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6 Annual Payments In consideration of the water to be sold and delivered under <br />this Agreement South Forty shall pay to the City in advance on or before the beginning of each <br />contract year the sum of per acre foot of Augmentation Water that South Forty uses under <br />this Agreement to replace the evaporative depletions from the Valco Ponds during each contract <br />year At the beginning of each contract year South Forty shall provide the City with a schedule <br />of replacement water deliveries under this Agreement together with payment for said amounts <br />based on the rate of per acre foot Any amount used in excess of the delivery schedule <br />shall be paid for within 30 days after the use of any such excess above the delivery schedule If <br />South Forty uses less than the delivery schedule amount made available by the City during any <br />contract year South Forty s annual payment for the following contract year shall be reduced by <br />the value of water that had been available under this Agreement but was not used during the <br />prior contract year by South Forty hereinafter called unused water Such value shall be <br />calculated by multiplying the number of acre feet rounded to the nearest tenth of unused water <br />times South Forty s cost per acre foot For example if South Forty was entitled to <br />receive 18 acre feet in the prior contract year but used only 15 5 acre feet of water the value of <br />the unused water would be 2 5 x s In addition the price of the Augmentation Water <br />on a per annual acre foot basis shall increase in any year by the same percentage that the City <br />raises its water rates for its commercial customers <br />7 Term This Agreement shall be effective for a term of thirty 30 contract years <br />commencing on the acquisition of the Valco Pond Property which is anticipated to be in <br />November of this year This Agreement may be extended by mutual agreement of the parties <br />hereto In the event that the South Forty s Augmentation Plan is not approved this Agreement <br />shall terminate <br />8 Water The water to be delivered pursuant to this Agreement will be raw <br />untreated fully consumable augmentation water from any one or a combination of sources legally <br />available to the City for the augmentation use contemplated herein <br />9 Location of Delivery of Water The City will deliver the water sold hereunder to <br />the Arkansas River Basin at a location or locations to be determined by the City Fryingpan <br />Arkansas Project Water generally will be delivered by release at Pueblo Reservoir Provided <br />however the parties realize that there may be times of low flows on the Arkansas River such as <br />wintertime operations where South Forty s replacement obligations under its Augmentation Plan <br />will need to made at or above the Valco Ponds At those times and the City will cooperate with <br />South Forty for the City s allocation of Project Water as the Augmentation Water source to be <br />released by the Southeastern Colorado Water Conservancy District from storage in Turquoise <br />Reservoir provided that any transit loss of water released from Turquoise Reservoir that is <br />charged to the City shall be treated as water sold and delivered to South Forty at the rate of <br />per acre foot The City shall not be responsible for any diversion measuring or storage of the <br />water sold hereunder after delivery of such water to South Forty <br />10 Rate of Delivery of Water The City shall deliver the water sold hereunder at <br />times and rates to be determined by the City that are consistent with South Forty s Augmentation <br />Plan Upon execution of this Agreement South Forty shall provide the City with a proposed <br />monthly delivery schedule for the first contract year and for each contract year thereafter The <br />3