JOINT BOARD APPROVED VERSION APRIL 20, 1998
NORTHERN TAMPA BAY NEW WATER SUPPLY AND GROUND WATER WITHDRAWAL REDUCTION AGREEMENT BETWEEN
WEST COAST REGIONAL WATER SUPPLY AUTHORITY, HILLSBOROUGH COUNTY, PASCO COUNTY, PINELLAS COUNTY, CITY OF TAMPA, CITY OF ST. PETERSBURG, CITY OF NEW PORT RICHEY, AND SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT

Table of Contents

THIS AGREEMENT is made and entered into by and between the WEST COAST REGIONAL WATER SUPPLY AUTHORITY, an interlocal governmental agency created and existing pursuant to Secs. 373.1962 and 163.01, Fla. Stat., acting by and through its Board of Directors, whose address is 2535 Landmark Drive, Suite 211, Clearwater, Florida 33761, herein referred to as AUTHORITY; HILLSBOROUGH COUNTY, a political subdivision of the State of Florida, whose address is 601 E. Kennedy Boulevard, Tampa, Florida 33602, herein referred to as HILLSBOROUGH; PASCO COUNTY, a political subdivision of the State of Florida, whose address is 7530 Little Road, New Port Richey, Florida 34654, herein referred to as PASCO; PINELLAS COUNTY, a political subdivision of the State of Florida, whose address is 315 Court Street, Clearwater, Florida 34616, herein referred to as PINELLAS; the CITY OF TAMPA, a municipal corporation of the State of Florida, whose address is 306 E. Jackson Street, Tampa, Florida 33602, herein referred to as TAMPA; the CITY OF ST. PETERSBURG, a municipal corporation of the State of Florida, whose address is P. O. Box 2842, 175 Fifth Street North, St. Petersburg, Florida 33731, herein referred to as ST. PETERSBURG; the CITY OF NEW PORT RICHEY, a municipal corporation of the State of Florida, whose address is 5919 Main Street, New Port Richey, Florida 34652, herein referred to as NEW PORT RICHEY; and the SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT, a public corporation of the State of Florida created and existing pursuant to Chapter 373, Fla. Stat., whose address is 2379 Broad Street, Brooksville, Florida 34609-6899, herein referred to as DISTRICT, for itself and on behalf of the ALAFIA RIVER BASIN BOARD, the COASTAL RIVERS BASIN BOARD, the HILLSBOROUGH RIVER BASIN BOARD, the NORTHWEST HILLSBOROUGH BASIN BOARD, the PINELLAS-ANCLOTE RIVER BASIN BOARD, and the WITHLACOOCHEE RIVER BASIN BOARD, herein collectively referred to as BASIN BOARDS. HILLSBOROUGH, PASCO, PINELLAS, TAMPA, ST. PETERSBURG and NEW PORT RICHEY shall be collectively referred to herein as MEMBER GOVERNMENTS. The parties to this AGREEMENT are the DISTRICT, the AUTHORITY, HILLSBOROUGH, PASCO, PINELLAS, TAMPA, ST. PETERSBURG and NEW PORT RICHEY.

WITNESSETH:

WHEREAS, pursuant to Chapter 373, Fla. Stat., the DISTRICT has the statutory responsibility to protect, manage and conserve the water resources within the DISTRICT; and

WHEREAS, the AUTHORITY was created in 1974 for the purpose of developing, storing and supplying water for county and municipal services in a manner as will give priority to reducing the adverse environmental effects of excessive or improper withdrawals of water from concentrated areas; and

WHEREAS, the 1997 Legislature recognized the need for coordination between water management districts, regional water supply authorities, and local governments and provided clear direction as to each entity's respective role in ensuring that sufficient water is available for all existing and future reasonable-beneficial uses and natural systems, while avoiding the adverse effects of competition for water supplies; and

WHEREAS, the 1997 Legislature has made it clear that the proper role of the water management districts in water supply is primarily planning and water resource development, and the proper role of local government and regional water supply authorities is primarily water supply development; and

WHEREAS, the AUTHORITY, MEMBER GOVERNMENTS and the DISTRICT agree that it is in the best interest of all the parties and the public that the parties work together toward accomplishing their respective statutory responsibilities under Chapter 373, Fla. Stat., as amended, including the coordination and development of new and additional water resources and supplies to meet existing and future demands of the Northern Tampa Bay area in such a manner as will give priority to reducing adverse environmental effects of improper or excessive withdrawals of water from concentrated areas.

NOW, THEREFORE, the AUTHORITY, MEMBER GOVERNMENTS and the DISTRICT, in consideration of the mutual terms, covenants and conditions set forth herein, agree as follows:

In this AGREEMENT, the following terms will have the meanings set forth:

ALTERNATIVE SOURCE OF POTABLE WATER includes, but is not limited to, the following AUTHORITY PROJECTS: Tampa Bypass Canal, Alafia River, Hillsborough River High Water, Tampa Water Resource Recovery, and Seawater Desalination.

"CONSOLIDATED PERMIT" shall mean the Water Use Permit addressed in paragraph 5 of this AGREEMENT which, upon issuance, would consolidate into one permit the existing Water Use Permits for the eleven (11) wellfields listed in Exhibit A, under which the AUTHORITY would be the sole permittee. The CONSOLIDATED PERMIT shall be in the form attached as Exhibit B to this AGREEMENT.

AELIGIBLE PROJECT shall mean a new project, excluding ground water sources, and including ALTERNATIVE SOURCES OF POTABLE WATER and transmission pipelines to interconnect regionally significant water supply sources and facilities of the AUTHORITY, which is approved by the DISTRICT for co-funding pursuant to subparagraphs 2.E. and 3.B. of this AGREEMENT.

"FUNDING AGREEMENT" shall mean a contract between the AUTHORITY and the DISTRICT, in the form attached as Exhibit C to this AGREEMENT, governing the design, construction and funding of an ELIGIBLE PROJECT.

INELIGIBLE PROJECT shall mean a new project, which is not approved by the DISTRICT for co-funding pursuant to subparagraphs 2.E. and 3.B. of this AGREEMENT.

INTERLOCAL AGREEMENT shall mean that certain Amended and Restated Interlocal Agreement, by and among the MEMBER GOVERNMENTS, dated as of May 1, 1998, as the same may be amended or supplemented from time to time. Such Amended and Restated Interlocal Agreement shall be the successor instrument to the Interlocal Agreement, dated October 25, 1974, as amended, among HILLSBOROUGH, PASCO, PINELLAS, ST. PETERSBURG and TAMPA.

NEW WATER PLAN shall mean the written plan to be submitted by the AUTHORITY for the development of PROJECTS, which shall include the details called for in subparagraphs 2.A. and 2.B. of this AGREEMENT.

NON-CONSOLIDATED PERMITS shall mean the individual Water Use Permits existing as of the effective date of this AGREEMENT for the wellfields listed in Exhibit A as modified to (1) include the form and substance of the Special Conditions attached hereto as Exhibit J; and (2) make each permit subject by its terms to the requirements, liabilities, duties and quantity reductions imposed by subparagraphs 3.A., 3.E., 4.A., 4.C., and 5.J.

OPERATIONS PLAN shall mean that document to be submitted by the AUTHORITY pursuant to subparagraph 4.B. for DISTRICT review and approval, which shall govern how the AUTHORITY will manage and operate the 11 wellfields listed in Exhibit A as well as completed and permitted PROJECTS in a manner that will facilitate or achieve the objectives of this AGREEMENT.

PROJECTS shall mean the ELIGIBLE PROJECTS and INELIGIBLE PROJECTS proposed by the AUTHORITY in the NEW WATER PLAN.

TRUST AGREEMENT shall mean a contract in the form attached as Exhibit F, which creates a trust fund of One Hundred Million Dollars ($100,000,000.00) for the benefit of, and use by, the AUTHORITY for the development of ELIGIBLE PROJECTS as part of the funding described in subparagraph 3.B.

1. OBJECTIVES OF THE AGREEMENT. The parties shall cooperate with one another to achieve the following objectives in accordance with the terms and conditions of this AGREEMENT:

1.A. Development of New Water Supply. Develop at least eighty-five million gallons per day (85 mgd) annual average of new water supply for regional distribution by the AUTHORITY to the MEMBER GOVERNMENTS as of December 31, 2007;

1.B. Reduction of Pumpage. Reduce the permitted pumpage from the 11 existing wellfields listed on Exhibit A to no more than one hundred twenty-one (121) million gallons per day annual average as of December 31, 2002 through December 31, 2007, and to no more than ninety (90) million gallons per day annual average as of December 31, 2007 through December 31, 2010;

1.C. End Litigation. End existing litigation and administrative hearings and avoid future litigation and administrative hearings among the parties; and

1.D. DISTRICT Financial Assistance. Provide DISTRICT financial assistance to the AUTHORITY to enable the AUTHORITY to achieve objectives 1.A. and 1.B., above.

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2. DEVELOPMENT OF NEW WATER SUPPLY.

2.A. NEW WATER PLAN. By July 1, 1998, the AUTHORITY shall prepare and submit to the DISTRICT a NEW WATER PLAN describing PROJECTS which, upon construction, shall provide an annual average of at least 85 mgd of new water supply, and which shall be sufficient to enable the AUTHORITY to meet the requirements set forth in subparagraph 4.A. for phased reduction in withdrawals from the 11 wellfields listed in Exhibit A. The NEW WATER PLAN must contain ELIGIBLE PROJECTS which would utilize all or such portion of the amount of DISTRICT co-funding under subparagraph 3.B. as is necessary to meet the objectives set forth in subparagraphs 1.A. and 1.B. As of December 31, 2002, the AUTHORITY shall have one or more PROJECTS permitted, constructed, in operation and providing, consistent with the OPERATIONS PLAN, an annual average quantity of at least 38 mgd of new water supply for regional distribution to the MEMBER GOVERNMENTS. As of December 31, 2007, the AUTHORITY shall have the remaining PROJECTS permitted, constructed, in operation and providing, consistent with the OPERATIONS PLAN, an annual average quantity of at least 85 mgd (inclusive of the 38 mgd) of new water supply for regional distribution to the MEMBER GOVERNMENTS. Nothing herein shall be construed to prevent the AUTHORITY from having more new water supply permitted, constructed, in operation and providing water at earlier dates.

2.B. NEW WATER PLAN Contents. At a minimum, the NEW WATER PLAN as submitted by July 1, 1998 shall describe each PROJECT and shall provide the following information for each PROJECT:

1) the estimated amount of new water supply to be produced and available for distribution;

2) the projected date of operation and the date when new water supply could be available for regional distribution to the MEMBER GOVERNMENTS;

3) the estimated cost of design, development, permitting, construction, operation;

4) the estimated unit cost of the water; and

5) the expected funding sources, including how much is expected from each funding source and when DISTRICT funding pursuant to this AGREEMENT could be required.

With respect to providing the information required by subparagraph 2.B.(5) above, the information shall be consistent with the schedule and limitations reflected on Exhibits C (New Water Source Funding Agreement), D (Funding Criteria) and E (SWFWMD Annual Funding) consistent with the requirements of subparagraph 3.B., below.

2.C. NEW WATER PLAN Development. The AUTHORITY shall keep the DISTRICT advised of the AUTHORITY's planning and progress toward completion of the NEW WATER PLAN. By May 1, 1998, or within ten (10) days following the effective date of this AGREEMENT, whichever is later, the AUTHORITY shall meet with the DISTRICT staff to discuss the details of the AUTHORITY's July 1, 1998, NEW WATER PLAN submittals, at which time the AUTHORITY shall provide the DISTRICT with a current draft of the submittals. The AUTHORITY shall furnish the DISTRICT with an original and 11 copies of the NEW WATER PLAN as soon as possible, but no later than July 1, 1998.

2.D. NEW WATER PLAN REVIEW. At the District's first regular monthly meeting following the 60th day after the AUTHORITY's submission of the NEW WATER PLAN (or the following regular monthly meeting if necessary to provide legally required notice of the intent to consider the NEW WATER PLAN). The DISTRICT shall complete its review of the NEW WATER PLAN and shall determine whether the NEW WATER PLAN satisfies the requirements of subparagraphs 2.A. and 4.A. of this AGREEMENT . If the objectives are satisfied, the District shall approve the NEW WATER PLAN. If the NEW WATER PLAN is disapproved, the DISTRICT shall advise the AUTHORITY in writing of its reasons for the disapproval. The AUTHORITY shall propose changes to the NEW WATER PLAN and shall submit said changes to the DISTRICT within 60 days after receiving the reasons for the DISTRICT's disapproval. Within 60 days after the submission of the revised NEW WATER PLAN, the DISTRICT shall complete its review of the revisions and shall approve or disapprove the revised NEW WATER PLAN in accordance with this subparagraph.

2.E. ELIGIBLE PROJECTS. Upon final approval of the NEW WATER PLAN the DISTRICT shall provide in writing to the AUTHORITY a listing of the PROJECTS which appear to be ELIGIBLE PROJECTS, the estimated amount of funding for each project, and the terms under which said funds will be made available to the AUTHORITY. However, both the commitment to fund and the amount of funding shall be subject to the AUTHORITY and DISTRICT entering into a FUNDING AGREEMENT as provided in paragraph 3. DISTRICT designation of ELIGIBLE PROJECTS shall not constitute a permit. The parties acknowledge that the approved NEW WATER PLAN is conceptual in nature and that the actual cost of funding a particular ELIGIBLE PROJECT will be unknown until such time as a Water Use Permit and any and all other governmental permits and approvals are obtained and construction contracts are awarded.

2.F. NEW WATER PLAN Update. No later than July 1, 1999, or such earlier date as the following information is available, the AUTHORITY shall provide the DISTRICT with a written schedule of the milestone events in designing, permitting, funding, contracting for and constructing each of the PROJECTS in the approved NEW WATER PLAN [capable of producing at least 85 mgd annual average of new water supply]. The updated information shall include the date when each PROJECT is expected to be in operation and capable of producing water for regional distribution, and the date when DISTRICT funding shall be required. The schedule shall be in sufficient detail to enable the DISTRICT to monitor the AUTHORITY's progress towards completing the PROJECTS in a timely manner so as to meet the objectives set forth in subparagraphs 1.A. and 1.B. of this AGREEMENT. The schedule of milestone events shall be subject to the review and approval of the DISTRICT.

2.G. NEW WATER PLAN Modification. The AUTHORITY may modify the approved NEW WATER PLAN so long as such modification is consistent with Objectives 1.A., 1.B. and 1.D. of this AGREEMENT and applicable law, and would not otherwise result in a delay in achieving the new water supply and the reductions in ground water withdrawals required by this AGREEMENT. However, if such modification is made after the DISTRICT has provided the AUTHORITY with its written designation of ELIGIBLE PROJECTS, and such modification would purport to add ELIGIBLE PROJECTS or affect existing ELIGIBLE PROJECTS, such modification shall require the consent of the DISTRICT which consent shall not be unreasonably withheld. The procedure for DISTRICT review and approval of any such modification shall be the same as the process for the review and approval of the NEW WATER PLAN as set forth in subparagraph 2.D.

2.H. PROJECT Permitting. The AUTHORITY shall expedite the preparation and filing of all permit applications for the development of PROJECTS that are to be developed pursuant to the approved NEW WATER PLAN. In the case of applications for DISTRICT permits, the AUTHORITY shall provide timely, full and complete responses to the DISTRICT's request for additional information. The DISTRICT shall give priority to, and expedite action on, any permit applications submitted pursuant to this AGREEMENT for PROJECTS that are to be developed pursuant to the NEW WATER PLAN. The DISTRICT and AUTHORITY also agree to have pre-application conferences designed to help the AUTHORITY file complete applications, and to fully inform the DISTRICT about the PROJECTS.

2.I. Funding Requests. Following the DISTRICT's approval of the NEW WATER PLAN, or concurrent therewith, the DISTRICT may enter into a FUNDING AGREEMENT pursuant to this subparagraph. The AUTHORITY's requests for funding for particular ELIGIBLE PROJECTS may be submitted prior to the approval of the NEW WATER PLAN, and must include sufficient information to enable the DISTRICT to make an informed judgment whether or not to approve the request prior to entering into a FUNDING AGREEMENT. The DISTRICT shall complete its review of the funding request within sixty (60) days of its receipt from the AUTHORITY and approve or disapprove all or any portion thereof which the DISTRICT determines to be unacceptable. If all or part of the funding request is disapproved, the DISTRICT shall advise the AUTHORITY in writing of the reasons for the DISTRICT's disapproval. If the request is approved, the DISTRICT shall advise the AUTHORITY in writing of the estimated amount of funds that will be made available for such ELIGIBLE PROJECT. In no event shall the DISTRICT enter a FUNDING AGREEMENT until the time when the DISTRICT has established the Trust Agreement described in subparagraph 3.D.

2.J. Progress Reports. The AUTHORITY shall keep the DISTRICT informed of the progress toward implementation of the approved NEW WATER PLAN and construction of the PROJECTS, and shall promptly furnish the DISTRICT with quarterly update reports in the format described in subparagraph 2.F. In addition, the AUTHORITY shall provide such information necessary to keep the DISTRICT informed of progress, as may be required by the terms of the DISTRICT's FUNDING AGREEMENT. Beginning on July 1, 1999, and each July 1 thereafter until the PROJECTS are constructed and fully operational, the AUTHORITY shall, in addition, prepare and submit to the DISTRICT an annual report that describes in detail the progress that has been made toward implementation of the approved NEW WATER PLAN and construction of the PROJECTS.

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3. DISTRICT FUNDING OF ELIGIBLE PROJECTS.

3.A. AUTHORITY Responsibility and Performance Obligation. The AUTHORITY shall fully and timely implement the approved NEW WATER PLAN. The AUTHORITY shall have the responsibility for the planning, design, construction and operation of all PROJECTS implemented pursuant to the approved NEW WATER PLAN.

3.B. DISTRICT Funding. In order to assist the AUTHORITY in developing at least 85 mgd annual average of new water by December 31, 2007 and to meet the phased reduction requirements provided for in this AGREEMENT, the DISTRICT shall fund $183,000,000.00 for ELIGIBLE PROJECTS, subject to the terms and conditions of this AGREEMENT. DISTRICT funds shall be disbursed to the AUTHORITY pursuant to the terms and conditions of FUNDING AGREEMENTS. DISTRICT funds shall be made available in accordance with the schedule and limitations reflected on Exhibits C, D, E and F and be used to cover Eligible PROJECT Costs as defined in the FUNDING AGREEMENT attached as Exhibit C. At such time as the AUTHORITY is prepared to develop a specific ELIGIBLE PROJECT, the AUTHORITY and DISTRICT shall enter a FUNDING AGREEMENT which will detail the terms and conditions by which DISTRICT funds will be disbursed. The AUTHORITY shall submit funding requests to the DISTRICT in accordance with the timetable contained in the DISTRICT approved NEW WATER PLAN (see paragraph 2.B.(5) of this AGREEMENT). Within 60 days after submission of a funding request, subject to subparagraph 2.I., the DISTRICT and the AUTHORITY shall execute a FUNDING AGREEMENT. In addition to the specific form of FUNDING AGREEMENT attached hereto as Exhibit C, the DISTRICT and the AUTHORITY may enter into other forms of agreement to effectuate different methods of developing ELIGIBLE PROJECTS so long as such agreements are consistent with the objectives of this AGREEMENT. For example, the AUTHORITY could propose to enter into a production or output contract whereby the AUTHORITY makes no payments until the ELIGIBLE PROJECT is producing water of a specified quantity and quality and agrees to purchase a specific quantity over the term of the contract. In that case the agreement could merely provide for the DISTRICT to pay for a portion of the water over the term of the production contract or the present value thereof after the performance standards set forth in the production contract are met. The overall result of the arrangement would be the same in that DISTRICT funds will be expended at a specified level after there are reasonable assurances that an ELIGIBLE PROJECT is being, or has been, developed.

3.C. Additional Funding. The AUTHORITY and DISTRICT shall jointly and cooperatively approach the Florida Legislature, the U.S. Congress, and other potential sources of funds to seek additional funds for the development of additional new water supplies, but such funding shall not be a condition precedent to the effectiveness of this AGREEMENT. Receipt of such additional funds shall not reduce or in any way affect the DISTRICT's commitment to fund $183,000,000.00 for ELIGIBLE PROJECTS as set forth in this AGREEMENT.

3.D. TRUST AGREEMENT. The DISTRICT, consistent with this AGREEMENT, shall establish the TRUST AGREEMENT as part of the funding described in subparagraph 3.B. (the "Initial Funding Requirement"). The TRUST AGREEMENT shall be funded at the same time the initial FUNDING AGREEMENT (or other form of agreement provided for in subparagraph 3.B.) is executed, provided that all of the following events have occurred by that date: 1) the DISTRICT has approved the NEW WATER PLAN and identified ELIGIBLE PROJECTS (the DISTRICT may waive this condition in its sole discretion, provided that the NEW WATER PLAN is substantially complete), 2) the DISTRICT's BASIN BOARDS have given all necessary approvals to this AGREEMENT, and 3) the conditions in Section 6.03(A) AND (D) of the INTERLOCAL AGREEMENT have been satisfied. The Initial Funding Requirement shall consist of $100,000,000.00 which may be comprised of an initial cash amount of not less than $43,737,663.00, a budgeted appropriation for fiscal year 1999 of approximately $14,709,464.00, and a $41,552,873.00 Credit Facility, such as a mutually agreeable letter of credit or surety bond from a financial institution. The Credit Facility coverage level shall decrease as the cash funding to the Trust increases, and the Credit Facility shall be terminated when the cash, including earnings from investments, has reached $100,000,000.00. The Credit Facility shall be drawn on by the Trustee under its terms and only to the extent that the DISTRICT fails to deposit funds as described in Exhibit E and to the extent amounts on deposit in the Trust are not sufficient to pay duly executed Draw Requests as defined in the TRUST AGREEMENT pursuant to valid FUNDING AGREEMENTS. The TRUST AGREEMENT shall permit the AUTHORITY to draw amounts only to the extent the AUTHORITY is entitled to funding under this AGREEMENT and associated FUNDING AGREEMENTS for specific ELIGIBLE PROJECTS. All earnings on amounts held by the Trustee shall be credited to the Trust and deducted from the next subsequent years' funding requirement as set forth in Exhibit E, and all costs and expenses of the DISTRICT associated with the Credit Facility shall be deducted from the Trust. The DISTRICT shall annually deposit any necessary funds to achieve the annual funds (in accordance with Exhibit E and subparagraph 3.D.) to the Trust by April 1 of each fiscal year until the Trust appropriation equals the total appropriation through 2007 according to Exhibit E. Starting fiscal year 1999 and thereafter through fiscal year 2007, the Trustee shall disburse to the AUTHORITY from the proceeds in the Trust only amounts consistent with this AGREEMENT, the TRUST AGREEMENT and the FUNDING AGREEMENTS. Should the DISTRICT fail to deposit funds for ELIGIBLE PROJECTS in violation of this AGREEMENT and one or more of the FUNDING AGREEMENTS, the Trustee shall continue to disburse all remaining funds in the Trust to the AUTHORITY consistent with this AGREEMENT and only to the extent authorized by any FUNDING AGREEMENTS (or other form of agreement provided for in subparagraph 3.B.) approved by the DISTRICT. Such proceeds shall be used by the AUTHORITY exclusively for ELIGIBLE PROJECTS and Eligible PROJECT Costs. Should the AGREEMENT terminate for any reason under paragraph 20, other than the DISTRICT'S failure to fund the sums specified in subparagraph 3.B., then the TRUST AGREEMENT, any FUNDING AGREEMENTS and any obligation of the DISTRICT pursuant to this subparagraph shall terminate and any remaining undisbursed funds, after payment of any outstanding Eligible PROJECT Costs under the FUNDING AGREEMENTS, shall be immediately returned to the DISTRICT pursuant to the TRUST AGREEMENT.

3.E. DISTRICT Failure to Fund. Except in the case where:

1) a judicial or administrative proceeding, regardless of who initiates any such proceeding, results in a final judgment or decision prohibiting the DISTRICT funding; or

2) the AUTHORITY fails to propose or receive approval of the NEW WATER PLAN; or

3) an injunction is entered that prohibits the DISTRICT from providing the DISTRICT funding; provided, however, that in such case all parties' responsibilities and obligations under this AGREEMENT shall be tolled during the term of the injunction;

if the DISTRICT does not fund the full amount under subparagraph 3.B., then the AUTHORITY shall be required to reduce pumping only by the proportional amount as determined by the following formula:

Pumpage reduction = 68* mgd x Total funds provided to AUTHORITY $183,000,000.00

*68 mgd represents the difference between the interim allowable production quantity for the 11 wellfields (158 mgd) less the 90 mgd production limitation as of December 31, 2007.

3.F. Funding Contingencies. The DISTRICT's payment obligations for each fiscal year are contingent upon the annual appropriation of the amount required by its Governing Board and appropriate BASIN BOARDS; provided, that the foregoing shall not be construed to apply to amounts held by the Trustee or amounts available to be drawn under the Credit Facility described above.

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4. RECOVERY STRATEGY.

4.A. Phased Reductions. The objectives of this AGREEMENT shall constitute part of the DISTRICT'S recovery strategy for the Northern Tampa Bay area as provided for in Secs. 373.0361, 373.0421(2), 373.0831 and 373.1963, Fla. Stat. More specifically, as part of the DISTRICT's phased recovery strategy for the Northern Tampa Bay area, the AUTHORITY and MEMBER GOVERNMENTS agree that: 1) combined production at the wellfields listed in Exhibit A shall upon the effective date of this AGREEMENT be limited through December 31, 2002 to a total annual average daily quantity of 158 mgd, calculated based on a thirty-six (36) month running average commencing thirty-five (35) months preceding the effective date of this AGREEMENT; 2) as of December 31, 2002, the total annual average daily quantity permitted for withdrawal from the 11 listed wellfields shall be one hundred twenty-one (121) mgd; and 3) as of December 31, 2007, the total annual average daily quantity permitted for withdrawal from the 11 listed wellfields shall be ninety (90) mgd; provided, however, these withdrawal limits shall be modified in accordance with the formula specified in subparagraph 3.E. should the DISTRICT default. Unless otherwise expressly provided, compliance with the quantity limitations set forth in this AGREEMENT shall be based on a 12-month running average beginning and resetting on the dates specified. The 11 wellfields are listed on Exhibit A attached hereto.

4.B. OPERATIONS PLAN. The AUTHORITY shall submit to the DISTRICT by July 1, 1998, an OPERATIONS PLAN that describes how the AUTHORITY shall operate its water supply system, including the 11 listed wellfields, in order to avoid, if possible, or minimize environmental stresses in the vicinity of those wellfields. The DISTRICT shall approve or disapprove the OPERATIONS PLAN within sixty (60) days of its receipt by the DISTRICT. If the OPERATIONS PLAN is disapproved, the DISTRICT shall advise the AUTHORITY in writing of the reasons for the DISTRICT's disapproval. The AUTHORITY shall propose changes to the OPERATIONS PLAN, and shall submit said changes to the DISTRICT within sixty (60) days after receiving the reasons for the DISTRICT's disapproval. Within sixty (60) days after the submission of a revised OPERATIONS PLAN, the DISTRICT shall complete its review of the revised OPERATIONS PLAN and shall approve or disapprove the revised OPERATIONS PLAN. DISTRICT approval of the OPERATIONS PLAN shall not constitute a permit. The OPERATIONS PLAN shall be amended from time to time to also address the operation of PROJECTS implemented pursuant to the approved NEW WATER PLAN as those PROJECTS are brought on-line. The OPERATIONS PLAN shall:

1) Define and control how the AUTHORITY will operate the existing 11 wellfields and PROJECTS as they are brought on-line;

2) Provide the protocol under which the AUTHORITY will select among available interconnected supply sources to meet demand;

3) Provide the protocol under which the AUTHORITY will rotate among available interconnected supply sources to avoid, if possible, or minimize environmental stresses;

4) Rely upon ground water elevations in the aquifer systems as a surrogate for water levels in wetlands and lakes, at a specified set of existing and proposed monitor wells, to gauge environmental stresses in and around the wellfields wherein increased ground water elevations will denote reduced environmental stresses;

5) Include procedures for analyzing relationships between the distribution and rate of ground water withdrawal at the wellfields and the associated Floridan and surficial aquifer system drawdown, using available hydraulic models;

6) Include procedures for selecting optimal scenarios for the distribution and rate of ground water withdrawals from the wellfields, using available mathematically-based optimization software, based on projected demand, such that ground water levels in the surficial aquifer system are maximized according to a specified weighting/ranking system as a surrogate for water levels in wetlands and lakes;

7) Include in the optimization analysis a weighting/ranking system to enable priority factors to be applied to avoid, if possible, or reduce environmental stress preferentially at selected locations, with such factors to be associated with the specified surficial aquifer monitor wells;

8) Propose a set of surficial aquifer monitor wells and a priority weighting system for those wells, and include data and software for hydraulic modeling and optimization modeling of alternative wellfield operational scenarios; and

9) With the AUTHORITY's July 1, 1998, submittal, include an outline for the required annual update report.

The OPERATIONS PLAN shall be submitted to the DISTRICT annually by July 1, for review and approval by the DISTRICT. The annual submission of the OPERATIONS PLAN shall include, but not be limited to, the following information: (a) data and documentation concerning improvements in hydraulic model calibration; (b) data and documentation concerning improvements in optimization software; (c) proposed changes in production well locations and/or withdrawal rates; (d) proposed changes in monitor well locations and/or priority weighting factors; and (e) proposed changes in the OPERATIONS PLAN to accommodate new supply sources. The AUTHORITY may propose modifications to the OPERATIONS PLAN from time to time. Any modification to the OPERATIONS PLAN shall require the prior approval of the DISTRICT. The DISTRICT's approval of the OPERATIONS PLAN or modifications shall not be unreasonably withheld as long as the OPERATIONS PLAN avoids, if possible, or minimizes environmental stresses associated with withdrawals from the wellfields listed in Exhibit A and is otherwise consistent with this AGREEMENT, the CONSOLIDATED PERMIT and applicable law.

4.C. Allocation of Reductions.

1) As an additional effort to avoid, if possible, or minimize environmental stresses, at any time prior to the dates for reduction of pumpage in subparagraph 1.B., as any new water supply is added to the AUTHORITY's water supply system (whether from ELIGIBLE PROJECTS or not), a minimum of fifty percent (50%) of the average annual permitted capacity from such new facilities shall be used to reduce production from the 11 listed wellfields. Said reduction may be greater, if demand needs are met, and shall be determined at or prior to the time the new facility is placed in operation. Said determination shall be based on the current and projected demand. However, for the first 10 mgd of new water supply placed in operation after the effective date of this AGREEMENT, the AUTHORITY shall only be required to allocate 2 mgd of its average annual permitted capacity for the pumpage reduction in Pasco County (specified in subparagraph 1.B.), provided, however, that for any new water supply project placed in operation thereafter, a minimum of 50% of its annual average capacity shall be used to reduce pumpage; and provided further that when the AUTHORITY has developed 20 mgd of new water capacity, the 50% commitment to pumpage reductions specified herein shall be applied retroactively to all new water supplies placed in operation after the effective date of this AGREEMENT. The reductions necessary to achieve the pumpage limitations set forth in subparagraph 1.B., shall be allocated as follows: 1) a minimum of 40% at wellfields in Pasco County; 2) a minimum of 20% at wellfields in Hillsborough County; 3) a minimum of 10% at wellfields in Pinellas County; and 4) the balance to be applied in accordance with the DISTRICT approved OPERATIONS PLAN. Said reductions shall be based on the annual average daily quantity. Further, the OPERATIONS PLAN when adopted shall control, but shall be consistent with, the allocation of reductions required under this subparagraph.

2) The AUTHORITY may apply to the DISTRICT for approval to withdraw water from a water supply facility in excess of the quantity specified in the Facility Quantity Table, below. Approval may be granted so long as the increase in withdrawal is balanced by a corresponding decrease in withdrawal or withdrawals at one or a combination of the Central System wellfields listed below, and such increases or decreases must be included as an amendment to the OPERATIONS PLAN. The peak month quantities permitted for each withdrawal point at each facility, together with the location and other information pertinent to each facility, are set forth in Table 2 - Individual Withdrawal Quantities, within the Withdrawal Points and Monitoring Sites Addendum attached to the CONSOLIDATED PERMIT as Exhibit A.

3) The peak month and annual average quantities for the individual withdrawal points at the facilities are set forth in Table 2 - Individual Withdrawal Quantities, within the Withdrawal Points and Monitoring Sites Addendum. The annual average quantities per well reflect the distribution of withdrawals within each facility prior to 1998 as a reference, but the AUTHORITY is not limited to this distribution of withdrawals. The AUTHORITY may make adjustments in the annual average pumping distribution as necessary, up to the peak month quantity for the individual withdrawals, so long as unacceptable adverse impacts to water resources, environmental systems, and existing legal uses do not result and such adjustments do not conflict with other permit conditions, including the annual average quantity limitations on wellfield withdrawals.

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5. WATER USE PERMITS

5.A. Purpose. The parties agree that the CONSOLIDATED PERMIT or, if it cannot be issued, NON-CONSOLIDATED PERMITS would be beneficial to the operation and regulation of the AUTHORITY's 11 listed wellfields serving the AUTHORITY's water supply system.

5.B. Four Wellfield Permits - Pending Administrative Proceeding. The DISTRICT, AUTHORITY, HILLSBOROUGH, PASCO, PINELLAS and ST. PETERSBURG agree to consolidate the existing individual Water Use Permits for the South Pasco, Cosme-Odessa, Section 21 and Northwest Hillsborough Regional wellfields into the CONSOLIDATED PERMIT or, if the CONSOLIDATED PERMIT cannot issue, said parties agree to the issuance of the NON-CONSOLIDATED PERMITS.

5.C. Other Existing Wellfield Permits. The parties hereby agree to the DISTRICT's modifications of the existing individual Water Use Permits for the Eldridge-Wilde, Cypress Creek, Cross Bar Ranch, Starkey, Morris Bridge, Cypress Bridge and North Pasco wellfields so that the operation and regulation of these wellfields can be governed by the CONSOLIDATED PERMIT, or if the CONSOLIDATED PERMIT cannot issue, by the NON-CONSOLIDATED PERMITS. Said modifications shall occur automatically, without the need for further action by the DISTRICT or any other party, at the same time the CONSOLIDATED PERMIT, or NON-CONSOLIDATED PERMITS, take effect.

5.D. New Water Supply. With respect to any Water Use Permits required under Part II of Chapter 373, Fla. Stat., for the ELIGIBLE PROJECTS developed pursuant to the NEW WATER PLAN, the AUTHORITY shall apply for and the DISTRICT shall issue such permits provided the conditions for issuance under DISTRICT rules then in force and effect are satisfied. The DISTRICT shall issue such permits subject to a term expiring no earlier than when the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS expire(s) provided that reasonable assurances are provided that the applicable permitting criteria will be met for that term. It is the present intent of the parties that Water Use Permits for new water supplies shall not be consolidated into the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS.

5.E. Chapter 120 Review. It is the intent of the parties that the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, will be issued pursuant to a Final Order of the DISTRICT approving a settlement of the pending administrative proceeding referred to in subparagraph 5.G., and will, therefore, not create a new point of entry to challenge the terms and conditions governing water use at the South Pasco, Cosme-Odessa, Section 21 and Northwest Hillsborough Regional wellfields. However, it is not the intent of the parties to limit or restrict in any way a substantially affected third party's rights under Chapter 120, Fla. Stat., as to the terms and conditions of the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS as it or they relate(s) to the wellfields or other facilities other than South Pasco, Section 21, Cosme-Odessa and Northwest Hillsborough Regional.

5.F. Timing of Issuance of CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS. The DISTRICT shall issue, and the AUTHORITY shall accept and be bound by, the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, upon: 1) the satisfaction of all requirements of Section 6.03(A) and (D) of the INTERLOCAL AGREEMENT; 2) DISTRICT implementation of any necessary amendments, modifications or extensions of the existing Water Use Permits for the Eldridge-Wilde, Cypress Creek, Cross Bar Ranch, Starkey, Morris Bridge, Cypress Bridge and North Pasco wellfields so that the operation and regulation of these wellfields can be governed by the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS; 3) final adoption of any and all changes to DISTRICT rules necessary for the issuance of the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, or effectiveness of the stipulated rule waiver or variance as set forth in paragraph 24; and 4) successful resolution of any third party challenge to the issuance of the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS, or to the final adoption of any DISTRICT rules or waivers or variances necessary to such issuance; and 5) DISTRICT approval of the OPERATIONS PLAN.

5.G. Settlement and Dismissal of Pending Administrative Proceeding. Immediately upon satisfaction of the conditions for issuance of the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, set forth in subparagraph 5.F., the DISTRICT, the AUTHORITY, HILLSBOROUGH, PASCO, PINELLAS and ST. PETERSBURG shall execute and file with the DISTRICT a written Stipulation and Settlement Agreement with proposed Final Order, substantially in the form attached hereto as Exhibit G. The CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, shall issue, and the Final Order shall be entered by the DISTRICT, at the DISTRICT's next regular monthly meeting following the date of filing of the Stipulation and Settlement Agreement which allows sufficient time for legally required notice of the intent to approve the Stipulation and Settlement Agreement and for entry of the Final Order. Entry of the Final Order shall constitute a full settlement of all issues in DOAH Case Nos. 95-1520, 95-1521, 95-1522, 95-1523, 95-1525, 95-1526, 95-1527 and 95-1528, and shall result in the dismissal of said proceedings. The parties agree to bear all of their own costs and fees related to these cases.

5.H. Chapter 120 Time Extensions. The parties hereby agree to an extension of all applicable Chapter 120 and DISTRICT rule time limits for action on any and all Water Use Permits for the wellfields listed on Exhibit A in order to fully effectuate the terms and conditions of this AGREEMENT.

5.I. Effect of Non-Issuance of CONSOLIDATED PERMIT and/or NON-CONSOLIDATED PERMITS.

1) Once it is determined that the CONSOLIDATED PERMIT will not issue by reason of the fact that one or more of the conditions to its issuance set forth in subparagraph 5.F cannot be satisfied, and assuming that the ground for non-issuance does not result in termination of this AGREEMENT, then the DISTRICT, the AUTHORITY, PASCO, PINELLAS, HILLSBOROUGH, and ST. PETERSBURG shall execute and file with the DISTRICT the written Stipulation and Settlement Agreement with proposed Final Order, substantially in the form attached hereto as Exhibit G, for entry of the Final Order by the DISTRICT in accordance with subparagraph 5.G. Entry of the Final Order shall constitute a full settlement of all issues in DOAH Case Nos. 95-1520, 95-1521, 95-1522, 95-1523, 95-1525, 95-1526, 95-1527 and 95-1528, and shall result in the dismissal of said proceedings. The parties agree to bear all of their own costs, including expert consultant and witness fees, and attorneys fees related to these cases.

2) Simultaneously with the entry of the Final Order, the NON-CONSOLIDATED PERMITS shall issue.

3) If the DISTRICT cannot lawfully issue the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS, or if one or more of the conditions for their issuance are not satisfied, this AGREEMENT shall terminate, as specified in subparagraph 20.B.

5.J. Effect of Termination of AGREEMENT on Water Use Permits.

1) Termination Due To Reasons Other Than DISTRICT's Failure To Fund:

Should this AGREEMENT terminate before December 31, 2010, pursuant to one or more of the grounds set forth in subparagraph 20.B., other than by reason of the DISTRICT's failure to fund, then:

a. If the CONSOLIDATED PERMIT or NON-CONSOLIDATED PERMITS have been issued, the term of the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, shall expire six (6) months from the date of termination of this AGREEMENT. Any application for renewal of the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, must be filed within this six (6) month period.

b. If the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, have not been issued, the terms of the existing individual Water Use Permits (other than for the four wellfields which are the subject of the pending administrative proceeding, unless renewal permits for these four facilities have been issued before termination of this AGREEMENT) shall expire six (6) months from the date of termination. Any applications for renewal must be filed within this six (6) month period.

c. If at the time of termination the DISTRICT has funded the full amount under subparagraph 3.B., then the AUTHORITY and MEMBER GOVERNMENTS shall be required to reduce pumping from the Central System wellfields to their obligations under subparagraphs 2.A. and 4.A.

2) Termination Due to DISTRICT's Failure To Fund:

Should this AGREEMENT terminate before December 31, 2010, by reason of the DISTRICT's failure to fund, then:

a. Assuming the CONSOLIDATED PERMIT, or NON-CONSOLIDATED PERMITS, have been issued;

(1) If at the time of termination the DISTRICT has funded a portion of the full amount under subparagraph 3.B., then

(a) The AUTHORITY and MEMBER GOVERNMENTS shall be required to reduce pumping from the Central System wellfields only by the proportional amount as determined by the formula set forth in subparagraph 3.E., and

(b) The quantities permitted per wellfield shall be based upon the percentage relative to 158 MGD of the individual wellfield quantities specified in the FACILITY QUANTITIES TABLE set forth in subparagraph 4.C., multiplied times the quantity that results from subtracting the pumpage reduction utilized in the formula set forth in subparagraph 3.E. from 158 MGD.

b. Assuming the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS, have not been issued;

(1) The terms of the existing individual Water Use Permits (other than for the four wellfields which are the subject of the pending administrative proceeding, unless renewal permits for these four facilities have been issued before termination of this AGREEMENT) shall expire six (6) months from the date of termination. Any applications for renewal must be filed within this six (6) month period.

(2) If at the time of termination the DISTRICT has not funded the full amount under subparagraph 3.B., then the AUTHORITY and MEMBER GOVERNMENTS shall be required to reduce pumping from the Central System wellfields only by the proportional amount as determined by the formula set forth in subparagraph 3.E.

3) If upon termination of this AGREEMENT the pending administrative proceeding identified in subparagraph 5.G. has not been concluded either by issuance of a final order by the DISTRICT's Governing Board or by settlement in accordance with subparagraph 5.G., then the DISTRICT shall have six (6) months from the date of termination within which to issue a final order.

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6. LAND ACQUISITION. By January 1, 2000, and upon the request of ST. PETERSBURG, the DISTRICT and ST. PETERSBURG shall endeavor to negotiate in good faith agreements for the acquisition of fee simple title to the Weeki Wachee Springs property owned by ST. PETERSBURG. The DISTRICT shall request Conservation and Recreation Lands (C.A.R.L.) funds for the acquisition of the property in the amount not to exceed the amount set forth in Exhibit H subject to applicable C.A.R.L. and statutory requirements and availability of funds.

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7. CONSERVATION AND REUSE.

7.A. Demand Management. The AUTHORITY's current Master Water Plan states that an aggressive conservation and demand management program is an integral component of a sustainable water supply. The Master Water Plan provides that the conservation program is expected to reduce use by 10 mgd (annual average) by 2000, and an additional 7 mgd (annual average) by 2005. These reductions are reflected in AUTHORITY'S projected water needs and would contribute to a reduction in per capita use. The AUTHORITY and the MEMBER GOVERNMENTS shall continue to plan, coordinate, develop, construct and implement conservation and reclaimed water projects, according to the responsibilities assigned to the AUTHORITY and the MEMBER GOVERNMENTS in Section 3.09 and Section 17 (F) of Exhibit B of the INTERLOCAL AGREEMENT and the AUTHORITY shall annually report, as part of the report required by subparagraph 2.J, on the status of conservation and demand management projects.

7.B. Demand Management Co-Funding. The DISTRICT, in conjunction with the appropriate Basin Boards, intends to collectively continue to fund, to the extent authorized by law, approximately nine million dollars ($9,000,000.00) per year for conservation and reclaimed water projects that effectively reduce potable water use. This collective funding is expected to be continued for ten (10) years and is expected to provide funds for such purposes to the AUTHORITY, MEMBER GOVERNMENTS and other local governments in Hillsborough, Pasco and Pinellas Counties on a 50/50 cost sharing basis. The DISTRICT shall undertake its best efforts to secure Resolutions from all appropriate Basin Boards in which the Basin Boards shall indicate an intent to collectively continue funding in accordance with this subparagraph. There shall be no remedy against the DISTRICT or Basin Boards should such funding fail to occur.

7.C. WUCA Rule. Upon issuance of the CONSOLIDATED PERMIT, the MEMBER GOVERNMENTS shall remain responsible for compliance with Basis of Review Sections 7.3.1.1, 7.3.1.2. and 7.3.1.3., only to the extent such rules would apply to the MEMBER GOVERNMENTS independent of this AGREEMENT. The AUTHORITY's responsibilities for reporting compliance with such rule shall be as set forth in the CONSOLIDATED PERMIT.

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8. ALTERNATIVE DISPUTE RESOLUTION.

8.A. Water Consortium. As an alternative to the high cost of administrative proceedings, litigation and appeals, the DISTRICT and the AUTHORITY shall investigate the availability or establishment of a scientific consensus process in conjunction with establishment of a Water Consortium as set forth herein. Within ninety (90) days after the effective date of this AGREEMENT, the DISTRICT and AUTHORITY shall consider establishment of a Water Consortium within the Environmental Science and Policy Program of the University of South Florida, or other suitable entities. This Water Consortium shall be an independent entity which will review scientific issues related to water sources, as may be jointly requested by the parties in order to minimize the conflicts between the AUTHORITY and DISTRICT and reduce or eliminate any need for further costly litigation.

8.B. Dispute Resolution Process. The DISTRICT, the AUTHORITY, and MEMBER GOVERNMENTS agree to resolve any disputes related to the interpretation, obligations or performance of this AGREEMENT, including, but not limited to, subparagraphs 14.C. and 20.A. of this AGREEMENT, in accordance with this subparagraph 8.B. Any party may initiate the dispute resolution process by providing written notice of the issue or issues raised and the complaining party's position on it to the other party. After transmittal and receipt of a notice specifying the area or areas of disagreement, the parties agree to meet at reasonable times and places, as mutually agreed upon, to discuss the issues. If discussion between the parties fails to resolve the dispute within thirty (30) days of the initial written notice, the parties shall appoint a mutually acceptable third party to act as a mediator. In such mediation the parties shall bear their own fees and costs. The mediation contemplated by this subparagraph is intended to be an informal and non-adversarial process with the objective of helping the parties reach a mutually acceptable and voluntary agreement. The decision-making shall rest solely with the parties. The mediator shall assist the parties in identifying issues, fostering joint problem-solving and exploring settlement alternatives. If the parties are unable to reach a mediated settlement within thirty (30) days of the mediator's written appointment, either party may terminate the settlement discussions by written notice to the other party. In such event, either party may initiate litigation or petition for an administrative hearing to the extent authorized by law within thirty (30) days of the notice terminating the settlement discussions. Failure by the party initiating the dispute to commence litigation or to file a petition requesting an administrative hearing within the thirty (30) day period shall be deemed to constitute an acceptance of the interpretation or performance of the other party.

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9. COMPLIANCE WITH APPLICABLE LAW. No party to this AGREEMENT shall be compelled to pay or perform under one or more of the provisions of this AGREEMENT where such payment or performance would constitute a violation of applicable law. Each party shall comply with all applicable federal, state and local laws, rules, regulations and ordinances relative to performance under this AGREEMENT. The parties agree that nothing contained in or done pursuant to this AGREEMENT shall be construed to modify any existing rules or orders, including permits, of the DISTRICT, except as otherwise provided herein.

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10. ASSIGNMENT. No party may assign or transfer its rights or obligations under this AGREEMENT.

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11. THIRD PARTY BENEFICIARIES. Nothing in this AGREEMENT shall be construed to benefit any person or entity not a party to this AGREEMENT.

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12. MODIFICATIONS. This AGREEMENT constitutes the entire AGREEMENT between the parties and may be amended only in writing, signed by all parties to this AGREEMENT.

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13. DOCUMENTS. The following documents are attached and made a part of this AGREEMENT:

Exhibit A List of Water Facilities
Exhibit B Form of CONSOLIDATED PERMIT
Exhibit C New Water Sources Funding Agreement
Exhibit D Funding Criteria
Exhibit E SWFWMD Annual Funding
Exhibit F Form of Trust Agreement
Exhibit G Stipulation And Settlement Agreement
Exhibit H Ownership, Acreage and Valuations
Exhibit I RULE AMENDMENTS
Exhibit J Central System Water Use Permit Special Conditions

The Exhibits are incorporated in this AGREEMENT by reference. In the event of an irreconcilable conflict between the terms of this AGREEMENT and an Exhibit, priority shall first be given to the language in the body of this AGREEMENT, then to the Exhibits.

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14. REMEDIES.

14.A. Limited Waiver of Monetary Damages. No board member, elected official, attorney, director, officer, employee, agent or representative shall be liable to any party or its board members, elected officials, attorneys, directors, officers, employees, agents or representatives for any monetary damages or costs including but not limited to indirect, incidental, special, consequential or punitive damages, however caused, whether in contract, tort, strict liability, warranty or otherwise, arising out of or relating to the performance or failure to perform under this AGREEMENT.

14.B. Liability for Mitigation. Nothing contained in this AGREEMENT is intended, nor shall the same be construed, to release any party in whole or in part, from responsibility for mitigating all past, present and future environmental stresses, if any, resulting from ground or surface water withdrawals at the facilities which would be covered by this AGREEMENT. Nothing contained in this AGREEMENT is intended, nor shall the same be construed, to admit any liability of any party.

14.C. Mandatory Purchase by AUTHORITY of New Water Supply. If the AUTHORITY fails to develop new water supply sources in accordance with subparagraph 2.A. or fails to comply with the phased reduction requirements under subparagraph 4.A., or should the AUTHORITY breach this AGREEMENT by failing to give adequate assurance of future performance in accordance with subparagraph 20.A., the DISTRICT may, in its sole discretion, acquire and construct one or more new water supply sources with a production capacity, on an average annual basis, greater than or equal to the amount necessary to meet the new water supply and phased reduction requirements under subparagraphs 2.A. and 4.A. The AUTHORITY shall be obligated to purchase from the DISTRICT as much of the new water produced and delivered from such facility or facilities as is necessary to meet the AUTHORITY's obligations under subparagraphs 2.A. and 4.A. The AUTHORITY shall pay a purchase price for such new water supply equal to the DISTRICT's total capital operating and maintenance costs to produce potable water and, without limitation, the capital cost (including any debt service and related cost) to acquire or construct one or more new water supply facilities. If no water is taken, the required payments shall still be sufficient to cover all the referenced costs. If the DISTRICT elects to use this remedy, the DISTRICT's right hereunder shall take precedence over the MEMBER GOVERNMENTS rights under Section 3.20(C) of the INTERLOCAL AGREEMENT. The water produced by the DISTRICT's new water supply source must, however, meet the water quality standards set forth in Section 3(JJ) and Exhibit D to Appendix B to the INTERLOCAL AGREEMENT.

14.D. Specific Performance. In addition to, and not in lieu of, other remedies provided for by this AGREEMENT and applicable law, in the event of a default under this AGREEMENT, the parties acknowledge and agree that the non-defaulting party or parties may seek specific performance of the terms and conditions of this AGREEMENT.

14.E. Preservation of Public Health, Safety and Welfare. In the event that the Authority breaches this AGREEMENT , the District shall have the right to exercise any and all remedies provided for under this AGREEMENT or applicable law, except that the District shall not seek to reduce withdrawals below that quantity necessary to preserve and protect the public health, safety and welfare.

14.F. Waiver of Rights. The MEMBER GOVERNMENTS waive any right to challenge the initial issuance of the OPERATIONS PLAN pursuant to subparagraph 4.B., the initial issuance of the CONSOLIDATED PERMIT or the NON-CONSOLIDATED PERMITS pursuant to paragraph 5 and the promulgations of the rule modifications or stipulated rule waivers and variances under paragraph 24, except for arbitrations of the OPERATIONS PLANS under the INTERLOCAL AGREEMENT.

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15. EFFECTIVE DATE. The effective date of this AGREEMENT shall be the date upon which all parties have executed this AGREEMENT. The effectiveness of this AGREEMENT is conditioned upon its being executed by all parties no later than May 31, 1998.

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16. EXTENSION OF TIME. Other than as specified in subparagraph 16.A., the time for performance of a party hereto of any obligation required of it by this AGREEMENT may be extended upon the consent of all other parties, which consent shall not be unreasonably withheld so long as the requesting party strictly complies with the provisions of this paragraph 16.

16.A. Performance Prevented. The time for performance of an obligation required of a party shall be extended by the length of any delay that prevents a party from timely fulfilling an obligation required of it under this AGREEMENT due directly to: 1) a judicial or administrative proceeding that delays or prevents performance of the obligation; 2) another party's material breach of this AGREEMENT; 3) the acts or omissions of anyone not a party to this AGREEMENT other than one whose act or omission occurs in connection with a contractual relationship existing directly or indirectly with a party to this AGREEMENT; or 4) arbitration pursuant to the INTERLOCAL AGREEMENT or Appendix B to the INTERLOCAL AGREEMENT by and between the AUTHORITY and MEMBER GOVERNMENTS, provided, however, that there shall be only one extension prior to December 31, 2002, and one extension prior to December 31, 2007, for the minimum period of time necessary to complete the arbitration, not to exceed 240 days within each time period; or 5) the DISTRICT's failure to take agency action within 90 days of receipt of a complete application for a Water Use Permit for a PROJECT.

16.B. Required Notice. A party seeking an extension of time for performance of any obligation under this AGREEMENT shall notify all other parties of its intention to obtain such time extension as soon as such party becomes aware of a need and basis for an extension. Except as provided in subparagraph 16.A., the other parties shall, within forty-five (45) days of receipt of the request, notify the requesting party in writing whether or not they consent to the request. Failure to timely reply to a request for an extension shall be deemed approval of the request. The time period for performance shall be tolled during the period from the date of the request through the date of receipt of notice of consent from all parties or the receipt of notice of the refusal to consent by any party. If the requested extension is denied by one or more of the parties and the deadline for performance has not at that time expired, this AGREEMENT may not be deemed repudiated by the requesting party until the applicable deadline expires or the requesting party does not provide adequate and timely assurance of due performance pursuant to paragraph 20.A., whichever occurs first.

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17. GOVERNING LAW. This AGREEMENT shall be governed by and construed in accordance with the laws of the State of Florida.

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18. TIME. Time is of the essence in this AGREEMENT.

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19. EXPIRATION DATE. This AGREEMENT shall expire on December 31, 2010, unless terminated earlier in accordance with its terms.

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20. TERMINATION.

20.A. Right to Adequate Assurance of Performance - Anticipatory Breach.

Should the AUTHORITY fail to meet the schedule of milestone events approved pursuant to subparagraph 2.F., the DISTRICT may demand in writing adequate assurance of due performance of the AUTHORITY's obligations under subparagraphs 2.A. and 4.A. of this AGREEMENT. After receipt of a demand, the AUTHORITY's failure to provide within thirty (30) days such assurance of due performance may be deemed to be in breach whereupon the DISTRICT may exercise all remedies under this AGREEMENT and applicable law to mandate performance by the AUTHORITY.

20.B. Events of Termination. This AGREEMENT shall terminate, subject to the notice and cure provisions contained in subparagraph 20.C., if any of the following occur: (1) the INTERLOCAL AGREEMENT is not executed by all MEMBER GOVERNMENTS on or before May 31, 1998; (2) the INTERLOCAL AGREEMENT is not fully implemented pursuant to Sections 6.03(A) and (D) thereof, or is terminated; (3) the NEW WATER PLAN is not timely submitted by the AUTHORITY or is not approved by the DISTRICT pursuant to subparagraph 2 of this AGREEMENT; (4) the OPERATIONS PLAN is not timely submitted by the AUTHORITY or is not approved by the DISTRICT pursuant to subparagraph 4.B. on or before December 31, 1998; or (5) this AGREEMENT is terminated pursuant to subparagraph 5.I.

20.C. Notice and Cure. Any party who believes that an event of termination has occurred may give notice in writing to all other parties specifying the basis of the claimed event of termination and specifying what actions, if any, may be needed to correct the circumstances underlying the event of termination. If the circumstances are not corrected in ninety (90) days of the notice, the AGREEMENT shall be terminated and the parties shall thereafter govern themselves accordingly.

20.D. Survival of Remedies. All remedies provided for in this AGREEMENT shall survive termination of this AGREEMENT.

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21. EMERGENCIES. Nothing contained in, or done pursuant to, this AGREEMENT is intended by the parties, and nothing in this AGREEMENT shall be construed, to limit or impair the DISTRICT's lawful authority and power to respond to emergencies. The DISTRICT's commitment to fund as set forth in this AGREEMENT shall not be affected by the exercise of any such emergency power.

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22. NON-WAIVER. Except to the extent specifically waived herein, nothing in this AGREEMENT shall constitute a waiver by any of the parties hereto of any rights they may have under Chapters 120 and 373, Fla. Stat.; provided, nevertheless, that no party shall institute, or encourage a third party to institute, a proceeding challenging this AGREEMENT, the Exhibits to the AGREEMENT, the NEW WATER PLAN, the TRUST AGREEMENT, any FUNDING AGREEMENTS, the OPERATIONS PLAN, the CONSOLIDATED PERMIT, or the NON-CONSOLIDATED PERMITS where such challenge would frustrate or undermine the objectives or enforceability of this AGREEMENT. Further, nothing in this AGREEMENT shall be construed to limit or waive the rights of any non-party under Chapters 120 and 373, Fla. Stat.

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23. DISMISSAL OF ACTIONS. In addition to the voluntary dismissal of the DOAH cases listed in subparagraph 5.G., and subject to the contingencies therein, PINELLAS agrees to voluntarily dismiss the DISTRICT with prejudice from the following case:

Pinellas County, Florida v. Southwest Florida Water Management District, et al.,
Case No. 97-00767, in the Fifth District Court of Appeal.

Each party shall bear its own fees and costs.

24. RULE MODIFICATIONS. The DISTRICT agrees to implement the rule modifications in substantially the form attached hereto as Exhibit I (RULE AMENDMENTS). The DISTRICT further agrees not to make any future changes to the RULE AMENDMENTS that would substantively effect the AUTHORITY's and MEMBER GOVERNMENTS' rights, and ability to perform and satisfy, the terms and conditions of this AGREEMENT. If the RULE AMENDMENTS are in any way revoked, defeated by a third party challenge or modified, so that the AUTHORITY's and MEMBER GOVERNMENTS' rights, and ability to perform and satisfy, the terms and conditions of this AGREEMENT are substantively affected, then the parties will work to develop specific rule amendments which would have the same legal and regulatory effect as the RULE AMENDMENTS. Concurrently the parties agree to work toward rule waivers or variances that likewise would have the same legal and regulatory effect in the event that the specific rule amendments are in any way revoked, defeated by a third party challenge or modified so that the AUTHORITY's or MEMBER GOVERNMENTS' rights and abilities to perform and satisfy, the terms and conditions of this AGREEMENT are substantively affected. If the DISTRICT does issue such rule waivers or variances, then the AUTHORITY and MEMBER GOVERNMENTS hereby agree and stipulate not to invoke, use or introduce such waivers and variances, or the fact of their issuance, in any legal or administrative proceeding, including arbitration or mediation, as evidence against the DISTRICT, except to the extent necessary to enforce or defend the issued waivers and variances, or the CONSOLIDATED or NON-CONSOLIDATED PERMITS issued in accordance with said waivers or variances.

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25. NOTICE. Any notice required under this AGREEMENT shall be in writing and shall be either hand delivered or transmitted by certified or registered mail, postage prepaid with return receipt requested, and addressed to the parties as follows:

A party may change its address set forth above by providing the other parties with notice of any such address change in the same manner provided above, and which change shall be effective fifteen (15) days from the mailing by certified mail, return receipt requested, of such written notice of change.

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26. CONSTRUCTION OF AGREEMENT. Notwithstanding any rule of law or principle of contract construction to the contrary, no term or provision of this AGREEMENT which is subsequently determined to be ambiguous shall be construed more favorably for or against either party based on draftsmanship or preparation of this AGREEMENT.

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27. COMPLIANCE DATES. In the event that any date specified in this AGREEMENT shall be on a Saturday, Sunday or state or national holiday, then the date so specified shall be deemed to be the next business day following such date, and compliance by such business day hereunder shall not be deemed a default by any of the parties under this AGREEMENT.

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28. HEADINGS. The headings of each section in this AGREEMENT are for convenience of reference only, and shall not affect the interpretation or meaning of this AGREEMENT.

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29. COOPERATION. In order to effectuate the terms and conditions of this AGREEMENT, including the transfer of assets pursuant to the INTERLOCAL AGREEMENT and to allow for the operation of the wellfields and facilities by the AUTHORITY, the DISTRICT, AUTHORITY and MEMBER GOVERNMENTS agree to execute all the necessary and appropriate amendments, agreements, contracts, applications and documents.

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30. VENUE. Venue for purposes of any action or proceeding brought to enforce or interpret this AGREEMENT to which the DISTRICT is a party shall lie in Hernando County, Florida. Venue in all other cases shall be as provided in the INTERLOCAL AGREEMENT.

31. EXECUTION IN COUNTERPARTS. This AGREEMENT may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto, or their lawful representatives, have executed this AGREEMENT on the day and year set forth next to their signature below.

STATE OF FLORIDA

COUNTY OF PINELLAS

The foregoing instrument was acknowledged before me this ______ day of ________, 1998, by _________________________ as Chairman for the West Coast Regional Water Supply Authority.

____________________________________________
Notary Public

____________________________________________
Print Name

My Commission Expires:

Personally Known __________ OR Produced Identification __________

Type of Identification Produced ________________________________

ATTEST: HILLSBOROUGH COUNTY

RICHARD AKE
CLERK OF THE CIRCUIT COURT_____________________________
By:___________________________________
Deputy Clerk Chairman

Date:__________________________________

(SEAL)

APPROVED AS TO FORM: _____________________________

Office of the County Attorney

STATE OF FLORIDA

COUNTY OF HILLSBOROUGH

The foregoing instrument was acknowledged before me this ______ day of ________, 1998, by _________________________ as Chairman for the Hillsborough County Commission.

____________________________________________
Notary Public

_____________________________________________
Print Name

My Commission Expires:

Personally Known __________ OR Produced Identification __________

Type of Identification Produced ________________________________

ATTEST: PASCO COUNTY

_____________________________ By:___________________________________
Deputy Clerk Chairman

Date:__________________________________

(SEAL)

APPROVED AS TO FORM:

_____________________________

Office of the County Attorney

STATE OF FLORIDA

COUNTY OF PASCO

The foregoing instrument was acknowledged before me this ______ day of ________, 1998, by _________________________ as Chairman for the Pasco County Commission.

____________________________________________
Notary Public

_____________________________________________
Print Name

My Commission Expires:

Personally Known __________ OR Produced Identification __________

Type of Identification Produced ________________________________

ATTEST: PINELLAS COUNTY

KARLEEN F. DE BLAKER BOARD OF COUNTY COMMISSIONERS

CLERK OF THE CIRCUIT COURT

________________