HomeMy WebLinkAbout11.c. Captial Assistance Grants - Materials Recovery, Inc.A
CITY OF ROSEMOUNT
EXECUTIVE SUMNARY FOR ACTION
CITY COUNCIL MEETING DATE: OCTOBER 20, 1992
AGENDA ITEM: CAPITAL ASSISTANCE GRANTS
AGENDA SECTION:
MATERIALS RECOVERY, INC.
NEW BUSINESS
PREPARED BY: STEPHAN JILK
AGENDI MA #11
ATTACMMTS: APPLICATION - CAPITAL ASSISTANCE
OVE BY:
GRANT - MATERIALS RECOVERY,'INC.
The city is currently acting as a sponsor for two Capital Assistance Grants through the
funding program provided by the Metropolitan Council. These two grants are:
1. Equipment purchased by Knutson Recovery Systems when their new Materials
Recovery Center was built on 160th, and
2. Equipment purchased by Materials Recovery, Inc. when they opened their
operation for recycling of demolition materials.
As sponsor for these grants, the city provides a channel for the funding program between
the Metropolitan Council and private industry. The way the program is set up is that the
Met Council provides matching funds for equipment and other capital investment items to
private and local government firms for projects which will reduce the landfilling of
recyclable materials. A local.government agency must sponsor a private firm.
The cost to the City of Rosemount is the time spent by city staff in reviewing the
application, responding to certain "sponsor" related questions and then coordinating that
review process for the application, and finally providing annual reports to the
Metropolitan Council on the progress of the report.
Materials Recovery, Inc. is desirous of expanding their operation to include the grinding
of wood pallets which are now being burned or landfilled. This capital assistance grant
would provide matching funds to purchase and install the necessary equipment. If the city
does sponsor the application there would be follow -up -action required by the City Council
to enter into an agreement, such as the one attached for the Knutson project between the
city and the Metropolitan Council and between the city and Materials Recovery, Inc. These
agreements formalize the "sponsorship" relationship between the agencies and the legal
aspects surrounding the fact that the city will actually hold title to the equipment
through the end of the grant period being three years from the date approved by the
Metropolitan Council.
RECOMMENDED ACTION:
Motion to approve the sponsorship of the Capital Assistance Grant for
Materials Recovery, Inc. and to direct staff to continue to process the
necessary application documents for Metropolitan Council and City
Council approval.
COUNCIL ACTION:
(Third Party)
Contract No. SG -90-38'
CAPITAL ASSISTANCE GRANT AGREEMENT
BETWEEN THE METROPOLITAN COUNCIL
AND
CITY OF ROSEMOUNT
ON BEHALF OF
K'd[nm RIIRRTCH SFRVIrM INC
THIS AGREEMENT is entered into this 23rd day of February , 1990,
by and between the Metropolitan Council, hereinafter referred to as the
"Council," and Citv of Rosemount , hereinafter referred to as
the "Grantee."
WHEREAS, the Council is authorized by Minnesota Statutes section 473.844 to
make project grants from the Metropolitan Landfill Abatement Fund; and
WHEREAS, the Council has approved a Capital Assistance Grant Program to assist
in the purchase of machinery or equipment for landfill abatement in the
Metropolitan Area; and
WHEREAS, the Grantee has submitted an application for a Capital Assistance
Grant as project sponsor on behalf of Knutson Rubbish Services Inc. ►
hereinafter referred to as the "Implementing Third Party;"and
WHEREAS, the Council has reviewed the application and desires to assist the
Grantee by the award of a Capital Assistance Grant; and
WHEREAS, the Grantee's project concepts are -not in conflict with Dakota
County's Solid Waste Management Master Plan.
NOW, THEREFORE, the Council and the Grantee agree as follows:
I. AUTHORIZED USE OF GRANT PROCEEDS
The Grantee agrees that the work program activities will be completed in
accordance with the Grantee's contract with the Implementing Third Party
and as described in the Grantee's application for grant assistance,
attached hereto as Appendix A and incorporated herein. The Grantee is
authorized to use.the grant funds only in payment of the line item costs as
Specified in Appendix B, which is attached hereto and incorporated herein.
No other use of grant funds is permitted.
Grant and matching funds maybe used only for the actual purchase price of '
the machinery or equirment plus freight and applicable taxes. Grant and
matching funds may not be used to pay for other expenses associated with
the project.
) t,
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B. Grantee's 2eLsMnsibility. The Grantee accepts full responsibility
for completion.of the project as contemplated by this agreement
between the Council and the Grantee. Failure of the Implementing
Third Party to perform its obligations to the Grantee shall not excuse
the Grantee's obligations to the Council under this agreement. In the
event of the Implementing Third Party's default, the Grantee agrees to
consult with the Council to determine the best course of action to
insure that the equipment or machinery is used for landfill abatement
activities during the Grant Period.
VI. GENERAL CONDITIONS
A. Grant Period. The Grant Period shall extend from the date of final
execution oT this agreement to a date three (3) years thereafter. The
Council encourages the Grantee to continue to use the equipment or
machinery for landfill abatement activities beyond the three year
Grant Period.
B. Completion of Work Program Activities. The Grantee agrees to
conduct the work program activities described in Appendix A during the
Grant Period. Specifically, the Grantee agrees to place the equipment
or machinery acquired into use for landfill abatement purposes within
three (3) months of final execution of this agreement. The Grantee
further agrees to deliver to the Council, within three (3) months of
final execution of this agreentnt, copies of the paid invoice(s)
covering the purchase of the equipment or machinery, freight costs,
and applicable taxes.
C. Title. Title to the equipment or machinery shall remain with the
Grantee during the Grant Period. Accordingly, the Grantee shall take
reasonable measures to protect and defend its title interest and shall
keep the equipment or machinery free and clear of any liens,
encumbrances, or other claims.
D. Risk of Loss. -The Grantee bears the risk of .loss of, damage to, or
destruction of the equipment. No such loss, damage, or destruction
shall relieve the Grantee of its obligations under this agreement.
E. Indemnification. The Grantee assumes liability for, and agrees to
indemnify, protect and hold harmless the Council from any liabilities,
obligations; losses, damages, claims, injuries, penalties, costs and
expenses, including reasonable attorney's fees, arising out of the
manufacture, use, condition, operation or ownership of the equipment
or machinery.
F. Repayment of Grant Proceeds. In the event that the machinery or
equipment is not used for at least three (3) years from the date of
final execution of this agreement for landfill abatement activities,
the Grantee shall return the Council's pro rata share of grant
proceeds within thirty (30) days of the date the machinery or
equipment ceases to be used for landfill abatement activities. The
Council's pro rata share shall be calculated by multiplying the
Council's total grant amount by the number of months the machinery or
equipment was actually used for landfill abatement activities, and
dividing the product by 36.
-5-
G. Noncompliance by Grantee. If the Council finds that there has been
failure to comply with the provisions of this agreement, the Council
may terminate the agreement at any time following seven days' written
notice to the Grantee and upon failure of the Grantee to cure the
default within the seven-day period. Nothing herein shall be
construed so as to limit the Council's legal remedies'to recover grant
funds.
H. Unauthorized Use of Grant Proceeds. Upon a finding by Council staff
that the Grantee has made an unauthorized or undocumented use of grant
proceeds, and a demand for repayment, the Grantee agrees to promptly
repay such amounts to the Council.
I. Amendments. The terms of this agreement may be changed or modified
by mutual agreement of the parties hereto. Such changes or
modifications shall be effective only upon the execution of written
amendments signed by authorized representatives of the Council and the
Grantee.
J. Equal Employment Opportunity; Affirmative Action. The Grantee
agrees to comply with all applicable laws relating to
nondiscrimination and affirmative action. In particular, the Grantee
agrees not to discriminate against any employee, applicant for
employment, or participant in this project because of race, color,
religion, sex, or national origin, and further agrees to take
affirmative action so that applicants and employees are treated
equally with respect to all aspects of employment and compensation.
The Grantee further agrees to take affirmative action to include the
participation of economically disadvantaged small businesses (EDBs) in
the performance of work program activities, whenever possible.
R. Publications. The Grantee shall appropriately acknowledge the grant
assistance made by the Council in any promotional materials, reports,
and publications relating to the work program activities.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives on the day and year first
above written.
METROPOLIT CO'JNCI
By
David Renz, Executive Director
GRANTEE
f
epn Jilk
Its Ci y Admini ator
LN261A
� V
Appendix A
B. Capital Assistance Grant Work Program
ACTIVITY/TASK
PERSON/POSITION
COMPLETION TIME
Final Facility
CRS
December
15, 1989
Design
Capital Acquisition
Knutson Management,
February
1, 1990
CRS
MPCA Solid Waste Permit
CRS
April 1,
1990
General Contractor-
Knutson Management,'
April 1,_1990
Construction Agreement
CRS
Equipment Procurement
•
CRS
April 1,
19x90 •
Construction Management
CRS
September
1, 1994
Operator Training
CRS
October
1, 1990
Commercial Account
Knutson Management
October
1, 1990
Adjustment
eration
Facility Op,
Knutson Recycling
Ongoing
Manager
Financial Management
Knutson Financial
Ongoing
'
Officer
Bin
1
Appendix B
SECTION D. INFORMATION ABOUT PROJECT FINANCES
1. Itemize the Capital Assistance Grant
budget
Project budget.
format provided
All project spon-
below. The budget
sors are required
must show how the
to use the
grant funds and cash
match will be
used for the pur-
chase of landfill
abatement machinery or equipment.
Total Project
LocMatch
Capital Ass istance
rant
Budget It
Cost
____a_----
Purchase.
Purchase
$220,473
$110,237
21,825
$110,236
21,825
,.,Equipment
Machinery Purchase43,650
,
(Rolling Stock)
Freight
Included Above '
Applicable Taxes
Included Above
$264,123
$132,062
5132,061
SUBTOTAL
The following llowin costs are not eligible for grant or match funds, but are part
of the total project costs:
Salaries/fringes
Contracted Labor $125,000
Travel Expenses
Printing
Equip/Mach..
Rent/Lease
Other project Costs
(Facility Procurement) $533,347
SUBTOTAL 5658,347
TOTAL
122,47
32,062
Anticipated Project Revenues, if any 5171 000 5335 000/vr_
17
a13L,vvi
MATERIAL RECOVERY FACILITY AGREEMENT
AGREEMENT made this f_7= day ofE.h���/^� 19�; by
and between the CITY OF ROSEMOUNT, a Minnesota municipal
corporation ("City"), and KNUTSON RUBBISH SERVICES, INC.,
("Knutson").
I. Background. Knutson, with its principal place of
business in Rosemount, is in the rubbish hauling and recycling
business. Knutson is seeking a capital assistance grant from the
Metropolitan Council to construct a material recovery facility.
Knutson has requested that the City be the project sponsor in
accordance with the Metropolitan Landfill Abatement Fund Capital
Assistance Grant program guidelines.
2. Grant Application. Knutson and the City shall apply for
a grant from the Metropolitan Council substantially in the form
attached hereto as Exhibit "A". The City shall be the project
sponsor for the grant.
- 3. Purchase of Equipment. If the grant is approved,
Knutson shall purchase the equipment listed on Table 1 of the
grant application ("equipment"). To the extent that the grant-
does not cover the cost of acquisition of all the equipment,
Knutson shall pay the cost. The City shall be the owner of the
equipment.
4. Lease. Commencing with the purchase of the equipment,
the City shall lease the equipment to Knutson for a three (3)
year term. Knutson shall lease the equipment "AS is,, and without
r12/15/89
b ) What are the costs associated with distribution? What
channeis are used by the competition and why was this channel
chosen by you? Would credit affect distribution? Could you
provide credit if the use of credit increased sales and
profitability?
Distribution costs are easily defined. They are the trucking
costs and container rental costs if used, associated with
delivering the product. We would have no reason to extend credit
to any consumer.
c) What is the budget for advertising and promotion? What
are the per-unit costs for advertising? What are the industry
costs for similar products, processes or services? How much
would be spent for media and print copy?
Advertising and promotion would be minimal. We would offer our
various proctuct sizes at a reduced price for a trial basis and
let the consumer decide which product would be best for his
application.
6. FINANCIAL PROJECTIONS
a) Sales - What additional dollar volume of sales is
projected for the first tnree years? What dollar volume of sales
is necessary to provide a nreak even situation? When will the
break even point be reacnea? what percentage of total market
sales are projected to be captured?
YEAR ONE (Approximately one trailer will be filled and
ready for deiivery each day.)
260 OPERATING DAYS
YEAR TWO
TWO LOADS/DA'I
YEAR THREE
THREE LOADS/DAY
$ 48,000
$ 52,000
$ 55,000
TOTAL $155,000
b) Capital How much total capital is required to carry the
enterprise through its early years of operation? Please specify
where the funds will come from and how they will be used. How
will borrowed capital be repaid?
Total capital required to initiate and operate the project is
$186,880. The funds will come from the Met Council Grant, Mid-
America Stank, Gopher Disposal, Eagle sanitation, and the small
Business Administration. Borrowed funds will be repaid out of
operating revenue and avoided disposal costs.
any express or implied warrantie
Payment s from. the City
shall be $1.00 lease
Kn nutso Per year, burin . The .
agrees: 9 -the term of the lease,
A• The equipment s
Purpose set forth in be be used exclusively
the grant a y for the
' B• The a PAlication,
corporate liequspmenthshall not be removed
City.
from the
C. No liens or encumbrances shall be
to the equipment.. allowed to attach
Working The equipment
9 order.. shall be kept
P in good repair and
E•
effKnutson shall obtain '
ect during the
following: term of theaat
full force and
lease, t its sole cost, the
risk') Insurance
customarily against loss by fire,
endorsement y covered by standard lightning,
mischief I together with coverage g', and
endorsement a vandalism and
the full replacement • all in an amount of malicious
where the equipment is°st of the aqui equipment
less than
located, p and building
coverin is
0Covering the a general public liability
o r bodily injury, deia'thlity of Knutson against insurance
in or about the and propertyaOccurring claims
located in the property where tedequip occurring
following amounts: equipment is
(i) one Million and 00
Dollars /100.($1
and for injury or death oof'one of00)
Person;
Two Million and
Dollars for 00/1fl0 ($2,0 0fl
Person; and injury or death 00'000.00)
more than one
(iii) Five and
($500i000.00 Thousand and 00/100 Dollars
for damage t0 the premises,
(iv) Two -Million
and umbrella coverage ($2,000
liability, '000.00
9e of comprehensive general
such. insurance
.insurance companies
policies shall be
insured es Xnu satisfactory written on forms
Parties Knutson and the ycity to casyt shall andaS with
name
heir interests may
-2-
ecifically provide that the
appear. All policies shall 3o s prior written notice
City shall receive thirty (30) day ,
such policies.
before cancellation of any of its
In the event of material default by Knutson as to any
der the City may, at is option, rescind the
obligations hereunder ,
the equipment, and thereafter Knutson shall not
lease and reclaim- however, shall
i went. Knutson,
have the right to purchase the equ P
st thirty (30) days advance written notice during
be given at lea
tson may cure the default.
which period Knu
5. Purchase. At
the end of the lease term, the City shall
convey title to Knutson for $1.00. Cit and its
6: gold garmless. Knutson shall hold the Y
es laims .made for
officers, employe , and agents harmless from c
stained on costs incurred resulting from the City
damages su .
entering into this Agreement and leasing
the equipment to
Knutson. Knutson
shall indemnify the City and its officers,
or expenses which
employees, and agents for all costs, damages,
e Cit may pay or incur in consequence of such claims,
th Y
including attorneys' fees.
7. Contingency.
Before proceeding with construction of the
Resource Recovery Facility, Knutson must obtain all
Material Reso and other
land use approvals and the like from the City
necessar y
permitting agencies. this
g. Termination. If the grant contemplated by
1, 1990, this
Agreement is not received on or before June
Agreement shall be void.
-3-
STATE OF MINNESOTA )
(
COUNTY OF�r<.r3 ss.
)
19
The foregoing instrument was acknowledged before me-this
the day of� ►n .L• 1989, by_a�
of Knutson Rubbish Services, on i
behalf.
Nor�a»nX f A AQL ,l
NO
��A NOTARY PUBLIC
-5-
9. Notices. Required notices to Knutson shall be in
writing, and shall be either hand delivered to Knutson, its
employees or agents, or mailed to Knutson by registered mail at
the following address: 15120 Chippendale Avenue, Rosemount,
Minnesota 55068. Notices to the City shall be in writing and
shall be either hand delivered to the City Administrator/
Clerk, or mailed to the City by registered mail in care of the
City Administrator/Clerk at the following address: 2875 - 145th
Street West, P.O. Box 510, Rosemount, Minnesota 55068.
CITY OF ROSEMOUNT
BY:
Rollo Hoke, Mayor
AND /e,rpt. t e 1G-
-ephan Ji1-k—
Administrator/Clerk
KNUTSON— BXSH SERVICES,',�NC.
Its- Presic ft jF
t
STATE OF MINNESOTA )
( ss.
COUNTY OF DAKOTA )
The foreggi instrument was acknowledged before me this
b _ day of �u �_1 1989, by Rollan Hoke, Mayor, and
y Stephan Jilk, Administrator/Clerk, of the City of Rosemount, a
Minnesota municipal corporation, on behalf of the corporation and
pursuant to authority granted by its City Council.
NOT Y ROBLIC
-4-
(:5 �' //0
b ) What are the costs associated with distribution? What
channeis are used by the competition and why was this channel
chosen by you? Would credit affect distribution? Could you
provide credit if the use of credit increased sales and
profitability?
Distribution costs are easily defined. They are the trucking
costs and container rental costs if used, associated with
delivering the product. We would have no reason to extend credit
to any consumer.
c) What is the budget for advertising and promotion? What
are the per-unit costs for advertising? what are the industry
costs for similar products, processes or services? How much
would be spent for media and print copy?
Advertising and promotion would be minimal. We would offer our
various proctuct sizes at a reduced price for a trial basis and
let the consumer decide which product would be best for his
application.
6. FINANCIAL PROJECTIONS
a) Sales - What additional dollar volume of sales is
projected ror the first tnree years? What dollar volume of sales
is necessary to provide a break even situation? When will the
break even point be reacned? What percentage of total market
sales are projected to be captured?
YEAR ONE ( Approximately one trailer will be filled and
ready for delivery each day.)
260 OPERATING DAYS
YEAR TWO
TWO LOADS/UAY
YEAR THREE;
THREE LOADS/DAY
$ 48,000
`: $ 52,000
$ 55,000
TOTAL $155,000
b) Capital - How much total capital is required to carry the
enterprise through its early years of operation? Please specify
where the funds will come from and how they will be used. How
will borrowed capital be repaid?
Total capital required to initiate and operate the project is
$186,880. The funds will come from the Met Council Grant, Mid-
America Bank, Gopher Disposal, Eagle Sanitation, and the Small
Business Administration. Borrowed funds will be repaid out of
operating revenue and avoided disposal costs.