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or are required for use by Lessee. Likewise, the Board agrees to make the water available for <br />delivery each year throughout the term of this Agreement. <br />13. Payments. The charge for water shall be paid annually in advance pursuant to the <br />following schedule: <br />13.1. On the date of mutual execution of this Agreement, Lessee shall pay the Board <br />representing the first contract year lease payment. <br />13.2 On or before October 1 st of each subsequent contract year, beginning on October <br />1, 2013, Lessee will pay the Board an amount equal to 120 multiplied by the applicable per -acre- <br />foot charge as set forth in paragraph 12. Annual payments shall be due from Lessee to the Board <br />in the amounts and on the dates set forth above for the tenn of this Agreement. Delinquent <br />balances shall be subject to a late payment charge of 1.5% per month on the unpaid balance. No <br />water will be delivered under this Agreement if the Lessee has an unpaid balance. <br />13.3 In addition, Lessee will pay to the Board upon execution of this Agreement a non - <br />reimbursable fee of $500 in consideration of legal and administrative costs incurred by the Board <br />for this Agreement. <br />14. Escalation. The charge for water leased by the Board to Lessee for the second contract <br />year, and for each year thereafter, shall be adjusted based upon the percentage increase, if any, <br />over the previous year of the Board's water rates for its general customers for treated water. The <br />Board will give to Lessee at least 30 days written notice of any rate increase pursuant to this <br />paragraph before such increase shall be effective. <br />15. Pueblo City Charter Provision. This Agreement involves the use of water outside the <br />territorial limits of the City of Pueblo and is specifically limited by the provisions of the City <br />Charter governing such use. The City Charter provides, among other things, that: "The Board of <br />Water Works shall have and exercise all powers which are granted to Cities of the First Class by <br />the Constitution and laws of the State of Colorado, except the power to levy and collect taxes <br />directly or indirectly. Surplus water may be supplied to territories outside the City until same is <br />needed by the inhabitants of the City." <br />16. Determination of Water Availability by Board. The Board has determined that the <br />welfare of Pueblo and its inhabitants requires a stable water supply not only for its citizens but <br />also for the other customers of the Board putting to beneficial use the water belonging to the <br />Board. Therefore, the extent to which limitation of water delivery outside Pueblo may be <br />necessary to enable the Board to provide adequately for users inside Pueblo is a fact to be <br />determined by the Board in the exercise of its reasonable discretion from time to time as <br />occasion may require. <br />17. Interruption of Water Supply Beyond Board's Control. While it is the purpose of the <br />Board to maintain a water supply adequate to meet the needs of the metropolitan area logically <br />dependent on the Board for water supply and for its other temporary contract customers, there <br />are many elements that make it uncertain whether the supply can always be adequate for all. <br />Page 3 of 7 <br />