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WATER SUPPLY AGREEMENT <br /> This Water Supply Agreement (the "Agreement") is entered into as of the Effective Date <br /> defined below between the City of Kyle, Texas, a municipal corporation ("Kyle") and the City of <br /> San Marcos, Texas, a municipal corporation (the "San Marcos"). <br /> Recitals <br /> WHEREAS, San Marcos maintains a reserved raw water capacity that currently exceeds <br /> its current and near future water needs; and <br /> WHEREAS, in order to preserve such reserved capacity to meet future long term water <br /> demands, San Marcos pays for such excess and unused capacity; and <br /> WHEREAS, Kyle is in need of additional water supplies to meet its current and near term <br /> demands and seeks to purchase from San Marcos water from San Marcos' excess and unused <br /> water capacity; and <br /> WHEREAS, without impairing its ability to meet current and near term needs, San <br /> Marcos has sufficient raw water capacity to supply the amount of water requested by Kyle; and <br /> WHEREAS, San Marcos' groundwater production facilities and the San Marcos Surface <br /> Water Treatment Plant(the "San Marcos Treatment Plant") are capable of producing and treating <br /> such water; and <br /> WHEREAS, it is understood that San Marcos does not intend and by this Agreement will <br /> not be obligated to sell to Kyle any amount of water other than is available from San Marcos' <br /> capacity in excess of what is necessary and available to meet the needs of San Marcos and <br /> WHEREAS, San Marcos and Kyle desire to enter into this Agreement for San Marcos to <br /> assist Kyle to meet its water supply needs. <br /> NOW, THEREFORE, in consideration of the foregoing and the following mutual <br /> promises, covenants, benefits and agreements contained herein, San Marcos and Kyle agree as <br /> follows: <br /> Article 1. Supply of Treated Water by San Marcos <br /> Section 1.01. Quantity of Water to be Supplied. San Marcos agrees to provide to <br /> Kyle, and Kyle agrees to purchase from the San Marcos, water treated at the San Marcos <br /> Treatment Plant (the "Treated Water") in such varying amounts as needed by Kyle, but not to <br /> exceed 560 Acre Feet per year (the "Annual Limit"). San Marcos will make available to Kyle up <br /> to 500,000 gallons of Treated Water each day (the "Maximum Daily Quantity"), which may be <br /> taken in smaller quantities at Kyle's sole discretion without reducing the Maximum Daily <br /> Quantity available for any subsequent day. The Treated Water shall be delivered in a consistent <br /> delivery pressure range, at a flow rate of up to 347 gallons per minute. Higher flow rates may be <br />