BMPC SOUTH Agreement - 2012 addendum
THIS BMPC SOUTH Agreement - 2012 ADDENDUM (this “Addendum”) is entered into this ____ day of ____________, 2012, by and between the City of Lawrence, a municipal corporation (hereinafter the “City”) and The Bowersock Mills & Power Company (which is one and the same company as “The Bowersock Mills and Power Company” and “Bowersock Mills and Power Company”), a Kansas corporation (hereinafter “Bowersock”).
WHEREAS, by that certain agreement titled “Agreement” and dated April 5, 1977 (hereinafter the “Base Agreement”), the City granted Bowersock a ground lease to occupy, possess and use, for a period of 50 years, certain land used in connection with the operation of a hydroelectric power plant, including a maintenance shop building, together with turbines, generators, and all other improvements, fixtures, machinery, and equipment used in connection with the power plant, with Bowersock retaining ownership of buildings, turbines, generators, and all other improvements, fixtures, machinery, and equipment (the power plant and other property of Bowersock retained ownership being hereinafter collectively the “BMPC South”); and
WHEREAS, the Base Agreement provides that the dam spanning the Kansas River just east of and generally parallel with the Massachusetts Street bridge, commonly known and referred to as the Bowersock Dam (hereinafter the “Dam”), remains owned by Bowersock, and outlines the rights and obligations of the City and Bowersock with respect to the operation and maintenance of the Dam during the term of the ground lease and Bowersock’s use and occupancy of the South Property; and
WHEREAS, in the Base Agreement, the City also granted to Kansas Fibreboard, Inc., a Kansas corporation, and to Justin D. Hill, Sr. and Stephen Higdon Hill, a ground lease to occupy, possess and use, for a period of 30 years, certain land under the building known as Bowersock Warehouse-Building 1A; and
WHEREAS, the rights of Kansas Fibreboard, Inc. and Justin D. Hill, Sr. and Stephen Higdon Hill were succeeded to by Bowersock, pursuant to assignments of all rights under the Base Agreement, which assignments the City approved by that certain agreement titled “Extension Agreement” and dated November 21, 2000 (hereinafter the “Extension Agreement”); and
WHEREAS, in the Extension Agreement, the term of the ground lease for possession and occupancy of the land originally leased to Kansas Fibreboard, Inc. was extended from an original term of 30 years to 50 years, to correspond with the term of Bowersock’s ground lease to occupy, possess and use the land pursuant to the Base Agreement; and
WHEREAS, to facilitate the construction of the Lawrence Riverfront Mall, Bowersock subsequently relinquished its rights with respect to some of the land encumbered by the Base Agreement; and
WHEREAS, by that certain agreement titled, “Ground Lease” and dated November 11, 2002 (the “2002 Agreement”), the City and Bowersock entered into a lease pursuant to which Bowersock was given the right to occupy, possess and use, for a period expiring November 11, 2027, certain land more particularly described in said 2002 Agreement, for driveway purposes; and
WHEREAS, by that certain agreement titled, “Extension and Modification Agreement” and dated August 29, 2009 (hereinafter the “Extension and Modification Agreement”), the City and Bowersock amended the Base Agreement, as previously extended by the Extension Agreement, to refine and clarify their respective rights and obligations with respect to maintenance of the Dam and to extend the period for Bowersock’s use, occupancy, and possession of the property subject to the Base Agreement and the 2002 Agreement an additional 50 years to April 5, 2077; and
WHEREAS, Bowersock has obtained Special Use Permit No. SUP-3-4-10 (approved by Ordinance No. 8529) to construct, maintain, and operate a hydroelectric powerhouse (“BMPC North”) on the north bank of the Kansas River immediately east of the Kansas River Bridge, at a site commonly known as 250 North Powerhouse Road in the City of Lawrence, County of Douglas, Kansas; and
WHEREAS, by that certain agreement titled “BMPC South Agreement” and dated November 24, 2010 (hereinafter the “BMPC South Agreement”), the City and Bowersock clarified and expanded the legal description of the real estate on the south bank of the Kansas River that is subject to the Base Agreement, the Extension Agreement, the 2002 Agreement, and the Extension and Modification Agreement to include the land legally described on Exhibit A, attached hereto and incorporated herein by reference; and
WHEREAS, by that certain agreement titled “BMPC South Agreement Addendum” and dated December 27, 2010 (hereinafter the “First Addendum”), the City and Bowersock amended their agreements to provide Bowersock with an option to extend all of the agreements referenced in the preceding paragraphs (collectively the “Existing Agreements”) beyond their then-current expiration dates; and
WHEREAS, the City and Bowersock desire to further amend the Existing Agreements to reflect (i) the use of a rubber dam, rather than flashboards, on the top of the Dam and (ii) Bowersock’s payment of certain Dam maintenance expenses with reimbursement from the City.
NOW, THEREFORE, in consideration of the mutual premises, covenants and agreements contained herein, the parties to this Addendum agree as follows:
1. Upstream Dam Maintenance.
a. City and Bowersock acknowledge that upstream Dam maintenance is necessary to continue and extend the functionality of the Dam. The proposed maintenance will be a continuation of the upstream Dam maintenance previously completed by City in March, 2010 (the “Upstream Dam Maintenance”), the purpose of which is to mitigate flow through the timber-crib section of the Dam. The Upstream Dam Maintenance will include all mobilization, engineering, permitting, insurance, testing, and inspection associated with or required for the construction. In connection with Bowersock’s construction of its new powerhouse on the north end of the Dam, Bowersock will contract with Kissick Construction to include the Upstream Dam Maintenance in its construction contract. Bowersock agrees to pay its contractor all sums that become due and owing for the Upstream Dam Maintenance in accordance with the terms and conditions of their contract.
b. In consideration of Bowersock’s construction of and payment for the Upstream Dam Maintenance, City agrees to reimburse Bowersock a sum not to exceed $295,000, paid in installments as provided in Section 3 below, upon receipt of detailed invoices from the Bowersock’s contractor showing the construction services provided as of the date of the invoice, and proof of payments made by Bowersock for said services.
2. Rubber Dam; City Payments to Bowersock.
a. Rather than maintaining the mill pond at appropriate levels through manually-raised flashboards, Bowersock intends to install and maintain a rubber dam system in place of the manually-raised flashboard system. The proposed rubber dam system will extend from the end of the Obermeyer Section at the south end of the dam to the end of the existing dam. City acknowledges that the rubber dam will perform the same functions that the flashboards previously performed, that the Existing Agreements require City to pay for flashboards and related materials, and that the flashboards and related materials will no longer be necessary upon installation of the rubber dam. In consideration of Bowersock’s installation and maintenance of the rubber dam, City agrees to pay Bowersock the sum of $129,000, paid in installments as provided in Section 3 below.
b. From and after calendar year 2013 and in lieu of City’s ongoing and periodic payment for flashboards and related materials and in consideration of Bowersock’s maintenance obligations with respect to the rubber dam, City agrees to set aside or otherwise appropriate and reserve funds for the future maintenance of the rubber dam in the amount of $18,000 annually until the Existing Agreements and Bowersock’s leasehold rights with respect to the BMPC North site, as extended and modified, are terminated or expire, whichever occurs first. The parties acknowledge and agree that the City’s obligation to pay for maintenance pursuant to this Section shall be for the maintenance of the rubberized fabric dam body and attachment hardware only, and shall not include maintenance or replacement of any concrete foundation, control room maintenance, mechanical or electrical equipment (e.g. air blower/water pumps, inflation and deflations mechanisms, or maintenance of any inlet/outlet piping systems). After Bowersock has incurred costs and charges for rubber dam maintenance, Bowersock shall send, and City shall, within 30 days of receipt, pay an invoice for such costs and charges in an amount not to exceed the accrued and unpaid annual set-aside. The City shall have no obligation under this Addendum to pay for rubber dam maintenance in excess of the amount then accrued and set aside. Each invoice shall document the previously unreimbursed rubber dam maintenance costs and shall note the previously accrued and unpaid set-aside. If the amount of any invoice is less than the then-current accrued and unpaid set-aside, City shall continue to hold the excess accrued and unpaid set-aside for future rubber dam maintenance. The annual set aside for calendar year 2013 and subsequent years shall be adjusted for inflation according to the following computation:
i. The index for computing the inflation adjustment is the Consumer Price Index for All-Urban Consumers (CPI-U) United States City Average, All Items (1982-84 = 100), as issued by the Bureau of Labor Statistics of the United States Department of Labor (the “Index”). In the event that the Bureau of Labor Statistics makes major revisions to this Index or changes the index base, the new consumer price index that most closely resembles the foregoing shall be used, with appropriate adjustments for changes in the index base.
ii. The Index shall be obtained for January 1 of the year in question (the “Adjustment Date”) and for January 1, 2012 (the “Base Date”).
iii. The annual payment for the year in question shall be $18,000 multiplied by the Index on the Adjustment Date and divided by the Index on the Base Date. For example, assuming the Index on the Adjustment Date is 115 and the Index on the Base Date is 110, the annual payment for the year is $18,000 x (115/110) = $18,818.
c. Notwithstanding the preceding provisions in this Section 2, City and Bowersock agree that Bowersock may determine at some future date that the rubber dam is not as efficient or effective at maintaining the mill pond and head level. In such event, the Existing Agreements shall be interpreted and applied with this Section 2 omitted.
3. City Payments. In consideration of Bowersock’s construction and payment for the Upstream Dam Maintenance referenced above in Section 1 and the rubber dam installation referenced in Section2, City agrees to pay Bowersock and Bowersock agrees to accept the sum of $424,000 ($295,000 for Upstream Dam Maintenance and $129,000 for flashboard replacement savings), payable in three equal installments as follows:
a. On or before expiration of the first Quarter 2012 - $141,333;
b. On or before October 15th, 2012 - $141,333; and
c. on or before expiration of the first Quarter 2013 - $141,333.
Notwithstanding the schedule set forth above, the City shall have no obligation to make a payment to Bowersock until the City receives from Bowersock or its contractor, an invoice showing actual expenses incurred as of the date of the invoice for the Upstream Dam Maintenance portion of the project only, or expenses associated with the maintenance of the rubber dam, as defined in Section 2.
4. Liability Limitation. The parties understand and agree that the City’s agreements under this Addendum shall not be construed to be for Bowersock’s interests or for the purpose of hydro-electric power production. The City shall be under no obligation to perform rubber dam maintenance on behalf of Bowersock and in no event shall this Addendum be construed to create additional liability of the City to Bowersock for any temporary or permanent loss of hydro-electric power production because of the failure of Bowersock Dam or for delay to Bowersock’s construction of the hydroelectric powerhouse (BMPC North), Special Use Permit No. SUP-3-4-10 approved by Ordinance No. 8529.
5. Cash Basis. This Addendum shall comply with the applicable provisions of the Kansas Cash Basis Law, K.S.A. 10-1101 et seq. The parties acknowledge and agree that the City is obligated only to make payments under this Addendum as may be lawfully made from funds budgeted and appropriated for the purposes as set forth in this Addendum during the City’s current budget year. If the City plans to consider not budgeting or appropriating funds for the purposes set forth in this Addendum, however, City agrees to use reasonable efforts to advise Bowersock of such plans in advance of its final decision. Notwithstanding the foregoing, City represents that it has sufficient funds available in 2012, and intends to make the two 2012 payments provided for in Section 3.
6. Reaffirmation. Provisions in the Existing Agreements contrary to the provisions of this Addendum are amended and superseded. Except as amended by this Addendum, the Existing Agreements are reaffirmed.
7. Counterparts. This Addendum may be executed in any number of counterparts (delivered by U.S. mail, fax, overnight delivery service or electronic mail), each of which shall be deemed to be an original and all such counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, this Addendum is executed by the parties on dates set forth below, effective as of the date first above written.
CITY:
City of Lawrence, Kansas,
a municipal corporation
By:
David L. Corliss, City Manager
BOWERSOCK:
The Bowersock Mills & Power Company, a Kansas corporation
By:
Printed Name:
Title:
ACKNOWLEDGEMENT
STATE OF KANSAS )
) ss
COUNTY OF DOUGLAS )
BE IT REMEMBERED, that on this _____ day of ____________, 2012, before me, the undersigned, a Notary Public in and for the County and State aforesaid came David L. Corliss, City Manager of the City of Lawrence, Kansas, a municipal corporation, who is personally known to me to be the same person who executed the within and foregoing instrument of writing, and duly acknowledged the execution of the same to be the free act and deed of such city.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal the day and year last above mentioned.
Notary Public
My Commission Expires:
ACKNOWLEDGEMENT
STATE OF KANSAS )
) ss
COUNTY OF DOUGLAS )
BE IT REMEMBERED, that on this ______ day of ____________, 2012, before me, the undersigned, a Notary Public in and for the County and State aforesaid, came _______________________, ______________________ of The Bowersock Mills & Power Company, a Kansas corporation, who is personally known to me to be the same person who executed the foregoing instrument of writing, and such person duly acknowledged the execution of the same to be the free act and deed of such company.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal the day and year last above mentioned.
Notary Public
My Commission Expires:
Exhibit A
[Legal Description of Land on South Bank of Kansas River]
All that part of the Southwest Quarter of Section 30, Township 12 South, Range 20 East, in the City of Lawrence, Douglas County, Kansas, described as follows:
COMMENCING at the Southeast corner of Lot 2, Block 1, The World Company Addition No.1, a subdivision in the City of Lawrence, Douglas County, Kansas, said point further described as the point of intersection of the North right of way line of 7th Street and the West right of way line of New Hampshire Street; thence North 1 degree 49 minutes 33 seconds West along the West right of way line of New Hampshire Street and its Northerly prolongation a distance of 805.79 feet to a point on the South line of a lease description as filed in Book 428 at Page 822, said point also lying on the North right of way line of the Atchison, Topeka and Santa Fe Railroad as established by Case No. CV31910B; thence North 77 degrees 27 minutes 00 seconds West along the North right of way line of said Railroad and the South line of said Lease as filed in Book 428 at Page 822, a distance of 31.78 feet to the Southwest corner of said Lease, the POINT OF BEGINNING; thence continuing North 77 degrees 27 minutes 00 seconds West along the North right of way line of said Railroad a distance of 299.96 feet to a point; thence North 7 degrees 26 minutes 30 seconds East a distance of 61.11 feet to a point on the North line of Tract A, Survey Record No. 4317; thence South 75 degrees 22 minutes 45 seconds East along the North line of said Tract A, a distance of 52.64 feet to a point; thence South 80 degrees 14 minutes 56 seconds East along the North line of said Tract A, a distance of 139.78 feet to the Northeast corner thereof; thence South 77 degrees 37 minutes 26 seconds East a distance of 113.03 feet to a point on the West line of said Lease as filed in Book 428 at Page 822; thence South 12 degrees 25 minutes 11 seconds West along the West line of said Lease as filed in Book 428 at Page 822 a distance of 66.13 feet to the POINT OF BEGINNING and containing 19,155 Square Feet or 0.440 Acres, more or less; EXCEPT AND EXCLUDING any portion of the stairway on the western end of the foregoing land that leads to the deck of the Kansas River Bridge.