Consider and take action on Amendment No. 2 to the Agreement regarding the Option to Purchase treated wastewater effluent between the City of Texas City and Valero Refining-Texas, L.P. to extend the term of the Agreement to February 20, 2026.

On June 8, 2020, the City of Texas entered into an agreement with Valero Refining - Texas, L.P. which granted Valero a five (5) year non-exclusive option to purchase treated wastewater effluent for various approved uses as specified in 30 TAC Chapter 210 such as cooling tower make-up water.  Valero exercised the option by notice provided on August 29, 2024, and the parties have been working diligently to negotiate terms and draft a long-term agreement for the purchase of treated wastewater effluent and for the lease of property necessary to construct facilities to deliver the treated wastewater to the Valero refinery in Texas City. The option agreement expired by its terms on June 8, 2025, and was extended by Amendment to December 31, 2025.  The parties have made significant progress in negotiation of the terms for the long term agreement and in the process of leasing the property needed for the project.  The parties need additional time to complete the drafting and approval of the agreement and to complete the process for the leasing of the necessary property.  An extension of the option agreement until February 20, 2026, is requested.  

The City Engineer recommends approval of Amendment No. 2 to the existing Agreement for the Option to Purchase treated wastewater effluent between the City of Texas City and Valero Refining — Texas, L.P to extend the term of the existing option agreement to February 20, 2026, to allow the parties more time to complete the negotiation of terms and process for the long term leasing of property necessary to complete the project.