HomeMy WebLinkAboutOrdinance 5391 ORDINANCE NO. 5391
AN ORDINANCE WAIVING THE REQUIREMENTS OF FORMAL
COMPETITIVE BIDDING AND APPROVING A CONTRACT WITH
ARKANSAS WESTERN GAS COMPANY IN THE MINIMUM AMOUNT OF
$715,560.00 FOR THE PROVISION OF NATURAL GAS SERVICE AND THE
CONSTRUCTION OF NECESSARY PIPING AND INFRASTRUCTURE
EXTENSIONS FOR BIOSOLIDS DRYING OPERATIONS AT THE NOLAND
WASTEWATER TREATMENT FACILITY
WHEREAS, the City desires to increase the amount of natural gas service provided by
Arkansas Western Gas Company to the Noland Wastewater Treatment Facility in order to operate
biosolids drying operations; and
WHEREAS, extension of the service will require infrastructure in the form of natural gas
pipe extensions of approximately two and three-quarters miles (14,500 feet); and
WHEREAS,entering into a cost-sharing agreement with Arkansas Western Gas Company is
the most cost-effective manner of obtaining both the utility service and the needed infrastructure
extension; and
WHEREAS,the method proposed in the cost-sharing agreement is the standard method for
paying for Public Service Commission utility extensions;
NOW,THEREFORE,BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FAYETTEVILLE,ARKANSAS:
Section 1. That the City Council of the City of Fayetteville,Arkansas hereby determines an
exceptional situation exists in which competitive bidding is deemed not feasible or practical and
therefore waives the requirements of formal competitive bidding and approves a contract with
Arkansas Western Gas Company in the minimum amount of$715,560.00 for the provision of natural
gas service and the construction of necessary piping and infrastructure extensions for biosolids
drying operations at the Noland Wastewater Treatment Facility. A copy of the contract is attached to
this Ordinance as Exhibit"A".
Page 2
Ordinance No. 5391
PASSED and APPROVED this 15`" day of March, 2011.
APPROVED: ATTEST:
By: By: Qq"A.'l
O ELD JO A , ayor S014DRA E. SMITH, City Clerk/Treasurer
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ARKANSAS WESTERN GAS COMPANY
MAIN EXTENSION AGREEMENT
This Main Extension Agreement ("Agreement") is made and entered into this
lrJ day of 1ja4ZA`, Z�, ("Effective Date") by and between the City of
Fayetteville, Arkansas (hereinafter referred to as "City"), and Arkansas Western Gas
Company (hereinafter referred to as "AWG").
WHEREAS, City is desirous of securing an increase in the amount of natural gas
service provided by AWG to the City's Paul R. Noland Wastewater Treatment Facility
(the "Wastewater Treatment Facility"); and
WHEREAS, AWG is desirous of furnishing that increased amount of natural gas
service to the City at the Wastewater Treatment Facility, in accordance with the rates,
terms and conditions set forth in AWG's Tariff filed with the Arkansas Public Service
Commission ("Commission"); and
WHEREAS, in order to supply the increased amount of natural gas service to the
Wastewater Treatment Facility, AWG will be required to extend its gas mains by
constructing a gas distribution main from its P-228A pipeline located at the northwest
corner of the intersection of Highway 16 East and Cunningham Road in Fayetteville, to
the Wastewater Treatment Facility, a distance of approximately 14,500 feet (hereinafter
referred to as "the Extension"); and
WHEREAS, AWG is willing to construct the Extension, but the expected
increased revenue from the increased amount of natural gas service to the Wastewater
Treatment Facility is insufficient to justify the necessary investment on the part of AWG
to construct the Extension; and
WHEREAS, City is willing to pay part of the cost of the Extension, by paying to
AWG a minimum of$715,560.00, in the form of Delivery Charges pursuant to AWG's
Tariff filed with the Commission and/or Construction Charges (as described below), over
a period of 120 months.
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NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES AND OTHER
VALUABLE CONSIDERATION HEREIN ACKNOWLEDGED, CITY AND AWG
AGREE AS FOLLOWS:
1. City will pay AWG a non-refundable amount in aid of the construction of
the Extension. For the month after the Extension is completed and in operation, and for
each of the next 119 months (this 120 month period will hereafter be referred to as the
"Repayment Period"), City will pay to AWG a minimum of$5,963.00 per month in the
form of a Delivery Charge, pursuant to the Rate Schedule of AWG's Tariff under which
City is being supplied natural gas service at the Wastewater Treatment Facility, and/or a
Construction Charge. For any month during the Repayment Period during which City's
usage of natural gas service at the Wastewater Treatment Facility is such that the
Delivery Charge from AWG for that month is equal to or greater than $5,963.00, City
shall pay no Construction Charge to AWG. However, for any month during the
Repayment Period during which City's usage of natural gas service at the Wastewater
Treatment Facility is such that the Delivery Charge from AWG for that month is less
than $5,963.00, City shall pay to AWG the difference between $5,963.00 and the
amount of the Delivery Charge for that month as a Construction Charge. During the
Repayment Period, City will pay to AWG a minimum of $715,560.00 ($5,963.00 x 120
months) in Delivery Charges and/or Construction Charges. All Delivery Charges and
Construction Charges will be billed to City on City's regular bill for natural gas service
from AWG. During the Repayment Period, City will pay each month, in addition to the
Delivery Charge and/or Construction Charge, all additional applicable charges, taxes
and fees pursuant to the Rate Schedule of AWG's Tariff under which City is being
supplied natural gas service at the Wastewater Treatment Facility (for example, the
Customer Charge, the Cost of Gas Charge, any applicable rate adjustment charges,
any applicable taxes and fees). If City ceases using natural gas service from AWG at
the Wastewater Treatment Facility prior to the end of the Repayment Period, then City
will pay to AWG the difference between $715,560.00 and the total amount of Delivery
Charges and/or Construction Charges which City has paid to AWG during the
Repayment Period prior to City ceasing the use of natural gas service from AWG at the
Wastewater Treatment Facility.
2. AWG has computed the above-stated minimum amount of$715,560.00 in
Delivery Charges and/or Construction Charges based on the construction conditions at
the site of the Extension as currently known by AWG. Should AWG encounter any
construction conditions of which AWG is presently unaware, including, but not limited to,
the need for: the excavation of rocks, the clearing of a right of way, the payment of right
of way acquisition costs, and the need to perform boring of a road as part of a road
crossing, then City will pay AWG, in addition to the sum set forth earlier in Paragraph 1
above, an amount equal to the additional costs incurred by AWG as a result of the
construction condition(s) of which AWG was unaware at the time of the execution of this
Agreement. AWG will adjust upward the above-stated minimum amount of
$715,560.00, and the corresponding.monthly minimum Delivery Charge and/or
Construction Charge payments to reflect the additional costs of construction of the
Extension. AWG will provide City with a written explanation for any additional costs for
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which City is being billed. Should the amount of the additional costs described in this
paragraph exceed $72,000.00, the amount in excess of that $72,000.00 must be
approved for payment by City's Mayor and City Council.
3. City hereby grants AWG a right of way license and permission to install
and operate utility facilities on or across City's property as shown on the approved plans
or sketch maps attached hereto and made a part of this Agreement. Prior to AWG
beginning work on the Extension, City will, at no cost to AWG, furnish AWG with all
necessary easements, rights of way and permits pertaining to land owned by City.
Those easements, rights of way and permits must release.AWG from any and all claims
for damage done to streets, land, fences and crops arising out of the construction of the
Extension, except for damages caused by AWG's gross negligence.
4. AWG will use its best efforts to obtain all necessary easements, rights of
way and permits pertaining to land owned by persons other than City.
5. AWG will install the Extension. AWG plans to begin installation of the
Extension on April 25, 2011. However, AWG will not begin the installation of the
Extension until City has: a) provided to AWG all necessary easements, rights of way
and permits, pertaining to land owned by City, in a form acceptable to AWG; b) caused
the right of way for the Extension to be clearly staked on land owned by City; c) caused
the right of way on land owned by City to be reduced to final grade and cleared of all
obstructions of any kind, to the satisfaction of AWG; and d) satisfied all the terms and
conditions for service in accordance with AWG's Tariff. Moreover, AWG will not begin
the installation of the Extension unless and until it has obtained all necessary
easements, rights of way and permits, pertaining to land owned by persons other than
City, in a form acceptable to AWG. The projected completion date of the Extension is
September 30, 2011. AWG shall not be liable for delays in commencing or performing
the installation of the Extension caused by the requirements of.governmental
authorities, lack of necessary easements, rights of way or permits, the unavailability of
materials and supplies, accidents, strikes,. acts of God, or any other event or condition
of whatever nature beyond the control of AWG. AWG reserves to itself the unqualified
discretion in dealing with any labor dispute that might delay the commencing or
performing of the installation of the Extension
6. Title to and ownership of the Extension, including the main, pipes and
appurtenances, connections thereto and extensions thereof and laterals off of, and
including the right to use, operate, maintain and remove same, shall forever be and
remain exclusively and unconditionally vested in AWG. City understands,
acknowledges and agrees that City shall have no title to, interest in, or ownership of the
Extension, including the main, pipes and appurtenances, connections thereto and
extensions thereof and laterals off of the Extension.
7. City understands, acknowledges and agrees that this Agreement shall not
limit AWG's right to use, extend or change its facilities in any manner or obligate AWG
to render any particular service except in the regular conduct of its business as a gas
3
utility and in accordance with its applicable Tariff and the rules and regulations of the
Commission.
8. City's obligation to pay the amounts stated in this Agreement shall not be
affected by any other customers of AWG being connected to and served off of any
future extensions or laterals coming off the Extension. City specifically understands,
acknowledges and agrees that AWG has the right to make further extensions to or
laterals off of the Extension, including any extensions or laterals that extend beyond the
physical boundaries covered by this Agreement, without any reduction of obligation
whatsoever on the part of City.
9. The decision to make further extensions to or laterals off of the Extension,
or to serve other customers from such further extensions or laterals, shall be at the sole
discretion of AWG, in accordance with its Tariff and the rules and regulations of the
Commission then in effect.
10. If an engineering study has been performed in connection with the
Extension, a summary of that study is attached to, and made a part of, this Agreement.
11. AWG and City acknowledge that there are no agreements or
understandings, written or oral, between the parties related to the Extension other than
as set forth in this Agreement, and that this Agreement contains the entire agreement
between the parties hereto. This Agreement may not be amended except by written
amendment signed by both parties.
12. This Agreement shall be governed in accordance with the.laws of the
State of Arkansas, the rules and regulations of the Commission, and the Tariff of AWG.
In the event of a conflict between this Agreement and any such laws, rules, regulations
or Tariff, such laws, rules, regulations or Tariff shall control.
13. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that City shall not have the right
to assign this Agreement without the express prior written consent of AWG. which
consent shall not be unreasonably withheld.
14. Contracts to which City is a party and documents prepared in connection
with work performed under such contracts, which are in City's possession, are subject
to the Arkansas Freedom of Information Act (Ark. Code Ann., Section 25-19-101 et
seq.).
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15. City acknowledges that it has been afforded an opportunity to have its
attorney review and explain the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives on the date stated above.
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ARKANSAS WESTERN GAS COMPANY CITY OFF YETTEVILLE, ARKANSAS
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City of Fayetteville Staff Review Form
City Council Agenda Items
and
Contracts, Leases or Agreements
15-Mar-11
City Council Meeting Date
Agenda Items Only
David Jurgens Utilities Capital Projects Utilities
Submitted By Division Department
Action Required:
Approval approval of a cost share agreement with Arkansas Western Gas(AWG)to extend gas service to the Noland
Wastewater Treatment Facility(WWTF), and approval of a bid waiver.
N/A 78,454 Utilities
Cost of this request Program Category/Project Name
5400.5110.5310.00 8,211 East Side WWT
Account Number Funds Used to Date Program/Project Category Name
N/A 70,243 Water/Sewer
Project Number Remaining Balance Fund Name
Budgeted Item 0 Budget Adjustment Attached Q
23 p4)l Previous Ordinance or Resolution# N/A
Depa rr ent Dir for Date
Original Contract Date:
2•2 y Original Contract Number:
ney Date
Q• LJ, 2-23-7.61L
Finance and Internal Services Director Date Received in City 02-23-1 1 P01 4 9 R CV D
Clerk's Office
Aor
Date
Received in
Mayor's Office
D to
Comments:
Revised January 15,2009
CITY COUNCIL AGENDA MEMO
TayMEETING DATE OF MARCH 15,2011
THE CITY OF FAYETTEVILLE ARKANSASS
www.accessfayetteville.org
To: Fayetteville City Council
Thru: Mayor Lioneld Jordan
Don Marr, Chief of Staff
From: David Jurgens, Utilities Director
Fayetteville Water and Sewer Co i t e
Date: February 22, 2011
Subject: Approval of a cost share agreement ' h Arkansas Western Gas to extend gas service to the Noland
Wastewater Treatment Facility
RECOMMENDATION
Staff recommends approval of a cost share agreement with Arkansas Western Gas (AWG)to extend gas service
to the Noland Wastewater Treatment Facility(WWTF), and approval of a bid waiver.
BACKGROUND
The City currently hauls an average of 15 tractor trailer loads of biosolids weekly to either the Prairie View
Landfill in Lamar, or the Ozark Ridge Landfill in Russellville. Fuel prices and tipping fees make the current
landfill operation much more expensive than when selected in 2003. There are also significant risks inherent in
landfilling, as demonstrated by the American Environmental Landfill's sudden refusal to accept biosolids on 26
August, 2008. Finally, landfilling represents a waste of a potentially valuable biosolids product.
Six solar dryer units currently under construction are expected to dry the material to a range of 40—70% solids,
depending upon weather conditions. The thermal dryer, also under construction, will dry the biosolids to over
90% solids, and allow for virtually unrestricted and unlimited use of product. We are currently investigating a
number of possible beneficial reuses for the dried biosolids after the first batch is processed.
DISCUSSION
The thermal dryer requires natural gas for operation. The current AWG pipeline lacks capacity. This
agreement provides for the construction of a 14,500 foot pipeline that has sufficient capacity for current and all
future anticipated natural gas requirements. In this agreement, the City agrees to pay a minimum charge of
$5,963.00 per month for 120 months for gas service to the Noland WWTF, including the new biosolids thermal
dryer. If the monthly consumption charge is below $5,963.00, then the City pays the minimum of$5,963.00. If
the consumption meets or exceeds $5,963.00, then the City only pays for the volume consumed. This is a
standard method of paying for Public Service Commission utility extensions.
We intend to evaluate possible use of other fuels in the future to supplement natural gas. These require
extensive evaluation and air permitting approvals, and will be evaluated after the initial process is in operation.
BUDGET IMPACT
Funds are available in the Wastewater Treatment operations budget.
AWG CCMemo 22Febl Ldoc
ORDINANCE NO.
AN ORDINANCE WAIVING THE REQUIREMENTS OF FORMAL
COMPETITIVE BIDDING AND APPROVING A CONTRACT WITH
ARKANSAS WESTERN GAS COMPANY IN THE MINIMUM AMOUNT OF
$715,560.00 FOR THE PROVISION OF NATURAL GAS SERVICE AND THE
CONSTRUCTION OF NECESSARY PIPING AND INFRASTRUCTURE
EXTENSIONS FOR BIOSOLIDS DRYING OPERATIONS AT THE NOLAND
WASTEWATER TREATMENT FACILITY
WHEREAS, the City desires to increase the amount of natural gas service provided by
Arkansas Western Gas Company to the Noland Wastewater Treatment Facility in order to operate
biosolids drying operations; and
WHEREAS, extension of the service will require infrastructure in the form of natural gas
pipe extensions of approximately two and three-quarters miles (14,500 feet); and
WHEREAS,entering into a cost-sharing agreement with Arkansas Western Gas Company is
the most cost-effective manner of obtaining both the utility service and the needed infrastructure
extension; and
WHEREAS,the method proposed in the cost-sharing agreement is the standard method for
paying for Public Service Commission utility extensions;
NOW,THEREFORE,BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FAYETTEVILLE,ARKANSAS:
Section 1. That the City Council of the City of Fayetteville,Arkansas hereby determines an
exceptional situation exists in which competitive bidding is deemed not feasible or practical and
therefore waives the requirements of formal competitive bidding and approves a contract with
Arkansas Western Gas Company in the minimum amount of$715,560.00 for the provision of natural
gas service and the construction of necessary piping and infrastructure extensions for biosolids
drying operations at the Noland Wastewater Treatment Facility. A copy of the contract is attached to
this Ordinance as Exhibit"A".
PASSED and APPROVED this 15th day of March,2011.
APPROVED: ATTEST:
By: By:
LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer
NORTHWEST ARKANSAS
NEWSPAPERS-Lc
Northwest Arkansas Democrat Gazette RECEIVED
The Morning News of Springdale MAR 31 2011
The Morning News of Rogers
CITY OF FAYETTEVILLE
Northwest Arkansas Times CITY CLERK'S OFFICE
Benton County Daily Record
212 North East Avenue, Fayetteville Arkansas 72701/ PO Box 1607, 72702
PHONE: 479-571-6421
AFFIDAVIT OF PUBLICATION
I, Cathy Wiles, do solemnly swear that I am Legal Clerk of the Northwest
Arkansas Newspapers LLC. Printed and published in Washington & Benton
County, (Lowell), Arkansas and that from my own personal knowledge
and reference to the files of said publication, the advertisement of: City
of Fayetteville- Ordinance 5391
March 26, 2011
Publication Charge : $ 142.02
Signed:
Subscribed and sworn to before me
Thisas-day of Mori , 2011 .
Notary Public
Jim Mears
Washington County
Commission Number 12374647
My Commission Expires Notary Public-Arkansas
My Commission Expires Jan.20,2020
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