4.5. SR 06-04-2001ElkBdver
Municipal Utilities
322 King Avenue
Elk River, MN 55330
To:
Elk River City Council
Stephanie Klinzing
John Dietz
Louise Kuester
Dan Yveite
Paul Motin
From: Bryan C. Adams
Item ~ 4.5.
phone: 763.441.2020
Fax: 763.441.8099
Subject:
Proposed LFG Project
The Elk River Municipal Utilities (ERMU) in partnership with Sherbume County (SC)
and Waste Management (WM) are proposing to expand the Landfill Gas (LFG) to
electrical energy project at the Elk River Landfill. The expansion entails removing the
existing 550 Kw generation unit and installing 3 - 800 Kw generation units with
provisions to install a 4th unit in the future. This project also included a building with an
education center for tours and group presentations about landfills and LFG to energy
technologies.
The current business arrangement for this project is as follows: ERMU would own this
facility thus preselwing the ability to receive Dept. of Energy annual credits, SC would
loan the money for this project (Estimated to be $2,350,000), and WM would operate
and maintain this facility. The operation and maintenance expense, along with the
principal repayment would be financed with the sale of electricity produced by the
facility. Life of the project is 20 years. The security for SC's loan is the physical assets
of the LFG to electric generation facility with no obligation to the City of Elk River or
ERMU.
Enclosed is the following information for your review: 1) Letter of Intent between ERMU and WM.
2) Letter of Intent between ERMU and SC
3) Resolution Approving the Exercise of Powers Under Minnesota Statues, Chapter
453, Respecting a Certain Electric Power Generation Project.
The above referenced resolution was adopted by the ERMU Commission on April 10,
200l. The City Council should also adopt this resolution so this project can move
forward. This resolution is very similar to resolution #98-125, which is attached, for
another project that did not come to fruition.
Letter of Intent
Landfill Gas to Energy Project
Elk River Municipal Utilities ("ERMU") and Elk River Landfill Inc. ("ERL") wish to
express their intent to enter into negotiations with respect to an agreement or agreements
providing for the design, construction and operation ora landfall gas-to-energy project at
the Elk River Landfill.
WHEREAS, ERL owns and operates the Elk River Landfill Landfill gas, consisting
primarily of methane and carbon dioxide, is produced as a byproduct of the decomposition
of waste within the landfall.
WHEREAS, ERL wi.shes to sell landfill gas extracted from the landfill to ERMU on an
exclusive basis for use as fuel in a landfill gas to energy, facility., and ERMU wishes to
purchase the landfill gas, subject to ERMU and ERL executing an agreement containing
mutually acceptable terms and conditions.
WHEREAS, ERMU wishes to generate and supply electricity in an environmentally
sound manner to its customers.
NOW THEREFORE, ERi, and ERMU agree that they will negotiate exclusively with one
another and negotiate in good faith with the respect to the development of the landfill gas-
to-energy project described above. The negotiations will be based on the premise that:
ERL will sell landfill gas to ERMU, supply the design specifications and
provide technical oversight to assist ERMU in developing a plant design for a
landfill gas to energy facility and in obtaining industry standard warranties from
the manufacturer of the generating equipment;
ERL will provide assistance and guidance relating to permits, eonsm~ction,
operation and maintenance of the landfill gas to energy facility;
o
ERL will assist ERMU in identifying a suitable engineering and/or general
contractor who ~4.L! design and build the facility based on plans and
specifications approved by ERL and ERMU;
ERMU will lease or purchase the land on which the generating facility will be
located, obtain permits (with ERL's assistance as required by ERMU) and
provide interconnection between the generating facility and ERMU's electric
distribution system;
5. ERL and ERMU will enter into an agreement pursuant to which ERL will
operate and maintain the landfill gas to energy facility, in a cost effective and
efficient manner, based on standard practices in the landfill gas industry;
6. ERMU will enter into separate negotiations with Sherbume County to secure
the financing necessary to build the facility;
7. The parties anticipate that the project will be implemented in two phases. The
first phase will include the design, permitting and construction comracts,
together with a final cost and construction schedule for the project. The
second phase will consist of ERMU's negotiations with Sherburne County for
the financing necessary to accomplish the project. The parties anticipate that
the two phases will proceed simultaneously.
The parties agree to commence negotiation tl~ agreetmnI (or agr~rmnlz)
come-plated by the foregoing. While both parties hol~ that tl~ negotiations will
result in a definitive agreement or agreements, ERL and ERMU intend that neither
party will have any obligation to the other with respect to the transactions descn'bed
above unless and until the parties have negotiated mutually acceptable agreements with
respect to all aspects of the transactions and until all such agreements are executed by
both parties and by any necessary third parties.
Acknowledged and agreed:
Dated: _/C~ / ,2000 Dated: f~(~ ~t. Z ~ ,2000
EL~~-'~I~ MUNICIPAL UTII, ITIES
.)
RESOLUTION
SHERBURNE COUNTY BOARD OF COMMISSIONERS
November 21, 2000
Date
112100-AD-656
Number
WHEREAS, The Sherbume County Board of Commissioners, pursuant to Minnesota Statutes 115A.919, has set
aside monies for the use of landfill abatement purposes, costs of closure, postclosure care, response actions and
for purposes of mitigating and compensating for the local risks, costs and other adverse effects of mixed
municipal solid waste facilities;
WHEREAS, Elk River Municipal Utilities has put forth a proposal to work in conjunction with the operator of
the Elk River Mixed Municipal Solid Waste Landfill to utilize the methane (a natural byproduct of the
degenerating waste) at said Landfill by converting the methane into electricity; and,
WHEREAS, the Sherburne County Board of Commissioners recognizes the inherent environmental and social
benefits, which include utilizing a byproduct of the landfill and conversion of that byproduct into a usable
product, and adding power unto the grid at a time when the State of Minnesota will be experiencing the need to
import power;
NOW, THEREFORE, THE SHERBURNE COUNTY BOARD OF COMMISSIONERS HEREBY MAKES
THE FOLLOWING RESOLUTION OF INTENT:
The Sherburne County Board of Commissioners hereby supports the project as proposed by Elk River
Municipal Utilities that would convert methane generated at the Elk River Landfill into power. Further, the
Sherburne County Board of Commissioners intends to financially support this project by loaning up to
$2,350,000 to Elk River Municipal Utilities for the purchase of the generators and related equipment from the
Solid Waste Surcharge fund of the County, as established under Minnesota Statute 115A.919. The terms of the
loan are: 1) a zero interest loan; 2) a twenty-year repayment period; 3) up to $783,000 will be forgiven over the
term of the loan upon successful operation of the project by the Elk River Municipal Utilities; and 4) such other
terms that will protect the County's interests. Prior to any disbursement of funds, the County shall enter into a
written loan agreement with Elk River Municipal Utilities; such agreement to be negotiated by the Sherbume
County Attorney's Office and Sherbume County Zoning Administrator or her designee. The Contract shall be
subject to approval by the Sherbume County Board of Commissioners.
Resolution moved by Commissioner Johnson, seconded by Commissioner Nagorski and adopted.
The Resolution passes.
The above action was taken on the 21~ day of November, 2000.
Clerk to the County Board
Dat~ /
SEAL
RESOLUTION -
A RESOLUTION OF THE CITY OF ELK RIVER
RESOLUTION APPROVING THE EXERCISE OF POWERS UNDER
MINNESOTA STATUTES, CHAPTER 453, RESPECTING A CERTAIN
ELECTRIC POWER GENERATION PROJECT
Be It Resolved as Follows:
1. I~ecitals.
(a) The City of Elk River, Minnesota, in cooperation and conjunction with the
Elk River Municipal Utilities Commission (collectively, the "City") proposes to enter into
contract(s) with Sherburne County, Minnesota (the "County") and Waste Management,
Inc., its successor, assigns and/or other persons (collectively "WM") to facilitate the
completion of a certain electric power generation project (the "Project").
(b) The Project would consist of the construction and completion of a 2.4
kilowatt hour landfill gas-to-energy electric generator located in the City at the Elk River
Landfill. The cost of the Project is currently estimated to be $2,350,000.00.
(c) The Project will be a base load generator owned by the City.
(d) It is proposed that WM, in conjunction with the City, would plan, complete
and operate the Project. The Project is expected to be operational on a full-time basis
to provide electric energy to the customers of the City. The City expects to benefit
from the Project by enhancing its capacity against the growing electricity needs of the
City and against uncertainty of national electric capacity as a whole.
(e) It is proposed that the County loan the sum of approximately
$2,350,000.00 from its Solid Waste Surcharge fund to the City for the purchase of the
generators and related equipment, with zero interest over a twenty-year repayment
period anticipating one-third of the loan forgivable upon twenty years of successful
operation.
(f) The City, the County and WM would enter into agreements (collectively,
the "Agreements") specifying the respective rights and obligation of the City, the
County and WM.
(g) The City would issue a note(s) to finance the Project. These Notes would
be payable from revenues derived from the operation of the Project and would be
secured by a mortgage or other suitable security interest in the Project. The Note(s)
F ~O~OATA~F-JU~J'll~5'tm~/~
would not be a general or moral obligation of the City, would not be secured by any of
the City's existing municipal electric utility assets, and would not be payable from or
a lien against the rates and charges imposed by the City on its municipal electric
customers.
2. ~J.tJ~L~.izR[[9~. It is hereby resolved and determined pursuant to Minnesota
Statutes, Section 453.58, that the City may exercise such powers and enjoy such
privileges provided in Minnesota Statutes, Chapter 453, as may be desirable or
necessary in connection with the City's participation in the Project, as generally
described hereinabove, the entering into the Agreements, and the issuance of the
Note(s) in aid of financing and completing the Project.
3. A.D0roval and Publication. This Resolution has been duly adopted by the City
Council of the City of Elk River, Minnesota, and by the Elk River Municipal Utilities
Commission, respectively, at duly called and regularly held meetings there on
,20 , and shall be published once in the official
newspaper of the City as soon as conveniently possible pursuant to Minnesota Statutes,
Section 453.58, Subdivision 2. This Resolution in itself if not intended and shall not
be interpreted as a commitment of the City to the Project, which shall be contingent
upon the execution of the mutually acceptable Agreements.
Passed and adopted by the City Council and the Elk River Municipal Utilities
Commission of the City of Elk River this day of April, 2001.
ELK RIVER MUNICIPAL
UTILITIES COMMISSION
ATTEST:
By:
George Zabee
Its: President
Bryan Adams
ELK RIVER CITY COUNCIL
ATTEST:
By:
Stephanie Klinzing, Mayor
Sandra Peine
2 F'4~oI~s~}ATA~J~J-II~$. [s~I¢~
RESOLUTION 98 - 125
A RESOLUTION OF THE CITY OF ELK RIVER
RESOLUTION APPROVING THE EXERCISE OF POWERS UNDER
MINNESOTA STATUTES, CHAPTER 453, RESPECTING A CERTAIN
ELECTRIC POWER GENERATION PROJECT
Be It Resolved as Follows:
1. Recitals.
(a) The City of Elk River, Minnesota, in cooperation and
conjunction with the Elk River Municipal U~ilities Commission (collectively,
the "City'S, proposes to enter into contract(s) with United Power Association,
its successors and/or other persons (collectively, 'TrPA") to facilitate the
completion of a certain electric power generation project (the '~Project").
(b) The Project would consist of the construction and completion of
a 35 to 50 megawatt gas turbine electric generator in the City. The cost of
the Project is currently estimated to be $18,000,000.
(c) The Project would be a peak load generator owned by the City.
(d) It is proposed that UPA, in consultation with the City, would act
as the City's agent for the planning, permitting, acquisition, completion, and
operation of the Project, subject to certain rights of the City to operate the
Project when not used by UPA. The Project, as a peak load generator, is
expected to be operational only on occasions throughout any given year when
demand for additional electric energy so requires. The City expects to benefit
from the Project by enhancing its capacity against the growing electricity
needs of the City and against uncertainty of national electric capacity as a
whole.
(e) The City and U-PA would enter into joint and cooperative
agreement(s) (collectively, the "Agreement") specifying the respective rights
and obligations of the City and UPA.
(f) The City would issue revenue or similar bonds or notes (the
'~Bonds") to finance the Project. These Bonds would be payable from
revenues derived from UPA under the Agreement and may be secured by a
mortgage or other suitable security interest in the Project. The Bonds would
not be a general or moral obligation of the City, would not be secured by any
of the City's existing municipal electric utility assets, amd would not be
payable from or a lien against the rates and charges imposed by the City on
its municipal electric customers.
2. Authorization. It is hereby resolved and determined pursuant to
Minnesota Statutes, Section 453.58, that the City may exercise such powers
and enjoy such privileges provided in Minnesota Statutes, Chapter 453, as
may be desirable or necessary in connection with the City's paxticipation in
the Project, as gener,]]y described hereinabove, including without limitation
the designation of UPA as agent of the City, the entering into the Agreement,
and the issuance of the Bonds in aid of financing and completing the Project.
3. A~)nroval and Publication. This Resolution has been duly adopted by
the City Council of the City of Elk River, Minnesota, and by the Elk River
Municipal Ut~Hties Commission, respectively, at duly called and regularly
held meetings thereof on November 9, 1998, and shall be published once in
the of-~c/al newspaper of the City as soon as conveniently possible pursuant
to Minnesota Statutes, Section 453.58, Subdivision 2. This Resolution in
itself is not intended and shall not be interpreted as a commitment of the
City to the Project, which shall be contingent upon the execution of the
mutually acceptable Agreement.
Passed and adopted by the City Council and the Elk River Municipal
Utilities Commission of the City of Elk River this 9~h day of November, 1998.
ELK R,,]~NER MUNICIPAL
U~IES COMbIISSION
~eorge~fresident
ELK RIVER CITY COUNCIL
~enry ~.. D~i~sman, Mayor -
an'dxa peine, City Clerk