Resolution No. 83151
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
RESOLUTION NO. 8315
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON REGARDING THE CESSATION OF SERVICES OF RMI
UTILITY SERVICES PURSUANT TO THE ELECTRIC SYSTEM
MAINTENANCE AGREEMENT BETWEEN RMI UTILITY
SERVICES AND THE CITY OF VERNON
WHEREAS, on February 7, 1989, the City Council of the City of
Vernon adopted Resolution No. 5598, which approved the Operation and
Maintenance Agreement ("Agreement") by and between RMI Utility
Services, Inc. ("RMIUS") and the City of Vernon; and
WHEREAS, the Agreement provided for RMIUS to operate
and maintain the City's electric system; and
WHEREAS, on April 27, 1992, the City Council of the City of
Vernon adopted Resolution No. 6087, which approved Amendment No. 1 to
the Agreement, providing for an increase in the level of staffing and
Ithe scope of services; and
WHEREAS, on July 28, 1998, the City Council of the City of
(Vernon adopted Resolution No. 7190, which approved another agreement
with RMIUS which replaced the Agreement (the "Renewal Agreement"); and
WHEREAS, the Renewal Agreement became effective on August 1,
11998 and is not scheduled to terminate until July 31, 2009; and
WHEREAS, Section 5.2 of the Renewal Agreement provides that
"either Party may terminate this Renewal Agreement by giving one (1)
year advance written notice to the other Party..."; and
WHEREAS, Navigant Consulting, Inc. ("NCI"), RMIUS's parent
company, has advised Vernon's staff that it desires to exit the
business of outsourced utility operations field services; and
WHEREAS, in the past, NCI has threatened to invoke the Force
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
WE
Majeure clause in the Renewal Agreement because of the difficulties it
claims that it has encountered in obtaining linemen to comply with the
staffing requirements in the Renewal Agreement; and
WHEREAS, the City disputes that NCI has the legal right to
invoke the Force Majeure clause; and
WHEREAS, by letter dated August 19, 2003, NCI requested that
the City terminate RMIUS's responsibilities under the Renewal
Agreement no later than December 1, 2003; and
WHEREAS, by letter dated September 4, 2003, NCI advised City
staff that it was providing written notice under Section 5.2 of the
Renewal Agreement of its intent to terminate the Renewal Agreement, no
later than one year from September 4, 2003; and
WHEREAS, the City did not receive any such written
termination notice before September 4, 2003; and
WHEREAS, the City Council has never waived the written
notice requirement in the Renewal Agreement; and
WHEREAS, because of the actions taken by RMIUS/NCI, the City
was forced to negotiate an agreement with Petrelli Electric, Inc., to
provide for the replacement of the services being provided by RMIUS
under the Renewal Agreement; and
WHEREAS, the City Council has considered RMIUS's/NCI's
desires to stop providing services under the Renewal Agreement as of
December 1, 2003; and
WHEREAS, the maintenance of the City's electric system is of
paramount importance; and
WHEREAS, the City Council believes that the City would be
best served by retaining a contractor that desires to continue
providing such services and is not threatening to terminate their
- 2 -
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
services while their agreement is ongoing; and
WHEREAS, although the City Council will allow RMIUS to stop
providing the services required under the Renewal Agreement as of
November 30, 2003, it does not intend, in any way, to waive any of the
rights that have accrued or may accrue to the City on or prior to
November 30, 2003.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The recitals contained herein are true and
correct.
SECTION 2: The City Council hereby approves November 30,
2003, as the last day for services to be provided by RMIUS under the
Renewal Agreement.
SECTION 3: The City's Legal Counsel is hereby authorized to
send a letter to RMIUS/NCI, advising of the City Council's decision.
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 November, 2003.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
EONIS C. MALBU G, Mayo
- 3 -
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
STATE OF CALIFORNIA )
) ss
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.
8315, was duly adopted by the City Council of the City of Vernon at a
regular meeting of the City Council duly held on Wednesday,
November 19, 2003, and thereafter was duly signed by the Mayor of the
City of Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerk
- 4 -
SUPPORTING
DOCUMENTS
' CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. "BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator / City Clerk
FAX (323) 826-1438
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
November 13, 2003
Bruce V. Malkenhorst
City Administrator
CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
ERIC T. FRESCH
Acting City Attorney
FAX: (323) 826-1433
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Light & Power
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
CONFIDENTIAL
ATTORNEY -CLIENT PRIVILEGE
Re: RMIUS Electrical System Maintenance Agreement -
Proposal by RMIUS Regarding End Date for
Services under the Agreement
Dear Bruce:
I previously reported that I have worked with the
Light & Power Department to negotiate an agreement with
Petrelli Electric, Inc. ("Petrelli") for maintenance services
on the City's electric system. The agreement with Petrelli,
which will be effective December 1, 2003, is intended to
replace the existing agreement with RMIUS and will be
considered for approval at the next City Council meeting.
The approval of the Petrelli Agreement will of
course necessitate the termination of the existing RMIUS
Agreement. In September, RMIUS provided one year notice of
their intent to terminate the agreement. They had also
previously requested that the City consider allowing them to
cease providing services under the agreement as of
December 1, 2003.
As previously advised, I believe that we have
negotiated a good agreement with Petrelli. The rates are
comparable to RMIUS's rates and the service should be better.
Thus, the City will not be damaged as a result of the
f Z�ruce V. Malkenhorst
November 13, 2003
r
Page 2
termination of the RMIUS Agreement. In any event, the longest
that RMIUS would have been obligated is up to September of
next year.
At this time, I recommend that the City Council
consider allowing RMIUS to terminate the Renewal Agreement
effective December 1, 2003. I want to make sure that RMIUS is
not relieved of any indemnification requirements in the
agreement, especially with regard to the fuel spill that may
raise liability issues. In that regard, I do not believe it
would be in the City's best interest to enter into a
transition agreement. The cleanest way to deal with the issue
is to simply agree to cut off RMIUS's service requirement
beyond December 1, 2003, and have Petrelli's Agreement become
effective that same date.
I have spoken with Ken DeDario about this issue and
have requested that he work with RMIUS now to wrap up pending
matters in anticipation of Petrelli starting on December 1,
2003, without RMIUS's assistance. Ken has advised that this
can be done.
Finally, when we approve the Petrelli Agreement and
terminate the RMIUS Agreement, we will stop paying the premium
on the insurance that the City was obligated to pay under the
Renewal Agreement. The City had already paid the $196,038.00
annual premium for the term which extends through February of
2004. RMIUS wants to maintain the insurance policy at this
time. Therefore, we will be advising RMIUS that as part of
our agreement to terminate early, we are entitled to a 25%
credit (3 months) of $49,009.50.
Please call me if you should have any questions.
Sincerely,
c" -v
Eduardo Olivo
Legal Counsel
cc: Acting City Attorney
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. "BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V MALKENHORST
City Administrator / City Clerk
FAX (323) 826-1438
C
i &
w �3�
�a-6b Q,
Jgk
bey `t may'
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811 .
November 26, 2003
Via Facsimile and U.S. Mail
(312) 573-5676 facsimile
Philip P. Steptoe
General Counsel
NAVIGANT CONSULTING
615 North Wabash Avenue
Chicago, Illinois 60611
ERIC T. FRESCH
Acting City Attorney
FAX: (323) 826-1433
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Light & Power
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
Re: Cessation of Services by RMI Utility
Services Pursuant to the Electric System
Maintenance Agreement between RMI Utility
Services and the City of Vernon
Dear Mr. Steptoe:
As you know, on February 7, 1989, the City
Council of the City of Vernon approved the Operation and
Maintenance Agreement by and between RMI-Utility Services,
Inc. ("RMIUS") and the City of Vernon. On April 27, 1992,
the Vernon City Council approved Amendment No. One to the
Agreement. Thereafter, on July 28, 1989, the Vernon City
Council approved another agreement with RMIUS which
replaced the February 7, 1989 Agreement ("Renewal
Agreement"). The Renewal Agreement became effective on
August 1, 1989 and was scheduled to terminate on July 31,
2009.
By letter dated August 19, 2003, Navigant
Consulting, Inc. ("NCI"), requested that the City terminate
RMIUS's responsibilities under the Renewal Agreement no
later than December 1,_2003. NCI had previously advised
Vernon Staff that it desired to exit the business of
outsource utility operations field services. Further, NCI
advised that RMIUS was encountering problems in obtaining
Philip P. Steptoe
November 26, 2003
Page 2
linemen to comply with the staffing requirements in the
Renewal Agreement.
After receiving and considering your August 19th
request, the Vernon City Council determined on November 18,
2003, to have RMIUS stop providing services under the
Renewal Agreement as of the end of the day on November 30,
2003.
My understanding is that City Staff and RMIUS
have been working on a transition to take place of on
December 1, 2003. I am advised that all tasks necessary
for the transition, including inventory matters, have been,
or will be completed before the end of this month. .
Under the Renewal Agreement the City was required
to pay the premium for RMIUS's insurance. The City paid
the annual premium of $196,038.00 for the term that ends on
March 1, 2004. The City paid this amount with the
expectation that the Renewal Agreement would continue and
that the insurance would be required at least through the
present policy term. Nevertheless, this will not occur.
Because RMIUS will no longer be providing
services under the Renewal Agreement, the City is entitled
to a pro rata credit for the annual premium. The policy
will be effective for another 25% of the policy term.
Therefore, the City should be entitled to a 25% credit of
the annual premium, which would equal $49,009.50.
Please call me if you should have any questions.
Sincerely,
Eduardo Olivo
Legal Counsel
cc General Counsel
RMI Utility Services, Inc.
3100 Zinfandel Drive, Suite 600
Rancho Cordova, California 95670
- City Administrator
- Director of Light & Power Department