HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/06/2010 - SECOND READING OF ORDINANCE NO. 077, 2010, AUTHORI DATE: July 6, 2010SUMMARY
STAFF: Helen Matson • COLLINSCOUNCIL
Second Reading of Ordinance No.077,2010,Authorizing a Ratification and Agreement with Larimer Energy, LLC for
the Landfill Methane Gas Project and Authorizing the Use of City-Owned Property.
EXECUTIVE SUMMARY
Larimer County has entered into an agreement with Larimer Energy that allows Larimer Energy to install a landfill gas
recovery system on landfill property, collect the methane gas, and sell the gas to a commercial energy user. The gas
agreement gives Larimer Energy the right to exclusive use of a portion of the landfill property for a period of at least
twenty years, and the right to build a facility on the property. This Ordinance, unanimously adopted on First Reading
on June 15, 2010, authorizes the City of Fort Collins to enter into an agreement with Larimer Energy and the City of
Loveland, ratifying the Gas Agreement, and consents to Larimer Energy's use of the jointly-owned landfill property.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
.1. Copy of First Reading Agenda Item Summary-June 15, 2010
(w/o attachments)
ATTACHMENT
DATE: June 15, 2010 A 0 1 '
STAFF: Helen Matson • ' • •
First Reading of Ordinance No.077,2010,Authorizing a Ratification and Agreement with Larimer Energy, LLC for the
Landfill Methane Gas Project and Authorizing the Use of City-Owned Property.
EXECUTIVE SUMMARY
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In 2008, Larimer County entered into alLandflll'Gas Purchase'Agreement(�Ga s Agreement")with Timberline Energy,
LLC. The Gas Agreement was assigned in 2009�to LarimerJEnergy;LLCN(''Larimer Energy'). The Gas Agreement
allows Larimer Energy to install a landfill gas recovery system on landfill property, collect the methane gas, and sell
the gas to a commercial energy user. ThelGas Agreement gives Larimer Energy the right to exclusive use of a portion
of the landfill property for a period of at least twenty years, and the right to build a facility on the property. This
Ordinance authorizes the City of Fort Collins to enter into an agreement with Larimer Energy and the City of Loveland,
ratifying the Gas Agreement, and consents to Larimer Energy's use of the jointly-owned landfill property.
BACKGROUND / DISCUSSION
The Larimer County Landfill is located at 5887 South Taft Hill Road. The southern half is owned solely by Larimer
County. Ownership of the northern half of the property is divided three ways: the City of Fort Collins has 50%
ownership; the City of Loveland has 25,/a-ownership`anand,Lafimer-'County`has4He remaining 25%ownership. Under
a 1974 Intergovernmental Agreement ("Landfill IGA') between the)City�oOort Collins, the City of Loveland, and
Larimer County, the County is responsible for operation1,of th`ellandfill. The Landfill IGA states that the landfill site
cannot be sold or otherwise disposed of without the��es u onsent of alllthree parties.
Larimer County has been working for several years on a project to reduce the carbon emissions from the Landfill. The
County developed a cooperative partnership with Timberline Energy to recover landfill gas. In 2008, the County and
Timberline Energy entered into the Gas Agreement, under which Timberline Energy agreed to install(at its expense)
a landfill gas recovery system on landfill property and then sell the recovered methane gas and carbon credits to a
commercial energy user. In June 2009, an Addendum to the Gas Agreement was executed by both parties. This
Addendum extended benchmark dates in the Gas Agreement. In July 2009, Larimer County consented to an
assignment from Timberline to Larimer Energy. The term of the Gas Agreement is twenty (20)years.
The Gas Agreement grants Larimer Energy,the right to install a structure and equipment for processing and delivering
the landfill gas (the "Facility"), and gives Larime�Energy0 exclusiveMse of'the site of the Facility (the"Proposed
Project Area'). It also grants Larimer Energy access to the proposed project area across the landfill property. The
proposed project area is in the northern half of the landfill,)of;ZTc- the City has 50% ownership.
Larimer Energy's use of property partially owned by the City came to the attention of Real Estate Service staff in the
fall of 2009 when Poudre Valley REA approached the City and the City of Loveland seeking an easement across the
landfill property to provide power to Larimer Energy's facility. On November 3, 2009,Council adopted Ordinance No.
110, 2009, granting a utility easement to Poudre Valley REA. With that easement, Larimer Energy was able to get
electricity to its landfill gas equipment, which is already in operation.
Larimer Energy is ready to construct the Facility and needs the City's approval prior to construction. City staff
contacted Larimer County about the possibility of amending the Gas Agreement to include the Cities of Fort Collins
and Loveland as parties and provide both cities with some of the same protections from liability that the County has
under the Gas Agreement. The County wwaasn of willing.to amend.the Gas Agreement, but stated it had no objection
to Fort Collins and Loveland entering/ip to their own agreemena with`L'ariiner Energy. The City is now seeking to enter
into a Ratification and Agreement with Larimer Energy and the.Cityof Loveland by which Fort Collins and Loveland
would ratify the Gas Agreement and�consenOto Larimer En y's proposed use of the landfill property, and in
exchange, Larimer Eneif
rgy would agree.to�iridemnify:40th cities and name them as additional insureds on all policies
of insurance that the County is requiring under the Gas Agreement.
June 15, 2010 -2- ITEM 19
FINANCIAL/ ECONOMIC IMPACTS
All costs to install and maintain the facility and equipment are the responsibility of Larimer Energy. Larimer Energy
will sell the gas and carbon credits as a way to provide a return on its investment and to recoup its costs. The Gas
Agreement states that Larimer Energy will pay Larimer County 3% royalty on all gross revenue derived from the sale
of the landfill gas. Larimer County will reinvest its monthly revenue through this Landfill Agreement into the landfill's
solid waste program.
ENVIRONMENTAL IMPACTS
The City of Fort Collins is 50%owner of a portion�f the landfill"Ind-this protect will reduce greenhouse gas emissions.
When Larimer Energy has the facility opi rational, the projected'landfill's carbon emissions will be reduced by about
26,000 tons per year. / U
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading
ATTACHMENTS 'r\ ,,
1. Location map
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ORDINANCE NO. 077, 2010
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING A RATIFICATION AND AGREEMENT WITH
LARIMER ENERGY, LLC FOR THE LANDFILL METHANE GAS PROJECT
AND AUTHORIZING THE USE OF CITY-OWNED PROPERTY
WHEREAS, the City is a partial owner, along with the City of Loveland("Loveland") and
Larimer County("County"),of property known as the Larimer County Landfill("Property")located
in the North % of Section 9, Township 6 North, Range 69 West of the 6th P.M.; and
WHEREAS, pursuant to an intergovernmental agreement between the City, County and
Loveland dated November 21, 1974 (the "Landfill IGA"), the County is responsible for the
operation of the landfill on the Property; and
WHEREAS, Paragraph 10 of the Landfill IGA states, "The landfill site shall continue to be
used as the site of a landfill open to the public and any other use of the site shall be reviewed and
approved by the City and the County and the City of Loveland. Such site shall not be sold or
otherwise disposed of without the express consent of all three of such parties..."; and
WHEREAS,on January 16, 2008,the County and Timberline Energy, LLC ("Timberline")
entered into a Landfill Gas Purchase Agreement(the"Gas Agreement"),a copy of which is attached
as Exhibit "A" and incorporated herein by this reference; and
WHEREAS, in July 2009,the County approved an assignment of the Gas Agreement from
Timberline to Larimer Energy, LLC ("Larimer Energy"); and
WHEREAS, under the Gas Agreement, in exchange for certain payments to the County,
Larimer Energy is permitted to construct a landfill gas facility and associated gas recovery system
(the "Facility") on the Property in order to capture methane gas from the landfill and sell it to a
buyer (the "Landfill Methane Gas Project"); and
WHEREAS, the Gas Agreement also gives Larimer Energy exclusive use of the portion of
the Property where the Facility will be built(the"Facility Site")for a period of up to 20 years,which
is the equivalent of a lease of the Facility Site, and access to the Facility Site across the Property;
and
WHEREAS,the City and Loveland were not made parties to the Gas Agreement and did not
approve in advance through their usual processes the County's grant to Larimer Energy of exclusive
use of the Facility Site; and
WHEREAS, at the request of Poudre Valley REA, the City Council on November 3, 2009,
approved Ordinance No. 110,.2009,authorizing an easement to Poudre Valley REA on the Property
to provide power to Larimer Energy's gas collection equipment,which is already in operation; and
WHEREAS, Larimer Energy is now seeking the consent of the City and Loveland to
construct the Facility on the Property and to use the Facility Site fora period of at least 20 years
pursuant to the terms of the Gas Agreement; and
WHEREAS,the Facility Site would be in the approximate location depicted on Exhibit`B",
attached and incorporated herein by this reference; and
WHEREAS,the Landfill Methane Gas Project will improve local air quality by reducing the
quantity of methane, a greenhouse gas, vented into the atmosphere by the landfill; and
WHEREAS, in exchange for permission to build the Facility, Larimer Energy would agree
to indemnify the City against any claims or damages arising out of its use of the Property, and to
name the City as an additional insured on any policies of insurance that Larimer Energy is require
to carry under the Gas Agreement; and
WHEREAS, Section 23-111 of the City Code authorizes the City Council to sell, convey or
otherwise dispose of any and all interests in real property owned in the name of the City, provided
that the City Council first finds, by ordinance, that such sale or other disposition 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 City Council hereby finds that Larimer Energy's exclusive use of a
portion of the Property for the Landfill Methane Gas Project for up to 20 years under the terms of
the Gas Agreement is in the best interests of the City.
Section 2. That the Mayor is hereby authorized to execute a Ratification and Agreement
ratifying the terms of the Gas Agreement, and authorizing Larimer Energy's use of the Facility Site
and access to the Facility Site across the Property,on terms consistent with this Ordinance,together
with such additional terms and conditions as the City Manager, in consultation with the City
Attorney,determines to be necessary or appropriate to protect the interests of the City including,but
not limited to, any necessary changes to the description of the Facility Site, so long as such changes
do not materially increase the size or change the nature of Larimer Energy's use of the Facility Site.
Introduced, considered favorably on first reading, and ordered published this 15th day of
June, A.D. 2010, and to be presented for final passage on the 6t a of July, A.D. 2010.
Mayor '
ATTEST:
City Clerk
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Passed and adopted on final reading on the 6th day of July, A.D. 2010.
Mayor
ATTEST:
City Clerk
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