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SW MOU

SW MOU

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Published by chris_moran

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Published by: chris_moran on May 24, 2012
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MEMORANDUMOFAGREEMENTHOBBYINTERNATIONALEXPANSIONPROJECTThisMemorandumofAgreement("MOA")isenteredintobetweentheCityofHouston,Texas("City")andSouthwestAirlinesCo.("Southwest")(the"Parties")regardingtheproposedWilliamP.HobbyAirport("Hobby")InternationalExpansionProjectasmorespecificallydetailedinArticleII("Project").ThePartiesagreethatthereisasignificantneedforthedevelopmentofadditionalfacilitiesatHobbytohandleaircraft,passengers,andcargodepartingto,andarrivingfrom,internationaldestinationsonscheduledandcharteredflights.Consequently,thePartiesagreetothefollowing.1.0EffectiveDate,TermandUse
&
LeaseAgreement1.1ThisMOAwillbeeffectiveonthedateofcountersignaturebytheCityControllerafteradoptionbyCityCouncilandsignaturebySouthwest,andshallexpiretwenty-fiveyearsfromtheDateofBeneficialOccupancy("DBO")oftheProjectunlessithasbeensupersededbyanamendmenttotheexistingUseandLease("U&L")AgreementbetweentheCityandSouthwestorbyanewU&LAgreementbetweentheCityandSouthwest,inwhichcasethisMOAshallbeofnofurtherforceoreffect.1.2ThePartiesagreetonegotiateingoodfaithtoexecuteaneworamendedU&LAgreementpriortothecommencementofconstructionoftheProject.WhereCityconsentisrequired,theCityshallnotunreasonablywithholdconsent.SouthwestshallhavenoobligationtocommenceconstructionoftheProjectintheabsenceofafullyexecutedneworamendedU&LAgreement,butmaychoosetodosoonthebasisofthisMOAandamutuallyagreedProjectdefinitionmanualwithspatial,performance,functionalandtechnicalrequirementsfortheProject("ProjectDefinitionManual").1.3Ifthereisnomutualagreementoni)aProjectDefinitionManualandii)aneworamendedU&LAgreement,andSouthwestdecidesnottocommenceconstruction,theCityagreestopurchasewhateverdesigndocumentsSouthwesthasalreadyprepared,fortheactualcostofthepreparationofthedesigndocuments,withfullrightstousesuchdocumentsonan"AS-IS"basis.ThecostofthatpurchasewillbereflectedasacredittoSouthwestinthenormalHobbyrates,feesandchargesundertheexistingU&LAgreement.TheCitymayincludesuchdesigncostsintheratebasefortheensuingfiscalyear.2.0Project2.1TheProjectconsistsof
i)
fivenewinternationalgatescapableofhandlingnarrow-bodytransportcategoryaircraft(e.g.,Boeing737seriesandAirbus320series);ii)aFederalInspectionServicefacility,togetherwithallnecessaryspaceandequipmentrequiredbytheDepartmentofHomelandSecurity,CustomsandBorderProtection
1
HobbyInternationalProjectMOAMay23,2012
 
("FIS");iii)associatedrampandextendedhydrantfuelingsystemimprovements,apronworkanddrainage;iv)relatedsecuritycheckpointenhancements;v)allassociatedenablingprojectsincluding,butnotlimitedto,theSouthwestticketcounterandofficerelocation,andtheHoustonAirportSystem("HAS")officerelocation;vi)allrelatedandapplicablecosts,feesandtaxes,includingwithoutlimitationplanning,legal,constructionmanagement,construction,materials,Projectmanagementfeesandpermitfees;vii)reimbursementtotheCityofthethirdpartyconsultantcostsfordevelopingtheProjectDefinitionManual;andviii)reimbursementtotheCityofthethirdpartyconsultantcostsfortheCityliaisonassociatedwithconstructionoftheProject.
3.0ProjectPlanningandManagement
3.1TheCitywillplantheProject.TheCitywilldevelopanddelivertoSouthwesttheProjectDefinitionManual.3.2SouthwestwilldesignandconstructtheProjectfollowingmutualagreementontheProjectDefinitionManual,subjecttotheconditionsinSection1.3above.3.3ThefinaldesignandconstructiondocumentsmustbeapprovedbytheDirectorofHASpriortothecommencementofconstruction.3.4UponcompletionoftheProjectDefinitionManual,thePartieswillestablishaProjectbudget,whichiscurrentlyestimatednottoexceed$100million,andProjectschedule,whichcurrentlyisestimatedtohaveconstructioncommencinginthethirdquarterof2013,andDBainthefourthquarterof2015.TheCitywillgrantSouthwestsuchconstructioneasementsandlicensesasnecessaryforconstructionoftheProject.3.5TheCitywillappointaliaisonforthisProjectwhowillreviewallschedules,thesequencingofallwork,andcoordinateonmattersrelatedtotheProjectbetweenSouthwestandtheCity.SouthwestagreestoreimbursetheCityforthecostoftheCityliaisonandthirdpartyconsultantsfordevelopingtheProjectDefinitionManual,asprovidedinSection2.1.TheCityliaisonwillcooperatewithSouthwestinitseffortstoexpeditetheissuanceofanyrequiredCitypermitsfortheProject.
4.0ProjectDelivery
4.1SouthwestwilldesignandconstructtheProject,atitsowncost,asa"turnkey"project.AtDBa,theCitywilloperateandmaintaintheProject.4.2Southwestwillusea"brick-by-brick"oranalogousmethodtodelivertheProjecttotheCitywiththeobjectiveofsavingsalestaxesonconstructionandothermaterialsaspermittedbyapplicablelaw.4.3UponcompletionreasonablysatisfactorytotheCity,SouthwestwillconveytitletotheProjecttotheCityasnecessarytobefreeandclearofanyliensorencumbrancesofanytype,withtheexceptionofthehydrantsystemextensionwhichwillremain2
HobbyInternationalProjectMOAMay23,2012
 
thepropertyofSouthwestuntilorunlesstheentiresystemispurchasedbytheCity.ThecostsforthehydrantsystemwillbeexcludedfromcapitalcostsusedtocalculateratesunderthisMOA.4.4Southwest'sdesignandconstructionoftheProjectwillbesubjectto,andperformedincompliancewith,allapplicablelocal,stateandfederallaws,regulationsandrequirements,includingbutnotlimitedtothoseoftheu.SDepartmentofHomelandSecurity,U.S.CustomsandBorderProtection,TransportationSecurityAdministration,FederalAviationAdministration,theHAS,aswellasCityOrdinancesandCodes.4.5SouthwestwillcomplywithCityordinances,policiesandExecutiveOrders,includingbutnotlimitedtoMWBEgoodfaithgoalrequirements,HireHoustonFirst,PayorPlay,DrugFreeWorkplacePolicy,CivicArtProgram,andPrevailingWages.5.0
ProjectFinancing
5.1Southwestshallprovideallcapital,andberesponsibleforallcostsoftheProject.TheCityshallhavenoresponsibilityforfundingtheProject.TheCityshallnotberequiredtoincuranydebtinconnectionwiththeProjectandshallnotberequiredtorepaySouthwestoranythirdpartyforanyfinancingorfundinginrelationtotheProject.5.2AtanytimeafterfinalcompletionoftheProject,theCitymaybuy-outSouthwest'sinvestmentintheProjectforthethen-unamortizedcostoftheProjectcalculatedattheCity'simputedamortizationrateoveratwenty-five(25)yearperiodasdefinedintheU&LAgreement.ShouldtheCitybuy-outSouthwest'sinvestment,thereafterSouthwestwillberesponsibleforthepaymentofitsproportionateshareofHAScapitalchargesandwillhavethesameobligationasanyothercarrierusingandoperatingintheProjectwithregardtoanyandallrentalcharges.6.0Use
oftheInternationalTerminal
6.1TheProjectwillincludefivenewinternationalgates.SouthwestwillhavetherighttousefourofthefivenewinternationalgatesonapreferentialbasissolongasSouthwestconductsanaverageofatleastfouroperationsperdayoneachgate.An"operation"isdefinedasacombinationofonearrivalandonedepartureataninternationalgate.Withregardtothesefourgates,theCitymayallowotherinternationalaircarrierstousethesegatesatsuchtimeasagivengateisnotrequiredforSouthwest'soperationsinaccordancewithathirtydayadvancewrittenscheduledeliveredbySouthwesttotheDirectorofHAS.Anoperationusinganaircraftwithfewerthanonehundred(100)seatswillbecountedasone-halfanoperation.6.2TheFISfacilityandoneofthefivenewinternationalgatesintheProjectshallbecommonusefacilities.3
HobbyInternationalProjectMOAMay23,2012

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