 
"Delivery Location" shall have the meaning set forth in Paragraph 4.1.1.
 
"Delivery Obligation" shall mean a minimum delivery of 72,250 AF of water over
each Ten­ Year Block.
 
"Delivery Year" means each 12-month period beginning June 1 and ending the
following May 31.
 
"DIA Connection" means that interconnection between Denver Water's treated
distribution system near the Denver International Airport and Aurora's PWP as
described in Attachment B.
 
"DIA Connection Fee" means the payment made by the Authority to Denver Water pursuant to Paragraph
 3.3.1.
 
"Dominion Agreement" means that certain Intergovernmental  Agreement for
Temporary Lease of Water between Aurora and Dominion Water & Sanitation District
dated July 30, 2012 or any subsequent agreement(s) for delivery to Dominion at
an alternative point of delivery.
 
"ECCV" means the East Cherry Creek Valley Water and Sanitation District.
 
"ECCV Western Line" means the 48"-54" pipeline owned by ECCV that runs from the
vicinity of E-470 and Smoky Hill Road south and west along E-470/C-470 to the
vicinity of E-470 and University  Boulevard.
 
"Effective Date" shall have the meaning set forth in Paragraph 5.30.
 
"Joint Advisory Committee" shall mean that certain advisory committee formed by
the Parties pursuant to Paragraph 5.1.
 
"Member" means a member of the Authority. At the time of execution of this
Agreement, the Members are as follows:
 

  Town of Castle Rock  
Dominion Water & Sanitation District
 
Stonegate Village Metropolitan District
 
Cottonwood Water & Sanitation District
 
Denver Southeast Suburban Water & Sanitation District (a/k/a Pinery Water and
Wastewater District)
 
Centennial Water & Sanitation District
 
Rangeview Metropolitan District
 
Parker Water & Sanitation District
 
Meridian Metropolitan District
 
Inverness Water & Sanitation District

 
 
 
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"MGD" means million gallons per day.
 
"Master Meter" shall refer to the primary meter through which deliveries are
made to the Authority; during the Phase In Period, through the Temporary
Interconnect and thereafter through the Binney Plant Connection.
 
"Minimum Payment" shall have the meaning set forth in Paragraph 3.5.3.
 
"Offered Delivery Amount" means the volume and flow rate of water offered by
Denver Water and Aurora to the Authority at the Delivery Location(s) subject to
the delivery volume and flow rate parameters set forth in Paragraph 3.4.
 
"Phase In Period" means the period between the completion of the Temporary
Interconnect and May 31, 2021.
 
"Prairie Waters Project" or "PWP" means the water collection, conveyance,
storage and treatment system owned and operated by Aurora that delivers water
from the South Platte River north of Denver to and including the Binney Plant.
 
"SM WISE IGA" means the "South Metro WISE Authority Formation and Organizational
Intergovernmental  Agreement" executed by the Members.
 
"Temporary Interconnect" shall mean the connection between the Aurora treated
distribution system and the Western Pipeline as described in Paragraph 3.2.2.
 
"TDS" means "Total Dissolved  Solids" as set forth in Paragraph 3.6.2.
"TDS Commitment" shall have the meaning set forth in Paragraph 3.6.2.
 
"Ten-Year Block" means successive ten-year periods, starting with the ten-year
period of June 1, 2021 through May 31, 2031, and continuing for subsequent
consecutive ten-year periods.
 
"Total Actual Cost" means the total cost of the land acquisition, design,
permitting, construction, and related expenses of the DIA Connection.
 
"Water Infrastructure  and Supply Efficiency Partnership" or "WISE Partnership"
or "WISE Project" or "WISE", as identified under Article  1, refers to the
cooperative water supply effort by Aurora, Denver Water, and the Authority to
develop efficient and cost effective water pursuant to this Agreement.
 
"Western Pipeline" means a pipeline capable of delivering water from the Master
Meter to the Authority.
 
"West Slope Charge Agreement" shall mean an agreement between the Authority and
the Colorado River Water Conservation District in substantially the form of
Attachment D, the purpose of which is set forth in Paragraph 4.4.1.
 
 
 
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Article 3
Water Supply
 
 
3.1           Volume of Water. Aurora and Denver Water agree to make available
for delivery to the Authority a minimum amount of 72,250 acre-feet (AF) of water
over each Ten-Year Block, an average of 7,225 AF per year ("Delivery
Obligation"). Delivery of the full 7,225 AF on an annual average will be phased
in over the Phase In Period, as described in Paragraph 3.4. Water deliveries in
a particular Delivery Year will be governed by the parameters in Paragraph 3.4.
 
3.2           Infrastructure Necessary to Commence Deliveries.  In order for any
water to be delivered from the PWP to the Authority additional infrastructure
must be constructed or acquired by the Parties.
 
3.2.l           Western Pipeline. Additional infrastructure will include either
the ECCV Western Pipeline or an alternate Western Pipeline.  Denver Water and
the Authority shall cooperate and coordinate the planning, design, cost-sharing,
construction and operation of the Western Pipeline under the terms of a separate
agreement.
 
3.2.2           Construction of the Temporary Interconnect.  The Authority is
responsible, at its own cost and expense, for the design and construction of the
Temporary Interconnect including acquiring all necessary permits and third party
approvals.  The Authority's design and construction of the Temporary
Interconnect and the location of the same shall be subject to the
specifications, approval and acceptance of Aurora. Upon completion and Aurora's
acceptance of the Temporary Interconnect, the Authority shall convey to Aurora
those portions of the Temporary Interconnect (and easements as necessary)
upstream of the isolation valve (downstream of the meter vault) free of all
liens and encumbrances that impair the maintenance, operation or control of the
Temporary Interconnect and with a one year warranty.  Aurora will thereafter
own, maintain, operate and control those portions of the Temporary Interconnect
conveyed by the Authority with associated maintenance or replacement costs to be
borne by Aurora.
 
3.2.3           Authority Infrastructure.  Any additional infrastructure
necessary for Authority Members to take delivery of water from the Western
Pipeline is the responsibility of the Authority and shall not be included as
WISE Facilities described in Attachment C.
 
3.3           DIA Connection.  In order for Denver Water and Aurora to begin
delivery of the full annual average of 7,225 AF, the DIA Connection will be
required.  Denver Water agrees to complete construction of the DIA Connection on
or before May 31, 2020, unless the Parties mutually agree to a different
date.  Denver Water shall provide to the Authority updates on construction
progress on an annual basis.  Denver Water will own and operate the DIA
Connection.
 
 
 
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3.3.l           Payment of DIA Connection Fee.  The Authority will pay to Denver
Water the fee described below for the construction of the DIA Connection.  The
first payment of $882,052 will be due sixty days after the date when the last of
the contingencies defined in Paragraph 5.30 has been met.
 
 
Date Due
Payment Due
 
  see above
$              882,052
       
11/15/2015
$              705,642
 
1/15/2016
$              882,052
 
1/15/2017
$           1,146,668
 
11/15/2018
$           1,146,668
 
11/15/2019
$           1,146,668
 
11/15/2020
$           1,146,668
 

 
The DIA Connection Fee payments are based on the current estimated cost of
constructing the DIA Connection. The infrastructure costs include all design,
engineering, permitting, land acquisition, and related expenses.  In the event
of termination of this Agreement due to a default by the Authority, there shall
be no return of any DIA Connection Fee payments made prior to such default.
 
3.3.2           Reconciliation of the DIA Connection Fee Payments.  The DIA
Connection Fee payments identified in Paragraph 3.3.l represent the Authority's
share of the estimated cost of the DIA Connection.   Should the Total Actual
Cost of construction of the DIA connection by Denver Water be greater than the
DIA Connection Fee, the Authority shall pay the remainder due on or before July
1, 2020, as provided for under Attachment B.  Should the Total Actual Cost of
the DIA Connection be less than the DIA Connection Fee, the Authority shall be
refunded the overpayment by Denver on or before July 1, 2020.  In any event, the
Authority shall be provided copies of all invoices associated with the DIA
Connection construction and any calculations performed by Denver Water in
determining the respective balances or credits due.
 
3.3.3           Permits. Easements and Approvals. The Parties agree to cooperate
to obtain such easements, approvals and permits as are necessary for: (i) the
construction of the DIA Connection and the Temporary Interconnect; (ii) any
other infrastructure reasonably necessary to fulfill the terms of this
Agreement, and (iii) the storage of WISE water in Rueter-Hess Reservoir.
 
3.3.4           The Authority is responsible for the construction by May 31,
2021, of any infrastructure necessary to convey and use water delivered from the
Binney Plant to the Western Pipeline ("Binney Plant Connection").  Use of this
Binney Plant Connection for water deliveries to the Authority is governed by
this Agreement.  The Authority's design and construction of the Binney Plant
Connection will be subject to the same terms and conditions controlling its
design and construction of the Temporary Interconnect except that the portion of
the Binney Plan Connection that will be conveyed to Aurora shall consist of all
components upstream of the Master Meter.  When water deliveries are interrupted
due to Denver Water's need to make use of its supplies, Denver Water will need
to use the Binney Plant Connection. On such occasions, and subject to all
delivery terms in this Agreement, Denver Water will have the first use of the
Binney Plant Connection, and will compensate the Authority for its costs,
including O&M and a capital recovery charge, based upon AWWA utility rate
setting and cost-of-service principles.
 
 
 
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3.4
Water Deliveries.

 
3.4.1           Deliverv Phase-in.  During the Phase In Period, Aurora and
Denver Water will make available 5,000 AF annually as a guaranteed minimum
delivery.  Deliveries in excess of the 5,000 AF will be offered on an
as-available basis.  The Authority, subject to the Minimum Payment obligations
under Paragraph 3.5.3, will determine, at its sole discretion, whether to take
such deliveries.
 
3.4.2           Post May 31, 2021 Deliveries. Beginning June 1, 2021, Aurora and
DenverWater will offer for delivery to the Authority a minimum of 72,250 AF of
water over a Ten-Year Block. The Offered Delivery Amount will be calculated
retrospectively on the basis of the daily offered flow rate and will be credited
towards the Delivery Obligation.
 
3.4.3           Maximum  and Minimum Offered Delivery Amount.  In any particular
year, the Offered Delivery Amount will depend on hydrology and infrastructure
constraints.  However, the Offered Delivery Amount volume shall not be required
to be more than in Paragraph 3.4.3(a) nor less than the minimums in Paragraph
3.4.3(b).
 
(a)              Maximum  Offered Delivery Amount.  Beginning June 1, 2021, the
maximum Offered Delivery Amount shall be as follows:
 
 
•
no more than 18,063 AF of water in any single Delivery Year,

 
•
no more than 32,513 AF of water in any two Delivery Year period,

 
•
no more than 43,350 AF of water in any three Delivery Year period,

 
•
no more than 54,188 AF of water in any four Delivery Year period, and

 
•
no more than 65,025 AF of water in any five Delivery Year period.

 
(b)             Minimum Offered Delivery Amount.  Beginning June 1, 2021, the
minimum Offered Delivery Amount will be as follows, without regard to Ten-Year
Blocks (i.e., within or between Ten-Year Blocks):
 
 
•
no minimum delivery for any single year,

 
•
no more than 24 consecutive months with no deliveries,

 
•
no less than 1,806 AF in any consecutive 36 month period,

 
•
no less than 3,613 AF in any consecutive 48 month period,

 
•
no less than 7,225 AF in any consecutive 60 month period,

 
•
no less than 21,675 AF in any consecutive 120 month period.

 
3.4.4           Available Delivery Flow Rate.  Aurora will determine the
available delivery flow rate in coordination with Denver Water and the
Authority.  Absent agreement by the Authority, the maximum available delivery
rate during the Phase In Period will be 15 MGD.  Thereafter the maximum
available delivery rate will be 22 MGD. Absent agreement by the Authority,
Aurora may change the available delivery rate by no more than 7 MGD (5 MGD
during the Phase In Period) and no more often than once per 24 hour period.
Aurora shall provide 24 hour notice to the Authority for any delivery rate
change, unless the change is caused by a power outage or other unforeseen
operational upset, in which case Aurora will notify the Authority as soon as
possible.
 
 
 
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3.4.5           Excess Deliveries.  Water in excess of the Maximum Offered
Delivery Amount in Paragraph 3.4.3a or in excess of 22 MGD will be offered for
delivery on an as available basis. The Authority will determine, at its sole
discretion, whether to take such excess deliveries.  Any such excess deliveries
shall not be credited towards the Delivery Obligation or the Offered Delivery
Amounts set forth in Paragraph 3.4.3.
 
3.4.6           Modifications of Offered Delivery Amounts.  The above minimum
and maximum Offered Delivery Amounts from Denver Water and Aurora may be
modified upon agreement, in writing, of all the Parties based upon future
hydrologic determinations, infrastructure decisions, or other pertinent factors,
without the need to modify the remainder of this Agreement or execute a new
agreement.
 
3.4.7           Distribution of the Offered Delivery Amount Over the Delivery
Year.  Aurora will determine the monthly timing, volume, and flow rate of
deliveries in coordination with Denver Water and the Authority.  Subject to the
provisions of this Agreement, Aurora shall maintain the Offered Delivery Amount
in any given year within the parameters of the table below, with the actual
Offered Delivery Amount based on water availability, subject to the minimum
deliveries in Paragraph 3.4.3(b).  While deliveries are being made, Aurora shall
provide the following to the Authority on a daily basis (or other interval
agreed to by the Parties' operating representatives):
 
 
(i)
Notice of changes to the Offered Delivery Amount, if any;

 
 
(ii)
The amount of the Offered Delivery Amount taken;

 
 
(iii)
The amount of excess deliveries to the Authority pursuant to Paragraph 3.4.5, if
any.

 
The above information shall be provided to the Authority via e-mail or other
mutually acceptable means of communication.
 
(a)           Phase-In Distribution. During the Phase In Period the distribution
of the Offered Delivery Amount over any Delivery Year will be made within the
following parameters (unless otherwise agreed to by all Parties):
 
 

   
Jun-Sep
Oct-Jan
Feb-May
   
Maximum
50.0%
65.0%
65.0%
   
Minimum
10.0%
25.0%
25.0%
 

 
 
 
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(b)           Distribution Above 7,225 AF.  Commencing on June 1, 2021, in years
where the Offered Delivery Amount over any Delivery Year is at or above 7,225
AF, the distribution of the Offered Delivery Amount over any Delivery Year will
be made within the following parameters (unless otherwise agreed to by all
Parties):
 

   
Jun-Sep
Oct-Jan
Feb-May
   
Maximum
75.0%
60.0%
50.0%
   
Minimum
10.0%
10.0%
5.0%
 

 
(c)           Distribution Below 7,225 AF. Commencing on June 1, 2021, in years
where the Offered Delivery Amount  over any Delivery Year is less than 7,225 AF,
the maximum amount of the Offered Delivery Amount   in any seasonal period is as
follows (unless agreed to by all Parties):

   
Jun-Sep
Oct-Jan
Feb-May
   
Maximum
5,419 AF
4,335 AF
3,613 AF
 

 
                   3.4.8           Good Faith. Though the bullets in Paragraph
3.4.3 and the charts in Paragraph 3.4.7 represent the minimum and maximum
allowable distribution of the Offered Delivery Amount, the Parties acknowledge
that hydrologic conditions and infrastructure capacity will dictate the amount
of water actually made available within the identified range of possible annual
deliveries, subject to the minimums in Paragraph 3.4.3(b).  Denver Water and
Aurora agree to act in good faith to make water available to the Authority on a
schedule which accommodates the Authority's needs subject to such
constraints.  The Parties further acknowledge that storage developed by the
Authority, either surface or sub-surface, can be utilized to manage seasonal
distributions in a more beneficial manner.
 
 
3.5
Charges for Water.

 
3.5.1           Basis for Charges.  Pricing for water provided under this
Agreement shall be based upon Attachment C and this Paragraph.  The pricing
methodology in Attachment C takes into account the cost of water and
infrastructure contributed by each Party and the actual cost of system operation
to a specified delivery location.  The rate for water delivered under this
Agreement shall be calculated for delivery at the Binney Plant (the "Delivery
Rate").  The Delivery Rate for 2013 is $5.50 per thousand gallons of water and
shall apply to all water regardless of the Delivery Location.  In addition to
the Delivery Rate, Aurora will charge and the Authority shall pay a conveyance
fee for water provided under this Agreement delivered to the Temporary
Interconnect.  (the "Conveyance Fee").  The Conveyance Fee is the sum of the
incremental energy costs incurred by Aurora associated with the conveyance of
water delivered under this Agreement between the Binney Plant and the Temporary
Interconnect.  The Conveyance Fee shall be payable on the same terms and
conditions as the Delivery Rate charge.
 
3.5.2           Modification of Charges.  Charges may be increased based on the
WISE Raw Water Rate and/or on an update to the cost of service model,
incorporating capital and operational costs following the utility basis for
ratemaking prescribed in Attachment C.  Aurora shall provide notice to the
Authority of any proposed rate adjustment prior to October 1, and the Authority
shall have the opportunity to comment on the proposal prior to the effective
date of the rate on January 1 of the following year.
 
 
 
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                     3.5.3           Minimum Payment.  In recognition that
Aurora and Denver Water will reserve for the Authority the volumes of water
described in this Article 3, the Authority agrees to make minimum payments (each
a "Minimum Payment") as described in this Paragraph 3.5.3.  Aurora shall bill
the Authority for the Minimum Payment at the end of each applicable Delivery
Year, and the Authority shall pay such invoices in the manner described in
Paragraph 4.7.
 
(a)               Phase In Period Deliveries.  Beginning with the 2017-2018
Delivery Year, regardless of whether the Phase In Period has commenced, if the
Authority takes delivery of less than the amount of water listed in the
following table, the Authority shall pay a Minimum Payment equivalent to the
then-current rate established under Paragraph 3.5.1 times the difference between
the amount listed in the table and the amount delivered to the Authority during
the Delivery Year.
 

       
Delivery Year
 
Minimum Payment
Amount (AF/yr)
6/112017-5/31/2018   1,500 6/112018-5/31/2019   2,500 6/1/2019-5/31/2020   3,500
6/1/2020-5/31/2021   5,000

 
(b)           Full Deliveries.  Beginning with full deliveries after June 1,
2021, as described in Paragraph 3.4.2, the Minimum Payment will be calculated
based on 7,225 AF of water, or the Offered Delivery Amount in the applicable
Delivery Year, whichever is less. The Authority shall pay a Minimum Payment
equivalent to the then-current rate established under Paragraph 3.5.l times the
difference between the amount of water delivered to the Authority during the
Delivery Year and: (1) 7,225 AF; or (2) the Offered Delivery Amount, whichever
is less. Once the Authority has paid for 72,250 AF during any Ten-Year Block, no
further Minimum Payment will be required for that Ten-Year Block.
 
(c)           Exceptions to Minimum Payment.  The Minimum Payment shall not
apply to: (i) any amount of the Offered Delivery Amount not delivered due to an
outage of infrastructure necessary to deliver water to one or more Members, if
such outage is caused by a factor outside the reasonable control of the
Authority or Members; (ii) any water made available for delivery at a flow rate
in excess of maximum delivery rates defined in Paragraph 3.4.4 that is declined
by  the Authority; and (iii) prior to June 1, 2030, any water containing TDS
levels higher than 500 mg/I that is declined by the Authority under Paragraph
3.6.2

 
3.6
Water Quality.

 
                  3.6.1           Compliance with Drinking Water
Standards.  Aurora will supply to the Authority at the Master Meter water that
meets all state and federal safe drinking water regulatory requirements as such
may exist now or in the future, subject to the qualification on TDS provided in
Paragraph 3.6.2.  The Authority is solely responsible for maintaining compliance
with drinking water standards beyond the Master Meter and requiring the Members
to ensure that water delivered under this Agreement is compatible with the other
water supplied by the Members.
 
 
 
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3.6.2          Total Dissolved Solids.  Primary drinking water standards have
not been established for IDS; the current secondary standard is 500
mg/I.  Unless the Authority agrees otherwise, for the period through May 31,
2030, Aurora will provide to the Authority water at the Master Meter that has a
IDS level no greater than that provided to Aurora's own customers from the
Binney Plant (the "IDS Commitment").   Ifthe IDS level at the Master Meter
exceeds the secondary standard of 500 mg/I, Aurora will notify the Authority and
the Authority may decline deliveries.  Until May 31, 2030, any declined water
above 500 mg/I IDS will not count toward the Delivery Obligation described in
Paragraph 3.1.  There is no guarantee of a maximum IDS concentration beyond May
31, 2030, regardless of whether a primary IDS drinking water standard has been
established, and accordingly, the IDS Commitment expires on May 31, 2030.
 
                3.6.3           Disinfection.  Currently, the water to be
supplied to the Authority at the Master Meter is disinfected with
Chloramines.  Aurora agrees to consult with the other Parties prior to a change
in the disinfection method.  The Authority is solely responsible for making this
water compatible with the other water supplies of its Members.

 
                3.6.4           Master Meter Deliveries. The water quality
standards and the IDS Commitment set forth in this Agreement apply only to water
delivered at the Master Meter and shall not apply to water delivered at any
Delivery Location that is not a Master Meter.

 
                3.6.5           Future IDS Management.   The Parties acknowledge
that at some point in the future, currently estimated to be 2030, Denver Water
and Aurora's own demands for more capacity and more blend water will result in
an inability to offer deliveries at the IDS concentrations in Paragraph 3.6.2,
once the IDS Commitment has expired.  The resolution to this IDS issue could
involve: (a) reverse osmosis (RO) or other equivalent treatment technologies;
(b) the development of additional blending water supplies; or (c) acceptance of
deliveries of unblended, higher IDS water.   In an attempt to maintain IDS
levels at the limits set in Paragraph 3.6.2, and to increase deliveries in
future phases, the Parties agree to evaluate the resolution of this IDS issue at
the bi-annual delivery meetings established in Paragraph 4.1.5, beginning in
2022.  Unless the Authority chooses to receive unblended water once the
aforementioned capacities are reached and the IDS Commitment has expired, the
Authority shall develop and implement a schedule for the timely construction of
any facilities and/or acquisition of any blend water supplies determined to be
necessary in order to maintain the IDS levels in Paragraph 3.6.2, for the
Delivery Obligation or for any expanded deliveries beyond that amount that may
be available.

                3.6.6           Implementation  of IDS Management Solution.  The
details governing the implementation of the agreed upon IDS management solution
will be the subject of a separate supplemental agreement.  Absent the execution
of such a supplemental agreement, the provisions of Paragraph 3.6.2 and
3.5.3(c)(iii) will no longer be effective and unblended water will be provided
under Article 3.

 
 
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Article 4
Operations
 
4.1
Deliveries to the Authority.

 
4.1.1           Delivery Location.  The "Delivery Location" shall mean,
collectively, the Master Meter and any other points of delivery of water to the
Authority under this Agreement as provided for under this Paragraph.  The
initial primary point of delivery to the Authority for purposes of delivery
under Paragraph 3.4.1 will be through a Master Meter to be installed at the
Temporary Interconnect.   Commencing June 1, 2021, the point of delivery to the
Authority will be through a Master Meter at the Binney Plant
Connection.  Alternative points of delivery may be used with the mutual consent
of the Parties.
 
(a)          The Parties acknowledge that, due to geographic considerations,
Member Rangeview Metropolitan District ("Rangeview") may receive water
deliveries at an alternate location at or near the Binney Plant and on terms
mutually acceptable to Rangeview, Aurora and Denver Water.
 
(b)          The Parties further acknowledge that due to geographic
considerations and the timing of infrastructure construction, Member Dominion
Water and Sanitation District ("Dominion") may receive water deliveries at an
alternate location pursuant to the terms of the Dominion Agreement.  Water
delivered under the Dominion Agreement shall not be assignable to any other
Member.
 
4.1.2           Use of Third Party Infrastructure.  Water supplies owned by
Denver Water and Aurora will not be delivered to the Authority through any third
party infrastructure located upstream of the Master Meter absent mutual
agreement by the Parties.
 
4.1.3           Other Water Owned by the Authority. Upon written request, Aurora
may, at its sole discretion, agree to collect, transport, and treat other water
owned by the Authority or its Members, based on the terms of a separate
agreement.
 
4.1.4           Reusable Supplies.  Denver Water and Aurora intend to provide
potable water from reusable supplies.  In the event that Denver Water or Aurora
provides any single-use water due to an adverse judicial or administrative
determination, the Parties agree to negotiate a mutually agreeable solution to
the Authority's use of non-reusable supplies.
 
4.1.5           Delivery Year Schedule.  The Parties will meet no later than May
1 of each year to discuss the tentative volumes and anticipated delivery amounts
and flow rates that may be available in the upcoming Delivery Year, and to
schedule estimated deliveries for June through August, and meet in August to
discuss the tentative schedule for September through May estimated deliveries,
with additional meetings on an as needed basis. The Authority may provide a
desired delivery schedule in advance of any such meetings for consideration and
discussion.
 
                     4.2             Deliveries to Authority Members.  The
Authority is responsible for deliveries to individual Members beyond the Master
Meter, including the construction of any additional infrastructure, as
necessary.  Members are responsible to develop whatever individual
infrastructure and connections are necessary to take delivery from the
Authority's infrastructure and any other Delivery Locations, and are responsible
for maintenance of such individual infrastructure.  It will be the sole
obligation of the Authority to identify and respond to the individual water
demands of the Members.  The Authority will determine in its sole discretion the
allocation of water delivered by Denver Water and Aurora through the Master
Meter.  The Authority will provide annual accounting to Aurora and Denver Water
of water deliveries to the Members.
 
 
 
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4.3           Use and Reuse of Water.  The Authority and the Members shall be
entitled to use and reuse to extinction the return flows from reusable supplies;
provided, however, that should the Authority or the Members be unable to reuse
such supplies or voluntarily choose not to do so, the Authority or the Members
may contract for other Members to do so.  Nothing herein shall preclude the
ability of Denver Water or Aurora to lawfully recapture and reuse water not
reused and recaptured by the Authority or the Members.  The Authority will make
best efforts to notify Denver Water and Aurora in a timely manner when unused
return flows from WISE deliveries are available.
 
4.4           As a condition of using Denver Water's reusable water, the
Authority and the Members receiving water must comply with the following
provisions in the CRCA. These provisions of the CRCA apply only to Members of
the Authority.
 
4.4.l           West Slope Charge.  The Authority, on behalf of the Members,
shall enter into a West Slope Charge Agreement containing the provisions
described in Attachment D.  The WISE Raw Water Rate, as defined in Attachment C,
includes a charge sufficient to satisfy the Authority's obligation under the
West Slope Charge Agreement.
 
(a)           Denver will transmit West Slope Charge payments to the Colorado
River Water Conservation District on behalf of the Authority in accordance with
the West Slope Charge Agreement, and will provide regular statements of such
payments to the Authority.
 
(b)           Aurora shall be entitled to retain the entirety of the WISE Raw
Water Rate attributable to water delivered by Aurora under this Agreement,
notwithstanding that such water is not subject to the West Slope Charge
Agreement.
 
4.4.2           Restriction on Seeking New Supplies from the Colorado River Basin.
Members must comply with the following Abstention Provisions, which are defined
in Article VIII of the CRCA. The Abstention Provisions, by their terms, do not
apply to any potential project whose diversions would occur only outside the
State of Colorado.
 
(a)           Abstain permanently from pursuing or participating in any project
that would result in any new depletion from the Colorado River and its
tributaries above the confluence with the Gunnison River, including without
limitation the Eagle River (with the exception of the Eagle River MOU for Aurora
and the Upper Colorado Cooperative Project).  Pursuing or participating in a
project means seeking formal approval of any aspect of a project in a regulatory
or judicial forum, but does not include conducting various planning activities
such as feasibility studies.
 
 
 
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(b)           Abstain from pursuing or participating in any project that would
result in diversions from the Colorado River Basin within Water Divisions Nos. 4
and 6, or downstream from the confluence of the Gunnison and Colorado Rivers in
Water Division No. 5 for a period of 25 years.  Pursuing or participating in a
project means seeking formal approval of any aspect of a project in a regulatory
or judicial forum, but does not include conducting various planning activities
such as feasibility studies.  This abstention period would be reduced to 15
years if, within the first ten (10) years following execution of this Agreement,
the NEPA permitting process for the Upper Colorado Cooperative Project has not
been initiated.  If construction of a cooperative project commences within 20
years from the date of this Agreement, then the abstention period under this
Paragraph would be extended for an additional ten (10) years (a total of 35
years).
 
4.4.3           Conservation and Reuse.  The Authority and Members must comply
with the following provisions of the CRCA, Articles I.B.4(c) and I.B.4(d),
respectively.
 
(a)           Reuse of Water.  The Members receiving WISE water must maximize,
using best efforts, the reuse or successive use of the reusable water provided
to them.
 
(b)           Conservation Plan. The Members receiving WISE water must adopt and
implement a conservation plan that would achieve results similar or
proportionately the same as Denver Water's.
 
4.4.4           Expectations.  As contemplated by Paragraphs 4.1.4 and 4.4, the
Parties expect that reusable water will be delivered under this Agreement and
that the water will be used and reused to extinction using best economically
feasible efforts.  The Parties believe that Members who are implementing a
State-approved conservation plan will satisfy the conservation plan requirement.
 
4.5           Use of Water.  Water delivered to the Authority under this
Agreement shall be decreed for municipal use.  The Authority agrees to use the
water delivered in a manner consistent with Denver Water's and Aurora's water
right decrees.  Denver and Aurora represent that they have no knowledge of any
restrictions on any of their water rights decrees that would prohibit or limit
the use of the water delivered for municipal uses within the Authority Service
Area.  Deliveries from Denver Water and Aurora may not be used for agricultural
uses.
 
4.6           Location of Use. Use of water provided to the Authority pursuant
to this Agreement shall be limited to the Authority Service Area. Use of the
water supplied under this Agreement outside of the Authority Service Area is
prohibited.
 
4.7
Billing and Payment.

 
4.7.1           Aurora shall bill the Authority each month for any water
delivered under this Agreement during the preceding month.  Each monthly invoice
shall establish the actual amount of water delivered during such period and the
Offered Delivery Amount for the same period.
 
4.7.2           Aurora shall bill the Authority at the end of each Delivery Year
for the applicable Minimum Payment, if any, owing with respect to such Delivery
Year.
 
 
 
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4.7.3           The Authority shall pay all such invoices within forty-five (45)
days ofreceipt. All late payments shall be subject to a late fee of 5% of the
amount due per month, up to a maximum of 25%.
 
 
 
4.8
Operating Representatives.
For purposes of this Agreement the Parties' representatives shall be:

 

  For Denver Water: Director of Planning    
Denver Water Department
1600 W. 12th Avenue
Denver, CO 80204-3412
        For Aurora:
Deputy Director, Water Resources
Aurora Water
   
15151 E. Alameda Parkway, #3600
Aurora, CO 80012
        For the Authority: Executive Director     South Metro WISE Authority    
8400 East Prentice Avenue, Suite 1500
Greenwood Village, CO 80111

 
Article 5
General Provisions
 
5.1           Joint Advisory Committee.  Each Party shall appoint one or two
members to a Joint Advisory Committee, which shall meet as often as determined
necessary, but no less than two times a year, in order to discuss any issues or
concerns arising in the implementation of this Agreement.
 
5.2           Assignment.  Following prior written notice to and approval by
Denver Water and Aurora, which approval shall not be unreasonably withheld or
denied, the Authority may assign this Agreement to another newly created Title
29 or Tile 32 governmental entity that is made up of all or substantially all of
the Members.  With the exception of the foregoing, no right hereunder shall be
assigned by any of the Parties, without prior written consent from all Parties.
 
5.3           No Operating Obligation. Nothing in this Agreement shall be deemed
or construed as creating any obligation on Aurora or Denver Water to operate its
facilities in any particular manner, so long as Aurora and Denver Water comply
with the express terms of this Agreement.
 
5.4           Indemnity. To the extent it lawfully may, the Authority shall
defend, indemnify, and hold harmless, Aurora and Denver Water, their officers,
agents, and employees against any liability, loss, damage, demand, action, or
cause of action by a third party which may occur as a result of the physical
delivery of water, commencing at the Delivery Location, by Aurora and Denver
Water under this Agreement, except as to any portion of negligence judicially
determined to be caused by Aurora or Denver Water. This includes but is not
limited to, any damages, including any special, indirect, consequential and
punitive damages which may result from the transportation of water under this
Agreement by means of any water carriage facilities after the Delivery
Location.  No provision of this Agreement shall be construed as a waiver or
release of the immunities, limitations, or defenses afforded to the Authority,
Aurora or Denver Water under the Colorado Governmental Immunity Act.
 
 
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5.5           Amendments.  Amendments to this Agreement shall only be effective
if entered into with the same formality as this Agreement and approved by all
Parties.
 
5.6           Denver Charter.  This Agreement is made under and conforms to the
provisions of Article X of the Charter of the City and County of Denver, which
controls the operation of the Denver Municipal Water System.  This Agreement
involves the use of water outside the territorial limits of the City and County
of Denver.  The Denver Charter provides that "the Board shall have power to
lease water and water rights for use outside the territorial limits of the City
and County of Denver, but such leases shall provide for limitation of delivery
of water to whatever extent may be necessary to enable the Board to provide an
adequate supply of water to the people of Denver ..."  The extent to which
limitation of water delivery outside Denver may be necessary to enable the Board
to provide an adequate supply of water to the people of Denver is a fact to be
determined by the Denver Water Board in the exercise of its reasonable
discretion. The Board has determined that the interruptible nature of the water
deliveries under this Agreement and the other terms and conditions of this
Agreement is sufficient to ensure an adequate supply of water inside
Denver.  This Agreement shall not be construed or implemented in such a way as
to impair Denver Water's obligations to provide water within its Combined
Service Area.
 
5.7           Sole Obligation of Aurora Utility Enterprise. This Agreement is
made pursuant and conforms to the provisions of the Charter of the City of
Aurora, Colorado, which controls the operations of the Utility Enterprise for
the City of Aurora. The obligations of Aurora under this Agreement are the sole
obligations of the City of Aurora acting by and through its Utility Enterprise
and, as such, shall not constitute a general obligation or other indebtedness of
the City of Aurora or a multiple fiscal year direct or indirect debt or other
financial obligation whatsoever of the City of Aurora within the meaning of any
constitutional, statutory, or charter limitation. In the event of default by
Aurora or failure to meet any of its obligations under the terms of this
Agreement, the other Parties hereto shall have no recourse to any revenues of
the City of Aurora except for the net revenues of the water utility system
available therefore in the City of Aurora Utility Enterprise water fund, or any
successor enterprise fund, and remaining after payment of all expenses relating
to the operation and maintenance and periodic payments on bonds, loans and other
obligations of the City acting by and through it Utility
Enterprise.  Notwithstanding anything herein to the contrary, nothing in this
Agreement shall be construed as creating a lien upon any revenues of the Utility
Enterprise or the City.  Aurora has determined that the interruptible nature of
the water deliveries under this Agreement and the other terms and conditions of
this Agreement are sufficient to ensure an adequate supply of water inside
Aurora.
 
5.8           Joint and Several Obligations.  The obligations by Denver Water
and Aurora under this Agreement shall be joint and several.
 
 
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5.9 No Remedy Against non-Parties. Except as provided in Paragraph 5.17, the
Parties to this Agreement may seek remedies under this Agreement only against
each other, and not against third parties.
 
5.10 Venue and Governing Law. Venue for resolution of any dispute resulting in
litigation shall be the Colorado District Court for the county in which any
defendant resides. This Agreement shall be governed by and construed under the
laws of the State of Colorado.
 
5.11 Waiver of Rights. The failure of any Party to exercise any right under this
Agreement shall not be deemed a waiver of such Party's right and shall not
affect the right of such Party to exercise at some future time the right or
rights or any other right it may have under this Agreement.
 
5.12 Captions. The captions in this Agreement are for convenience of reference
only, are not part of this Agreement and shall not define or limit any of its
terms or provisions.
 
5.13 Failure to Perform Due to Force Majeure. No Party to this Agreement shall
be liable for any delay or failure to perform due solely to conditions or events
of force majeure, as that term is defined in this Paragraph; provided that: (i)
the non-performing Party gives each other Party prompt written notice describing
the particulars of the force majeure; (ii) the suspension of performance is of
no greater scope and of no longer duration than required by the force majeure
event or condition; and (iii) the non-performing Party proceeds with reasonable
diligence to remedy its inability to perform and provides weekly progress
reports to the other Parties describing the remedial actions taken. In the case
of a force majeure event, the Parties shall meet and agree, in writing, upon an
appropriate modification of obligations identified herein, with specific
reference to water delivery obligations, so as to address the unanticipated
conditions associated with such event. As used in this Paragraph, force majeure
shall mean any delay or failure of a Party to perform its obligations under this
Agreement caused by events beyond the Party's reasonable control and without the
fault or negligence of the Party, including, without limitation (a) acts of God,
(b) sudden actions of the elements such as floods, earthquakes, hurricanes, or
tornadoes, (c) sabotage, (d) vandalism beyond that which can be reasonably
prevented by the Party, (e) terrorism, (f) war, (g) riots, (h) fire, (i)
explosion, G) blockades, (k) insurrection, or (1) strike, slow down or labor
disruptions (even if such difficulties could be resolved by conceding to the
demands of a labor group). Provided that hydrological change is addressed in
5.14.
 
5.13.1 Subordination Clause. In the event of a force majeure event or condition
as described above in Paragraph 5.13, until the event or condition is resolved,
this Agreement shall be made expressly subordinate to any present or future use
of water supply for municipal purposes within the service territories of Aurora
or Denver Water or to meet contracted water delivery obligations of Aurora or
Denver Water existing prior to the execution of this Agreement.
 
5.13.2 Cooperation under Force Majeure. Should there be evidence of force
majeure that may affect, or has affected, the ability of any of the Parties to
meet their obligations under this Agreement, the Parties agree to meet and
negotiate in good faith any modifications to this Agreement to ensure a
reasonable and coordinated response to such force majeure with the goal of
forestalling the need for a force majeure declaration.
 
 
 
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5.14           Hydrologic Change.  The Parties acknowledge that the WISE
Project, and deliveries under this Agreement, are based on surface water
supplies that are variable to the extent described in this Agreement.  The
Parties have undertaken engineering studies based on observed historical
hydrology that suggest these supplies will continue, and may increase in the
future. Should future hydrology change such that there are demonstrably and
significantly less water supplies available than expected at the time of the
execution of this Agreement, the Parties agree to cooperate in the
identification and development of additional supplies designed to assist Aurora
and Denver Water in meeting the delivery obligations identified in this
Agreement. Demonstration of changing hydrology may include persistent water use
restrictions imposed on customers of Denver Water and Aurora or a Colorado River
compact call or water management efforts to mitigate a Colorado River compact
call. Provided, however, that nothing in this 5.14 shall relieve Denver Water or
Aurora from meeting the Delivery Obligation then in effect, nor shall it modify
the "basis for charges" (including the calculation of the WISE Raw Water Rate)
relative to the cost of such deliveries as identified in 3.5.1 and Attachment C.
 
 5.15            Enforcement. Subject to the provisions of Paragraphs 5.16 and
5.17, this Agreement may be enforced in law or equity, damages, or such other
legal and equitable relief as may be available to a Party.  Except as otherwise
provided herein, each party waives any right to special, indirect, consequential
and punitive damages, including lost revenue.  Should Denver Water or Aurora
fail to treat or deliver water in accordance with the terms of this Agreement,
the Authority shall have recourse against either or both of these parties based
upon the factual cause of the default.
 
5.16             Remedies for Monetary Defaults.
 
       5.16.1           Suspension of Deliveries. If the Authority does not
timely satisfy any of its payment obligations under this Agreement, Aurora may
give the Authority a notice of default.  If the Authority does not cure the
default by making full payment within seven (7) business days from receipt of
the default notice, Denver Water and/or Aurora, in addition to pursuing any
other remedies available to them at law or in equity, may suspend deliveries of
water to the Authority.
 
       5.16.2            Termination of Agreement.   If the Authority fails to
cure the default within 180 days from receipt of the default notice described in
Paragraph 5.16.1, then Denver Water and/or Aurora, in addition to pursuing any
other remedies available to them at law or in equity, may terminate this
Agreement.
 
5.17   Delivery Obligation and Minimum Payment Ad justment.
 
       5.17.1            With respect to any Delivery Year after June 1, 2017,
if any Member fails to pay to the Authority the sums required of such Member
under the SM WISE IGA (''Non-paying Member") towards the Minimum Payment
required by Paragraph 3.5.3(b), then the Authority may seek an adjustment of the
Minimum Payment in future Delivery Years pursuant to the terms of this
Paragraph, under the following conditions:
 
 
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  (a)
the Authority pays the full Minimum Payment required by Paragraph 3.5.3(b) for
the subject Delivery Year (Delivery Year 1);
  (b)
the Authority provides written notice to Denver Water and Aurora identifying the
Non-paying Member and the Non-paying Member's pro-rata share of the Minimum
Payment and reasonable evidence of such non-payment;
  (c)
the Authority terminates both deliveries under this Agreement and deliveries of
any other water through the Western Pipeline to the Non-paying Member;
  (d)
the Authority uses commercially reasonable efforts to ensure compliance by the
Non-paying Member, including pursuing all applicable available remedies set
forth in the SM WISE IGA; and
  (e)
the Authority provides regular written notice to Denver Water and Aurora of the
remedies undertaken and the status of those remedies;
     

 
5.17.2 If the Authority continues to satisfy these conditions during Delivery
Year 2 and requests an adjustment, then the basis for calculating the Minimum
Payment for Delivery Year 2 shall be reduced ("Temporary Reduction") by the
amount of water attributable to the Non-paying Member's share of the Minimum
Payment required by Paragraph 3.5.3(b) for Delivery Year 2. The Temporary
Reduction shall not exceed 30% of the Minimum Payment for Delivery Year 2,
subject to the limitations in Paragraph 5.17.5. The Delivery Obligation for the
applicable Ten­ Year Block shall be reduced by the same amount as the basis for
the Temporary Reduction for Delivery Year 2.
 
5.17.3 The same procedure will be followed for Delivery Years 3-5, if the
Authority continues to satisfy the conditions for a Temporary Reduction. A
Temporary Reduction shall not be available for more than four Delivery Years.
 
5.17.4 At the end of Delivery Year 3 but in no event after Delivery Year 5, the
Authority may request, the Delivery Obligation will be reduced by the amount of
water that formed the basis for the Temporary Reduction ("Permanent Reduction"),
provided that the Authority demonstrates that the Non-paying Member is no longer
a Member under the SM Authority IGA and is permanently excluded from receiving
any water under this Agreement and any other water through the Western Pipeline.
To effectuate a Permanent Reduction, the Parties shall enter into an amendment
to this Agreement that: (i) reduces the Delivery Obligation by the Permanent
Reduction; (ii) makes other necessary conforming changes, including reductions
to maximum and minimum deliveries in Paragraph 3.4.3 in the same proportion as
the Permanent Reduction bears to the prior Delivery Obligation and the Minimum
Payment in 3.5.3; and (iii) removes the Non-paying Member as a Member under this
Agreement. If a Permanent Reduction is to be effectuated during any Delivery
Year other than the first Delivery Year of a Ten-Year Block, the
reduction of the Delivery Obligation for that Ten-Year Block shall be one-tenth
of the Permanent Reduction multiplied by the number of years remaining in the
Ten-Year Block.
 
5.17.5 The aggregate amount of all Permanent Reductions, or of all
contemporaneous Permanent and Temporary Reductions, shall not exceed 30% of the
Minimum Payment (i.e. 2,168 AF per year or a reduction in the Delivery
Obligation of more than 21,675 AF.)
 
 
 
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5.18           Defense against Third Parties.  In the event of litigation by any
third party concerning this Agreement, and to the extent permitted by law, the
Parties agree to jointly defend any such third party action.
 
5.19           No Third Party Beneficiaries. There are no third party
beneficiaries of this Agreement.
 
5.20           Water Rights Peace Pact.
 
       5.20.l Diligence Proceedings. As stated in Recital 0, the Parties may
agree to work to increase WISE deliveries. With regard to all conditional water
rights presently owned by Denver Water and/or Aurora, the Parties agree to
withdraw any statements of opposition in each other's pending diligence filings
and not to oppose each other's pending or future diligence applications,
including pending or future applications to make conditional rights, existing on
the date of this Agreement, absolute. However, the Parties may file statements
of opposition in such proceedings for the limited purpose of ensuring compliance
with the obligations of this Agreement.
 
 
       5.20.2 Other Proceedings. The Parties also agree to negotiate in good
faith the stipulated resolution of any pending or future water right and
administrative or judicial proceedings that may be necessary: (a) for Denver
Water and Aurora to meet their delivery obligation for the provision of reusable
water supplies under this Agreement or (b) for the Authority or its Members to
use and reuse water delivered under this Agreement. To that end, the Parties
shall timely share all relevant factual information concerning the existence or
absence of injury to the respective decreed water rights of each party as a
consequence of the administrative or judicial approvals being sought.
 
 
       5.20.3 SM WISE IGA. The Authority shall include in the SM WISE IGA an
obligation to comply with the provisions of this Paragraph 5.20. Failure of a
Member to comply with this Paragraph shall constitute a breach of this Agreement
by the Authority. However, in actions other than diligence proceedings, nothing
in this paragraph 5.20 or in the SM WISE IGA is intended or shall be interpreted
to prevent any Member from taking any actions it deems necessary to protect its
water rights from injury, consistent with the intent of Paragraph 1.3.
 
5.21           Infrastructure Ownership. Nothing in this Agreement shall
constitute or be interpreted as constituting the transfer of any ownership
interests in the infrastructure assets of the Parties. Each Party shall remain
individually responsible for the operation, maintenance, repair and replacement
of their infrastructure absent express written agreement to the contrary.
 
5.22         Separate Water Supply Agreements. Any separate water supply
agreement between a Member and either Aurora or Denver Water, executed after the
effective date of this Agreement, shall be contingent upon the Member being in
full compliance with its WISE-related obligations. Denver Water and Aurora agree
to suspend deliveries immediately under any separate water supply agreement if
the Member becomes a Non-paying Member as defined in paragraph 5.17. Any
separate water supply agreement shall contain a provision requiring suspension
of deliveries during any period in which the Member is in default of any of its
obligations under the SM WISE IGA.
 
 
 
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5.23           New Participating Members of Authority.  The Parties acknowledge
that at times additional entities may request to join the Authority and become a
Member.  Any new Member must be an entity in existence and delivering water to
customers as of the effective date of this Agreement, unless the parties agree
otherwise in writing.  Acceptance of qualified Members and the nature of their
financial obligations, if any, to the Authority, shall be within the sole
discretion of the Authority; provided, however, that such change in the Members
shall not in any manner affect the obligations of Denver Water and Aurora under
this Agreement nor modify the terms of any existing agreement between either
Denver Water or Aurora and any current or future Members.  New Members shall be
bound by the terms of this Agreement and shall enjoy such benefits as determined
at the discretion of the Authority.
 
5.24           Authority of the Parties.  The Parties each affirm and represent
that they have the full power and authority to execute this Agreement and
thereafter perform all of the terms and conditions set forth herein.
 
5.25           No Agency Created.  This Agreement is not intended and shall not
be construed to create any joint venture, agency relationship or partnership
between the Parties.  None of the Parties shall have any right or authority to
act on behalf of or bind any other Party.
 
5.26           Dispute Resolution. If a dispute relating to this Agreement
arises among the Parties, the Parties shall first consider any proposed
resolution of the matter. If the matter is not resolved, the Parties shall
promptly convene a meeting to be attended by persons with decision-making
authority regarding the subject matter of the dispute. The meeting attendees
shall attempt in good faith to negotiate a resolution of the dispute. If the
dispute is still not resolved within 20 days after the meeting, the Parties
shall be free to pursue any other legal remedy.
 
       5.26.l   In the event of legal proceedings, the Parties agree to seek a
prompt resolution, and that each Party shall pay its own costs and expenses,
including attorney fees.
 
5.27           Effect on Prior Agreements.  This Agreement supersedes the Pilot
Project Agreement between Denver Water and the Authority dated February 14,
2007.  All other agreements between any of the Parties shall remain in full
force and effect.  In the event of a conflict between the terms of a prior
agreement between any of the Parties and this Agreement, the terms of this
Agreement shall prevail.
 
5.28           Countemarts and Facsimiles.  This Agreement may be executed in
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument. Facsimile signatures bind the Parties.
 
5.29         Notices.
 
       Any notice or other communication required or permitted under this
Agreement shall be sufficient if in writing and delivered to the addresses
provided below or such other addresses as designated by any Party by one of the
following means: (a) in person (by hand delivery or professional messenger
service); (b) by U.S. Mail, postage prepaid; (c) by overnight service (Express
Mail of the U.S. Postal Service, Federal Express) or any other courier service
guaranteeing overnight delivery), addressed to each of the following:
 
 
 
22

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  For Aurora:      
Deputy Director of Water Resources of Aurora Water
15151 East Alameda Parkway, Suite 3600
      Aurora, CO 80012              
Copy to:
City Attorney
15151 East Alameda Parkway, Suite 5300
Aurora, CO 80012
            For Denver Water:      
Director of Planning
Denver Water Department
1600 W. 12th Avenue
Denver, CO 80204-3412
            For Authority:      
Executive Director
South Metro WISE Authority
8400 E. Prentice Avenue, Suite 1500
Greenwood Village, CO 80111
             
Copy to:
Spencer Fane & Grimshaw LLP
ATTN: James M. Hunsaker
1700 Lincoln Street, Suite 3800
Denver, CO 80203
 

 
 
or at such other address as any Party hereto may hereafter or from time to time
designate by written notice to the other Parties given in accordance herewith.
 
                  Any notice delivered (a) in person shall be effective upon
delivery; (b) by first class U. S. Mail shall be effective three (3) business
days after the mailing; (c) by overnight service shall be effective one (1)
business day after delivery to the overnight service provider.
 
5.30           Agreement Contingencies.   The ability and obligation of the
Parties to perform under this Agreement is contingent upon:
 
       (a)            the execution of the Western Pipeline Agreement which
shall include provisions ensuring the financing thereof, referenced in paragraph
3.2.1; and
 
       (b)           issuance of a permit satisfactory to the Parties by the
U.S. Army Corps of Engineers (Corps) allowing water delivered under this
Agreement to be stored in Rueter-Hess Reservoir.
 
       The "Effective Date" of this Agreement shall be December 31,
2013.    If these contingencies have not been satisfied as of December 31, 2014,
the Parties agree to terminate this Agreement or extend the dates set forth in
this Agreement.
 
 
 
23

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       IN WITNESS WHEREOF, Denver Water, the Authority and Aurora have executed this Agreement.
 

  CITY AND COUNTY OF DENVER   acting by and through its ATTEST: BOARD OF WATER
COMMISSIONERS

Image [page24image.jpg]
 
 
APPROVED AS TO FORM:
 
 
 By:
  Legal Division
 
 
 
24

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Image [exh103_p27.jpg]

 
South Metro WISE Authority
 
By:
   President
 
 
Date:           12/18/13
 
 
 
25

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CITY OF AURORA, COLORADO,
ACTING BY AND THROUGH ITS
UTILITY ENTERPRISE
 
Image [ex103_p26.jpg]
 
 

STATE OF COLORADO    )
             )     SS
COUNTY OF ARAPAHOE       )
 
    The foregoing instrument was acknowledged before me this day of 2013, by
Stephen D. Hogan, Mayor, acting on behalf of the Utility Enterprise of the City
of Aurora, Colorado.
 
Image [ex103_p26pt2.jpg]
 
 
 
26

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LIST OF EXHIBITS AND ATTACHMENTS
 
Attachment A -Major WISE Partnership Facilities
Attachment B -DIA Connection Infrastructure
Attachment C -Water Delivery Pricing
Attachment D - West Slope Charge Agreement
 
 
 
 
 
27

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Attachment A -Major WISE Partnership Facilities
 
Image [ex103_p28.jpg]
 
 
 
 
28

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ATTACHMENT B

DIA CONNECTION INFRASTRUCTURE

 

1.             Connection from Denver Water's distribution system at DIA to
Aurora Water's Pump Station #2
 
The connection from DIA to Aurora's PWP will provide blend water for Authority
WISE deliveries.  The current estimate for design, permitting, construction and
all other costs for the DIA connection is $8.7 million.  Authority will pay 85%
of the total costs, based on estimated usage of the connection.  Authority's 85%
of the $8.7 million total estimated cost is included in the DIA Connection Fee.
 
    1.1   Description:   A 24" pipeline, approximately six (6) miles in length,
from the north end of DIA at East I 14th Avenue and Newbern Street to the PWP
Pump Station #2 near 96th Avenue and E-470, and meters at a location to be
determined.
 
 

 
Attachment B 
 

--------------------------------------------------------------------------------

 
 
ATTACHMENT C
WATER DELIVERY PRICING
 
 
1.
General. Pricing for water deliveries to the Authority under this Agreement (the
"Delivery Rate") is intended to be based on the principles of cost-of-service
utility rate setting. However, it is understood by the Parties that specific
circumstances defined under this Agreement require advanced understanding and
application of those principles and that the Parties have adapted in some cases
an application of rate setting principles that are particular to this Agreement,
the characteristics of the services provided, and the purpose and intent of the
Parties themselves. In cases where generally accepted principles of utility rate
setting may appear to differ from the pricing of water deliveries under this
Agreement, the terms defined in this Attachment C of the Agreement will prevail.
If a term or condition necessary for the pricing of water deliveries under this
Agreement is missing from this Attachment, that term and condition will be
established by mutual agreement of the Parties.

 
 
2.
Overall Principles. The Delivery Rate incorporates the following overarching
principles:

 
 
2.1.
Appropriate Return on Investment.  The Delivery Rate will allow those who own
Facilities ("Owner") to receive an appropriate return on historical and new
investments in the Facilities as defined in this Attachment.

 
 
2.2.
Consistent with Owners' Internal Ratemaking and Financial Practices.  The
Delivery Rate will be consistent with the financial requirements and internal
ratemaking practices of the Owner.

 
 
2.3.
Equitable and Transparent Allocation of Costs. The costs incurred to provide
deliveries under this Agreement include the operating and maintenance costs in
addition to various capital components.  Equitable pricing means that these
costs will be allocated to those receiving water deliveries from the project
each in accordance with their particular demand characteristics and their
contractually defined delivery requirements. Transparency exists when the
process for such an allocation can occur within a framework that is visible,
understood by all the Parties, and repeatable over time with consistent and
predictable results.

 
 
3.
Facilities.  The WISE Facilities include all tangible assets, and intangible
real property rights (e.g. water rights), that are used and useful in providing
the water deliveries under this Agreement.  A listing of the current Facilities
is included in Table I .The listing of Facilities may change from time to time.
No changes to the Facilities listed in Table 1 will be made without the consent
of the Parties which consent shall not be unreasonably withheld or denied.  All
Facilities, current and future, include the following overall characteristics:

 
 
 
3.1.
Facilities are Used. To be considered a Facility, the asset must be physically
used for delivery of water under this Agreement with measurable flows of water
occurring on a regular and recurring basis. Any Facility included in the
Delivery Rate is either: a) currently used with measurable flows, or b) will be
used in the year immediately following Owner's budget year as part of the normal
operations of the Facilities.

 
      
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
 
 
3.2.
Facilities are Useful. A Facility must provide a specific function that enables
the delivery of water as described in this Agreement. Facilities, or parts of
Facilities, that do not enable the deliveries under this Agreement are not
included in the Delivery Rate. Facilities that are only used by the Facilities'
Owner are not included in the Delivery Rate.

 
 
 
 
3.3.
Exceptions. Additional Facilities will be required in the future to maintain
current deliveries and provide increased deliveries to the Authority in excess
of an average of 72,250 acre feet in a Ten-Year period, or 7,225 acre feet per
year on average. In some cases, those Facilities may need to be constructed
ahead of the Owners' planned schedules. Exceptions to Paragraphs 3.1 and 3.2 may
be required to address the additional costs, if any, incurred in accelerating
construction of planned Facilities. Facilities may be added to the Delivery Rate
in anticipation of future construction under the following conditions:

 
 
 
3.3.1.
Conditions for Exception:

 
 
3.3.1.1.
Acceleration of planned Facilities.   The Owners need to accelerate planned
infrastructure to maintain the current delivery commitment.

 
 
 
3.3.1.2.
Increased Delivery Requested. The Authority has requested increased delivery
from a previous commitment level, and the Owners are willing and able to meet
the requested deliveries.

 
 
 
3.3.1.3.
Additional Facilities Required. The Owners cannot meet the requested increased
delivery without additional Facilities. The Facilities required are either newly
identified and were not part of the Owners' prior plans, or must be constructed
ahead of the Owners' plans.

 
 
 
 
3.3.1.4.
Owner Investment Required. The Owners pay for the additional Facilities and
incur an Owner Investment consistent with Paragraph 5.2.1 below.

 
 
3.3.2.
Allowances in Pricing. If the conditions in Paragraphs 3.3 and 3.3.l are met,
then the pricing for the next determination of the Delivery Rate will include
the reasonably estimated costs for the identified Facilities.

 
 
3.3.2.1.
Capital Costs. The capital costs calculated under this provision will include a
return to the Owners as described in Paragraph 5.2 based on the reasonably
estimated construction cost of the Facilities in question.  The pricing will not
include any depreciation expense as described in Paragraph 5.1 or working
capital as described in Paragraph 5.2.1.3, however, until the Facilities are
constructed and placed into service and used and useful for delivery of water
under this Agreement. All other provisions of Section 5.2 will apply.

 
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
 
3.3.2.2.
Operating Costs.  Operating and maintenance expenses as described in Paragraph
6, below, will not be included in the pricing analysis until such time as the
Facility is placed into service for the delivery of water under this Agreement.

 

 
4.
Ownership.  Each of the Facilities has at least one Owner.  The Owner(s) will be
identified for each of the Facilities by name and by percentage of ownership.

 

 
5.
Capital Costs.  Capital costs include the depreciation expense on the
Facilities, plus a return to the Owner of the Facilities.

 

 
5.1.
Depreciation Expense.  Depreciation expense has the same meaning as is normally
applied by the Government Accounting Standards Board.  All depreciation is to be
determined using the Straight-Line method based on the initial term of the
Facility's life. Determination of salvage value, if any, is at the discretion of
the Facility Owner.

 

 
5.2.
Return. Owner(s) will be compensated for their investment in the Facilities in
an amount equal to the Owner(s) weighted average cost of capital (WACC) times
the Owner(s) investment in the Facilities.

 
 
5.2.1.
Measuring Owner Investment. Owner investment is also referred to as "Rate Base."
The Rate Base is meant to accurately measure the Owner(s) actual investments in
the Facilities. It includes the following components:

 
 
5.2.1.1.
Net Book Value of Facilities.  This is equal to the actual original cost of the
Facility less accumulated depreciation.  The book value may be increased by
additions or improvements to the Facilities; it decreases with asset deletions,
retirements, and accumulated depreciation.

 
 
5.2.1.2.
Construction Work in Process.  Future Facility investments may be included in
the Rate Base if the Facility meets the definitions in Paragraph 3 above.

 
 
5.2.1.3.
Working Capital.  Owners are allowed to include an allowance for working capital
equal to 90 days of their operating & maintenance expenses incurred at the
Facilities. The working capital allowance for each Facility shall be calculated
as the annual operating and maintenance expense, divided by 365 days, times 90
days.

 
 
5.2.1.4.
(Less) Contributions Received.  Any capital payments or assets in kind paid by
the Authority to the Owner(s) to defray the Owner(s) Investment shall be
accounted for as capital contributions and credited to the Authority as a
reduction in the Owner(s) Investment.  Contributions reduce both the Return and
depreciation expenses related to the Facilities.   All contributions will be
amortized at a rate equal to the rate of depreciation for the Facility in
question.

 
 
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
 
5.2.2.
Measuring the Weighted Average Cost of Capital.  The weighted average cost of
capital is the sum of the weighted debt cost and weighted equity cost; it will
be used as the rate of return described in section 5.2.

 
 
5.2.2.1.
Total Cost of Capital. The cost of capital will include an allowance for the
Owner(s) actual cost of debt financing, as well as a return for the Owner(s)
equity.

 
 
5.2.2.1.1.Cost of Debt -The cost of debt is the average annual interest rate
paid on the Owner(s) portfolio of outstanding long-term debt. For the purposes
of this Agreement, the cost of debt shall be calculated as follows:

 
 
5.2.2.1.1.1. Determine the total amount of long-term debt issued and outstanding
as measured from the Owner(s) most recently audited and publicly available
financial statements.  Total long-term debt outstanding shall include all
portions of long-term debt due and payable within one year, also called the
"current portion'', together with those amounts payable at any time after one
year, also called the "long-term portion."

 
 
5.2.2.1.1.2. Determine the net interest payment due on each component of the
long-term debt during the 12-month period in which the Delivery Rate will be
determined.  Interest payments due shall reflect the total of scheduled interest
payments, net of any discounts, premiums, grants, state/federal subsidization,
or other reductions.

 
 
5.2.2.1.1.3. Divide the total amount of interest due by the total amount of
long-term debt outstanding to derive the annual effective interest rate.

 
 
 
5.2.2.1.2. Cost of Equity -the cost of equity is the interest rate to be paid on
the use of the Owner(s) equity capital. For the purposes of this Agreement, the
cost of the Owner(s) equity shall be calculated as follows:

 
 
5.2.2.1.2.1. Determine the cost of equity using the Build-Up Method (BUM)
expressed as the following formula: Cost of Equity (Ke) = Risk Free Rate (Rf)
+ Market Risk Premium (MRP) + Industry Risk Premium (IRP) + Size Premium (SP).

 
 
5.2.2.1.2.2. Risk Free Rate (Rf). The risk-free rate is equal to the yield on a
20-year US Treasury bond. For the purposes of this Agreement, the yield shall be
the average calculated for the 12 months immediately preceding the determination
of the Delivery Rate.

 
 
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
 
 
5.2.2.1.2.3. Market Risk Premium (MRP).  The MRP represents the additional
return required by equity holders over debt holders in general.  For the
purposes of this Agreement, the MRP will be taken from
Ibbotsons Stocks, Bonds, Bills, and Inflation  Valuation Yearbook. The MRP shall
be the historical long-term horizon expected equity risk premium as published in
the Ibbotson SBBI Valuation Yearbook, and not the supply side equity risk
premium.

 
 
5.2.2.1.2.4.
Industry Risk Premium (IRP). The IRP represents the additional or reduced return required by equity holders in the same industry as
the Owner(s).
 For the purposes of this Agreement, the Owner(s) industry is Water Supply, classified under the Standard
Industrial Code of 494, or the NAICS code of 221310 .
 The IRP will be taken from the then current edition of Ibbotsons Stocks, Bonds,
Bills, and Inflation Valuation Yearbook.

 
 
5.2.2.1.2.5. Size Premium (SP).
 The SP represents the additional or reduced return required by equity holders as a result of the size of the Owner(s) specific enterprise.
 For the purposes of this Agreement, the SP will be taken from Ibbotsons Stocks, Bonds, Bills, and Inflation
Valuation Yearbook for the appropriate decile (the text provides an appropriate SP for different enterprise sizes grouped into deciles).
 For the purposes of this Agreement, the Owner(s) size shall be determined as the book value of its equity. Book value of the Owner(s) equity shall be determined based on the most recently audited and publicly available financial statements;
book value is equal to total assets less total liabilities with no further adjustments whatsoever.

 
 
5.2.2.1.2.6. In the event that Ibbotsons Stocks, Bonds, Bills, and Inflation
 Valuation Yearbook is no longer published in its current form, the parties
agree to negotiate in good faith to identify a comparable substitute publication
for the purposes of this Attachment C.

 
 
5.2.2.2.
Weightings.  The weighted average cost of capital is affected by the relative
percentage of debt and equity financing used by the Owner(s) in the Owner(s)
overall water utility enterprise.

 
 
5.2.2.2.1.
Total Invested Capital.  An Owner's total invested capital is equal to the sum of: (a) total long-term debt as described in 5.2.2.1.1; and
(b)  his total equity as measured from the most recently published,
publicly available, audited financial statements as the Owner(s) total assets less total liabilities.

 
 
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
 
5.2.2.2.2. Determine the Weight of Debt as a Portion of Invested Capital. The
total long-term debt divided by Total Invested Capital is the debt weighting.

 
 
5.2.2.2.3. Determine the Weight of Equity as a Portion of Invested Capital. The
equity weighting shall be determined as I 00% minus the debt weighting described
in 5.2.2.2.2.

 
 
5.2.2.3.
Calculate the WACC.  The WACC for the Owner(s) shall be calculated using the
formula: WACC = Wd(Kd) + We(Ke). Where Wd = weight of debt as described in
5.2.2.2.2; Kd = cost of debt as described in 5.2.2.1.1; We = weight of equity as
described in 5.2.2.2.3; and Ke = cost of equity as described in 5.2.2.1.2.

 

 
6.
Operating & Maintenance Costs.  The costs of operating and maintaining the
Facilities will be properly budgeted and accounted for on a regular basis.
Whether or not operating and maintenance costs are incurred, and the level, if
any, of those costs is determined at the sole discretion of the Owner(s) of the
Facilities. Only the operating and maintenance costs incurred in the operation
of the Facilities are included in the basis for the Delivery Rate.

 
 
6.1.
Direct Operating and Maintenance Costs.   The direct expenses in operating and
maintaining the Facilities are to be included in the Delivery Rate determined
under this Agreement.  Direct operating and maintenance costs include the fixed
and variable costs of operating the Facilities.  Capital repairs and
replacements are not to be included as operating and maintenance costs.  Any
expenditure meeting the Owner(s) then existing capitalization policy should be
recorded as an asset and included in the determination of Rate Base as described
above.

 
 
7.
WISE Raw Water Rate.  The "WISE Raw Water Rate" shall be determined as the then
published rate established by Denver Water for non-reusable nonpotable water
service charged to its Outside Combined Service Area customers times 1.625 for
all reusable water supplied under this Agreement.

 
 
8.
Direct Overhead and Administration.   Administrative costs directly incurred in
the management of this Agreement are to be included in the Delivery
Rate.  Owners are responsible for accounting for any direct overhead and
administrative costs, both fixed and variable.

 
 
9.
Indirect Overhead and Administration.  Costs that are not directly attributable
to the performance of this Agreement are not included in the Delivery Rate.

 
Attachment C
 
 

--------------------------------------------------------------------------------

 
 
10.
Ratemaking Process.  Except as noted in Paragraph
10.1, the Owners will at their expense, prior to proposing to increase the Delivery Rate for any year, prepare a cost-of-service allocation for the Facilities' costs in accordance with this Attachment
C. The cost-of-service allocation will be based on the Owners' budgeted expenditures for the forthcoming year, and
the capital costs will be based on the expected Rate Base for
the same forthcoming year.
 The WISE Pricing Summary results of the Rate Model for 2013 are attached hereto as Exhibit 1. A full model print-out has been provided to the Parties for 2013.
 The Owners will provide reasonable back-up documentation with similar detail when proposing future Delivery Rate increases.

 
    10.1.
Water Supply Rate Adjustments.   The rate may be increased annually to reflect
changes to the WISE Raw Water Rate as determined in accordance with paragraph
7.  If the Owner is increasing the Delivery Rate solely as a result of an
increase in the WISE Raw Water Rate, then the Owner is not required to prepare a
new cost-of-service allocation but can incorporate the updated WISE Raw Water
Rate into the Delivery Rate.

 
    10.2.
Annual Period.   Except for Delivery Rate changes pursuant to 10.1, the Delivery
Rate will be prepared for the forthcoming year in which a new Delivery Rate is
to take effect.  For the purposes of rate administration, all changes to the
Delivery Rate charged under this Agreement will be prepared and placed into
effect on January 1 of each year.

  
    10.3.
Information Requirements.   Using the average annual delivery amount to the
Authority of 7,225 AF (5,000 AF until 2021), to be adjusted in the future if
additional commitments are agreed to, the Owner will then take the following
steps:

 
       10.3.1.
Determine Water Demand   at Each Facility.  The Owner will prepare an estimate
of the average water through each Facility for each month. The estimate will
show for each Facility: (i) the total amount of water sent through the Facility
in each month, and (ii) the total water delivered to each Party for each month.
The amount of water delivered to the Authority through each Facility may be
adjusted to account for "trade" water. Trade water is a TDS management approach
where the Authority will receive treated Aurora Mountain Water in exchange for
Aurora taking water from Brighton that would have been delivered to the
Authority, but for the TDS concentration. The "trade water" approach for pricing
will have the effect of increasing the amount of flow accounted for in the PWP
Treatment Train for the Authority and will allow Aurora Water to recover the
additional costs, if any, it incurs to produce water for delivery.
 

 
       10.3.2.
Determine the Operating and Maintenance Costs for Each Facility.   The Owners
will prepare, at their expense, a detailed budget of operating and maintenance
expenses anticipated for each Facility for the Delivery Year. Operating and
maintenance expenses shall not include any provision for capital expenditures of
any kind. All capitalized asset purchases should be reported as additions to the
fixed assets as described in Paragraph 10.3.3, below.

 
 
Attachment C
 
 

--------------------------------------------------------------------------------

 

         10.3.3.
Update Fixed Asset Register. The Owner will provide, at their expense, a
detailed listing of fixed assets for each Facility that will be updated,
current, and audited as of the end of the Owner's financial reporting year
immediately preceding the Delivery Year. The fixed asset register will detail
the following information for each Facility and will be reported in accordance
with generally accepted accounting principles of the Government Accounting
Standards Board, except in no case will the fixed assets be reported for the
purposes of this Agreement using the so-called "Modified Approach" as described
under GASB Rule No. 34: (i) Name and description of the asset, (ii) the original
acquisition cost of the asset, (iii) the month and year the asset was acquired
and physically placed into service, (iv) the estimated useful life of the asset
as estimated for accounting purposes using straight line depreciation methods,
and (v) the accumulated depreciation for the asset.

 
           10.3.4.
Determine the Owners' Rates of Return. The Owners' rates of return shall be
determined each year based on the provisions of Paragraph 5.

           10.3.5.
Determine the WISE Raw Water Rate. The WISE Raw Water Rate shall be determined
in accordance with Paragraph 7.

           10.3.6.
Allocate the Costs of Service. The cost-of-service Delivery Rate will be
determined as follows:

 
 
10.3.6.1.
Standard Method.  The Delivery Rate will be determined by allocating the total
costs of the Facilities to the Parties based on the water demands as described
in Section  10.3.1; provided, however, that the following adjustment for water
deliveries characterized as less-than-firm or interruptible under this Agreement
shall be made: the total costs of the Facilities will be limited to the total
costs of providing the average daily demand (ADD) and will exclude any costs
associated with the capacity in the Facilities above and beyond that necessary
to provide for the ADD (i.e., Parties with interruptible deliveries will be
allocated 0% of the "Share of Facility Capacity" as that term is used in the
Rate Model Report).

 
 
10.3.6.2.
Exceptions. Changes in delivery characteristics, addition of new Facilities, and
the ownership structure of new and/or existing Facilities dictate a change in
cost allocation methods. Aurora reserves the right to modify the cost allocation
methods under such circumstances to reflect the actual delivery characteristics.
No changes to the cost allocation methods shall be made without the consent of
the Authority which consent shall not be unreasonably withheld, conditioned or
delayed.

 
             10.3.7.
Determine Rates. The Delivery Rate will be specific for each Party based on each
Party's particular usage of the Facilities. Rates may include a charge for
volume of water delivered, charges for reservations of capacity, or any
combination of these based on specific circumstances and characteristics of
demand for each Party.

 
 
Attachment C
 
 

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  Table 1

Facility Name
 
Description
PWP -North Campus
 
Riverbank filtration wells, aquifer recharge and recovery system, and associated
piping
PWP -Pumping Stations
 
Three pump stations along the pipeline from Brighton to the Binney Water
Purification Facility  (Binney)
PWP -Pipeline(s)
 
Pipeline from Brighton to Binney
PWP -Treatment (PWP Train)
 
Binney treatment process for water from Brighton
PWP -Treatment (Mountain Train)
 
Binney treatment process for water from Strontia Springs

** Infrastructure no longer used to provide WISE Water deliveries shall be
deleted.
 
 
Attachment C
 
 

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WISE Pricing Summary

 
Scenario Name:
5,000 Acre-Foot Commitment
 
Scenario Description:
A short-term scenario with South Metro receiving delivery of 5,000 acre feet per
year. This scenario includes existing PWP facilities only - no expansions. The
pricing in this scenario includes an assumed ratio of 2 to 1of mountain to PWP
supply.
 
 
 
 
 
Filename
WISE Pricing - 2013 Update.xlsm
 
Report Date:
 
Test Year:
February 13, 2013
 
2013
 
 
Total Deliveries:
 
MG
 
Acre-Feet
Denver Water Aurora Water
 
7,191.8
 
22,071.0
SMWSA
1,629.3
5,000.0
 
Total
 
8,821.1
 
27,071.0

 
 
 
 

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Image [ex103_p40.jpg]
 
1,036,159
so S601,936
S130,964
212,041                                PWP North campus
PWP Pumpln1 Stations                                              SD.OD
$0.0D              SD.OS
$0.14                SD.OS
$0.13
194,048                                                                                              5,952               PWP Pipelines $0.0D $0.03 $0.0D
3,580,227                                                                                              668,773               PBWPF PWP Train
Tmt. $0.0D $0.50 $0.41
2,345,794                                                                                              390,606               PBWPF Mountain Train $0.0D $0.33 $0.24
458,90D RAW PWP Water - Denver Only $0.0D $0.0D $0.28
917,800               OW Mountain - Denver Only $0.0D $0.0D $0.56
4,0D2,1199                                                                                              458,901               AW PWP Raw - Aurora Only $0.0D $0.56 $0.28
8,151,286                                                                                              917,814               AW Mountain- Aurora Only $0.00 $1.13 $0.56
$0                                                                                              $19,912,350 $4,161,750 Total $0.0D $2.77 $255
°"                                                                                              83%              17"

I                                                                                                           capital Costs I I capital costs I
 Fadl!!!
 Name                                                                                                           Total Denver Watl!r Aurora  Water SMWSA  Faclllty Name Denver Water Aurora Water SMWSA
PWP North Campus                                       $8,105,219                             $0           $6,686,425                             $1,418,794 PWP North campus $0.0D $0.93 $0.87
PWP Pumpln1 Stations                                       7,014,208                                        6,434,406                             579,802 PWP Pumpin1 Stations $0.0D $0.89 $0.36
PWP Pipelines                                       11,142,875                                        10,811,285                             331,590 PWP Pipelines $0.0D $1.50 $0.20
PBWPF PWP Train Tmt.                                                                    16,111,359                                        15,346,357 1,472,0D2 PBWPF PWP Train Tmt. $0.0D $2.13 $0.90
PBWPF Mountain Train                                       11,105,612                                        10,104,155                             1,0Dl,457 PBWPF Mountain Train $0.0D $1.40 $0.61
RAW PWP Water - Denver Only RAW PWP Water - Denver Only $0.0D $0.0D $0.0D
OW Mountain - Denwr Only DW Mountain - Denver Only $0.0D $0.0D $0.0D
AW PWP Raw - Aurora Only AW PWP Raw -Aurora Only $0.0D $0.0D $0.0D
AW Mountain-Aurora  Only AW Mountain-Aurora  Only $0.0D $0.0D $0.0D
Total                                       $54,116,273                             $0           $49,382,628                             $4,803,644 Total $0.0D $6.87 $2.95
 
 
 
1

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Image [ex103_p41.jpg]

 
Customer
Total Annual Usage (MG)
Avg. Day Usage (MGD)
% ofTotal Usage
Max Month (MGD) Adj. for Interruptible

(MGD)
Allee. Of Unused Reserve (MGD)
Total Capacity Used (MGD)

% ofTotal
Denver Water                                -                            -                     0%                       -                    - - - 0%
Aurora Water                                2,368.6                            6.5                     81%                       6.5                    - 2.0 8.5 100%
SMWSA                                543.1                            1.5                     19%                       3.4                    (3.4) - - 0%
Total Usage                                2,911.7                            8.0                     100%                       9.9                    (3.4) 2.0 8.5 100%
I                                Facility Costs                                                I                       I Cost Allocations I
Allocated to                            Allocated to
Annual Costs                                Usage                            Capacity                     Total                                           Denver Water Aurora Water SMWSA Total
Fixed O&M Costs                                $469,249                            $30,751                     $500,000                       Usage Units - 2,368.6 543.1 2,911.7
Capital Cost                                7,606,724                            498,495                     8,105,219                       $/Unit                    $2,854 $2,854 $2,854 $2,854
Variable O&M                                232,900                            0                     232,900
Subtotal                    $0 $6,759,115 $1,549,758 $8,308,873
Total           $8,308,873                      $529,247                      $8,838,119
Capacity Units                                -
8.5 - 8.5
Units                                2,911.7                            8.5                                           $/Unit                    $62,264 $62,264 $62,264 $62,264
Cost per Unit                                $2,854                            $62,264                                           Subtotal                    $0 $529,247 $0 $529,247
$1,859
$212,251
Total Cost                    $0 $7,288,361 $1,549,758 $8,838,119
 
 
 
2

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Image [ex103_p42.jpg]
Maximum Capacity (MGD) Average Day Usage (MGD) % of Max Capacity Use Facility
Cost NBV ($ million)

18.0 8.0 44% $85.57 The PWP pumping stations include three (3) stations located
between the PWP North Campus and the PBWPF treatment plant. The stations pump
water from the North Campus along a 32 mile pipeline.            Share of
Facility Usage
 
I                                     Share of Facility Capacity Adj. for
Total Annual                                         Avg.
Day                      % of Total                      Max
Month                        Interruptible                      Alloc. Of Unused
Total Capacity
Customer                                        Usage
(MG)                               Usage
(MGD)                               Usage                         (MGD)                              (MGD)                               Reserve
(MGD)Used (MGD)%  ofTotal Denver Water - - 0% - - - - (),".{, Aurora
Water2,368.66.581%6.5-11.S18.0100,".{,
SMWSA                                                 543.1                       1.5                    19%                         3.4                   (3.4)                       -                    -                       0%

Total
Usage                                               2,911.7                         8.0                  100%                           9.9                   (3.4)                      11.5                    18.0                     100%
 
Facility Costs     Cost  Allocations    Allocated
to                      Allocated to
Annual Costs Usage
Capacity Total
Denver Water Aurora Water
SMWSA Total Fixed O&M Costs
$88,636 $200,000
$111,364 Usage Units
2,368.6 543.1 2,911.7

Capital Cost                                            3,108,551                    3,905,657                    7,014,208                    $/Unit                             $1,458                       $1,458                    $1,458                      $1,458
Variable
O&M                                            1,048,200                               0          1,048,200
Total                                          $4,245,387                                        $4,017,021
$8,262,408
Subtotal                                   $0            $3,453,544                      $791,843
$4,245,387

Capacity Units                                  -                      18.0                     - 18.0
Units                                               2,911.7                        18.0                                $/Unit                          $223,168
$223,168 $223,168 $223,168

Cost per
Unit                                $1,458                      $223,168                      Subtotal                      $0           $4,017,021                      $0           $4,017,021
 
 
 
3

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Image [ex103_p43.jpg]

Customer Total Annual Avg. Day % of Total
Max Month                      Adj. for Interruptible Alloc. Of Unused
Total Capacity
Usage (MG)                              Usage (MGD)                                         Usage                       (MGD) (MGD) Reserve (MGD) Used (MGD) % of Total
Denver Water                             -                              -                     0%                     -                       - - - 0%
Aurora Water                             2,368.6                              6.S                     81%                     6.S                       - 43.S so.a 100%
SMWSA                             S43.1                              1.S                     19%                     3.4                       (3.4) - - 0%
 
Annual Costs                            Facility Costs                                                  I                        I Cost Allocations
Allocated to                               Allocated to
Usage                               Capacity                    Total                                           Denver Water Aurora Water SMWSA Total
Fixed O&M Costs                                                          $31,909                    $168,091                   $200,000 Usage Units - 2,368.6 S43.1 2,911.7
Capital Cost                            1,777,784                               9,36S,091                    11,142,87S                                           $/Unit $622 $622 $622 $622
Variable O&M                            0                               0                    0
Subtotal                    $0 $1,472, 1S2 $337,S41 $1,809,693
Total           $1,809,693                      $9,S33,182                      $11,342,87S
Capacity Units
 
 
 
4

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Image [ex103_p44.jpg]

 
Share of Facility Usage                      Share
of Facility Capacity                  Adj. for
Total Annual                                         Avg.
Day                      % of
Total                      Max  Month                         Interruptible                      Alloc.
Of Unused  Total Capacity
Customer                                        Usage
(MG)                               Usage
(MGD)                               Usage                         (MGD)                              (MGD)                     Reserve (MGD) Used
(MGD) %  ofTotal
Denver Water - - 0% - - - -0% Aurora Water2,368.66.581%6.5-10.517.0100%
SMWSA                                                 543.1                       1.5                    19%                         3.4                   (3.4)                       -                    -                       O"Ai
Total
Usage                                               2,911.7                         8.0                  100%                           9.9                   (3.4)                      10.5                    17.0                     100%
Facility Costs                                                          Cost
 Allocations             
Allocated
to                                                                                                                     Allocated
to
 
Annual Costs
Usage
Capacity
Total
Denver Water
Aurora  Water
SMWSA
Total Fixed O&M Costs
$586,561
$663,439
$1,250,000
Usage Units
-
2,368.6
543.1
2,911.7

Capital
Cost                                            7,891,990                    8,926,369                   16,818,359                     $/Unit                             $3,942                       $3,942                    $3,942                      $3,942
Variable
O&M                                            2,999,000                               0          2,999,000
Total                                         $11,477,550                                       $9,589,808$21,067,359
Subtotal                                  $0            $9,336,775                                       $2,140,775$11,477,550
Capacity Units                                  -                      17.0                     -                    17.0
Units                                               2,911.7                        17.0                                $/Unit                          $564,106$564, 106 $564,106 $564,106

Cost per
Unit                                $3,942                      $564,106                      Subtotal                      $0           $9,589,808                      $0           $9,589,808
 
 
5

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Image [ex103_p45.jpg]

 
Share of Facility Usage                 Share of Facility Capacity                                            Adj.
for
Total Annual                                         Avg.
Day                      % ofTotal                      Max
Month                        Interruptible   Allee. Of Unused  Total Capacity
Customer                                         Usage
(MG)                              Usage
(MGD)                                Usage                         (MGD)                              (MGD)                               Reserve
(MGD)Used (MGD)%  ofTotal
Denver Water - - 0% - - - -0% Aurora Water4,823.213.282%18.5-14.533.0100%
SMWSA                                               1,086.2                         3.0                    18%                         1.7                   (1.7)                       -                    -                       0%

Total
Usage                                               5,909.4                        16.2                    100%                         20.2                     (1.7)                      14.5                    33.0                     100",{,
 Facility Costs       Cost  Allocations      
Allocated to                      Allocated to
 
Annual Costs
Usage
Capacity
Total
Denver Water
Aurora Water
SMWSA
Total Fixed O&M Costs
$588,732
$611,268
$1,200,000
Usage Units
-
4,823.2
1,086.2
5,909.4

Capital Cost                                            5,448,525                    5,657,087                   11,105,612                     $/Unit                             $1,282                       $1,282                    $1,282                     $1,282
Variable
O&M                                            1,536,400                               0          1,536,400
Total                                          $7,573,657                                      $6,268,355$13,842,012
Subtotal                                   $0            $6,181,594                                         $1,392,063$7,573,657
Capacity Units                                  -                     33.0                     -                    33.0
Units                                               5,909.4                        33.0                                $/Unit                          $189,950 $189,950 $189,950 $189,950

Cost per
Unit                                $1,282                      $189,950                      Subtotal                      $0           $6,268,355                      $0           $6,268,355
 
 
 
6

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ATTACHMENT D

WEST SLOPE CHARGE AGREEMENT
[WISE agreement with Authority]

 

Agreement between Authority, River District and Denver Water.
 
1.           Authority agrees to pay into the West Slope Fund the West Slope
Charge for each acre­ foot of water provided by Denver Water, as provided in
Authority's water supply contract with Denver Water.
 

 
•
The West Slope Charge will be 12.5% of the standard nonpotable or potable water
rate, as applicable, charged by Denver Water to customers outside its Service
Area.

 
 
•
Authority agrees that payment of the West Slope Charge is a contractual
obligation to the River District, established at the defined
percentage.  Parties agree that the West Slope Charge is not a cost-based rate,
but a contractual obligation, and is not governed by rate provisions in Denver
Water's water supply contracts and leases.

 
 
•
Authority agrees that nonpayment of the West Slope Charge may constitute breach
of this contract and may result in suspension of water deliveries.

 
2.           Billing and payment

 
•
Denver Water agrees to be responsible for collection of the West Slope Charge on
behalf of the River District.

 
 
•
Whenever Denver Water adjusts the rates charged to Authority [usually annually],
it will notify the River District in the same manner as it notifies its
customers.  The River District will respond in writing, requesting that Denver
Water be responsible for billing and collection of the specified revised West
Slope Charge based on the adjusted rate.

 
 
•
Authority will pay the West Slope Charge as part of its payment for water
provided.

 
 
•
Denver Water will follow its normal procedures for providing notice of
nonpayment.

 
 
•
Denver Water will transmit the collected West Slope Charge payments to the River
District on a regular schedule determined by the payment schedule.

 
 
3.            Default for nonpayment
 
 
•
If Authority fails to pay the West Slope Charge within the period allowed by
Denver Water's normal collection procedures, Denver Water will send a written
notice to the River District.

 
 
•
The River District will send written notice to Authority, with a copy to Denver
Water, of breach of contract for failure to pay the West Slope Charge.  The
notice of breach shall include a reasonable period during which the Authority
may cure the breach.

 
 
•
The River District will undertake such measures as it deems necessary to collect
the unpaid West Slope Charge.

 
 
Attachment D -- pg. 1 
 

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•
If other efforts fail and the River District deems it necessary, the River
District will send a notice of proposed suspension of water delivery to the
Authority and a notice of default to Denver Water requesting that Denver Water
suspend delivery of water on a proposed date of suspension, which shall be no
less than ten (10) days following the date of the notice.

 
 
•
If payment is not received prior to the end of the noticed period, Denver Water
agrees to suspend deliveries of water as requested by the River District, until
such time as the West Slope Charge is paid and the River District requests
Denver Water to resume deliveries.

 
 
•
Denver Water will not suspend deliveries of water to the Authority unless the
written notice of default includes a certification from the River District that
it will take full responsibility for any damages to the Authority resulting from
suspension of service requested by River District that is later determined to be
unlawful or to be invalid by reason of an error committed by the River District,
and to hold Denver Water harmless for any such damages and costs incurred by
Denver Water, if any, in defending itself. The River District will assume no
responsibility for an error committed by Denver Water.

 
4.           Agree to Abstention Provisions and agree to enforce Abstention Provisions against WISE
Members, as required in the SM WISE IGA between the Authority and the Members, relevant
portions of which are attached .
 
 
Attachment D -- pg. 2

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