HomeMy WebLinkAboutContracts & Agreements_10-2011_CCv0001.pdf MEMORANDUM OF UNDERSTANDING
BETWEEN THE CITY OF REDLANDS
AND NORTH AMERICA BIOMASS COMPANY, LLC
This Memorandum of Understanding ("MOU") is made this I" day of February, 2011
"Effective Date"), by and between the City of Redlands, a municipal corporation and general law
city organized pursuant to the laws of the State of California (the "City"), and North America
Biomass Company, LLC, a limited liability company ("NABC"). The City and NABC are
sometimes individually referred to herein as a "Party"and, together, as the"Parties."
RECITALS
WHEREAS, NABC desires to produce energy from the California Landfill gas and
wastewater treatment plant digester gas; and
WHEREAS, the City owns land contiguous to its Wastewater Treatment Plant suitable
for the construction of gasification facility; and
WHEREAS, a gasification facility would serve as an appropriate buffer to the City's
Wastewater Treatment Plant; and
WHEREAS, a gasification facility could provide cost effective processing and diversion
of the City's Wastewater Treatment Plant's biosolids; and
WHEREAS, construction of a gasification facility on land contiguous to the City's
Wastewater Treatment Plant provides an opportunity for the operation and sale of electricity to
the City; and
WHEREAS, the City and NABC desire to enter into negotiations relating to the
execution of a lease of City-owned property and other ancillary agreements relating to the
construction of gasification facility on such property, and the construction of biogas facility at
the City's Wastewater Treatment Plant, and the purpose of this MOU is to establish a period
during which NABC shall have the right to exclusively negotiate with the City for these
purposes;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the City
of Redlands and North America Biomass Company, LLC agree as follows:
AGREEMENT
Section 1. Exclusive_Negotiations.
A. NABC shall enter into good faith, exclusive negotiations with the City for
the possible lease of approximately six acres of real property (the "Lease") owned by the City
and located in the unincorporated area of the County of San Bernardino (the "Property") upon
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which NABC proposes to construct a gasification facility capable of processing approximately
4,700 tons of City-generated biosolids and 60,000 tons of municipal solid waste annually (the
"Gasification Facility"), at no cost to the City. The City shall make available and deliver to
NABC such City-generated biosolids provided the City determines it reasonably can do so, at no
greater cost to the City than the cost it incurs for disposing of such biosolids as of the Effective
Date of this MOU lus inflation over time as measured by the: annual change in the Consumer
Price Index. all urban consumers (Los Angeles-Riverside-Orange County). 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 Wastewater Treatment Plant, and is more particularly
described in Exhibit "A" attached hereto and incorporated herein by this reference.
B. Further, the City and NABC shall enter into good faith negotiations for the
construction of a Biogas renewable energy facility (the "Biogas Facility") at the City's
Wastewater Treatment Plant, in close proximity to the existing header feed-in and enclosed flare,
to produce electricity from gases generated from the City's California Street Landfill and
Wastewater Treatment Plant digesters at no cost to the City, and to sell all of the electricity
generated by the Biogas Facility to the City at a discount to Southern California Edison
Company rates. As part of the negotiations, NABC shall be responsible for obtaining all
necessary permits for the Biogas Facility.
Section 2. Negotiating Period. This MOU shall expire (unless earlier terminated
pursuant to Section 4, hereot) on the date the County of San Bernardino approves a conditional
use permit (*'CUP") for construction of the Gasification Facility on the Property (the "CUP
Approval Date") (the "Initial Term"). If, at the expiration of the Initial Term, NABC has not
executed the 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, NABC has executed the Lease and submitted
it to the City's City Council, then this MOU shall be automatically extended beyond the Initial
Term for an additional sixty (60) calendar 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 NABC of the same.
Section 3. Cooperation and Good. Faith. At all times during the Initial Term 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-.
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A. The mutual agreement of the Parties;
B. A determination by the City's City Council, after at least thirty (30)
calendar days prior written notice to NABC 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 the Lease; or
C. The expiration of thirty (30) calendar 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 thirty (30) calendar day period, or if such failure cannot be cured or
corrected within thirty (30) calendar days, the noticed Party's failure to begin in good faith and
diligently pursue such cure or correction within the thirty (30) calendar day period; or
D. On the date of the City's approval of the Lease with NABC; or
E. Upon a final denial by the County of San Bernardino of NABC's CUP
application for construction of the Gasification Facility.
Section 5. Lease Provisions. The Lease and other ancillary agreement provisions
will include, but not be limited to, the following:
A. An anticipated Lease term of approximately thirty(30) years;
B. The payment of an annual rent by NABC to the City;
C. The requirement that NABC obtain comprehensive liability insurance, in
amounts and with carriers reasonably acceptable to the City and NABC, and containing
endorsements naming the City as additional insured and providing that such insurance is primary
with respect to the City and non-contributing to any insurance or self insurance maintained by
the City..
D. That NABC and its contractors comply with applicable federal and state
prevailing wage laws in connection with the construction of the Gasification and the Biogas
Facility.
E. NABC will take possession of the Property under the Lease only after the
Gasification Facility is permitted for construction by all appropriate regulatory agencies;
F. NABC will sell electricity to the City at a price less than the price of
electricity purchased by the City from the Southern California Edison Company provided such
pricc-k-does not fall below the price existing, as of fate-a-the Feffective Date ofthise MOU.
G. The City will use its reasonable efforts to maximize the quality and
quantity of gas from the City's California Street Landfill and Wastewater Treatment Plant
digesters for delivery to NABC by upgrading, from time to time, and in its sole discretion, its
facilities to meet applicable regulatory requirements, and NABC will fund any additional
upgrades sought by NABC to further enhance the quantity and quality of gas;
H. NABC will process and divert, annually, approximately 4,700 tons of
biosolids from the City's Wastewater Treatment Plant and 60,000 tons of municipal solid waste
from the California Street Landfill at no cost to the City. The City shall, make available and
deliver to NABC such municipal solid waste provided the City determines it reasonably can do
so, at no greater cost to the City than the cost it incurs for disposing of such solid waste as of the
Effective Date of this MOU,plus inflation-overtime as measured by the annual change in the
Consumer Price Index. all urban consumer: Los Angeles-riverside Orange County), All
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blosolids and municipal solid waste.processed.byNABCshall be delivered by the Cite. or h-,,
person or parties approved by the City to deliver such biosolids or municipal solid waste; and
I. NABC will provide security to the City, in amounts and forms determined
by and acceptable to the City, to pay for all costs required for the removal of the Gasification
Facility, and returning the Property to its original state as of the Effective Date of this MDU,. in
the event the Gasification Facility is not successfully completed, or ceases to reasonably operate
for any reason.
J. NABC will provide the City with an opportunity to financially participate
in NABC's subsequent gasification project undertakings that are, in part, based upon, or result
from, the technology associated with the successful construction and operation of the
Gasification Facility. Such participation shall be upon such terms as are mutually agreed to
between NABC and the City.
Section 6. NABC Funding Agreements. As a condition of the City's entry iiilki flic
Lease,NABC shall have entered into funding agreements with the City to pay any costs Incurred
by the City for specialized technical and financial consultants, and for special legal services
(collectively the"Consulting Services"), in connection with the City's review of the proceedings
for and construction of the Biogas Facility and the Gasification Facility, and negotiation of the
lease and any ancillary agreements. The costs for these Consulting Services shall not, without
NABC's prior written consent, exceed a total of Two Hundred Thousand Dollars ($200,000).
Section 7. Application for Conditional Use Permit. The City consents to NABC's
filing of an application for a CUP with the County of San Bernardino for construction of the
Gasification Facility on the Property. The Mayor of the City is hereby authorized to execute the
application for the CUP, and any other documents reasonably required by NABC for
constructing the Gasification Facility on the Property, on behalf of the City. NABC, and its
successors and assigns, shall defend, indemnify and hold harmless the City of Redlands and its
elected officials, officers, agents and employees from and against any and all claims, actions, and
proceedings to attach, annul, void or set aside approval of the CUP. This indemnification shall
include, but not be limited to, damages, fees, costs. liabilities and expenses incurred in such
actions or proceedings, including any award of attorneys' fees. In the event of any legal
challenge in connection with respect to the approval of the CUP, within thirty (30) calendar days
of the same, NABC shall file with the City a performance bond or irrevocable letter of credit
(together, the "Security") in a form and amount reasonably satisfactory to the City to ensure
NABC's performance or its defense and indemnity obligations under this MDU. The failure of
NABC to provide the Security shall be deemed an express acknowledgement and agreement of
NABC, that the City shall have the right to abandon the approval of the CUP and/or request the
County of San Bernardino to revoke the CUP. The provision of this Section 7 shall survive any
termination of this MDU.
Section 8. Indemnification Against Costs. NABC acknowledges and agrees that the
provisions of the funding agreements and the Lease shall insure that the City incurs no costs in
connection with NABC's processing of the CUP, or any other regulatory entitlement or permits
associated with any approvals for the construction of the Gasification Facility., or NABC's
construction of the facility. The funding agreements and the lease shall contain provisions
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providing for NABC's defense and indemnity of the City against the City. The provisions of this
Section 8 shall survive any termination of this MOU.
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 laves of the State of Cali fornix.
Section 11. Authority. The representatives of the City and NABC 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 NABC,
respectively.
Section 12. Discretionary Approval. By its execution of this MOU, the City is not
committing itself to, or agreeing to undertake: (i) any leasing or other disposition of property to
NABC; 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 he 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 NABC. This MOU does not vest NABC with any
entitlement. NABC 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 quasi-legislative powers, except as may be expressly provided for herein.
Section 13. No Third Parte Beneficiaries. This MOU is for the sole and exclusive
benefit of the City and NABC. 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 ti,an-ants 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 faxed 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
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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 City: if notice is to be made to NABC:
Attention: City Manager Attention: Graeme Bethell, President
City of Redlands North America Biomass Company, LLC
35 Cajon Street, Suite 200 4133 — 1335 Bear Mountain Parkway
P.O. Box 3005 (mailing) Victoria, BC
Redlands CA 92373 Canada, V913 6T9
Telephone No. (909) 798-7510 'Telephone No. (250) 478-8820
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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/Venue. 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 at prevailing rates for private counsel
performing similar work in San Bernardino County. In the event that suit is brought by either
Party relating to this MOU, the Parties agree that venue shall be vested exclusively in the state
courts of the County of San Bernardino, California, or where appropriate, in the United States
District Court, Southern District of California, Riverside, California. The provisions of this
Section 17 shall survive any termination of this MOU.
Section 18. Defense and Indemnity. NABC 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 NABC and its contractors, agents and
employees in connection with NABC 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 Lease, any ancillary agreement contemplated hereby, or the approval of
the CUP or any other entitlement of permit associated with the construction of the Gasification
Facility or the Biogas Facility. The City shall fully cooperate in the defense of any such actions
and shall provide to NABC such documents and records as are relevant to such actions. The
provisions of this Section 18 shall survive any termination of this MOU.
Section 19. No Damages Relief Atsainst Citv. The Parties acknowledge and agree
that the City would not have entered into this MOU had it been exposed to damage claims from
NABC for any breach of this Agreement. As such, the Parties agree that in no event shall NABC
be entitled to recover damages of any kind against the City for breach of this Agreement.
NABC's sole remedy for the City's breach of this Agreement shall be specific performance. The
provisions of this Section 19 shall survive any termination of this MOU.
Section 20. Assignment. There shall be no assignment or other transfer
("Assignment") of the rights and/or obligations of the NABC 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 NABC, or
which NABC 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 NABC under this MOU
up to the date of the Assignment; and (iii) NABC remains fully responsible for the perfonnance
of, and the liable for the obligations of, NABC 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. NABC shall promptly notify the City in writing of any and all changes whatsoever
in the identity of the persons in control of NABC and the degree thereof.
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Section 21. Relationship.of Parties. It is specifically understood and agreed by
and between the Parties that the construction of the Gasification Facility on the Property,
construction of the Biogas Facility, and NABC's performance of its obligations under this
Agreement are private undertakings, and that neither Party is acting as the agent of the other Party
in any respect hereunder. The City and NABC also hereby renounce the existence of any form of
joint venture or partnership between them, and agree that nothing contained herein or in any
document executed in connection herewith shall be construed as snaking the City and NABC joint
ventures or partners.
North American Biomass Company, LLC City of Redlands
Graeme Be ell, President Pete Aguilar, Mayor
North America Biomass Company, LLC City of Redlands
ATTEST:
Sam Irwin, City Ierk
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