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and Capital Improvements. The bids solicited by Owner were pursuant to a private bidding <br /> procedure as allowed by Section 212.071 of the Texas Local Government Code. The Waterline <br /> Improvements have been included as an add alternate item to the bid solicitation for the public <br /> improvements related to the McCarty Project. As of the Effective Date, bids from qualified <br /> contractors have been received, but have not been tabulated or awarded.. Owner shall be entitled <br /> to award the contract for the public improvements related to the McCarty Project, including the <br /> Waterline Improvements, to the bidder that the Owner reasonably determines is the most <br /> appropriate contractor to perform the work and provided that such award and construction contract <br /> complies with Section 2.2.1 below. <br /> 2.1.3 City Cost Participation. The estimated cost breakdown for the Waterline <br /> Improvements is set forth in Exhibit B attached hereto and made a part hereof. The City shall be <br /> responsible for payment of the actual costs to construct the Waterline Improvements according to <br /> the bid awarded under Section 2.1.2 above, in an amount not to exceed 30 percent of the Owner's <br /> total construction contract price for the public improvements related to the McCarty project, <br /> including the Waterline Improvements. If, after consideration by the City of any options to reduce <br /> the scope of work, the contract price for the Waterline Improvements exceeds 30 percent of the <br /> contractor's total construction contract price, then at Owner's election (i) this Agreement shall <br /> terminate and neither Party shall have any further obligations under this Agreement,or(ii)Owner, <br /> in its sole discretion,may elect to cover such excess cost. <br /> 2.1.4 Change Orders. Change orders may be approved by the City subject to the <br /> requirement that the total cost for the Waterline Improvements may not exceed 30 percent of the <br /> Owner's total construction contract price for the public improvements related to the McCarty <br /> Project,including the Waterline Improvements.The City Manager of the City may approve change <br /> orders up to $50,000. Any change order in excess of$50,000.00 is subject to the approval of the <br /> San Marcos City Council.The City agrees to reasonably cooperate in connection with the approval <br /> of any change orders that meet the requirements of this Section 2.1.4. If,after consideration by the <br /> City of any options to reduce the scope of work,the cost of any proposed change orders causes the <br /> cost for the Waterline Improvements to exceed 30 percent of the contractor's total construction <br /> contract price, then at Owner's election (i)this Agreement shall terminate and neither Party shall <br /> have any further obligations under this Agreement, or(ii) Owner, in its sole discretion, may elect <br /> to cover such excess cost. <br /> 2.1.5 Construction. The Waterline Improvements will be constructed by the Owner <br /> through the Owner's contractor according to the Approved Plans and in compliance with the City's <br /> applicable ordinances, standards and processes. The City acknowledges and agrees that Owner <br /> shall not be obligated to post or provide any fiscal surety for completion of the Waterline <br /> Improvements. <br /> 2.1.6 Performance Bond. The Owner will cause a performance bond to be provided for <br /> the benefit of the City to ensure completion of the Waterline Improvements. The bond must be <br /> executed by a corporate surety in accordance with the Chapter 2253 of the Texas Government <br /> Code. <br /> 2.1.7 Project Manager. The Owner will act as project manager in the construction of the <br /> Waterline Improvements. The City and the Engineer,however,will be entitled to conduct periodic <br />