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CONCURRENT RESOLUTION
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WHEREAS, Sumitomo Mitsui Banking Corporation, as collateral |
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agent for certain secured lenders and other entities, some of which |
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are headquartered or incorporated in Texas, alleges that: |
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(1) Papalote Creek Wind Farm II, LLC, built, owns, and |
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operates a wind farm that generates electricity in San Patricio |
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County, Texas, on land leased from many San Patricio County |
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landowners; |
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(2) before Papalote Creek Wind Farm II, LLC, |
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constructed the San Patricio wind farm, Papalote Creek Wind Farm |
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II, LLC, and the Lower Colorado River Authority, a conservation and |
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reclamation district created by Chapter 7 (S.B. 2), Acts of the 43rd |
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Legislature, 4th Called Session, 1934, now codified as Chapter |
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8503, Special District Local Laws Code, executed a power purchase |
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agreement, under which Papalote Creek Wind Farm II, LLC, agreed to |
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sell and the authority agreed to take and pay for all of the San |
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Patricio wind farm's power generation; |
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(3) under the power purchase agreement's terms: |
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(A) the Lower Colorado River Authority promised |
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to purchase at a set price all of the wind-generated power from the |
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San Patricio wind farm during an 18 year term in accordance with the |
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power purchase agreement; and |
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(B) the Lower Colorado River Authority is |
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required to pay Papalote Creek Wind Farm II, LLC, damages if the |
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authority fails to meet the authority's purchasing obligations |
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under the power purchase agreement; |
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(4) the Lower Colorado River Authority's promises to |
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buy electricity or pay damages were crucial to the San Patricio wind |
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farm's viability, and Papalote Creek Wind Farm II, LLC, built the |
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San Patricio wind farm in reliance on those promises; |
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(5) in 2013, Papalote Creek Wind Farm II, LLC, sought |
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financing from secured lenders and other entities for which |
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Sumitomo Mitsui Banking Corporation serves as collateral and |
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administrative agent; |
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(6) the Lower Colorado River Authority's long-term |
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power purchase agreement commitments to Papalote Creek Wind Farm |
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II, LLC, were important to the financing and payment of the |
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obligations of Papalote Creek Wind Farm II, LLC, to Sumitomo Mitsui |
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Banking Corporation and the other secured lenders and required |
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that: |
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(A) Papalote Creek Wind Farm II, LLC, assign its |
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rights under the power purchase agreement to Sumitomo Mitsui |
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Banking Corporation as collateral for the financing; and |
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(B) the Lower Colorado River Authority make |
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related agreements to ensure the authority's continued performance |
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under the power purchase agreement in the event of the occurrence |
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and continuance of an event of default under the financing; |
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(7) Papalote Creek Wind Farm II, LLC, Sumitomo Mitsui |
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Banking Corporation, and the Lower Colorado River Authority |
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executed the consent to assignment of the rights under the power |
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purchase agreement, and the authority's obligations under the power |
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purchase agreement were crucial to Sumitomo Mitsui Banking |
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Corporation's financing of Papalote Creek Wind Farm II, LLC; |
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(8) the consent to assignment of power purchase |
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agreement grants Sumitomo Mitsui Banking Corporation the right to |
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compel the Lower Colorado River Authority to specifically perform |
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its obligations under the power purchase agreement and prohibits |
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the authority from modifying the power purchase agreement without |
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Sumitomo Mitsui Banking Corporation's prior written consent; |
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(9) the Lower Colorado River Authority has breached |
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the consent to assignment of power purchase agreement by: |
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(A) modifying the power purchase agreement |
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without Sumitomo Mitsui Banking Corporation's prior written |
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consent through a separate arbitration to which Sumitomo Mitsui |
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Banking Corporation was not a party; and |
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(B) ceasing performance under the power purchase |
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agreement, in violation of the consent to assignment provision that |
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the Lower Colorado River Authority must continue to specifically |
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perform its obligations under the power purchase agreement when |
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directed to do so by Sumitomo Mitsui Banking Corporation; |
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(10) the consent to assignment of power purchase |
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agreement grants Sumitomo Mitsui Banking Corporation the right to |
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compel the Lower Colorado River Authority to specifically perform |
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the authority's obligations under the power purchase agreement, and |
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provides that if the corporation notifies the authority in writing |
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that an event of default has occurred and is continuing, and |
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requests that the authority continue performance under the power |
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purchase agreement, the authority must perform under the power |
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purchase agreement in accordance with the terms of that agreement; |
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(11) Sumitomo Mitsui Banking Corporation has: |
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(A) notified the Lower Colorado River Authority |
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in writing that an event of default has occurred and is continuing; |
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and |
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(B) requested continued performance of the power |
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purchase agreement by the Lower Colorado River Authority; |
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(12) Section 20 of the consent to assignment of power |
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purchase agreement further provides: "This Consent does not confer |
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any additional rights or obligations from the Consenting Party to |
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the Assignor or the Assignee other than those contained in this |
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Consent. THE PARTIES AGREE TO SEEK SPECIFIC PERFORMANCE AS THE SOLE |
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AND EXCLUSIVE REMEDY FOR ANY AND ALL CLAIMS ARISING FROM THIS |
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CONSENT AGREEMENT. THE PARTIES' REMEDIES UNDER THIS CONSENT ARE |
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LIMITED TO SPECIFIC PERFORMANCE ONLY AND THE PARTIES AGREE THAT |
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THEY WILL NOT SEEK DAMAGES OR ANY OTHER REMEDIES AT EQUITY OR LAW."; |
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(13) the purpose of the consent to assignment of power |
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purchase agreement entered into by the Lower Colorado River |
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Authority was to facilitate the financing arrangements of Papalote |
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Creek Wind Farm II, LLC, by further guaranteeing that the authority |
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would continue to buy power throughout the term of the power |
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purchase agreement; |
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(14) Sumitomo Mitsui Banking Corporation and the |
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secured lenders relied on the Lower Colorado River Authority's |
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agreements and obligations as set forth in the consent to |
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assignment of power purchase agreement in connection with the |
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financing, including the authority's consent and agreement to the |
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bringing of a specific performance action against the authority |
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with respect to the enforcement of the rights of Sumitomo Mitsui |
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Banking Corporation and the secured lenders under the consent to |
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assignment of power purchase agreement; |
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(15) the Lower Colorado River Authority has asserted |
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that it is immune from suit for breach of the consent to assignment |
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of power purchase agreement; |
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(16) the Lower Colorado River Authority's position is |
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legally erroneous under Texas law; |
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(17) Sumitomo Mitsui Banking Corporation seeks to |
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enforce the rights granted to it under the consent to assignment of |
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power purchase agreement; |
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(18) Sumitomo Mitsui Banking Corporation does not seek |
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authorization or permission to join any other agency or institution |
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of the State of Texas in any other lawsuit; and |
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(19) Sumitomo Mitsui Banking Corporation is not |
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seeking the recovery of monetary damages from the State of Texas, |
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but only the ability to fully litigate and obtain relief against the |
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Lower Colorado River Authority; now, therefore, be it |
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RESOLVED by the Legislature of the State of Texas, That |
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Sumitomo Mitsui Banking Corporation, as collateral agent for |
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certain secured lenders, is granted permission to sue the Lower |
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Colorado River Authority subject to Chapter 107, Civil Practice and |
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Remedies Code; and, be it further |
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RESOLVED, That the suit authorized by this resolution may be |
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brought in San Patricio or Travis County; and, be it further |
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RESOLVED, That the attorney general, the general manager of |
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the Lower Colorado River Authority, and the presiding officer of |
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the board of directors of the Lower Colorado River Authority be |
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served process as provided by Section 107.002(a)(3), Civil Practice |
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and Remedies Code. |