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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/06/2008 - FIRST READING OF ORDINANCE NO. 048, 2008, FIRST ITEM NUMBER: 25 AGENDA ITEM SUMMARY DATE: May 6, 2008 FORT COLLINS CITY COUNCIL STAFF: John Stokes Daylan Figgs SUBJECT First Reading of Ordinance No. 048, 2008, Authorizing the Lease of a Portion Of Running Deer Natural Area To Hageman Earth Cycle, Inc. RECOMMENDATION The Land Conservation and Stewardship Board recommended in a 4-3 vote that City Council not approve the lease to Hageman Earth Cycle. The Natural Resources Advisory Board recommended in a 6-2 vote that City Council approve the lease to Hageman Earth Cycle. Staff recommends this lease be approved for the following reasons: environmental issues and concerns are addressed with the terms of the lease and Hageman Earth Cycle will pay a fair market lease rate. FINANCIAL IMPACT Hageman Earth Cycle will pay an annual rate of$18,480 ($1540/month)the first year of the lease. The lease rate will increase 4%annually. There will be a modest amount of staff time devoted to lease-related administrative duties. EXECUTIVE SUMMARY Running Deer Natural Area was purchased in 3 transactions between 1998 and 2000. Included in the purchase was a 15-acre parcel leased to Hageman Earth Cycle by the previous owners for the operation of an organic material drop off site,material processing, and sale of landscape products. This portion of Running Deer has been leased to Hageman Earth Cycle since 2001. The term of the new lease is for one year with up to nine renewals. BACKGROUND Running Deer Natural Area was purchased in 3 transactions between 1998 and 2000. A 15-acre portion of the property was leased to Hageman Earth Cycle by the City of Fort Collins Natural Areas for a seven-year period from July 1,2001 through June 30,2008. Hageman Earth Cycle utilizes the lease area as part of an organic waste recycling service offered by its business. As the only organic May 6, 2008 -2- Item No. 25 lease area as part of an organic waste recycling service offered by its business. As the only organic waste recycling business for public use in Fort Collins, Hageman Earth Cycle is responsible for the diversion of approximately 65,000 cubic yards of material from the waste stream destined for the land fill. No other organic material drop off site is located within Fort Collins. Other activities allowed in the lease include the storage and sale of landscape products. The initial five-year lease period was intended to provide transition time for Hageman Earth Cycle to relocate to a new location. As additional two-year lease was approved in 2006 to allow additional time for relocation. Past correspondence indicates clearly the City's desire for Hageman's Earth Cycle to relocate. However, Hageman has not been able to transition to a new location and has requested a renewal of the lease. In addition to the fact that Hageman's Earth Cycle has not been able to move, this lease has been challenging for other reasons. Environmental concerns including dust complaints and suspected soil and water contamination have been raised in past years. In November 2007, the Colorado Department of Public Health and Environment (CDPHE) cited Hageman Earth Cycle for composting without a permit. While the citation was resolved between Hageman and CDPHE, it did emphasize the need to assess current environmental conditions and to determine if historic or recent operations have resulted in an adverse impact to the site. A Limited Phase II Environmental Assessment was conducted from December 2007 through January 2008 to examine water and soil contamination concerns. Five groundwater wells, 3 composite soil samples, and 2 surface water locations were sampled. Based on field observations and a review of the laboratory results, there is no evidence that groundwater at the site has been adversely impacted by metals, volatile organic compounds (VOC's), semi volatile organic compounds(SVOC's),organochlorine pesticides(OCP's),organophosphorous pesticides(OPP's), nitrate-nitrite, or fecal coliforms. While select metals, VOCs, SVOCs, OCPs, nitrate-nitrite, and fecal coliforms compounds were detected in pools of surface water/leachate it does not appear that these compounds are infiltrating into underlying groundwater at the site,based on the results of this assessment work. No significant concerns were identified in the Phase II report. To continue to monitor the ground water in the area and to prevent the movement of soil and water offsite several conditions were placed in the lease. The Lessee must design a Stormwater Management Plan consistent with the standards established in the Urban Drainage and Flood Control Manual,Volume 3,(the"Standards")which is published by the Denver Urban Drainage and Flood Control District. The Plan will include a description of surface water control systems designed, constructed and maintained to accomplish each and all of the following:(1)manage and accommodate flow onto the Property during peak discharge from a 25-year,24-hour storm event and a 100-year,24-hour storm event; and(2)control and collect the onsite run-off water volume resulting from a 25-year,24-hour storm event on the Property and a 100-year, 24-hour storm event on the Property; and (3) contain and manage leachate that is generated when precipitation comes in contact with materials maintained on or in the vicinity of the Property or in any way by Lessee; and (4)a 100-foot buffer (or other dimension as the City determines to be appropriate upon review and consideration of the Stormwater Management Plan) must be planted with native vegetation constructed around the existing wetlands located adjacent to the Property and depicted on an attached map; and, (5) all leachate collection structures must be constructed of compacted or in-situ earthen material or other May 6, 2008 -3- Item No. 25 -s low permeability materials to achieve hydraulic conductivity of less than or equal to 1 x 10 cm/sec. The Plan shall be developed under the direction of a professional engineer and submitted to the City for review and approval prior to construction of any of the improvements required by the Plan. All improvements must be approved and constructed by October 1, 2008 or by such other date as the parties mutually agree is acceptable. In addition to the lease terms discussed above, the lessee will be required to obtain any permits, licenses, or other approvals or grants of authorization required in order to conduct its activities. Further,this lease does not allow for the composting or dyeing of material on site and all composted material stored for sale must originate from a permitted composting facility. Also, the lessee will be required to collect and analyze soil and water samples on an annual basis in an effort to monitor environmental conditions of the lease area. Sample locations will be identified by Natural Area staff and all analysis will follow appropriate EPA methodology. Prior to the end of the lease, the lessee will be required to remove all personal property or improvements, including all foundations, slabs, and fences, fill and level any excavations, and restore the ground to a condition that is level and free and clear of debris or other materials. This lease is a one year lease with up to 9 renewals. If the lease is in place the full term, it will enable Hageman Earth Cycle to continue its operation for a period of 10 years. Benefits include the continued diversion of approximately 65,000 cubic yards of organic waste from the landfill on an annual basis. The 10-year lease term also allows the lessee up to 10 years to recoup the financial costs of the required surface water control system and other improvements outlined in the lease. It also allows staff to focus on managing the lease with the understanding that Hageman Earth Cycle may be on site for a 10-year term. The Natural Areas Program has estimated that restoration of currently owned Natural Areas will take approximately twenty years to accomplish, and the restoration of the lease parcel has not been scheduled to occur during the maximum term of the lease. While the property is occupied by Hageman,the maintenance requirements for the City will be reduced as a result of Hageman's use and maintenance of the property. In addition,the interim use will generate revenues for the Natural Areas program. Staff has recommended against sale of the property to Hageman, as the long-term objectives of preserving this property are important and will be met by the City's continued ownership and eventual restoration of the lease area. Several different options were discussed during the Land Conservation and Stewardship Board and the Natural Resources Advisory Board Meetings. A summary of the options are discussed below. 1. Sale of the 15-acre lease area to Hageman Earth Cam. Natural Resources staff recommends against selling the lease area to Hageman Earth Cycle. Some of the long-term environmental reasons for this recommendation include: the close association with wetlands on Running Deer Natural Area;shallow depth to ground water(and the potential for contamination);and potential movement of material stored on Hageman to the Poudre during flood events. While these issues can be mitigated in the mid-term, any development in this location for the long-term is undesirable. Also,this property was purchased as a Natural Area as part of a planned gateway to the City. Future development in this area is likely to be employment and research and development related. May 6, 2008 -4- Item No. 25 2. Shorter-term lease. This option was coupled by NRAB with the suggestion of developing a multi-agency task force to identify long-term solutions to organic waste recycling within Fort Collins. Natural Resources staff does not favor a shorter-term lease for several reasons. Primarily, Natural Resources staff does not believe that site-based improvements and investments are financially feasible with a short-term lease. Natural Resources staff does not recommend continuing in a lease arrangement of any length without proper environmental controls. 3. Termination of the lease. (LCSB recommendation). While this recommendation would allow the Natural Areas Program to restore the lease area back to native vegetation,Natural Resources staff does not recommend it. Staff s understanding is that Hageman Earth Cycle has not been able to find a suitable local, relocation site. Thus, if Earth Cycle is unable to continue organic recycling operations, it is possible that for at least some period of time there would be no organic recycling options available to the public. Thus, approximately 65,000 cubic yards of organic material now being diverted would enter the landfill on an annual basis. 4. One-year lease with 9 renewals (NRAB and staff recommendation). This option places several conditions on the lease to address environmental concerns. The expense to Hageman for the design and construction of the site improvements can be spread over a 10-year period. The lease can be terminated by either party, so if other viable organic recycling options become available the City and Hageman Earth Cycle can adapt to changing business conditions. This option maintains Natural Area ownership of the lease area and allows for the eventual restoration of the property to natural conditions. Natural Areas program plans for restoring the Property and making it available for public use do not call for restoration activity on the Property until after the proposed lease term. Organic recycling will continue to be provided to the public at this location during the term of the lease. ATTACHMENTS 1. Minutes from the Land Conservation and Stewardship Board meeting -April 9, 2008. 2. Minutes from the Natural Resources Advisory Board meeting- April 16, 2008. 3. Power Point presentation. ATTACHMENT Land Conservation & Stewardship Board April 9,2008 Hageman Earth Cycle- Excerpt Hageman Lease • Stokes: Running Deer Natural Area was purchased in three transactions between 1998 and 2000. Included in the purchase was a 15 acre parcel leased to Hageman Earth Cycle by the previous owners for the operation of an organic material drop off site, material processing, and sale of landscape products. Earth Cycle is presently the only facility in the City of Fort Collins that accepts this type of material. There has been a series of short-term leases with the expectation of this company finding another site to relocate. However, for a variety of reasons the company has not moved so we have extended the lease several times. In speaking with our Solid Waste department folks today, they mentioned that the weight of material being processed at the facility is approximately 13 to 14 thousand tons annually. This business is valuable to the City of Fort Collins. As a staff we weighed the pros and cons, and decided as a Natural Resource Department to extend the lease for a long period of time. There are a number of additional requirements added to the lease that the management of Earth Cycle must fulfill as part of the lease renewal. • Figgs: We looked at ground water, surface water and on-site soils and off-site soils of the surrounding area. We tested for a host of parameters,testing for 15 different metals, pesticides, nitrate and nitrite and other compounds, which all fell below standards. Overall, even though there are residual compounds found on the property, the origin can not be pin pointed, and therefore can not be tied to the facility that is in place presently. Should this lease be approved there are still things that need to be put into place, and the lease will be contingent on the improvements. Now that we have a good understanding of the environmental conditions of the property we want to make sure that we are not adding anything to it. We will require a sample of ground water, surface water and soil on an annual basis. Hageman Earth Cycle is not a permitted composting facility. They were sited in violation of this in 2007, so we will watch this in the future. We will do site visits often. • McLane: Can you address the question of the flood plain. • Figgs: Part of the property is in the flood plane, and there is also a flood way that is part of the property, so we need to protect this area. • McLane: Can you address the 100 year flood hazard area and floatable material, and also composting material in this area and the regulations of the Poudre River and the flood plane regarding this. • Figgs: They are still issues today. • Stokes: Composting is prohibited in the current lease and in the lease that we are proposing so Earth Cycle is in violation of this lease, but this has been corrected and we received a written notice that he is not composting anymore. In terms of storm water issues, in the lease being constructed he would be treated as a new project to the City of Fort Collins and he would have to adhere to the City's development system. Regarding floatable material, we are working with Stormwater and Engineering, as to the best ways to address this. He would have to design and build the site according to their specifications. • Ting: I feel we need to address a monitoring protocol for this site. • Figgs: We can enter the leased area at any time. • Ting: Do you have a sense of the actual cost of doing this? • Figgs: Depending on our sampling, and going on the site, I don't foresee a huge impact unless there are issues. • Ting: Bonding for repair and restitutions, how will that be handled? • Figgs: We have a clause in the lease that states that he is liable for this. • Ting: Will there be a bonding? • Figgs: No • McLane: Has he met the State requirements, as stated in section 14? • Figgs: Since he is not a composting facility that went away when he clarified the issue. • Grooms: I would like to comment along these lines. Extending the Hageman lease has been going on for some time, and two years ago the lease was extended for two years. Because Earth Cycle is the only recycling operation of its kind in Fort Collins it seems we have to accommodate him. Is it worth it from a cost perspective to offer him this lease because of the time involved in monitoring this business? What is the City doing to offer residents an alternative to Hageman Earth Cycle? • Stokes: We decided that it is worth is because of the recycling that is not making its way to the landfill. Regarding offering alternative recycling, the City has started a trash services study to take a confident look as to how trash services are provided. There may be changes to the system endorsed by Council, which could have an impact on how we manage yard wastes, and how they are picked up in the City of Fort Collins. • Grooms: Hageman is making an income from charges to residence of Fort Collins, and he is making an indent in our soil, surface water and ground water. If he weren't at that location would that area be more pristine? I may not know all the details, but I'm looking at this as a resident of Fort Collins. • Gaughan: Why have this business in a flood plain area when there are many up- land areas here in the City? The area by the landfill seems like a much better place. • Stokes: We've looked, and there are no other sites that we can move this business to. Hageman was doing business there when we acquired the property and we were willing to keep them there as long as they couldn't find a site that was viable for them. This is also why we have suggested a number of controls. • Gaughan: In looking at the map you can see that there are obvious impacts. • Stanley: It's distressing to me to hear you say that you are willing to keep them there as long as they can't find a viable site. When I voted on this two years ago that was not my impression at all. I understood that we would help them find a suitable place to move to, but we continue extending their lease. • Stanley: I would like to give Tom Pierce a chance to comment at this time. • Pierce: If that business were to come into that area today it would not be allowed. • Hageman: Recycling is not cheap, I wish it were. Open space land is expensive and I can't compete with tax dollars from the City. This is a Family owned business, and we are trying to do our best and that includes working with our neighbors. I've had only three complaints in 13 years. I'm looking at two to three million dollars for land anywhere else. I can't operate this business on a postage stamp. I have talked to over 35 realtors and looked at over 35 different places and a lot of it is owned by the City. I can't move four miles outside of the City because people won't come to me. If you have any other solutions I'd be willing to listen. Figgs reviewed the Hageman Earth Cycle lease with the Board. • Stanley: Would the Board like to make a motion? Vicky McLane motioned to deny the renewal of the Hageman Earth Cycle lease. I feel strongly that our primary charge and responsible is stewardship of the Natural Areas. I also feel that this Board is not charged to find areas for disposal of solid waste. Chris Gaughan second. • Stanley: Any discussion or comments? • Ting: I disagree with the motion. There is an issue regarding preemptive use. This area is not pristine, and I do believe that there is an appropriate use. I don't see an alternative on the horizon within the next year or two. The question is do we want to eliminate this route as a convenience to the City of Fort Collins; I would find it as a great inconvenience. Staff needs to insure that this area is monitored properly. I respectfully disagree. • Lindsey: I agree with Karyl. Given there is no alternative, the recycling options this company gives the City of Fort Collins is an important service. I do have hesitations with the activity near the wetland area, but presently there are no alternatives. • Boyd: I agree with both of these statements. • Stanley: Looking at the minutes from two years ago, I understood then that the renewal of this lease was final. What bothers me is that I feel that people were misled. • Stokes: I read those minutes recently, and it was mentioned in the minutes that in two years it's possible we could be back here saying we ought to renew the lease. One of the reasons why we crafted a lease that has a 10 year term, it's a year to year lease with a 10 year term. • Stanley: What is in place for monitoring this business? • Figgs: If there is a question of composting you can call the Department of Public Health. Can we make the determination if it's composting? This may not fall into our jurisdiction. • Gaughan: I think there are alternatives. There are both composting on your own property, which a lot of people do, and there is also bringing that kind of waste to a landfill. In an ideal world you separate that out, but landfills operate with earth and material. • Ting: From one of our last storms I estimated that I had three tons of tree limbs from my yard. Taking this material to the landfill would be a little bit of an undertaking. From a convenient standpoint for the majority of people in town who have bulk plant material, Hageman is closer than the landfill. • Grooms: I'm as confused, and this is a hard decision. I feel the same as Vicky, that we are stewards of the land, and we are here to make the best decisions for what the City of Fort Collins has invested in, which is to keep nature as pristine as possible. Where I am conflicted is that Hageman has a service that we as a City can benefit from. • Stanley: When will this come to the Natural Resource Board? • Stokes: It may go before the Natural Resource Board in May. Stanley asked for a show of hands of those Board members who recommend to City Council that the Ground Lease of 15 acres of Running Deer Natural Area to Hageman Earth Cycle for the purpose of recycling organic materials from the public,processing of these materials and sale of landscaping products be denied. There were four votes in favor of denial of the lease and three votes for the approval of the Hageman Lease. • Stanley: I will write a memo to City Council using the minutes to explain both sides of this discussion. • Sears: City Council will also receive a copy of the Board minutes. DRAFT ATTACHMENT NATURAL RESOURCES ADVISORY BOARD Regular Meeting April 16,2008 DATE: Wednesday, April 16, 2008 LOCATION: 215 N. Mason - Conference Room 1-A TIME: 6:00pm For Reference: Alan Apt,NRAB Chair 221-9875 Ben Manvel, Council Liaison 217-1932 John Armstrong, Staff Liaison 416-2230 Excerpt from minutes: Hageman Earth Cycle Lease/Running Deer Natural Area Natural Areas Program Manager, Mark Sears outlined the issue before the Natural Resources Board. • The Hageman Earth Cycle lease is for a 15 acre portion of the Running Deer Natural Area, acquired by the City in the late 1990's. It has been leased to Roger Hageman and Hageman Earth Cycle for the last 7 years. During this time the lease has been reviewed by the Natural Resources Advisory Board and Land Conservation and Stewardship Board and renewed and extended several times. • Last week, on April 16, 2008, the LSCB reviewed the current proposal to extend the lease and voted 4-3 to recommend the Fort Collins City Council deny the lease due to environmental concerns. • Staff is making the same presentation tonight to the NRAB to obtain their recommendation to renew/not renew the lease. • Mark Sears explained the Natural Resources staff recommends the lease be approved for 10 years (one year lease with nine extensions) because Hageman Earth Cycle is the only business in town that provides recycling of organic materials and are therefore diverting 55,000-60,000 yards of it from the landfill. The staff also feels environmental issues or concerns can be addressed with the terms of the lease. Senior Environmental Planner Daylan Figgs presented some background on the Running Deer lease to Hageman Earth Cycle from the City of Fort Collins and stated he felt it was serving the community well. • Daylan explained the staff recommendation to renew the lease was based on many things, one of which is the storm water management plan. Mr. Hageman has installed some measures to control water that are consistent with flood water issues. 1 • A condition of the lease is to do environmental analysis and monitoring of any contaminants to the property as a result of the presence of Hageman Earth Cycle's business on the property. o Late in 2007, Hageman Earth Cycle was cited for composting without a permit by the Colorado Department of Public Health and Environment. o The citation issue was resolved but, because it is similar to an industrial site and there were some concerns about possible contaminants to the groundwater, the City did a limited Phase 2 analysis to understand what was going on, if anything. o The parameters of the analysis were recommended by Walsh Environmental Consulting. They were standard EPA tests for volatile organic compounds, semi volatile compounds, organochlorine pesticides, organophosphorous pesticides, nitrates and fecal coliforms in the surface water, soil and groundwater. Temporary monitoring wells were drilled and the storage facility soils and pond water/leachate were examined. o The results revealed the groundwater is fine and there is no indication any materials from Hageman Earth Cycle is leaching into the groundwater. ■ All monitoring wells had nitrates in them, but the levels were consistent throughout the entire property. ■ Surface water had pesticides, but was also fine. Nothing exceeded the state standards. • Some of the tests done did not have state standards to measure them. ■ The soil showed levels of Benzo(a)pyrene, and dieldrin that exceeded residential levels. There were no identifiable sources for this. However,they could have been brought in with yard waste. They sent this report to Colorado Public Health and Environment, but haven't gotten feedback yet. It will be incorporated into the study. ■ Arsenic that exceeded residential and commercial levels was also found. Walsh and Department of Public Health and Environment explained it is quite common in western soils. It could easily be a background level of arsenic. ■ Fecal coli form was found in ponds, probably from manure. However, it was not found in the groundwater, as there is a large layer of clay that appears to be keeping it from entering the groundwater. ■ Nitrates were found in surface water, but within acceptable range. ■ Neighbor Tom Pierce provided some water samples in which he found some manure issues which indicates manure on site may be migrating ■ Daylan Figgs explained one other concern about the potential migration of manure had been expressed from the storm water people because this facility is in the floodplain and has a moderate risk of flooding. 2 • Because Natural Resources does not want manure or other stored material migrating off site into the wetlands they will put in lease a condition that there will be some containment in case of surface flow of materials. • Also the leachate ponds will have a hard bottom so there is no leaching downwards. They would be managed, filled and monitored. • They also want to establish as many vegetative buffers along with berms, etc. • Their management approach will maintain the soil and water sampling over time, compare this data to baseline and monitor for increases in contaminants. Daylan Figgs explained the terms of the current lease proposal for Hageman Earth Cycle. • The lease was extended to ten years (a one year lease with nine one-year renewals) because there will be expenses to Hageman to put in the containment and monitoring requirements and the longer time will allow them to recoup some of the expenses. • The lease value is set by real estate staff at fair market value and will escalate 5% annually, taking in account for inflation. The Natural Resources Advisory Board discussed Daylan Figg's presentation. • Rosemarie Russo asked if the CDPHE are just looking at sampling or are they looking at design and operational standards. o Daylan explained the CDPHE will look at what WALSH said. As far as design, this facility is not regulated by the CDPHE because it is not a composting facility, but the city staff storm water engineering people will. o The citation in 2007 has been corrected and Hageman is not allowed to compost on site. As long as there is no composting no further action has been required. Soil sampling and engineering will be paid by Hageman and EPA methodology will be followed. • Linda Knowlton recalled that she was on the NRAB the last time they approved the lease with Hageman Earth Cycle. At that time the NRAB asked City staff to find another location for this type of activity, stating this would be the last time they renew the lease and wanted to know what the City has done to this end. o Daylan stated Roger Hageman has looked for another site and he is not sure at what level the city has been searching. To date no other site has been found that is suitable for this operation and affordable to Hageman Earth Cycle. • The Group discussed why another site has not been found where Hageman Earth Cycle can be located. o Mark Sears pointed out the Natural Resources staff has not been actively involved in the search. o Susie Gordon pointed out the type of land they need is very unique with unique zoning requirements, and is very difficult to find within the city limits. 3 o Clint asked why the Resource Recovery Farm would not be a good location. ■ John Armstrong stated the city did engage in conceptual planning in 2004-2005 to identify multiple ways the Resource Recovery Farm could be utilized. Discussions about the building on the site ranged from dismantling to restoration, but the planning didn't progress beyond concepts; the predominant concern being cost. • In response to questions from Joe Piesman, Daylan Figgs confirmed the soil had some very persistent contaminants that were most likely brought in from yard waste. Regarding coli form in water, Daylan clarified the conditions of the new lease will require containment and treatment of it. Hageman will pay for it and the City will monitor and approve it. • Joe Piesman asked if the $100/acre price is a fair market price or does the lease take into consideration Hageman Earth Cycle is providing a valuable service for the City. o Daylan responded it is based it on the raw land rental cost escalated to current day dollars and rate of return. No consideration was given to the service being provided. o Mark Sears clarified the lease would be about $18,000/year, equated to the land worth of$19,000 acre and is in the ballpark with the other comparable land within the City. • Glen Colton pointed out that recycling within the City is becoming more popular that other recycling businesses have been denied residence on City property and wondered why the City is allowing Hageman Earth Cycle to be within the City and the others can't. Also, he wondered if it's the City's responsibility to find Hageman a new property. o Daylan explained this is a unique situation because Hageman was on the property when the City purchased it. o Mark explained it's a question Council should answer. Hageman provides a service not being provided elsewhere. Coincidentally, it's on City land managed by the Natural Resources Department. He also mentioned Natural Resources has other land leases for various purposes such as agricultural and grazing. • Glen also voiced his frustration that the City is reluctant to require curb side pick up of yard waste and compostables. He would be more inclined to support Hageman Earth Cycle's operation if there was a city-wide program. • In answer to questions from Heather Manier, Daylan stated Hageman pays for annual testing. If the tests indicate the levels have changed, we will address with terns in the lease and if needed, ask the CDPHE for assistance. The lease states that when Hageman leaves the property there would be an exit cleanup and the land would be put back to natural status. • Liz Pruessner had some questions about the testing process. Liz suggested also testing upastream and downstream in a larger testing scenario because there is so much variability. o Daylan explained if the tests standards weren't met every year, the lease may be terminated. The testing will be done on site only. However, they 4 have the option to move the sampling. He pointed out the further away the sampling, the less it reflects what's going on on the property but they can look at other sampling including earlier records for the Resource Recovery Farms. • Ben Manvel pointed out the City has a solid waste study going on currently. The outcome of the study could result in more organic matter being collected and wondered what the impact would be on Hageman's lease. o Daylan stated the lease would be in place until either party chooses to end it. • Joe Piesman wondered, if Hageman was not on the property, what would Natural Resources do with it. o Daylan Figgs pointed out it would be incorporated into the Running Deer Natural area in some fashion and returned to native vegetation. o Mark Sears stated there may not ever be any trails built on the Hageman property when it is incorporated into Running Deer, but would be left natural. Roger Hageman addressed the Natural Resources Advisory Board. • Roger stated he would rather not be located on City property, however he has not found another suitable location because of his unique parameter requirements. o His operation needs to have a location that is closer to his customers, as people do not like to drive outside the city. Distance is also an issue relative to the high price of gasoline for his truck fleet. o He needs to have acreage. o The land needs to be affordable. He is also in competition with the City and others to purchase affordable commercial property within the City. o He needs access to an abundance of water for dust control. o Roger has contacted 25 realtors to search for such a property but so far none they have showed him meet these criteria. The current property is still the best so far. • Roger stated Hageman Earth Cycle provides a valuable service to the City and residents of Fort Collins. He tries to accommodate people and gives a quality product. However, he must be able to sell the product that he takes in. o Last year they we took in and moved 66,000 cubic yards of organic matter (that would fill a football field 5-6 stories tall) o They have 38 contracts to sell lots of material down the Front Range from Denver and into Nebraska and Wyoming. They also work with every mowing contractor in the City. • Ben Manvel asked Mr. Hageman if his business could handle a substantial increase to perhaps a factor of 10 if the City's trash study encouraged everyone to take their organic waste to Hageman Earth Cycle. o Mr. Hageman replied his business has the potential to do much more than they're doing and felt it could easily take the increase since he has enough contracts in Denver to move the material. o Regarding Prospect Road, Roger is frustrated his trucks have to wait for the traffic congestion to pass before they can be dispatched. He's willing 5 to work with the City, but would like to see the road safety improved and is thankful there hasn't been an accident. The NRAB addressed Roger Hageman with questions. • Liz Pruessner asked Roger how he came to lease the property o Hageman explained he was in the process of buying it when the Fort Collins Natural Resources bought it because he couldn't compete with open space funds. He lost the chance to develop the land the way it should have been customized for his business. He has been very frustrated leasing the property but would like to find another appropriate property. • Glen Colton asked Roger if he has ever approached Larimer landfill about co- locating with their facility because it seems a logical fit. o Roger stated he had contacted them several times but the County didn't have the money to recycle out there. So they gave up on it. • Linda Knowlton wondered if the City ever considered selling it to Hageman. o Roger stated he has tried to buy it many times, but each time the City Council was not agreeable. o Susie Gordon pointed out the issue of co-locating has come up before, but it comes down to Larimer County operating the landfill as a business center. They aren't ready for that and are very sensitive with their permit and don't want to jeopardize it with the Health Department. Until you can demonstrate financial viability it will not happen. • Clint Skutchan asked Mr. Hageman if this lease is feasible for him and can his business absorb the costs and still be cost effective. Also, has he looked at public and private angel investors and what can the NRAB do to help. o Roger stated it was questionable and a risk, however it's the least of the risks that are out there right now. He will need time to recoup the costs. o Roger stated he is open to any option that would work. He started in the lawnmower business 1988 and provides an economical service. • Clint wondered if the redevelopment of the Resource Recovery Farm would work for him. o Roger Hageman stated traffic restricts his business. His trucks can't leave until 8:15. The area would be nice if he could incorporate it into his business even though the building is not very efficient. He currently does more on a smaller piece of land. • Glen Colton asked if he would want to go into an industrial area such as the 750 zoned industrial acres at Prospect and I-25. o Hageman reiterated his operation needs at least 5 gallons of water per yard of waste and that area doesn't have that kind of well. He needs to have a well that won't be shut down in a drought. o If he moves is going to have a composting site. Right now he trucks material 6 miles away to a dairy to compost. The water well on Prospect is for dust control. • Liz Pruessner asked what would happen 10 years from now if there is a large increase of yard waste and Hageman is no longer in town. 6 o Roger stated the ball is in the City's court. He can't do any more with the current land because he doesn't own it. It's a perfect location and he could make it work if he owned it and had the right conditions. • Joe Piesman asked if a ten year lease suits Hageman's needs or the City's needs o Hageman stated he needs the extra time in order to amortize the extra expense. • Daylan Figgs stated Hageman Earth Cycle's current lease expires in July, 2008. • Glen asked Roger if he had talked to the county since they're trying to keep rural development alive. o Roger pointed out that he's competing with the City to purchase land. Tom Pierce addressed the NRAB and thanked the NRAB for the opportunity to submit two letters and make this presentation. In his opinion, it is time for Hageman Earth Cycle to find a new permanent home. He pointed out the discussion tonight did not address the fact that Hageman is on the taxpayer's land and the taxpayers should have access to it. • The NRAB asked questions of Tom Pierce. o In answer to a question from Liz Pruessner Tom stated he got his samples from a pond between the 2 areas leased by Hageman and took it to CSU for testing. o Glen wanted to know how Tom became interested in this issue. ■ Tom explained he bought the property next door to Hageman because his research showed Hageman's lease was about to end. However, the lease didn't end and Hageman is still there. He has had some dust issues with Roger, but they have been resolved. o Joe Piesman wanted to know if Tom had a vision for an alternative use for that site for the city. ■ Tom stated he had a conceptual idea for a yard art gallery, but it wasn't acceptable to zoning. • Liz asked if Hageman was able to purchase the property would he be prohibited from doing composting because of zoning. o Mark Sears stated it would come in as a non-conforming use. Daylan clarified it would be a transition district that allows the use that was on the property when the zoning came into effect. • Ben Manvel wanted to know if composting would be part of the grandfather lease. Daylan did not know. o For clarification Susie Gordon stated a"transition zone" is between the county and city. There are about 6-8 zoning classifications. Almost every other zone in the city allows composting with the exception of residential. Linda Knowlton moved and Liz Pruessner seconded a motion that the Natural Resources Board would recommend the Council approve the new lease for Hageman Earth Cycle for one year,renewable for nine years. Discussion: 7 • Joe Piesman suggested a caveat be added to the motion to say the proper containment of the lechate ponds should be included in the lease thereby emphasizing the necessity of"proper environmental safeguards in place." • Glen stated he did not see the point to having a lease. He suggested the City not string Roger Hageman along—Either sell to him or help him move within a year. • Clint agreed with Glen and added there should also be a caveat that the NRAB assist Hageman to find a new property for Hageman. The NRAB should give some resolution to this and get the best decision possible. • Alan Apt summarized that there were two waus to proceed with the motion: o Go with Linda's proposal with proposed conditions o Vote on what's on the table. • Clint stated he was on the NRAB before when the lease was discussed. To him, the degree of uncertainty isn't healthy for the business, community or the city. If the lease is extended for 10 years, he does not have hope for a resolution by the end of that time since the City has taken no action up to now to resolve it. He was also not sure what the best time period for a lease would be. • Glen suggested a one year lease with resolution at the end—either sell to him or he vacates. o Alan felt one year to resolve doesn't allow enough time. Five years is probably more realistic. He cautioned not to eliminate the only organic waste diversion the City has right now. • Linda Knowlton would like to see the City to talk with Roger about selling him the land. • Alan reminded the NRAB they were not making a decision here - only making recommendations to Council. • Joe wondered who makes the decision to extend the lease and what concerns go into it because the practice seems to have been more or less automatic. Specifically, what transparent examination is there of the valuation of the facility to the public, the City and the Natural Resources. • Mark Sears stated the issue as very complex. o He stated he couldn't speak on behalf of the City, but it seemed to him that, as long as Roger is in compliance with the lease, he didn't know why the City would suddenly not extend the lease. o He also pointed out that recycling organic waste is not an appropriate use of the property from the zoning and use standpoint, since the City bought it to be part of the Running Deer Natural Area. There is no guarantee if Hageman bought the property that he would be there forever. He could always sell it to someone else o Mark stated the reason that Prospect has not been evolving at this point is that it is contingent on the overpass being redeveloped. When that happens the complexion of the area will change and land use values will go up a lot. He could sell then. o The City extended the lease for five years and then for two years. At that time there was lots of documentation that the lease would end, however nothing has transpired 8 • Glen Colton stated the City could make it a part of the lease that the land could only be resold as open lands. Also, he stated this needs to get done and land values are as slow as they'll ever get right now. • Alan suggested they also discuss the possibility of a public/private partnership for this property. If the City doesn't want to sell this property, but decides this is the place where they want this kind of use, the City should partner with him and make this a first-class demonstration project that is properly buffered. o If the city does institute a mandatory collection of yard waste then it's important for the City to partner with someone. Roger can handle that type of volume right where he is right now. It's inappropriate to put a gun to Roger's head with a one year agreement. • The group discussed the possibility of a task force being formed to determine a realistic solution and timeline. o Clint stated he felt that resolving this issue was never a directive and questioned what would be a realistic time frame for a task force to come up with a resolution: 1 year, 2 years or what • Linda Knowlton projected that ten years from now a Natural Resources Board will be having the same discussion if nothing is done. How can the current NRAB move this along. • Alan suggested either renew the lease or recommend a public/private partnership and within 2 years do one or the other. • Clint suggested a definite directive be given with an urgency factor. Also, if there is no resolution by a deadline, that deadline should not coincide with the expiration of the lease. He suggested a five year extension to the lease. • Alan pointed out that the original suggestion of a ten year lease would help Hageman amortize the expenses he will incur to satisfy the terms of the lease. A shorter lease would cause an economic hardship for Roger and for that reason should not have the same environmental testing requirements. Alan Apt reminded the NRAB there was a motion on the table and stated the NRAB can either amend, dismiss or vote on it. Ben Manvel reminded the group the Council makes the final decision and they need only give a general direction to Council with this vote. The group discussed how to word the recommendation • Glen Colton asked what was the result of discussion of the Land Conservation and Stewardship Advisory Board. o Mark Sears stated the LCSB will be writing a formal opposition from the viewpoint of natural areas stewardship. He pointed out the LCSB does acknowledge the value that Hageman Earth Cycle provides the city, but they were voting from a narrower perspective. The Natural Resources Advisory Board represents issues that are of broader benefit to the community. • Joe Piesman offered a friendly amendment to the motion to have a study be done to find a solution. After discussion, Joe withdrew the amendment. 9 Alan Apt called the vote: Linda Knowlton moved and Liz Pruessner seconded a motion that the Natural Resources Board recommends the Fort Collins City Council approve a new lease for Hageman Earth Cycle for one year, renewable for 9 years. Motion Passed. 6 - 2 with Glen Colton, Clint Skutchan against Clint Skutchan moved to recommend the Fort Collins City Council renew the 10 year lease to Hageman Earth Cycle, but that a multi jurisdictional task force to be created to find a long term solution for solid waste recycling within two years. (Glen Colton made a friendly amendment to add "within two years"to the motion.) Motion Passed 6—2 10 April 24, 2008 TO: Fort Collins City Council and City Manager The Natural Resources Advisory Board thoroughly considered all aspects of the renewal of the lease for Hageman Earth Cycle. The board felt that the current situation is less than ideal for the city and Hageman, but that there is no viable alternative for the recycling of solid organic waste in the foreseeable future. The volume of waste currently being processed is significant and important for a variety of city environmental goals. The environmental safeguards in the new lease are a major improvement and deemed necessary and prudent by the board. These new requirements seem to make a shorter lease unfair to Hageman due to the need for cost recovery of the investments precipitated by the new requirements. The NRAB, on a 6-2 vote, endorsed the renewal of the 10-year lease because the majority concluded there are currently no viable alternatives for the city or Hageman, and the environmental monitoring measures will improve the situation. At the same time there was frustration that no alternative sites were found during the term of the previous lease. This lead to a second resolution/recommendation: The board, on another 6-2 vote, recommends the creation of a multi jurisdictional task force to work with Hageman to produce long-term solutions for solid waste recycling. Though the term of the new lease is 10 years, in fairness to Hageman and the requested improvements; the board felt a goal of two years on this city-county effort was necessary to ensure immediate action. Without this kind of action, the same situation could present itself at the end of the next lease extension. The board felt that an on-going and immediate effort to look at all possible alternatives should be made to avoid a similar situation. The board felt that this is especially important because the city is considering measures to greatly increase the recycling of yard waste and the volume to be recycled. Thank you for your consideration of our recommendations. Alan Apt Chair,NRAB City of Foft • Natural Areas Program City Council May 6 , 2008 Natural Area Program Lease to EarthCycle Nat.ura,N r r i 1 Staff recommends a 1 -year lease renewable for 9 additional years with EarthCycle for 15 acres at Running Deer Natural Area Land Conservation Stewardship Board voted 4 -3 to discontinue lease Natural Resources Advisory Board voted 6 -2 to continue the lease EarthCycle Lease Area w+.n canr a.na — p = E PROSPECT.RO z n Cottonwood a Hollow c ' i Natural i Area a m EarthCycle Lease Area y i RunningDeer ~ oy �� Natural Area 'o^ A ,r . 1 ¢III Ir'IU1'(l' O _ Environmental z o Learning Center V C� EarthCycle Lease Area City of Fort Collins Natural Area Water Features a sin M I'M 2M Parcels CSU Environmental Learning Center -- Existing Streets R A 2 Lease OptIOIIN • Terminate lease • Sell the property • Short-term lease • Longer-term lease ( recommended option ) • Lease includes environmental protections • Stormwater plan • Water and soil testing 3 City of Foft • Natural Areas Program 4 ORDINANCE NO. 048, 2008 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF A PORTION OF RUNNING DEER NATURAL AREA TO HAGEMAN EARTH CYCLE, INC. WHEREAS, in 1998 through 2000, the City of Fort Collins purchased certain land known as Running Deer Natural Area(the "Natural Area") for its Natural Areas program; and WHEREAS, a portion of the Natural Area has previously been occupied and used by Hageman Earth Cycle, Inc. ("Hageman") for the deposit and storage of tree limbs, leaves, and other yard waste and organic materials for composting, mulching and other reuse; and WHEREAS, the City has, in the acquisition of natural areas, established a practice of working with pre-existing users and tenants of acquired property in transitioning the properties to public natural area ownership; and WHEREAS, pursuant to this practice and to City Council's authorization in Ordinance No. 85, 2001, the City previously leased to Hageman that portion of the Natural Area shown on Exhibit "A" (the "Lease Area"), in order to continue its use of that property for the above- referenced purposes; and WHEREAS, by adoption of Ordinance No. 48, 2006, the City later extended the lease to Hageman of the Lease Area for an additional two-year period; and WHEREAS, in leasing the Lease Area to Hageman, the initial lease tern of five years and the extension of an additional two years was intended to allow sufficient time for Hageman to transition its operations to a new location; and WHEREAS, Hageman has not relocated its operations as anticipated, and has requested an additional one-year lease with the option to extend the lease for nine one-year terms; and WHEREAS, City staff has negotiated with Hageman a proposed lease agreement similar to the existing lease agreement but with several additional lease terms designed to ensure that no adverse environmental impact occurs, to protect ground water in the area, and to prevent the movement of soil and water from the Lease Area; and WHEREAS, the lease agreement negotiated with Hageman and containing such provisions, dated April 30, 2008, is on file in the Office of the City Clerk and available for public inspection (the "Lease Agreement"); and WHEREAS the Lease Agreement establishes an initial one-year term with nine possible one-year extensions for a monthly rental amount of$1,540 for the initial term; and WHEREAS, the Natural Areas program has a limited annual budget for restoration of properties and the restoration of the Lease Area is not a high priority among the properties to be restored; and WHEREAS, the interim use of the Lease Area as described herein, in exchange for payment of the required monthly rent and maintenance of the Lease Area by Hageman during the term of the lease, together with the eventual restoration of the Lease Area will further, rather than interfere with or impair, the City's long-term intended uses of the Lease Area; and WHEREAS, City staff has also determined that the lease rate of $1,540 per month is consistent with the approximate fair market lease rate for comparable property; and WHEREAS, pursuant to Section 23-114 of the Code of the City of Fort Collins, the Council is authorized to lease any and all interests in real property owned in the name of the City, provided that Council first finds that the lease is in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the lease by the City of the Lease Area to Hageman, under the terms and conditions set forth herein and in the Lease Agreement, is in the best interests of the City of Fort Collins. Section 2. That the City Manager is hereby authorized to enter into the Lease Agreement, together with such other related provisions determined necessary to protect the interest of the City by the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City, including any necessary changes to the legal description of the Property, as long as such changes do not materially increase the size or change the character of the leased premises, and is further authorized to extend the term of the same for the full potential term of nine years, as provided herein. Introduced, considered favorably on first reading, and ordered published this 6th day of May, A.D. 2008, and to be presented for final passage on the 20th day of May, A.D. 2008. Mayor ATTEST: City Clerk -2- Passed and adopted on final reading on the 20th day of May, A.D. 2008. Mayor ATTEST: City Clerk -3- EXHIBIT " A " Running Deer Natural Area ` EIPRQSPECT' RD_ ! a J jjLi..mjAiw � '— D • = m Y r - S , 2' t p 4r e �- .. f `' L (�. OA Z.� O *� 1 I \ w G1 I m •. k. lip • ti E DR. E RD `' �`� ) ^� �� • M� � Legend Lease Area from N .A N RUNNING DEER NATURALAREA Parcels 0 400 800 11600 Feet