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11-15-2011 City Council Study Session PacketCity of Grand Island Tuesday, November 15, 2011 Study Session Packet City Council:Mayor: Jay Vavricek City Administrator: Mary Lou Brown City Clerk: RaNae Edwards T u 7:00:00 PM Council Chambers - City Hall 100 East First Street Larry Carney Linna Dee Donaldson Scott Dugan Randy Gard John Gericke Peg Gilbert Chuck Haase Mitchell Nickerson Bob Niemann Kirk Ramsey Call to OrderCity of Grand Island City Council A - SUBMITTAL OF REQUESTS FOR FUTURE ITEMS Individuals who have appropriate items for City Council consideration should complete the Request for Future Agenda Items form located at the Information Booth. If the issue can be handled administratively without Council action, notification will be provided. If the item is scheduled for a meeting or study session, notification of the date will be given. B - RESERVE TIME TO SPEAK ON AGENDA ITEMS This is an opportunity for individuals wishing to provide input on any of tonight's agenda items to reserve time to speak. Please come forward, state your name and address, and the Agenda topic on which you will be speaking. MAYOR COMMUNICATION This is an opportunity for the Mayor to comment on current events, activities, and issues of interest to the community. Call to Order Pledge of Allegiance Roll Call This is an open meeting of the Grand Island City Council. The City of Grand Island abides by the Open Meetings Act in conducting business. A copy of the Open Meetings Act is displayed in the back of this room as required by state law. The City Council may vote to go into Closed Session on any agenda item as allowed by state law. City of Grand Island City Council Item -1 Recognition of Tom Osterbuhr for Participation in the New York Marathon and Fund Raising Efforts for St. Jude’s Children’s Research Hospital The Mayor and City Council will recognize Tom Osterbuhr, a St. Jude's Hero who just returned from completing the New York City Marathon to help raise funding for St. Jude's Children's Research Hospital. Tuesday, November 15, 2011 Study Session City of Grand Island Staff Contact: Mayor Vavricek City of Grand Island City Council Item -2 Discussion on Veolia WWTP Operations Proopsal Tuesday, November 15, 2011 Study Session City of Grand Island Staff Contact: John Collins City of Grand Island City Council Council Agenda Memo From: John Collins, Public Works Director Meeting: November 15, 2011 Subject: Discussion on Wastewater Treatment Plant Contract Management with Veolia Water Item #’s: 2 Presenter(s): John Collins, Public Works Director Background At the July 11, 2011 City Council meeting the Public Works Administration staff gave a presentation on contracting operations of the Wastewater Treatment Plant. Based on that discussion a Request For Qualifications (RFQ) was developed, with qualifications being submitted by four (4) qualified companies; Veolia Water of Naperville, Illinois; Severn Trent Services of Fort Washington, Pennsylvania; USW Utility Group of Sioux City, Iowa; and CH2M Hill of Englewood, Colorado. With the selection committee following the qualification criteria set forth in the RFQ Veolia Water was selected as the most qualified company for the contract management of the Wastewater Treatment Plant. Discussion City Staff has worked diligently with Veolia Water to gather information on employee benefits, budget figures for the Wastewater Treatment Plant and to accommodate a thorough review of the Plant operations. Through this process Veolia Water has been able to competitively price the contract operation services of the Wastewater Treatment Plant, and provide a competitive benefits package to the employees Conclusion This item is being presented to the City Council in a Study Session to allow for any questions to be answered and to create a greater understanding of the issue at hand. It is the intent of City Administration to bring this issue to a future council meeting for a formal vote on the negotiated contract. PUBLIC WORKSVeolia WWTP Operations Proposal PUBLIC WORKSPartnerships/Operations Agreements/PrivatizationLate 2010: Council requested a discussion of partnerships, management agreements, and privatizationJanuary 2011: Presentation at Council retreatJuly 2011: Study Session presenting intent to look into contract operations. PUBLIC WORKSReview of Retreat PresentationServices not currently performed by the City of Grand Island:Garbage collectionAnimal controlEconomic developmentBaseball and softball programsHeartland Event CenterRacquet Center PUBLIC WORKSContract may be desirable when:•Increased expertise•Irregularly occurring tasks•Expediency •Specialized equipment required•Liability•Lower cost PUBLIC WORKSContract may not be desirable when:•Loss of control•Loss of quality•Loss of flexibility•Loss of other duties performed•Loss of transparency•Loss of political responsiveness•Lack of public accountability PUBLIC WORKSPotential Benefits*Optimize plant operations by utilizing expertise gained through years of operating dozens or even hundreds of these facilitiesReduce our operating costsReduce long term costs by guiding our choices during the $44 million repair program.Reduce odor by optimizing operation* from July 7 Presentation Operation, Maintenance and Managementof the Wastewater Treatment FacilitiesNovember 15, 2011 8 Operations AgreementCity Maintains Control•City Owns the Assets•City Defines the Scope of the Contract•City Sets Rates Veolia Water •Manages the Day-to-Day Operations•Responsible for Permit Compliance•Pay Operating Costs Objectives Reduce Short-Term Costs•Process Control Management•CMMS / Asset ManagementReduce Long-Term Cost•“Informed” Decisions•Capital Management PlanOptimize Operations •Permit Compliance •Enhanced Odor Mitigation ProgramAccountability•Provide Predictable O&M Costs •Accurate and Reliable Information9 Employer of ChoiceDevelop and Retain Skilled StaffGrand Island Staff•Comparable Salaries and BenefitsCity Hire Dates Recognized Seniority / VacationSick Leave Bank•Career Growth OpportunitiesIndividual Development Plans•Group and Individual IncentivesParticipation in Regional CommitteesSafety, Laboratory QA/QC, Asset Management•Training and License Upgrades10 Transition ProcessWell-Defined New Hire Process•Group and one-on-one meetings with the Director of Human Resources•Physical and drug screen is conducted•Each employee receives a written “offer letter” confirming comparable wages and benefitsMaterials Distribution•Benefits program summary•Veolia Water handbook of employee discounts•On-line library of information, orientation and training materials11 Operations Management Approach Process Control Management PlanVeolia Procurement Advantage•Operations Disciplined Tracking of Consumables and Utilities•Maintenance Leverage National Purchasing AgreementsBioWin Modeling•Predict the Impact of Current and Future Loadings•Determine Nutrient Addition and Removal Requirements •Regulatory Change Management•Capital Planning 12 Asset Management / Capital Planning Reliability Centered MaintenanceComputer Maintenance Management System•Asset Hierarchy By Process Unit•Criticality Driven Categories of Maintenance Short-term and Long-term Capital Planning•Condition Assessment•Life Cycle•Criticality AnalysisCARMS Modeling13 Asset Management/Capital Planning Life-Cycle Stages14 Price ProposalLabor and BenefitsRepair and MaintenanceTechnical AssistanceLong-Term PlanningOperations ManagementLaboratoryIndustrial PretreatmentOdor Control ManagementSolids Dewatering and Disposal Thank Youfor theOpportunity to Work Together WASTEWATER TREATMENT PLANTVEOLIA PROPOSALThree WWTP Divisions included in Proposal2010 Actual2011 Actual2012 BudgetVeolia Proposal General Operations/WWTP/Composting to Solids 3,821,256 3,686,211 4,111,600 3,447,191 *Labor 1,561,014 1,499,307 1,588,346 1,541,134 *Chemicals 240,116 162,111 247,800 86,101 *Repairs & Maintenance 495,556 569,102 611,657 342,316 *Biosolids/Solid Waste 199,146 183,726 228,623 200,683 *Utilities 780,146 811,023 784,500 621,052 *Other 545,278 460,942 650,674 655,905 Savings 374,065 239,020 664,409 * See Addendum for details PUBLIC WORKSCapital Repairs (>$15,000)ProjectDate200920102011Repaired electrical switch gear02/02/09$16,326.50 Applied corrosive resistor coating on air scrubber filter02/19/09$35,230.00 Bought a 10" raw sewage pump10/02/09$29,095.00 Repaired (2) recycle pumps just under $15,000 -$14,998.00 each01/31/11$30,268.00 Replaced UV transmitter probe05/17/11$15,516.95 Replaced heating unit on grit building10/02/09$15,250.00 Replaced outdoor lighting around plant with LED lights10/02/11$16,631.00 From 10-07-10 to 10-02-11 replaced rusted cabinets in lab $27,521.21 $27,521.21 New lift station alarm system10/20/09$17,412.00 Replaced materials in polymer system09/23/10$50,020.00 $113,313.50 $77,541.21 $89,937.16 3 Year Average (mean): $93,597 PUBLIC WORKSBenefits ComparisonCityVeolia WaterSeniority Recognize the employee’s seniority with the CityMajor Medical/ Dental/VisionPPO medical, dental, no visionEPO,PPO or SPPO options, visionSick Leave8 hours per month, maximum accrual 1,064 paid at 37.5% at retirement or deathFront load each employee 80 hours. 1.54 per pay period – bank up to 160 hoursShort Term Disabilityn/aUp to 26 weeksContinuous Service 80% or 60% Benefit based on years of service PUBLIC WORKSBenefits ComparisonCityVeolia WaterLong Term DisabilityMonthly benefit = 60% of mo pay to max of $850050% of pay to maximum of $7,000 per month 60% option availableVacation DaysUp to 22 daysUp to 20 days Holidays and Personal Days1110Retirement Plan / 401KCity matches 100% of 6% contribution5 year vestingVWNA matches 50% up to 7% of employee contribution3 year vesting Life & accidental death & dismemberment (AD&D) insurance$50,000 emp/$10,000 Spouse, $5,000 dependentsNo cost to employeeNo cost to employee1 x base pay to maximum of $300,000; same amount of AD&D PUBLIC WORKSBenefits ComparisonCityVeolia WaterFlexible BenefitsHealthcare $4,500Dependent Care $5,000Healthcare $5,000 Dependent care $5,000Voluntary group legaln/aAvailableTuition reimbursementBudget authority - $0Up to $5,250 per yr.Adoption reimbursementn/aUp to $2,500 per yr.529 plan – Putnam college advantagen/aAfter-tax savings programEmployee Discount Programn/aCorporate discount program (travel, cell phone, Fed-Ex, auto purchase, electronics, office supplies, etc.) PUBLIC WORKSEMPLOYEE PAY EXAMPLEAlex earns $10 per hour¾City Family Health Insurance is $25 per pay period¾Veolia Health Insurance is $37 per pay period$12 / 80 hours = .15 per hour Alex’s new wage is $10.15* per hour*example of how wages will be increased to offset the difference in cost for health, dental and vision insurance. PUBLIC WORKSUnion RepresentationVeolia has committed to recognizing the current union representation of the employees.The Veolia benefits that have been presented are based on the non-union package.Negotiations will begin with the union to reach a labor agreement with IBEW Local 1597. PUBLIC WORKSEmployee AccrualsEmplMedical Balance-80hrsHrly RateFactorMedical LiabilityVacation Balance Vacation LiabilityComp BalComp LiabilityTotal1889.0 23.16980.3757,724.23 189.88684,399.64 12,123.87 2888.0 32.58040.5014,465.70 101.68353,312.89 17,778.59 3404.0 19.88590.3753,012.71 108.01002,147.88 5,160.59 4917.0 24.40650.5011,190.38 171.69654,190.51 15,380.89 5(15.5)25.94260.375 52.04961,350.30 1,350.30 6368.5 22.06650.3753,049.31 149.08703,289.83 6,339.14 7559.0 20.40840.3754,278.11 146.81482,996.26 7,274.37 8974.0 25.04450.3759,147.50 96.49632,416.70 11,564.21 9156.5 25.94260.3751,522.51 235.46356,108.54 2.257.07 7,688.12 1014.0 22.06650.375115.85 52.88701,167.03 0.051.10 1,283.98 11238.5 23.16980.3752,072.25 200.00004,633.96 21.4500496.99 7,203.20 12702.0 23.31980.3756,138.94 115.74382,699.12 8,838.06 13671.0 23.16980.3755,830.10 192.30794,455.74 10,285.84 14(5.0)33.43990.50 67.88512,270.07 2,270.07 1556.0 24.32320.50681.05 60.46801,470.78 27.525669.50 2,821.32 16928.0 24.59550.3758,559.23 154.77363,806.73 12,365.97 17901.0 23.16980.3757,828.50 102.58452,376.86 10,205.36 18(48.0)23.16980.375 73.50461,703.09 1,703.09 1951.0 16.61630.375317.79 24.8923413.62 731.40 20938.0 27.17740.5012,746.20 95.37282,591.98 15,338.19 98,680.36 57,801.52 1,224.67 157,706.55 PUBLIC WORKSContract may be desirable when:•Increased expertise•Irregularly occurring tasks•Expediency •Specialized equipment required•Liability•Lower cost PUBLIC WORKSContract may not be desirable when:•Loss of control•Loss of quality•Loss of flexibility•Loss of other duties performed•Loss of transparency•Loss of political responsiveness•Lack of public accountability PUBLIC WORKSKey PointsCity Maintains Ownership of PlantImmediate and long term savingsSimilar employee benefits. PUBLIC WORKSAppendix 1 Comparison Budget Worksheet 2010 Actual2011 Actual2012 BudgetVeolia ProposalLabor per Budget Book$1,526,191$1,492,776$1,602,899$1,541,134Adj: WWTP employees: amount of work time charged to other WWTP divisions$34,823$6,531($14,553)Labor of employees moving to Veolia$1,561,014$1,499,307$1,588,346$1,541,134Chemicals$240,116$162,111$247,800$86,101Repairs & Maintenance$495,556$569,102$611,657$342,316Biosolids/Solid Waste $199,146$183,726$228,623$200,683Utilities$780,146$811,023$784,500$621,052Other (50% of General Operations)$545,278$460,942$650,674$655,905$3,821,256$3,686,211$4,111,600$3,447,191Savings$374,065$239,020$664,409Continued City Expenses from the three divisionsProject Consulting Services moving to Infrastructure Division$621,274$387,576$443,43050% of General Operations moving to Infrastructure Division$181,885$215,244$280,326Sales Tax collected on Utility Bills paid to State of NE$587,767$535,902$600,0002010 Actual2011 Actual 2012 BudgetVeolia ProposalSEWER GENERAL OPERATIONS (Pg. 140 City Budget Book)PERSONNEL SERVICES5303000185105SALARIES -REGULAR195,828$191,252$194,930$85110SALARIES -OVERTIME2,174$1,409$2,520$85115F.I.C.A. PAYROLL TAXES14,720$14,220$15,531$85120HEALTH INSURANCE24,778$34,128$33,206$85125LIFE INSURANCE98$304$297$85130DISABILITY INSURANCE427$589$351$85135TUITION REIMBURSEMENT-$-$500$85145PENSION CONTRIBUTION11,636$11,295$11,874$85150WORKERS COMPENSATION6,020$2,820$6,428$85160OTHER EMPLOYEE BENEFITS2,270$2,121$3,500$85161VEBA669$695$675$53030001TOTAL PERSONNEL SERVICES 258,621$258,833$269,812$OPERATING EXPENSES 5303000185201AUDITING & ACCOUNTING5,000$5,000$5,000$85207CONSULTING SERVICES6,484$81,489$200,000$8520753007 C/S-MECHANISM PRIMARI94,214$6,394$-$8520753008 C/S SCADA SYSTEM7,800$-$-$8520753011 C/S LIFT STATION #71,760$8520753019 C/S-LIFT STATION #1915,711$-$-$8520753030 C/S-COMPREHENSIVE PLA31,288$-$-$8520753047 C/S AERATION BASIN 1M351,100$254,192$313,430$85209COLLECTION SERVICES121,160$125,229$130,000$85221ADMINISTRATIVE SERVICES223,190$205,332$223,200$85227HEALTH SERVICES261$144$250$85245PRINTING & BINDING SERVICES425$475$350$85305UTILITY SERVICES3,562$4,257$4,500$85317NATURAL GAS73,995$60,561$100,000$85319REPAIR & MAIN-LD IMP/IRRIGA27,033$9,778$18,000$85324REPAIR & MAINT BUILDING27,343$107,660$84,000$85325REPAIR & MAINT - MACH & EQU11,911$19,928$19,200$85330REPAIR & MAINT - OFF FURN &10,663$3,862$5,000$85350SANITATION SERVICE2,011$2,705$3,000$85309OTHER PROPERTY SERVICES5,687$5,469$5,000$85401GENERAL LIABILITY INSURANCE43,500$43,500$43,500$85404PROPERTY INSURANCE20,000$20,000$20,000$85407AUTOMOBILE INSURANCE6,000$6,000$6,000$85410TELEPHONE3,148$1,838$2,100$85416ADVERTISING735$1,536$1,200$85424LICENSE & FEES-$160$200$85425BOOKS-$451$500$85427PERIODICALS464$300$480$85428TRAVEL & TRAINING293$161$500$85465UNINSURED LOSS-$-$900$85490OTHER EXPENDITURES7,509$9,859$10,000$85501SOFTWARE & ACCESSORIES14,500$12,901$13,722$85505OFFICE SUPPLIES6,251$8,146$8,500$85510CLEANING SUPPLIES3,380$4,305$4,400$85530OIL SUPPLIES207$358$300$85540MISC OPERATING EQUIPMENT529$1,888$900$85560TREES & SHRUBS-$486$900$85590OTHER GENERAL SUPPLIES14,196$17,986$9,750$85905SALES TAX587,767$535,902$600,000$53030001Total Operating Expenses (page 141)1,727,318$1,560,012$1,834,782$ Veolia to assume 50% of costs 2010 Actual = $181,885.00 2011 Actual = $215,244.50 2012 Budget = $280,326.00 WASTEWATER TREATMENT PLANT ADDENDUMVEOLIA PROPOSALThree WWTP Divisions included in proposal General Operations/WWTP/Composting to Solids Veolia to assume 100% costs General Operations/WWTP/Composting to Solids 2010 Actual2011 Actual 2012 BudgetVeolia ProposalWASTEWATER TREATMENT (Pg. 142 City Budget Book)5303005185105SALARIES - REGULAR636,689$653,539$686,733$85110SALARIES - OVERTIME109,553$63,369$100,140$85115F.I.C.A. PAYROLL TAXES55,334$52,933$59,461$85120HEALTH INSURANCE102,563$125,605$127,128$85125LIFE INSURANCE1,220$1,115$1,136$85130DISABILITY INSURANCE1,723$1,392$1,346$85135TUITION REIMBURSEMENT-$-$-$85145PENSION CONTRIBUTION43,904$42,089$45,457$85150WORKERS COMPENSATION24,900$20,776$24,610$85160OTHER EMPLOYEE BENEFITS-$-$-$85161VEBA2,704$2,581$2,584$TOTAL PERSONNEL SERVICES (pg.143)978,590$963,400$1,048,595$OPERATING EXPENSES 5303005185213CONTRACT SERVICES8,212$16,468$10,120$85213CONTRACT SERVICES-$9,880$85227HEALTH SERVICES2,833$13,857$10,000$85241COMPUTER SERVICES22,561$48,517$48,000$85290OTHER PROFESSIONAL & TECH16,150$10,104$16,000$85305UTILITY SERVICES702,590$746,205$680,000$85325REPAIR & MAINT - MACH & EQU236,940$268,469$300,000$85335REPAIR & MAINT - VEHICLES22,656$7,232$18,000$85410TELEPHONE6,603$6,083$7,000$85413POSTAGE5,130$5,848$5,000$85422DUES & SUBSCRIPTIONS901$-$880$85425BOOKS47$-$48$85428TRAVEL & TRAINING5,403$6,881$8,400$85515GASOLINE12,217$18,830$23,000$85520DIESEL FUEL319$20$3,000$85530OIL SUPPLIES6,731$6,805$9,000$85531LAB SUPPLIES31,552$32,384$29,000$85535CHEMICAL SUPPLIES36,419$5,729$60,000$85540MISC OPERATING EQUIPMENT31,284$27,021$19,000$85556LIQUID OXYGEN121,720$83,584$44,000$85590OTHER GENERAL SUPPLIES52,540$39,513$45,000$85593PROPANE & OPERATING SUPPLIES411$3,913$7,500$53030051Total Operating Expenses (page 143)1,323,218$1,347,466$1,352,828$Composting to Solids Handling (Pg. 144 City Budget Book)5303005285105SALARIES - REGULAR198,080$193,986$204,632$85110SALARIES - OVERTIME20,748$3,387$7,185$85115F.I.C.A. PAYROLL TAXES16,224$14,572$16,511$85120HEALTH INSURANCE30,306$34,693$35,301$85125LIFE INSURANCE353$310$315$85130DISABILITY INSURANCE505$386$374$85135TUITION REIMBURSEMENT-$-$-$85145PENSION CONTRIBUTION12,871$11,587$12,623$85150WORKERS COMPENSATION9,100$10,908$6,834$85160OTHER EMPLOYEE BENEFITS-$-$-$85161VEBA793$714$717$53030052TOTAL PERSONNEL SERVICES 288,980$270,543$284,492$OPERATING EXPENSES 5303005285213CONTRACT SERVICES177,601$14,168$125,000$85227HEALTH SERVICES550$680$600$85290OTHER PROFESSIONAL & TECH-$240$500$85325REPAIR & MAINT - MACH & EQU34,067$69,329$55,700$85335REPAIR & MAINT - VEHICLES47,797$14,010$25,000$85410TELEPHONE1,822$974$1,250$85425BOOKS2$6$50$85520DIESEL FUEL36,176$38,803$55,000$85530OIL SUPPLIES1,499$6,139$6,500$85535CHEMICAL SUPPLIES81,977$72,797$143,800$85540MISC OPERATING EQUIPMENT3,619$900$1,000$85590OTHER GENERAL SUPPLIES16,377$16,377$16,377$85590OTHER GENERAL SUPPLIES199,146$183,726$228,623$53030052Total Operating Expenses (page 144)600,633$418,148$659,400$Veolia to assume 100% costVeolia to assume 100% cost Veolia to assume 100% cost 2010 Actual = $143,623.00 2011 Actual = $189,926.00 2012 Budget = $186,948.00 Veolia to assume 100% cost 2010 Actual = $219,770.00 2011 Actual = $55,771.00 2012 Budget = $183,400.00 PUBLIC WORKSAppendix 2 Veolia Water Presentation Team Veolia Water Presentation Team November 15, 2011 David C. Carter Vice President of Operations -Central David.Carter@veoliawaterna.com Dave oversees all municipal operations for the Central Region. Scott Edwards Executive Vice President of Communications scott.edwards@veoliawaterna.com Karole Colangelo Director, Communications karole.colangelo@veoliawaterna.com Both Scott and Karole are from our Corporate Headquarters. Jack J. Page Technical Direction Group North Central Coordinator jack.page@veoliawaterna.com Jack is a corporate resource assigned to the Central Region. He oversees the operations and maintenance support programs and coordinates any requests for technical expertise for O&M support, consumable consumption, energy mgmt, etc. Sandy Thompson, SPHR Director, Human Resources sandy.thompson@veoliawaterna.com Sandy is our Director of HR for both the Central and West Regions. She oversees all aspects of HR for these regions including labor relations and benefits. Peg Becker Area Manager margaret.becker@veoliawaterna.com Over sees all municipal operations in the Upper Midwest.Peg is responsible for contract compliance and client relations. PUBLIC WORKSAppendix 3 Fact Sheet :ISPME;EXIVMWXLIFIRGLQEVOMRRSZEXSVJSV[EXIV TEVXRIVWLMTW1SVIXLER2SVXL%QIVMGER GSQQYRMXMIWXVYWXYWXSGEVIJSVXLIMV[EXIVIZIV] HE]+VERH-WPERHGERXVYWXYWXSWIVZIXLIGSQQYRMX] F]GSQFMRMRKSYVI\TIVXMWI[MXLXLIWOMPPWERH ORS[PIHKISJXLIPSGEP+VERH-WPERHXIEQ [IWIVZI QQYRMXMIWERHQEREKIQSVI XLER[EXIVERH[EWXI[EXIV JEGMPMXMIWEPSRK[MXLXLIPEVKIWX MRHYWXVMEPTVSNIGXWXLVSYKLSYX 2SVXL%QIVMGEXLEXVIP]SRTVMZEXI WIGXSVI\TIVXMWI [SVPHPIEHIVMR[EXIVERH [EWXI[EXIVWIVZMGIWERHXIGLRSPSKMIW [IQEREKI[EXIVERH [EWX JEGMPMXMIW )QTPS]IIWEVISYVQSWX MQTSVXERXEWWIX TIVG SJSYVIQTPS]IIWVIGSQQIRH SYVGSQTER]EWEKSSHTPEGIXS[SVO MXvWEPWSFIGEYWI:ISPME;EXIVIQTPS]IIW XLEXQSWXSJSYVIQTPS]IIW EGXYEPP]GSQIJVSQXLITYFPMGWIGXSV JSGYWIHSR MRZIWXMRKMRSYVIQTPS]IIWXLVSYKLGSQTIRWEXMSR ERHXVEMRMRKTVSKVEQW[LMGLMRXYVRVIWYPXMRQSVI IQTPS]IIMPPRIWWIWMRNYVMIW :ISPME;EXIVERHXLI ’MX]SJ+VERH-WPERH4EVXRIVWLMT TEVXRIVWLMTW# 7)6:-’) :%09) 6)74327-&-0-8= ;IvVIEGSQTER]XLEXTVMHIWMXWIPJSREGYPXYVISJ WEJIX]IQTPS]IILIEPXLERH[IPPRIWW’SRWMWXIRXP] :ISPME;EXIVvWWEJIX]TIVJSVQERGIMWJEVFIXXIVXLER EPPREXMSREPWXERHEVHW[LMGLQIERW+VERH-WPERH XLVIIXMQIWFIXXIVXLER XLIREXMSREPEZIVEKI QIWFIXXIVXLERXLI REXMSREPEZIVEKI 3YV4EVXRIVWLMT[MXLXLI’MX]SJ+VERH-WPERH IUYEPWZEPYIJSVXLIGSQQYRMX]ERHVIWMHIRXW8LI TEVXRIVWLMTIRWYVIWGMX]GSRXVSP[LMPIVIHYGMRKGSWXW ERHSTXMQM^MRKTPERXSTIVEXMSRW [IvPPWEZI ETTVS\MQEXIP]SVQSVIXLER PS[IVSTIVEXMRKGSWXW IRWYVIIRZMVSRQIRXEPGSQTPMERGIERHHIZIPST PSRKXIVQEWWIXQEREKIQIRX 1]XL TVMZEXIGSQTER][MPPS[RSYV[EXIV 1]XL TVMZEXIGSQTER][MPPWIXSYVVEXIW 1]XL TVMZEXIGSQTER][MPPSRP]HVMZIGSWXWYTWS 4YFPM ;SVOW*MRERGMRK1EVGL:SPYQI 1]XL 4VMZEXM^EXMS [MPPGSWXQYRMGMTEPIQTPS]IIW XLIMVNSFW 1]XL WLSYPHQEREKITYFPMGVIWSYVGIW 1]XLW;LEXXLMW4EVXRIVWLMTMW238 VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 1 of 23 Agreement For Operations, Maintenance and Management Services THIS AGREEMENT is entered into effective the [XX] day of [XXXX, 20XX], by and between The City of Grand Island, Nebraska with a business address at P.O. Box 1968, Grand Island, Nebraska 68802 (hereinafter "OWNER"); and Veolia Water North America-Central, LLC, with a business address at 184 Shuman Blvd., Suite 450, Naperville, Illinois 60563 (hereinafter "VWNA") WHEREAS, OWNER owns and provides for the operation of wastewater treatment facilities; and, WHEREAS, OWNER desires to employ the services of VWNA in the management, operation and maintenance of these facilities, and VWNA desires to perform such services for the compensation provided for herein; and NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, OWNER and VWNA agree as follows: 1 General 1.1 Definitions of words and phrases used in this Agreement and the attachments are contained in Appendix A. 1.2 All land, buildings, facilities, easements, licenses, rights-of-way, equipment and vehicles presently or hereinafter acquired or owned by OWNER shall remain the exclusive property of OWNER unless specifically provided for otherwise in this Agreement. 1.3 This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nebraska. 1.4 VWNA shall have the right to assign this Agreement only with OWNER’s consent.However, VWNA may collaterally assign this Agreement and/or its right to any payments hereunder, but not its obligations to perform services hereunder, to one or more lenders providing financing to VWNA or any affiliate thereof. Any other transfer or assignment by either VWNA or the OWNER of this Agreement VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 2 of 23 shall be null and void unless authorized by the other party in writing in advance, such authorization not to be unreasonably withheld. 1.5 All notices shall be in writing and transmitted to the party's address stated above. All notices shall be deemed effectively given when delivered, if delivered personally or by courier mail service, i.e., Federal Express or United Parcel Service; delivered 3 days after such notice has been deposited in the United States mail postage prepaid, if mailed certified or registered U.S. mail, return receipt requested; or when actually received by the party for which notice is intended, if given in any other manner. 1.6 This Agreement, including Appendices A through E, is the entire Agreement between the parties. This Agreement may be modified only by written agreement signed by both parties. Wherever used, the terms "VWNA" and "OWNER" shall include the respective officers, agents, directors, elected or appointed officials and employees and, where appropriate, subcontractors or anyone acting on their behalf. 1.7 If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall remain in full force and effect, and shall in no way be affected, impaired or invalidated. 1.8 It is understood that the relationship of VWNA to OWNER is that of independent contractor. The services provided under this Agreement are of a professional nature and shall be performed in accordance with good and accepted industry practices for contract operators similarly situated. However, such services shall not be considered engineering services, and nothing herein is intended to imply that VWNA is to supply professional engineering services to OWNER, unless specifically stated in this Agreement to the contrary. 1.9 If any litigation is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, which are directly attributed to such litigation, in addition to any other relief to which it may be entitled. 1.10 Nothing in this Agreement shall be construed to create in any third party or in favor of any third party any right(s), license(s), power(s) or privilege(s). 1.11 Prior to the commencement of work under this Agreement, each party shall designate in writing an employee or other representative of the designating party who shall be the contact person for administration of this Agreement. With respect to OWNER, such person shall not have the independent authority to approve changes in the Scope of Work and compensation therefor, or to execute written Change Orders reflecting such changes but instead shall make recommendations to the council for approval.. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 3 of 23 2 VWNA's Services - General 2.1 VWNA will staff the Project with employees who have met appropriate licensing and certification requirements of the State of Nebraska. 2.2 VWNA shall provide ongoing training and education for appropriate personnel in all necessary areas of modern wastewater process control, operations, maintenance, safety, and supervisory skills. 2.3 VWNA shall develop and/or supply and utilize computerized programs for maintenance, process control, cost accounting, and laboratory Quality Assurance/Quality Control. 2.4 Within forty-five (45) days after VWNA begins service under this Agreement, VWNA will provide a physical inventory of OWNER's vehicles and equipment in use at the Project and a general statement as to the condition of each piece of equipment. 2.5 VWNA will provide OWNER with a physical inventory of chemicals and other consumables on hand when VWNA begins services under this Agreement. VWNA will provide OWNER with the same quantity of chemicals or equivalent upon termination of this Agreement; in the event that the quantity transferred at termination is more or less than the quantity at startup, the parties will peform a “true up” and the overage or underage in quantity value will be paid by VWNA or OWNER, as appropriate. (For example, if the starting quantity of a chemical was 100 pounds and the final quantity was 125 pounds, OWNER shall pay the value of 25 pounds to VWNA, and vice versa.) 2.6 VWNA shall be responsible for maintaining all manufacturers' warranties on new equipment purchased by OWNER and assist OWNER in enforcing existing equipment warranties and guarantees. 2.7 VWNA shall operate, maintain and/or monitor the Project on a 24-hour per day, seven-day per week schedule. 2.8 Visits may be made at a reasonable time by OWNER's employees so designated by OWNER's representative. Keys for the Project shall be provided to OWNER by VWNA for such visits. All visitors to the Project shall comply with VWNA's operating and safety procedures. Within a reasonable time after startup, the parties will collaborate on a protocol for visits and work performed by OWNER’s employees who are assigned to operation, maintenance, and repair of the wastewater collection system. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 4 of 23 2.9 VWNA will perform a Comprehensive Criticality and Condition Assessment on appropriate Plant equipment at the Project. The first Assessment will be delivered to OWNER within 180 days of services beginning under this Agreement. This evaluation may be updated annually at OWNER’s request. Costs incurred for the Assessments shall be charged to the Maintenance and Repair Limit. 2.10 VWNA will implement and maintain an employee safety program in compliance with applicable laws, rules and regulations.. 2.11 VWNA may modify the process and/or facilities to achieve the objectives of this Agreement and charge the Costs to the Maintenance and Repair Limit; provided, however, no modification shall be without OWNER's prior written approval, if the complete modification Cost shall be in excess of five thousand dollars ($5,000.00). 2.12 In any emergency affecting the safety of persons or property, VWNA may act without written amendment or change order, at VWNA's discretion, to prevent threatened damage, injury or loss. VWNA shall be compensated by OWNER for any such emergency work notwithstanding the lack of a written amendment. Such compensation shall include VWNA's Costs for the emergency work plus a reasonable mark-up for overhead and profit. Nothing contained in this Section shall impose upon VWNA a duty to perform any emergency work absent a change order, and failure to perform any such emergency work shall not impose upon VWNA any liability for errors and omissions. 2.13 As required by law, permit or court order, VWNA will prepare plant performance reports and submit them to OWNER for signature and transmittal to appropriate authorities. 2.14 VWNA will provide laboratory testing and sampling presently required by plant performance portions of the NPDES permit and/or any federal, state or local rules and regulations, statutes or ordinances, permit or license requirements or judicial and regulatory orders and decrees. 2.15 VWNA will provide laboratory testing and sampling presently required by the City’s IPP program. 2.16 VWNA will provide for the collection and hauling of solid waste, screenings, grit, and scum (“Waste”) to OWNER's existing or approved disposal sites. It shall be the sole right and responsibility of OWNER to designate, approve or select disposal sites to be used by VWNA for OWNER's waste materials. All Waste and/or byproduct treated and/or generated during VWNA's performance of services is and shall remain the sole and exclusive property of OWNER. All manifests or other VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 5 of 23 documentation required for disposal of Waste shall be signed by or in the name of the OWNER. 2.17 VWNA will provide for the dewatering and disposal of biosolids produced from the OWNER's existing solids handling system. Changes in disposal sites, tipping fees, processes or equipment will constitute a Change in Scope of Service. All biosolids generated during VWNA's performance of services is and shall remain the sole and exclusive property of OWNER. All manifests or other documentation required for disposal of Waste shall be signed by or in the name of the OWNER. 2.18 Upon request of OWNER, or as it shall deem necessary, VWNA will provide a listing of recommended capital improvements required for the Project. VWNA will not be relieved of its responsibility to perform if the recommendations are not implemented; provided, however, that capital improvement necessary to: (i) meet effluent requirements; (ii) meet federal, state or local laws, rules or regulations for the safety or accessibility of persons in or about the Project shall not be optional for the OWNER. If approved, the OWNER will make arrangements for the design and construction of said improvements. 2.19 VWNA may coordinate modifications to the facilities required to comply with OSHA standards and all costs associated therewith shall be charged to the Maintenance and Repair Limit. 2.20 VWNA will retain ownership of any vehicles, predictive maintenance equipment and/or computers supplied. In the event that this contract is terminated by the OWNER prior to the natural expiration of any term, then at VWNA’s option it may transfer all or part of such equipment (including potentially the transfer of leases for vehicles used at the project) to the OWNER. In such case, OWNER shall be responsible to pay any ongoing costs of ownership or lease, along with any unamortized costs of acquisition of the equipment. 3 VWNA's Scope of Services - Wastewater 3.1 This Article shall apply to VWNA's OM&M services for the OWNER's wastewater treatment system. 3.2 Within the design capacity and capabilities of the Waste Treatment Plant described in Appendix B, VWNA will manage, operate and maintain the Plant so that effluent discharged from the Plant's outfalls meets the requirements specified in Appendix C- 1. 3.3 VWNA will perform all Maintenance and Repairs for the Wastewater portion of the Project, and submit a monthly accounting to OWNER, along with a detailed invoice, VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 6 of 23 if Maintenance and Repair expenditures for the Project exceed the Maintenance and Repair Limit specified in Section 5.1. 4 OWNER's Duties 4.1 The OWNER shall fund and shall pay the full cost of all necessary Capital Expenditures. Priority shall be given to safety and the ADA related expenses described in Section 2.18. Any loss, damage, or injury resulting from OWNER's failure to provide capital improvements and/or funds in excess of the Maintenance and Repair Limit, when reasonably requested by VWNA, shall be the sole responsibility of OWNER. 4.2 The OWNER shall keep in force all Project warranties, guarantees, easements and licenses that have been granted to OWNER and are not transferred to VWNA under this Agreement. 4.3 The OWNER shall pay all sales, excise, ad valorem , property, franchise, occupational and disposal taxes, or other taxes associated with the Project, if any, other than taxes imposed upon VWNA's net income and/or payroll taxes for VWNA employees. It is the mutual intention of the OWNER and VWNA that VWNA will have the benefit of the same tax exemptions related to operation of municipal wastewater/pollution control assets that the OWNER is entitled to (for example, for the purchase of chemicals, parts, supplies, etc.), and to the extent permitted by law VWNA shall be considered as OWNER’s agent for purposes of purchasing such items for use at the Facilities. In the event VWNA is required to pay any sales tax or use taxes on the value of the services provided by VWNA hereunder or the services provided by any subcontractor of VWNA, such payments shall be reimbursed by the OWNER, unless the OWNER furnishes a valid and properly executed exemption certificate relieving the OWNER and VWNA of the obligation for such taxes. In the event the OWNER furnishes an exemption certificate which is invalid or not applicable to services by VWNA, the OWNER shall indemnify VWNA for any taxes, interest, penalties, and increment costs, expenses or fees which it may incur as a result of VWNA’s reliance on such certificate. 4.4 The OWNER may provide VWNA, within a reasonable time after request and on an "as available" basis, with the temporary use of any piece of OWNER's heavy equipment that is available so that VWNA may discharge its obligations under this Agreement in the most cost-effective manner. The provision of equipment pursuant to this section shall be at OWNER’s discretion, and OWNER shall not be required to provide temporary use of any equipment if it does not wish to do so. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 7 of 23 4.5 OWNER shall provide for VWNA's exclusive use of all equipment presently in full- time use at the Project. 4.6 OWNER shall provide the Project with appropriate devices (e.g. video monitoring, coded entry to treatment facilities, etc.) to protect against any losses resulting from the theft, damage, or unauthorized use of property owned by OWNER and shall accept liability for such losses, except to the extent such losses are directly caused by the negligent acts or omissions of VWNA. 4.7 OWNER warrants that during the interim period between the initial Project inspection by VWNA and the commencement date, the plants, facilities and equipment have been operated only in the normal course of business, all scheduled and proper maintenance have been performed, and there are no issues known to OWNER regarding the condition of the Project and Facility composing the Project and/or any equipment used by the Project. 4.8 OWNER shall be responsible for the payment of all accrued vacation and related time or benefits of OWNER employees upon the effective date of this agreement. 4.9 OWNER shall be responsible for the cleaning and disposal of biosolids from the sludge storage lagoons. VWNA will continue to manage and oversight of the day- to-day cleaning and disposal process. 5 Compensation 5.1 VWNA's compensation under this Agreement shall consist of an Annual Fee. The Annual Fee shall include limits for Maintenance and Repair and Electric Utilities. For the first year of this Agreement the Annual Fee shall be Three Million, Four Hundred Forty Seven Thousand, One Hundred Ninety One Dollars ($3,447,191). The Maintenance and Repair Limit included in the Annual Fee is Three Hundred Forty Two Thousand, Three Hundred Sixteen Dollars ($342,316). The “Electrical Utility Limit” included in the Annual Fee is Six Hundred Twenty One Thousand, and Fifty Two Dollars ($621,052). All costs related to odor control are not included in the Annual Fee and will be reimbursed at a Cost Plus 10%. 5.2 If actual Maintenance and Repair expenditures exceed the Maintenance and Repair Limit by ten percent (10%) or greater, OWNER will pay the excess over ten percent to VWNA in accordance with Section 6.3. VWNA will notify OWNER when actual Maintenance and Repair expenditures equal eighty percent (80%) of contract VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 8 of 23 limits. If actual Electric Utilities expenditures exceed the Electric Utilities Limit, OWNER will pay the excess to VWNA in accordance with Section 6.3. 5.3 The Annual Fee shall be negotiated each year at least four (4) months prior to the anniversary of this Agreement's commencement date. Should OWNER and VWNA fail to agree, the Annual Fee will be determined by the application of the procedures in Appendix D. The Maintenance and Repair Limit shall increase by a percentage equal to the change in the Annual Fee. 5.4 The Electric Utilities Limit shall be increased or decreased annually by applying the percentage differential between the annual cost for electricity for the current year and the annual cost for electricity for the immediately preceding year to the existing Electric Utilities Limit. For example, the 2014 Electric Utilities Limit will be determined by taking the 2013 Electric Utilities Limit and multiplying it by the cost percentage change from 2012 to 2013. 6 Payment of Compensation 6.1 One-twelfth (1/12) of the Annual Fee for the current year shall be due and payable on the first business day of the month for each month that services are provided. 6.2 All other compensation to VWNA is due upon receipt of VWNA's invoice and payable within fifteen (15) days. 6.3 Any monies payable pursuant to Section 5.2 will be paid within sixty (60) calendar days after the end of each Agreement year. 6.4 OWNER shall pay interest at an annual rate equal to the prime rate published by the Wall Street Journal plus four percent (4.0%), said rate of interest not to exceed any limitation provided by law, on payments not paid and received within thirty (30) calendar days of the due date, such interest being calculated from the due date of the payment. In the event the charges hereunder might exceed any limitation provided by law, such charges shall be reduced to the highest rate or amount within such limitation. 6.5 Odor Control Costs will be invoiced quarterly on a Cost plus 10% rate. OWNER will pay VWNA in accordance with Section 6.2. 7 Scope Changes 7.1 A Change in Scope of services shall occur when and as VWNA's costs of providing services under this Agreement change as a result of: VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 9 of 23 7.1.1 any change in Project operations, personnel qualifications or staffing or other cost which is a result of an Unforeseen Circumstance; 7.1.2 increases or decreases of not less than ten percent (10%) in the number of users connected to the facilities; 7.1.3 increases or decreases of not less than ten percent (10%) in the influent flow or loadings as demonstrated by a twelve month floating average compared to the twelve month period ending on the effective date of this Agreement (baseline flow and loading information is located in Appendix C); 7.1.4 increases or decreases in rates or other related charges (including taxes) imposed upon VWNA by a utility provider or taxing authority, excluding taxes based on VWNA's net income; and/or 7.1.5 OWNER's request of VWNA and VWNA's consent to provide additional services. 7.1.6 increases or decreases of greater than 20% on average in a 12 month period in insurance premium costs, healthcare benefit costs, or chemical costs which are not caused by the fault of either party. 7.2 For Changes in Scope described in Sections 7.1.1 through, and including, 7.1.3, the Annual Fee shall be increased (or decreased) by an amount equal to VWNA's additional (reduced) Cost associated with the Change in Scope. Modifications of the Annual Fee as a result of conditions described in Section 7.1.3 shall be retroactive to the beginning of the twelve month comparison period. 7.3 For Changes in Scope described in Section 7.1.4, the Annual Fee shall be increased (or decreased) by an amount equal to VWNA's additional (reduced) Cost associated with the Change in Scope. (See Section 7.5) 7.4 OWNER and VWNA shall negotiate an increase in VWNA's Annual Fee for Changes in Scope based on Sections 7.1.5 and 7.1.6. 8 Indemnity, Liability and Insurance 8.1 VWNA hereby agrees to indemnify and hold OWNER harmless from any liability or damages for bodily injury, including death, which may arise from VWNA's negligence or willful misconduct under this Agreement; provided, VWNA shall be liable only for that percentage of total damages that corresponds to its percentage of total negligence or fault. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 10 of 23 8.2 OWNER agrees to indemnify and hold VWNA harmless from any liability or damage or bodily injury, including death, which may arise from all causes of any kind other than VWNA's negligence or willful misconduct, including, but not limited to, breach of an OWNER warranty. 8.3 Both parties shall be liable to the other to the extent specified in this Agreement for direct damages caused to that party as permitted by law, but neither party nor their affiliated companies, officers, agents, employees or contractors, shall be liable to the other in any action or claim for indirect, consequential or special damages, loss of profits, loss of opportunity, loss of product or loss of use. 8.4 VWNAC DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, AND DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 8.5 VWNA shall be liable for those fines or civil penalties imposed by a regulatory or enforcement agency for violations occurring on or after the start of operations under this Agreement, of the effluent quality requirements provided for in Appendix C-1 that are a result of VWNA's negligence. OWNER will assist VWNA to contest any such fines in administrative proceedings and/or in court prior to any payment by VWNA. VWNA shall pay the cost of any such contest. 8.6 OWNER shall be liable for those fines or civil penalties imposed by any regulatory or enforcement agencies on OWNER and/or VWNA that are not a result of VWNA's negligence or are otherwise directly related to the ownership of the Project and shall indemnify and hold VWNA harmless from the payment of any such fines and/or penalties. 8.7 To the fullest extent permitted by law and notwithstanding any other provision of this Agreement, VWNA's liability for performance or non-performance of any obligation arising under the Agreement (whether arising under breach of contract, tort, strict liability, or any other theory of law or equity) including, but not limited to its indemnity obligations specified in Section 8.1 of the Agreement, shall be limited to: (i) general money damages in an amount equal to the amount of any proceeds of insurance received by the OWNER or to which VWNA is entitled pursuant to any general liability insurance or automobile liability policy required to be maintained by VWNA hereunder as specified in Appendix F (without regard to the amount of any deductible which may be applicable under any such general liability or automobile liability policy) with respect to such loss; or (ii) to the extent proceeds of insurance are not received and such general liability or automobile insurance is not applicable, a cumulative aggregate over the full initial term and any extended term(s) of this agreement of an amount not to exceed One Million Seven Hundred Thousand Dollars ($1,700,000). VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 11 of 23 8.8 Each party shall obtain and maintain insurance coverage of a type and in the amounts described in Appendix E. Each party assumes the risk of loss or damage to its respective property, from any cause, including the actual or alleged negligence or strict liability of the other party, and shall maintain broad form property insurance in order to protect both parties against any such loss. Each party shall provide the other party with satisfactory proof of insurance. 8.9 Indemnity agreements provided for in this Agreement shall survive the termination of the Agreement. 9 Term, Termination and Default 9.1 The initial term of this Agreement shall be five (5) years commencing [[DATE]]. Thereafter, this Agreement shall be automatically renewed for two successive terms of five (5) year each, unless canceled in writing by either party no less than one hundred and twenty (120) days prior to expiration. Provided, however, that either party will have a right to terminate this Agreement without cause or penalty, and subject only to the contractual consequences of termination (for example, those provisions governing inventory true-up and transfer of equipment but excluding any markup over Cost or similar profit or penalty, such as the markup described in Section 9.3), at the end of the third year of the initial term, and thereafter at the end of the third year of any successive terms, upon notice in writing of not less than one hundred twenty (120) days prior to the end of such third year. 9.2 Except as otherwise set forth herein, a party may terminate this Agreement only for a material breach of the Agreement by the other party; only after giving written notice of breach; and, except in case of a breach by OWNER for non-payment of VWNA's invoices, in which case termination may be immediate by VWNA, only after allowing the other party thirty (30) days to cure or commence taking reasonable steps to cure the breach. 9.3 Upon notice of termination by OWNER, VWNA shall assist OWNER in assuming operation of the Project. If additional Cost is incurred by VWNA at request of OWNER, OWNER shall pay VWNA such Cost plus a markup of fifteen percent (15%) for profit within 15 days of invoice receipt. 9.4 Upon termination of this Agreement and all renewals and extensions of it, VWNA will return the Project to OWNER in the same condition as it was upon the effective date of this Agreement, ordinary wear and tear excepted. Equipment and other personal property purchased by VWNA for use in the operation or maintenance of the Project shall remain the property of VWNA upon termination of this Agreement, unless the property was directly paid for by OWNER, or OWNER specifically reimbursed VWNA for the cost incurred to purchase the property, or this Agreement VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 12 of 23 provides to the contrary. Any costs for the ongoing use, transfer, or support of software or hardware systems used at the project will be the responsibility of OWNER. 10 Disputes and Force Majeure 10.1 In the event activities by employee groups or unions cause a disruption in VWNA's ability to perform at the Project, OWNER, with VWNA's assistance or VWNA at its own option, may seek appropriate injunctive court orders. During any such disruption, VWNA shall operate the facilities on a best-efforts basis until any such disruptions cease. 10.2 Neither party shall be liable for its failure to perform its obligations under this Agreement, if such failure is due to any Unforeseen Circumstances beyond its reasonable control or force majeure. However, this Section may not be used by either party to avoid, delay or otherwise affect any payments due to the other party. 11 Confidentiality 11.1 VWNA or OWNER may from time to time disclose to the other party confidential information relating to the provision of services or the terms of this Agreement (“Confidential Information”). Neither party will disclose Confidential Information of the other to any third party, or use such Confidential Information for any purpose other than as specified herein, without the express written consent of the other party. Confidential Information will be clearly designated in writing as confidential. Confidential Information does not include information: (a) generally available to or known to the public; (b) previously known to the recipient; (c) independently developed by the recipient outside the scope of this Agreement; (d) lawfully disclosed by a third party; or (e) required to be disclosed by operation of law. Upon any termination or expiration of this Agreement in accordance with its terms, each party will, within a reasonable period of time thereafter return all confidential or proprietary information received from the other party under the terms of this Agreement, except that each party may retain a legal file copy. 11.2 Any protectable intellectual property developed or used by VWNA in the course of performing the services under this Agreement shall be the exclusive property of VWNA. [END OF TEXT THIS PAGE] VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 13 of 23 The parties hereto indicate their approval of this Agreement by their signatures below, and each party warrants that all corporate or governmental actions necessary to bind the parties to the terms of this Agreement have been and will be taken. VEOLIA WATER NORTH AMERICA-CENTRAL, LLC By:_________________________________ Name: ______________________________ Title: _______________________________ Date:________________________________ CITY OF GRAND ISLAND, NEBRASKA By:________________________________ Name:______________________________ Title:_______________________________ Date:_______________________________ VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 14 of 23 CERTIFICATE OF COUNSEL The undersigned, as counsel(s) for the City of Grand Island in this transaction, hereby certifies that (s)he has examined the circumstances surrounding the selection of Veolia Water North America- Central, LLC ("VWNA") and the award and letting of the foregoing contract to VWNA by the City of Grand Island and has found that said selection and award process comply with the procurement laws of the State of Nebraska, and the City of Grand Island. _______________________________ Date: ____________________ Counsel for City of Grand Island VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 15 of 23 APPENDIX A DEFINITIONS A.1 “Abnormal Substances” means substances or materials that: (i) create a fire or explosion hazard at the Facility; (ii) will cause corrosive structural damage to the Facility; (iii) contain solid or viscous pollutants in amounts which will cause obstruction to the flow in the Facility; (iv) are present in flow rates or concentrations that will cause Interference or Pass Through; (v) will result in the presence of toxic gases, vapors or fumes within the Facility in a quality that may cause acute worker health and safety problems; or (vi) will result in an alteration of the requirements or costs for the operation or maintenance of the Facility. A.2 "Adequate Nutrients" means plant influent nitrogen, phosphorus and iron contents proportional to BOD5 in the ratio of five (5) parts nitrogen, one (l) part phosphorus, and one- half (0.5) part iron for each one hundred (100) parts BOD5. A.3 "Annual Fee" means a predetermined, fixed sum for VWNA's services. The Annual Fee includes Cost and profit. A.4 "Biologically Toxic Substances" means any substance or combination of substances contained in the plant influent in sufficiently high concentration so as to interfere with the biological processes necessary for the removal of the organic and chemical constituents of the wastewater required to meet the discharge requirements of OWNER's Certificate of Approval. Biologically toxic substances include, but are not limited to, heavy metals, phenols, cyanides, pesticides and herbicides. A.5 "Capital Expenditures" means any expenditures for (1) the purchase of new, repaired, or replacement of equipment or facility items that cost more than Fifteen Thousand Dollars ($15,000.00); or (2) major repairs or replacements which significantly extend equipment or facility service life and cost more than Fifteen Thousand Dollars ($15,000.00) or (3) expenditures that are planned, non-routine and budgeted by OWNER. A.6 "Cost" means all Direct Cost and indirect cost determined on an accrual basis in accordance with ge nerally accepted accounting principles. A.7 “Condition Assessment” means. the evaluation of critical equipment using industrial standards such as PSAT, Air-master and Motor Master (all DOE-developed tools) and other predictive maintenance technologies as well as in-house developed spreadsheets and databases to asses and quantify asset condition. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 16 of 23 A.8 “Criticality Assessment” means the ranking of environmental, financial and/or safety risk based on the consequence of failure. A.9 "Direct Cost" means the actual cost incurred for the direct benefit of the Project including, but not limited to, expenditures for project management and labor, employee benefits, chemicals, lab supplies, repairs, repair parts, maintenance parts, safety supplies, gasoline, oil, equipment rental, legal and professional services, quality assurance, travel, office supplies, other supplies, uniforms, telephone, postage, utilities, tools, memberships and training supplies. A.10 "Electrical Utility Limit" means the amount apportioned within the Annual Fee to cover the annual cost for electrical utility service at the Wastewater Treatment Plant. The limit is set assuming the installation of the planned 400 HP blowers. Costs exceeding the limit will be reimbursed by the OWNER as set forth herein. A.11 "Maintenance" means those routine and/or repetitive activities required or recommended by prudent industry practices or by VWNA to maximize the service life of the equipment, sewer, vehicles and facilities. A.12 "Maintenance and Repair Limit" means the total Maintenance and Repair expenditures that VWNA has included in the Annual Fee. Such expenditures exclude any labor costs for VWNA's staff assigned to the Project. VWNA's specialized maintenance personnel, not assigned at the Project, who provide such specialized services such as, but not limited to, vibration, thermographic and electrical analyses, instrumentation maintenance and repair will be charged to the Maintenance and Repair Limit. A.13 “Odor Control Cost” means the cost for chemicals, the purchase and/or lease of equipment used to mitigate odors, and the upkeep of such equipme nt. Cost to maintain the equipment will be charged to the Repair & Maintenance Limit. A.14 The "Project" means all equipment, vehicles, grounds, rights of way, sewers and facilities described in Appendix B and, where appropriate, the management, operations and maintenance of such. A.15 "Repairs" means those non-routine/non-repetitive activities required for operational continuity, safety and performance generally due to failure or to avert a failure of the equipment, sewer, vehicles or facilities or some component thereof. A.16 "Unforeseen Circumstances" shall mean any event or condition which has an effect on the rights or obligations of the parties under this Agreement, or upon the Project, which is beyond the reasonable control of the party relying thereon and constitutes a justification for a delay in or non-performance of action required by this Agreement, including but not limited to (i) an act of God, landslide, lightning, earthquake, tornado, fire, explosion, flood, failure to possess sufficient property rights, acts of the public enemy, war, blockade, VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 17 of 23 sabotage, insurrection, riot or civil disturbance, (ii) preliminary or final order of any local, province, administrative agency or governmental body of competent jurisdiction, (iii) any change in law, regulation, rule, requirement, interpretation or statute adopted, promulgated, issued or otherwise specifically modified or changed by any local, province or governmental body, (iv) labor disputes, strikes, work slowdowns or work stoppages, but excluding labor disputes, strikes, work slowdowns or work stoppages by employees of VWNA; and (v) loss of or inability to obtain service from a utility necessary to furnish power for the operation and maintenance of the Project. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 18 of 23 APPENDIX B DESCRIPTION OF PROJECT VWNA agrees to provide the services necessary for the management, operation and maintenance of the following: a. All equipment, vehicles, grounds and facilities now existing within the present property boundaries of or being used to operate OWNER's Wastewater Treatment facility located at 3013 East Swift Road, Grand Island, Nebraska 50501. b. All equipment, vehicles (except pick-up trucks), grounds and facilities now existing within the present property boundaries of lift stations described as follows:. Station ID Location Status Lift Station #1 2004 W 3rd Street On-line Lift Station #2 Five Points On-line Lift Station #3 Off-line Lift Station #4 Broadwell Ave & BNSF Tracks On-line Lift Station #5 5th St & Evans Street On-line Lift Station #6 Off-line Lift Station #7 Phoenix Ave & Grand Street On-line Lift Station #8 Forrest Street & Custer Ave On-line Lift Station #9 On-line Lift Station #10 20th & Sycamore Street On-line Lift Station #11 8th Street & Custer On-line Lift Station #12 Off-line Lift Station #13 18th Street & Indiana Street On-line Lift Station #14 Broadwell Park On-line Lift Station #15 17th Street & Hanocock Ave On-line Lift Station #17 Locust & Ramada Rd On-line Lift Station #18 Shady Bend Road On-line Lift Station #19 Capital Ave & Diers Ave On-line Lift Station #20 Highway 281 & Highway 34 On-line Lift Station 3340 N Shady Bend Road On-line Storm Water Pump Station Storm Water Pump Station Storm Water Pump Station VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 19 of 23 b. All OWNER provided vehicles and equipment now existing for use at the Project: Unit # Model 741 Mixer Truck 742 Mixer Truck 750 621E Case Loader 752 Sterling Dump w/Pup 753 Ford 8000 Dump 754 IHC Dump 755 Ford 9000 Dump 756 IHC Dump 757 Hicklan Gen 210KW 758 Winco Gen 25KW 760 JD MB Injection Pump 761 4" Ford Pump 766 10" JD/GR Emerg. Pump 767 John Deere Tractor 4640 771 10 yd Dump Truck 775 Onan 70KW Generator 781 Ford Semi Tractor 783 Nisson Fork Lift 786 Blue Ford Tractor 788 621D Case Loader 789 Backhoe 792 4650 John Deere Tractor Mustang Telehandler Winco Gen 65KW VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 20 of 23 APPENDIX C-1 NPDES PERMIT AND PROJECT CHARACTERISTICS WASTEWATER TREATMENT C.1 VWNA will operate so that effluent will meet the requirement of NPDES permit number [[XXXXX]] effective [[DATE]] and expiring [[DATE]], a full and complete copy of which is adopted by reference herein as of the date hereof. VWNA shall be responsible for meeting the effluent quality requirements of the Permit unless one or more of the following occurs: (1) the Project influent does not contain Adequate Nutrients to support operation of Project biological processes and/or contains Abnormal Substances or Biologically Toxic Substances which cannot be removed by the existing process and facilities; (2) dischargers into OWNER's sewer system violate any or all regulations as stated in OWNER's Industrial Water and Sewer Ordinance(s) or as required by law; (3) the flow or influent BOD5 and/or suspended solids exceeds the Project design parameters which are xxx million gallons of flow per day, xxxx pounds of BOD5 per day, xxxx pounds of suspended solids, xxx pounds per day of ammonia and a daily peaking factor of xxx times flow; (4) if the Project is inoperable or can operate only at a reduced capacity on account of construction activities, fire, flood, adverse weather conditions, labor disputes or other causes beyond VWNA's control. C.2 In the event any one of the Project influent characteristics, suspended solids, BOD5 or flow, exceeds the design parameters stated above, VWNA shall return the plant effluent to the characteristics required by NPDES in accordance with the following schedule after Project influent characteristics return to within design parameters. Characteristics Exceeding Recovery Period Design Parameters By Maximum 10% or Less 5 days Above 10% Less than 20% 10 days 20% and Above 30 days Notwithstanding the above schedule, if the failure to meet effluent quality limitations is caused by the presence of Abnormal Substances or Biologically Toxic Substances or the lack of Adequate Nutrients in the influent, then VWNA will have a thirty (30) day recovery period after the influent is free from said substances or contains Adequate Nutrients. C.3 VWNA shall not be responsible for fines or legal action as a result of discharge violations within the period and any subsequent recovery period that (1) influent exceeds design parameters; or (2) does not contain Adequate Nutrients; or (3) contains Abnormal Substances or Biologically Toxic Substances; or (4) is inoperable. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 21 of 23 C.4 The Annual Fee for services under this Agreement is based upon the following: (a) Project influent characteristics: Flow [[XXXX]] gpd NH4N [[XXX]] pounds per day BOD5 [[XXX]] pounds per day TSS [[XXX]] pounds per day DHS* [[XXX]] mg/L *DHS means Dissolved Hydrogen Sulfide concentration. The above characteristics are the design criteria for the facility. Any change of 10 percent (10%) or more in any of these characteristics, based upon a twelve (12) month moving average, will constitute a Change in Scope. (See Article 7) VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 22 of 23 APPENDIX D ANNUAL FEE ADJUSTMENT FORMULA Annual Adjustme nt Annually until the expiration or earlier termination of this Agreement, the Annual Fee shall be adjusted each year, such adjustment becoming effective on the anniversary date of the commencement date of the Initial Term. The parties may negotiate each adjustment, but in the event that they are not able to mutually agree on an adjustment the Base Compensation shall be adjusted according to the change in the Escalation Factor. The Escalation Factor is comprised of the following: (a) 50.8% of the year-to-year change in the Consumer Price Index, All Urban Consumers (“CPI-U”), as published by the United States Department of Labor, Bureau of Labor Statistics Not Seasonally Adjusted, US City Average, All Items, Series ID:CUUR0000SA0; plus (b) 47.7% of the year-to-year change in the Employment Cost Index (“ECI”) as published by the United States Department of Labor, Bureau of Labor Statistics Not Seasonally Adjusted, Compensation-Civilian Workers-Service Occupations, Series ID: CIU1010000300000I; plus (c) 1.5% of the year-to-year change in the Producer Price Index (“PPI”) as published by the United States Department of Labor, Bureau of Labor Statistics Not Seasonally Adjusted, Chemicals and Allied Products – Series ID: WPU06. For purposes of this Agreement, the indices applicable to calculation of the Escalation Factor shall be the indices published in March of each year. In no event shall the Annual Fee be reduced by application of the adjustment formula. VWNA-City of Grand Island, Nebraska O&M Agreement 10-2011 Page 23 of 23 APPENDIX E INSURANCE COVERAGE VWNA SHALL MAINTAIN: 1. Statutory workers’ compensation for all of VWNA’s employees at the Project as required by the State of Nebraska. 2. Commercial General Liability insurance, insuring VWNA's negligence, in an amount not less than $1,000,000 each occurrence and $5,000,000 aggregate for bodily injury and/or property damage. 3. Business Automobile Liability insurance, insuring owned, non-owned and hire automobiles in an amount not less than $1,000,000 combined single limit. OWNER SHALL MAINTAIN: 1. Statutory workers’ compensation for all of OWNER’s employees associated with the Project as required by the State of Nebraska. 2. Property damage insurance for all property, including vehicles owned by OWNER and operated by VWNA under this Agreement. Any property, including vehicles, not properly or fully insured shall be the financial responsibility of the OWNER. VWNA will provide at least thirty (30) days’ notice of the cancellation of any policy it is required to maintain under this Agreement. VWNA may self-insure reasonable deductible amounts under the policies it is required to maintain to the extent permitted by law. Each party shall include the other party as an additional insured on the coverages, excluding workers’ compensation, required to be maintained hereby and shall contain a waiver of subrogation in favor of the other part as respects any claims covered or which should have been covered by valid and collectible insurance including any deductibles or self insurance maintained thereunder.