CR 93-09 SL To Finance Landfillli
December 31, 1992
Council Report # 93 -9
SPECIAL LEGISLATION TO FINANCE LANDFILL REMEDIATION
Proposed Action
Staff recommends adoption of the following motion: Move to
approve the special legislation asking to State Legislature
to appropriate additional money to finance landfill
remediation at the 7th street landfill and to authorize city
staff to proceed with the legislative effort.
Adoption of this motion will allow staff to work with the
State Legislature in drafting and hopefully, adopting
special legislation giving the City an additional
appropriation of $800,000 to complete the special
legislation previously authorized by the legislature.
Overview
The 1991 Legislature enacted a law directing the State to
pay 1.3 million dollars to the City of Hopkins for clean -up
measures to be taken at the 7th Street Landfill in Hopkins.
The project is now essentially complete and final totals
have estimated that the true state cost associated with the
legislation should be 2.1 million dollars. In discussing
the final bills with the Minnesota Pollution Control Agency
and our legal counsel, it has been suggested that an
additional appropriation from the State of Minnesota would
be feasible to complete the intent of the legislation passed
by the 1991 legislature.
Staff is recommending that the Council adopt the language
proposed in this report and authorize staff to begin the
legislative effort.
Primary Issues to Consider
o What are the final costs associated with the
Hopkins Landfill project?
o What does the 1991 legislation indicate in terms
of financing responsibilities?
What process will be followed in seeking
legislation?
o What costs are involved in the proposed effort?
Supporting Information
o Staff analysis of issues
o City of Hopkins 1993 landfill remediation funding
request.
S even C. Miel e, City Manager
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Council Report 93 -9
Special Legislation to finance landfill remediation
STAFF ANALYSIS OF ISSUES
o What are the final project costs associated with
the Hopkins Landfill Project?
The final construction costs are roughly 2.4 million
dollars. This is roughly $800,000 more than was originally
budgeted for the project. A detail of those additional.
expenses is included in the background information
contained in this report.
o What does the 1991 legislation indicate in terms
of financing responsibilities?
In 1991, special legislation indicated that the state would
loan or grant funds to the City of Hopkins for all costs in
excess of $400,000. An estimate was provided at the time of
1.7 million dollars and thus, the State appropriated 1.3
million dollars to the City of Hopkins.
The new legislation would ask that the legislature simply
appropriate additional funds to continue and complete the
financing package agreed to in the special legislation of
1991.
o What process will be followed in seeking
legislation?
As was done with the 1991 legislation, staff will work with
our legal consultants to draft specific language and to work
with our legislators to carry the legislation through both
houses of the legislature and to the Governor.
This can be a rather intensive process, although unlike the
1991 legislation, the request is not for new language but
instead to simply appropriate the additional funds to
Hopkins to assist in paying for the project.
o What costs are involved in the proposed effort?
The only real costs involved with the special legislation
will include these payable to Doherty, Rumble and Butler to
provide legal and lobbying support and also to dedicate time
for the City Manager and perhaps other staff to work on
securing approval for this legislation
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CITY OF HOP INS 1993 LANDFILL
REMEDIATTON FUNDING REQUEST
DRAFT
BACKGROUND INFORMATION
Legislation was enacted in 1991 which provided the City of
Hopkins with $1.3 million from the Metropolitan Landfill
Contingency Action Trust Fund to construct a methane remediation
project (the Project) to mitigate methane gas migration from its
closed 7th Street Landfill toward townhomes and apartments located
east and south of the waste deposit. This legislation provided
Hopkins with special revenue authorization and required it to pay
$400,000 to fund this Project, recognizing its potential statutory
liability, and to attempt to recover the state and local funds
expended from both insurers and potential responsible parties
associated with the contamination at the Landfill.
The Project involved the excavation of � cubic yards of
waste, the installation of a vinyl and earthen barrier, the
placement of granular fill material in a 50 - foot buffer area and
monitoring wells and was estimated in 1991 to cost $1.7 million.
This is the first project of its kind in this State and very
little had been done in the area of post reaed:iation and
methane abatement to provide a track record. Although appropriate
engineering was employed, the Project costs significantly exceeded
the estimate and resulted in a total expenditure $2.4 million
exclusive of legal fees. The increased costs included the
following;
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construction change orders (approximately
$208,000);
(ii) relocation of residents at the adjoining Westbooke
patio homes (approximately $93,000);
(iii) partial reimbursement of Westrooke engineering
expenses (approximately $85,000);
(iv) miscellaneous fencing, utility, street repair costs
and forensic evaluation of the barrier
(approximately $43,000).
Hopkins now returns to request that the legislature complete
funding of the Project by authorizing a supplemental grant/loan by
the appropriation of an additional. $800,000 to fund the difference
between the actual costs for the Project and the local payment and
previous state grant /loan. The City has separated the costs
associated with the Project from costs incurred in connection with
the study of groundwater contamination emanating from the worst
deposit, including monitoring well construction, and from other
costs associated with the study and reaediation of methane and
oth r impacts potentially caused at the landfill and at property to
the north and west of the waste deposit. A summary of the actual
projected costs associated with the landfill investigation and
retediation as well as long term monitoring and maintenance is
provided in the attached table.
The situation which prompted Hopkins' request for the use of
MLCAF funds in 1991 remains the same. The 7th Street Landfill, one
of four closed landfills in the City, was utilized by communities
in the western metropolitan area for waste disposal from the 1950s
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through 1980. The City is now faced with an xpensive
study /remediation problem and no operating waste disposal
facilities.
Hopkins has a population of approximately 15,000 with
moderate commercial and industrial tax base. This tax base does
not allow the City to generate sufficient revenues to independently
fund the necessary landfall investigation and remediation efforts
without a dramatic adverse impact on other City services. Hopkins
cannot impose a surcharge on waste disposal to provide funds for
landfill investigation cleanup costs. In addition, though the
contamination is associated with waste from throughout Hennepin
County, The County does not have a separate funding mechanism by
which it can provide assistance for this study and remediation
effort.
Hopkins has done what the 1991 legislation required. It has
tried to secure funding from both its insurance carriers and
Landfill potential responsible parties. Legal impediments,
however, have prevented the City, thus far, from securing
assistance from either of these sources.
Briefly, an investigation of insurance coverage was completed
and claims submitted in 1991. The insurance carriers, however,
have thus far denied coverage based on the evolutionary state of
Minnesota law. Insurers have refused coverage for landfill-
associated contamination under a variety of theories, including the
"owned property" exclusion, arguments that contamination
investigation and remediation costs are not covered "damages" under
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the policies, trigger of coverag r quirements and arguments that
the contamination is not a covered "occurrence" .
In a variety of decisions, the Minnesota Court of Appeals and
supreme Court have stricken and/or limited these defenses. Cases .
relating to other groundwater contamination incidents decided by
our courts, however, have supported insurers' coverage denials
except in relation to the "sudden and accidental" exception to the
pollution exclusion found in many of these comprehensive general
liability policies. The issue of whether coverage will be afforded
will likely be determined in the next two years incident to a
number of cases now making their way through the courts. One
principal case is tivester Brothers Development CO. . six named
insurers which has moved up and down in the Anoka County District
Court, court of Appeals, and now is on appeal to the State Supreme
Court. The determination of this case will result in clarification
of the meaning of the "sudden and accidental" exception in relation
to landfill . groundwater contamination incidents. Based on current
Court of Appeals decisions, recovery may be afforded if it can be
established that pollution and contamination emanating from a
landfill waste deposit resulted from a sudden and accidental event.
Exactly how the Supreme Court and /or a jury will determine the
meaning and interpretation of this phrase in relation to a specific
landfill contamination event, is still unknown. Hopkins has
appropriately prosecuted its insurance claims and now must await
judicial clarification of the policy provisions.
In connection with the directive that it attempt to secure
recovery for study and remediation costs from responsible parties
associated with waste disposal at the Landfill, the City has
ass mbled information and p rformed extensive res arch with regard
to past waste disposal activities. The City has also performed
legal research in relation to the possibility of recovery in
connection with such claims as well as the costs associated with
such an effort. At this point, the City has elected not to
formalize its cost recovery efforts against responsible parties
through litigation due to concerns about potential inability to
attribute landfill gas generation to commercial industrial waste
disposal as well as the potentially enormous costs of prosecuting
such claims. simply and without compromising its future position
in this regard, research and investigation raises question about
th possibility of recovery for costs associated with methane
remediation from entities who did not bring residential municipal
waste to the Landfill. Entities whose commercial and industrial
wast was disposed at municipal landfills have been successfully
tapped only for assistance for study and remediation. The
principal costs which have been incurred by the City in connection
with the 7th Street Landfill, however, are not associated with
groundwater contamination impacts. The costs of bringing
litigation against responsible parties to determine whether
contribution can be secured in connection with methane migration
would likely be in the range of $250,000 to $500,000. With
recovery viewed as problematic, the City at this point has not
decided to proceed with litigation until better information has
been developed with respect to groundwater contamination.
Hopkins would welcome assistance in connection with ; the
ill fro ect as well as the groundwater contamination investigation
monitoring and remediation from any source. The Landfill Superfund
funding bill considered during the last session and likely to be
considered in 1993 however, does not appear to provide a mechanism
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for funding methane remediation at a landfill which has been closed
for over ten years. On the other hand, the MCLAr fund was
deliberately created to provide study and remediation financing for
old and /or abandoned landfills such as the 7th Street Landfill.
TOTAL P.08