AMENDMENT TO CONTRACT FOR PUBLIC/PRIVATE PARTNERSHIP AND OPERATION, MAINTENANCE AND MANAGEMENT SERVICES FOR THE CITY OF HOBOKEN'S MUNICIPAL WATER SYSTEM WHEREAS, the City of Hoboken (City) and United Water New Jersey, formerly known as Hackensack Water Company (Contract Partner) and United Water Mid-Atlantic, formerly known as Mid~ Atlantic Utilities Corporation and herein (Mid-Atlantic) are currently parties to a Public/Private Partnership Agreement and Operation, Maintenance and Management Services Agreement for the City of Hoboken's Municipal Water system, dated May 18, 1994 (the Contract) for the operation, maintenance and management of the city's water system pursuant to and accordance with the provisions N.J.S.A, 40A:31-1 et seq. and pursuant to said Contract. The contract Partner took over the operation and maintenance of the city's water system on July 1, 1994; and WHEREAS, it is the mutual desire of the parties to enter into this Amendment to said Contract to provide for the continued operation, maintenance and management of the System through June 30, 2014, pursuant to and in accordance with the provisions of N.J.S.A, 40A:31-1 et seg., and thereby amend the Contract as set forth herein; and WHEREAS, the Mayor and city Council of the City has determined that the public health, safety, and welfare of the residents of the City can be best protected by entering into this Amendnent to the Contract to provide for the continued operation, maintenance, and management of the system as set forth herein. NOW, THEREFORE, in consideration of the mytual covenants, aeconditions, and terms contained herein, the City, the Contract Partner and Mid-Atlantic, intending to be legally bound agree to amend certain provisions of the Contract, dated May 18, 1994 as follows. SECTION 1 TERM The parties agree that the term of the Contract shall be extended to expire on June 30, 2014, In that regard, Section 2 of the Contract shall be amended to read as follows: "A. The Term of this agreement shall commence on July 1, 1994 (the "Commencement Date"), and, unless earlier terminated in accordance with Section 5 hereof shall expire on June 30, 2014, subject to such annual or other earlier renewal as may be required by law and to such renewal as is contemplated in subsection B of this section 2. B. As of the date of the execution of this Agreement the parties hereto intend to extend the term of this agreement for two (2) consecutive ten (10) year renewals commencing on each of July 1, 2014 and July 1, 2024, respectfully, and expiring on each of June 30, 2024 and June 30, 2034 respectively. on or prior to the September 1 preceding each of the July 1, 2014 and July 1, 2024 dates, the parties hereto shall commence discussions to renegotiate the provisions of sections 5, 7, 8, 16, 17 and 19 hereof which shall become effective on the following duly 1. Additionally, the parties shallcommence discussion to renegotiate and/or clarify and contract terms that have proven impractical, ambiguous or unclear. If, on or prior to the April 1 preceding each of July 1, 2014 and July 1, 2024 dates, respectfully, the parties shall fail to agree upon all of the terms and conditions of this agreement which shall become effective on the following July 1, then unless the parties shall otherwise agree to extend the term of this agreement, this agreement shall automatically terminate on the following July 1.” SECTION 2 PAYMENT TO THE CITY Im addition to the payments provided for in Section 4 of the Contract, on or prior to June 30, 1996, Mid-Atlantic will pay to the City THREE MILLION DOLLARS ($3,000,000.00), and on or prior to June 30, 1997, Mid-Atlantic will pay to the City an additional TWO MILLION DOLLARS ($2,000,000.00), or such lesser amount as shall be requested by the City in a written notice to the Contract Partner @elivered prior to dune 30, 1996 and/or, June 30, 1997, respectively. Said payments to the City shall constitute partial consideration for Mid-Atlantic's and the Contract Partner's investment and undertaking as the City's partner in the public/private partnership venture created hereby and does not convey to Mid-Atlantic or the Contract Partner any ownership interest or leasehold interest in the physical assets of the systen. If the City is paid less than the amount specified in Section4 of the agreement, or less than 5 million dollars in accordance with the provisions of this amendment, the parties hereto agree to amend the rates shown on Exhibit D to the Contract to reflect such lower amount that was paid to the City. SECTION 3 TERMINATION Section 5 of the Contract shall be modified as follows. The formula set forth in section 5(B)4, 5(C)2, 5(D)2, 5(E)2, shall be deleted and replaced with the following formula: (A+BHE) x D. 6574 Where: A= ‘he amount paid to the City in accordance with Section 4 of the contract and Section 2 hereof. Where: B= The unamortized portion, if any, as of the date of termination of this Agreement, of any advances previously made by the Contract Partners for System capital improvements and/or repairs in accordance with Section 7 of the Contract and Section 4 hereof. Where: C= The actual cost to the Contract Partner of the installation of the Automatic Meter Reading equipment as certified to the City in accordance with the provisions of subsection B of Section 6 hereof, or if such cost has not yet been so certified, then C shall equal $1,000,000. Where: D= The number of days in the period beginning with the date of termination of this Agreement and ending with June 30, 2014. SECTION 4 SYSTEM CAPITAL IMPROVEMENTS AND/OR REPAIRS Section 7 of the Contract shall remain in full force ana effect until June 30, 1997. Thereafter, beginning July 1, 1997,Section 7A and 7B of the Contract shall be superseded and shall read as follows. "A. For the one year period commencing on July 1, 1997 and ending June 30, 1998 and for each one year period thereafter commencing on July 1 of each year and ending on June 30 of the following year, the Contract Partner, after consulting with the City and/or its consultants, shall prepare a budget for such period which sets forth in detail the capital improvements and/or repairs which sets forth in detail the capital improvements and/or repairs to be made to the System during such period. The Contract Partner shall be obligated to make and pay for at its sole cost and expense the first $550,000.00 of the capital improvements and/or repairs to be made to the System during each such period as set forth in such budget. All charges made against the Contract Partner's obligation to pay for the first $550,000.00 of the capital improvements and/or repairs to be made to the System during each such period shall be made at the Contract Partner's direct cost of labor, material and overhead, based upon the formula provided in the Agreement, dated as of May 18, 1994, between the Contract Partner and Mid-Atlantic, a copy of which is attached to the Contract as Exhibit "B". The overhead cost charged by Mid-Atlantic to the contract Partner shall be reasonable and shall not exceed the costs charged by Mid-Atlantic to other water utilities for similar services. B. If for any reason, the Contract Partner does not incur expenditures for System capital improvements and/or repairs in any one year period which are equal to $550,000.00, then the Contract Partner's obligation to contribute to the system capital improvements and/or repairs during the next one year period shall be increased to the sum of $550,000.00 plus the difference between $550,000.00 and the amount actually incurred by the Contract Partner in the preceding one year period. Tt is the intent of the parties hereto that the Contract Partner shall have contributed a total of at least $6,000,000.00 for System capital improvements and/or repairs by no later than June 30, 2014. If for any reason the Contract Partner's total contribution for System capital improvements and/or repairs by June 30, 2014 is less than $6,000,000.00, then the Contract Partner shall pay to the City the difference between $6,000,000.00 and the amount actually contributed by the Contract Partner over the twenty year period." SECTION 5 RATES, FEES AND CHARGES Section 17 of the contract shall remain in full force and effect until June 30, 1996. Thereafter, beginning July 1, 1996 Section 17A and 17B of the Contract shall be superseded and shall read as follows. * "A. Effective as of July 1, 1996 and as of each July 1thereafter to and including July 1, 2013, the city agrees, to the extent permitted by law, to increase its rates for the supply of water service to customers of the System to at least the rates set forth for each such July i on Exhibit "D" attached hereto. Nothing herein shall be construed to restrict the City form establishing rates for the supply of water service to customers of the System which are in excess of the rates set forth on Exhibit "Dv attached hereto, as such Exhibit D may be amended from time to time in accordance with the terns of this Agreement. B.1, The City and the contract Partner agree that the rates set forth on Exhibit D which are to become effective on July 1, 2001, July 1, 2002 and July 1, 2003 are intended to increase the rates in effect for the prior one year period by two (2%) percent more than the rise or fall in the United States consumer Price Index (the "CPI") during such prior one year period. The City and the Contract Partner agree that the rates set forth on Exhibit D which are to become effective on July 1, 2001, duly 1, 2002 and July 1, 2003 shall be adjusted higher or lower to the extent that the CPI for the prior ene year period varies from the assumed three (3%) percent increase which was used to compute the rates for those dates shéwn on Exhibit D hereto. B.2. The City and the Contract Partner agree that therates set forth on Exhibit D which are to become effective on July 1, 2004, and on each successive July 1, until and including July 1, 2013, are intended to increase the rates in effect for the prior one year period by the rise or fall in the United States Consumer Price Index (the "CPI") during such prior one year period. The City and the contract Partner agree that the rates set forth on Exhibit D which are to become effective on July 1, 2004, and on each successive July 1, until and including July 1, 2013, shall be adjusted higher or lower to the extent that the CPI for the prior one year period varies from the assumed three (3%) percent increase which was used to compute the rates for those dates shown on Exhibit D hereto. It is the intention of the City and the Contract Partner that any such adjusted rates which are to become effective on July 1, 2001, and on each successive July 1, until July 1, 2013, respectively, will be reasonable, shall result in a reasonable industry based return for the Contract Partner and will not be excessive." SECTION 6 Except as amended herein all other provisions of the Contract dated May 18, 1994, between the City and the Contract Partner and Mid-Atlantic shall remain in full force and effect throughout the term of said Contract as amended herein.IN WITNESS WHEREOF, the parties have hereunto set their hands and fixed their seals as of the date first above written. ATTEST: CITY OF HOBOKEN ATTEST: UNTTED WATER NEW JERSEY i la _ hdtiidlf my, [rll 6. MR Title? ATTEST: UNITED WATER MED-ATEANTIC Liisi ei Ga Lad u Title: ~EXHIBIT D SCHEDULE OF RATES Rate/1000 c.f. —_of water & _Increas: $18.96 2.58 19.91 5.0 21.11 6.0 23.22 10.0 25.54 10.0 28.09 10.0 29.50 5.0 * 30.97 5.0 * 32.52 5.0 * 33.50 3.0 * 34.50 3.0% 35.54 3.0 * 36.62 310 * 37.72 3.0 * 38.84 310 * 40.01 3.0 * 41.21 3.0 # 42.45 3.0 * 43.72 3.0% * Assumes CPI = 3%CITY OF HOBOKEN PROPOSAL FOR CONTRACT EXTENSION TERM SHEET Term: 10 year extension to 20 years contract to run through June 30, 2014 Proposal: Concession Fees $3 Million July 1, 1996 $2 Million July 1, 1997 Capital Improvement Program ~ $4.3 (in Addition to current $300,000 repaix budget) $250,000/yr starting July 1, 1997 Revenue Sharing: Current contract provisions remain in place. 20% of net increase in revenue for usage in excess of 5.5 MGD 50% of net increase in revenue for usage in excess of 6 MCD Buy-out Provision: Current amortization provisions to be rewritten to amortize the remaining balance of the initial $5.5 Million advance and the proposed concession fees and Capital Improvements over the remaining 18 years of the contract.