KIAWAH ISLAND UTILITY, INC.

DOCKET NO. 2011-317-W/S

PRE-FILED REBUTTAL TESTIMONY OF BECKY DENNIS

TO THE TESTIMONY OF INTERVENOR KPOG’S EXPERTS

FILED NOVEMBER 16, 2011

BEFORE THE SOUTH CAROLINA PUBLIC SERVICE COMMISSION

Testimony Prepared: November 23, 2011

Hearing Date: November 30, 2011

THIS REBUTTAL TESTIMONY IS FILED PURSUANT TO THE REVISED PSC NOTICE DATED NOVEMBER 8, 2011. THE APPLICANT RESERVES THE RIGHT TO SUPPLEMENT THIS TESTIMONY AND TO PROVIDE FURTHER REPLY TESTIMONY TO THE TESTIMONY OF KPOG’S EXPERTS.

MR. WALKER: In the prefiled testimony of KPOG expert Ellen Blumenthal, she

referred to a Utilities Service Agreement between KIU and KRA. Are you familiar

with that agreement?

MS. DENNIS: Yes. The Utilities Service Agreement she referred to was dated

July 29, 1994, before the entry of a Development Agreement between the Town of

Kiawah Island and KRA in September 1994.

MR. WALKER: Is the 1994 Utilities Service Agreement still in effect?

MS. DENNIS: No. The 1994 Utilities Service Agreement was terminated on June

6, 1997. I have attached a copy of the recorded termination as Exhibit A to my

testimony.

MR. WALKER: Was a new Utilities Service Agreement entered after the

1

termination?

MS. DENNIS: Yes. At the same time as the 1994 agreement was terminated, a new

Utilities Service Agreement was entered. I have attached a copy of the 1997

Utilities Service Agreement dated June 5, 1997, as Exhibit B to my testimony.

MR. WALKER: Does the 1997 agreement also include a provision addressing the

sale of from KRA to KIU?

MS. DENNIS: Yes. Paragraph 6 states as follows:

“6. As additional consideration to KIU for entering into this Agreement, KRA shall

provide additional land to KIU, if required to meet the obligations hereof, at a price

to be agreed upon, but not to exceed the fair market value of such property at the

time of transfer to KIU. KRA shall have the sole discretion to select the location of

any such property within the Sora Rail Road tract and other areas.”

MR. WALKER: Is the 1997 Utilities Service Agreement still in effect?

MS. DENNIS: Yes.

MR. WALKER: The testimony of KPOG’s expert witnesses refers to the sale of certain sewer facilities from KRA in 2005. Please explain this transaction.

Ms. DENNIS: In August 2005 we inventoried the sewer facilities constructed by

KRA that were in place and operational that had not been conveyed to KIU. These facilities consisted of sewer distribution lines and sewer transmission lines. KRA transferred the sewer distribution lines as a donation. The value of this donation was

$507,501.90. KIU purchased the sewer transmission lines for $382,666. The purchase of the transmission lines was in keeping with prior practice and orders of the Public

2

Service Commission in prior rate cases. I have attached a copy of the schedules of the

facilities that were conveyed as well as the Bills of Sale for the transfers as Exhibit C to my

testimony.

MR. WALKER: In the prefiled testimony of Mr. Rogers, he referred to work performed

for KIU by Gulfstream Construction Company. Is Gulfstream an affiliate of KIU or KRA?

MS. DENNIS: Not to my knowledge.

MR. WALKER: Did KIU take steps to make sure that the work performed for it by

Gulfstream Construction Company was reasonably priced?

MS. DENNIS: Yes, the cost of the work done by Gulf Stream was negotiated through

KIU’s engineers based on their knowledge of the costs for similar jobs. In my estimation,

because the engineers negotiated the price down on our behalf, the amounts we paid

Gulfstream were below what we would have paid other contractors, not higher.

END OF REBUTTAL TESTIMONY

3

EXHIBIT A

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/ ~~ UC::ooj 0 'n 7497 c) STATE OF SOUTH CAROLINA ) ) TERMINATION OF COUNTY OF CHARLESTON ) UTILITYUTtLITY SERVICE AGREEMENT

WHEREAS, KiawahKiawal. Resort Associates.Assoaates L.P,u.P. ("KRA').('KRA'), a Delaware limited

partnership, andanci Kiawah Island Utility.Util!ty. Inc,inc, C'KIU")("KIU") entered a Utility Service Agreement

dated July 29,29. 1994; and

WHEREAS,VVHEREAS, KRA and KiUKlU entered a Memorandum ofor UtilityUtf)lty Service ,A,greementAgreement

recorded in the RMC Office for Charleston County at Book R247, Page 129, providingprovidir,g

notice of the Utility ServiceServ(ce Agreement dated July 29,29. 1994;

NOW THEREFORE. in returnreturr for the mutual promises stated herein and contained

in the Utility Service Agreement of even date herewith,herewitl, KRA and KIU hereby terminate the

Utility Service Agreement dated July 29,29. 1994,1994.

IN WITNESS WHEREOF, KiawahK)swah Resort Associates, LP.,L.P., has caused these presents to be executed in itsiis name by itsas General Partner thereunto duly authorized and

its seal to be hereunto affixed,affixeo. this ~~~ day of '-~ ,, inin the year of our

Lord One Thousand Nine Hundred andar,d Ninety-Seven,N)nety-Seven. in the Two Hundred and Twenty-

First year of the Sovereignty and Independenceindependence of the United States of America,America. EXHIBIT A 750

SIGNED, SEALED AND DELIVERED KIAWAH RESORT ASSOCIATES, L.P. IN THE PRESENCE OF: (SEAL)(SEAL} By: D&WD8W Investments, Inc.,inc., a South Carolina corporation (CORP.(CORP, SEAL) 211 King Street, Suite 300 Charleston, SC 29401 Its: General Partner

I By: ~D~y~C Its:its: President

STATE OF SOUTH CAROLINA ) ) COUNTY OF CHARLESTON )

THE FOREGOING INSTRUMENT was acknowledged before me by Kiawah Resort

Associates, L.P., by D8WD&W Investments, Inc., a South Carolina corporation, its General

Partner, by Charles P. Darby, III, its President, this ~~l.a'+'- day of ;3"", we....

1997.

J) - (SEAL) ~tary Publ" . f r South Carolina Myy commission expires: :;;.g - l~-l.;;;t· ;"00gobi I

KIAWAH ISLAND UTILITY, INC., a South Carolina Corporation (SEAL)(SEAL} P.O. BoBc@419 419 Charle t ,SC 29402

Blf Leonard L. Long, Jr. I Vice PresidBnt_.. _

2 EXHIBIT A

U2 8 oPG 751

STATE OF SOUTH CAROLINA ) ) PROBATE

COUNTY OF CHARLESTON )

PERSONALLY appeared before me the undersigned witness who after first being duly sworn, deposes and says that s/he saw the within-named Kiawah Islandisland Utility, Inc. a South Carolina corporation by Leonard L. Long, Jr.,Jn, its Vice President, sign, seal and as its act and , deliver the within-written of Termination of Utility Service Agreement for the uses and purposes therein mentioned, and that s/he together with the other witness whose signature appears above, witnessed the execution thereof.

SWORN TO BEFORE ME THIS 2.-ddayy off~. :..::::r",,-,,,- ,1997.F997. ~PCbl~ My Commissi

3 EXHIBIT A

752 ElisabethEIisab th F.F xbmmonsNimmons Legal PlalmingPlatrning Assistant KiawahKiaxrab Resort Associates,Associates. LP,L.P. POSlPost Office Box 419 Charleston,Cbarleston. SC 29402'9402 EXHIBIT B

STATE OF SOUTH CAROLINA ) ) UTILITY SERVICE AGREEMENT COUNTY OF CHARLESTON )

This Utility Service Agreement "Agreement" (this ) made and entered into this ~ d y f~, 7997 by and between Kiawah Resottn sociates, L.P. and K ah Island Utility, Inc. WITNESSETH

Kiawah Resort Associates, L.P. (nKRAn) is a Delaware limited partnership which

owns approximateiy 2,000 acres of undeveloped real property more particularly described

in Exhibit A attached hereto (the "Property") located on Kiawah Island, South Carolina on

which may be added several thousand housing units under current zoning authorizations, with a cap of adding 1974 such units plus extensive commercial, hotel, and mixed use

under a development agreement (the nDeveiopment Agreement") dated September 26,

1994, between KRA and the Town of Kiawah.

Kiawah Island Utility, Inc. (nKIUa) is a South Carolina corporation which owns approximately 18 acres of more generally described in Exhibit B attached hereto (the nKIU Property") located on Kiawah Island South Carolina, together with various improvements, equipment, rights, , and other property rights.

KIU operates a water distribution and water collection and treatment system

(the "System") on the KIU Property for service to persons and businesses on Kiawah

Island, South Carolina.

KRA is in the process of developing the Property pursuant to its development plan

(the "Development Plan" ) which, by its nature, is subject to change over time, and in accordance with the Development Agreement. KIU has long supplied KRA with the water EXHIBIT B

and sewer needs and capacities necessary to allow KRA to develop the Property to its current state KIU's and continued supply of sufficient water and sewer capacity for future

development of the Property is essential to the value of the developed and undeveloped portions of the Property.

The historical relationship between KRA and KIU (with the former owning all shares

of stock in the latter) has been in large part responsible for the development of Kiawah

Island as a first-class residential and resort community, as well as the sound financial

status of KIU. The timely provision of water and sewer infrastructure and services assures that the highest values are created and maintained for all Kiawah properties. This has been possible in the past due to, among other things, the constant commitment of KRA to assist with financing of enhanced and continually expanding utilities infrastructure. A

utilities agreement is deemed necessary and desirable in order to facilitate and assure the continued mutual benefits to both KRA and KIU as development of Kiawah Island continues.

To that end, KRA desires to contract with KIU to provide tor the timely supply of water distribution and waste water collection and treatment with respect to the Property.

KIU desires to contract with KRA to assure that future needs for expansion and improvement of its capabilities are provided for in a timely and sufficient manner. Both parties acknowledge and agree that any failure or delay by KIU in complying with the terms, conditions, and obligations set forth in this Agreement will have a material and substantial adverse impact on the value of the Property and the ability of KRA to complete the development of the Property in accordance with the Development Plan and the Development Agreement. EXHIBIT B

KRA, KIU and their respective engineers and agents have reviewed the Develop-

ment Plan (relating to the commercial, rental, and mixed use parcels owned by KRA), and determined the capacities of water and waste water collection and treatment required during the various phases of development of the Property pursuant to the Development

Plan. Such estimated requirements are listed on Exbibi~ attached hereto and are generally referred to hereinafter collectively as the "Requirements," or, separately, as the

"Water Requirements" or the "Sewer Requirements".

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration flowing to both parties, the receipt and adequacy of which are hereby acknowledged, the parties do hereby agree as follows:

1. Commencing as of the date of this Agreement and continuing for the entire term of this Agreement, KIU, its successors and assigns, shall, subject to the availability of the utility funds generated from customers according to KIU's Rate Schedule approved by the

South Carolina Public Service Commission ("PSC"):

a. Supply KRA, its successors and assigns, with all present and future

Requirements for all or any portion of the Property which is either developed,

under development or planned for development pursuant to the Develop-

ment Plan, as the same may be amended from time to time by KRA;

b. Maintain and operate the System in accordance with all applicable

Legal Requirements, and

c. Expand, modify, update, upfit, maintain, repair, improve and operate

the System in such manner as is necessary to allow KIU to supply the EXHIBIT B

Requirements provided for herein. This shall include, but not be limited to,

expending such capital in a timely manner as may be necessary to expand

the water delivered by the City of Charleston Commission of Public Works

("CPW") and/or the St. John's Water District so as to serve KRA's future

development of the Property.

2. So long as KIU complies with the terms of this Agreement and has the physical plant

and capacity to supply the Requirements to KRA, its successors or assigns, KRA, its

successors or assigns, agrees to purchase the Requirements from KIU at the rates which

are currently published by the PSC, or at such increased or decreased rates as may be

approved by the PSC from time to time. Anything to the contrary contained in the previous

sentence notwithstanding, KRA may provide water to all or any portion of the Property from

certain wells that KRA may estabiish from time to time.

3. KIU will not (i) apply for or support any change in rates by PSC which shall be

discriminatory against KRA, its successors or assigns, or any portion of the Property; or

(ii) enter into any agreement, arrangement or contract whereby any other entity, property

or project will have a greater priority than KRA or the Property with respect to the supply

of water distribution and/or waste water collection and treatment; (iii) charge KRA any fee,

exaction, or other monetary payment of any kind for provision of water and sewer services

other than those approved by the PSC. KIU and KRA acknowledge that the effluent

presently being produced by KIU's sewer treatment plant is a result of an aeration treatment process. In the event that subsequent to the effective date of this Agreement

either: (a) any legal requirement necessitates that the treatment of waste water be

increased to a higher standard with a resultant increase in the water quality of the effluent; EXHIBIT B

or (b) any capital expenditures are made by KIU for purposes of receipt and handling of

sewerage or effluent, or the treatment and delivery of water; then in such event the cost

thereof will be paid for by KIU and recovered by KIU by such permitted rate increases as

are approved by the PSC.

"Lots" 4. As KRA sells lots (the ) or other parcels or tracts (collectively, the "Parcels" )

of land in the course of the development of the Property, to the extent reasonably required

by KIU, KRA will reserve easements for the construction and maintenance of water and

sewer lines required for the supplying of the Requirements to the particular Lot or Parcels

being sold and all remaining portions of the Property. KRA, at its sole cost and expense, shall construct the distribution lines to the extent necessary to supply the Requirements in accordance with reasonable engineering and construction standards, all applicable

Legal Requirements, and the Development Plan.

Additionally, KRA shall, at times convenient to its normal development process, transfer the water and sewer lines and all related easements to KIU. KRA shall convey the distribution lines and related easements to KIU at no cost. KIU shall accept such transfers and shall maintain, repair, and replace those improvements and easements in a good, professional and workmanlike manner, from time to time, to the extent necessary to supply the Requirements. KIU's obligations to accept transfer of the lines and all related easements, and to maintain, repair, and replace the same, shall be unconditional, provided prevailing industry construction standards and typical Legal Requirements are met (as have been customary tor the last 20 years).

5. When the actual amount of the average daily sewage flow reaches 80% of maximum treatment capacity of the wastewater System (as then existing) required to EXHIBIT B

provide the then committed Requirements (and notwithstanding actual flows or use

indicators), KIU will take all steps necessary to expand said capacities inin order to provide

for the projected Requirements, as same may change from time to time. KRA may amend

Exhibit C from time to time by submitting new or revised Development Plans and/or

Requirements to KIU.

6. As additional consideration to KIU for entering into this Agreement, I\~AKRA shall

provide additional land to KIU, if required to meet the obligations hereof, at a'price to be

agreed upon, but not to exceed the fair market value of such property at the time of

transfer to KIU. KRA shall have the sole discretion to select the location of any such

property within the Sora Rail Road tract and other areas.

7. As additional consideration for the duties and obligations of KIU herein, KRA agrees

to assist KIU from time to time in securing any necessary financing for the construction of

facilities required by KIU to meet its obligations to expand and/or maintain the System and

to provide the Requirements. This financial assistance may be inin the form of loans,

mortgages, letters of credit, bonds or such other type of credit enhancement as KRA inin its

sole discretion elects.

8. KIU agrees to satisfy all applicable LegalLegai Requirements related to the operation or

maintenance of the System and the supply of the Requirements.

9. As used herein "Legal Requirements" shallshai! mean the requirements, approvals,

consents, permits, and the like which are imposed or required by all applicable , ordinances, nules.rules. regulations or conditions of any federal, state, county, city or local government agency or authority, including, without limitation, the South Carolina

Department of Health and Environmental Control and/or PSC.

6 EXHIBIT B

10. The rights, covenants, obligations, duties, benefits, burdens, easements and other

provisions created, declared or contained in this Agreement shall benefit the Property and

bind the KIU Property, respectively, and each owner, purchaser, tenant, invitee,

mortgagee, licensee, user, and lienholder of any part or such portions of the Property or

of the KIU Property and each of their respective successors and assigns, and shall at all

times hereafter be commercially necessary, appurtenant to, affect and run with the land

(i.e., the Property or the KIU Property, respectively) generally. KRA shall have the right to

assign its rights and obligations under this Agreement to its successors-in-interest or successors-in-.

11. KRA and KIU acknowledge and agree that any failure or refusal of either party

hereto, its successors or assigns, to strictly comply with the terms of this Agreement could

have serious and irreparable consequences to the non-defaulting party. As a result, the

non-defaulting party may elect, upon any such breach, to seek, and is hereby granted the

right, to have specific performance of this Agreement as well as any other legal or

equitable remedy provided by . In the event of any litigation between KRA and KIU

arising out of breach or enforcement of or emerging from this Agreement, the prevailing

party in such litigation (or appeal therefrom) shall be entitled to reasonable attorney's fees

and all reasonable costs of such action, including the cost of expert witnesses.

12. This Agreement shall commence upon the execution hereof and shall continue in

effect for a period of twenty (20) years hereafter; provided; however, that this Agreement

may be terminated by either party upon the occurrence of a default by the other party in the performance of a material obligation under this Agreement which is not cured within thirty (30) days after written notice of default to such defaulting party, or, if the subject EXHIBIT B

default(s) requires more than thirty (30) days to cure, if the defaulting party fails to begin

performance within such thirty (30) day period and does not diligently and continuously

proceed with such performance until completion.

13. All notices, elections and communications permitted or required hereunder shall be

in writing, signed by the party making the same, and shall be delivered personally or by

registered or certified mail, return receipt requested, to the other parties hereto at the

addresses set forth below their respective signature block. The date of such notice of

communication shall be the date of personal delivery or mailing as the case may be. In the

event any date on which any notice or election is required to be made hereunder falls on

a Saturday, Sunday, or federal holiday, then the date on which notice is required to be

given or made hereunder shall, for all purposes, be deemed to be the next following

business day.

14. All rights and remedies of the parties hereunder shall be cumulative, and none shall

be exclusive of any other, or of any rights and remedies allowed by law, and pursuit of any

one of said rights or remedies does not preclude pursuit of any one or more of such other

rights or remedies.

15. The parties shall cause this Agreement (or a memorandum of agreement evidencing

this Agreement) to be recorded in the Office of the Register of Mesne Conveyances for

Charleston County, South Carolina. The parties shall share any recording fees and other

charges related to such recording.

16. If any term of this Agreement is declared to be illegal or unenforceable, all other terms hereto shall remain in full force and effect. EXHIBIT B

17. No , term or condition hereof shall be deemed waived, except by written

consent of the party against whom the waiver is claimed, and any waiver of the breach of

any covenant, term or condition shall not be deemed to be a waiver of any preceding or

succeeding breach of the same or any other covenant, term or condition of this Agreement.

Acceptance of any performance by a party after the time the same shall have become due

shall not constitute a waiver by the nondefaulting party of the breach or default of any

covenant, term or condition of this Agreement unless otherwise expressly agreed to by the

non-defaulting party in writing.

18. This Agreement, together with any later written modifications or amendments

thereto, shall constitute the entire agreement between the parties with respect to the

subject matter hereof and shall supersede any prior or contemporaneous agreements or

understandings, whether written or oral, which the parties, their agents or representatives

may have had relating to the subject matter hereof. No modification, alteration or waiver of any term, condition or covenant of this Agreement shall be valid unless in writing and signed by both parties hereto.

19. This Agreement is entered into in South Carolina and shall be enforced and construed in accordance with the laws thereof.

20. Time is of the essence with respect to all obligations to be performed by the parties hereunder.

IN WITNESS WHEREOF, Kiawah Resort Associates, L.P., has caused these presents to be executed in its name by its General Partner thereunto duly authorized and its seal to be hereunto affixed, this 4~ day of , in the year of our EXHIBIT B

Lord One Thousand Nine Hundred and Ninety-Seven, in the Two Hundred and Twenty-

First year of the Sovereignty and Independence of the United States of America.

SIGNED, SEALED AND DELIVERED KIAWAH RESORT ASSOCIATES, L.P. IN THE PRESENCE OF: (SEAL) By: D&W Investments, Inc., a South Carolina corporation (CORP. SEAL) 211 King Street, Suite 300 Charleston, SC 29401 Its: General Partner

By: harles P. Darby, Its: President

STATE OF SOUTH CAROLINA ) ) COUNTY OF CHARLESTON )

THE FOREGOING INSTRUMENT was acknowledged before me by Kiawah Resort

Associates, L.P., by DB W Investments, Inc., a South Carolina corporation, its General

Partner, by Charles P. Darby, iii, its President, this fdt day of

1997.

(SEAL)

y commission expires: N- JcP .Dao/

10 EXHIBIT B

KIAWAH ISLAND UTILITY, INC., a South Carolina Corporation (SEAL) P.O. Box 419

Ch I t C 29402

BY

STATE OF SOUTH CAROLINA ) ) PROBATE COUNTY OF CHARLESTON )

PERSONALLY appeared before me the undersigned witness who after first being duly sworn, deposes and says that s/he saw the within-named Kiawah Island Utility, Inc. a South Carolina corporation by Leonard L. Long, Jr., its Vice President, sign, seal and as its act and deed, deliver the within-written Utility Service Agreement for the uses and purposes therein mentioned, and that s/he together with the other witness whose signature appears above, witnessed the execution thereof.

SWORN TO BEFORE ME THIS day of~~, 1997.

My Commission expires

11 EXHIBIT B

Exhibit "A"

Description of KRA's "Property"

All those certain pieces, parcels, and tracts of land situate, lying and being on Kiawah Island, in the County of Charleston, State of South Carolina, presently owned by Kiawah Resort Associates, L.P., having been conveyed to Kiawah Resort Associates, L.P. by (i) deed of conveyance from Kiawah Resort Associates, a South Carolina joint venture dated June 26, 1992, and recorded in Book L215, page 486, in the R.M.C. Office for Charleston County, S.C.; and (ii) deed of conveyance from KRA/Strawmarket, L.P. dated June 26, 1992, and recorded in Book L215, page 455, in said R.M.C. Office, SAVIliIG AND EXCEPTING THEREFROM, all those certain lots, pieces, parcels and tracts of land previously conveyed by Kiawah Resort Associates, L.P. to third parties by of conveyance dated and recorded in said R.lvl.C. Office prior to the date of execution of the within written instrument. EXHIBIT B

"B" EX HI B IT

the "KIU PROPERTY"

All that certain piece, parcel, or tract of land situate, lying and being in the Town of Kiawah Island, Charleston County, South Carolina, known generally as the "Kiawah island Utility tract," containing 16.856 acres, more or less, and shown and designated as" SEWER TREATMENT PLANT KIAWAH ISLAND UTILITY, INC. TMS 209-01-00-120 N127/118 16.856 AC" on a plat prepared by Southeastern , Inc., entitled "A LINE

ADJUSTMENT PLAT OF A 16.856 ACRE TRACT OWNED BY KIAWAH ISLAND UTILITY, INC. AND AN 8.015 ACRE TRACT OWNED BY KIAWAH RESORT ASSOCIATES, L.P. AND UTILITY EASEMENTS 'A'ND 'B'OCATED IN THE TOWN OF KIAWAH ISLAND, CHARLESTON COUNTY, SOUTH CAROLINA" dated September 11, 1996, and recorded in Plat Book EB at page 382, in the R.M.C. Office for Charleston County, S.C., said tract having such location, butts and bounds, metes, courses, and distances as will by reference to said plat more fully appear.

ALSO

(yyeJLPurnfLTrac4

All that certain piece, parcel, or tract of land situate, lying and being in the Town of Kiawah Island, Charleston County, South Carolina, known generally as the "Ocean Course Well Pump tract," containing .063 acres, more or less, and shown on a plat prepared by Southeastern Surveying, Inc., entitled "A BOUNDARY SURVEY OF THE WELL PUMP TRACT OWNED BY LANDMARK LAND COMPANY OF CAROLINA, INC. TO BE CONVEYED TO KIAWAH ISLAND UTILITY, INC. LOCATED IN THE TOWN OF KIAWAH ISLAND CHARLESTON COUNTY, SOUTH CAROLINA" dated April 19, 1991, last revised on September 5, 1991, and recorded in Plat Book CE at page 96, in the R.M.C. Office for Charleston County, S.C., said tract having such location, butts and bounds, metes, courses, and distances as will by reference to said plat more fully appear. EXHIBIT B

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f' EXHIBIT C

STATE OF SOUTH CAROLINA ) BKL OF SAM ) FOR COUNTY OF CHARLESTON ) WATER AND WASTEWATER FACILITIES (Donated Lines - 2005)

FOR/AND in consideration of the sum of Five and No/100 ($5.00) Dollars, tbe receipt and sufficiency of which is hereby acknowledged, KIAWAH RESORT ASSOCIATES, L.P. (a Delaware limited partnership hereinafter sometimes referred to as the "Seller") hereby transfers, assigns, conveys, confirms, ratifies and sets over unto KIAWAH ISLAND UTILITY, INC. (a South Carolina corporation hereinafter sometimes referred to as the "Buyer") all of its right, title and interest in and to all those mains, valves, hydrants and other items of "A" described on Exhibit attached hereto and incorporated herein by reference (collectively, the "Property,") TO HAVE AND TO HOLD, all and singular, the Property unto the Buyer and its successors and assigns, to its and their own use and behoof forever.

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE BUYER AND THE SELLER AGREE THAT THE PROPERTY WILL BE SOLD AND DELIVERED TO BUYER "AS IS" AND "WHERE IS," AND WITHOUT ANY REPRESENTATION, GUARANTEE OR WARRANTY OF SELLER, EXPRESS OR IMPLIED& OF ANY KIND& ARISING BY LAW OR OTHERWISE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER SPECIFICALLY DISCLAIMS AND EXCI UDKS HEREFROM (i) ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (ii) ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF FREEDOM FROM ANY RIGHTFUL CLAIM BY WAY OF INFRINGEMENT OR THE LIKE; (iii) ANY IMPLIED REPRESENTATION OR WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; AND (iv) ANY OBLIGATION OR LIABILITY OF SELLER ARISING IN , WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF SEI LER, ACTUAL OR IMPUTED, OR IN STRICT LIABILITY, INCLUDING ANY OBLIGATION OR LIABILITY FOR LOSS OF USK, REVENUE OR WITH RESPECT TO THE KQUIPMKNT OR FOR ANY LIABILITY OF BUYER TO ANY THIRD PARTY OR ANY OTHER DIRECT INCIDENTAl OR CONSEQUENTIAL DAMAGE.

And for the consideration aforesaid, the Seller hereby appoints the Buyer„ its successors and assigns, its true and lawful attorneys, with full power of substitution in its name or otherwise to demand, collect„sue upon, receipt for and otherwise dispose of or deal with the Property.

Seller further covenants and agrees with the Buyer that it will, from time to time, at the request of the Buyer, execute and deliver or cause to be executed and debvered all such further bills of sale, assignments, instruments of transfer and agreements as may be reasonably required by the Buyer in order to more effectually vest title in the Buyer to the Property hereby conveyed or intended hereby to be conveyed. EXHIBIT C

IN WITNESS WHEREOF, Kiawah Resort Associates, L,P,, has caused these presents to be executed in its name by its General Partners thereunto duly authorized, and its seal to be hereunto affixed, this 17th day of August, 2005.

SIGNED, SEALED AND DELIVERED KIAWAH RESORT ASSOCIATES, L.P. IN THE PRESENCE OF: (SEAL)

By: D&W Investments, Inc., a South Carolina corporation (CORP.SEAL) Its: Ge IP

By: Charles P. Darby, HI Its: President

By: TWD Investments, LLC a South Carolina limited liability company (SEAI.) Its: General Partner

By: Charles P. Darby, III Its: Manager EXHIBIT C EXHIBIT C

STATE OF SOUTH CAROLINA ) BILL OF SALK ) FOR COUNTY OF CHARLESTON ) WASTEWATER FACII ITIKS (Purchased Lines-2005)

FOR/AND in consideration of the sum of Three Hundred Eighty Two Thousand Six Hundred Sixty Six and Noi100 ($382,666.00) Dollars, the receipt and sufficiency of which is hereby acknowledged, KIAWAH RESORT ASSOCIATES, L.P. {a Delaware limited partnership hereinafter sometimes referred to as the "Seller") hereby transfers, assigns, conveys, confirms, ratifies and sets over unto KIAWAH ISLAND UTH.ITY, INC. (a South Carolina corporation hereinafter sometimes referred to as the "Buyer") all of its right, title and interest in and to all those mains and other items of personal property described on Exhibit "A" attached hereto and incorporated herein by reference {collectively, the "Property, ") TO HAVE AND TO HOLD, all and singular, the Property unto the Buyer and its successors and assigns, to its and their own use and behoof forever.

EXCEPT AS OTHERWISK EXPRESSLY SET FORTH HEREIN, THE BUYER AND THE SELLER AGREE THAT THK PROPERTY WILL BK SOLD AND DELIVERED TO BUYER "AS IS" AND "WHERE IS," AND WITHOUT ANY REPRESENTATION, GUARANTEE OR WARRANTY OF SELLER, EXPRESS OR IMPLIED, OF ANY KIND, ARISING BY LAW OR OTHERWISE. WITHOUT LIMITING THK GENERALITY OF THE FOREGOING, SELLER SPECIFICALLY DISCLAIMS AND EXCLUDES HEREFROM (i) ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF MERCIS&KABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (ii) ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF FREEDOM FROM ANY RIGHTFUL CLAIM BY WAY OF INFRINGEMENT OR THE LIKE; {iii) ANY IMPLIED REPRESENTATION OR WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; AND (iv) ANY OBLIGATION OR LIABILITY OF SELLER ARISING IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF SELLER, ACTUAL OR IMPUTED, OR IN STRICT LIABILITY, INCI UDING ANY OBLIGATION OR I,IABILITY FOR I OSS OF USE, REVENUE OR PROFIT WITH RESPECT TO THE EQUIPMENT OR FOR ANY I IABILITY OF BUYER TO ANY THIRD PARTY OR ANY OTHER DIRECT INCIDENTAL OR CONSEQUENTIAL DAMAGE.

And for the consideration aforesaid, the Seller hereby appoints the Buyer, its successors and assigns, its true and lawful attorneys, with full power of substitution in its name or otherwise to demand, collect, sue upon, receipt for and otherwise dispose of or deal with the Property.

Seller further covenants and agrees with the Buyer that it will, from time to time, at the request of the Buyer, execute and deliver or cause to be executed and delivered all such further bills of sale, assignments, instruments of transfer and agreements as may be reasonably required by the Buyer in order to more effectually vest title in the Buyer to the Property hereby conveyed or intended hereby to be conveyed. EXHIBIT C

IN WITNESS WHEREOF, Kiawah Resort Associates, L.P., has caused these presents to be executed in its name by its General Partners thereunto duly authorized, and its seal to be hereunto affixed, this 17th day of August, 2005.

SIGNED, SEALED AND DELIVERED KIAWAH RESORT ASSOCIATES, L.P. IN THE PRESENCE OF: (SEAL)

By: D&W Investments, Inc., a South Carolina corporation (CORP. SEAI.) Its: Ge I P

By: Charles P. Darby, III Its: President

By: TWD Investments, LLC a South Carolina limited liability company (SEAL) Its:

By: Charles P. Darby, III Its: Manager EXHIBIT C