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Resolution No. 5395 1 2 3 4 5 6 7 8 RESOLUTION NO. 5395 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A DEVELOPMENT AGREEMENT, MUNICIPAL WASTE FACILITY, BY AND BETWEEN APPLIED COGENERATION AND THE CITY OF VERNON PROVIDING FOR THE DEVELOPMENT OF A MUNICIPAL WASTE FACILITY TO DISPOSE OF INDUSTRIAL AND COMMERCIAL WASTE ORIGINATING IN THE CITY OF VERNON WHEREAS, Applied Cogeneration intends to sell steam and refrigerant to various customers located within the City of Ver- 9 non and intends to apply to the City of Vernon for encroachment 10 11 12 13 14 15 16 17 permits to permit the installation of pipes and other apparatuses in the streets of the City of Vernon in order to transport steam, refrigerant, and a ,heated thermal fluid to properties located within the City of Vernon: and WHEREAS, Applied Cogeneration intends to give first priority to all municipal waste generated within the City of Ver- non to be burned at the municipal waste facility and intends to "over fire"' with methanol in order to create a more efficient air 18 pollution control system in order to produce a heated thermal 19 20 21 22 23 24 25 26 27 28 fluid, steam, refrigerant and ice: and WHEREAS, Applied Cogeneration is a distributor of methanol within the Southern California area and intends to engage in the business of distributing methanol for use in rub- bish trucks and other vehicles and stationary sources which are currently driven by other fuels: and . WHEREAS, the City of Vernon is primarily an industrial city where substantially all of the property located within its borders are devoted to industrial and commercial uses: and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, it is commonly recognized that refuse gen- erated by industrial and commercial users have higher heat rates than refuse generated by residential users and is a very desirable fuel source: and WHEREAS, the City of Vernon wishes to encourage the development of a municipal waste facility to dispose of in- dustrial and commercial waste originating in the City of Vernon: and WHEREAS, the City of Vernon desires to provide Applied Cogeneration with a twelve (12) month time period in which to fully develop its municipal waste facility project with the as- surance that the municipal waste will be available if their project is acceptable to the City of Vernon after it is more fully developed and therefore both parties desire to establish terms and conditions upon which the City of Vernon will permit Applied Cogeneration to have exclusive negotiation rights to develop a municipal waste facility project to sell steam, refrigerant and ice in the City of Vernon. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: That the City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: That the City Council of the City of Vernon hereby approves the Development Agreement, a copy of which has been presented to the City Council concurrently with this resolu- tion and the City Council hereby orders said Agreement to be -2- 1 2 3 4 5 6 7 8 9 10 received and filed by the City Clerk. SECTION 3: That the City Council of the City of Vernon hereby authorizes the Mayor and the City Clerk to execute said Agreement for, and on behalf of, the City of Vernon. SECTION 4: The City Clerk of the City of Vernon shall certify to the passage of this resolution and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 19th day of May, 1987. 11 12 ATTEST. /~ B~MALKE~ORST~ City Clerk 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ~. LEONIS C. MAL URG, Mayor -3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2S 24 25 26 27 28 STATE OF CALIFORNIA ) ) SSe COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 5395 , was duly adopted by the City Council of the City of Vernon, and was approved by the Mayor of said City at a regular meeting of the City Council heid on Tuesday, Hay 19 , 19 87 . (SEAL) -4- ~: . i . ;. [EXECUTION COPY] DEVELOPMENT AGREEMENT MUNICIPAL WASTE FACILITY THIS DEVELOPMENT AGREEMENT is made, entered into and ex- ecuted in duplicate originals, either copy of which may be con- of per~:~?fn , 1987 BY AND BETWEEN CITY OF VERNON, a Municipal corporation (hereinafter referred to as"Vernon") 4305 Santa Fe Avenue Vernon, CA 90058-0805 AND APPLIED COGENERATION, a California Joint-Venture (hereinafter referred to as "Applied") ll34l San Fernando Road San FernandO, CA 91340 each being a party hereto and sometimes referred to as "Parties". RECI~ALS WHEREAS, this Agreement is made with reference to the following facts, among others: 0.1. Applied has submitted to Vernon a proposal for the right to exclusively negotiate with Vernon for a period of twelve (12) months the right to develop a project which requires the submittal of,a detailed feasibility study for a specific plan for a municipal waste facility which will produce heat.ed thermal fluid, steam, and refrigerant for sale to businesses within Ver- non and ice for sale to businesses Wherever located: and 0.2. Applied intends to sell steam and refrigerant to 11 various customers locatedwlthin Vernon and intends to apply to Vernon for encroachment permits to permit the installation of pipes and other apparatuses in the streets of Vernon in order to transport steam, refrigerant, and a heated thermal fluid to properties located within Vernon7 and 0.3. Applied intends to give first priority to all municipal waste generated within Vernon to be burned at the municipal waste facility and intends to "over fire" with methanol in order to create a more efficient air pollution control system in order to produce a heated thermal fluid, steam, refrigerant and ice7 and 0.4. Applied is a distributor of methanol within the Southern California area and intends to engage in the business of distributing methanol for use in rubbish trucks and other vehicles and stationary sources which are currently driven by other fuels7 and 0.5. Vernon is primarily an industrial city where sub- stantially all of the property located wi thin its borders are devoted to industrial and commercial uses, and 0.6. It is commonly recognized that refuse generated by industrial and commercial users have higher heat rates than refuse generated by residential users and is a very desirable fuel source,and 0.. 7 . Vernon wishes to ,encourage the deve,1.()plIlel11:.ofa municipal waste facility to dispose of industrial and commercial waste originating in Vernon7 and 0.8. Vernon intends not to exercise during the term -2- "II ........... hereof>t.he power or authority provided for in Section 425" of the Health and Safety Code, to support any other municipal waste facility, or to establish an exclusive franchise to collect and dispose of the industrial and commercial waste originating in Vernon to the detriment of Applied's project: and ".9. The Parties desire to provide Applied with a twelve (12) month time period in which to fully develop its municipal waste facility project with the assurance that the municipal waste will be available if their project is acceptable to Vernon after it is more fully developed and therefore desire to establish terms and conditions upon which Vernon will permit Applied to have exclusive negotiation rights to develop a municipal waste facility project to sell steam, refrigerant and ice in Vernon. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS: AR'l'ICLE .1 PURPOSE 1.1. The primary purpose of the Parties in entering into tbis Agreement. is t.oprovide for the orderly development of a municipal waste facility which will dispose of the industrial and commerc.ial wast.e originat.ing wit.hin Vernon and to produce a heat.ed>t.berma1 fluid, steam, re,frigerant.> and -ice from"said,wast.e whichwil1ibe sold to . customers located within Vernon'<andiice outside of Vernon. -3- iii ARrICLE II TERM 2.1. This Agreement shall become effective when ex- ecuted by the Parties and shall remain in effect for a term of twelve (12) months commencing on the date of execution. ARTICLE III CONSIDERATION 3.1. As consideration, for the exclusive right to nego- tiatewith Vernon, Applied agrees to make a payment to Vernon of One Hundred Twenty-Five Thousand Dollars and No Cents ($125,000.00) upon execution of this Agreement. Failure to make said payment will cause this Agreement to become null and void. Further, Applied will have the right to one (1) six (6) month ex- tension of this Agreement, upon notice given prior to the expira- tion hereof upon the payment of a second payment of Fifty Thousand Dollars and No Cents ($50,000.00). The failure to make said payment prior to the expiration of this Agreement will cause this right of extension to expire. ARl'ICLIl: IV APPLIED'S OBLIGATIONS 4.1. Applied will submit to Vernon prior to the exp.,~ra- tion>of the term hereof, or any extension, a proposal for receiv- ingandconverting all solid waste ma terial>()ri9inat.int~i.~b.in Vernon of at> least a minimum capacity ',of l508'tonsper>d~y.l;~<>ia. heated thermal fluid, steam, refrigerant and ice. This proposal will, at a minimum, include the following items: 4.1.1. That Applied will not contest Ordinance -4- {)) No. 968 or any subsequent amendment thereto that establishes a business license fee based on the gross receipts produced by the project, which shall include the sale of a heated thermal fluid, steam, refrigerant and ice and any other products associated with said operation. Further, that said business license fee shall be a minimum annual fee of Three Million Dollars ($3,000,f2HiJ0.00) per year, or ten percent (10%) of gross receipts, whichever is larger. Vernon will agree that this tax will not be changed for a period of ten (10) years. 4.1.2. That the total air pollutants in all major measurable categories originating from existing stationary energy related sources in Vernon, including the proposed facility, will be less than that being emitted at present or as measured during an air monitoring period prior to operation date after the project commences operation. 4.1.3. That the facility will be in compliance with all applicable local, county, state and federal environmen- tal laws and regulations. 4.1.4. That all drawings, plans ,andspecifica- tions for the facility shall be submitted to Vernon for its ap- proval. 4.1.,5. That in the event the facility is restrict.ed<in the amount of mun.icipal waste it can}PX'og4!fJs, Vernon's refuElewi.11ibeigiveri',firstpriority. 4.1.6. That the proposed facility will not dupli- cate any facilities currently being operated by Vernon and will not adversely impact the electrical load served by Vernon, except -5- I)( for three (3) megawatts. 4.1.7. That the waste will be used to produce a heated thermal fluid, steam and refrigerant which will be sold to customers located within Vernon and ice to customers wherever located and other uses approved by Vernon. 4.1.8. That Applied will pay all the costs required to alter or modify the public right-of-way to accom- modate the transmission of heated thermal fluid, steam and refrigerant produced at the facility. 4.1.9. That Applied will make and pay for public improvements related to the design and implementation of said facility. 4.2. Applied agrees to designate nationally recognized consulting engineering firm( s) to analyze and opine on the feasibility of ,the facility. 4.3. Any and all costs and expenses in furtherance of this Agreement will be paid by Applied. 4.4. That the method contemplated for the Vernon project will allow more manufacturil1gin the area. AltrICLB ,V VERNON'S OBLIGATIONS 5.1. Vernon shall 'cooperate fully in providing '..anyin- forma.tfOn'>and assistance required al1d>sha.ll assist. Appl'i~>in designating>a site for the locationofithefacility. 5.2. Vernon agrees to negotiate reasonable terms and conditions of appropriate encroachment rights, privileges, and permits which will be necessary for the installation of pipelines -6- If, . - . and, othex-pertinent facilities as part of the project to sell heated thermal fluid, steam, refrigerant and ice. 5.3. Vernon shall, if necessary exercise the power and authority provided for in Government Code Sections 54351, 66755, 66756, 66757 and Health and Safety Code Sections 425e et seq., in order to require that refuse collected within Vernon be disposed of at a facility selected and established as part of this proposal, provided that rates to be charged for the disposal of said refuse originating in Vernon shall be subject to a formula which will, when considering all costs related to the disposition of the waste, be a rate which is less than the competitive rates at alternative sites and, in the event there is a disagreement as to the level of competitive rates, then such rates shall be determined by the City Council of Vernon after a public hearing. ARTICLE, VI MISCELLANEOUS PROVISIONS 6.1. Vernon will not be restricted in developing a similar project based on the technology and/or systems developed by Applied after the expiration of the term hereo,f ,proviCled that Vernon acts in good faith if Applied performs in accordance with this Agreement. >.:::.\ struction and operation of the municipal waste ~.2. Vernon is not required to purchase or>t.OP911t.r~bute>funds or make financial guarantees ARTICLE VII JOINT OBLIGATIONS 7.1. Both Parties understand that upon a determination -7- ~ .. ..~ . . , . of feasibility and a decision by Applied to proceed, more formal and extensive agreements will have to be entered into between Vernon and Applied for the implementation of the project. 7.2. Both Parties each represent that they have engaged no broker, agency, or finder in connection with this transaction, other than Government Research Consultants which will be compen- sated solely by Applied. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, or caused it to be executed, as of the day, month and year first above written. CITY OF VERNON B~~ Title Mayor ATTEST: ()~ BRUCE V. MALKENHORST, -r City Clerk APPROVED AS TO FORM: D~~ ~RE~ii:cl~ Attorney APPLIED COGENERATION ;;;;;;:;~=e Title C\...'t~ "'-C\~",' O~~-.J AP.~~ \"~~ Ft.