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CR 92-07 Long-Term Care Trust Agreement December 30, 1991 v '" m .y . <0 OPK\~ Council Report: 92-7 LONG-TERM CARE TRUST AGREEMENT SEVENTH STREET SOUTH LANDFILL Proposed Action. Staff recommends adoption of the following motion: Move to approve a lonq-term trust aqreement with the Minnesota Pollution Control Agency and authorize the Mayor and city Manager to affix their siqnatures thereto. Overview. At its September 10 worksession, Council was given a summary report of the status and future activity of environmental projects in Hopkins, especially those projects relating to the City's old landfills. At that meeting, reference was made to terms of the 1988 Closure Order associated with the Seventh Street landfill, specifically the requirement for a funding mechanism to accomplish the Closure Order's long- term care and monitoring objectives. Staff has been working with its consultant attorney in negotiating a trust agreement with the MPCA that provides the necessary financial assurance mechanism. That agreement is provided for your review. Primary o Issues to Consider. What type of financial assurance will the City provide? What are the post-closure maintenance costs? Staff recommendation. o o Supportinq Information. o Trust agreement ~W~L James Gessele Engineering Superintendent Analvsis o council Report 92-7 Page 2 What type of financial assurance will the City provide? The City has chosen a trust as a means of providing financial assurance to the MPCA that funds will be available for the cost of long-term care and necessary monitoring actions at the Seventh Street landfill site. Hignlighted terms of the agreement follow: 1. A trust fund will be established by the city and the city will designate a trustee. 2. Funding of the trust will be accomplished through two equal annual installments in the amount of $76,000, each to be made in June 1992 and 1993. The total sum of the trust shall be $152,000. 3. The intent of the trus~ fund is to provide assurance of the city's commitment to provide post-closure care and monitoring at the landfill site. The city does not intend the trust fund to be used as a provider of operating capital for monitoring and repair expenses. 4. Investment earnings on the trust fund shall be paid to and belong to the city. 5. The City-named trustee shall annually furnish to the City and the MPCA a statement concerning the value of the trust. If the City can demonstrate to the MPCA that the amount deposited into the trust and the subsequent earnings thereon exceed the amount required to cover two years' post-closure and monitoring, then the agency shall release to the City the excess trust funds. 6. Exhibit A estimates an eighteen year term of post-closure care. This is only an estimate and the terms of the agreement are that the trust is irrevocable and shall continue until terminated by written consent of the City, trustee, and the MPCA commissioner. Council Report 92-7 Page 3 o What are the post-closure maintenance costs? Exhibit A of the agreement lists post-closure cost estimates on an annual basis. Annual costs will vary for reasons that the number of groundwater monitoring wells will decrease after five years. Decomposition gas monitoring costs also decrease after the first year. Projected over an eighteen year period of care, the estimated value of post-closure totals $692,000. ' o Staff recommendation. Staff had solid parameters in mind concerning a trust agreement. These were related to the city's consultant attorney at Doherty Rumble and Butler before contact was made with the MPCA. Negotiations with the agency were arduous but City's counsel prevailed in most cases. Staff is confident this is the very best agreement that could be made and recommends its approval. Staff also recommends that Firstar Trust Company of Minnesota, a corporate trustee, be designated as trustee in this agreement. CITY OF HOPKINS SEVENTH STREET LANDFILL DEDICATED LONG-TERM CARE TRUST TRUST AGREEMENT TRUST AGREEMENT (the "Agreement"), entered into on , 1991 by The city of Hopkins, a political subdivision of the state of Minnesota (the "Grantor"), and [name of corporate trustee], a (the "Trustee"). The Minnesota Pollution Control Agency ("Agency"), an agency of the State of Minnesota, and the City of Hopkins ("city") entered into a C10sure Order by Consent dated July 1, 1988 ("Closure Order") relative to the Hopkins Sanitary Landfill ("Landfill") located in section 25, T117N, R22W, in the city, pursuant to which Closure Order city agreed, among other things, to submit a financial assurance mechanism adequate to ensure that funds will be available for the cost of the long-term care and monitoring actions outlined in the Closure Order. The Grantor has chosen a trust to provide the financial assurance for the facilities identified herein. The Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee. The Grantor and the Trustee agree as follows: Section 1. Definitions. As used in this Agreement: a. The term "Grantor" means the owner or operator who enters into this Agreement and any successors or assigns of the Grantor. b. The term "Trustee" means the Trustee who enters into this Agreement and any successor Trustee. c. The term "Beneficiary" means the Minnesota Pollution Control Agency and any successor agency. JPS 0026564.WP section 2. Xdentification of Facilities and cost Estimates. This agreement pertains to the facilities and cost estimates, if any, identified on attached Schedule A. section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund (the "Fund") for the benefit of the Agency. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. The Fund shall consist of the sums deposited therein pursuant to section 16 hereof, together with all earnings, and profits on earnings, less any paYments or distributions made by the Trustee under this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor, any paYments necessary to discharge any liabilities of the Grantor established by the Agency. section 4. payment for Postclosure Care. The Trustee shall make paYments from the Fund as the Agency Commissioner shall specify, in writing, to provide for the payment of the costs of postclosure care of the Landfill. The Trustee shall reimburse the Grantor or other persons as specified by the Agency Commissioner from the Fund for postclosure expenditures in amounts the Agency Commissioner shall specify in writing. In addition, the Trustee shall refund to the Grantor the amounts the Agency Commissioner specifies in writing. Upon refund, these funds shall no longer constitute part of the Fund as defined herein. section 5. payments Comprising the Fund. PaYments made to the Trustee for the Fund shall be made in cash, in accordance with section 16 hereof . Section 6. Trustee Management. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge its duties with respect to the Fund solely in the interests of the Agency and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that: a. securities or other obligations of the Grantor, or any other owner or operator of the Landfill , or any of their affiliates as defined in the Investment Company Act of 1940, United states Code, Title 15, section 80a-2(a), shall not be JPS 0026564.WP 2. acquired or held, unless they are securities or other obligations of the federal or state government; b. the Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the federal or state government; c. the Trustee is authorized to hold cash awaiting investment or distribution uninvested for a period of three (3) business days and without liability for the paYment of interest thereon; and d. the Trustee shall in all events guarantee a return or yield on the Fund of an amount of not less than percent per annum. section 7. Authorized Investment. Any investment by the Trustee shall be one in which funds of a municipality may be invested under Minn. stat. ~~ 471.56 and 475.66. section 8. Investment Earnings on Fund. All investment earnings on the Fund shall be paid to and belong to the Grantor, and shall be distributed by the Trustee to the Grantor as and when received by the Trustee, subject only to the right of the Trustee to reimbursement therefrom for items payable to the Trustee hereunder. section 9. Express Powers of Trustee. without in any way limiting the power and discretion conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: a. To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee may be bound to see to the application of the purchase money or to inquire into the validity or expediency of a sale or other disposition. b. To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted. c. To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing the securities with certificates of the same issue JPS 0026564.WP 3. held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of the securities in a qualified central depository even though, when so deposited, the securities may be merged and held in bulk in the name of the nominee of the depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the united states Government, or any agency or instrumentality thereof, with a federal reserve bank but the books and records of the Trustee shall at all times show that all these securities are part of the Fund. d. To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other financial institution affiliated with the Trustee, to the extent insured by an agency of the federal or state government. section 10. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund, it being understood that while the Trustee may administer the payment of such taxes from the Fund, the Trustee shall not be liable for such taxes. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges ~nd disbursements of the Trustee shall be paid from the Fund. Such expenses shall be charged to the Fund by the Trustee. Section 11. Annual Valuation. The Trustee shall annually, at least 30 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the Agency Commissioner a statement confirming the value of the Trust. Any securities in the fund shall be valued at market value as of no more than 60 days prior to the anniversary date of establishment of the Fund. The failure of the Grantor to object in writing to the Trustee within 90 days after the statement has been furnished to the Grantor and the Agency Commissioner shall constitute a conclusively binding-assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to matters disclosed in the statement. section 12. Advice of Counsel. The Trustee may from time to time consult with counsel, with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel. IPS 0026564.WP 4. Section 13. Trustee Compensation. It is agreed that the Trustee's standard fee schedule, as amended from time to time is deemed to be reasonable and any fees or expenses charged thereunder for its services shall constitute reasonable fees. The Trustee shall notify the Grantor in writing of any amendment to its standard fee schedule. Section 14. Successor Trustee. The Trustee may resign or the Grantor may replace the Trustee, but the resignation or replacement shall not be effective until the Grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes administration of the trust in a writing sent to the Grantor, the Agency Commissioner and the present Trustee by certified mail ten days before the change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 10. Section 15. Instructions to the Trustee. All orders, requests, and instructions by the Agency to the Trustee shall be in writing, signed by the Agency Commissioner; and the Trustee shall act and shall be fully protected in acting in accordance with the orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change. or a termination of the authority of any person to act on behalf of the Grantor or the Agency hereunder has occurred. The Trustee shall have no duty to act in the absence of orders, requests, and instructions from the Agency Commissioner, except as provided herein. Section 16. Funding of Trust. The Trustee and the Grantor understand that the funding of the Trust shall be accomplished through paYment by Grantor into the Trust of the sum of $152,000 in two equal annual installments, each in the amount of $76,000, each to be made not later than June 30, 1992, and June 30, 1993, respectively, and that the Trustee shall notify the Grantor and the Agency Commissioner by certified mail as to the amount received from the Grantor not later than July 15 in calendar years 1992 and 1993, respectively. IPS 0026564.WP 5. section 17. Release of Excess Funds in Trust. The Grantor may show the Agency commissioner that the amount deposited into the Trust pursuant to this Agreement after distribution to the Grantor of the earnings thereon, pursuant to section 8 hereof, exceeds the amount that will be reasonably required to cover two years' postclosure care and monitoring costs and that if the Agency Commissioner agrees that the amount so deposited exceeds such amount, and within 60 days after receiving a request from the Grantor for release of such funds, the Agency Commissioner shall instruct the Trustee in writing to release to Grantor funds in excess of the current cost estimates covered by the Fund. Provided, that commencing June 30, 1995, and not more often than annually thereafter, the Agency commissioner shall, upon written application of the grantor, authorize the distribution to Grantor out of the corpus of the Fund of such amounts as shall exceed the total of the two calendar years' prior expenditures by the Grantor for post-closure care of the Landfill, as evidenced by the actual books and records of the Grantor with respect thereto, it being the understanding of the Grantor and. Agency Commissioner that the cost estimates identified on attached Schedule A are estimates upon which the initial deposits into the Trust, pursuant to section 16, have been determined and that the amount of the Fund required to be maintained hereunder, from and after June 30, 1995, shall be determined with reference to the actual costs incurred by the Grantor for the preceding two calendar years. section 18. Amendment of Agreement. This agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the Agency commissioner, or by the Trustee and the Agency Commissioner if the Grantor ceases to exist. section 19. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in section 14 and in section 18, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Agency commissioner, or by the Trustee and the Agency commissioner, if the Grantor ceases to exist and in all events at such time as Grantor shall have completed its performance under the Closure Order. upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be' delivered to the Grantor or to any successors or assigns of the Grantor. Section 20. Immunity and Indemnification. shall not incur personal liability of any nature with any act or omission, made in good faith, in administration of this Trust, or in carrying out The Trustee in connection the any directions JPS 0026564.WP 6. by the Agency Commissioner issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor or from the Fund, or both, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide a defense. Section 21. Choice of Law. This Agreement shall be administered, construed, and enforced according to the laws of the state of Minnesota. Section 22. Interpretation. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the date first above written. CITY OF HOPKINS, MINNESOTA GRANTOR By Its Mayor and By Its City Clerk JPS 0026564.WP 7. TRUSTEE By Its STATE OF MINNESOTA COUNTY OF ) ) SSe ) The foregoing instrument was acknowledged day of , 1991, by Mayor of the City of Hopkins and City Clerk of the City of Hopkins. before me this , the , the Notary Public STATE OF MINNESOTA COUNTY OF ) ) SS. ) this its The foregoing instrument was acknowledged before me day of , 1991, by as Trustee of , a corporation, on behalf of the corporation. Notary Public 8. EXHIBIT A TO CITY OF HOPKINS DEDICATED LONG-TERM CARE TRUST TRUST AGREEMENT The following schedule lists the post-closure cost estimates for the 7th street Landfill (estimates are on an annual basis). Cost estimates on an annual basis are: Cover Repair $ 5,000 (assumes inspections, replacement of 500 yd3 at $8.00/yd3, turf establishment, fence repair, etc.) Groundwater and Surface Water Monitoring- Years 1-5 (monitoring 19 wells) Years 6-18 (monitoring 12 wells) 50,000 35,000 Decomposition Gas Monitoring Year 1 Years 2-18 13,000 5,000 Operation and Maintenance Costs Groundwater Gas 4,000 4,000 Net Present Value for 18 years of post-closure required by Closure Order: (A 5% rate was used for estimating present value) Cover Repair $ 58,000 Groundwater and Surface Water Monitoring 474,000 Decomposition Gas Monitoring 66,000 Operations and Maintenance 94.000 $ 692,000 Total 9.