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26. C:\Corel\WPDOCS\CONTRACT\EAA water K amdmtl.doc AMENDMENT NO.1 TO AGREEMENT FOR FINANCIAL PARTICIPATION IN SURFACE WATER TREATMENT PLANT PROJECT BETWEEN THE EDWARDS AQUIFER AUTHORITY AND THE CITY OF SAN MARCOS This is Amendment No.1 (this "Amendment") to the Agreement for Financial Participation in Surface Water Treatment Plant Project dated March 12, 1992 (the "Agreement") between the Edwards Aquifer Authority (the "Authority") and the City of San Marcos (the "City"). The Authority and the City are referred to collectively in this Amendment as the "Parties". Recitals A. The Authority's predecessor agency, the Edvvards UndergrOlmd Water District (the "District") and the City entered into the Agreement in support of the City's surface water treatment plant project (the "Project"). The Agreement provides for the Authority to reimburse the City for the purchase of up to 5,000 acre-feet of surface water per year from the Guadalupe-Blanco River Authority ("GBRA") for a period of five years. B. The Project has achieved substantial completion, and will soon achieve final completion, and will treat and supply surface water to the City's water distribution system in substitution for water from the Edwards Aquife: (he "Aquifer"). C. Since the time of the Agreement, the price at which water is sold by GBRA has risen from $44.76/acre foot to $69.00/acre foot, the State Legislature passed the Edwards Aquifer Authority Act limiting withdrawals from the Aquifer, and a market is developing for groundwater rights in the Aquifer. D. The Authority and the City wish to revise the Agreement to 1) require the City to suspend the withdrawal of a specific quantity of Aquifer water in exchange for contract payments, 2) increase the payment rate per acre-foot to reflect current market rates for Aquifer water that the City agrees to suspend its rights to withdraw, through the use of surface water, 3) extend the time period for the City's conservation of Aquifer water, and 4) waive Authority aquifer management fees on the amount of groundwater for which the City suspends its withdrawal rights. Amendment For and in cOllsideration ofthe mutual promises, covenants, obligations and benefits described in this Amendment, the Authority and the City agree to amend the Agreement as follows: 1. The terms "Edwards Aquifer Authority" and "Authority" are substituted for the terms "Edwards Underground Water District" and "District," respectively, throughout the Agreement. 2. Paragraphs 2.2, 2.3 and 2.4 are amended, and Paragraph 2.3.1 is added, as follows (underlining indicate added text; overstrike indicates deleted text): 2.2. The term of this Agreement is for the period commencing upon the date first written