HomeMy WebLinkAboutContracts & Agreements_170-2009_CCv0001.pdf MEMORANDUM OF UNDERSTANDING
BETWEEN THE CITY OF REDLANDS
AND NORTH AMERICAN BIOMASS COMPANY, LLC
This Memorandum of Understanding("MOU")is made this 3d day of November,2009 b
and between the City of Redlands,a municipal co Y
p corporation,and North American Biomass Company,
LLC,a general partnership between NABC and Gussing Renewable Ener
The City and NAB are sometimes individually referred to herein as a«p�Amend,ca,LLC("NAB,,).
"Parties." y and, together, as the
REALS
WHEREAS, NAB desires to locate a gasification facility in proximity of the Ci
ty's Wat
Reclamation Facility; and er
WHEREAS,the City owns land contiguous to its Water Reclamation Facility suitable for the
construction of the gasification facility; and
WHEREAS, a gasification facility would serve as an appropriate buffer to the City's Water
Reclamation Facility; and
WHEREAS, a gasification facility could provide cost effective processing and diversion of
the City's Water Reclamation Facility's biosolids; and
WHEREAS, a gasification facility on land contiguous to the City's Water Reclamation
Facility provides an opportunity for the sale of excess electricity to the City; and
WHEREAS,the Parties desire to enter into negotiations leading to the execution of a lease of
City-owned property and the construction of a gasification facility on such property,and the purpose
of this MOU is to establish a period during which NAB shall have the right to exclusively ne uot�iate
with the City for that purpose; g
NOW, THEREFORE, in consideration of the mutual promises contained here, the City of
Redlands and North American Biomass Company, LLC agree as follows:
AGREEMENT
Section 1. Exclusive Ne otiations NAB shall enter into good faith,exclusive negotiations
with the City for the possible Iease of approximately four to five acres of real property, owned b
the City, and located in the unincorporated area of the County of San Bernardino ("the Property"),
for construction of a gasification facility capable of processing approximately 4,000 tons of C _
generated biosolids and 34,000 tons of municipal solid waste annually("the Facility"), at no ty
to
the City. The Property to be leased is a portion of an approximately nineteen acre parcel of real
Property located immediately south of, and contiguous to, the City's Water Reclamation Facility,
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which property is more particularly described in Exhibit"A"attached hereto and incorporated herein
by this reference.
Section 2. Negotiating Period. This MOU shall expire(unless earlier terminated pursuant
to Section 4, hereof) on the date the County of San Bernardino approves a conditional use permit
("CUP") for construction of the Facility on the Property (the "CUP Approval Date") (the "Initial
Term"). If,at the expiration of the Initial Term,NAB has not executed a lease in a form satisfactory
to City staff and submitted it to the City's City Council, then this MOU shall remain terminated,
unless extended by the mutual written agreement of the Parties. If,prior to or on the CUP Approval
Date,NAB has executed a lease and submitted it to the City's City Council,then this MOU shall be
automatically extended beyond the Initial Tenn for an additional sixty(60)days during which time
the City's City Council shall review and consider the lease for approval and give such public notices
and hold such public meetings or hearings which the City, in its sole discretion, deems to be either
necessary or prudent for compliance with law. In the event that the City's City Council, after due
consideration, decides in its sole discretion not to approve the lease, then this MOU shall
immediately expire and all rights and obligations of the Parties under this MOU shall terminate
upon the date of the City's written notice to NAB of the same.
Section3. Cooperation and Good Faith. At all times during the Initial Tenn of this
MOU, and any extended term of this MOU, the Parties shall negotiate diligently and in good
faith to carry out the obligations of this MOU and shall cooperate with each other and supply
such information and documents as may be within each Party's possession and reasonably
requested by the other Party.
Section 4. Early Termination. This MOU shall expire,and all rights and obligations of the
Parties under this MOU shall be immediately terminated, upon the occurrence of any of the
following circumstances:
A. The mutual agreement of the Parties;
B. A determination by the City's City Council, after at least thirty (30) days'
written notice to NAB of the City Council's intent to consider such issue, that the negotiations
between the Parties, despite the good faith of each Party, will not lead to approval of a lease; or
C. The expiration of fifteen(15)days after one Party sends the other Party written
notice of the noticed Party's failure to timely and diligently perform any of its obligations under this
MOU,and the noticed Party's failure to cure or correct the failure to perform within the same fifteen
(15) day period, or if such failure cannot be cured or corrected within fifteen(15)days, the noticed
Party's failure to begin in good faith and diligently pursue such cure or correction within the fifteen
(15) day period; or
D. On the date of the City's approval of a lease with NAB; or
E. Upon a final denial by the County of San Bernardino of :'dab's CUP
application for construction of the Facility.
Section 5. Lease Provisions. The proposed lease will include, but not be limited to, the
following:
A. An anticipated lease term of approximately thirty(30) years;
B. The payment of a nominal annual rent by NAB to the City;
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C. NAB will take possession of the Property under the lease only after the
Facility is permitted for construction by all appropriate regulatory agencies;
D. The City would purchase power from the Facility("over the fence") for an
amount less than the price of power purchased by the City over the power grid;
E. The City would use reasonable efforts to maximize its generation of landfill
gas and digester gas for delivery to NAB,to facilitate a reduction in the City's costs associated with
the City's operation and maintenance of its cogeneration facility; and
F. NAB will process and divert, annually, approximately 4,000 tons of bios
lids from the City's Water Reclamation facility and 34, 000 tons of municipal solid waste from
the California Street landfill at no cost to the City.
Section 6. NAB Funding Agreement. As a condition of the City's entry into the lease,
NAB shall have entered into a funding agreement with the City to pay any costs incurred by the City
for the preparation of a waste characterization study for the proposed Facility(the"Waste Study"),
and for legal consulting services in connection with the City's review of the proposed Facility. The
costs for the Waste Study and legal services shall each not exceed Thirty Thousand Dollars
($30,000), respectively. In addition,NAB shall provide funding to pay for the City's costs for hiring
a full-time Project Specialist (as that employment position is defined in the City's existing salary
resolution) within the City's Quality of Life Department
Section 7. Application for Conditional Use Permit. The City hereby consents to NAB's
filing of an application for a CUP,with the County of San Bernardino for construction of the Facility
on the Property that will be the subject of the lease . The Mayor of the City is hereby authorized to
execute the application for the CUP, and any other documents reasonably required by NAB for
constructing the Facility on the Property, on behalf of the City.
Section 8. Indemnification Against Costs. NAB acknowledges and agrees that the
provisions of the funding agreement and the lease shall insure that the City incurs no costs in
connection with NAB's processing of the CUP, or any other regulatory entitlement or permits
associated with any approvals for the construction of the Facility, or NAB's construction of the
Facility itself. The funding agreement and the lease shall contain provisions,reasonably satisfactory
to the City, providing for NAB's defense and indemnity of the City against the City incurring such
costs.
Section 9. Entire Agreement. This MOU represents the entire agreement of the Parties,
and supersedes all prior negotiations and agreements between the Parties,with respect to the subject
matter hereof.
Section 10. Governing Law. The MOU shall be governed by and construed in accordance
with the laws of the State of California.
Section 11. Authority. The representatives of the City and NAB who have executed this
MOU represent that they are an official or officer of their respective employers,and are vested with
the authority to execute this MOU on behalf of their employers, the City and NAB, respectively.
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i Section 12. Discretionary Approval. By its execution of this MOU, the City is not
committing itself.to or agreeing to undertake: (i)any lease or other disposition of property to NAB;
or(ii)any other acts or activities requiring the subsequent independent exercise of discretion by the
City. Execution of this MOU by the City is merely an agreement to enter into a period of exclusive
negotiations according to the terms hereof, reserving final discretion and approval by the City as to
any lease. Nothing herein shall be deemed a covenant,promise or commitment by the City to issue
any entitlement with regard to the entitlement construction of the Facility, or to approve any lease
with NAB. This MOU does not vest NAB with any entitlement. NAB acknowledges and agrees that
nothing herein restricts nor shall be deemed to restrict the City in the free exercise of its discretion,
or in the free exercise of its executive, quasi-adjudicative or legislative powers except as expressly
provided herein.
Section 13. No Third Party Beneficiaries. This MOU is for the sole and exclusive benefit of
the City and NAB. No other persons or entities are intended to be, or shall be considered, a
beneficiary of the performance of any of the Parties' obligations under this MOU.
Section 14. Interpretation. This MOU is the product of mutual arms-length negotiation and
drafting, and each Party represents and warrants to the other that it has been represented by legal
counsel in the negotiation and drafting of this MOU. Accordingly, the rule of construction which
provides that ambiguities in a document shall be construed against the drafter of that document shall
have no application to the interpretation and enforcement of this MOU. In any action or proceeding
to interpret or enforce this MOU,the finder of fact may refer to such extrinsic evidence not in direct
conflict with any specific provision of this MOU to determine and give effect to the intention of the
Parties.
Section 15. Notices,Demands and Communications Between the Parties. Formal notices,
demands and communications between the Parties shall be given in writing and personally served or
dispatched by registered or certified mail,postage prepaid,return receipt requested,to the principal
offices of the Parties, as designated in this Section, or taxed to the facsimile number listed below
followed by dispatch as above described. Such written notices,demands and communications may
be sent in the same manner to such other addresses as either Party may from time to time designate
by mail as provided in this Section. Any such notice shall be deemed to have been received upon the
date personal service is affected, if given by personal service, or upon the expiration of three (3)
business days after mailing, if given by certified mail, return receipt requested, postage prepaid.
If notice is to be made to the: If notice is to be made to NAB:
Attention: City Manager Attention:
City of Redlands North American Biomass Company
35 Cajon Street, Suite 200 P.O. Box 33
P.O. Box 3005 (mailing) Angelus Oaks, CA 92305
Redlands CA 92373
Telephone No. (909) 798-7510
Facsimile No. (909) 798-7503
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Section 16. Counterpart Originals. This MOU may be executed in duplicate originals,each
of which is deemed to be an original.
Section 17. Attorneys' Fees. In the event any action is commenced to enforce or interpret
the terms or conditions of this MOU the prevailing party in such action, whether resolved by
mediation, arbitration or judgment, shall, in addition to any costs and other relief,be entitled to the
recovery of its reasonable attorneys' fees, including, in the case of the City,attorneys' fees incurred
for any use of its in-house counsel.
Section 18. Defense and Indemnity. NAB shall defend,indemnify and hold harmless the
City,its elected officials,officers,employees and agents from and against(i)any and all third party
claims, losses, proceedings, damages, causes of action, liability, costs and expenses (including
reasonable attorneys' fees) arising from or in connection with or caused by any negligent or
intentionally wrongful act or omission of NAB and its contractors, agents and employees in
connection with NAB carrying out its obligations under this MOU;and(ii)any action or proceeding
brought by any third party challenging the validity of any provision of,or the entirety of,this MOU.
The City shall fully cooperate in the defense of any such actions and shall provide to NAB such
documents and records as are relevant to such actions.
Section 19. Assignment. There shall be no assignment or other transfer("Assignment")of
the rights and/or obligations of the NAB under this MOU unless the City has given its prior written
approval to the Assignment. The City shall not unreasonably withhold its approval of an Assignment
that meets the following requirements: (i) the Assignment is to a validly organized and existing
business entity which is an affiliate or subsidiary of the NAB, or which NAB is the majority owner
(meaning owning at least 51% of the outstanding stock, partnership interest, or limited liability
interest entitled to voting rights in the business entity): (ii) the Assignment is to an entity that
expressly assumes the obligations of the NAB under this MOU up to the date of the Assignment:and
(iii) NAB remains fully responsible for the performance of, and the liable for the obligation's of,
NAB under the MOU up to the date of the Assignment (iv) the assignee is financially capable of
performing the duties and discharging the obligations it is assuming. NAB shall promptly notify the
City in writing of any and all changes whatsoever in the identity of the persons in control of NAB
and the degree thereof.
Dated:
North American Biomass Company, LLC
4, Dated: November 3 , 2009
Mayor, City o ands
T,or— e o
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