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3.5. SR 04-12-2010 ~/ Elk REQUEST FOR ACTION River To Item Number Ci Council 3.5. Agenda Section Meeting Date Prepared by Consent April 12, 2010 Rebecca Haug, Environmental Administrator Item Description Reviewed by Waste Delivery Agreement with Resource Recovery Lori ohnson, Ci Administrator Technologies (RRT) Reviewed by Action Requested Staff requests the City Council approve the Waste Delivery Agreement with Resource Recovery Technologies (RRT) to be in effect once Great River Energy (GRE) purchases RRT. Background/Discussion The agreement before you will allow the City to continue processing their waste into fuel to be turned into electricity at Great River Energy. On October 5, 2009, staff presented a similar five-year Waste Delivery Agreement which was approved by the Council only through December 31, 2010. At that time, i Sherburne County was offering a rebate through August 2010, which was the reason for Council entered mto a one year agreement. Since that time, Sherburne County has entered into an agreement with RRT to continue offering a rebate through December 31, 2012. In light of this new agreement with the County, the City has been asked to sign a new Waste Delivery Agreement that would be in effect until December 31, 2014, and then automatically renew for two additional five-year periods unless the City chooses to terminate the agreement. As before, this agreement will not go into effect until GRE purchases RRT. One of the contingencies with the purchase of that facility is receiving agreements from Anoka and Sherburne Solid Waste Haulers. Since the City has organized garbage collection it is considered a Solid Waste Hauler. Financial Impact Staff expects that the garbage fund would be able to absorb most of the increase in the short term (2010). However, future garbage rate increases may be required. Attachments Staff report dated October 5, 2009 Waste Delivery Agreement • Action Motion by Second by Vote Follow Up C:\Documents and Settings\jmiller\Local Settings\Temporery Internet Files\OLK3E\Action Requested-contract2010.doc-book Elk REQUEST FOR ACTION ,..._.. River To Item Number City Council Agenda Section Meeting Date Prepared by Consent October 5, 2009 Rebecca Haug, Environmental Administrator Item Description Reviewed by RRT Waste Delivery Agreement Lori ohnson, Ci Administrator Reviewed by Peter Beck, Ci Attorne Action Requested Staff requests the City Council approve the Waste Delivery Agreement with Resource Recovery Technologies (RRT) for one year. Background/Discussion The City of Elk River has been processing their waste at the RRT facility since the inception of the facility back in the late 1980's. The contracts for waste delivery have pxunaxily been negotiated by the participating Counties, which have been Anoka, Hennepin, Sherburne and Tri-County. Due to the recent contract negotiations between the Counties, RRT is now responsible fox negotiating the contracts with the garbage haulers. Since Elk River has organized garbage collection, it is considered a hauler. The agreement before you will allow the Ciry to continue processing their waste into fuel to be turned into electricity at Great River Energy. Staff is recommending that this agreement be approved through December 31, 2010. Anoka and Sherburne County are offering rebates to haulers through August 20, 2010. Depending on whether the Counties continue to offer the rebate the Ciry will have an opportunity to again look at the financial impacts prior to agreeing to delivering waste to RRT through 2012. Financial Impact Based on tons hauled September 2008 -September 2009 the estimated additional cost to the City's garbage fund will be approximately $46,000 after the $12/ton rebate from Sherburne County, please see attached e-mail from Dave Lucas, Sherburne County Solid Waste Officer. We expect that the garbage fund would be able to absorb most of the increase in the short term (2010). However, future increases may be reflected in garbage rate adjustments. Attachments E-mail dated September 30, 2009 from Dave Lucas, Sherburne County Solid Waste Officer Spreadsheet prepared by Lori Ziemer showing the rate of disposal Action Motion by Second by Vote Follow Up C:\Documents and Settings\jmillec\Local Settings\Temporary Internet Files\OLK3E\Action Requested-contnct.doc-book WASTE DELIVERY AGREEMENT (For Anoka and Sherburne Counties) This WASTE DELIVERY AGREEMENT ("Agreement"), made this _ day of 2010, by and between GREAT RIVER ENERGY, a Minnesota cooperative corporation with principal offices at 12300 Elm Creek Boulevard, Maple Grove, MN 55369 ("GRE"), and , a [corporation/limited liability company], with principal offices located at (address] (the "Hauler"). WHEREAS, GRE has entered into an asset purchase agreement for the purchase of the municipal solid waste processing facility located at 10700 165' St. NW in Elk River, Minnesota (the "Facility") from Resource Recovery Technologies, LLC ("RRT"), and anticipates that the closing of the purchase transaction will take place by May 1, 2010; and WHEREAS, the Hauler is engaged in the recycling and refuse hauling business in one or both of the counties of Anoka and Sherburne (each a "County" and together the "Counties"); and WHEREAS, the Hauler and RRT are parties to a waste delivery agreement (the "Interim Waste Delivery Agreement") dated , 2009, under which the Hauler delivers municipal solid waste to the Facility and which will be terminated effective as of the closing of the purchase of the Facility by GRE; and WHEREAS, as a condition of the closing of the sale of the Facility, and to provide for a seamless transition of the ownership and operation of the Facility from RRT to GRE, GRE is requiring the execution of waste delivery agreements with the Hauler and with the Other County Haulers to provide for the continued delivery of municipal solid waste to the Facility after GRE assumes ownership and operational responsibility for the Facility; and WHEREAS, this Waste Delivery Agreement between GRE and the Hauler is intended to (1) be contingent upon the closing of the purchase of the Facility by GRE, (2) be contingent upon execution of substantially similar waste delivery agreements with the Other County Haulers, and (3) replace the Interim Waste Delivery Agreement between the Hauler and RRT effective as of the calendar day following the date of the closing of the purchase of the Facility by GRE (the "Effective Date"), and WHEREAS, the Hauler will continue to delivery Acceptable Waste to the Facility under the terms and conditions of the Interim Waste Delivery Agreement until the Effective Date, and as of the Effective Date, the Hauler will deliver Acceptable Waste to the Facility under the terms and conditions of this Waste Delivery Agreement between the Hauler and GRE. NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the receipt and sufficiency of which is hereby mutually acknowledged, the parties agree as follows: I. DEFINITIONS The following definitions apply to this Agreement: -1- A. Acceptable Household Quantities: Means waste which is otherwise Unacceptable Waste, but which is contained in garbage, refuse, and municipal solid waste generated from normal household activities, provided, however, that no amount of Hazardous Waste or any other waste that is regulated or restricted by law shall be Acceptable Household Quantities. For the purposes of this definition, "household" includes any permanent or temporary residential dwelling unit. B. Acceptable Non-Household Waste: Means waste which is otherwise Unacceptable Waste, but which is contained in garbage, refuse, and municipal solid waste generated from commercial, industrial, or community activities, where the quantity of such Unacceptable Waste contained in any load delivered to the Facility constitutes an insignificant portion of such load, provided, however, that no amount of Hazardous Waste or any other waste that is regulated or restricted by law is Acceptable Waste Non-Household Waste. C. Acceptable Waste: Means garbage, refuse, and other municipal solid waste from residential, commercial, industrial, and community activities which is generated and collected in aggregate, and which is not otherwise defined herein as Unacceptable Waste. Acceptable Waste shall also include Acceptable Household Quantities and Acceptable Non-Household Waste, as each such term is defined herein. Acceptable Waste does not include Recyclable Materials or Hazardous Waste, as each such term is defined herein, or any other waste that is regulated or restricted by law. D. Contracted Tonnage: The quantity in tons of Acceptable Waste Hauler agrees to deliver to the Facility as set forth in Section II.A.1 of this Agreement. E. County: Means Anoka County or Sherburne County. F. Effective Date: Means the calendar day following the closing date of the purchase of the Facility by GRE. G. Force Majeure: Means any act, event or condition relied upon by a party as justification for delay in or excuse from performing an obligation or complying with any condition required of such party under this Agreement, which act, event or condition is beyond the reasonable control of the party, its affiliates or agents relying thereon, including, without limitation, (i) an act of God, epidemic, landslide, lightning, earthquake, fire or explosion, storm, flood or similar occurrence, an act of public enemy, war, blockage, insurrection, riot, general arrest or restraint of government and people, civil disturbance or disobedience, sabotage or similar occurrence; (ii) the order or judgment or other act of any federal or state court, administrative agency or governmental office or body; (iii) the denial, loss, suspension, expiration, termination or failure of renewal of any permit, license or other governmental approval required to operate (including, without limitation, those permits required to operate the Facility); (iv) the -2- adoption or change (including a change in interpretation) of any federal, state, county or local law, rule, permit, regulation or ordinance after the date hereof applicable to the Facility, or GRE, materially adversely affecting its obligations hereunder; or (v) GRE or the Facility is for any reason delayed or barred by governmental or judicial action from collecting all or any part of the fees and charges owed to it pursuant to this Agreement. H. GRE: Great River Energy I. Hauler Rebate: Has the meaning set forth in Section II.H of this Agreement. J. Hazardous Waste: Means waste defined as hazardous waste by state, federal, and county laws, rules, and regulations, as any of the foregoing may be amended from time to time. K. Holiday: Means New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. L. Interim Waste Delivery Agreement: Means the waste delivery agreement between the Hauler and RRT that terminates effective as of the date of the closing of the purchase of the Facility by GRE. M. MSW: Means municipal solid waste. N. New Service Agreement: Means the agreement between GRE and each County for the provision of waste processing services at the Facility. O. Other County Haulers: Means all haulers operating in the applicable County who have entered into a waste delivery agreement with GRE substantially similar to this Agreement. P. Recyclable Materials: Means materials that are separated from mixed municipal solid waste for the purpose of recycling, including paper, glass, plastics, metals, automobile oil, and batteries. Refuse-derived fuel or other material that is destroyed by incineration is not a recyclable material. Q. RRT: Resource Recovery Technologies, LLC. R. Tipping Fee: Has the meaning set forth in Section II.D of this Agreement. S. Unacceptable Waste: Waste which is not acceptable at the Facility. Unacceptable Waste shall include waste which would likely pose a threat to health or safety or which may cause damage to or materially adversely affect the operation of the Facility, including but not limited to: explosives; hospital, pathological and biological waste; commercial, industrial, and community Hazardous Waste, as regulated by federal, state and local law; chemicals and -3- radioactive materials; oil sludges; asbestos in identifiable quantities; cesspool, domestic sewage or other sewage sludge; human or animal remains; street sweepings; ash; mining waste; sludges; non-combustible demolition and construction debris, including loads that are predominantly (i.e., over 50 percent) sheet rock, metal studs/framing, metal siding, garage doors, lights, bricks, block, or concrete; waste in liquid state; hazardous refuse of any kind, such as cleaning fluids, used crank case oils, cutting oils, paints, acids, caustics, poisons, and drugs; loads of predominantly windshields, mirrors or other autobody glass; loads of predominantly asphalt shingles; and any other materials that may be agreed to from time to time by the parties. If any governmental agency or unit having appropriate jurisdiction shall determine that certain chemicals or other substances which are not currently considered harmful or of a toxic nature or dangerous, are harmful, toxic or dangerous, GRE and the Hauler agree that such chemicals or other substances shall be Unacceptable Waste. II. HAULER RESPONSIBILITIES A. Delivery of Acceptable Waste. 1. The Hauler agrees to deliver to the Facility in each of the following periods no less than the following "Contracted Tonnage" of Acceptable Waste: Period Contracted Tonnage Effective Date -December 31, 2010 January 1, 2011 -December 31, 2024 2. The Hauler agrees to use its best efforts to avoid delivering any Unacceptable Waste to the Facility and shall not knowingly mix any Unacceptable Waste with Acceptable Waste. 3. The Hauler shall use its best efforts to deliver the Contracted Tonnage of Acceptable Waste to the Facility in a manner which spreads delivery of the Contracted Tonnage evenly over the days of operation of the Facility. B. Waste Origin. The parties agree that the purpose of this Agreement is to assure that only Acceptable Waste generated and collected in the Counties is delivered by the Hauler to the Facility. The parties acknowledge that there will be times when waste generated in other counties is collected along with waste from the Counties for operational and routing efficiency. The parties agree that the incidental delivery of small amounts of Acceptable Waste from other counties is allowed under this Agreement, so long as the Hauler agrees that, before any such incidental delivery of non-County waste can occur, it will provide G1ZE with, and update as necessary, a list of generators from where Acceptable Waste will be delivered from other counties, and GRE agrees in writing that the list of generators, as updated by the Hauler, constitutes an incidental delivery of non- -4- County Acceptable Waste. Without the prior written approval of GRE, in no event shall the Hauler deliver waste to the Facility that originates from Ramsey, Scott, Dakota or Washington counties. C. Rejection of Deliveries. The Hauler may be denied entrance to the Facility by GRE if waste is delivered at any time other than the Facility's standard receiving hours or if the Hauler has not paid the Tipping Fee, or if GRE has a reasonable basis to believe that a vehicle contains Hazardous Waste or a significant amount of Unacceptable Waste. D. Tipping Fee. The Hauler shall pay to GRE the following tipping fee (the "Tipping Fee") for each ton of Acceptable Waste delivered by the Hauler to the Facility during the calendar year of the Term noted below. Calendar Year Tipping Fee ($/ton) Period 2010 $64 2011 $68 2012 $72 2013 $72 2014 $78 2015 $84 Previous calendar year Each calendar year Tipping Fee + annual CPI thereafter adjustment. Notwithstanding the foregoing, the Tipping Fee shall be no higher than the tipping fee charged to the Other County Haulers who deliver to the Facility during the same calendar year of the Term. If a tipping fee lower than that indicated above is offered to any Other County Hauler during the same calendar year of the Term, the Hauler's Tipping Fee under this Agreement will be adjusted to reflect the lower tipping fee for the applicable portion of the calendar year that the lower tipping fee was in effect. Notwithstanding the foregoing, in the event (i) Other County Haulers fail to deliver their respective contracted tonnage under their respective waste delivery agreements with GRE, or (ii) a new technology (not currently available) becomes available to the marketplace at a materially lower cost and the Hauler can reasonably demonstrate to GRE that Hauler is suffering a material loss of customer-driven revenue due to a resulting lower disposal cost (including costs for transportation and tipping fees) applicable to the Other County Haulers, the parties agree to negotiate in good faith to adjust the Tipping Fee to an amount that fairly reflects the circumstances at the time. -5- E. Use of Facility. The Hauler agrees that it will comply with such reasonable rules and regulations regarding the use of the Facility as GRE may periodically adopt. F. Licensing and Compliance with Law. The Hauler agrees to (1) maintain and comply with the requirements of all permits and operating licenses applicable to the Facility; and (2) comply with all federal, state or local laws, rules, regulations or ordinances. G. Mattresses. In addition to all other charges, the Hauler agrees to pay to GRE the mattress charge established by GRE from time to time. H. Hauler Rebate. The Counties will implement, and will continue to offer through December 31, 2012, a rebate (the "Hauler Rebate") that will require the Counties to pay the Hauler a processing rebate for each ton of MSW accepted at the Facility or the Back-up Disposal Facility. The amount of the Hauler Rebate is as set forth on the attached Exhibit A. The County from where the MSW originated will pay the processing rebate directly to the Haulers; GRE will not be responsible for obtaining Hauler Rebates on behalf of the Hauler or for paying Hauler Rebates on behalf of the Counties. GRE will have no liability or obligation in the event a County fails to pay the Hauler Rebates to the Hauler. III. TERM. This Agreement shall be in effect from the Effective Date through December 31, 2014 and shall thereafter automatically renew for two (2) additional five (5) year periods on the terms and conditions set forth herein unless earlier terminated pursuant to Section VI below. IV. REMEDIES. In the event the Hauler fails to deliver the Contracted Tonnage of Acceptable Waste to the Facility for any of the periods specified in Section II.A.1. during the Term of this Agreement, GRE will be entitled to liquidated damages. The amount of the liquidated damages shall be determined by multiplying the applicable Tipping Fee for such period by the difference between the tons of Contracted Tonnage of Acceptable Waste scheduled for delivery minus the total tons of Acceptable Waste actually delivered to the Facility for such period. The liquidated damages shall be payable within fifteen (15) days of the end of the applicable period. V. FORCE MAJEURE. In the event any party is rendered unable, wholly or in part, by an event of Force Majeure to carry out any of its obligations under this Agreement, then the obligations of such party, to the extent affected by such an event of Force Majeure and to the extent that reasonable business efforts are being used to resume performance at the earliest practicable time, shall be suspended during the continuance of any inability so caused by the event of Force Majeure but for no longer period. Any time that a party intends to rely upon an event of Force Majeure to excuse or suspend its obligations hereunder as provided in this Section, such party shall notify the other parry as soon as is reasonably practicable, describing in reasonable detail the circumstances of the event of Force Majeure. Notice shall again be given when the effect of the event of Force Majeure has ceased. -6- VI. TERMINATION A. Termination. The parties may terminate this Agreement as follows: 1. Either party may terminate this Agreement by providing notice to the other party if the other party commits a material breach of this Agreement, and the breach is not cured within 30 days after receipt of notice from the party not in breach, stating the nature of the breach. 2. Either party may terminate this Agreement by providing notice to the other party in the event of any proceedings, voluntary or involuntary, in bankruptcy or insolvency by or against the other party, or the appointment with or without such other party's consent of an assignee for the benefit of creditors or of a receiver for such other party, or the going into liquidation voluntarily or otherwise for the making of a composition with creditors of such other party. 3. GRE may terminate this Agreement by providing sixty (60) days advance written notice to the Hauler in the event of the early termination of a New Service Agreement with one of the Counties. 4. Beginning January 1, 2015 and continuing on January 1 of each year thereafter during the Term of this Agreement, in the event the Hauler has experienced for the preceding calendar year a decrease of greater than fifteen percent (15%) as compared to the calendar year preceding the preceding calendar year in (i) the aggregate tonnage of MSW picked up in Anoka and Sherburne counties, or (ii) its residential pricing for MSW originating in Anoka or Sherburne County due to the effects of a new entrant in the relevant hauling market, the Hauler may terminate this Agreement by providing one hundred eighty (180) days advance written notice to GRE together with appropriate documentation evidencing the applicable decrease in MSW tons or revenue. 5. The Hauler may terminate this Agreement upon ninety (90) days prior written notice in the event of the early termination of the Hauler Rebates (earlier than the schedule described in Appendix A) or at the expiration of the Hauler Rebates on December 31, 2012. Notwithstanding the foregoing, within thirty (30) days after receipt of the written notice described above, GRE shall have shall have the right to reduce the Tipping Fee by the amount of the applicable Hauler Rebate, in which case this Agreement shall not terminate and the terms of this Agreement shall continue in full force and effect with such adjusted Tipping Fee. 6. Beginning January 1, 2015 and continuing on January 1 of each year thereafter during the Term of this Agreement, in the event the Hauler has -7- received a bona fide written offer that will reduce such Hauler's "costs of disposal" (tipping fees plus transportation costs) by greater than fifteen percent (15%) per year, the Hauler may terminate this Agreement by providing one hundred eighty (180) days advance written notice to GRE together with appropriate documentation evidencing such bona fide written offer. Notwithstanding the foregoing, within thirty (30) days after receipt of the written notice described above, GRE shall have the right to match the terms of such bona fide written offer, in which case this Agreement shall not terminate and the terms of this Agreement shall continue in full force and effect, as appropriately amended to incorporate the terms of such bona fide written offer. B. Effect of Termination. Termination under this Section VI will cause all rights and obligations of the parties under this Agreement to terminate without any liability of any party to any other party, except that termination will have no effect on performance obligations or amounts to be paid that have accrued up to the effective date of such termination. In addition, the indemnification obligations contained in Section VII of this Agreement will survive the termination of this Agreement. VII. INDEMNIFICATION A. Indemnification of GRE. The Hauler agrees to defend, indemnify, and hold harmless GRE, its officers, agents, employees and contractors (i) from any liability, claims, causes of action, judgments, damages, losses, costs, or expenses, including reasonable attorney's fees, resulting directly or indirectly from any act or omission of the Hauler or its officers, agents, employees or contractors, and (ii) against all loss by reason of the failure of the Hauler to perform fully, in any respect, all obligations under this Agreement. B. Indemnification of Hauler. GRE agrees to defend, indemnify, and hold harmless the Hauler, its officers, agents, employees and contractors (i) from any liability, claims, causes of action, judgments, damages, losses, costs, or expenses, including reasonable attorney's fees, resulting directly or indirectly from any act or omission of GRE or its officers, agents, employees or contractors, and (ii) against all loss by reason of the failure of GRE to perform fully, in any respect, all obligations under this Agreement. VIII. CONDITIONS TO EFFECTIVENESS; BINDING EFFECT. This Agreement will become effective only upon (i) consummation of GRE's purchase of the Facility from RRT; and (ii) GRE entering into agreements with the Other County Haulers servicing the Counties (the "Other Hauler Contracts") on substantially similar terms and conditions as are set forth in this Agreement with respect to minimum requirements of tonnage delivery and uniformity of pricing. Upon satisfaction of these conditions, this Agreement shall then be binding upon and inure to the benefit of the respective parties, their representatives, successors and assigns. -8- IX. ENTIRE CONTRACT, MODIFICATION AND WAIVER. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. No supplement, modification or waiver of this Agreement shall be binding unless it is executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof, whether or not similar, nor shall such waiver constitute a continuing waiver. X. INDEPENDENT CONTRACTOR. For the purposes of this Agreement, the Hauler shall be deemed to be an independent contractor, and not an employee or agent of GRE. Any and all agents, servants, or employees of the Hauler or other persons, while engaged in the performance of any work or services required to be performed by GRE under this Agreement, shall not be considered employees or agents of GRE and any and all claims that may or might arise on behalf of GRE, its agents, servants or employees as a consequence of any act or omission on the part of the Hauler, its agents, servants, employees or other persons shall in no way be the obligation or responsibility of GRE. The Hauler, its agents, servants, or employees shall be entitled to none of the rights, privileges, or benefits of Hauler employees except as otherwise may be stated herein. XI. GOVERNING LAW. This Agreement shall be interpreted and construed according to the laws of the State of Minnesota. XII. SEVERABILITY. In case any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. XIII. ASSIGNMENT. The Hauler shall not delegate, assign, subcontract, or transfer any of its duties or interests in this Agreement, whether by subcontract, assignment, delegation or novation without the prior written consent of GRE, which consent shall not be unreasonably withheld. XIV. MERGERS AND ACQUISITIONS A. Maintenance of Obligations. The Hauler shall maintain its existence and shall not dissolve or otherwise dispose of all or substantially all of its assets, and shall not allow itself or its routes to be acquired, and shall not consolidate with or merge into another corporation, association, or entity or permit any other corporation, association, or entity to consolidate with or merge into it unless the acquiring, surviving, resulting or transferee corporation, association, or other -9- entity, as the case may be, if other than the Hauler, assumes all of the obligations of the Hauler under this Agreement. B. Another Hauler. If the Hauler acquires or merges with another hauler or its routes where such other hauler is obligated to provide GRE with Acceptable Waste, the Hauler shall assume the other hauler's agreement with GRE and, in addition to continuing to meet its own obligations, the Hauler shall deliver the acquired hauler's contracted Acceptable Waste to the Facility. IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth above. Gam; HAULER: GREAT RIVER ENERGY By Its: By (printed name) (printed name) (printed title) Its: (printed title) -10- Appendix A Hauler Rebate Period Hauler Rebate May 1, 2010 -December 31, 2010 $12 January 1, 2011- December 31, 2012 $14 -11-