AMENDED AND RESTATED OPERATING AGREEMENT

THIS AMENDED AND RESTAT~D OPERATING AGREEMENT (the "Agreement") is made and entered into as of the effecti:ie; <4tt~ hereim;ifter sei forth, by and between Denton County

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Fresh Water Supply District No. I-A ("District T,-A") and Denton County Fresh Water Supply District No. 1-0 ("District I-D"), political subdivisions ofthe State of Texas organized under Article XVI, Section 59 and Article III, Section 52 of the Constitution of the State of Texas.

RECITALS

WHEREAS, District I-A and District 1-0 entered into an Amended 2000 Joint Utility Contract (the "Joint Utility Contract") with the City of Lewisville, Texas, a home rule city and political subdivision of the State of Texas, organized pursuant to Article XI, Section 5 of the Constitution of the State of Texas (the "CityJl) in the form attached hereto as EXHIBIT "A" and made a part hereof for all purposes, which addresses the methodology fOl: financing the construction and acquisition of certain water, sewer, drainage and road improvements (the "Facilities") to serve District 1-D;

WHEREAS, at an election conducted on the 14th day of August, 1999, the voters within District I-D approved the Joint Utility Contract and authorized the levy, assessment and collection of an ad valorem tax on all taxable property within the boundaries of District I-D for the payments required by the Joint Utility Contract;!.

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WHEREAS, at an election c6~d~c/~~' o~ t~e ~~ of~ay, 2000, the voters within District 1-D approvedthe amended 2000 Joint Utility Contractiind authorized the levy, assessment and collection of an valorem tax on all taxable property within the boundaries of District 1-D for the payments required by the Amended 2000 Joint Utility Contract hereinafter referred to as "Joint Utility Contract";

WHEREAS, in accordance with the terms of the Joint Utility Contract, the City has issued Bonds (hereinafter designated the "1-0 Bonds") to wit:

$14,000,000 City of Lewisville, Texas Combination Contract Revenue and Special Assessment Bonds, Series 1999 (Lewisville Castle Hills Project No.2)

$18,150,000 City ofLewisvil1e, Texas Combination Contract Revenue and Special Assessment Refunding and Capital Improvement Bonds, Series 2002 (Lewisville-Castle Hills Public Improvement District No.2)

$10,350,000 City of Lewisville, Texas Combination Contract Revenue and Special Assessment J;Jonds, .seri~s 2005 (Lewisville-Castle Hills Public Improvement Di,stri6(N,o .. ~) [I, i

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WHEREAS, all capitalized tenns in this Operating Agreement shall have the meanings assigned to them in the Joint Utility Contract Wlless otherwise defined herein;

WHEREAS, Section 2.07 of the Joint Utility Contract specifies that it is the responsibility of District I-A and District I-D to operate and maintain the Facilities constructed pursuant to the Joint Utility Contract;

WHEREAS, the proceeds fr~ili ~&e~~~sti~~~' 6'hhe Bpnds are being utilized, in part, to make payments for the purchase from the City of sewe~'treatment facilities and services and to make payments for the purchase from Upper Trinity Regional Water District of certain contractual rights concerning potable and non-potable water and water facilities;

WHEREAS, the payments to the City and to the Upper Trinity Regional Water District are made pursuant to contracts entered into by District l-A which benefit areas within the original boundaries of Denton County Fresh Water Supply District No.1;

WHEREAS, the parties acknowledge and agree that the payments to be made by District I-D to District I-A pursuant to this Operating Agreement constitute charges by District I-A which do not exceed the actual costs to District I-A for all facilities and services that are necessary to provide services to District I-D and that are financed or are to be financed in part by tax supported obligations;

WHEREAS, District I-A entered into a Project Management Agreement with the City by which District I-A has been given the primary responsibility as the Project Manager for the construction and acquisition of the Facilities;

WHEREAS, the City has issped Ne Secles,;1999, ,Series 2002 and Series 2005 Bonds in .' t I" Ii, .'." I, i • ,"I l

accordance with the terms of the Jomt Utility 'Contract. :

WHEREAS, Sections 49.211,49.212,49.213 and 51.149, Texas Water Code, as amended, provide authority for the execution and implementation of this Agreement;

WHEREAS, the parties have detennined that it is in their best interests to execute this Agreement and implement its terms and conditions.

NOW THERE, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL COVENANTS HEREINAFTER SET FORTH, TOGETHER WITH TEN DOLLARS($l 0.00) AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HEREBY CONTRACT, COVENANT AND AGREE AS FOLLOWS:

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ARTICLE I

REPRESENTATIONS AND WARRANTIES

Section 1.1 Representations, Covenants and Warranties of District I-A.

District I-A represents, covenants and warrants as follows:

(a) District I-A is a political subdivision of the State of Texas, created and organized pursuant to Article XVI, Section 59 and Article Ill, Section 52 of the Constitution of the State of Texas and is duly organized, validly existing and in good standing under the laws of the State of Texas; is duly qualified to transact business ,in the. St~te of Texas and in every jurisdiction in which the nature of its activi!ies requires iU?:ij~ s,dfqu~li:tie?;\ has ~1I and complete power to enter into t~is Agreement, to enter mto and carry dut the transactlons contemplated hereby, and to carry out Its obligations under this Agreement; and has duly authorized the execution and delivery of this Agreement.

(b) Neither the execution and delivery of this Agreement nor the fulfillment of or compliance with the terms and conditions hereof nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which District I -A is now a party or by which District I-A is bound, or constitutes a default under any of the foregoing.

Section 1.2 Representations, Covenants and Warranties of District I-D.

District I-D represents, covenants and warrants as follows:

(a) District I-D is a political subdivision of the State of Texas, created and organized pursuant to Article XVI, Section 59 and Article Ill, Section 52 of the Constitution of the State of Texas and is duly organized, validly existing and in good standing under the laws of the State of Texas; is duly qualified to transact business in the State of Texas and in every jurisdiction in which the nature of its activities requires it to be so quali:tied; has full and complete power to enter into this Agreement, to enter into and carry'<\,-Qt th~1~ahs~4tr6~S cob.templated hereby, and to carry out its obligations under this Agreement; and has duly authorized the execution and delivery of this Agreement.

(b) Neither the execution and delivery of this Agreement nor the fulfillment of or compliance with the terms and conditions hereof nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which District I-D is now a party or by which District I-D is bound, or constitutes a default under any of the foregoing.

Section 1.3 The parties acknowledge and agree that all of the facts set forth in the Recitals are true and correct.

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ARTICLE 2

OPERATIONAL RESPONSIBILITY AND BUDGETS

Section 2.1 Operational Responsibility. The parties acknowledge and agree that, for and in consideration of the timely receipt of the sums specified in Article 4 of this Agreement, District I-­A shall be responsible for operating, maintaining, and managing the Facilities (as defined in the Joint Utility Agreement) and the other facilities approved to be constructed within the original boundaries of Denton County Fresh Water Supply District No.1 (collectively "District Facilities"), as such operating, maintenance, and managing responsibilities are outlined in Article 4.

Section 2.2 Facilities Operating and Maintenance Budget. The parties acknowledge that District I-A will prepare and submit to District I-D for its review on or about September I of each year an annual operating and maintenance budget for the District Facilities for the next fiscal year beginning October I of each year (the "Facilities Operating and Maintenance Budget" or "FOMBn). The FOMB shall cover all maintenance and operating expenses of the District Facilities in connection with the services to be pr9vide;d pursuant to Articles 3 and 4 ofthis Agreement. With the exception of expenses based on CUstomer usage, if the total actual expenses incurred on behalf of District I-D during the fiscal year do not exceed the estimated FOMB for that fiscal year by more than 12%, all suggestions by District I-D for revision of the next fiscal year's FOMB shall be deemed advisory only, and District I-D shall be obliged to make the payments to District I-A set forth in the next year's proposed FOMB for the operation of District Facilities. With the exception of expenses based on "Direct Expense" and "District Usage", if the total actual expenses incurred on behalf of District 1-D during the prior fiscal year exceed the estimated FOMB for the prior fiscal year by more than 12%, the FOMB for the next fiscal shall not take effect until it is approved by the Board of Directors of District I-D. Until such approval, the FOMB for the preceding fiscal year shall continue in place and District I-A shall be entitled to receive the payments authorized in the Budget for the preceding fiscal year. District I-D's comments on the FOMB shall be delivered to District I-A within 30 days after receipt by District I-D of the proposed FOMB.

Section 2.3 Revised Operational Budget. If, during the fiscal year, Districtl-A anticipates increases in actual operational expenses of the District Facilities more than 12% above the estimates set forth in the FOMB, District I-A shall deliver written notices to District 1-D of such anticipated variances specifying the reasons therefore and concurrently therewith submit a revised FOMB to District I-D for approval. District I-D shall approve or disapprove the revised FOMB within fifteen (15) days following the delh:ery by Di~trict I-D of the revised FOMB. In the event of a disapproval, the differences shall b~:tn:edi'~te;d, ~d if not tesolved, then arbitrated pursuant to the rules of the American Arbitration Association. ;

Section 2.4 Budget Limitations. Any term or provision hereto to the contrary notwithstanding, the approved FOMB shall constitute an authorization for District I-A to pay all operation and maintenance expenses of the District Facilities set forth in the FOME. District I-A may do so without further approval so long as District I-A does not exceed the FOMB by more than

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12%. In addition, in any situation which District I-A deems to be an emergency, District 1-A shall be authorized to make expenditures not approved in the FOMB to the extent that each such expenditure is either (i) immediately requir,ed by law, or (ii) not in excess of $5,000; provided, however, District I-A shall attempttq not(iY Dis~riqt 1-D o.f such emergency expenditure prior to " .. L . I.. 'I' ~ InCUrrIng same. '"

Section 2.5 District I-D Approval. By its execution of this Agreement, District 1-0 hereby approves the Facilities Operating and Maintenance Budget for the fiscal year ending September 30, 2008, a copy of which is attached hereto as EXHIBIT "B", and made a part hereoffor all purposes.

ARTICLE 3

OPERATION AND MAINTENANCE SERVICES

Section 3.1. Operation and Maintenance Services. District l-A shall perform the administrative services necessary to operate the District Facilities including, but not limited to, the following (to the extent so required) with respect to the District Facilities:

(a) Arrange for, supervise, enter into contracts and make expenditures for all aspects of the operation and maintenance of the District Facilities, including, without limitation, hiring employees, purchasing chemicals, stores, rqaterials and supplies, measuring meters, electric power, legal fees and engineering fees rela~g t6 :bistIict Facilities (but not the legal and professional service provided directly to the Disti'i'6t~ Io~;their thruiagement), testing costs, payment of all charges or assessments for water, sewer, or' solidwastei collection services, handling claims, acquiring insurance for property damage and tort actions or contractual1iability, acquiring other insurance deemed appropriate, making all payments (other than payments to be made directly by District 1-0) to the City of Lewisville under the Joint Utility Contract, the Upper Trinity Regional Water District, or other persons for water, water treatment, sewage collection or treatment services, solid waste collection services, or for the operation and maintenance of such other persons and all other items and expenses of a like or different nature reasonably required or desirable for the efficient maintenance and operation of the District Facilities in full compliance with all regulatory requirements and the performance of this Agreement and the Joint Utility Contract, repairs and replacements of damaged, worn-out or obsolete parts; maintain or cause to be maintained the District Facilities in proper operations to render adequate service and to comply fully with all regulatory requirements, and to pay general and administrative expenses of District I-A and allocable to the operation and maintenance of the District Facilities;

(b) Arrange for, supervise and enter into contracts with bookkeepers, operators, accountants and other professionals, necessary for the operation and maintenance of the District Facilities in accordance with the FOMB;

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(c) Negotiate with each ofthe various utility companies (including the City) that provide" utility service to the District Facilities to obtain installation of electricity, gas, water, sewer, telephone, telecommunications, television and other facilities deemed appropriate by District I-A;

(d) Coordinate with various municipal, county, state agencies, school districts and District I-D with respect to the design of services required to implement this Agreement, including, without limitation, the location of schools, roads, access to existing roads, major drainage systems, and sewer and water lines;

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(e) Review all statements, 'lhvoid.es;:"requests for-payment of bills and expenses and draw requests for the District Facilities arid arrange for: the payri1ent of approved statements invoices, requests for payment, and draw requests;

(f) Arrange for, supervise and cause all contractors to provide all insurance which is appropriate, including worker's compensation insurance, public liability insurance, and other insurance protection for damages which might reasonably be expected to occur in the operation and maintenance of the District Facilities in such amounts and with such insurers as are deemed appropriate by District I-A;

(g) Meet with municipal, utility, and state officials and with municipal bodies, such as school and park boards, planning boards, water boards, boards of equalization and appeal, and boards of assessment on issues which will have an influence on maintenance and operation expenses;

(h) Establish water and sewer rates to be recommended to District I-D for its services;

(i) Perfonn such other reasonable services and functions that District I-A and District 1-D deem to be necessary for the successful operation and maintenance of the District Facilities;

G) Issue building pennitsJor .construction of homes and other improvements within District I-D and provide routine i~pel~t~ol'tbf;such ¢hhstrubtion;

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(k) File all claims, administrative proceedings and lawsuits necessary or appropriate to pennit the District Facilities to be constructed and, the proceeds of the Bonds to be utilized in the manner contemplated by the Bonds and defend all claims, administrative proceedings and lawsuits brought by third parties against I-D or I-A which have any effect on the District Facilities, the construction, maintenance or operation of the District Facilities, the I-D Bonds, the Joint Utility Contract, or the agreement between the City of Lewisville and the Upper Trinity Regional Water District and any party to this Agreement.

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ARTICLE 4

SERVICES AND PAYMENTS

Section 4.1 Inspection Fees and Services. District I-A hereby agrees to provide to District I-D the building pennit and inspection services required to construct the District Facilities in District I-D and District I-A agrees to bear the costs thereof District 1-D agrees to adopt a rate order containing building penn it and inspection fees no less than those shown in the rate order attached hereto as EXIDBIT "C". District I-A agrees to collect the building pennit and inspection revenues pursuant to District I -D's rate order and deposit such revenues to the credit of District I-D.

Section 4.2 Water, Sewer. Solid Waste Collection System Services. District I-A agrees to provide management services to Distriqt.l-D to i:p order to operate the water, sewer, and solid waste collection system of District I-P:. m;trict l~Aiagreesto provide such water, sewer, and solid waste collection services to the users of these services and water within District I-D (hereinafter "Customers"), including contracting for such water and services, maintaining the water and sewer lines and facilities necessary to provide such services, maintaining an office in or near District 1-D, and providing other services incidental to the provision of these services to District I-D's Customers. District I-D's current rate order specifying water, sewer, and solid waste collection rates is attached as EXIDBIT "C" hereto. Such rate order may be amended from time to time as recommended by district I -A, with a copy being provided to District I-A. District I-D hereby authorizes, and District I-A hereby agrees to bill and attempt to collect from each Customer within District I-D in accordance with the District 1-D rate order as mentioned herein and to pay from these revenues the costs of operating the water, sewer, and solid waste collection system of District I-D, including the cost of water used by the residents of District 1-D and charged by the Upper Trinity Regional Water District as usage costs. District I-D concurs in the payment of all of the costs of water to the Upper Trinity Regional Water District out of the proceeds of the Bonds, and District I-D agrees to pay for the cost of the water used by the customers of District I-D and to pay a share of the other Upper Trinity Regional Water District costs (other than usage costs and costs paid out ofthe proceeds of the Bonds), which non-usage costs are to be allocated on the basis of Projected property values ofthe Districts south of 544. When it is necessary to expand the Upper Trinity Regional Water District to accommodate development north of 544, the allocation shall be adjusted to include the newly developed areas. District I-D agrees that aflother ofth~ costs of operating its water, sewer, and solid waste collection system is the payment 'of a ~rd~r~ta pbrtion of overhead incurred by District I-A in order to manage and operate the water, sewer, and solid waste collection system, and that such overhead shall be calculated on the basis of the estimated percentage oftime spent on this function by District I-A personnel, as calculated by the District I-A General Manager, and as it may be adjusted from time to time, and shall be paid monthly. District I -A shall use it best reasonable efforts to collect the bills sent to District I-D's users. District I-D agrees to raise its rates in an amount sufficient to cover any increases in the cost of water, sewer, or solid waste services incurred by I-D. District I-D further agrees that if the revenues collected from its Customers by District I-A are insufficient to cover the costs of operating the water, sewer, and solid waste collection system of District I-D, that District 1-D shall timely pay District l-A such additional costs in accordance with

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Section 4.6 below. The cost ofthe'~Jint~~aJ'!.ce!;Qf,~.e wa~er and sewer system facilities shall be allocated to each District on the basis of Projected property values. Such costs shall be allocated among the Districts (currently Denton County Fresh Water Supply District Nos. I-B, I-C, I-D, I-E, I-F, I-G and I-H, being the current operating districts within the Castle Hills Subdivision) based upon a fraction the numerator of which shall be the total projected property value on January 1 the year immediately following the completion of the fiscal year being budgeted within District No. I-D divided by the total projected property value on January 1 the year immediatlely following the completion ofthe fiscal year beirig budgeted within all of the Districts. "Projected property values" shall be defined as the combined total value of all property that is existing on January 1 of the current fiscal year plus that which is projected to be added during the next succeeding fiscal year for the Districts. Such fraction shall be calculated as of the first day of the fiscal year in which such fraction is to be used to allocate such costs among the Districts, and shall be recalculated as of the first day of each succeeding fiscal year thereafter.

In addition, District I-A agrees to provide to Builders the services necessary to connect Customers to District I-D's water and sewer system. District I-A shall bill and collect from the Builders the fees therefor in accordance with District I-Drs rate order. The actual costs of providing these services shall be borne by District I-D. District J-D agrees that one ofthe costs of performing the facilities connection services is the payment of a pro-rata portion of overhead incurred by District I-A in order to perform such services ~()'D~sirict 1 ~Pi. and that such overhead shall be calculated on the basis of the estimated percentage 'dftiiRe '~'pep~ pli this~function by District I-A personnel, as calculated by the district 1-A General Manager, and as it may be adjusted from time to time. Any other costs therefor which are not identifiably for the benefit of a specific District shall be allocated to each District on the basis of Projected property values, as defined above.

Section 4.3 Construction and Contract Management Services. District I-A agrees to perform the construction and contract management services necessary to construct and maintain the District Facilities and any other items authorized by District I-D and agreed to by District I-A. The actual costs shall be borne by District I-D. District I-D agrees that one of the costs of performing said construction and contract management services is the payment of a pro-rata portion of overhead incurred by District I-A in order to perform such services to District I-D, and that such overhead shall be calculated on the basis ofthe estimated percentage oftime spent on this function by District I-A personnel, as calculated by the District I-A General Manager, and as it may be adjusted from time to time. The expenses of outside professionals such as attorneys, engineers, and consultants and other costs related to these services will be allocated to the District for which the services were provided.

Section 4.4 Miscellaneous Services. District I-A agrees to provide the following services and District I-D agrees to bear the costs rehited thereto as allocated to District I-D in accordance with this Section. , ' '~" i i ;:'1; i ':,,' i: \ l'

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A. Street Lighting: District I-A shall provide the services necessary to provide and maintain the street lights within both District I-A and District I-D. The costs therefor shall be allocated to each District on the basis of Projected property values.

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B. Landscaping of Common Areas: District 1 -A shall provide the services necessary to maintain the landscaping of the common areas within all Districts that are part of the Castle Hills Development. The costs therefor shall be allocated to each District on the basis of Projected property values. , "(,, ,:,.:: : , " '

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C. Police and EmergencyServic~s:' bi~trict'l ~A ~hall contract with the City of Lewisville for the provision of such services. District 1 ~D shall be allocated its share of the fixed costs of such contract on the basis of Projected property values, and the cost of each per call charge shall be allocated to the District in which an incident occurs. District I-D agrees to pass any necessary rate orders, or rules and regulation necessary to pass the per incident costs for EMS and other services and for false alanns to the individual residents and tenants of District I-D.

D. Other Miscellaneous Services: Any other services provided to District I-D by District I-A pursuant to Article 3 herein shall be allocated to District I-D and shall be paid for by District 1-D. To the extent such services are clearly identified as District 1 ~D expenses, they shall be allocated in full to District I-D; otherwise, such expenses shall be allocated using Projected property values.

E. Miscellaneous Service Overhead: District I-D agrees that one of the costs of performing the miscellaneous services of this section is the payment of a pro-rata portion of overhead incurred by District I-A in order to perform such s(:!rvices to District I-D, and that such overhead shall be calculated on the basis of the estimated percentage of time spent on these miscellaneous functions by District I-A personnel, as calculated by the District I-A General Manager, and as it may be adjusted from time to time. District I-D further agrees that one of the costs of obtaining the miscellaneous services of this section, ;t'!1ayf~e cp~t o~ outside professionals and consultants, which costs will be allocated to each Distri~fforwhiCh ~e;servic~s are performed.

Section 4.5 Reconciliation'District I-A shall prepare a fmandal statement each month reconciling all expenses and revenues allocated to District I-D according to this Agreement.

Section 4.6 District I-D's obligation to make payments specified in this Agreement are unconditional and not subject to off-set or counterclaim. '

Section 4.7 In addition to all rights and remedies provided by the laws of the State of Texas, District No. 1-D covenants and agrees that in the event District I-D defaults in the payment of any of the amounts required to be paid under this Agreement when due, or defaults in the observance or performance of any of the covenants, conditions or obligations set forth in this Agreement, District I-A shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the Board of Directors and officers of District I-D to observe and perform any covenant, obligation or condition prescribed in this Agreement. No delay or omission to exercise any right or power accruing to District l-A shall impair any right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and so often as may be deemed expedient.

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Section 4.8 Inspection Rights. District 1-0 shall at all times have the right to inspect District I-A's records with respect to the work provided under this Agreement. District I-A agrees to make available to the District 1-0 the records and accounts kept on the District Facilities, including all overhead allocations, for inspection by District 1-0. District I-A agrees, for accounting purposes, to keep separate from any of District I-A's other projects, all records, ledgers, invoices, receipts, and such other docmnents detailing the activity of the District Facilities. If District I-D disputes the overhead allocation or any other accounting, it may challenge them by following three procedures: 1) District I-D shall submit a written proposal to District I-A, stating the dispute and specifying the change in accounting or allocation which is requested to resolve the dispute; 2) if no resolution from District I-A is obtaineq. within thirty days of the submission, District I-D shall submit the matter to mediation pursuant to the mediation n,Ues9fthe:A.riterican Arbitration Association; and 3) if no resol ution from District I-A is 0 btain~d;withln ;thirty days of mediati on, District 1-0 shall submit the matter to arbitration pursuant to the arbitration rules of the American Arbitration Association. However, during the dispute resolution process outlined herein and until final resolution, the disputed accounting or allocation shall continue to be applied. The costs of mediation and arbitration shall be borne by the challenging District if the resulting change in accounting or allocation (if any) is less than 20% more favorable than the disputed accounting or allocation to the challenging District for each fiscal year being disputed; otherwise, if the resulting change is at least 20% more favorable to the challenging District, then District I-A shall bear the costs of mediation and arbitration.

Section 4.9 Building Permits. District I-A and District I ~D acknowledge and agree that the health, welfare and safety of the residents of the two districts will be well-served by the institution of a building permit procedure by District I·A. The fees and charges for the aspects of the building permit procedure are set forth in District J-D's Rate Order, which is attached hereto as EXHIBIT "C" and made a part hereof for all purposes.

Section4.10 Rate Order. District l-D represents to District I~A that it has adopted a rate order which complies with the requirements ofthls Agreement and agrees to make only such changes in the rate order, from time to time, as may be requested by District I-A in order to make the payments required by this Agreement

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ARTJ(~~:LIE·i5

MISCELLANEOUS

Section 5.1 Approvals by District I-D. District I·A may take any actions reasonably contemplated and required by the approved FOMB then in effect for the day-to-day operation and maintenance of the District Facilities, without any prior approval by District 1-0.

Section 5.2 Capacity. The parties agree that District 1-0 will not transfer, assign or convey any ofthe unutilized capacity, ifany, in the District Facilities which have been financed with I-D Bonds to any party other than District I-A or an entity approved by District I-A on terms and conditions approved by District I-A.

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ARTICLE 6

COVENANTS

Section 6.1 Compliance with Laws and Government Regulations. District I-A shall operate and maintain the District Facilities in compliance, in all material respects, with applicable federal, state and local laws, ordinances, regulations and orders relative to the use, operation, leasing, repair, and maintenance of the District Facilities. District I-A shall, in all material respects, abide by all applicable federal, state and municipal rules and regulations applicable to the District Facilities.

Section 6.2 Liens and Encumbrances Without the prior written approval of District I-A (unless required by the FOMB), District 1-0 shall not do any of the following: (i) allow any encumbrance or lien to be placed against the District Facilities or any part thereof, (ii) allow any easement, right-of-way, deed restrictions, building line, lease, or other cloud on title to be created with respect to the District Facilities or any part thereof; or (iii) modify any existing instrument creating any of the rights or other matters described in clauses (i) and (ii) above,

Section 6.3 Performance'District i-A's4a:ll perform and complete its obligations under this Agreement in a professional and workmanlike manner in accordance with existing industry standards and shall maintain and operate the District Facilities in a manner so as to protect the value of the District Facilities.

Section 6.4 Notices and Documents. District I-A shall promptly advise District I-D of the service upon District I-A of any summons, subpoena, or other like legal document, including any notices, letters or other communications setting out or claiming an actual or alleged potential liability of District I-D or the District Facilities and to fully cooperate with District I-D in connection with any legal or arbitration proceeding arising in connection with the District Facilities or its operation. District I-A shall also notify District I-D promptly of (i) any notice of violation or claimed violation of any governmental requirement, (ii) any damage to the District Facilities, and (iii) any actual or alleged personal injury or property damage incurring to or claimed by any third party or employee on or with respect to the District Facilities.

Section 6.5 District 1wA's Insurance. District I-A shall maintain in effect at all times during the full term of this Agreement with insurers licensed to do business in the state where the District Facilities are located and reasonably acceptable to District I"D and under forms ofpolicies satisfactory to District 1-0, and all insurance policies contemplated by this Section shall be placed with such companies, in such amounts"with,sqch belleficial:interests appearing thereon and as shall be required by the Bonds. All costs of such insurarice' which can appropriately be reimbursed from the proceeds of the Bonds, shall be IlAdministrative Expenses" and shall be paid from the "Administrative Expense Fund" as specified in the respective Trust Agreements relating to the Bonds.

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ARTICLE 7

TERMS; DEFAULTS; TERMINATION

Section 7.1 Term. The term ("Termtl) of this Agreement shall commence on October 1, 2008 (the effective date hereof) and terminate on the fortieth (40th) anniversary date hereof unless sooner terminated or unless extended by mutual agreement of District I-A and District I-D.

Section 7.2 Defaults.

(a) Default by District I-A. District I-A shall be deemed to be in default under this Agreement: (i) in the event the District I-A shall fail to keep, observe or perform any material covenant, agreement, ten-n or provision of this Agreement to be kept, observed or performed by the District I-A, and such failure shall continue for a period of thirty (30) days after written notice thereof by District I-D to the District I-A, or if such failure cannot be cured within such thirty (30) day period, then such additional period not to exceed an additional fifteen (15) days, provided the District I-A has proceeded to commence the cure of such failure and diligently proceeds to prosecute such cure to its completion, (ii) the malting of a general assignment by the District I-A for the benefit of its creditors, the filing by the District I-A with any bankruptcy court of competent jurisdiction of a voluntary petition under Title 11 of the United States Code, as the same may be amended from time to time.

(b) Default by District I-D. District I-D shall be deemed to be in default hereunder (i) in the event District 1-D shall fail to payor to approve for payment any sums of money due and payable pursuant to the terms ofthis Agreement within fifteen (15) days after written notice thereof from the District I-A to District I-D, (ii) in the event District I-D shall fail to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, District I-A observed or performed by District 1-D (other than the payment of money to the District I-A) and such failure shall continue for a period of thirty (30) days after written notice thereof by the District I-A to District I-D, or if such default cannot be cured within such thirty (30) day period, then such additional period not to exceed an additional fifteen (15) days, provided that District I-D is capable of curing same and has proceeded to commence the cure of such failure and diligently proceeds to prosecute such cure to its completion, or (iii) the making of a general assignment by District I-D for the benefit of its creditors, the filing by District I-D with any bankruptcy court of competent jurisdiction of a voluntary petition under Title 11 of the United States Code, as the same may be amended from time to time. Notwithstanding anything to the contrary in this Agreement, District I-D's liability shall be limited to the payments of the District Facility Charges, the water and sewer tap fees and the ad valorem tax specified in Section 4.2 hereof.

Section 7.3 Termination for Cause.

(a) Termination by District I-D. This Agreement may be terminated by District I-D, for Cause (hereinafter defined), at the end of the fiscal year of District I-A following District I-D's delivery to the District I-A of written notice of such termination. If this Agreement is terminated

12

pursuant to the provisions of this Section, District I-D shall pay to District I-A the sums contemplated hereby, together with any and all other sums owing by District I-D to District I-A in accordance herewith, through the date of such termination. The obligations of this Section shall survive the termination hereof.

(b) Termination by the District I-A. This Agreement may be terminated by the District I-A, with Cause (hereinafter defined). at any time by the District I-A's delivery to District 1-D of written notice of such terminatio~ Y{hich: nqti,c,e, ~pall specify in detail the reasons for such termination and any such termination shall be effective on the last day of District I-D's fiscal year following delivery by District I-D of the notice oftermination. Regardless of a termination of this Agreement pursuant to the provisions of this Section, District 1-0 shall pay to District I-A the compensation contemplated hereby, from the sources herein referenced, together with any and all other sums owing by District I-D to District I-A in accordance herewith, through the date of such termination. The obligations of this Section shall survive the termination hereof.

(c) Cause. For purposes of this Agreement, the term "Cause" shall mean and be defined herein as follows:

i. The condemnation or destruction by casualty of all or substantially all of the District Facilities;

ii. The occurrence of a default hereunder (which occurs at a time when the party giving notice of termination is not in default), and the delivery of any applicable notice and the expiration of any opportunity to cure contemplated hereby; or

iii. The incurrence of costs and expenditures in excess of 100% ofthe costs and expenses contemplated by the FOMB (as irevised iri accordance with terms of this Agreement), excluding any cost or expense oveITurtS be~9nd the 860trol Iofthe District i-A (including, without limitation, interest rate differentials, ddsts and expbn~es arising from any changes to the Operational Plan or in the construction or development of the District Facilities required by any governmental agency)

Section 7.4 Delivery of Records. In the event of the termination of this Agreement (including any termination of this Agreement pursuant to Section 7.3 above), District l~A shall deliver to District I-D within thirty (30) business days after the date of such termination, all books, documents, funds, contracts, invoices, surveys, plans, receipts for payment, and the like maintained in connection with the development, marketing, and management of the Project and shall render a final accounting to District I-D within thirty (30) business days after termination reflecting all invoices outstanding, all invoices paid, and any pending contracts of sale, in addition to such other materials or actions as District I-D may request in order to effectuate an orderly and systematic termination of the District I-A duties and activities hereunder.

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. L':t) i :!.{T'

i , .'

Section 7.5 Limit on Effect of Termination. In no event shall a termination by either party have any effect on the irrevocable transfer, assignment and conveyance by District 1·D to District l·A pursuant to Section 4.1 hereof.

ARTICLES

GENERAL PROVISIONS

Section 8.1 Attorney's Fees. Should either party be required to employ an attorney to enforce or defend the rights of such party hereunder, the prevailing party shall be entitled to recover its reasonable attorneys' fees and expenses actually incurred in connection therewith.

. Section 8.2 Go:erning ~~~'! 1.'~iSIA~e~~ent i~ being executed and delivere.d, and is mtended to be performed In the State of Texas, ang tlie laws of such state shall govern the nghts and duties of the parties hereto and the validity, construction, enforcement, and interpretation hereof.

Section 8.3 Notices. Unless specifically otherwise provided, whenever this Agreement requires or permits any consent, approval, notice, request, or demand from one party to another such communication must be in writing to be effective and shall be deemed to have been given on the day actually delivered by (a) telephonic facsimile communication, or (b) Federal Express or other guaranteed overnight delivery service. Until changed by notice pursuant hereto, the address for each party for purposes hereof is as follows:

Denton County Fresh Water Supply District No.1-A:

with a copy to:

2540 King Arthur, Suite 220 Lewisville, Texas 75056 Attention: Zane Miller

Frank Van Court : i Kelly Hart & Hallman.:lJLLlh' :' I! ' •.

201 Main Street ;' . Suite 2500 Fort Worth, Texas 76102

Denton County Fresh Water Supply District No.1 -D:

2540 King Arthur, Suite 220 Lewisville, Texas 75056 Attention: Zane Miller

: i

with a copy to: I 1'; ~ I !: t !. ~"

Frank Van Court Kelly Hart & Hallman LLP 201 Main Street Suite 2500 Fort Worth, Texas 76102

Section 8.4 Headings; Terminology. Wherever in this Agreement the singular number is used, the same shall include the plural where appropriate; and vice versa; and words of any gender in this Agreement shall include each other gender where appropriate. The words "herein," "hereof, II and "hereunder," and other words of similar import refer to this Agreement as a whole and not to any particular part of subdivision hereof. The hearings, captions, and arrangements used in this Agreement are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify, or modify the terms hereof, nor affect the meaning thereof.

Section 8.5 No Assignment. No party hereto shall have the right to assign, transfer or convey any of its rights, title or interest hereunder to any entity without the prior written consent of the other party.

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I ',: ~. i:, '. t .' ".! "

Section 8.6 Invalid Provisions. Ifany provision' of this Agreement is held to be illegal, invalid, or unenforceable under the present or future laws effective during the term hereof, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid, or enforceable provision or by its severance here from.

Section 8.7 Mnltiple Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this contract, it shall not be necessary to produce or account for more than one such counterpart.

Section 8.8 Entirety and Amendments. This Agreement embodies the entire agreement between the parties, supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, and may be amended only by an instrument in writing executed jointly by District I-A and the District 1-0, and supplemented only by documents delivered or to be delivered in accordance with the express terms hereof.

Section 8.9 Binding Effect. This Agreement shall be binding, and shall inure to the benefit of, District I-A, District I-D, and the respective successors and assigns of each; subject to the restrictions on assignability set forth i~, Sec~~on 8.5 hereof.

'. :,; .• I 'I •• •

I "; " • >'1 •

Section 8.10 Business Day. 'For purposes here of the term"busihess day"or words oflike import shall mean any day of the week other than Saturday, Sunday or legal holiday.

981464_1 15

EXECUTED THIS 16th day of September, 2008, effective October 1,2008. ; ,-

'.; :

ATTEST:

BY:~ C(f (j]...d¢4G~ By: ./ Scott Beard, Secretary

ATTEST:

By:

981464_1

. ,DENTON COUNTY FRESH WATER I· SUPPLYDISTRICTNO.l~A

DENTON COUNTY FRESH WATER SUPPLY DIST.RICT NO. ,I/-;

( zra-..{ F:CftL ~/ ;> Mark E. Channels, presi~t

i",'

Exhibit "A"

AMENDED 2000 JOINT UTILITY CONTRACT

STATE OF TEXAS

COUNTY OF DENTON

§ § §

KNOW ALL MEN BY THESE PRESENTS:

THIS AMENOED 2000 JOINT UTILITY CONTACT is executed pursuant to the authority granted by Sections 51.149, 49.108, 53.029, et seq., Water Code, as amended by and between the City of Lewisville, Texas (the "Issuer") a home rule city organized, created and established pursuant to Article XI, Section 5 of the Constitution of the State of Texas, Denton County Fresh Water Supply District No. I-D ("District No. I-D") and Denton County Fresh Water Supply District No. I-A ("District No. I-A"), political subdivisions of the State of Texas created and operating under Article XVI, Section 59 and Article III, Section 52 of the Constitution of the State of Texas, to take effect as of the date on which all parties have executed this Contract.

WHEREAS, at an election conducted on January 17, 1983, the voters within the boundaries . of Denton County Fresh Water Supply District No. 1 ("District No. I ") approved the creation of District No. I and elected the governing body of District No.1; .

WHEREAS, on August 8, 1987, the voters within District No.1 approved an election by which District No. 1 was authorized to assume the rights, authority, privileges and functions of a road district under Article III, Section 52(b)(3) of the Texas Constitution, in the manner pruvided by Section 53.029(c) of the Texas Water Code; \

WHEREAS, at the same election on August 8, 1987, the voters within District No.1 authorized District No.1 to purchase, construct, acquire, own, operate, repair, improve and extend sanitary sewer systems to control wastes;

WHEREAS, on December 21, 1993, following a hearing conducted in accordance with Sections 51.040 through 51.044 of the Texas Water Code, as amended, the governing' body of District No.1 adopted an Order Setting Out Findings On Conversion And Ordering Conversion To· A Water Control And Improvement District by which District No.1 ,converted into a district operating under Chapter 51 of the Texas Water Code, and exercising all the powers, authority, functions and priVileges provided in Chapter 51 and District No.1 specifically reserved in the manner specified in Section 51.044 of the Texas Water Code, the powers then specified in Sections 53.029, 53.030 t~ough 53.035,53.037 through 53.041, 53.111, 53.112, 53.121 and 53.125 of the Texas Water Code, as amended from time to time;

WHEREAS, District No.1 entered into a contract with the Upper Trinity Regional Water District, by which District No.1 will receive a supply of potable fresh water for all areas located Within the boundaries of District No.1;

VlHEREAS, on May 7, 1994, the voters within District No. I approved an election authorizing District No.1 to assess, levy and collect annual ad valorem taxes on all taxable property in District No.1 in an unlimited amount to secure funds for maintenance purposes, including but not limited to, funds for planning, maintaining, repairing and operating all necessary plants, properties, facilities and improvements of District No. I and for services, engineering and legal fees, operational and administrative expenses;

WHEREAS, pursuant to the specific authority retained by District No.1 under Sections 53.029-53.035 and Sections 53.037-53.041 of the Texas Water Code, and granted to District No.1 by Chapter 51 of the Texas Water Code, (i) on May 6, 1995, the voters within District No.1 approved an election by which District No.1 was divided into Denton County Fresh Water Supply District No. I-A (hereinafter designated "District No. I-A") and Denton County Fresh Water Supply DistrictNo. I-B (hereinafter designated "DistrictNo. I-B") (ii)onAugust 9,1997, the voters within T)istrict No. I-A approved an election by which District No. I-A was divided into District No. I-A .hd Denton County Fresh Water Supply District No. I-C (hereinafter designated "District No.I-C");

on May i, 1999, the voters within District No. I':C approved an election on which District No. l-C was divided into District No. I-C and Denton County Fresh Water Supply District No. I-D (hereinafter designated "District No. I-D"); and on May 1, 1999, the voters within District No. I-A approved an election by which District No. I-A was divided into District I-A and Denton COUIity Fresh Water Supply District No. I-E (hereinafter designated "District No. I-Ell ,"~" "-, ....

WHEREAS, as of July 15, 1996, Lewisville, District No. I-A and District No. I-B entered into a Joint Utility Contract that provided in Section 2.08 thereof that Lewisville and District No. t-A acknowledged and agreed that procedures substantially the same as those specified therein, including the creation of Cast Ie Hills Public Improvement District ("P.I.D. No. 1") over the territory included within the boundaries of District I-B, would be used for the orderly installation of similar facilities for all areas then located within the boundaries of District No.1-A, which includes the area .no~ within Pistric,t No. I-D; " '

WHEREAS, on August 14, 1999, the voters within District No. I-D approved a Joint Utility Contract (the "1999 Joint Utility Contract") by which District No. I-D subsequen~ly pledged ad valorem taxes to repay the $14,000,000 City of Lewisville Combination Contract Revenue and Special J\ssessment Bonds Series 1999 (Lewisville Castle Hills Public Improvement District No. 2) (the "Series .1999 P.LD: No.2 Bonds");

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WHEREAS, Lewisville exercised the authority granted to it by Section 372.001, et seq., Texas Local Govenunent Code, and adopted, on September 13, 1999, Resolution No. 2490-9-1999(R), authorizing the creation ofthe Castle Hills Public Improvement District No.2 (liP J.D. No. 2") over the territory included within the boundaries of District No.I-D, and making certain findings as to the advisability of the improvements, the nature of the improvements, the method of assessment and the apportionment of the costs to P.LD. No.2;

WHEREAS, on October 18, 1999, Lewisville adopted Ordinance No. 2503-10-1999 approving the Castle Hills Public Improvement District No.2 Assessment/Service Plan;

WHEREAS, Lewisville, District No. I-A and District No. I-D have determined that th~ authorization, execution and implementation of this Amended 2000 Joint Utility Contract (the "Contract"), in accordance with the applicable provisions of the Texas Water Code, is necessary and appropriate to implement ·the provisions of the Castle Hills Public Improvement District No.2 Assessment/Service Plan and to provide authorization of an ad valorem tax which could be levied on all taxable property within the boundaries of District No. I-D to provide contract revenues to the City ofLewisviIle to repay obligations which could be issued by the City of Lewisville to refund all .-,r any portion of the above-referenced Series 1999 P.I.D: No.2 Bonds and to refund all or any iortion of the Additional P.I.D. No.2 Bonds; .

WHEREAS, at an election conducted on August 12,2000, the voters'within District No. I-D authorized the imposition of an ad valorem tax on all taxable property within the District, with~ut limit as to rate or amount, sufficient to make payments under the Amended· 2000 Joint y~i1ity Contract between the City of Lewisville, District No. I-D and Denton County Fresh Water:Sapply District No. I-A to support the issuance by the City of Lewisville of up to $28,500,060 total principal amount of obligations (the "PJ.D. No.2 Refunding Bonds") to refund all or any portion of the Series 1999 Bonds or the Additional P J.D. No.2 Bonds;

WHEREAS, the par:ties anticipate that District No. I-A will have the right to acquire, own, operate, maintain and manage all of the Additional Facilities which are not acquired, owned, operated, maintained or managed by District No. I-D, including, but not limited to, the Additional. Project-Wide'Facilities; . .. .

WHEREAS, the parties hereto agree that the Additional Facilities are hereby declared not to be a part of the System, as defined in Lewisville's ordinances which have authorized Lewisville's outstanding "Bonds Similarly Secured"; and

WHEREAS, the Bonds to be issued by Lewisville are to be paid in the manner set forth in ·'''e Trust Agreement pertaining to each respective series of the P J.D. No.2 Bonds from the contract

3

revenues to be received from District No. I-D and from assessments imposed by Lewisville and not from revenues pledged to" the payment of Lewisville's "Bonds Similarly Secured".

NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter set forth, the City of Lewisville Denton County Fresh Water Supply District No. I-A and Denton County Fresh Water Supply District No. 1-D hereby contract, covenant and agree as follows:

ARTICLE I DEFINITIONS

SECTION 1.0 1. RECITALS. The parties hereto contract, covenant and agree that all matters set forth in the recitals of this Contract are accw-ate and true.

SECTION 1.02. ,DEFINITIONS. Unless the context requires otherwise, the fonowing terms shall have the meanings hereinafter set forth:

(a) "Additional Castle Hills Drainage and Stonnwater Control System" means .he works, equipment, facilities and improvements for drainage, stonnwater control, siltation preve~tion, erosion control and: conservation and reclamation otthe soils and natural resources including, but not limited to, permits,licenses and interests in real property now owned or to be acquired or utilized to serve the area identified in Exhibit fiB", whiCh is attached hereto and m~de a part hereof for all purposes. " "

'. '\ '.

(b) "Additional Castle Hills Facilities" means the Additional Castl~" Hills Drainage and Stonnwater Control System, the Additional Castle Hills Road System, the Additional Castle Hills Sanitary Collection System and the Additional Castle Hills Water Delivery System.

(c) "Additional Castle Hills Road System" means the macadamized, graveled or paved roads or turnpikes, lateral roads, arterial roads, main feeder streets or internal streets which serve the area id<;mtified in Exhibit liB". .

(d) . "Additi~nal Castle Hills Sanitary· Sewage Collection System" means the" sanitary sewage collection system to be constructed or acquired or utilized to serve the area identified in Exhibit "B", including the sanitary sewers, manholes, intercepting sewers, pumping works and all other plants, works and equipment for the collection and transportation of waste to the

. Project-Wide Sanitary Sewage Collection and TreatmentSystem, together with all extensions thereof and additions thereto.

4

(e) "Additional Castle Hills Water Delivery System" means all or any part of the equipment, facilities, works and improvements to be constructed or acquired or utilized to receive water from the Project-Wide Water Supply and Delivery System .and serve the are~ identified in <Exhibit "B" including water mains, trunks, pumping works, interests in real property, and pe~it rights for the delivery of pot able water to each residential or commercial connection.

(f) "Additional Facilities" means the Additional Castle Hills Facilities and additions to the Project-Wide Facilities, th~ total construction costs and non-construction costs of which aggregate $28,500,000, all as more specifically set forth in Exhibit "A", which is attached hereto and made a part hereoffor all purposes.

(g) "Board" or "Board of Directors" means and refers to the governing body of District No. 1-0, its successors and assigns.

(h) "Bond Ordinance" means and refers to any ordinance. resolution or trust indenture of Lewisville authorizing the issuance of P.I.D. No.2 Bonds and providing for their security and payment, as amended from time to time as therein pennitted.

(i) "Bonds" means any bonds, notes or other obligations incurred or issued by any party to this Confract to finance the construction, acquisition or utilization of the Additiohai Facilities, including but not limited to contracts, leases; notes and leases with option to purchase and also means any bonds, notes or other obligations incurred or issued by any party to this contract to refund any Bonds. '

'. <, (j) "Commercial Connection" means any connection other than a Resldential

Connection.

(k) "Operation and Maintenance Expenses" means all costs and expenses incurred in, or allocable to, the operation and maintenance of the Additional Facilities, including, without limitation, wages and salaries, chemicals, the purchase of stores. materials and supplies, measuring meters, power, supervision, expenses of directors' meetings, legal fees, engineering fees, testing costs, costs 9f audits, expenses of establishing or maintaining any operating funcI or construction fund, waste disposal charges or assessments, claims, insurance' for property damage and tortious or . contractual liability, contractual payments to Lewisville, District No.1-A, the Upper Trinity Regional Water District, Castle Hills Public Improvement District No.2, or other persons for water, water treatment, sewage collection or treatment services or for the operation and maintenance of such other persons and all other items and expenses of a like or different nature reasonably required or desirable for the efficient maintenance and operation of the Additional Facilities in full compliance with all regulatory requirements and the perfonnance of the provisions of this Contract; A-epairs and replacements of damaged, worn-out or obsolete parts; improvements and betterments to

5

maintain or to cause to be maintained the Additional Fadlities in proper operation to render adequate . service and to comply fully with all regulatory requirements; the Jegalliability of Distri~t N9. 1.A or District No. l·D to pay money arising from an arbitration award or court decision creating a judgment; and the general and administrative expenses of District No. l·A and District No. 'l-D allocable to the operation and maintenance ofthe Additional Facilities.

(1) . "Person" means any individual, public or private corporation, district, authority, political subdivision or other agency or entity of the State of Texas or the United States of America; the State of Texas or the United States of America; any incorporated city, tovro or village, whether operating under general1aw or under its home-rule charter; public improvement district; county development district; new districts created by the division of District No. I-A; and any co-partnership, association, finn, trust, estate or any other entity whatsoever.

(m) "Public Improvement District No.2" or "P.J.D. No.2" means Castle Hilis Public Improvement District No.2, its successors and assigns.

(n) "PJ.D. No.2 Bonds" means the Series 1999 P.LD. Bonds, the Additional P J.D. No.2 Bonds, the P.I.D. No.2 Refunding Bonds and other bonds, notes or other obligations ,ssued by the City of Lewisville and repayable, in ,whole or in part, by assessmentsimpos~d within

,the boundaries of P J.D. No.2, and repayable, in whole or' in part from payments made under the 1999 Joint Utility Contract or this Amended 2000 Joint Utility Contract pursuant to the authority of Chapter 372, Texas Local Government Code, and Chapters 51 or 49 ofthe Texas Water Code.,as amended and pursuant to, and limited in purpose and amount to the terms of this Contract., '

"" " ",\ .....

(0) "Potable Water" means water that meets Federal and State standards for consumption by humans.

(P) "Project~Wide Drainage and Stormwater Control System" means the works, equipment, facilities and improvements constructed or maintained or operated by P .I.D . No.1, P .LD. No.2, Lewisville, District No. 1 ~A, District No. I-B, District No. I-C, District No. I-D, DistrictNo. I ~E or any successor or assign of District No. I-A, for drainage, stormwater control, siltation, prevention an~ contraIl erosion prevention, control and conserVation'and reclamation of the soils and natural resources, induding· but not limited to, permits, -licenses, interests in real property.

(q) "Project-Wide Facilities" means the Project-Wide Sanitary Sewage Collection and Treatment System, the ProjectwWide Water Supply and Delivery System, the Project-Wide

. Drainage and Stonnwater Control System and the Project-Wide Road System, the plans for all of which may be amended from time to time with the approval of the necessary partie~.

6

(r) "Project-\Vide Sanitary Sewage Collection and Treatment System" means the sanitary sewage collection system to be constructed by Lewisville and utilized by P.LD. No. I, P.I.D. No.2, Lewisville, DistrictNo. I-A; District No. I-B, District No. I-C, District No .. I-D, District No: l-E or any successor or assign of District No. I-A, including the sanitary sewers, manholes, intercepting sewers, pumping works and all other plants, works and equipment for the collection and .transportation of waste of District No. I-D or any territory ever within District No. I-A to 'Lewisville's Waste Disposal System (together with all extensions thereof and additions thereto), at which the sanitary sewage will be treated in accordance with the provisions of the contract with Lewisville.

(s) "Project-Wide Water Supply And Delivery System" means all or any part of the system and equipment for producing potable water which is to be owned, or constructed or operated by P.I.D. No.1, P.I.D. No.2, Lewisville or District No. I-A or District No. I-B, District No. I-C, District No. l-D, District No. I-E or any successor or assign to District No. I-A to provide potable water to District No. I-A, District No. I-B, District No. I-C, District No. I-D, District

··No. I-E or any area ever within District No.1-A, and further includes any appurtenances or facilities used in connection therewith, including water mains, water trunks, pumping facilities, water

. treatment facilities, contract rights, water rights, permit rights, interests in real property and all brage facilities, including elevated storage tanks.

. . (t) "Regulatory Requirements" means the requirements and provisions of any

. state or federal law. and any pennits, rules, orders or regulations issued or adopted from time to time by any regulatory authority, state, federal or other, having jurisdiction concerning drinking water standards, water quality standards, or the discharge of wastewater or effluent or otherwisy hriVing jurisdiction obtained by virtue of the acceptance of grants to finance capital costs of the Additional Facilities.

(u) "Residential Connection" means a structure designed for residential use which has sanitary conveniences and which is connected to the Additional Castle Hills Sanitary Sewage Collection System.

. . . (v) "Service Area" m~ans that territory or area.depicted and ou~lined in red in . EXhibit liB" hereto, as adjusted from time to time by District No. I-A. . .

(w) "Sewage" means the liquid and water carried waste discharged from sanitary conveniences of dwellings and buildings connected to a publiq sanitary sewer system.

(x) "Sewage Services" means any wastewater . collection, transportation, ... · .. atment, disposal or related services furnished or made available by the Additional Facil1ties.

(y) "Waste" means sewage and commercial and industrial waste collected by a public sanitary sewer system, together with ,such infiltration water as may be present.

(z) "Water Services" means the supply, treatment, transportation or related services furnished or made available by the Additional Facilities.

SECTION 1.03. HEADINGS, ETC. The titles and headings of the articles and sections of this Contract have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Contract or any provision hereof or in ascertaining intent, if any question of intent should arise. Unless the context otherwise requires, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa and words of the singular number shall be construed to include correlative words of the plural number and vice versa.

SECTION 1.04. INTERPRETATIONS. This Contract and all the teans and provisions hereof shall be liberally construed to effectuate the purpose set forth herein and to sustain the validity of this Contract. The parties agree that this Contract shall not be construed in favor of or against any )arty on the basis that the party,did or did not author this· Contract. Nothing in this Contract shall

'be' construed to Violate any State Qr Federal statutory p~ovision or any provision of the State or . Federal Constitutions and all acts done pursuant to this Contract shall 'be performed in such manner as to conform thereto whether expressly provided or not. '. '

ARTICLE II. DESIGNATION OF PROPERTY AND SERVICES

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"'. ". ,

SECTION 2.0 I. Lewisville agrees that it will proceed, as promptly as practicable with the financing and acquisition, construction and utilization ofthe Additional Facilities and refunding of the P J.D. No.2 Bonds, all in the manner hereinafter described, for the benefit of District No. I-A, District No. I-D and Lewisville. The parties acknQwledge that the City has .iss\led the Series, 999 P.lD. No.2 Bonds in the principal amount of$14,000;000 in accordance With the provisi'ons cif1he,

. 1999 Joint Utility Contract and is authorized to issue Additional P 1Jj. No.2 Bonds in the additional principal amount of $14,500,000' to finance, acquire, construct, own or operate the Additional Facilities; to pay the costs of issuance of the Additional P.I.D. No.2 Bonds, and tQ pay the other costs set forth in Exhlbit "A", which is attached hereto and made a part hereoffor all purposes. The form of the bonds or other obligationS, including the P.I.D. No.2 Bonds, shall be in the fonn requested by the governing bodies of the City of Lewisville and District No. 1 ~D. To the extent any .... ·I.D. No.2 Bonds, additional P.I.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds will not have

• investment grade rating from a nationally recognized securities rating service, such bonds will

8

be credit enhanced in a mrumer satisfactory to Lewisville. The parties agree that District No. l-A shall have primary responsibility as Project Manager, as provjded in Section 2.02 hereof, and shall

. perform its duties in accordance with the Agreement dated April!, 1996 (the "Agreement") between District No. I-A, Denton County Fresh Water Supply District No. I-B ("District No. I-B), the City ofLe'Wisville and the owners of the land within District No. I-A and District No. I-B regarding the fInancing, construction, acquisition and operation of the Project-Wide Facilities and the Additional Facilities. District No. I-A hereby covenants that it will make a diligent effort to design and to complete the Additional Facilities as soon as practicable. District No. I -A shall designate the consulting engineers for the Additional Facilities, which Additional Facilities shall be constructed in accordance with plans and specifications prepared by the consulting engineers and approved by District No. I-A and by Lewisville. Any changes or exceptions to the submitted plans and specifications, taken or suggested by Lewisville, shall be provided by Lewisville to District No. I-A within 10 business days from the date they are submitted to Lewisville or the plans and specifications shaH be deemed approved. After approval ofthe plans and specifications, there shall be no changes, modifications or amendments to the plans and specifications which are deemed by the City to be material without the prior written consent of Lewisville, which consent will be provided to District No. I-A in a manner consistent with the immediately preceding sentence.

SECTION 2.02. DIstrict No. I-A shall serve as Project Manager for the purpose of asement and facilities site negotiation and acquisition, as well as the purpose of inspection and' supervision of the construction of the Additional Facilities. In addition, District No. I-A shall serve as Project Manager for, and shall supervise the award and administration of the contracts for,.the construction of the Additional Facilities. Lewisville shall cooperate with District No. I-A'in connection with the services of District No. I-A as Project Manager. The constructio,n ·pf'·the Additional Facilities shall be perfonned in accordance with the Contract. ...

SECTION 2.03. District No. I-A shall enter into such contracts as may be necessary to provide for the acquisition, construction, financing or utilization ofthe Additional Facilities. Said contracts shall be approved and executed as required by applicable provisions of the Texas Water Code, as amended. Lewisville shall be given notice of and invited to attend all bid openings .

. SECTION 2.04. District No. 1-A agrees that adequate water distribution, wastewater . collection and treat~ent capacity, stdrin sewer and drainage capacity and road system capacity shall .

be reserved in the Project-Wide Facilities to accommodate the Additional Castle Hills Facilities.

SECTION 2.05. Lewisville agrees to pursue, in a timely manner, the approvals necessary to issue $14,500,000 in principal amount of Additional P.I.D. No.2 Bonds as soon as practicable to fmance, acquire, construct, own or operate the Additional Facilities. Lewisville further

. ~"rees to pursue, in a timely manner as appropriate, the approvals necessary to issue P.I.D. No.2 ''\tnding Bonds to refund the Series 1999 P.I.D. No. 2 Bonds as soon as practicable and the'

9

Additional P.I.D. No.2 Bonds in a timely manner as appropriate. In consideration of the issuance ofP.I.D. No.2 Bonds by Lewisville, and the payment from the proceeds of P.LD. No.2 Bonds of the costs se't forth in Exhibit "A" of the 1999 Joint Utility Contract, District No. I-A and District No. I-D agree to cooperate with Lewisville and the Castle HiI1s Public Improvement District No.2 to implement the financing, construction, acquisition and operation of the Additional Facilities, including, but not limited to the use offunds lawfully available to District No. I-A for such purpose, and to implement the issuance of Bonds to refund the Series 1999 P.I.D. No.2 Bonds and the Additional P.I.D. No.2 Bonds. This authority, however, does not grant P.LD. No.2 the ability to issue any additional debt without approval of the City of Lewisville. The parties further agree that any funds which are lawfully available to the Castle Hills Public Improvement District No.2 and not dedicated to the financing, acquisition, construction or utilization of the Additional Facilities or the repayment of the P.I.D. No.2 Refunding Bonds, may be expended for any lawful purpose. P.I.D. No.2 Bonds, Additional P.I.D. No.2 Bonds or P.LD. No.2 Refunding Bonds, may be expended for any lawful pwpose.

SECTION 2.06. In accordance with the provisions of Section 49.068 of the Texas Water Code, as amended, the parties agree that District No. I-A, or its successors or assigns, and District No. I-D, or its successors or assigns, shall have the right to acquire the Additional Facilities, If any portion of the Additional Facilities, at any time during the tenn of this Contract by paying to

.Lewisville the amount necessary to repay, redeem, refund or defease P.LD. No.2 Bonds allocabh~ to the Additional Facilities being acquired, together with all costs incident thereto. District No. I-A or District No. 1 ~D, as the case may be, shall provide written notice to Lewisville of the exercise .of this right no less than sixty (60) days prior to the closing of the transaction by which District No. 1-D, District No. I-A or their respective successors and assigns, acquires the additional f~dlities. Lewisville shall take the steps required by the terms of the P.I.D. No.2 Bonds to repay, redeem, refund or defease P.I.D. No.2 Bonds. Any acquisition under this section shall comply with procedures required by law.

SECTION 2.07. The parties acknowledge and agree that it is the responsibility of DistrictNo. I-A and District No. I-D to operate and maintain the Additional Facilities constructed pursuant to this Contract by District I-A. The cost of operation and ma.intenance of these facilities 'shaH be borne by the Dis~ricts and not Lewisville.

SECTION 2.08. Lewisville and District No. I-A acknowledge and agree that procedures substantially the same as those specified herein and relating to the financing, construction, and operation of the Additional Facilities and for the issuance of Bonds and Refunding Bonds will be used for the orderly installation of similar facilities for all areas currently located within the boundaries of District No. I-A.

10

SECTION 2.09. Lewisville agrees to pursue, as appropriate, the necessary approvals to issue P.I.O. No.2 Refunding Bonds to refund the Series 1999 PJ.D. No.2 Bonds'as soon as practicable and to refund, as appropriate, any subsequen't series of P.I.D. No.2 Bonds originally issued to finance, acquire, construct, own or operate the Additional Facilities.

ARTICLE III. DISTRICT'S AGREEl\ffiNT TO PROVIDE FUNDS TO

REPAY P .I.D. NO.2 BONDS AND P.LD. NO.2 REFUNDING BONDS

SECTION 3.01. In order to repay P.LD. No.2 Bonds issued by Lewisville to pay the construction and non-construction costs of the Additional Facilities, and to repay the P.I.D. No.2 Refunding Bonds, District No. I-D agrees to pay to Lewisville, each year, the amount necessary to repay the debt service requirements ofP.I.D. No.2 Bonds and the P.LD. No.2 Refunding Bonds, as they come due, together with such amounts as may be necessary to pay the costs and expenses incident thereto, issued by Lewisville to pay, the costs and expenses of acquiring, constructing, financing or operating the Additional Facilities, including, without limitation, the cost of acquiring all rights-of-way, easements, and land therefor; the funding' of all special funds created for the !ayrnent and security of P.lD. No.2 Bonds and the P.lD. No.2 Refunding Bonds; fin~cial

advisor's fees; credit enhancement fees including letter of credit fees and bond IDsurance premiums; liquidity facility fees; underwriter's discounts; reoffering fees; trustee's fees; registrar and paying agent's fees; bond counsel fees, fees of other legal counsel, rating agency fees, printing and other expenses incurred in connection with the sale and delivery of P.I.D. No.2 Bonds and the P.LD. No. 2 Refunding Bonds; and an amount sufficient to provide for the payment of capitalized inrer~ston the P.I.D. Bonds and the P.1.D. No.2 Refunding Bonds for a period not to exceed two (2) years.

SECTION 3.02. Lewisville shall deliver a substantial draft of any Bond Ordinance including any trust indenture authorized therein to the District, setting forth the principal amount and the maturity of P.1.D. No.2 Bonds and the P.I.D. No.2 Refunding Bonds to be issued, the special funds created for the payment and security ofP.I.D. No.2 Bonds and the P.1.D. No.2 Refunding Bonds, the provisions related to the refunding, early retireinent or defeasance of P.I.D. No.2 Bonds and the P.I.D. No. 2 Refunding Bonds, including provisions relating to the creation' and establislunent of a 'special escrow fund for the deposi,t of the proceeds of the sale ofP.I.D. No.2' Bonds and the P.I.D. No.2 Refunding Bonds; and the procedures to be followed for the disbursement or withdrawal offunds deposited in such accounts. The governing body of District No.1 wD and any other entity which would be obligated to make payments by the tenns ofthe Bon¢! Ordinance must approve the t~nns and conditions of the Bond Ordinance in order to be bound to pay the debt service requirements as required by this Contract.

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ARTICLE IV. PA YMENTS BY THE DISTRICT

SECTION 4.01. Following its approval of the Bond Ordinance in the manner set forth in Article III, District No. I-D shall be committed each year, to levy, assess and collect a tax on all taxable property within the District, unlimited by rate or amount, sufficient to make the debt service requirements on P.LD. No.2 Bonds and the P.LD. No.2 Refunding Bonds, in the maMer set forth in Section 4.02 hereof. District No. I-D agrees to pay to Lewisville an amount equal to the total of the principal, premium if any, interest, paying agents' fees, credit enhancement or liquidity facility fees and other reasonable charges and expenses which may accrue each year in connection with the payment ofP.I.D. No.2 Bonds and the P.I.D. No.2 Refunding Bonds.

SECTION 4.02. Without in any manner diluting the obligation of District No. I-D to pay to Lewisville, in accordance with Section 4.01 hereof, an annual amount equal to the principal, premium ifany, interest, paying agents' fees, credit enhancement or liquidity facility fees and other reasonable charges and expenses which may accrue each year in connection with the payment of P.I.D. No.2 Bonds and the payment of the P.I.D. No.2 Refunding Bonds, the parties agree that the 1Tlanner in which District No. I-D's annual amount shall be calculated and paid shall be as follows: ,

. (a) Lewisville shall, priOl: to setting its assessment within P.I.D. No. i each year, . calculate the total amount ofthe payments to be made by Lewisville pursuant to P .I.D. No.2 Bonds and the P.I.D. No.2 Refunding Bonds in the twelve (12) months beginning on the following March 1, after the application of the available reserves established with the proceeds of such P.I.D. No: 2 Bonds and the P.I.D. No.2 Refunding Bonds, and shall calculate an assessment on all asse~~able property within P.I.D. No.2 which, if95% of such assessments are collected in a timely fashion, would be sufficient to make the entire annual payment to Lewisville under Section 4.01 (the "AlUlual Assessment"). Lewisville shall provide written notice to District No. I-D of the calculation of the Annual Assessment by September 1 of each year preceding the above-referenced March 1.

(b) Upon receipt of notification by District No. I-D of the calculation of Annual Assessment, District No. I-D shall assess and collect on all taxable property within its botmdaries the tax levied pursuant to this Jomt Utility Agreement which, if95% of such taxes are collected in·· a timely f~shion'- would be sufficient to pay to the holders ofP.I.D. No.2 Bonds. or P.I.D. No.2· Refunding Bonds an amount equal to the Annual Assessment.

(c) On February 1 following the date of receipt of written notification of the Annual Assessment in accordance with Section 4.02(a) hereof, District No. 1-D shall certify to Lewisville the amount of all taxes collected by District No. 1-D pursuant to the levy in accordance

~-th Section 4.02(b) hereo£· Lewisville shan thereupon impose an assessment within P.I.D. No.2 [icient, with all other funds available to it for the purpose, to pay the debt service requirement on

12

P.LD. No.2 Bonds and the P.LD. No.2 Refunding Bonds as they come due, together with such amounts as may be necessary to pay the costs and expenses incident thereto. District No. I-D and Lewisville shall thereafter make the payments in the manner required by the Bond Ordinance.

SECTION 4.03. The parties acknowledge and agree that the obligations of Lewisville under this Contract and the obligations of District No. I -D to make the payments required by Article IV hereof are subject to the one-time approval by the voters within District No. I-D of a tax, unlimited in rate or amount, to make the payments under this Contraqt. The parties further agree to make such modifications in this Contract as may be suggested by the underwriters ofP.I.D. No. 2 Bonds or the P.LD. No.2 Refunding Bonds, the rating agencies, the Attorney General of the State of Texas, or the issuers of any credit enhancement for the P.I.D. No.2 Bonds or P.LD. No.2 Refunding Bonds so long as the modifications do not materially increase the obligations of Lewisville under this Joint Utility Contract.

SECTION 4.04. For each year while PJ.D. No.2 Bonds, or P.LD. No.2 Refunding Bonds or any part of the principal, premium (if any) or interest thereof, remain outstanding and unpaid, there shall be levied, assessed and collected by District No. I-D in due time, form and manner, and there is hereby levied, a continuing direct annual ad valorem tax, without limit as to rate !>r amoUQt on all taxable property within such District, at a rate from year to year sufficient to pay the principal.of, premium, if any, and interest on P.I.D. No.2 Bonds and the P :I.D. No.2 Refunding Bonds and to create a sinking fund for the paiment of prinCipal thereof, when due, and to pay the expenses of assessing and collecting such taxes, and to pay paying agents fees, credit enhancem,ent

. or liquidity fees or obligations or other charges and expenses relating to the P J.D. No. 2 Bo~ds or P.LD. No.2 Refunding Bonds, all in the marmer set forth in Section 4.02 hereof. All proceeds from the collection of taxes levied as herein provided, except expenses incurred in assessm~nt and collection, shall be paid into the debt service fund or such other funds as may be created by the Bond Ordinance. Nothing in this section shall affect the obligations of the District to maintain a minimum tax rate in accordance with Section 3 of the Contract.

SECTION 4.05. The obligation of District No. I-D to make the payments specified in this Article shall terminate at such time as: .

,(8) all of P.LD. No. '2 Bonds and P.I.D. No. 2 Refunding Bonds arid all obligations relating thereto have been paid in full and are no longer outstanding, or

(b) there is irrevocably deposited with the paying agent or trustee, as the case may be, in trust, Government Obligations, certified by an independent public accounting firm of national reputation, which shall mature as to principal aQ,d interest in such amounts and at such times as will :~ure the availability t without reinvestment, of sufficient funds to pay the principal of; redemption

;mium, if any, on and interest on all outstanding P J.D. No.2 Bonds and ,P.I.D. No.2 Refunding

13

Bonds to their respective due date or dates by reason of maturity, redemption or otherwise. and all other obligations and fees relating to the P.I.D. No.2 Bonds, and P J.D. No.2 Refunding Bonds have been fully paid. "Government Obligations" as used herein shall mean direct obligations of the United States of America, including obligations, the principal of and interest on which are unconditionally guaranteed by the United States of America, and United States Treasury obligations such as its State and Local Government Series, which may be in book-entry fonn.

SECTION 4.06. The following payments shall be made by District No. I-D in the manner specified in Section 4.02 hereof, for so long as any of P .I.D. No.2 Bonds and the P .LD. No. 2 Refunding Bonds issued pursuant to this Contract (or other obligations and fees relating to such P.I.D. No.2 Bonds) are outstanding:

(a) Such amounts, payable semi-annually on or before 30 days prior to the last business day prior to the due date of each interest payment on P.LD. No.2 Bonds or P.I.D. No.2 Refunding Bonds, as may be necessary to pay the principal and/or interest coming due on p.I.n . No. 2 Bonds or P.I.D. No.2 Refunding Bonds on the next succeeding interest payment date;

(b) Such amounts, payable upon receipt of a statement therefor, as may be .ecessary to pay the fees, other costs and charges of the paying agent, registrar or trustee for paying

or redeeming PJ.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds coming due on such date;

(c) Such amounts, payable upon receipt of a statement therefor, as maybe necessary to pay: (1) the fees incident to credit enhancement ofP.I.D. '!'To. 2 Bonds or P.I.D. No~ 2 Refunding Bonds; (2) the actual cost of any special accounting audits required by any party to R .. I:D. No.2 Bonds or P.LD. No.2 Refunding Bonds; (3) any extraordinary or unexpected expenses ot ~osts reasonably and necessarily incurred in connection with P J.D. No.2 Bonds or P J.D. No.2 Refunding Bonds and the Additional Facilities, such as expenses of litigation, ifany; and (4) costs of special studies and special professional services, if and when required by any governmental directive or regulation or deemed appropriate by the District;

. (d) Such amounts as may be necessary to make all payments into any special fund 0,1.' reserve fund required to be establ~shed ~dlor maintained 1;>1 the provisions o(any Bond.

·Ordinanqe; . . '. .

(e) Such amounts as may be necessary to pay any deficiency in any fund or account required to be accumulated andlor maintained by the provisions of any Bond Ordinance;

(f) All operation and maintenance expenses of the Additional Facilities that are "'roally incurred, if any, by Lewisville related to the Additional Facilities.

14

SECTION 4.07. The payments under and pursuant to this Article IV hereof shall.be payable from and secured by an ad valorem tax, imposed by District No. I-D, unlimited as to rate or amount, which District No. I-D hereby levies, assess and collect, upon all taxable property within District No. I-D at the same time as other District No. 1-0 taxes are levied, assessed and collected, all in the manner specified in Section 4.02 hereof.

SECTiON 4.08. District No. I-D agrees to establish and maintain any funds required by any Bond Ordinance authorizing the issuance of P.I.D. No.2 Bonds or PJ.D. No.2 Refunding Bonds and to pay those fees and expenses incurred in connection with the issuance ofP.I.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds and the construction or acquisition of the Additional Facilities which are not paid from the proceeds ofP.LD. No.2 Bonds or P.I.D. No.2 Refunding ·Bonds,

SECTION 4.09, District No. I-D's obligation to make payments under this Contract are unconditional and not subject to off-set or counterclaim, and may be pledged by Lewisville to the repayment of P.I.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds until the entire principal of, redemption premium, if any, and interest on P.I.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds and other obligations, costs and fees relating thereto have been paid or provided for. The City of iLewisville shall also have the right not to pledge District No. I-D~s obligation to make payments under this Contract to the repayment of the P J.D. No·, 2 Bonds or the P .LD:N o. 2 Refunding Bonds.

SECTION 4.10. District No. I-D's obligation to make payments under this Contract constitute a general obligation of the District, for the faithful performance of which the full taith, credit and re!:>l.mrces of District No. I-D are hereby irrevocably pledged. , \.'

SECT! ON 4.11. In addition to all rights and remedies provided by the laws ofthe State of Texas, District No. I-D covenants and agrees that in the event District No. I-D defaults in the payment of any of the amoWlts required to be paid under this Contract when due, or defaults in the observance or performance of any of the covenants, conditions or obligations set forth in this Contract, Lewisville or any trustee for the owners of P .I.D. No.2 Bonds or P J.D. No.2 Rc:::funding

. Bonds shall be entitled to a writ of mandarp.us issued by a court of proper jurisdiction compelling

. and requiring the Board of Directors and other officers of District No. I-D to observe and perform any covenant, obIigation·or condition prescribed in this Contract, all in the manner prescribed in the· Bond Ordinance or Trust Agreement. No delay or omission to exercise any right or power accruing to Lewisville or any trustee for the owner of P .I.D. No.2 Bonds or P.I.D. No.2 Refunding Bonds upon default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient

15

SECTION 4.12. Lewisville shall have the right, but not the obligation, to make any payment related to .P.I.D. No.2 Bonds or PJ.D. No.2 Refunding Bonds or the Additional Facilities

.. Jrorn any source including the payments by District No. 1 ~D under this Contract and the Assessments collected 'pursuant to the Castle Hills Public Improvement District No.2 Assessment/Service Plan.

ARTICLEV. INSURANCE

SECTION 5.01. During such time as District No. I-A. District No. I-D ortheir respective contractors engage in construction work in relation to the Additional Facilities, each of said Districts agrees to require all contractors perfonning such work to provide adequate insurance in relation to the Additional Facilities and the work being perfonned as is usually carried by contractors constructing like properties and also to require all contractors to carry worker's compensation insurance.

ARTICLE VI. CONDITIONS PRECEDENT

SECTION 6.01. The obligation of District No . .-1.:.D to acquire and/or construct the Additional Facilities shall be conditioned upon the following:· . .

(a) Approval of the Additional Facilities by any and all other Iocal,state or federal agencies having jurisdiction; and '. '<.'

"'.,'.

(b) Sale ofP.I.D. No.2 Bonds in an amount sufficient to pay the costs of the acquisition, construction or utilization of the Additional Facilities, together with the expenses ofissuing PJ.D. No.2 Bonds and other non-construction costs related to the P.LD. No.2 Bonds; or

(c) Sale ofP.I.D. No.2 Refunding Bonds in an amount sufficient to pay the costs of refunding the P.I.D. No.2 bonds to be refunded, together with the expenses ofis~uing P.I.D. No.2 ~efunding Bonds and other .costs related to th~ P.LD~ No.2 Refunding B~nds. . .

ARTICLE VII. REGULATORY BODIES

SECTION 7.01. This Contract, and the acquisition of the Additional Facilities, shall ·mbject to all valid rules, regulations, and laws applicable thereto passed.or promulgated by the

16

United States of America, the State of Texas, or any governmental body or agency having lawful jurisdiction thereof.

ARTICLE VIII. PARTIES IN INTEREST

SECTION 8.01. This Contract shall be for the sale and exclusive benefi t of Lewisville, the Castle Hills Public Improvement District No.2, District No. I-A, District No. I-D and any trustee for owners or holders of P.I.D. No.2 Bonds and P.I.D. No.2 Refunding Bonds from time to time, and shall not be construed to confer any benefit or right upon any other parties.

ARTICLE IX. SEVERABILITY

SECTION 9.01. The provisions of this Contract are severable, and ifany word, phrase, clause, sentence, paragraph, section or other part of this Contract, or the application thereof to any person or circumstance, shall ever be held by any court of competent jurisdiction to be invalid or

I Unconstitutional for any reason, the remainder of this Contract and the application of such word, phrase, clause,' sentence; :paragraph, section or other part . of this Contract' to ()ther persons' or

. circumstances shall not be affected thereby. ' . . ,

ARTICLEX. TERM OF CONTRACT

SECTION 10.01. This Contract shall be in force and effect for so long as the P.I.D. No.2 Bonds, the PJ.D. No.2 Refunding Bonds, or any of them, remain outstanding and unpaid; provided, however, that in no even.t shall the tenn of this Contract exceed forty (40) years from the date of execution hereof by the parties hereto.

ARTICLE XI. AMENDMENTS

SECTION 11.01. This Contract may be amended, modified, revised or changed by written instnunent executed by the parties hereto. District No. J-A and District No. I-D shall each have the right to perfonn the obligations and duties of the Districts under this Contract, with the prior . 'written approval of both Districts.

17

ARTICLE XII. GENERAL PROVISIONS

, . . . .

SECTION' 12.0 1. ' District No. I-A covenants that it will operate the Additional Facilities in accordance with accepted good business and engineering practices and in accordance with rules and regulations issued and to be issued by appropriate Federal and State agencies.

SECTION 12.02. The effective date of this Contract shall be the date which it is executed by all of the parties hereto, but the Contract shall take effect only upon the passage of the election referenced in Section 4.03 hereof.

SECTION 12.03. a waiver.

Failure to enforce any provision of this Contract shall not constitute

SECTION 12.04. TIlls Contract contains the entire understanding of the parties with respect to the subject matter hereof and there are no oral understandings, statements or stipulations bearing upon the meaning or effect of this Contract which have not been incorporated herein.

SECTION 12.05. ,AnY party hereto ~ay ace'ept advances, loans, grants and grattiities' from arty source ,approve~ by the goveming body 'of that party for the pUIpose ofperfonning any obligation Under this Contiact and may make and enter into contracts, agreements, covena.ri.ts the Board considers appropriate in connection with acceptance of such advances, loans, grants'and gratuities. ' '.'

.. ~ "". ", '-. SECTION 12.06. Notwithstanding any other provision of this Contract to the contrary,

District No. I -A and District No. I-D each specifically reserve the right, to make payments under ills Contract from proceeds from the sale of notes or bonds, from taxes, from any other income of either District, or from any combination of these. This shall not be construed to relieve either District from its obligations under this Contract. including specifically, without limitation, the obligation to levy, assess and collect taxes sufficient to make the payments to Lewisville required under this Contract .

SECTION 12.07. . Any notices required under this Contract shall be deemed received five (5) calendar days after date deposited in the United States Postal Service, postage paid, addressed in the manner set forth in Section 12.08.

18

SECTION 12.08. This Contract is performable inDenton County. Venue for any action affe~ting this Contract sballlie in Denton County.

If to Lewisville or Castle Hills Public Improvement District:

City of Lewisville 1197 West Main, Lewisville, Texas 75067

If to District: Denton County Fresh Water Supply District No. I-A Suite 900

With a copy to:

600 N. Pearl Street Dallas, Texas 75201-3095

Denton County Fresh Water Supply District No. I-D Suite 900 600 N. Pearl Street Dallas, Texas 75201

Toni Leonard Attorney forlhe Districts Suite 900 600 N. Pearl Street Dallas, Texas 75201

19

IN WITNESS WHEREOF, the parties hereto acting under authority of their respective goveriting bodies have caused this Contract to be duly executed in several count~rparts, each of

. which shall constitute an original all as of the date on which all parties have executed this Contract.

CITY OF LEWISVILLE

BY:~~ enearey, Mayor

DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. l-A

....::::.:::.L..:.=:.....:..::.....;:::.....:..~_..:...:.-.; President

DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. I-D

By:~t:C22 . Mark E. Channels • President

DATED: JUNE 12, 2002

C:\DOCS\DENTON\J~\Amende~ 2000 Joint Utility Contl'3ct7.wpd

20

~, " . .... \. \

Exhibit "A"

to

Exhibit" A"

The estimate of the principal amount of the obligations to be incurred by the District to provide the facilities, improvements and services and to cover the expenses necessary to administer, maintain and operate the improvements, facilities and services is $28~500,000, more particularly set . out as follows:

CONSTRUCTION COSTS

Stonn Drainage System and Erosion Control Roads and Streets Water Supply and Distribution System, including acquisition

of contract rights Sanitary Sewer Collection System and Pump Station

SUBTOTAL

Contingencies

Design, Survey, Geotechnical, Engineering and Contract Administration

. TOTAL CONSTRUCTION COSTS

NON-CONSTRUCTION COSTS

Legal Fees (2%) Placement Agent Fees (2%) Capitalized Interest

(2 years@ 5112% per annum) Letter of Credit Fees

(3 years@ 1 114% per annum) Administration,. Organization, Maintenance

and Operation Expenses

TOTAL NON CONSTRUCTION COSTS·

TOTAL PRINCIPAL AMOUNT OF OBLIGATIONS TO BE INCURRED BY THE DISTRICT TO PROVIDE FACILITIES, IMPROVEMENTS AND SERVICES

$ 5,625,000.00 $ 5,125,000.00

$ 4,750,000.00 $ 3,500,000,00

$19,000,000.00

$ 2,470,000,00

$ 1.288,200.00

$22,758,200.00

$ 570,QOO.OO $ 570,000.00

$ 3,135,000.00

$ 1,068,750.00

$ 398,050.00

$ 5,741,800.00

Exhibit "B"

to

Exhibit" A"

.. . •

. '

~ :t

b

~ r.l

General Fund

Proposed Revenue Proposed Expenses

Fund Transfer Un designated Reserve Balance

Utility Fund

Proposed Revenue Proposed EXl!enses

Fund Transfer Un designated Reserve Balance

Combined

Proposed Revenue Proposed Expenses

Onaes1gnatedlleserve Balance •. ....:;,.

1-A 1,254,868 -5,334,637 177,055 4,079,769 177,055

Denton County FWSD 1-A FY 08/09 Operating Budget

Fund Summary

1-B 1-C 1-0 482,203 52,704 212,364

1,073,090 62,771 1,162,529 590,887 10,066 950,165

(1)_ (0) ° (0) 0

i-A 1-B 1-C 1-0 7,246,431 241,242 1,317,790 69,673 1,664,951 2,873,919 64,187 566,761 57,238 701,205

(4,079,769) (177,055) (590,887) (10,066) (950,165) 292,743 0 160,142 2,369 13,580

1-A 1-B 1-C 1-0 8,501,299 241,242 1,799,993 - -1.22 .. 377 1,877,315 8,208,557 241,242 1,639,851 -120,009 1,863,734

292,742 . - . (0) 160,142 .. .2,368 13,581

1-E 1-F 1-G 1-H 28,862 343,793 134,942 -

1,045,349 1,056,097 327,311 430,436 1,016,487 712,304 192,369 430,436

(0) ---

0 --

(0) 0

1-E 1-F 1-0 1-H I 1,699,861 1,140,982 390,375 721,557J

570,188 426,462 197,073 290,803 !

(1,016,487) (712,304) (192,369) (430,436) 113,186 2,215 933 -- .317.

1-E 1-F 1-G 1-W: .

1,728,723 1,484,774 525,317 - -121;557 1,615,538 1,482,559 524,385 7_2=1,239

113,185 2,216 933 '.' .~317

Estimated.~larting Balance I 1,1631 167,048 I .:-4,133 I 293,5891 246,422 I 250,000 I - T·:· .:~---

Forecast~d Next Year Startl 1,1631 327,190 I 6,501 I 307,170 I 359,607 I 252,216 I 933 I .:. . .. --. -- --~~~'bi~~~~'-:':- .~-- - '-'.'-~' :':';::::.-::.'::::.~:'~:-. -::.~:-~".~: \~{;.-. --'-"'--;--~'-'-';----'~":'-:-.~:::. _.,-.' ---.-;:"-: ::- .. -.- ...... __ .-:

- -

1-A 1-B 1-C 1-0 1-E 1-F 1-G 1-H

Proposed Revenue 7,843,231 - 1,617,013' - 2,388,645 2,098,754 1,738,820 - -Proposed Expenses 7,791,265 - 1,587,319 - 2,375,538 2,089,588 1,738,820 - -

Fund Transfer - - - - - - - - -Balance - 29,694 - 13,107 9,166 (0) - -

BUDGET 08-09 1 of 1 09/15/2008

GENERAL FUND REVENUE Account No. I Description

4201 I Building Permit 42021 Fence Permit 4205firrigation Permit 42071Pool Permit 42101COM. Building Fees 4211leOM.lrrLgation Permit Fees 4212!eOM. Fence Permit Fees 42131COM. Fence Column Permit Fees 4214JeOM. Retaining Wall Permit Fee 42151COM. Pool Permit Fees 42181COM. Electrical Permit Fees 42191"eOM. Mechanical Permit Fees 4220IeOM. Plumbing.Permit Fees 41031ConnectiReconnect 41201Solid Waste Sales 41211Solid Waste Bin SljIles 4122ISolid Waste Sales Tax 41301 Penalty 41401Transfer Fee 42001Re-lnspection Fee 42041 Builders Maint. Fee 42061Contractor R~gistration 42091Fine & Penalty 4221IeOM. Re-Inspi:!ction Fees 4222ICOM. Fine/Penalty Fees 42231COM. Miscellaneous Fees 42241COM. Maint. Fees 4300IMisc. Revenue 4310lehargeback Fees 4400llnterest Income 4500lFranchise Fees 4BOOIMaint. Property. Tax 47051MGMT Fees

Sales Tax

FY 08/09 Proposed

89,000

1,165,868

Denton County FWSD 1-A FV 08/09 Operating Budget Proposed Revenue

GENERAL FUND

l-A 1-B i-e 1-D

20,000 5,000

462,203 52,704 207,364

1-E

10,000

18.862

'.: • .' ':.;: :l:.. • • •• :: .' •• " ", ~. :.. •

1-F 1-G '-H

4,000 50,000

339.793 84.942

IFund Transfer I 177,055 I 590,887 I 10,066 I 950,165 I 1,016,4Srr=if2,304 I· 192,369 1 430,436 I . . .. . - '. . . . , ~

.. . - - ..... .. :: ... ".. .' '. _ .. 0', •• :=:.

.. 0.-; . . . .... . . . .. 1-A 1-B 1-e 1-0 l-E 1-F ·1-G l-H

Proposed Revenue 1,254,868 - 482,203 52,704 212,364 28,862 343,793 134,942 -Proposed Expenses 5,334,637 177,055 1,073,090 62,771 1,162,529 1,045,349 1,056,097 327,311 430,436

Fund Transfer 4,079,769 . 177,055 590,887 10,066 950,165 1,016,487 712,304 192,369 430,436 Undesignated Reserve Balance (1 (0) 0 (0 0 (0) .. , ·0 (0 0

• oZ_ •• _.

DIRECT - EXPENSES Account No. Description FY 08/09

Proposed 501-1000 Salary Directors 33,750 501·1001 Medicare 489 501·1002 Social Security 2,093 501-2000 Prof. Service Property Appraisal 500 501-2001 Prof. Service Tax 13,019 501·2002 Prof. Service Auditing 38,088 501-2003 Prof. Service Legal 110,500 501·2004 Prof. Service Legal Supply 21,200 501-2005 Prof. Service Engineering 20,000 501-3000 Director Expenses 3,750 501-4000 Election Expense 4,000 501-5000 Water Meter Expenses . 50l·aOOQ Special Assessments l-F 307,498

554,887

'-::;:-:---

Denton County FWSD l-A FY 08/09 Operating Budget Proposed Expenses

GENERAL FUND

1-A l-B '-C 1-0

4,500 4,500 2,250 4,500 65 65 33 65

279 279 140 279

· · 500 · · 5,884 640 5,532

7,425 6325 3,163 5,225 30,000 15,000 3,000 12,500

3,500 2,250 450 2,250 20,000 · . ·

500 500 250 500 500 500 SOD 500 - - - · · · - · '.

66,769 35,303 10,925 31,351

l-E l-F l-G l·H

4,500 4,500 4,500 4,500 65 65 65 65

279 279 279 279

- . . -463 500 - ·

5,225 3,575 3,575 3,575 12,500 12,500 12,500 12,500

3,250 3,500 3,000 3,000 . . - · 500 500 500 500 500 500 500 500 - - - -. 307,498 . ·

27,282 333,417 2.4,919 24,919

'.-.'-~-

PERSONNEUOVERHEAD-EXPENSES Account No. Description FY08/09

Proposed 502-1000 Salary Regular 765.540 502-1050 Medicare 11.100 502-1051 Social Security -501-1060 Ins. Worker's Compo 31,500 502-1070 Unemployment Tax 3,678 501-1110 Ins. Accident & Health 2,800 501-1120 Ins. Director & Employee Bonds 1,444 501-1121 Ins. Director & Officer Liability 13,078 501-1124 Ins. General Liability 38,925 501-1125 Ins. Vehicles 20,948 501-1127 Ins. Commercial Property 9,500 501-1128 Ins. Pollution 5,250 502-1080 Contract Labor -_., 193,160 502-1100 Retirement Contribution 187,098 502-1110 Ins. Employee Health 59,500 502-1111 State Certification. Pay 2,450 502-1200 Office SupplY 17,500 502-1210 Dues & Subscriptions 3,500 502-1220 Traininq & Education. 12600 502-1230 Administration Travel 4,200 502-1240 Communication 18,900 502-1250 AdVertisement 6,000 501-2500 Bank Fees 6,000 501-4000 Bad Debt -503-3300 Lease Equipment 24,500 503-3305 Rental Equipment 31,500 503-3306 Rental Office 59,157 503-3315 Supply Small Tools 5,250 503-3325 Supply Uniforms 4,900 503-3330 Supply Medical 350 503-3345 Supply Gas & Fuel 24,500 503-3432 Maintenance Parks 60,000 503-3433 Maintenance Building 1,750 503-3440 Maintenance Vehicles & Equip. 12,950 503-3450 Misc. Expenses 8,750 503-3520 Capital Outlay Bulldlnq & Site 8,750 503-3530 Capital Outlay Vehicle & Equipment 28,000 503·3540 Maintenance Landscape Contract 192,000 502-1260 Management Fees to 1-A 178,305

50% Split 2,048,061

Denton County FWSD 1-A FY OB/09 Operating Budget Proposed Expenses

GENERAL FUND

1-A 1-B l-C 1·0

42.518 161.108 13.262 153.500 617 2,336 192 2.226

- . - -1,546 7.065 495 6,714

228 715 71 756 168 588 56 504

87 303 29 260 785 2,746 262 2,354

2,336 8.174 779 7.007 1,201 4.399 419 3,no

010 1,995 190 1.710 315 1,103 105 945

10,006 42350 3,243 41,527 10,391 39,375 3,241 37,516

2,924 13,345 935 12,682 120 550 ". '~9 522 860 3,925 275. 3,730 172 785 . :55 746

. 1119 2826 -- 4-98 ~. 206 942 .. _ .. ~66 895 929 4,239 297 4,028 360 1,260 ·120 1.080 360 1,260 120 1,080 . - - -

1,204 5,495 385 5,222 1,548 7,065 495 6,714 2,907 13,268 930 12,609

258 1,178 83 1,119 241 1,099 77 1,044 17 79 6 75

1,204 5,495 385 5,222 3,000 14,400 1.200 13,200

86 393 28 373 636 2,905 204 2,760 430 1,963 138 1,865 430 1,963 138 1865

1,376 6,280 440 5,968 9,600 46,080 3,840 42,240

. 37,856 3,375 34,473 100,312 446,903 36,168 420,987

1-E ,-F 1-G 1-H

163.350 125.795 56,404 49,603 2,369 1,824 818 719

- . - -7,056 3,942 2,412 2,268

766 660 267 216 560 560 196 168 289 289 101 87

2,616 2,616 915 -7.785 7.785 2,725 2,336 4,189 4,189 1,466 1,257 1,900 1,900 665 570 1,050 1,050 368 315

42768 25,124 14,762 13,380_ ~ ... -39,923 30,744 13,785 12,123 13,328 7,446 4,556 4.284

549 307 18B 17.6 .' 3,920 2,190 1,340 1,260

784 438 268 252 .2.H22.. . 1,5n .. - 965 907~ .-..

941 526 322 302. .... " 4,234 2,365 1.447 1,361' . 1,200 1,200 420 360 .. 1,200 1,200 420 360

- . - -5,468 3,066 1,876 1,764 7.056 3942 2,412 2,268

13.251 7,403 4,530 4,259 1,176 657 402 378 ',098 613 375 353

78 44 27 25 5,488 3,066 1,876 1,764

13,200 6,000 4,200 4,800 392 219 134 126

2,901 1,621 992 932 1,960 1,095 670 630 1,960 1,095 670 630 6,272 3,504 2,144 2,016

42,240 19,200 13.440 15,360 37,018 31,218 12,794 11,337

443,176 306,469 151,350 138,947

M&O-% Val -- -""r""".~_""

Account No. Description Annual Combined

503-1010 NPWS Raw Water -503-1020 RTWS Potable Water 503-1030 L.V. Potable Water -

Irrigation Water 550,000 503-3200 Police 171,000 503-3210 Fire 261.000 503-3300 Lease Equipment 24.500 503-3305 Rental Equipment 31,500 503-3306 Rental Office 59,157 503-3315 Supply Small Tools 5,250 503-3325 Supply Uniforms 4,900 503-3330 Supplv Medical 350 503-3345 Supply Gas &·Fuel 24,500 503-3350 Supply Postage -503-3370 Utility ElectrIc 124,000 503-3375 utility Bank Fees -503-3400 Maintenance Water -503-3410 Malntenance.Sewer 140,000 503-3420 Maintenance Effluent -503-3430 Malntenance.Street 8< Drainage 80,000 503-3433 Maintenance Building 1,750 503-3440 Malntenance·Vehlcles & Equip. 12,950 503-3450 Misc. Expenses _ 8,750 503-3500 Sewer-Lewisville Contract 450,000 503-3510 Solid Waste Services 250,000 503-3520 Capital Outlav Building & Site 8,750 503-3530 Capital OuUay Vehicle & Equipment 28,000 503-3540 Maintenance Landscape Contract 192,000 503-3550 RTWSDemand -503-3560 L.V.Demand -

50% Split 2,428,438

Denton County FWSD l-A FY 08/09 Operating Budget Proposed Expenses

GENERAL FUND

1-A 1-B l-e 1-0 . 0.0002 0.2026 0.0046 0.2591

- - - -- - - -- - - -107 111,407 2.540 142,506

33 34,637 790 44,306 51 52,B68 1,205 67,625

5 4.963 113 6,348 6 6,381 145 8,162

12 11,983 273 15,328 1 1,063 24 1,360 1 993 23 1,270 0 71 2 91 5 4,963 _..:._- 113 6,348

- - - -24 25,117 573 32,129

- - .. - -- - - -: ... 27 28,358 . ..:.,. .. 646 36,274

- - -:.. ... _.- - -16 16,205 •.• __ ·0 369 20,728

0 354 8 453 3 2.623 ... . , 60 3,355 2 1,772 -".'-:'-',j: . 5 2,267

88 91,151 .. 0.·2;078 116,596 49 50,640 1,154 64,775

2 1,772 40 2,267 5 5,672 129 7,255

37 38,891 887 49,747

- - - -- - - -474 491,683 11,177 629,190

1-E l-F 1-G 1-H I 0.1989 0.1636 0.0618 0.10941

- - - I

- - - I

- - - -109,370 89,965 33,983 60,149

34,004 27.971 10,566 18,701 51,901 42,692 16,126 28,543

4,872 4,008 1,514 2,679 6,264 5,153 1,946 3,445

11,764 9,676 3,655 6,470 1,044 859 324 574

974 802 303 536 70 57 22 38

4,872 4,008 1,514 .2,679

- - - -24,658 20,283 7,662 13,561

- - - ... -. .. - - - . .. _-,

27,840 22,900 8,650 .15,311-

- - - -.. 15,908 13,086 4,943 .- ~,?:49

348 286 lOB ·.O.~ .. 191

2,575 2,118 800 . 1,416 1,740 1,431 541 ,··:-957

89,485 73,607 27,804 49,213 49,714 40,893 15,447 27,340

1,740 1,431 541 957 5,568 4,560 1,730 3,062

38,180 31,406 11,663 20,997

- - - -- - - -

482,692 397,211 150,042 265,569

USAGE-EXPENSES Account No. Description FY Oa/09

Proposed 504-1001 NPWS Effluent . 504-5007 NPWSDemand 306,000

306,000

I Proposed Revenuel 1,254,868

I Proposed Expensesl 5,337,385 I Undes\gnated Reserve Balancel (4,082,518

-..:.-...:..-::::

.-...,..~

::-:Y.

Denton County FWSD 1-A FY 08/09 Operating Budget Proposed Expenses

GENERAL FUND

l-A 1-6 1-C 1-0

- - - . 9,500 99,000 4,500 81,000 9,500 99,000 4,500 81,000

1-A 1-8 l-C 1-0

- 482,203 52,704 212,364 177,055 1,073,090 62,771 1,162,529

(177,055 (590,887 (10,066) (950,165)

'~.~.~.-

1-E l-F 1-G 1-H

- . . -92,000 19,000 1,000 1,000 92,000 19,000 1,000 1,000

l-E 1-F l-G 1-H 28,862 343,793 134,942 -

1,045,349 1.056,097 327,311 430,435 (1,016,487 (712,304) (192,369 (430,436)

""'f~~

....... ~'!

---

Account No. Description FY08/09 Proposed

4201 Building Permit 289.518 4202 Fence Permit 9.724 4205 Irrigation Permit 8,456 4207 Pool Permit 23,000 4210 COM. BuildingFees 314,586 4211 COM. Irrigation Permit Fees 4,000 4212 COM. Fence Permit Fees 4,000 4213 COM. Fence Column Permit Fees 4,000 4214 COM. Retaining Wall Permit Fee 4,000 4215 COM. Pool Permit Fees 5,500 4218 COM. Electrical Permit Fees 5,031 4219 COM. Mechanical Permit Fees 5,031 4220 COM. Plumbing Permit Fees 5,031 4103 Connect/Reconnect -4120 Solid Wasle Sales 363,430 4121 Solid Waste Bin Sales 26,425 4122 Solid Wasts Sales Tax . 4130 Penal!y 45,795 4140 Transfer Fee 1342 4200 Re-lnspection Fee 7,450 4204 Builders Maint. Fee 105,700

"-'-- ~~"'!"

- 4206 Contractor Registration 11,667 4209 Fine & Penalty 40,000 4221 COM. Re-Inspeclion Fees 7,150

-' 4222 COM. Fine/Penally Fees 4223 COM. Miscellaneous Fees -4224 COM. Maint. Fees 19,000 4300 Misc. Revanue 53,317 4310 Chargeback Fees 15,500 4400 Interest Income -4500 Franchise Fees 368,511 4800 Mainl. Property Tax 4705 MGMTFees 241,242

Developer Advance 361,482 Sales Tax -

4100 Potable Water Sales 2,731,814 4101 Effluent Water Sales 65,000 4102 Raw Water -4203 Facility Connection 1,079,198 4205 WalerMeler 74,060 4216 Com. Facility Conneclion 333,975 4217 Com. Water Meier 6,375

___ ~10 S~~rSales 606,220 - - ----

I Proposed Revenuel 7,246,431

I Proposed Exoensesl 2,873,919

l Undesigneted Reserve Balanc~ 4,372,512

Denton County FWSD l-A FY 08/09 Operating Budget Proposed Revenue

UTILITY FUND

1-A l·B l-G 1-D

- 4.960 · 116,303 - 152 · 2.953

- 132 · 2,568 - 3,000 - 13,000

- · - · - - - -- - - -- - · -- - - -· - - -- - - -- - - -- - - -- - - -

. -'._- - 121175 104,682 - -- 413 - 8,025

- - · -- - 13,454 141 15,370 ........ -- - 377 · 409

.. - 450 · 2,000 .. - 1,650 · 32,100

· 1,667 1.667 1,667 -~ ." - 700 · 6.650

- - · · · · - -

,- - · - -· · - -- 13,015 136 14,859 - 500 · 5,000

· · - 122806 190 106,091

241,242 - - ·

- -· 824,964 2,540 758,945

· · 65,000 -- · - · - 20,260 - 290,343

- 1.155 · 22,470 - - - -- · -· 186,963 · 161,516

i-A 1-B 1-C 1-D 241.242 1,317,790 69,673 1,664,951

64,187 566,761 57,238 701,205 177,055 _.,51,029 12,435 963,745

1·E 1·F 1·G 1-H

53,249 105,007 - -2,222 4,398 - -1.932 3,824 - · 5.000 2,000 - · - 38,282 31,108 245,196

- 2,000 2,000 -· 2,000 2,000 · - 2,000 2,000 -· 2,000 2,000 -- 500 5,000 -- 2,300 1,869 862

- 2,300 1,869 862

· 2,300 1,869 862

- -119,677 - -' 17,896 · -

6,038 11.950 · · · - -

15,120 -.. 710 1,000 406 50 100

2,000· - 2,000 1,000 24,150 47,800 · -

1,667 1,667 1,667 1,667 5,145 .... 22,505 5,000

150 2.000 5,000

- - · · -- 8,000 B,500 4,500

14,621 6B6 10.000 5,000 - 5.000

121,288 18,137 - -

c · - 132,422 229,060

· - · -814,108 218,399 52,710 60,149

· - · -· . - ·

296,533 472,062 · · 16,905 33530 - -

- 61.276 99,301 173,297

· 700 575 5,100 184.662 52,703 20,386 ·

i-E 1-F l-G 1·H 1699.861 1,140,982 390,375 721,557

570,188 426,462 197,073 290,803 1,129,673 .7t4,519 193,302 430,753

DIRECT Account No. Description FY 08/09

Proposed 501-1000 Salary Directors 33,750 501-1001 Medicare 489 501-1002 Social Security 2,093 501-2000 Prof. Service Property Appraisal -501-2001 Prof. Service Tax -501·2002 Prof. Service Auditing 38,08a 501-2003 Prof. Service Legal 110,500 501-2004 Prof. Service Legal Supply 21,200 501-2005 Prof. Service E'lgineering -501-3000 Director Expenses 3,750 501-4000 Election Expense 4,00Q 501-5000 Water Meter Expenses 95,000

.... Due to Others 501-5000 Special Assessments 1-F -

308,870 -

.-~:~-

Denton County FWSD 1-A FY 08/09 Operating Budget Proposed Expenses

UTILITY FUND

'-A 1-8 1-C 1-D

4,500 4,500 2,250 4,500 65 65 33 65

279 279 140 279

- - - -- - - -

7,425 6,325 3,163 5,225 30,000 15,000 3,000 12,500

3,500 2,250 450 2,250

- - - -500 500 250 500 500 500 500 500

- 2,000 - 40,000

- .'-- .. - -- - - -46,769 31,419 9,7B5 65.819

..... -

-'~-=-:--"

1-E l-F 1-G 1-H

4,500 4,500 4,500 4,500 65 65 65 65

279 279 279 279

- - - -- - - -

5,225 3,575 3,575 3,575 12,500 12,500 12,500 12,500

3,250 3,500 3,000 3,000

- - - -500 500 500 500 500 500 500 500

21,000 22,000 5,000 5,000

- - .-- -- - - -

47.B19 47,419 29,919 29,919

PERSONNEUOVERHEAD-EXPENSES Account No. Description FY OB/09

Proposed 502-1000 Salary Regular 266,485 502-1050 Medicare 3,864 502-1051 Social Security -501-1060 Ins. Worker's Compo 13,500 502-1070 Unemployment Tax 3,780 501-1110 Ins. Accident & Health -501-1120 Ins. Director & Employee Bonds -501-1121 Ins. Director & Officer liability -501-1124 Ins. General Liability -501-1125 Ins. Vehicles -501-1127 Ins. Commercial Property -501-1128 Ins. Pollution -502-1080 Contract Labor 62,040 502-1100 Retirement Contribution 65.129 502-1110 Ins. Employee Health 25,500 502-1111 State Certification Pay 1,050 502-1200 Office Supply 7,500 502-1210 Dues & Subscriptions 1,500 502-1220 Training & Education MOO 502-1230 Administration Travel .. > • 1,800 502-1240 Communication 8.100 502-1250 Advertisement -501-2500 Bank Fees ' . 6.000 501-4000 Bad Debt 5,600 503-3300 Lease Equipment 10.500 503-3305 Rental Equipment 13,500 503-3306 Rental Office 25.353 503-3315 Supply Small Tools 2,250 503-3325 Supply Uniforms 2,100 503-3330 'Supply Medical 150 503-3345 Supply Gas & Fuel 10.500 503-3432 Maintenance Parks -503-3433 Maintenance Building 750 503-3440 Maintenance Vehicles & Equip. 5.550 503-3450 Misc. Expanses 3,750 503-3520 Capital Outlay Building & Site 3,750 503-3530 Capital Outlay Vehicle & Equipment 12,000 503-3540 Maintenance Landscape Contract . 502-1260 Management Fees to 1-A 384

50% Split 567,785

Denton County FWSD 1-A FY 08/09 Operating Budget Proposed Expenses

UTILITY FUND

1-A 1-8 1-C 1-0

7,995 63,956 5,330 58,627 116 927 77 850 - - - -405 3,240 270 2,970 113 907 76 832 - - - -- - - -- - - -- - - -- - - -- - - -- - - -

1,861 14,890 1,241 13,649' 1,954 15,631 1,303 14.328

765 6,120 510 5~10 32 252 21 231

225 1,800 150 1,65!) 45 360 30 330

. ---162. .1.296- - ~.oa. .i,11i8.. 54 432 36 ..... 396

243 1,944 162 1;782 - - - -180 1,440 120 1,320 168 1,344 112 1,232 315 2.520 210 2,310 405 3.240 270 2,970 761 6085 507 5,578

68 540 45 495 63 504 42 462

5 36 3 33 315 2,520 210 2,310

- - - -23 180 15 165

167 1,332 111 1,221 113 900 75 825 113 900 75 825 360 2,880 240 2.640 - - - -12 92 8 85

17,034 136,268 11,356 124,913

1-E 1-F l·G '·H

61,291 26,648 21,319 21,319 889 386 309 309

- - - -3,105 1,350 1,080 1,080

869 378 302 302

- - - -- - - -- - - -- · - -· - - -· - - -· · - -

14,269 6,204 4,963 4,963 14,980 6.513 5.210 5,210

5.865 2,550 2,040 2,040 24;2 105 84 84

1,725 750 600 600 345 150 120 120

1.?4? -54Q.. . - .,432- ~ . .432. 414 180 144 144

1,863 810 648 648

- - - -1.380 600 480 480 1,288 560 448 448 2,415 1,050 840 840 3,105 1.350 1,080 1,080 5,831 2,535 2,028 2,028

518 225 180 180 483 210 168 168 35 15 12 12

2,415 1,050 840 840

- - - -173 75 60 60

1277 555 444 444 863 375 300 300 863 375 300 300

2,760 1.200 960 960

· · - -88 38 31 31

130,590 . 56.778 45,423 45,423

~ ... -- I ... .. 1105 ........... AfoI""'._ .......

Account No. Description FV 08/09 Proposed

503-1010 NPWS Raw Water 1,000 503-1020 RTWS Potable Water 455,022 503-1030 L.V. Potable Water 100,005 503-3200 Police -503-3210 Fire -503-3300 Lease Equipment 10,501 503-3305 Rental Equipment 13,501 503-3306 Rental Office 25,354 503-3315 Supply Small Tools 2,250 503-3325 Supply Uniforms 2,100 503-3330 Supply Medical 150 503-3345 Supply Gas & Fuel 10,501 503-3350 Supply Postage - 25,001 503-3370 UtlJlty Electric 80,004 503-3375 Utility Bank Fees 6,000 503-3400 Malntenar!Ce~Water 80004 503-3410 Maintenance Sewer -503-3420 Maintenance Em uent 2,000 503-3430 Maintenance Street 8. Drainage -503-3433 Malntenan.ce.Bullding 750 503-3440 Maintenance'Vehicles 8. Equip. 5,550 503-3450 Misc. Expenses 3,750 503-3500 Sewer-Lewisville Contract . 503-3510 Solid Waste Services -503-3520 Capital Outlay Building & Site 3,750 503-3530 Capital Outlay Vehicle & Equipment 12,001 503-3540 Maintenance Landscape Contract -503-3550 RTWSDemand 831,897 503-3560 L.V. Demand 299,174

50% Split 1,970,265

Denton County FWSD l·A FY 08/09 Operating Budget Proposed Expenses

UTIUTYFUND

1-A 1-8 l-C 1-0 0.0002. 0.2026 0.0046 0.2591

0 203 5 259 89 92,164 2,101 117,891 19 20,256 462 25,910 . - - -- - - -

2 2,127 48 2,721 3 2,735 62 3,498 5 5,135 117 6,569 0 456 10 583 0 425 10 544 0 30 1 39 2 2,127 48 2,721 5 5064 .' •• -115 6,478

16 16,205 369 20,728 1 1.215 28 1,555

16 16,205 . .= 369 20.128

- - -_ .... - -0 405 ... 9 518

- - ';0 • .=..':- _ -0 152· 0". ___ ! .... 3 194 1 1,124 .. - .. ~'. 26 1,438 1 760 _ .. 17 972

- - ·-:r:.:. "- -- - - .... - -

1 760 17 972 2 2,431 55 3,109

- - - -162 168,499 3,841 215,535

58 60,597 1,381 77.513 384 399,074 9,097 510,473

l-E l-F l-G 1-H I 0.1989 0.1636 0.0618 0.1094

199 164 62 109 90,479 74,425 28,113 49,760 19,8B6 16,357 6,179 10,935 . - - -

- - - -2,088 1,718 649 1,148 2,685 2,208 834 1,476 5,042 4,147 1,566 2,773

447 36B 139 246 418 344 130 230 30 25 9 16

2,088 1,718 649 1,148 4,971 4,089 1,545 2,7.34·

15,908 13,086 4,943 8,749 1,193 981 371 655

15,908 13,086 4,943 ... lk749

- - - .. ~-.-

398 327 124 '219

- - - : -.... -.

149 123 46 .... " · .•.. ·.82 1,104 908 343 -:·607

746 613 232 410

- - - .... <,.

- - - .-746 613 232 410

2386 1,963 741 1,312 . - - -

165,419 136,068 51,398 90,973 59,490 48.934 18,484 32,717

391,779 322,264 121,731 215,461

USAGE - EXPENSES Account No. Description FV 08/09

Proposed 504-1001 NPWS Effluent 27,000 504-6007 NPWS Demand -

27,000 -.~ '.- .. ~ . . .... -' . . ~ . _ .... ·r. __ ~_'< __ ~ ••. , .. ,,;-. , "

Denton County FWSD 1-A FY 08/09 Operating Budget Proposed Expenses

UTILITY FUND

1-A '·B l-e 1-0

- - 27,000 -- - - -- - 27,000 -

1-E 1-F 1·G '·H - - . -. - . . - - - -

- .I Fund Transfer 4,079,769.1 ~ 177,055 I 590,8871' 10,0~61950,165 I 1,016,4871 712,304! ,192,36,91 430,4361

" , ~ . '. , , ' ... ' ." .. " - , , ' , .. l-A 1-B l-C 1-0 1-E l-F 1-6 1-H

Proposed RevenueJ. 7,246,431 241,242 1,317,790 69.673 1,664,951 1,699,861 1,140,982 390,375 721,557 Proposed Expenses! 2,873,919 64,187 566,761 57,238 701,205 570,188 426,462 197,07.3 290,803.

Undesignated Reserve Balancel 4,372,512 177,055 751,029 12,435 963,745 1,129,673 714,519 193,302 430,753.

z::: "'~- -··-r

Exhibit "c" AMENDED ORDER ESTABLISHING DISTRICT

FACILITY CHARGES, WATER AND WASTEWATER SERVICE RATES, TAP FEES, SOLID WASTE AND RECYCLING FEES AND ADOPTING CERTAIN GENERAL

POLICIES WITH RESPECT TO THE mSTRICT'S WATER, W ASTEW ATER, AND DRAINAGE SYSTEMS

Septernber16,2008

THE STATE OF TEXAS

COUNTY OF DENTON

DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 1 ~D

§

§

§

The Board of Directors of Denton County Fresh Water Supply District No. 1-D (hereinafter sometimes designated the "District" or "District ] ~D"), met in regular session, open to the public, after due notice, at 201 Main Street, Suite 2500, Fort Worth, Texas, its office outside the boundaries of the District, on the date hereinafter set out; whereupon, the roll was called of the members of the Board of Directors, to-wit:

Mark E. Channels Alex Ramsey Julie S. Koustouhardis Ronald R. Vaughn, Jr. Patti Bro\\'Il

All members of the Board were present.

President Vice President Secretary T reasurerl Assistant Secretary Assistant Secretary

WHEREUPON, among other business was conducted by the Board, Director Koustoubardis introduced the Order set out below and moved its adoption, which motion was seconded by Director Ramsey, and, after a full discussion and the question being put to the Board of Directors, said motion was carried by the following vote:

"Aye"~; "No"~.

The Order thus adopted is as follows:

WIJEREAS, pursuant to Section 49.212, Texas Water Code, as amended, the Board of Directors (the "Board") of the District is authorized to adopt and enforce all necessary rates, charges, fees, rentals and deposits for providing any district facility or service;

IT IS, THEREFORE, ORDERED BY THE BOARD OF DIRECTORS OF DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. I-D AS FOLLOWS;

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1. General Policies.

A. Definitions. For purposes of this Order, the following tcrms shall have the meanings indicated:

I. "Connection" shall mean and refer to each residential lUlit occupied by a separate family, including separate apartments located within a single building, and each business lUlit occupied by a separate business, including separate establishments within a single building.

2. "Districts' Representative" shall mean and refer to any employee or agent of District I-D acting under authority of District I-D.

3. "Rules" shall mean and refer to such rules and regulatiom as the District may adopt pursuant to Chapter 51 or Chapter 49, Texas Water Code, as amended.

4. "System" or "Systems" shall mean and refer to the water, wastewater, and drainage systems located within the bOlUldaries of the District and subject to current 10int Utility Contracts between the District, the City of Lewisville, when ordered and each of the separate districts - Denton County Fresh Water Supply District No. 1-B, Denton County Fresh Water District l-C, Denton County Fresh Watcr Supply District No. I-D, Denton County Fresh Water District I-E, Denton County Fresh Water District I-F, Denton County Fresh Water Supply District No. I-G, Denton County Fresh Water Supply Distri<.1i-H (the "Joint Utility Contracts").

5. "Building Permit" shall mean a permit for any facility being constructed or built within the District (i.e., single family dwellings, separate building or additions to single family dwellings, apartment complexes, non-single family buildings, swimming pools, fences or any other building, facility or structure being constructed or installed within the District).

B. All Services Required. Except as otherwise expressly authorized in the Rules, by the Districts' Representative, or by the Board, no service shall be provided by and through the Systems unless the applicant agrees to take both water and wastewater servicc.

c. All Services Charged. At no time shall the District render water and/or sewer services without charge to any person, firm, corporation, organization, or entity-

D. Other Utilities. Prior to installing underground cables in the area of water supply and sanitary sewer collection lines located within District No. I-D, representatives of utility companies shall meet with the Districts' Representative to file such companies' construction plans and schedules \",itb the Districts' Representative, and to review the engineering plans illustrating the location of the District's lines.

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E. All District Facility Charges required per this Order shall be collected by Distriet I-A.

n. Connections to the District's Systems.

A. Applications for Connections.

1. Any party desiring to make a connection to the Systems shall first make an application to the Districts' Representative in the form approved by the Board. The applicant shall, upon request, fumish the Districts' Representative with evidence that the party who will actually install the tap and connecting line has comprehensive general liability insurance in the minimum amounts 0[$300,000.00 bodily injury and $50,000.00 property damage, with an underground rider and a completed operations rider.

2. The Districts' Representative shall review all applications for connections to the Systems. In the event that the Districts' Representative finds that the materials to be used and the procedures and methods to be followed in laying the line and making the connection are (i) equal to or better than the standards established by the International Plumbing Code as amended and supplemented by the City of Lewisville International Plumbing Ordinance for water service, any and all applicable water standard service details promulgated by the City of Lewisville International Plumbing Ordinance for water service, any and ail applicable water standard service details promulgated by the City of Lewisville Water Utility and any and all applicable wastewater standard service details promulgated by the City of Lewisville Wastewater Utility, as amended from time to time, and (ii) in compliance with all terms and conditions of the Rules, then the Districts' Representative may approve the application and the proposed c.onnection, subject to such tenns or conditions as the Districts' Representative deems necessary or convenient to accomplish the purposes and objectives of the Rules.

B. Payment of Charges and Fees. Any party desiring to make a connection to the System shall pay any and all appropriate District facility charges and water and wastewater service fees to the Districts' Representative at the time the application for such connection for said property is made. Any party desiring that water or wastewater service be initiated for a new customer ac.count at an existing connection shall pay any applicable connection fees and service deposits at the time the application for such service initiation is made. No connection shall be made until such tap and oversize fees are paid.

C. District Facility Charges. Prior to any connection being made to the System, the following District facility Charges will be imposed to all District customers, except for public school district customers or other governmental units as determined by the Board ofDircctors of the District, prior to any connection being made to the System.

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1. Connection Charges:

Meter Si7..e Water & Irrigation Only Sewer Total Water & Sewer Only

.75"'" $2,002.00 $1,580.00 $3,582.00 1" $3,403.40 $2,686.00 $6,089.40

IS' $6,606.60 $5,214.00 $11,820.60 2" $13,413.40 $10,586.00 $23,999.40 "It J $32,032.00 $25,280.00 $57,312.00 4" $56,056.00 $44,240.00 $100,296.00 6" $122,722.60 $96,854.00 $219,576.60 8" $213,613.40 $168,586.00 $382,199.40

10" $333,733.40 $263,386.00 $597,119.40

"'The.75" meter size is authorized for residential lots under 6,000 sq. ft. and commercial uses only.

2. Buildine Inspection Charges;

Building Permit

$1.00 $1,000 $20.00

$1,001 - $2,000 $20.00 for the first $1,000 pIm $2.00 for each additional $100 or fraction thereof, to and including $2,000

$2,001 - $25,000 $40.00 for the first $2,000 plus $6.00 for each additional $1,000 or fraction thereof, to and including $25,000

$25,000 - $50,000 $178.00 for the first $25,000 plus $5.00 for each additional $] ,000 or fraction thereof, to and including $50,000

$50,000 - $100,000 $303.00 for first $50,000 plus $3.00 for each additional $1,000 or fraction thereof, to and including $100.000

$100,000 and Up $453.00 for the first $100,000, plus $2.00 for each additional $1,000 or fraction thereof.

Water Meter Size Meter cost

5/8" - 3/4" $300.00 I" $300.00

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1-1/2" 2"

Electrical Permit

$475.00 $475.00

$.022 per square foot of floor area, (minimum $55.00)

Mechanical Permit $.022 per square foot offioor area. (minimum $55.00)

Plumbing Permit $.022 per square foot offioor area, (minimum $55.00)

Sign Permit Fee. Permit Fce Schedule Based on total sign area: 0- 50/sq ft $ 38.75 51-100/sq ft $ 48.50 10 1-200/sq ft $ 68.00 201-300/sqft $ 87.25 301-400/sq ft $ 106.50 401-500/sq it $ 135.50

Plan Review Fifty percent (50%) of the Building Pennit charge: additional plan review $50.00 per hour (minimum of one (1) hom)

Miscellaneous permit - one trade only Based on total valuation of construction, and charges are the same as for building permits.

Demolition Permit Ba<;ed on total valuation of work performed

Environmental Maintenance Fcc $500 per Single family residential lot $lOOO/pcr acre Commercial lot ($1,000 minimum charge)

Miscellaneous Inspection Charges *Inspections outside normal business homs $SO.OOlhour (minimum two (2) bours) *Charge for rc-inspection of same item - $50.00 first re-inspection; $100.00 second re-inspection; $200.00 third and subsequent re-inspections *Utility (Public Works) inspections - 3.5% of permit value, paid for at time of permit

Engineering Site Plan: Less than 1 acre 1 to 4.99 acres 5 to 24.99 acres

5

S125.00 $400.00 $400.00 plus $30.00 per acre

25 acres and up

Grading Site Work Plan: Less than 1 acre 1 to 4.99 aeres 5 acres and up

3. Contractor Registration Charges:

$750.00 plus $30.00 per acre

$ 125.00 $ 200.00 $ 200.00 plus $15.00 per acre

$ 50.00 - Annually Backflow Prevention Registration fee

$ 60.00 - Annually Licensed Irrigator Registration fee

$ 60.00 - Annually Irrigation Installer Registration fcc

$120.00 - Initial fee Master Electrician no~-refundable registration fee $ 80.00 - Renewal

$ 80.00 _. Initial fee Joumeyman non-refundable registration fee $ 50.00 Renewal

$ 50.00 - Initial fcc Residential Wireman non-refundable registration fee $ 30.00 - Renewal

$ 60.00 - Annually General Contractors. HV AC and plumbing non-refundable registration fee

D. Out-or-District or Annexation Reguests. Each application to the Board for approval of an out-of-district service or annexation request filed pursuant to the District's policy relating to the same shall be accompanied by a .filing fee calculated as follows;

1 - 24.99 acres 25 - 49.99 acres 50 - 99.99 acres 100 acres or more

$ 500 $ 750 $1,000 $1,500

Any costs to the Db"trict including legal fees incurred by the District to review and prepare documents pertaining to the request, shall be the responsibility of the applicant and shall be payable to the District upon demand.

III. Water, Wastewater and Solid Waste Service.

A. Applications for Service. Any party desiring to receive service from the Systems shall make an application for such service to the Districts' Representative in the fonn approved by the Board. All applications shall be made by the record owner of the property for which service is

98216U 6

being requested. Proof of ownership shall be furnished to the Districts' Representative upon request.

B. Security Deposit. With the exception of temporary service for builders of residential andlor commercial property in the District, a security deposit per connection shall be paid by each customer to the Districts' Representative prior to the time that service is provided in the following amounts:

Meter Size ~", 5/8", 1"

1-1/2" 2" 3"

Over 3"

Security Deposit $ 50.00 $200.00 $250.00 $550.00 Established by District on a case by case basis

Security deposits shall not be transferable and shall be held by the Districts' Representative to assure the prompt payment of all bills for water and wastewater services to the customer. The security deposit shall be held and applied to the customers' final bill. At its option, the District may apply all or any part of a customer's security deposit against any delinquent bill of the customer. Upon discontinuation of service, the deposit shall be applied against amounts due, including any disconnection fees. In order to restore disconnected service, the customer shall pay any outstanding amounts due including disconnection fees and, if the existing security deposit had been used to off.c;et amounts due or if no security deposit had been paid by the customer, a security deposit of $50 shall be paid by the customer prior to service being restored. In no event shall the security deposit bear interest for the benefit of the customer.

C. Water and Sewer Service Rates. The following rates and charges for the sale of water and the collection and disposal of sewage shall be in effect for both residential and commercial customers of the District from the effective date of this Order and shall be payable to the District:

1. Water !'dtes: The minimum monthly rates for retail service furnished by the District for up to 2,000 gallons is based on meter size. The base rates shall be as follows:

98216U 7

98216U

Up to I inch 1 Y:! inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch

Volume charge per 1,000 gallons(g) over minimum:

Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6

$3.44 $3.64 $4.59 $5.59 $6.59 $7.59

2. Sewer Rates:

Single-family dwellings:

2,001 g - 15,000 g 15,001 g - 25,000 g 25,001 g - 35,000 g 35,001 g - 45,000 g 45,001 g - 55,000 g 55,001 g - over

$ 18.74 $ 35.14 $ 58.12 $ 123.80 $ 215.66 $ 478.33 $ 846.17 $1,319.18

Cuslomers' rates shall be based upon the four-month winter average of monthly water consumption billed in the most recent November. December, January and February for such dwelling and charged:

Monthly minimum bill (2,000 gallons) Volume charge per 1,000 gallons over 2,000 not to exceed 15.000 gallons

Non-single familv dwellings:

$ 7.75 $ 3.20

Rates shall be based upon 100 percent of each month's water consumption and charged:

Monthly minimum bill (2,000 gallons) Volume charge per 1,000 gallons over 2,000 gallons

New customers:

$ 7.75 $ 3.20

All residential customers transferring their service to a new address in the District will be charged the flat rate until a new meter average is established at the new address.

Per month, flat fee, Wltil the winter average can be established at the new dwelling

8

$ 22.66

Sewer only customers: In instances where dwellings are not served by the District waterworks system:

For services furnished by city sanitary sewer system, per dwelling unit, per month, flat fee

Industrial surcharge:

$ 22.66

Factors per 1,000 gallons for industrial/commercial customers whose sewage strengths exceed the maximum allowance 0[240 mgll):

Per mg/l of BOD Per mgll ofTSS

$0.003235 $0.002008

3. Reconnect fees.

4.

5.

Charges for reconnecting service shall be calculated for the user Or

customer in the following prescribed manner. At the beginning of January in every even numbered calendar year, the user or customer utility account records listing the number of field disconnections for non-payment shall be reset to zero. During each ensuing maximum 12-month period the following schedule for reconnect fees shall apply:

First Occurrence Second Occurrence Third Occurrence Fourth and subsequent Occurrences

$25.00 $40.00 $60.00 $80.00

After Hours reconnect fee: (5:00 pm - 8:00 am) $ 100.00 Homeo-wner to be present at time of reconnect, to sign consent form Authorizing reconnection and acceptance of reconnect fcc.

Tampering fee: In the event the user or customer or their agent restores the water, sewer, garbage or recycling service after service has been disconnected by the District's Representative, or if the user or customer or their agent tampers with the water meter or service line appurtenances in any manner, a tamper fcc shall be collected in addition to the reconnect fee provided by this article. The tamper fee shall be a minimuDl of $25.00 or an amount equal the applicable reconnect fee in accordance with provisions of this article.

Meter Check fee: Any resident or property owner that requests more than two (2) meter chceks in any twelve (12) month period will be charged a fcc of$35.00

9

98216U

6. Meter bench testing fees: Bench testing of meters by third party contractor - actual contractor charge plus labor and equipment charges incurred by the District's Representative for meter removal and replacement per hour.

7. Transfer of Service: In the event service at an address is to be transferred from one customer to another customer name, there shall be assessed the following charge:

Transfer Fee: $10.00

8. Fire Hydrant Meter Fee: Sale of District water on a temporary basis from fire hydrants shall be applied for through the Districts' Representative. There shall be charged and collected for each fire hydrant meter a fire hydrant meter fee in the amount of $50 per month or any part of a month plus a commodity charge equal to $3.44 per 1,000 gallons. A security deposit shall be paid to the Districts' Representative at the time application is paid for a fire hydrant meter in the amount of $800.00. Such security deposit shall be refunded to the applicant at the time the meter is returned in good working order less any amounts due for damage to the meter. In the event of theft or loss of the Districts' meter while in the responsibility of the party under whom the deposit was placed, the deposit will be retained as payment for the meter.

9. Park Irrigation: Water use which is for park irrigation shall be billed at the lowest tiered rate.

10. Rate Adjustments: One time per 12 month period, a water customer will be allowed a consumption rate adjustment for a water leak. The customer shall notify the district in writing of the leak and provide sufficient documentation by paid receipts or contractor invoice that the leak has been repaired to be eligible for a bill adjustment.

11. Solid Waste and Recycling Collection Service and Fees: Effective October 1,2007, pursuant to an Agreement between District No. I-A and Waste Management of North Texas ("Waste Management") solid waste collection, recycling collection, hauling and disposal services shall be provided to the District through District No. I-A. District No. I-A is obligated to pay for such services and bill the District's residential customers at monthly rates as follows:

Monthly minimum charge Twice per week collection Extra cart

10

$15.75 $14.83 $ 4.70

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Residential Customers shall be required to purchase standard 95-gallon reusable containers from District No. I-A for $75 each. Once purchased, the container is the responsibility of the residential customer and if damaged, lo~i or stolen will be the responsibility of the residential customer to replace with a similar container purchased from the District for $75. Residential customers will be provided ''lith an initial recycling container. Upon the loss of theft of original container, if the residential customer wishes to replace the original container, or if they desire to have an additional recycling container, one may be purchased at the cost of $ 50.00 each. Pursuant to the Agreement, the District shall require its commercial customers to establish accounts with Waste Management under the terms set forth in EXHIBIT" A" attached hereto it being understood that such commercial accounts will be billed directly by Waste Management to the commercial customer and paid directly to Waste Management by the commercial customer.

12. Delinquent Accounts:

a.

b.

c.

Billing. The District shall bill each customer monthly for all services rendered in the preceding month. All bills shall be due when rendered and shall become delinquent if not paid by the date specified in the bill.

Late Charge. A late charge of ten (l 0%) percent of bill amount shall be added for each monthly billing date the delinquent amount remains unpaid. If a bill remains delinquent for fifteen (15) days, or is paid with a check which is dishonored, water service shall be terminated in accordance with this paragraph. Prior to termination, the customer shall be notified of the amount due by letter sent by regular first class mail. The notice shall state the date upon which water service shall be terminated, which date shall be not less than ten (10) days from the date such notice is sent. Such notice shall state the time and place at which the account may be paid and that any errors in the bill may be corrected by contacting the Districts' Representative, whose telephone number shall also be given in such notice. Provided, however, that in the event the customer contacts the Districts' Representative within such ten (l0) day period, the Districts' Representative may. at its discretion, allow the customer to make arrangements to pay the delinquent amount in installments to be approved by the Districts' Representative.

Suit for Collection. The District reserves the right to institute suit for the collection of any amounts due and unpaid, together with interest thereon at the maximum legal rate and reasonable attorneys' fees.

11

IV.

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d. Dishonored Checks. The District further reserves the right to charge a customer paying a bill with a check which is dishonored an amount established from time to time by the Districts' Representative, which amount shall be based on the prevailing or usual charges made for dishonored checks and drafts by other vendors in the same general area as the District.

District Material and Labor Charges:

I" water meter box $70.00 plastic $90.00 concrete $120.00 traffic

2" water meter box $100.00 plastic $125.00 concrete $250.00 traffic

3!4 copper service line $5.00/per ft I" copper service line $7.00/per ft 2" copper service line $15.00/per ft Transponder $145.00 5/8" water meter $300.00 )" water meter $300.00 1 112 water metcr $475.00 2" water meter $475.00 Over 2" water meter Cost of meter plus labor Tapping cost Applicant responsibility Per Yard Sod $2.25 Linear fect Silt Fence $3.00 SupervisorlHour $40.00 Skill Labor!I lour $30.00 Labor/Hour $20.00 Service TruckIHour $30.00 BobcatlHour $75.00 Back HoelHour $75.00 SweeperfHour $75.00 Water truckIHour $75.00 Sewer jet/Hour $75.00 Vac machinelliour $100.00 Gator/Hour $30.00 Dump trucklHour $75.00 Tractor/Hour $75.00 Miscellaneous Fittings Cost plus 25% Imaterials

12

Administrative Fee 25% added to the cost of materials and labor

V. Special Events and Other charges

A. Application Fce (required for all permits) $ 10.00 Special Event Pennit (also includes usc of public parks and athletic areaslfields) Carnival/Circus fee $250.00 Park EventlParade $ 50.00 1st & 2nd Barricade $ 25.00 Each additional barricade $ 15.00 On site District labor $ 20.00 (per man/per hour)

B. Miscellaneous charges Fishing Pennit Resident - $ 1.00 (per adult) Non-resident - $ 500.00 (per adult)

C. Administrative charges: Copies $ .10 per page (each side that has recorded

information is considered a page)

VI. Violations: Failure to adhere to the violations set forth in the Amended Order Adopting Rules and Regulations will occasion a flne of Two Hundred Fifty ($250.00) for the first violation and Five Hundred Dollars ($500.00) for the second and subsequent violations per day to be paid by the builder, developer, corporation or other entity Or individual who violates the above regulations to be paid to the District in care of its Designated Representative, with the exception of traffic violations, which will have fines consistent with City of Lewisville criteria and will be enforced pursuant to the Law Enforcement Services Agreement between the City and the District's Designated Representative. In addition to the fines set forth herein, violation under Article XI and XIII in the Amended Order Adopting Rules and Regulations will carry with it the cost of replacement of the public property or the cost associated with trash removal plus an administrative fee of 15% of sucb costs. In addition, the Board may seek further remedies available under Government Code, Section 27.031, as amended.

VI. Regulatorv Assessment. Pursuant to Senate Bill No.2, passed by the nod Texas Legislature, 2nd Special Session, a regulatory assessment charge of one-half of one percent of retail water and sewer charges will be added to the customer's monthly billing commencing with all billings rendered by the district on and after September 1, 1991. The assessments will be remitted by the District to the Texas Commission on Environmental Quality ("Commission") and are to be used by the Conunission in performing its regulatory duties and in providing technical assistance and training to utilities.

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VII. Effective Date. This Order shall be in force and effect from October 1,2008 until amended by the Board of Directors.

VIII. filing in Principal Oflice. The Secretary of the Board is hereby directed to file a copy of this Order in the principal office of the District.

(REMAINDER Of PAGE LEFT BLANK INTENTIONALLY)

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APPROVED, ORDERED AND ADOPTED this 16th day of September, 2008.

"-7~£:O~ Mark E. Channels, President

ATTEST:

-. __ ....--'''''

(DISTRlCT SEAL)

15

CASTLE HILLS DEVELOPMENT DISTRICT RATE SCHEDULE EFFECTIVE 10-1-08

RESIDENTIAL RATES Twice r week cart collection $9.40 additional carts $4.70 Ooce erweek cart rec clio $3.97

COMMERCIAL RATES

NOTES I FREE SERVICES Once per year no charge access to landfill with proper ID ... limited 10 a standard pick up truck bed.

Brush and bulk collection on the second colleetlon day of the week.

10-30-yard roli off pulls per year at no charge.

\0 cardboard special event boxes per year at no charge. 50 coloring books or similar item per year at no charge.

upon request from the City, we will colleatect carts up the driveway for eldery or disabled.

EXHIBIT "A" to EXHIBIT "C"