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By separate agreement, the Parties will participate to complete the pipeline (the "Texas State <br />Reclaimed Waterline Segment ") with the aid of grant funding from the Texas Water Development <br />Board and the Edwards Aquifer Authority. <br />7. Pursuant to the Texas Interlocal Cooperation Act, Section 791.001, et seq. of the <br />Texas Government Code which authorizes the Parties to contract with each other to perform <br />governmental functions and services and in consideration of the mutual promises and benefits <br />contained herein, the Parties enter into this Agreement. <br />., <br />1. Exchange of Surface Water Rights for Reclaimed Water. Texas State agrees to <br />allocate its rights to withdraw surface water that flows through the San Marcos River to the City <br />in exchange for the delivery of reclaimed water from the City under the terms set forth below. <br />a. Start of Water Delivery. Within 30 days after completion and acceptance <br />by the City of the Texas State Reclaimed Waterline Segment, the authorized <br />representatives of Parties will coordinate to establish appropriate connections and metering <br />systems for Texas State to receive reclaimed water from the City and to agree upon a date <br />upon which delivery will begin. <br />b. Allocation of Surface Water Rights. Concurrent with the start of the <br />City's delivery of reclaimed water to Texas State, Texas State will forego its rights to <br />withdraw surface water that flows through the San Marcos River and hereby allocates its <br />rights to the City to withdraw 1,164 acre feet of water from the San Marcos River under <br />TCEQ permits numbered 18- 3865 -401 (534 ac -ft) and 18- 3865 -404 (630 ac -ft). <br />2 <br />