By: Keffer H.B. No. 3031

A BILL TO BE ENTITLED

AN ACT

relating to the sale by the Brazos River Authority of certain residential and commercial leased lots and other real property in the immediate vicinity of Possum Kingdom Lake.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 8502, Special District Local Laws Code, is amended by adding Section 8502.020 to read as follows:

Sec. 8502.020. SALE OF AUTHORITY PROPERTY. (a) Definitions. In this section:

(1) "Authority Land" means the FERC Project Area and all other real property owned by the Authority at the Lake as of the date before Closing, save and except for the Leased Tract.

(2) "Buffer Zone" means that twenty-five or fifty foot strip of land measured landward horizontally from the 1000' contour line that is included in the FERC Project Area as defined in the FERC License.

(3) "Close" or "Closing" means the date on which the Authority transfers its interest in the Leased Tract, in whole or in part, to a Purchaser. There may be multiple closing dates if the Leased Tract is sold in portions.

(4) "Commercial Leased Land" means that portion of the Leased Tract that is located wholly outside the FERC Project Area and which is leased for commercial purposes as of the date the Restrictions are placed of record.

(5) "Contract" means the Authority entering into a purchase and sale agreement with a Purchaser for the transfer of the Authority's interest in the Leased Tract, in whole or in part.

(6) "Consumer Price Index" means the consumer price index for residential and commercial real property, as published by the Bureau of Labor Statistics of the United States Department of Labor.

(7) "Driveways" means those certain private gravel and/or paved driveways which connect a Road or other street or thoroughfare to an individual Leased Tract or any improvements thereon; Driveways also includes those shared or common Driveways which serve more than one Leaseholder or individual Leased Tract.

(8) "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Toxic Substances Control Act, the Clean Water Act, the Resource Conservation and Recovery Act and any other similar federal, state or local law, rule or regulation respecting the environment or Hazardous Materials, together with all rules and regulations promulgated thereunder and all present or future amendments thereto.

(9) "FERC License" means the order of the Federal Energy Regulatory Commission issuing a license to the Authority for project number 1490-003-Texas on September 8, 1989, as such license has been renewed, extended, or amended and may be further renewed, extended, or amended at any time and from time to time, and also including the Amendment to the original FERC License which amendment was issued on May 15, 1980, to the extent incorporated or referenced in the FERC License.

(10) "FERC Project Area" means that portion of Authority property which is subject to the FERC License, as identified and defined in the FERC License, as may be amended at any time and from time to time, and which FERC Project Area may move or change over time due to natural forces.

(11) "Ground Lease" means each of those certain residential and/or commercial ground leases between the Authority and a Leaseholder, and the respective heirs, successors, and assigns.

(12) "Hazardous Materials" means underground storage tanks, petroleum and petroleum products, asbestos, PCB's, urea-formaldehyde and any hazardous or toxic substances, pollutants, contaminants, wastes or materials as defined under any Environmental Laws.

(13) "Lake" means Possum Kingdom Lake located in Young, Palo Pinto, Stephens, and Jack Counties. The boundary of the Lake is defined by the 1000' contour line, as that contour may meander and change over time with natural forces, including erosion and accretion. The "1000' contour line" means the line running along the periphery of the Lake if the surface of the Lake is at an elevation of 1000 feet above mean sea level, as measured from the top of the spillway crest gates of the Morris Sheppard Dam, as such line may move and shift from time to time due to natural forces.

(14) "Leaseholder" means a person or entity that has a residential lease or a commercial lease with the Authority, including the Leaseholder's heirs, successors, and assigns.

(15) "Leased Tract" or "Tract" means all or any portion of the Commercial Leased Land, the Residential Leased Land, and Undeveloped Strips, whether owned by the Authority, Purchaser, or Owner and whether or not subject to a lease, Ground Lease, or owned in fee simple.

(16) "Lienholder" means any mortgagee under a mortgage, or a trustee or beneficiary under a deed of trust, constituting a lien on any portion of the Leased Tract.

(17) "Owner" means the record holder of fee simple title to any portion of the Leased Tract sold pursuant to this section, including its heirs, personal representatives, successors, assigns. This term shall not include a Purchaser who acquires the Leased Tract from the Authority in accordance with Subsection (b).

(18) "Property" means the Leased Tract and the Authority Land.

(19) "Purchaser" means any person or entity, including its successor's in interest, heirs, or assigns, that acquires the Leased Tract (or any portion thereof) from the Authority in accordance with Subsection (b) of this section. This term shall not include those Leaseholders that acquire individual Leased Tracts from the Purchaser in accordance with Subsection (b) of this section.

(20) "Ranch" means that certain subdivision of record in Palo Pinto County, Texas according to the map or plat of record in Volume 7, Page 71, Plat Records of Palo Pinto County, Texas, as it may be amended or modified from time to time, which subdivision includes a portion of the Leased Tract and a portion of the Authority Land.

(21) "Ranch Agreement" means that certain agreement by and among the Authority, The Ranch on Possum Kingdom, L.P., and Hill Country Harbor Village, L.P. effective as of August 1, 1997 and dated December 12, 1997.

(22) "Ranch Declarations" means that certain Declaration of Covenants, Conditions and Restrictions for The Ranch on Possum Kingdom Palo Pinto County, Texas, dated December 8, 1997, as recorded in Volume 944, Page 403 of the Official Public Records of Palo Pinto County, Texas.

(23) "Residential Leased Land" means that portion of the Leased Tract located outside the FERC Project Area which is leased for single-family residential purposes only as of the date the Restrictions are placed of record. This term does not include land which is subject to a commercial lease, where such lessee is authorized to sublease for residential purposes.

(24) "Restrictions" means the easements, covenants, restrictions, liens, encumbrances, and requirements contained in the Declaration of Restrictive Covenants, Easements, and Conditions to be recorded by the Authority as set forth in subsection (d).

(25) "Roads" means those paved or gravel streets, roads, and thoroughfares owned and maintained by the Authority which are located in Stephens, Jack, Young, and Palo Pinto County and which provide access, ingress, and egress to and from the Leased Tract, the Lake, and/or Authority Land; provided however, that the definition of Roads, as used herein, shall not include (a) Driveways, (b) paved or gravel roads located wholly within Authority public use areas, (c) paved or gravel roads located within gated Authority operations areas, and (d) paved or gravel roads located wholly within an individual tract which is part of the Commercial Leased Land, which roads only serve that individual commercial Tract.

(26) "Shoreline Management Plan" means that certain Possum Kingdom Shoreline Management Plan and Customer Guide, adopted May 22, 2006 and amended July 31, 2006, and as may be revised and/or further amended by the Authority at any time and from time to time.

(27) "Undeveloped Strips" means small strips of unleased land located between individual lots within the Leased Tract and small parcels of land between the Leased Tract and Roads which the Authority determines in its sole discretion to include in any sale of all or any portion of the Leased Tract.

(b) Sale to Purchaser. Prior to January 1, 2011, the Authority may sell the Leased Tract in whole or in part, to a Purchaser in accordance with applicable law, this subsection and subsections (d), (e), (f), (g), (h), and (i) for an amount to exceed 50% of the land only assessed value of the Leased Tract without exemptions (as determined by the county appraisal district) for the year 2008. Any sale of the Leased Tract to a Purchaser under this subsection shall be subject to the following:

(1) Each Leaseholder shall have the opportunity to buy such Leaseholder's individual Leased Tract from the Purchaser or to continue leasing the applicable Leased Tract from the Purchaser in accordance with the following purchase or lease options. The Purchaser shall:

(i) Permit the Leaseholder to purchase such Leaseholder's individual Leased Tract in cash or through lender financing for 65% of land only assessed value without any exemptions (as determined by county appraisal district) for the year 2008, such option to be available at Closing as set forth in subsection (b)(2) and for a period of at least one year from Closing.

(ii) Permit the Leaseholder to purchase for the percent of assessed value only as set forth in (i) above such Leaseholder's individual Leased Tract via seller financing, with a down payment of ten percent (10%) and an interest rate of six percent (6%), with a 30-year amortization, such option to be available at Closing as set forth in subsection (b)(2) and for a period of at least one year from Closing. The leaseholder shall not be charged any origination fees or points by purchaser as a part of the closing costs involved in the seller financing option.

(iii) Offer a new 99-year lease at a rental rate of 6% of the land only assessed value without any exemptions (as determined by county appraisal district) for the year 2008, with annual Consumer Price Index increases or decreases, such option to be available for a period of at least one year from Closing. The 99-year lease will include an option to purchase the applicable Leased Tract at the land only assessed value without any exemptions (as determined by county appraisal district) at the time of purchase (but not less than the 2008 land only assessed value without any exemptions).

(iv) Offer a new 20-year lease with a rental rate as determined by the current Authority lease rate methodology or other lease rate structure as set forth in the Ground Lease as applicable (and including increases and adjustments to such rates) with annual Consumer Price Index increases or decreases, to Leaseholders who are over the age of 65 and who receive an ad valorem tax exemption under Section 11.13, Tax Code, for a structure on the Leaseholder's individual Leased Tract, such option to be available for a period of at least one year from the date of Closing. The 20-year lease will include an option to purchase the applicable Leased Tract at the land only assessed value without any exemptions (as determined by county appraisal district) at the time of purchase (but not less than the 2008 land only assessed value without any exemptions).

(v) Ratify the existing Ground Lease of any Leaseholder who does not timely exercise one of the foregoing options, such ratification to include:

(A) adoption of the current Authority lease rate methodology or other lease rate structure as set forth in the Ground Lease, as applicable (and including increases and adjustments to such rates) for a period of 8 years from Closing,

(B) an option permitting the Leaseholder to purchase such Leaseholder's individual Leased Tract for the land only assessed value without any exemptions (as determined by county appraisal district) at the time of purchase, or for the year 2008, whichever is greater, for a period of 8 years from Closing, and

(C) an agreement to extend Ground Leases as necessary to allow for this full 8-year purchase option period. Nothing in this subsection shall preclude the Purchaser from offering additional purchase or lease options to the Leaseholders, provided any additional options are made available to all Leaseholders on an equal basis.

(2) A Leaseholder who desires to buy such Leaseholder's individual Leased Tract from the Purchaser pursuant to the option set forth in either Subsection (b)(1)(i) or (ii) concurrently with the Purchaser's Closing must exercise the desired option as follows:

(i) notify the Authority and Purchaser in writing within 90 days after the effective date of the Contract between the Authority and Purchaser of Leaseholder's intent to purchase the applicable Leased Tract;

(ii) Leaseholder and Purchaser will enter into a purchase and sale agreement in substantially the form as agreed to between the Authority and Purchaser, which form will be attached to the Contract, and which individual purchase and sale agreements will be ratified by Purchaser at the Closing; the purchase and sale agreement shall contain, at a minimum, the following terms and conditions:

(A) the purchase price for the individual Leased Tract in accordance with the applicable purchase option;

(B) earnest money in the amount of $1,000 to be delivered to the title company agreed to by Leaseholder and Purchaser and approved by the Authority along with the executed purchase and sale agreement;

(C) the Leaseholder's obligation to provide a survey as set forth in this subsection and a title commitment from the agreed upon title company;

(D) a 60-day period commencing on the date of the purchase and sale agreement for the Leaseholder to obtain financing (if exercising its option pursuant to subsection (b)(1)(i) above);

(E) the Leaseholder must notify Purchaser of any objections to any items on the title commitment and/or survey within fifteen (15) days after receipt of same, but in no event less than 45 days prior to the anticipated date of Closing, provided however, Authority shall cure any such items or to incur any expenses in curing any items;

(F) Leaseholder is purchasing the applicable individual Leased Tract in its "as-is" condition and Purchaser shall have no obligation to make any improvements or modifications thereto, nor will Purchaser make any representations or warranties as to the condition or use of the applicable Leased Tract

(G) Purchaser shall not be responsible for any broker fees or commissions due to any broker or agent engaged or claiming to have been engaged by Leaseholder for the purchase and sale of the applicable Leased Tract;

(H) Purchaser shall be responsible for costs related to the release of any existing liens placed on the applicable portion of the Leased Tract by Purchaser, including prepayment penalties and recording fees, release of Purchaser's loan liability to the extent applicable to the individual Leased Tract; tax statements or certificates; preparation of the deed; and one-half of any escrow fee;

(I) Leaseholder shall be responsible for any costs associated with a loan or financing for the applicable portion of the Leased Tract, including, without limitation, loan origination, discount, buy-down, and commitment fees, appraisal fees, loan application fees, credit reports, preparation of loan documents, loan-related inspection fees, and interest on the notes from the date of disbursement to date of first monthly payment; the cost of the survey; recording fees; copies of easements and restrictions; mortgagee title policy with endorsements required by lender, if any; one-half of any escrow fee; any pre-paid items, including without limitation, insurance premiums and reserves and taxes; underwriting fee; any title policy (including endorsements) obtained by Leaseholder;

(J) Taxes will be pro-rated as of the date of Closing; if taxes are not paid as of the date of Closing, then Leaseholder shall be responsible for the payment of taxes; and

(K) the agreement between Leaseholder and Purchaser shall be contingent on Closing occurring within the timeframes set forth in this subsection.

(iii) Leaseholder shall deliver to Authority and Purchaser no less than forty-five days prior to Closing, at the Leaseholder's expense, an accurate survey of the individual Leased Tract (including any Undeveloped Strips being included in such Leased Tract) which survey is acceptable to the Authority and Purchaser. To be acceptable to the Authority and Purchaser, the survey must:

(A) be acceptable to the title company selected by the Purchaser and Leaseholder and approved by the Authority for purposes of issuing any policy of title insurance on the applicable portion of the Leased Tract;

(B) be prepared by a licensed state land surveyor or a registered professional land surveyor acceptable to the Authority;

(C) include the boundary of the Leaseholder's Leased Tract and any Undeveloped Strips being conveyed, which boundaries must be consistent with the master survey prepared on behalf of the Authority in conjunction with the sale of the Leased Tract to the Purchaser;

(D) include all improvements on the Leased Tract and indicate any encroachments across the applicable boundary lines or into the FERC Project Area or Buffer Zone; Leaseholder must provide evidence that any such encroachments across boundary lines or into the FERC Project Area or Buffer Zone have been cured by the Leaseholder (either by removal of such encroachment or by written agreement between the affected parties permitting such encroachment to continue) prior to the survey being deemed acceptable; and

(E) be reviewed and approved by the Authority and Purchaser; the Authority, Purchaser, and their representatives or agents may perform an inspection of the applicable Leased Tract to verify the accuracy of the Survey and any encroachments thereon;

(iv) On or before Closing, the purchase and sale agreement between the Leaseholder and Purchaser and any earnest money which may be required pursuant to such agreement shall be timely delivered to a title company or escrow agent acceptable to the Authority and agreed to by Leaseholder and Purchaser in such agreement;

(v) on or before Closing, Purchaser and Leaseholder shall complete all documentation necessary to effectuate transfer of the applicable Leased Tract from the Purchaser to the Leaseholder and deliver such completed and executed documents to the applicable escrow agent; and

(vi) Promptly after Closing, the deed and any other applicable documents effectuating transfer of such Leased Tract to the Leaseholder shall be recorded in the county records where the Leased Tract is located promptly after such escrow agent receives written notice from the Authority or title company or escrow agent facilitating the Closing of the Leased Tract from the Authority to Purchaser that such Closing has been completed and the necessary documents have been recorded pursuant to such Closing. In no event shall the deed or any other documents transferring the applicable portion of the Leased Tract to the Leaseholder be recorded prior to Closing.

(3) Closing shall occur no later than December 31, 2010. The Authority shall post on its website no later than thirty days after entering into a Contract for sale with Purchaser the effective date of such Contract and the anticipated date of Closing, which date shall be at least six (6) months from the effective date of the Contract. Any changes to the anticipated date of Closing shall also be posted on the Authority's website. These dates shall be used to establish the time periods provided in Subsection (b)(2).

(c) Sale to Leaseholders. This subsection shall only apply to, and be effective for, those portions of the Leased Tract (if any) for which Closing has not occurred on or before December 31, 2010 pursuant to Subsection (b) above, in which case the effective date of this Subsection (c) shall be January 1, 2011. Upon the effective date of this subsection, the Authority shall suspend any applicable sale efforts under Subsection (b) for a period of two years beginning on the effective date of this subsection and initiate a tract by tract sale of the Leased Tract to the then-current Leaseholders as follows:

(1) For a period of two years beginning on the effective date of this subsection and in accordance with the procedures set forth in this subsection (c), and subject to subsections (d), (e), (f), (g), (h), and (i) the Authority shall provide Leaseholders the opportunity to purchase their individual Leased Tracts directly from the Authority. Leaseholders shall have until the expiration of such two year period to submit a completed application of intent to purchase their individual Leased Tracts as provided in Subsection (c)(4).

(2) The Authority shall determine if, and how, any Undeveloped Strips will be divided between adjacent Leaseholders and incorporated into any individual Leased Tract; provided, however, Leaseholders shall not be required to accept any such Undeveloped Strips.

(3) On or before the effective date of this subsection, the Authority shall make available to the Leaseholders a form for an application of intent to purchase the Leaseholder's individual Leased Tract. Such application shall be deemed a contract subject to the provisions set out herein. The application of intent shall provide the Leaseholder a 30-day feasibility period beginning on the date such application is submitted in which Leaseholder can determine the feasibility of purchasing the applicable individual Leased Tract, including the ability of such Leaseholder to obtain financing for such purchase.

(4) A Leaseholder who desires to purchase such Leaseholder's individual Leased Tract must submit a completed application to the Authority on or before December 31, 2012. An application will be deemed "complete" upon the following:

(i) Leaseholder delivers to the Authority an executed application of intent to purchase with all required information included in the application;

(ii) Leaseholder delivers an earnest money deposit, in good funds acceptable to the title company or escrow agent selected by the Authority, in the amount of $1,000 to such title company or escrow agent, which earnest money shall be nonrefundable after the expiration of the feasibility period except in the event closing does not occur due to the fault of the Authority;

(iii) any and all rent and other fees or amounts due to the Authority pursuant to such Leaseholder's Ground Lease have been paid and there are no amounts then outstanding which are past due;

(iv) Leaseholder has delivered to the Authority a survey which is acceptable to the Authority of the applicable Leased Tract (and any Undeveloped Strips being included in such Leased Tract). To be acceptable to the Authority, the survey must:

(A) be acceptable to the title company selected by the Authority for purposes of issuing any policy of title insurance on the applicable portion of the Leased Tract

(B) be prepared by a licensed state land surveyor or a registered professional land surveyor acceptable to the Authority;

(C) include the boundary of the Leaseholder's Leased Tract and any Undeveloped Strips being conveyed, which boundaries must be consistent with the master survey of the Leased Tract prepared on behalf of the Authority;

(D) include all improvements on the Leased Tract and indicate any encroachments across the applicable boundary lines or into the FERC Project Area or Buffer Zone; Leaseholder must provide evidence that any such encroachments across boundary lines or into the FERC Project Area or Buffer Zone have been cured by the Leaseholder (either by removal of such encroachment or by written agreement between the affected parties permitting such encroachment to continue) prior to the survey being deemed acceptable; and

(E) be reviewed and approved by the Authority; the Authority or its representatives or agents may perform an inspection of the Leased Tract to verify the accuracy of the Survey and any encroachments thereon.

(v) Leaseholder has delivered to the Authority a title commitment and, if requested by the Authority, any exception documents referenced therein, prepared by the applicable title company or escrow agent selected by the Authority; and

(vi) Leaseholder has delivered to the Authority written evidence from Leaseholder's lender or financial institution that Leaseholder has the financing or funds available, as applicable, to complete the purchase of Leaseholder's Leased Tract.

(5) Completed applications which are timely delivered will be accepted and processed by the Authority in the order in which they are received; except that the Authority shall give preference in processing applications to Leaseholders who receive an ad valorem tax exemption under Section 11.13, Tax Code, for a structure on the Leaseholders' Leased Tract.

(6) A Leased Tract sold under this subsection shall be sold for 65% of the land only assessed value without any exemptions, as determined by the county appraisal district, for the year in which the Leaseholder's application of intent to purchase is submitted to the Authority, or for the year 2008, whichever is greater.

(7) The Leaseholder purchasing such Leaseholder's Leased Tract is responsible for:

(i) timely paying all rent and other fees or amounts due to the Authority pursuant to such Leaseholder's Ground Lease through the date of closing on the Leaseholder's portion of the Leased Tract; and

(ii) obtaining and delivering to the Authority a survey of the applicable Leased Tract in accordance with Subsection (c)(4)(iv) above and curing any encroachments shown thereon, all at Leaseholder's expense; and

(iii) obtaining and delivering to the Authority, at such Leaseholder's expense, a title commitment in accordance with Subsection (c)(4)(v) above; the Authority shall cure any objections which Leaseholder may have to the exceptions, covenants, easements, reservations or any other items reflected on the title commitment; and

(iv) delivering to the applicable title company or escrow agent on or before closing on the Leaseholder's Leased Tract, in good funds, the purchase price and all reasonable, normal, customary and documented costs associated with the transfer of the individual Leased Tract to the Leaseholder including, without limitation, all escrow fees, recording fees, taxes on the land after the date of such closing, document preparation fees, the cost of any Title Policy (including any endorsements thereon) obtained by Leaseholder, and any costs associated with removing any liens on the applicable Leased Tract; and

(v) timely delivering to the escrow agent any notices, statements, affidavits or other documents required by the application, escrow agent, or at law to effectuate the transfer of the applicable Leased Tract to the Leaseholder.

(8) For those completed applications of intent to purchase timely delivered to the Authority under this subsection, the purchase must be completed no later than June 30, 2013. For any individual Leased Tracts for which closing has not occurred by such date, the application shall be deemed terminated. The Authority shall not accept any applications of intent to purchase after December 31, 2012; and any applications of intent to purchase which are delivered to the Authority prior to such date but which are not "complete" as of such date in accordance with Subsection (c)(4) above shall be rejected by the Authority. Leaseholders submitting an application of intent to purchase their individual Leased Tracts are responsible for ensuring that such application is deemed "complete" on or before December 31, 2012.

(9) Any Ground Lease which would otherwise expire shall be automatically extended as necessary for one year terms to permit such Leaseholder the full two year period to deliver such application of intent to purchase such Leaseholder's individual Leased Tract and to complete such transaction no later than June 30, 2013.

(10) The Owner of a Tract sold under this subsection shall pay the Authority any reasonable fees set by the Authority for any services the Owner accepts from the Authority. However, the Owner of a Tract is under no obligation to accept services from the Authority.

(11) Any Tract subject to the Ranch Agreement shall only be subject to sale under this subsection if the Authority is released from its obligations under the Ranch Agreement relating to such Tract.

(12) The following laws do not apply to sale of an individual Leased Tract under this subsection:

(i) Chapter 272, Local Government Code;

(ii) Section 49.226, Water Code; and

(iii) Section 8502.013, Special District Local Laws Code.

(13) A provision that applies to the Leaseholder of a Leased Tract under this section applies to any subsequent Owner of the Leased Tract.

(14) At closing on the individual Leased Tract, the Leaseholder shall pay any indebtedness secured by a lien on the Leaseholder's leasehold estate (including the Buffer Zone, whether or not included as part of the Leased Tract pursuant to subsection (e) below) or deliver the express written consent of the Lienholder on the leasehold estate in the Leased Tract permitting the Leaseholder to grant a purchase money lien on the fee simple estate in the Leased Tract.

(15) At the closing of the applicable Leased Tract, the Authority will deliver a special warranty deed.

(16) For any portion of the Leased Tract which has not been sold pursuant to subsection (c) on or before June 30, 2013, the Authority's Board of Directors shall sell any such remaining portion of the Leased Tract pursuant to terms and conditions determined by such Board of Directors.

(d) Restrictions on Leased Tract. The Leased Tract (or any portion thereof) sold in accordance with subsection (b) or (c) shall be subject to the following Restrictions, which shall be included, in substance, in a Declaration of Restrictive Covenants, Easements, and Conditions to be prepared by the Authority substantively in accordance with the following and recorded by the Authority, as declarant, in the applicable county records prior to any sale pursuant to subsection (b) or (c):

(1) Subject to subsection (d)(10) below, no Owner, Purchaser, or Leaseholder may forbid, restrict, or take any action which effectively forbids or restricts, the public from using the FERC Project Area and the adjacent areas of the Lake in accordance with the terms of the FERC License.

(2) Each Owner, Purchaser, and Leaseholder shall agree to not block, restrict, or otherwise prohibit access over, through or across any Road and further agrees that such Roads or portion thereof shall remain open for use by the Authority, other Owners or Purchasers, lessees of any portion of the Property (including Leaseholders) and the general public. Except for (i) those portions of the Property which are accessible by water only as of the effective date of the Restrictions, and/or (ii) restrictions of access existing as of the effective date of the Restrictions (e.g., access to and from public roads that requires traversing real property not owned by the Authority, Owners, or Purchasers hereunder), and/or (iii) the covenants and restrictions of the Ranch Declarations (to the extent applicable to the Roads) or other restrictive covenants existing prior to the date the Restrictions are recorded of record, no Owner, Purchaser, or Leaseholder shall be permitted to block, restrict, or otherwise prohibit access on, over, or across the Roads.

(3) The Driveways are not part of the Roads and shall be maintained by the Owner, Purchaser, or Leaseholder of the applicable Driveways. No Owner, Purchaser, or Leaseholder shall obstruct, prevent, or otherwise restrict access on, over or across any portion of a common Driveway by any such other Owner, Purchaser, or Leaseholder, or their guests or invitees, whose portion of the Property is served by such common Driveway. Owners, Purchasers, and/or Leaseholders whose portion of the Property is served by a common Driveway shall at all times have a non-exclusive right of ingress and egress over and across such common Driveway to access their portion of the Property.

(4) All grants and dedications of easements, rights-of-way, restrictions, and related rights affecting the Leased Tract, made prior to the Leased Tract becoming subject to the Restrictions which are of record, or visible or apparent, shall be incorporated into such Restrictions by reference and made a part of the Restrictions for all purposes as if fully set forth therein and shall be construed as being adopted in each and every contract, deed, or conveyance executed or to be executed by or on behalf of the Authority conveying any part of the Leased Tract. The foregoing adoption of such easements includes, without limitation, any and all written easements or agreements, whether or not recorded, between the Authority and any other party for the installation, maintenance, repair or replacement of utility lines located on, above, over, under, or beneath the Property.

(5) The Authority shall reserve for itself and its successors, assigns, and designees the non-exclusive right and easement, but not the obligation, to enter upon the Property, the Lake and other bodies of water, if any, located within the Property (a) to install, keep, maintain and replace pumps in order to obtain water for the irrigation of any portion of the Authority Land, (b) to construct, maintain, replace, and repair any wall, dam, or other structure retaining water therein, (c) to access, construct, maintain, replace, and repair any measurement stations, monuments, or other similar improvements, (d) to remove trash and other debris and (e) to fulfill the Authority's obligations as a river authority and any obligations set forth in the FERC License, state water rights, or other governmental regulations. The Authority and its designees shall have an access easement through, over and across any portion of the Leased Tract to the extent reasonably necessary to exercise the rights and responsibilities under this subsection (d)(5); provided however, that (i) the Authority shall provide written notice at least 48 hours in advance of such entry to the Purchaser or Owner of such portion of the Leased Tract (except in the event of an emergency in which case advance notice shall not be required, but the Authority shall provide such written notice as soon as practicable thereafter), (ii) the Authority shall promptly repair any damage to the portion of the Leased Tract caused by the Authority's entrance onto such Owner's or Purchaser's portion of the Leased Tract; and (iii) the Authority shall use reasonable efforts to avoid interfering with the Owner's or Purchaser's use of the portion of the Leased Tract.

(6) The Authority shall reserve for itself and its successors, assigns, and designees a perpetual right, power, privilege, and easement to occasionally overflow, flood, and submerge that portion of the Property located at or below the elevation contour of 1015' above mean sea level in connection with the Authority's operation and maintenance of the Lake. The Authority shall have no liability to any Owner, Purchaser, Leaseholder, or any other person for any damages, claims, costs, injuries, or liabilities to any person or the Property or any improvements thereon which are caused by or arise from any act or omission by the Authority in connection with the foregoing right and easement.

(7) Additional land may be included in the Property or Leased Tract at any time by the Authority, as long as the Authority owns any portion of the Property by recording an amendment to these Restrictions in each of the counties in which the Property is located. Upon such additions, the Restrictions shall apply to the added land and the rights, privileges, duties, and liabilities of the Owners or Purchasers subject to the Restrictions shall be the same with respect to the added land as with respect to the Property originally covered by the Restrictions. As additional lands are added hereto, the Authority shall, with respect to said land, record amendments which may incorporate the Restrictions therein by reference and which may supplement or modify the Restrictions with such additional covenants, restrictions and conditions which may be appropriate for those added lands.

(8) The Restrictions may not be modified in any respect whatsoever or terminated, in whole or in part, except with the consent of (i) the Owners or Purchasers of at least seventy-five percent (75%) of the individual lots which comprise the Residential Leased Land and Commercial Leased Land, and (ii) the Owners or Purchasers of at least seventy-five percent (75%) of the land area of the Authority Land; and (iii) the Authority, for so long as the Authority has any interest in the Property, whether as an Owner or holder of the FERC License or otherwise. Notwithstanding the foregoing, the Authority, without the joinder of any other party, shall have the absolute right to make minor changes or amendments to the Restrictions to correct or clarify errors, omissions, mistakes or ambiguities contained therein. No amendment shall be effective until such amendment has been recorded in the Official Public Records of each of the counties in which the Property is located.

(9) No improvements (except as specifically set forth in subsection (d)(11)) shall be constructed or located on the Leased Tract within twenty-five feet (25') landward measured horizontally from the 1000' contour line of the Lake, a meander line that changes over time due to natural forces, such as erosion and accretion; provided, however, this restriction shall not include improvements inside this setback that are existing at the time the Restrictions are filed which (i) have been approved in writing by the Authority, and (ii) if such improvements are located within the FERC Project Area, have been approved by the Federal Energy Regulatory Commission (and to the extent not already approved by the Federal Energy Regulatory Commission, the Authority intends to file an application to obtain permission for the existing encroachments into the FERC Project Area to remain in place). In addition, no improvements on the Leased Tract (or any portion thereof) shall be constructed or located within five feet (5') of any other boundary line (i.e., the side and back boundary lines), other than fences; provided, however, this restriction shall not include improvements located within this 5' setback that are existing at the time the Restrictions are filed and which have been approved in writing by the Authority.

(10) No Owner, Purchaser, or Leaseholder shall have any rights to construct any improvements or fencing which block or restrict access to the FERC Project Area, except with the written consent of the Authority, to be granted or withheld in its sole discretion, and except in compliance with the FERC License. This limitation does not apply to fences located within the Leased Tract and outside the FERC Project Area.

(11) Erosion control improvements (such as retaining walls, rip rap, etc.) and landscape planting may not be constructed or located within the FERC Project Area or at or below the 1000' contour line without the prior written approval of the Authority. Such improvements shall be subject to the terms and conditions set forth in the Restrictions, in the FERC License, in any other Federal Energy Regulatory Commission rules and regulations, and in the Authority's regulations, including without limitation, the Shoreline Management Plan.

(12) No Owner, Purchaser, or Leaseholder shall have the right to place, or permit to be placed, any advertisements, private notices, signs, or billboards on the Leased Tract except that temporary signage customarily found on residential property may be placed on the Residential Leased Land at the reasonable discretion of the Owner, Purchaser, and/or Leaseholder of that portion of the Residential Leased Land.

(13) No activities shall be conducted on the Leased Tract and no improvements constructed on the Leased Tract which are or might be unsafe or hazardous to any person or property.

(14) No Owner, Purchaser, Leaseholder, or occupant of any portion of the Leased Tract shall use or permit the use, handling, generation, storage, release, disposal or transportation of Hazardous Materials on, about or under the Leased Tract except for such quantities which are routinely utilized in connection with residential use (for all portions of the Leased Tract except the Commercial Leased Land) or for commercial uses which are in compliance with the Restrictions (for the Commercial Leased Land), and which are stored, used, and disposed of in compliance with all Environmental Laws. Each Owner, Purchaser, and Leaseholder shall indemnify, defend, protect and save the Authority, its successors and assigns, trustees, directors, employees and officers and each other Owner, Purchaser, and Leaseholder, harmless from and against, and shall reimburse such indemnified parties for, all liabilities, obligations, losses, claims, damages, fines, penalties, costs, charges, judgments and expenses, including, without limitation, reasonable attorneys' fees and expenses which may be imposed upon or incurred or paid by or asserted against such indemnified parties by reason of or in connection with such Owner's, Purchaser's, or Leaseholder's or failure to comply with subsection (d)(14).

(15) No Owner or Purchaser shall conduct, or permit to be conducted, any activity on the Leased Tract which is improper, immoral, noxious, annoying, creates a nuisance or is otherwise objectionable to other Owners or Purchasers or incompatible with the recreational use of the Lake and the FERC Project Area.

(16) The Residential Leased Land (and any Undeveloped Strips which are conveyed to an Owner or Purchaser as part of the Residential Leased Land pursuant to either subsection (b) or (c) above) shall be improved and used solely for single-family residential use, inclusive of a garage, fencing and other such related improvements as are necessary or customarily incident to normal residential use and enjoyment and for no other use. No portion of the Residential Leased Land (and any Undeveloped Strips which are conveyed to an Owner or Purchaser as part of the Residential Leased Land pursuant to either subsection (b) or (c) above) shall be used for manufacturing, industrial, business, commercial, institutional or other nonresidential purpose, save and except as set forth in subsection (d)(18) below. Notwithstanding the foregoing, Owners, Purchasers, and/or Leaseholders shall be permitted to conduct a "garage sale" on their respective portion of the Residential Leased Land (and any Undeveloped Strips which are conveyed to an Owner or Purchaser as part of the Residential Leased Land pursuant to either subsection (b) or (c) above) not more than one time per calendar year.

(17) No professional, business, or commercial activity to which the general public is invited shall be conducted on the Residential Leased Land (and any Undeveloped Strips which are conveyed to an Owner or Purchaser as part of the Residential Leased Land pursuant to either subsection (b) or (c) above); except an Owner, Purchaser, Leaseholder, or occupant of a residence may conduct business activities within a residence so long as: (a) the existence or operation of the business activity is not apparent or detectable by sight, sound, or smell from outside the residence; (b) the business activity conforms to all zoning requirements; (c) the business activity does not involve door-to-door solicitation of residents, lessees, Leaseholders, Owners, or Purchasers within the Property; (d) the business does not generate a level of vehicular or pedestrian traffic or a number of vehicles parked within the Property which is noticeably greater than that which is typical of residences in which no business activity is being conducted; and (e) the business activity is consistent with the residential character of the Residential Leased Land and does not constitute a nuisance, or a hazardous or offensive use, or threaten the security or safety of other residents, lessees, Owners, Purchasers, or Leaseholders of the Property. The terms "business" and "trade", as used in this provision, shall be construed to have their ordinary, generally accepted meanings and shall include, without limitation, any occupation, work, or activity undertaken on an ongoing basis which involves the provision of goods or services to persons other than the provider's family and for which the provider receives a fee, compensation, or other form of consideration, regardless of whether: (x) such activity is engaged in full or part-time; (y) such activity is intended to or does generate a profit; or (z) a license is required. Leasing of a residence shall not be considered a business or trade within the meaning of this subsection. This subsection (d)(18) shall not apply to any activity conducted by the Authority.

(18) Except as may be otherwise provided in the Restrictions, Commercial Leased Land (and any Undeveloped Strips which are conveyed to an Owner or Purchaser as part of the Commercial Leased Land pursuant to either subsection (b) or (c) above) may be improved and used for any lawful commercial purpose, including without limitation, non-profit organizations or governmental or quasi-governmental agencies.

(19) No portion of the Leased Tract may be used for the commercial testing or development of wind power, or to produce, lease, store, and/or transmit electrical power generated thereby for commercial or resale purposes.

(20) Each Owner or Purchaser shall keep, or cause to be kept, all improvements located on its respective portion of the Leased Tract maintained in good condition and repair, clean and free of rubbish and other hazards, and otherwise in full accordance with the Restrictions and all governmental rules, regulations codes and zoning requirements. Such maintenance shall include, but not be limited to, the following: regular and timely removal of all litter, garbage, trash and waste; regular lawn mowing; tree, shrub and plant pruning and trimming; watering of landscaped areas; weed control; pest control; maintaining exterior lighting and mechanical facilities in good working order; keeping walks and driveways clean and in good repair; and the repairing and repainting of the exterior improvements visible to neighboring properties and/or public view.

(21) In the event of any damage to or destruction of any building or improvement on any portion of the Leased Tract from any cause whatsoever, the Owner, Purchaser, or Leaseholder upon whose portion of the Leased Tract the casualty occurred shall, at such Owner's, Purchasers, or Leaseholder's sole option, either (i) repair, restore, or rebuild and complete the same with reasonable diligence, (ii) clear the affected area of all hazardous or dangerous debris and structures and lawfully dispose of same within one year from the date of casualty, or (iii) effectuate any combination of clauses (i) and (ii) of this subsection (d)(22) as such Owner, Purchaser, or Leaseholder may deem reasonably appropriate. Notwithstanding the foregoing, in the event the Owner, Purchaser, or Leaseholder elects to rebuild buildings or improvements which were located within the FERC Project Area or within twenty-five feet (25') landward measured horizontally from the 1000' contour line that were approved in accordance with subsection (d)(9) above, such buildings or improvements shall be rebuilt in accordance with subsection (d)(25) below.

(22) The Texas Commission on Environmental Quality has adopted rules governing on-site sewage facilities (also called septic systems). The Authority is the commission's authorized agent for the septic system licensing program, including the enforcement of the commission's septic system rules and regulations for the Property. The Authority, as the agent for the commission, shall have the authority to access the Property for the purpose of issuing such licenses, inspecting such septic systems, and enforcing any and all rules and regulations related thereto. Each Owner, Purchaser, and Leaseholder agrees to comply with all sanitary regulations and the licensing process adopted by the commission and enforced by the Authority, as its agent, from time to time.

(23) The Owner or Purchaser shall be responsible, at such Owner's or Purchaser's expense, for providing for the collection, removal and disposal of all solid waste on the Leased Tract; or the Owner or Purchaser of any portion of the Leased Tract shall be responsible for ensuring that the Leaseholders provide for such collection, removal and disposal of all solid waste on the applicable portion of the Leased Tract. In the event the Ranch fails to provide for the collection, removal and disposal of all solid waste related to the Ranch, the Owner or Purchaser shall be responsible for providing for the same.

(24) (i) An Owner, Purchaser, or Leaseholder, subject to approval by the Federal Energy Regulatory Commission, may repair, alter or rebuild improvements located within the FERC Project Area, which improvements were previously approved in accordance with subsection (d)(9) above; provided, however, such repairs, alterations, and/or rebuilding shall not extend beyond the footprint of the existing or previously existing improvement.

(ii) An Owner, Purchaser, or Leaseholder may repair, alter or rebuild improvements located outside the FERC Project Area but within 25' landward measured horizontally from the 1000' contour line, and/or improvements located within the 5' boundary setback, which improvements were previously approved in accordance with subsection (d)(9) above. Such repairs, alterations, or rebuilding may extend such improvements outside the previously existing footprint towards the side boundaries and back boundary of the applicable Leased Tract, but such improvements may not be extended towards the shoreline or encroach closer to the 1000' contour line of the Lake than the existing or previously existing improvements.

(25) The Authority shall reserve its rights, title, and interest in all oil, gas and other minerals in and under any and all Property, including the Leased Tract.

(26) No land within the FERC Project Area shall be improved, used or occupied, except in such manner as shall have been approved by the Authority and, to the extent required, by the Federal Energy Regulatory Commission. No docks, piers, on-water facilities, retaining walls, or any other structures or facilities shall be built, installed or maintained in, on, or over the waters of the Lake or within the FERC Project Area except as authorized by the Authority. All such structures or facilities shall be subject to all rules and regulations applicable to the Lake and the FERC Project Area, as the same may be adopted or amended from time to time. Owner, Purchaser, and/or the Leaseholder shall be responsible for any fees or annual charges assessed by the Authority and/or the Federal Energy Regulatory Commission for such permit or improvements and shall be responsible for ensuring that any such improvements are consistent with the FERC License, Shoreline Management Plan, and all other rules and regulations applicable to the FERC Project Area. Owner or Purchaser shall not, at any time, permit any liens to encumber the FERC Project Area.

(27) No use of the Lake or other bodies of water within the Property, if any, shall be made except in accordance with the FERC License, the Shoreline Management Plan, the Authority's regulations and any other rules and regulations that may be promulgated by the Federal Energy Regulatory Commission and/or the Authority at any time and as amended from time to time. Any such use shall be subject to the Authority's and the Federal Energy Regulatory Commission's superior use rights. The Authority shall not be responsible for any loss, damage, or injury to any person or property arising out of the authorized or unauthorized use of the Lake or other bodies of water within or adjacent to the Property.

(28) The Authority may use and regulate the Lake or other bodies of water within the Property for the irrigation of the Authority Land, or for any other purpose deemed appropriate by the Authority, subject to the rights and authority of the Federal Energy Regulatory Commission or other governmental entity having jurisdiction of such areas, and subject to the water rights granted (or which may be granted) to the Authority by the State of Texas. The Authority's rights under this subsection (d)(29) shall be superior to any rights of any Owner, Purchaser, or Leaseholder. This subsection (d)(29) shall not be construed to limit or restrict the rights and authority of the Federal Energy Regulatory Commission or other governmental entity having jurisdiction of the Property.

(29) Owners or Purchasers must obtain written permission from the Authority in accordance with the Authority's regulations to use or divert water from the Lake on any portion of the Leased Tract for domestic or commercial purposes.

(30) No Owner, Purchaser, or Leaseholder shall be permitted to divert or alter the natural drainage of the terrain or clear vegetation on any portion of the Property in such a manner that would cause unnatural erosion or silting of the Lake.

(31) Owners, Purchasers, and Leaseholders shall take all reasonable precautions to insure that all use of and activities on the Leased Tract and the FERC Project Area, including without limitation, the construction, operation and maintenance of any improvements on the Leased Tract, and/or FERC Project Area occur in a manner that is in compliance with the FERC License and that will protect the scenic, recreational and environmental values of the Lake. The Authority, as a licensee of the Federal Energy Regulatory Commission has specific approval authority on any proposed construction that impacts the FERC Project Area or lakebed, and Owner, Purchaser, and Leaseholder shall comply with the approval process as may be established by the Authority and/or the Federal Energy Regulatory Commission from time to time.

(32) Structures in place within the FERC Project Area shall be subject to the FERC License, as the same may be amended and/or renewed from time to time. Any structures erected in the FERC Project Area after May 15, 1980 (the date of the amendment to the previous FERC License) may be required to be removed at the expense of the owner of the improvement, unless such improvements are approved in writing by the Authority in accordance with the FERC License. In no event shall this subsection (d)(33) grant any authorization for a violation of any rules or regulations of the Authority, the FERC License or any state, federal, or local law.

(33) The Owner, Purchaser, and Leaseholder of any portion of the Leased Tract shall comply with all of the following rules and regulations: (i) the Shoreline Management Plan and any amendments or revisions to that document to the extent such Shoreline Management Plan applies to the Owner's, Purchaser's, and/or Leaseholder's portion of the Leased Tract; (ii) the applicable rules, regulations, and order of the Federal Energy Regulatory Commission including, without limitation the FERC License; (iii) the Authority's "Regulations for Governance for Brazos River Authority Lakes and Associated Lands," as published on the Authority's internet website; and (iv) other rules and regulations adopted by the Authority regarding conduct on and use of the Lake or the Property.

(34) By Texas Statute, the Authority is empowered to adopt and has adopted certain regulations governing conduct on and use of the Property within the FERC project area and Lake. Owners, Purchasers, Leaseholders, and persons using the Leased Tract with such Owners' or Purchasers' consent, shall abide by all such rules and regulations adopted from time to time by the Authority and any future revisions and amendments thereto.

(35) Owners, Purchasers, and Leaseholders of that portion of the Leased Tract which are part of the Ranch shall comply with the terms and conditions of the Ranch Agreement and the covenants and restrictions set forth in the Ranch Declarations, to the extent applicable to such portion of the Leased Tract. As to that portion of the Property which is part of the Ranch, the Ranch Declarations shall control in the event of any conflict between the covenants, restrictions, and conditions set forth in the Ranch Declarations and the Restrictions.

(36) In order to maintain the quality of the Lake's water, the stability of the shoreline, and of the environment in the Lake's vicinity, each Owner, Purchaser, and Leaseholder of all or any portion of the Leased Tract agrees to:

(i) comply with any local, state, or federal laws related to water quality or the environment, including laws governing toxic wastes and hazardous substances;

(ii) if the Owner's or Purchaser's private on-site sewerage facility is not licensed by the Texas Commission on Environmental Quality (or any successor to such Commission) then the Owner, Purchaser, or Leaseholder shall connect to and use, at the Owner's or Purchaser's or Leaseholder's expense, as applicable, any wastewater treatment system or service that becomes available to the Owner's or Purchaser's portion of the Leased Tract, not later than twelve (12) months after the system or service becomes available to such portion of the Leased Tract and thereafter discontinue use of any private on-site sewerage facility; and if, at any time after a wastewater treatment system or service becomes available to the Owner's or Purchaser's portion of the Leased Tract, the Owner's or Purchaser's private on-site sewerage facility (whether licensed or not) requires either replacement or an alteration or change in the on-site sewage facility resulting in (A) an increase in the volume of permitted flow, (B) a change in the nature of permitted influent, (C) a change from the planning materials approved by the permitting authority, (D) a change in construction, and/or (E) an increase, lengthening, or expansion of the treatment or disposal system, then such Owner or Purchaser shall promptly connect to and use, at the Owner's or Purchaser's or Leaseholder's expense, as applicable, such wastewater treatment system or service and thereafter discontinue use of any private on-site sewerage facility. Notwithstanding the foregoing, in the event a property owners association or municipality requires the Owners or Purchasers of the portion of the Leased Tract which are included in such association or municipality to connect to a wastewater system or service, then such association or municipality rules shall control;

(iii) obtain written consent of the Authority prior to diverting or pumping water from the Lake or any body of water within or adjacent to the Property, constructing or erecting any embankment or retaining wall, or commencing any dredging activity; and

(iv) pay to the Authority any reasonable fee related thereto (e.g., water usage, recreational user, dredging, or retaining wall fees) as may be adopted from time to time by the Authority.

(37) Each Owner or Purchaser of all or any portion of the Leased Tract agrees and acknowledges that the water level in the Lake varies and that the Authority is not responsible for maintaining the Lake at any certain level or above or below any certain level.

(38) The Authority is not responsible or liable for any personal injury or damage to any Owner, Purchaser, Leaseholder, the Leased Tract, the Property, or to any improvements caused by any increase or decrease in the water level (even if such increase or decrease is due to modifications of the Morris Sheppard (Possum Kingdom) Dam or other actions or omissions of the Authority) or caused by natural flooding.

(39) The Authority shall reserve the right of ingress and egress for the Authority and any person authorized by the Authority, including an agent of the Authority or employees, over and across the Leased Tract and any and all on-water facilities whether located within the Leased Tract or FERC Project Area for all reasonable purposes of the Authority, including, without limitation, the construction, maintenance, repair, and/or replacements of any roads, drainage facilities and power, water, wastewater, and other utility mains and lines that the Authority considers necessary or beneficial and for public safety, health, and welfare purposes; provided however, that (i) the Authority shall provide written notice at least 48 hours in advance of such entry to the Purchaser or Owner of such portion of the Leased Tract (except in the event of an emergency in which case advance notice shall not be required, but the Authority shall provide such written notice as soon as practicable thereafter), which notice shall state with reasonable specificity the purpose for such entry, (ii) the Authority shall promptly repair any damage to the portion of the Leased Tract caused by the Authority's entrance onto such Owner's or Purchaser's portion of the Leased Tract; and (iii) the Authority shall use reasonable efforts to avoid interfering with the Owner's or Purchaser's use of the portion of the Leased Tract.

(40) Each Owner, Purchaser, and Leaseholder shall comply strictly with the Restrictions, as the same may be amended from time to time. Failure to comply with the Restrictions shall constitute a violation of the Restrictions, and shall give rise to a cause of action to recover sums due for damages or injunctive relief or both, maintainable by the Authority or other Owners or Purchaser; provided however, no Owner, Purchaser, Leaseholder, or other person shall have any right of action against the Authority arising under the Restrictions.

(41) The Authority shall make no warranty or representation as to the present or future validity or enforceability of any such restrictive covenants, terms or provisions. Any Owner, Purchaser, or Leaseholder acquiring or leasing, as applicable, any portion of the Property in reliance on one or more of the Restrictions shall assume all risks of the validity and enforceability thereof and, by acquiring such portion of the Property, agrees to hold the Authority harmless therefrom.

(42) If the Owner, Purchaser, or Leaseholder of any portion of the Leased Tracts or on-water facilities related thereto (including retaining walls) shall fail to comply with the requirements of the Restrictions, then the Authority shall have the right, but not the obligation, following thirty (30) days prior written notice to such defaulting owner to enter the such defaulting owner's portion of the Leased Tract (but only if such failure to comply results in a public health, safety, or welfare concern) and/or such defaulting owner's on-water facility and cure such breach, the cost of which shall be reimbursed by such defaulting owner to the Authority upon demand. Any such unpaid amounts, together with interest thereon (at the rate of six percent (6%) per annum) and the costs of collection (if any), shall be charged as a continuing lien against such defaulting owner's portion of the Leased Tract, which lien shall be subordinate to the lien of any third party deed of trust previously recorded against such defaulting owner's portion of the Leased Tract.

(43) A person shall be deemed to be in default of the Restrictions only upon the expiration of thirty (30) days (ten [10] days in the event of failure to pay money) from receipt of written notice from the Authority or other Owner or Purchaser specifying the particulars in which such person has failed to perform the obligations of the Restrictions unless such person, prior to the expiration of said thirty (30) days (ten [10] days in the event of failure to pay money), has rectified the particulars specified in said notice of default. However, such person shall not be deemed to be in default if such failure (except a failure to pay money) cannot be rectified within said thirty (30) day period and such person commences the cure of such default within such (30) day period and thereafter is continuously using good faith and its best efforts to rectify the particulars specified in the notice of default.

(44) The Authority shall have the right, but not the obligation, to enforce all of the provisions of the Restrictions. Any Owner or Purchaser shall have the right to enforce all of the provisions of the Restrictions against any other Owner, Purchaser, or Leaseholder, but not against the Authority. Such right of enforcement shall include the right to sue for both damages for, and injunctive relief against, the breach of any such provision. Furthermore, the Authority shall have the right, when appropriate in its sole judgment and discretion, to claim or impose a lien upon any portion of the Leased Tract, or improvement constructed thereon, in order to enforce any right or effect compliance with the Restrictions.

(45) The failure of a person (including the Authority or any Owner or Purchaser) to insist upon strict performance of any of the Restrictions shall not be deemed a waiver of any rights or remedies that said person may have, and shall not be deemed a waiver of any subsequent breach or default in the performance of any of the Restrictions by the same or any other person.

(46) The Authority shall not be liable to any Owner, Purchaser, or Leaseholder, or to any other person for any loss, damage, or injury arising out of or in any way connected with the performance or non-performance of the Authority's rights, obligations or privileges under the Restrictions. Without limiting the foregoing, the Authority shall not be liable to any Owner, Purchaser, or Leaseholder due to the construction of any improvements within the Property.

(47) Each of the Restrictions on the Leased Tract shall be a burden on each portion of the Leased Tract, shall be appurtenant to and for the benefit of the other Property, other portions of the Leased Tract, and each part thereof and shall run with the land.

(48) The Restrictions shall inure to the benefit of and be binding upon the Owners or Purchasers, their heirs, successors, assigns and personal representatives, and upon any person acquiring all or any portion of the Leased Tract, or any interest therein, whether by operation of law or otherwise. Notwithstanding the foregoing, if any Owner or Purchaser sells or transfers all or any portion of such Owner's or Purchaser's interest in all or any portion of the Leased Tract, such Owner or Purchaser shall, upon the sale and conveyance of title, be released and discharged from all of its obligations as Owner or Purchaser in connection with the property sold by it arising under the Restrictions after the sale and conveyance of title but shall remain liable for all obligations arising under the Restrictions prior to the sale and conveyance of title. The new Owner or Purchaser of all or any such portion of the Leased Tract, (including, without limitation, any Owner [or Lienholder] who acquires its interest by foreclosure, trustee's sale or otherwise) shall be liable for all obligations arising under the Restrictions with respect to such portion of the Leased Tract on and/or after the date of sale and conveyance of title. The Authority may assign, in whole or in part, any of its privileges, exemptions, rights, and obligations (if any) under the Restrictions to any other person and may permit the participation, in whole or in part, by any other person in any of its privileges, exemptions, rights, and obligations (if any) hereunder.

(49) Except as provided in this subsection, the term of the Restrictions shall be for a period of fifty (50) years from the date such Restrictions are executed by the Authority. Notwithstanding the foregoing, upon the expiration of the such period, the term of the Restrictions shall automatically renew for successive periods of five (5) years each unless, at least ninety (90) days prior to the date of expiration of any period then in effect, (i) the Owners or Purchasers of at least seventy-five percent (75%) of the individual lots which comprise the Residential Leased Land and the Commercial Leased Land, and (ii) the Owners or Purchasers of at least seventy-five percent (75%) of the land area of the Authority Land; and (iii) the Authority, for so long as the Authority has any interest in the Property, whether as an Owner or holder of the FERC License or otherwise, duly execute, acknowledge and record in the office of the recorder of the counties in which the Property is located a written termination notice, in which event, the Restrictions shall automatically expire at the end of the period then in effect.

(e) Buffer Zone. Notwithstanding any provision in this subsection to the contrary, a sale under subsection (b) or (c) shall be subject to the following:

(1) If at the time Closing occurs under subsection (b) or if at the time a Leaseholder completes the purchase of the applicable Leased Tract from the Authority pursuant to subsection (c), as applicable, the Buffer Zone, or any portion thereof, has been removed from the FERC Project Area, the Leased Tract being conveyed shall include that portion of the Buffer Zone so removed; provided, however, the Purchaser and/or Owner, as applicable, shall grant the Authority access to the FERC Project Area and Lake to allow the Authority to fulfill its obligations as a River Authority and any obligations set forth in the FERC License, state water rights, or other governmental regulations.

(2) If at the time Closing occurs under subsection (b), or if at the time a Leaseholder closes on the purchase of the applicable Leased Tract from the Authority pursuant to subsection (c), as applicable, the Buffer Zone, or any portion thereof, has not been removed from the FERC Project Area and a portion of the Leased Tract is located within the Buffer Zone, the Authority shall provide such Purchaser and/or Owner, as applicable, a residual interest in that portion of the Buffer Zone adjacent to the Leased Tract and covered by the applicable residential Ground Lease, such residual interest to automatically vest upon satisfaction of either of the following conditions:

(i) the Federal Energy Regulatory Commission approves an amendment to the FERC License removing the Buffer Zone from the boundaries prescribed by the FERC License such that the Buffer Zone is no longer subject to regulation by the Federal Energy Regulatory Commission, or

(ii) the FERC License expires (and is not renewed or extended) or is otherwise terminated and thus the Buffer Zone is no longer subject to regulation by the Federal Energy Regulatory Commission. Notwithstanding the foregoing, if such residual interest has not vested on or before August 31, 2040, then such residual interest shall be terminated and of no further force and effect. Upon satisfaction of either of the foregoing conditions prior to August 31, 2040, this conveyance shall be automatically effective without necessity of further documentation. From and after the date such conveyance becomes effective, the Buffer Zone shall be considered to be a part of the Leased Tract conveyed under subsection (b) or (c) and the Purchaser or then-current Owner of the applicable Leased Tract shall be the beneficiary of the residual interest created herein, but only as to the portion of the Buffer Zone located adjacent to the Purchaser's or Owner's property, and all right, title and interest in such adjacent portion of the Buffer Zone, as measured by extending the boundary lines on both sides of the applicable portion of the Leased Tract in a straight line across the Buffer Zone to the then current 1000' contour line of the Lake, or, if such portion cannot reasonably be measured as set forth above, then as otherwise determined by the Authority. Such residual interest shall immediately vest in the Purchaser or then current Owner of such adjacent Leased Tract without the necessity of any additional written conveyance.

(3) In the event a sale under subsection (b) or (c) does not include the Buffer Zone, or any portion thereof, only includes a residual interest in the Buffer Zone, or any portion thereof, then such Buffer Zone shall remain subject to the terms and conditions of the residential Ground Lease in effect between the Leaseholder and the Authority at the time Closing occurs under subsection (b) or at the time the Leaseholder purchases the applicable Leased Tract under subsection (c); provided, however, no rent shall be due the Authority under such Ground Lease for the Buffer Zone. At such time as the applicable Ground Lease expires or is otherwise terminated, the Authority may, subject to approval of the Federal Energy Regulatory Commission, grant the Purchaser or the then-current Owner of the adjacent tract (as determined pursuant to the method set forth in subsection (e)(2)(ii) above), an easement for use of such portion of the Buffer Zone, which easement shall be subject to the FERC License. The Authority shall retain ownership of such portion of the Buffer Zone and exercise control over such portion of the Buffer Zone consistent with the FERC License and this subsection. The easement granted to such Owner shall be limited to uses permitted under the terms of the FERC License and the Authority's Shoreline Management Plan, and any other Authority rules and regulations as may be adopted from time to time.

(f) Purchase Price. For purposes of determining the purchase price and/or lease rate pursuant to the options set forth in subsection (b)(1) or the purchase price in subsection (c), in the event a county does not provide an assessed value for the applicable portion of the Leased Tract for the applicable year, then the land only assessed value without any exemptions for the applicable portion of the Leased Tract shall be calculated based on the assessed value per square foot of comparable lots with similar physical characteristics in the applicable county or adjoining counties, as determined by the Authority.

(g) Roads. The Authority shall, on or before December 31, 2010, transfer its interest in Roads to the county in which such Road or portion thereof is situated; provided, however, the transfer of any portion of a Road located within the FERC Project Area shall be subject to approval of the Federal Energy Regulatory Commission. Beginning on the date of such transfer, the Authority or Purchaser shall no longer have any obligations regarding such Roads. Prior to any transfer under this subsection, the Authority shall ensure that the Road, or portion thereof, complies with the standards in effect in the applicable county for like roads currently maintained by that county.

(h) Platting. A sale of the Leased Tract under this section shall not be subject to Chapter 232, Local Government Code, or any other platting requirement.

(i) Mineral and Groundwater Interests. The Authority shall reserve its interest in all oil, gas, and other minerals in and under the Leased Tract (or any portion thereof) sold under this section.

SECTION 2. If the provisions of this section conflict with any other provisions of this code, then the provisions of this section shall prevail, notwithstanding all such conflicting provisions.

SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.