HomeMy WebLinkAbout199 - 03/21/2000 - AUTHORIZING THE LEASE OF PORTIONS OF THE RESOURCE RECOVERY FARM TO WESTERN MOBILE NORTHERN, INC. FOR ORDINANCE NO. 199, 1999
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE LEASE OF PORTIONS OF
THE RESOURCE RECOVERY FARM TO WESTERN MOBILE NORTHERN, INC.
FOR GRAVEL MINING AND AUTHORIZING
THE ACQUISITION OF RELATED CONVEYOR EQUIPMENT AS AN EXCEPTION
TO COMPETITIVE PURCHASING REQUIREMENTS
WHEREAS, the City of Fort Collins Utility is the owner of the property known as the
Resource Recovery Farm in Latimer County,Colorado(the"Site"),which was acquired by the City
for the City's wastewater utility to be used as part of the utility's sludge disposal program and which
is approximately 174 acres in size; and
WHEREAS,Western Mobile Northern,Inc.("Western Mobile")currently has the necessary
lease and mining permit to mine sand and gravel on valuable riparian corridor property along the
southern side of the Poudre River(the"River Parcel"),which is approximately 40 acres in size and
lies to the south of the Site; and
WHEREAS, Western Mobile has advised City staff that it will defer mining on the River
Parcel, allowing time for the City to negotiate the acquisition of the River Parcel for future
protection, if Western Mobile is allowed to mine the Site; and
WHEREAS,Western Mobile has agreed that it will pay royalties for the first one million tons
of gravel mined at a rate of$0.05 per ton, which is a discounted rate reflecting the higher cost of
mining the Resource Recovery Farm compared to the River Parcel; and
WHEREAS, Western Mobile has agreed that it will pay royalties on the remaining gravel
mined from the Site at a rate of$0.75 per ton, which is the fair market value of the gravel to be
mined, if it relinquishes its legal right to mine the River Parcel, or a rate of$1.14 per ton, which is
a premium rate for the gravel, if it has not relinquished its legal right to mine the River Parcel as of
the completion of mining of the first one million tons; and
WHEREAS,Western Mobile has agreed to pay rent to the City for conveyor equipment to
be provided at a rate of$0.39 per ton of gravel mined, and has agreed to pay these sums to the City
by the end of the mining lease term, whether or not the mining has occurred; and
WHEREAS,City staff has negotiated the acquisition and installation by Western Mobile for
a total cost not to exceed$1.2 million,of conveyor equipment for use in connection with the mining,
which conveyor shall be owned by the City unless and until Western Mobile repays the related costs
to the City through its payment of rental for the conveyor; and
WHEREAS, Section 8-161 (d)(1)(b) of the Code of the City of Fort Collins authorizes the
Purchasing Agent to negotiate the purchase of supplies and services without utilizing a competitive
bidding process where the Purchasing Agent determines that the use of a competitive process will
result in substantially higher cost to the City or otherwise injure the City's financial interests; and
WHEREAS,the Purchasing Agent has determined that although there exists more than one
responsible source for the conveyor equipment, a competitive process, if used, will result in
substantially higher cost to the City and will injure the City's financial interests,and has submitted
the requisite justification for such determination to the City Manager for approval; and
WHEREAS,the City Manager has reviewed and approved the justification for this service;
and
WHEREAS, Section 8-161(d)(3) of the City Code requires approval of this purchasing
method by the City Council for items costing more than One Hundred Thousand Dollars($100,000)
prior to acquisition; and
WHEREAS,Western Mobile and City staff have negotiated a mining lease agreement to set
out their respective rights and responsibilities in connection with the mining ; and
WHEREAS, City staff has recommended that the Council approve the conveyance of the
proposed mining lease to Western Mobile, in order to gain the royalty payments for the gravel to
be mined, to allow for reclamation of the mined area as valuable wetlands habitat, and to improve
the City's ability to permanently protect the River Parcel from mining by Western Mobile or any
other entity; and
WHEREAS, staff has determined that the fair market value of the entire Site is $1,270,000;
and
WHEREAS, funds are available in the Natural Areas Portion of the Building Community
Choices Fund in fiscal year 2000 to compensate the Utility the amount of$540,000 for the fair
market value of the first of three portions of the Site to be mined, which will be mined in the year
2000 under the terms of the mining lease , which Staff has recommended be managed and used for
natural areas purposes upon the completion of mining,as sludge management operations are phased
out from the Site and moved to Meadow Springs Ranch; and
WHEREAS, staff anticipates that funds for payment from the Natural Areas Portion of the
Building Community Choices Fund to the Wastewater Utility Fund to compensate the Utility for
the remainder of the Site will be available in subsequent years,as sludge management operations are
phased out on those portions of the Site, allowing for the subsequent conversion of those portions
of the Site to natural areas purposes; and
WHEREAS, in the event that funds are not available to compensate the Utility for those
portions of the Site to be mined after 2000, royalties received by the City for mining on those
portions of the Site will be deposited in the Wastewater Utility Fund; and
WHEREAS, Section 23-111 of the City Code provides that the City Council is authorized
to sell, convey or otherwise dispose of real property owned by the City,provided the Council first
finds by ordinance that any sale or disposition of real property owned by the City will not materially
impair the viability of any City utility system as a whole of which the property is a part, will be for
the benefit of the City's citizens, and will be 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 above described conveyance of mining rights on the Site will not
materially impair the viability of the City's wastewater utility or utility as a whole, will be for the
benefit of the City's citizens, and is in the best interests of the City.
Section 2. That the Mayor is hereby authorized to execute a mining lease to Western
Mobile in substantially the form of that Mining Lease Agreement,dated March 17,2000, on file in
the Office of the City Clerk, subject to such modifications and together with such other terms and
conditions, consistent with the terms of this Ordinance, as the City Manager, in consultation with
the City Attorney, determines are in the best interest of the City.
Section 3. That the conversion of all or any portion of the Site from wastewater utility
purposes to natural areas purposes,consistent with the terms and conditions set forth herein,will not
materially impair the viability of the City's wastewater utility or utility as a whole, will be for the
benefit of the City's citizens, and is in the best interests of the City.
Section 4. That the acquisition of conveyor equipment related to the Mining Lease
Agreement from Western Mobile, at a total cost to the City not to exceed $1,200,000.00, is hereby
approved as an exception to the City's competitive purchasing procedures in accordance with City
Code Section 8-161(d)(3).
Introduced, considered favorably on first reading, and ordered published this 7th day of
December, A.D. 1999, and to be presented for final passage on the 21 st day of March, A.D. 2000.
Mayor
UTTEST
� zy.,
City Clerk
Passed and adopted on final reading this 21 st day of March, A.D. 2000.
Mayor
ATTEST:
City Clerk