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the Groves Property through which water can be delivered into the pipeline for return to the <br /> South Platte River. These facilities, together with all necessary and related structures and <br /> equipment, comprises the Pipeline Project. Although the parties have done preliminary designs <br /> of the Pipeline Project, both parties recognize that additional engineering design will be needed <br /> in order to complete the Pipeline Project. The parties agree to work cooperatively to design and <br /> develop the Pipeline Project in a manner that will work successfully for both parties. <br /> 5. Project Contracting and Construction. After Pipeline Project financing has been <br /> obtained, the parties contemplate that it will be necessary to enter into agreements for final <br /> design and construction of the Pipeline Project. Because FMRICO has been designated as the <br /> applicant to obtain project financing, Groves agrees that FMRICO shall be designated as the <br /> contracting entity for design and construction contracts. However, FMRICO agrees that Groves <br /> should be directly involved in all discussions and decision making about such contracts. Joint <br /> agreement of both parties is required for all substantive decisions concerning contracting and <br /> construction. To the extent not covered by the grants and loans obtained for the Pipeline Project <br /> through joint effort, the parties agree that construction costs for the Pipeline Project will be <br /> shared equally, unless both parties agree that a project feature is being constructed to benefit one <br /> party disproportionately, and in that event, the parties shall agree upon an appropriate cost <br /> allocation for that project feature. Groves hereby agrees that it shall be liable for fifty percent <br /> (50%) of any design and construction contracts contemplated herein. <br /> 6. Ownership and Operation of Pipeline Project. It is the intent of the parties that, <br /> upon completion, the Pipeline Project will be jointly owned and operated by both parties. The <br /> primary rules for this ownership and operation are set forth below. However, the parties <br /> acknowledge that future agreements may be needed to deal with issues that arise at a later date. <br /> A. Ownership of Facilities. Upon completion of the Pipeline Project, <br /> FMRICO shall own a 50% interest in the project facilities, and Groves shall own a 50% <br /> interest in the project facilities. This co-ownership shall be as tenants-in-common. <br /> Groves acknowledges that its ownership interest may be subject to a security interest in <br /> favor of the CWCB to secure the project loan. <br /> B. Ownership of Water Rights. <br /> 1. FMRICO is the owner of the water it will divert at the Pipeline <br /> Project and deliver to the recharge facilities of the Pipeline Project, and all of the water <br /> that recharges the aquifer of the South Platte River by seepage out of the recharge <br /> facilities attributable to the FMRICO water delivered. FMRICO grants to Groves a Right <br /> of First Refusal to purchase excess augmentation credits (i.e., credits not needed for <br /> augmentation purposes in FMRICO's augmentation plans or by agreement executed <br /> before the date of this Agreement)up to a maximum of 900 acre feet per year, at a fixed <br /> price of twenty-five dollars ($25.00) per acre foot, for the first two years after this <br /> Agreement is signed. After this initial two-year period, Groves shall have a Right of First <br /> Refusal to purchase excess augmentation credits generated from the Groves Ponds or any <br /> 4 <br />