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ART. 5. Whereas, the Secretary has determined, upon engineering and economic considerations, that it is advisable to provide for the construction of such diversion dam and main canal and appurtenant structures, and has determined that the revenues provided for by this contract are adequate in his judgment to insure payment of all expenses of construction, operation, and maintenance of the said diversion dam, main canal, and appurtenant structures in the manner provided in the reclamation law;

ART. 6. Now therefore, in consideration of the mutual covenants herein contained, the parties hereto agree as follows, to wit:

CONSTRUCTION BY UNITED STATES

Art. 7. The United States will construct the Imperial Dam in the main stream of the Colorado River at the approximate location indicated on the map marked Exhibit A attached hereto and by this reference made a part hereof, and will also construct the All-American Canal and appurtenant structures to the Imperial and Coachella Valleys, the approximate location of said canal to be as shown on the aforesaid Exhibit A. Said canal shall be constructed to a designed capacity of fifteen thousand (15,000) cubic feet of water per second from and including the diversion and desilting works at said dam to Syphon Drop; thirteen thousand (13,000) cubic feet of water per second from Syphon Drop to Pilot Knob, and ten thousand (10,000) cubic feet of water per second westerly from Pilot Knob to Engineer Station nineteen hundred and seven as said Engineer Station is indicated on said Exhibit A. Other portions of said canal shall be constructed with such capacities as the Secretary may conclusively determine to be necessary or advisable upon engineering or economic considerations to accomplish the ends contemplated by this contract; provided, however, that changes in capacities, locations, lengths, and alignments may be made during the progress of the work as may, in the opinion of the Secretary, whose opinion shall be final and binding upon the parties hereto, be expedient, economical, necessary, or advisable, except the capacities above indicated from and including the diversion and desilting works at Imperial Dam to Engineer Station nineteen hundred and seven as hereinabove in this article referred to, which capacities may be changed only by mutual agreement between the Secretary and the district. The ultimate cost to the district of the aforesaid works shall in no event exceed the aggregate sum of thirty-eight million five hundred thousand dollars ($38,500,000). Such cost shall include all expenses of whatsoever kind heretofore or hereafter incurred by the United States from the reclamation fund or the Colorado River Dam fund in connection with, growing out of, or resulting from the construction of said diversion dam, main canal, and appurtenant structures, including but not limited to the cost of labor, materials, equipment, engineering, legal work, superintendence, administration, overhead, any and all costs arising from operation and maintenance of said dam, main canal, and appurtenant structures prior to the time that said costs are assumed by the district, damage of all kinds and character and rights of way as hereinafter provided. The district hereby agrees to repay to the United States expenditures incurred on account of any and all damages due to the existence, operation, or maintenance of the diversion dam and main canal, the incurrence of which increases expenditures by the United States beyond said sum of $38,500,000. The United States will invoke all legal and valid reservations of rights of way under acts of Congress, or otherwise reserved or held by it, without cost to the district, except that the United States reserves the right where rights of way are thus acquired to reimburse the owners of such lands for the value of improvements which may be destroyed, and the district agrees that the United States may include such disbursements in the cost of the work to be performed hereunder. If rights of way are required over an existing project of the Bureau of Reclamation, such sum or sums as may be necessary to reimburse the United States on account of the construction charges allocated to irrigable areas absorbed in such rights of way shall also be considered as a part of and be included with other costs of the work to be performed hereunder. The district agrees to convey to the United States without cost, unencumbered fee simple title to any and all lands now owned by it which, in the opinion of the Secretary, may be required for right of way purposes for the aforesaid diversion dam, main canal, and appurtenant structures. Where rights of

Where rights of way within the State of California are required for the construction of works herein provided for, and such rights of way are not reserved to the United States under acts of Congress, or otherwise, or the lands over which such rights of way are required are not then owned by the district, the district agrees that it will, upon request of the Secretary, acquire title to such lands, and in turn convey unencumbered fee simple title thereto to the United States at the actual cost thereof to the district, subject to the approval of such cost by the Secretary.

ASSUMPTION OF OPERATION AND MAINTENANCE BY DISTRICT

ART. 8. Upon sixty (60) days' written notice from the Secretary of the completion of construction of the aforesaid diversion dam, main canal, and appurtenant structures, or of any major unit thereof useful to the district as determined by the Secretary, whose determination thereof shall be final and binding upon the parties hereto, the district shall assume the care, operation, and maintenance of said diversion dam, main canal, and appurtenant structures, or major units thereof, including Laguna Dam, and thereafter the district shall at its own cost and without expense to the United States care for, operate, and maintain the same in such manner that such works shall remain in as good and efficient condition and of equal capacity for the diversion, transportation, and distribution of water as when received from the United States, reasonable wear and damage by the elements excepted. Operation and maintenance of Imperial Dam by the district is a part of the obligation undertaken under this contract by the district for the transportation and delivery of water to public and Indian lands of the United States, and shall not interfere with the control of such dam by the United States. The United States may from time to time in the discretion of the Secretary, resume operation and maintenance of said dam upon not less than 60 days' written notice and require reassumption thereof by the district on like notice. During such times, after completion, as the dam is operated and maintained by the United States, the district shall on March 1 of each year advance to the United States the estimated cost of operation and maintenance for the following twelve months, upon estimates furnished therefor on or before September 1 next preceding. After the care, operation, and maintenance of the aforesaid works have been assumed by the district, the district shall save the United States, its officers, agents, and employees harmless as to any and all injury and damage to persons and property which may arise out of the care, operation, and maintenance thereof. In the event the United States fails to complete the works herein contemplated and the district fails to elect to make use of the works theretofore partially or wholly constructed, the district shall be fully relieved of any and all responsibility for any further operation and maintenance of the works theretofore taken over by the district for that purpose and thereupon the district shall no longer be responsible for said maintenance or operation or damage to person or property which may arise therefrom.

KEEPING DIVERSION DAM, MAIN CANAL, AND APPURTENANT

STRUCTURES IN REPAIR

ART. 9. Except in case of emergency no substantial change in any of the works to be constructed by the United States and transferred to the district under the provisions hereof shall be made by the district without first having had and obtained the written consent of the Secretary and the Secretary's opinion as to whether any change in any such works is or is not substantial shall be conclusive and binding upon the parties hereto. The district shall promptly make any and all repairs to and replacements of all works constructed hereunder or transferred to it under the terms and conditions hereof, which in the opinion of the Secretary are deemed necessary for the proper operation and maintenance of such works. In case of neglect or failure of the district to make such repairs, the United States may, at its option after reasonable notice to the district, cause such repairs to be made and charge the actual cost thereof plus fifteen

per centum (15%) to cover overhead and general expense to the district. On or before September 1 of each calendar year the United States shall give written notice to the district of the amount expended by the United States for repairs under this article during the twelve-month period immediately preceding; Such cost plus overhead and general expense as stated above shall be repaid by the district on March 1 immediately succeeding.

AGREEMENT BY DISTRICT TO PAY FOR WORKS CONSTRUCTED

BY THE UNITED STATES

ART. 10. (a) The district agrees to pay the United States the actual cost, not exceeding thirty-eight million five hundred thousand dollars ($38,500,000), incurred by the United States on account of the aforesaid works, subject, however, to the provisions of article seven (7) hereof; provided, that should Congress fail to make necessary appropriations to complete the work herein provided for, then the Secretary may, at such reasonable time as he may consider advisable, after Congress shall have failed for five consecutive years to make the necessary appropriations which shall have been annually requested by the Secretary, give the district notice of the termination of work by the United States and furnish a statement of the amount actually expended by the United States thereon. Upon the receipt of such notice by the district the district shall be given two years from and after such receipt of notice to elect whether it will utilize said works theretofore constructed, or some particular part thereof. Such election on the part of the district shall be expressed by resolution of the board of directors submitted to the electorate of the district for approval or rejection in the manner provided by law for submission of contracts with the United States. If the district elects not to utilize, or fails within said two-year period to elect to utilize said works or some portion thereof, then the district shall have no further rights therein and no obligations therefor. If the district elects to utilize said works or a portion thereof, then the reasonable value to the district of the works so utilized not exceeding the actual cost thereof to the United States shall be paid by the district under the terms of this contract; the first payment to be due and payable on the first day of March following the first day of September next succeeding the final determination of the reasonable value to the district of such works, in case no further work is done by the district. Should the district elect to complete the work contemplated by this contract, or some portion thereof, the first payment shall be due and payable on the first day of March following the first day of September next succeeding the date of final completion of the work by the district as determined by the Secretary. In determining the value of such works to the district there shall be taken into account, among other things, the method of financing required and cost of money, so that in no event shall all of the works contemplated by this contract cost the district more than they would have cost the district had they all been constructed by the United States under the terms of this contract. In the event of failure of the parties to agree as to the reasonable value to the district of the works which the district elects to use, the same shall be determined as provided in article twenty-seven (27) hereof.

(6) The district as a whole is obligated to pay to the United States the full amount herein agreed upon regardless of the default or failure of any tract in the district, or of any landowner in the district, in the payment of the assessments levied by the district against such tract or landowner, and the district shall, when necessary, levy and collect appropriate assessments to make up for the default or delinquency of any tract of land or of any landowner in the payment of assessments, so that in any event, and regardless of any defaults or delinquencies in the payment of any assessment or assessments, the amounts due or to become due the United States shall be paid to the United States by the district when due.

(c) The district shall be divided into units by the board of directors of the district. Said units shall be named, commencing with Imperial Unit, which unit shall comprise the lands of the district as of July 1, 1931. Each of the other units shall be as determined by the board of directors of the district and shall be described by legal description of the lands embraced therein or by designation of exterior boundaries or otherwise suitable for identification. Additional lands may be added to any unit herein or hereafter designated.

(d) The lands within each unit as hereinabove provided for will be benefited by the works to be constructed under this contract in the proportion that the area within such unit bears to the total area of the district and the costs of the said works, construction, and otherwise, shall be apportioned to and paid by the lands within each unit in that proportion. In levying assessments or other charges to meet the cost of the said works, the board of directors of the district shall take into 150912—33

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consideration payments to be made under this contract, with proper allowance for existing and anticipated delinquencies and redemptions, in order to provide sufficient funds to meet such payments as same become due and said board shall also take into account all sums expended or to be expended under the contract of October 23, 1918, for the right to connect with the Laguna Dam, the cost of all surveys and investigations and other expenditures properly chargeable as a part of the cost of the said works but which are not included as a part of the construction cost thereof reimbursable to the United States under this contract. While the cost of the said works and other expenditures above mentioned shall be apportioned to the various units according to their resepctive areas, it is understood that the assessments or other charges to be imposed upon the lands within each respective unit shall be on an ad valorem or other basis as now or may hereafter be provided by law for assessment or imposition of other charges upon lands within irrigation districts. Rates of assessment or schedule in the various units from year to year or from time to time may be different or unequal as between the various units. If the amount collected from the lands in any unit in any year shall be less than the amount apportioned to such unit for that year for such purpose, the deficit shall nevertheless be charged to that unit and any fund or funds of the district from which money may be taken to make up such deficit in order to provide for the payment in full of the obligations of the district, shall be entitled to reimbursement for such money from subsequent collections of unpaid assessments or charges in said unit or from the amounts received for the redemption of lands sold for delinquent assessments or charges, or from subsequent or additional levies made on the lands within that unit to provide for such reimbursement.

(e) In the event lands now or hereafter within Coachella Valley County Water District, a county water district organized and existing under the laws of the State of California, are included within Imperial Irrigation District, the said Coachella Valley County Water District shall have the privilege at its option, if, as, and when authorized to do so by law, to pay to Imperial Irrigation District the total amount of any annual and/or special assessments levied by the last-named district upon said lands or any installment of such assessments or any of the several individual assessments or installments thereof, in any case as the same become due and payable. The regular and lawful proceedings, rights, and remedies of the last-named district shall be in no manner impaired or affected by the provisions of this subarticle. The agreement in this subarticle contained is made expressly for the benefit of said Coachella Valley County Water District.

(f) If for any reason only a part of the works herein contemplated is constructed either by the United States or by the district, then the board of directors of the district shall, after public hearing, determine whether or not all of the lands in the district are benefited by the works constructed. If the board shall find and declare that any certain lands within the district are not benefited by such construction, then no assessments shall thereafter be levied upon such lands for the purpose of meeting the obligations under this contract; and, for the purpose of this subarticle, no land shall be regarded as benefited by the construction of such works until the works contemplated by this contract, as indicated on said Exhibit A, from which water would reasonably be obtained for such lands shall have been constructed.

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