Loading...
HomeMy WebLinkAboutContract 32407 STATE OF TEXAS § § KNOW ALL PERSONS BY THESE PRESENTS: COUNTIES OF TARRANT, § DENTON AND WISE § FIRST AMENDMENT TO THE AGREEMENT TO LEASE AND OPERATE SOUTHEAST LANDFILL BY AND BETWEEN THE CITY OF FORT WORTH, TEXAS, AS LESSOR AND ALLIED WASTE SYSTEMS, INC. d/b/a TRINITY WASTE SERVICES, AS LESSEE This "FIRST AMENDMENT TO THE AGREEMENT TO LEASE AND OPERATE SOUTHEAST LANDFILL BY AND BETWEEN THE CITY OF FORT WORTH, TEXAS, AS LESSOR AND ALLIED WASTE SYSTEMS, INC. d/b/a TRINITY WASTE SERVICES, AS LESSEE" (this "Amendment") is entered into as of the day of September, 2005, by and between THE CITY OF FORT WORTH, TEXAS, a home rule municipal corporation in Tarrant County, Texas, acting herein by and through its Assistant City Manager, Libby Watson ("City") and ALLIED WASTE SYSTEMS, INC. d/b/a TRINITY WASTE SERVICES, a Delaware corporation duly authorized to do business in the State of Texas, acting by and through its duly authorized representative ("Lessee"). WITNESSETH: WHEREAS, the City and Lessee have heretofore entered into a certain "AGREEMENT TO LEASE AND OPERATE SOUTHEAST LANDFILL"known as City Secretary Contract No. 28336 (the "Agreement"), dated January 28, 2003, for the lease of the City's Southeast Landfill, pursuant to the terms of that certain RFP 02-0087, issued by the City; and WHEREAS, the parties desire to amend the Agreement and revise the Minimum Annual Variable Rent as more particularly set forth below. NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto agree as follows: 1. Minimum Annual Variable Rent. The parties recognize that the Operation Commencement Date was March 23, 2003, and that the first Operating Year began on that date and ended March 22, 2004. Any and all Minimum Variable Rent payments made during the third Operating Year shall be applied as Carryforward Credit in subsequent Operating Years of this Agreement. Lessee may apply such Carryforward Credit from the third Operating Year in any subsequent Operating Year upon the written mutual consent of the City, which Lessee shall request from the City at least sixty (60) Days prior to the beginning of the Operating Year in which Lessee wishes to apply the Carryforward Credit from the third Operating Year to the Minimum Variable Rent payment. The City will not withhold consent to application of such Carryforward Credit unless it reasonably determines that doing so in the proposed Operating Year will necessitate an increase in rates charged by the City to customers. Subsections 4.04(D) and 4.04(H) of the Agreement are amended and restated in their entirety as set forth below; other subsections of Section 4.04 are not amended hereby. FIRST AMENDMENT SELF LEASE ��� ,y, , Pagel "(D) Minimum Annual Variable Rent. During the second through twenty-fourth Operating Years (subject to reduction or extension of the Term as provided in Section 3.01 of this Agreement), the Lessee agrees that the minimum amount of Variable Rent that will be paid to the City for each Operating Year will be as set forth below: Tentative Operating Year Minimum Annual Variable Rent 2 (March 23,2004-March 22,2005) $1,935,767 [paid already] 3 (March 23,2005-March 22,2006) $0 4 (March 23,2006-March 22,2007) $0 5 (March 23,2007-March 22,2008) $0 6 (March 23,2008-March 22,2009) $0 7(March 23,2009-March 22,20 10) $6,264,300 8 (March 23,2010-March 22,2011) $6,510,783 9 (March 23,2011 -March 22,2012) $6,856,527 10(March 23,2012-March 22,2013) $7,432,815 11 (March 23,2013-March 22,2014) $8,222,639 12 (March 23,2014-March 22,2015) $9,021,410 13 (March 23,2015-March 22,2016) $9,214,444 14(March 23,2016-March 22,2017) $9,411,719 15(March 23,2017-March 22,2018) $9,613,332 16(March 23,2018-March 22,2019) $9,819,382 17(March 23,2019-March 22,2020) $10,029,969 18 (March 23,2020-March 22,202 1) $10,245,196 19 (March 23,2021 -March 22,2022) $10,465,169 20(March 23,2022-March 22,2023) $10,689,997 21 (March 23,2023-March 22,2024) $10,919,791 22 (March 23,2024-March 22,2025) $11,154,663 23 (March 23,2025-March 22,2026) $11,394,731 24 (March 23,2026-March 22,2027) $11,640,112 FIRST AMENDMENT SELF LEASE Vf i i � J''� t5ge 2 � � u°zSAM Beginning on the first day of the Operating Year after the Commission authorizes a Successful Landfill Expansion Permit, the Minimum Annual Variable Rent set forth in the table above to begin in Operating Year 7 will commence and thereafter the Minimum Annual Variable Rent for each succeeding Operating Year will be that shown for each succeeding year in the table above. So, for example, if the Landfill Expansion Permit is achieved in the fifth Operating Year, then the Minimum Annual Variable Rent for Operating Year 6 (beginning March 23, 2008) will be $6,264,300; if, instead, the Successful Landfill Expansion Permit is achieved in the seventh Operating Year, then the Minimum Annual Variable Rent for Operating Year 8 will be $6,264,300 and the Minimum Annual Variable Rent for Operating Year 7 will be$0. During those Operating Years when no Minimum Annual Variable Rent is due pursuant to Sections 4.04(C) and 4.04(D), the Lessee shall not be allowed to exceed 85,000 tons of Non- City Waste annually (measured for each such Operating Year) into the Southeast Landfill pursuant to Section 6.10 of the Agreement, unless otherwise agreed to by the City in writing." "(H) Carryforward Credit. At the end of each of the second through twenty-fourth Operating Years, the Variable Rent paid on Tons delivered to the Southeast Landfill shall be compared to the Minimum Annual Variable Rent required to be paid for that year. If, at the end of any of the second through twenty-fourth Operating Years the actual Variable Rent amount that would be due by the Lessee to the City for such Operating Year is more than the Minimum Variable Rent Amount for the Operating Year, then the amount of such difference is referred to in this Section 4.4 as a "Net Variable Rent Underpayment" and Lessee will pay to the City an amount equal to the actual Variable Rent amount due and not previously paid pursuant to Section 4.04(E), minus the Minimum Variable Rent Amount (if any), and minus available Carryforward Credits pursuant to the following paragraphs. Such amount shall be paid by Lessee to the City within twenty (20) Days after the end of the Operating Year, and shall be accompanied by a report summarizing the actual Variable Rent amount and the Minimum Variable Rent Amount (if any) for such Operating Year. If, at the end of any of the second through twenty-fourth Operating Years the actual Variable Rent amount due by Lessee to the City is less than the Minimum Variable Rent Amount for that Operating Year, then such condition is referred to in this Section 4.4 as a Variable Rent Overpayment and Lessee shall be entitled to a credit (a "Carryforward Credit") against Net Variable Rent Underpayments in future years in accordance with this paragraph. If in any Operating Year after the year in which such Carry Forward Credit exists (a "Subsequent Year") there is a Net Variable Rent Underpayment, Lessee shall be entitled to credit up to the sum of all prior Carryforward Credits against the amount due to fund such Net Variable Rent Underpayment. Example 1: In year 11 the Minimum Variable Rent Amount is $8,222,639, and Lessee's actual Variable Rent amount is$8,000,000. A Net Variable Rent Overpayment exists and the carryover is$222,639. In year 12 the Minimum Variable Rent Amount is $9,021,410, and Lessee's actual Variable Rent amount is$9,300,000. For that year a Net Variable Rent Underpayment exists and Lessee would pay the City a total Variable Rent of $9,077,361 (Actual Variable Rent of$9,300,000 minus the$222,639 carryover from the previous year). FIRST AMENDMENT SELF LEASE Page 3 Example 2: In year 11 the Minimum Variable Rent Amount is $8,222,639,and Lessee's actual Variable Rent amount is$8,000,000. A Net Variable Rent Overpayment exists and the carryover is$222,639. In year 12 the Minimum Variable Rent Amount is $9,021,410, and Lessee's actual Variable Rent amount is $9,150,000. For that year a Net Variable Rent Underpayment exists and Lessee would pay the City a total Variable Rent of $9,021,410 and would have a new carryover of $94,049 for subsequent years (actual Variable Rent of $9,150,000-Minimum Variable Rent of $9,021,410 = $128,590; $128,590-prior carryover of $222,639 = $94,049). If at the end of the last Operating Year of the Initial Term of this Agreement there is a Carryforward Credit from one or more Operating Years that has not been credited against Net Variable Rent Underpayments prior to the end of the Initial Term, then the aggregate amount of such unused Carryforward Credits shall be credited against Variable Rent payments due during the Renewal Term. Each month that a Variable Rent payment is due, there shall be credited against such Variable Rent amount due the lesser of(i) the amount of such Variable Rent due or (ii) the remaining aggregate unused Carryforward Credits. Once the balance of unused Carryforward Credits is zero, there shall be no further crediting of Carryforward Credits. During each month that Lessee applies any Carryforward Credit to any Variable Rent amount due, Lessee shall send to City a report detailing the Carryforward Credit applied." 2. Landfill Expansion Applications. The Landfill Expansion shall be consistent with the schematic set forth in Appendix 3A attached hereto, which supercedes Appendix 3 attached to the original Agreement. Accordingly, Sections 5.01 and 5.02(B) of the Agreement are hereby amended and restated. a. Section 5.01 of the Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.01. Landfill Expansion. The Lessee shall have the right and shall use all commercially reasonable efforts to expand the Southeast Landfill to utilize approximately an additional 23 million cubic yards of airspace, upon receipt of proper Government Approvals from appropriate Governmental Entities. The foregoing volume of airspace may be adjusted to accommodate for design and permitting issues. The Landfill Expansion shall be consistent with the schematic set forth in Appendix 3A." b. Section 5.02(B) of the Agreement is hereby amended and restated in its entirety to read as follows: "(B) Successful Landfill Expansion Permit. Approval by the Commission of the Permit application for the Landfill Expansion after exhaustion of all applicable appeals thereto shall be deemed successful if the Commission approves at a minimum, an expansion of hours to the Minimum Permit Hours and an expansion by approximately 23 million cubic yards of airspace (collectively, "Successful Landfill Expansion Permit"). In the event that the Commission does not authorize a Successful Landfill Expansion Permit, then (i) the Lessee and the City may agree on appropriate reductions to the Minimum Annual Variable Rent (and the Lessee and the City shall communicate and work together in good faith to resolve the issues relating to such reductions); (ii) if the Lessee and the City do not agree on appropriate reductions to the Minimum Annual Variable Rent, the Lessee and/or the City may terminate all its future obligations hereunder, except with respect to any applicable FIRST AMENDMENT SELF LEASE Page 4 Closure and post-Closure requirements and with respect to Sections 14.9 and 14.12; or (iii) the City may terminate this Agreement if and as provided in Section 5.02." C. A new Section 5.02(C) is hereby added to the Agreement, to read in its entirety as follows: "(C) Landfill Expansion Application Submittals. As required by Section 5.02(A), the Lessee shall prepare and submit all necessary applications for the Landfill Expansion at the earliest possible date. In any event, the Lessee shall take the actions described on Appendix 3B attached hereto no later than the due date for each such action (the "Task Deadline") set forth on Appendix 3B. Lessee shall use all commercially reasonable efforts to achieve administrative and technical completeness as required by the Commission in accordance with Applicable Laws. If accomplishment is delayed due to any of the conditions set forth on Appendix 3B not being fulfilled by the third party responsible therefor, then the Task Deadline and the Liquidated Damages Date may be extended by mutual agreement of the City and the Lessee, which shall communicate and work together in good faith to resolve the issues relating to such extensions. If the Lessee fails to achieve the required completion of application or submittal of such application (as applicable and as described further on Appendix 3B) on or before the Task Deadline (a "Deadline Failure"), the City shall, on or after the first Day after the relevant Task Deadline, give to the Lessee a written notice of the Lessee's Deadline Failure and a request to cure such Deadline Failure according to Section 14.02(A)(1) of this Agreement. The Lessee shall respond with a notice of corrective action pursuant to Section 14.02(D) within seven (7) Days after the notice of Deadline Failure is given by the City; such notice of corrective action may include a request to extend the deadline for cure of the Deadline Failure beyond the "Liquidated Damages Date" set forth for such action on Appendix 3B. The Lessee and the City shall communicate and work together in good faith to resolve issues surrounding any Deadline Failure and corrective action proposed by the Lessee. The City shall act reasonably in consideration of a proposed extension of the Cure Deadline, and will take into account whether the Deadline Failure is attributable to the actions or inactions of any third party beyond the control of the Lessee. If the City, in response to the Lessee's notice of corrective action, agrees with the Lessee to extend the period for the Lessee to cure the Deadline Failure beyond the Liquidated Damages Date, the City may do so and the Cure Deadline (herein so called) will be such agreed date. If the City, in response to the Lessee's notice of corrective action, does not agree with the Lessee to extend the period for the Lessee to cure the Deadline Failure beyond the Liquidated Damages Date, the Cure Deadline will be the Liquidated Damages Date. If the Lessee commits a Deadline Failure and fails to remedy such Deadline Failure on or before the Liquidated Damages Date, then, if this Agreement is not terminated on the Day after the Liquidated Damages Date pursuant to the following paragraph, the Lessee shall be subject to liquidated damages as follows: for every Day, from the first (1st) through fourteenth (14th) Days, after the Liquidated Damages Date and before the Day on which the applicable task is accomplished, the Lessee shall be subject to liquidated damages of$5,000 per Day; for every Day, from and after the fifteenth (15th) Day, after the Liquidated FIRST AMENDMENT SELF LEASE Page 5 Damages Date and before the applicable task is accomplished, the Lessee shall be subject to liquidated damages of$10,000 per Day. If Lessee does not cure its Deadline Failure by the Cure Deadline, then the Lessee's failure shall constitute an Event of Default subject to the remedies of the City in Section 14.02(B); the parties agree that the provisions of Section 14.04(A) shall not apply to an Event of Default which is the subject of this Section 5.02(C), and that the liquidated damages of this Section 5.02(C) shall instead be applicable, but only for Deadline Failures that occur during the Operating Years when the Minimum Annual Variable Rent equals $0. The City may terminate this Agreement upon an Event of Default under this Section 5.02(C) relating to any item on Appendix 3B, other than Submittal of Phase II of the Major Permit Amendment Application, upon thirty (30) Days' prior written notice to the Lessee; the City may terminate this Agreement upon an Event of Default under this Section 5.02(C) relating to Submittal of Phase 1I of the Major Permit Amendment Application upon sixty (60) Days' prior written notice to the Lessee. The City may issue notice of termination for an Event of Default on the fifteenth (15`h) Day or any Day following the fifteenth (15`h) Day after the Task Deadline. In no event will any liquidated damage amount be due with respect to any Day after the Day on which this Agreement is terminated by the City pursuant to this Section 5.02(C). Assessment of any liquidated damage shall not waive the City's right to terminate this Agreement pursuant to this Section 5.02(C) and Section 14.04(A) if no cure of a Deadline Failure is made on or before the Cure Deadline. In case of any inconsistency between Article 14 of this Agreement and this Section 5.02(C), the provisions of this Section 5.02(C) shall control, but only for Deadline Failures that occur during the Operating Years when the Minimum Annual Variable Rent equals $0." 3. Term Extension. a. Section 3.01 of the Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 3.01. Initial Term. The initial term of this Agreement (the "Initial Term") shall commence on the Contract Date, and shall expire on the earlier of(i) except as otherwise provided in Section 4.04(A), midnight on the date that is the day before the twenty-fourth (24`h) anniversary of the Operation Commencement Date (which will be March 22, 2027) (such expiration date being referred to herein as the "Anticipated Term End"), (ii) the last day of the Useful Life of the Southeast Landfill and (iii) the date this Agreement is terminated pursuant to Article XIV or otherwise as permitted herein. If the $6,264,300 Minimum Annual Variable Rent begins before Operating Year 7, then the Initial Term will end at midnight of the date that is the day before the anniversary of the Operation Commencement Date which equals twenty-four (24) minus the number of Operating Years prior to Operating Year 7 in which the Minimum Annual Variable Rent Amount of $6,264,300 is due. If the $6,264,300 Minimum Annual Variable Rent amount begins after Operating Year 7, then the Initial Term will end at midnight on the date that is the day before the anniversary of the Operation Commencement Date which equals twenty- four(24) plus the number of Operating Years after Operating Year 7 in which the Minimum Annual Variable Rent Amount of $6,264,300 is due. If the renewal option-se�46rtir FIRST AMENDMENT SELF LEASE , , Page 6 Section 3.2 is exercised, during the Renewal Term there shall be no Minimum Annual Variable Rent." b. Clause (2) of the first sentence of Section 6.25(A) of the Agreement is hereby amended and restated to read as follows: "(2) during any period prior to the Anticipated Term End following the exhaustion of the useful life of the Southeast Landfill, the City may elect, in its sole discretion, to require the Lessee to: ...." 4. Miscellaneous. Nothing contained herein shall be deemed to amend or modify the Agreement, except as expressly set forth herein. Specifically, this Amendment shall in no way affect Section 4.09 of the Agreement. Any defined term used herein, but not defined herein, shall have that meaning set forth in the Agreement. In the event of a conflict between the terms of this Amendment and the Agreement, the terms of this Amendment shall control. [Signatures on following page] FIRST AMENDMENT SELF LEASE Page 7 IN WITNESS WHEREOF, this Amendment has been executed as of the date both parties have fully executed the Amendment and is effective on such date. LESSEE: ALLIED WASTE SYSTEMS, INC. d/b/a TRINITY WASTE SERVICES By: Its: V Date Signed: 9-1 CITY: CITY FORT WORTH, TEXAS Libby Watson Assistant City Man ger Date Signed: ATTEST: - CCA k C rth0rizati0a Marty Hen ix q J /©6- City Secretary APPROVED AS TO FORM AND LEGALITY: Christa V. Lopez Assistant City Attorney DALLAS 1550714v15 FIRST AMENDMENT SELF LEASE 2 v� y j LA < Z a lid ox e fl��� � +i F � C ��Otln�p MHIM i I I I o x E � OWR HMO a � . . Who U C 7� 11 dt 01 1 o�� hil ,yes � /•, `' � .� I 4 � t I ` , l r.. , ¢ _ F a-�.. . ao a! -[ a a 0 U � coE" cd O 0 p oA " > o A y G 0 0 o ° �, a ° Baa 0co 0 0 � . cl � ° QO ° ICY � c 9 co '� >,,0 O 40. 2 0 0 0a� 2 aa i _ NO Q ° o o ° co x 2�, ° O 3 U -owU ° o O co _ 0 0c� � � � � co `� b b coami ate+ X00 g �� .— O 04 0 dam _" a � ° � O � � F" �= � •� .� ami � � v, Co ce) co _ 00 a 0 Wim " G. °a' F�- Z � a Hwa 0 wN! O cq cO N 00 nj r-i O O oN ooai y O N NO yj LL •k Ln O c 0 (v o o ,o o o .o co ., w •, > a ° Q aaQ ° Q a, a ¢ g S � w � a ° � rcl p W r ° O ¢ - � U �rU� Ui�Rl SEA. City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 9/20/2005 DATE: Tuesday, September 20, 2005 LOG NAME: 52TRINITYAMEND REFERENCE NO.: C-21011 SUBJECT: Authorize Execution of the First Amendment to City Secretary Contract Number 28336 with Allied Waste Systems, Inc., d/b/a Trinity Waste Services for the Lease and Operation of the Southeast Landfill RECOMMENDATION: It is recommended that the City Council authorize the City Manager to execute the First Amendment to the City Secretary Contract Number 28336 with Allied Waste Systems, Inc. d/b/a Trinity Waste Services for the lease and operation of the Southeast Landfill, DISCUSSION: On November 19, 2002, (M&C C-19358) the City Council authorized the negotiation and execution of an agreement with Allied Waste Systems, Inc., d/b/a Trinity Waste Services for the lease and operation of the City's Southeast Landfill (SELF) and to provide disposal services for the City's municipal solid waste which was executed on January 28, 2003. Due to Kennedale's restriction of Dick Price Road and Trinity's resulting inability to access the SELF, Trinity has been unable to traffic the volume required to make its Minimum Annual Variable Rent Payment without jeopardizing the City's Landfill space before a permit modification has been granted. Trinity also claimed Kennedale's restrictions hampered its ability to submit a Landfill expansion permit that would be acceptable to the Texas Commission on Environmental Quality (TCEQ). As a result, the anticipated amount of third party volume going into the Landfill at this time has not been realized and will not be realized until the new Landfill road is completed and the modification of the SELF permit is achieved. Therefore the City and Trinity entered into negotiations to address these issues which have led to the First Amendment to the Southeast Landfill Agreement. The First Amendment makes an adjustment to the minimum variable rent schedule in the Lease Agreement so that for the operating years in which Trinity shall seek a Landfill amendment and modification to expand the Landfill as is currently required by the Lease Agreement, the minimum variable rent due would be $0. In exchange for this hiatus in the variable rent, Trinity would be restricted from bringing in more than 85,000 tons of third party waste per year, lessening the risk to the existing Landfill space. Once Trinity has secured a successful Landfill permit amendment and modification from TCEQ, then the minimum annual variable rent would escalate back up. The monthly base rent is not affected by this modification. Evaluation of this schedule shows that, over the life of the Lease Agreement, an additional $18,008,841 of minimum variable rent (in total dollars) will be generated while the net present value of schedule decreases by $369,602. Based on this analysis, staff recommends that the payment schedule be altered. Additionally, the First Amendment to the Lease Agreement incorporates a timeline which sets out the date (s) that Trinity must submit application(s) for the Landfill permit amendment and modification to TCEQ. The First Amendment also allows the City to terminate the Lease Agreement if Trinity fails to perform and cure its failure by the Cure Deadline. The City must act reasonably and in good faith to resolve any issues that may be the fault of a third party and in granting any requested extension based on that factor. The City may Logname: 60SOUTHWEST Page 1 of 2 also assess liquidated damages for Trinity's failure to perform past a certain date. The First Amendment allows both parties to progress toward a successful Landfill permit amendment and modification while protecting the City's interests of preserving Landfill space until the expansion is possible. This amendment will not increase the monthly sanitation charge on each service unit. FISCAL INFORMATION/CERTIFICATION: The Finance Director certifies that the Department of Environmental Management, Solid Waste Division, will be responsible for the collection of revenues under this amendment. TO Fund/Account/Centers FROM Fund/Account/Centers Submitted for City Manaaw's_Office by: Libby Watson (6183) Origi�natiMl)epartment Head: Brian Boerner (6647) Additional Information Contact_ Kim Mote (6647) -name: 60SOUTHWEST Page 2 of 2