Item 3.8 - Amendment to the SewerTy
OtSegF o
MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
May 10, 2021
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
City Attorney Kendall
3.8
STRATEGIC VISION
MEETS:
I THE CITY OF OTSEGO:
X
Is a strong organization that is committed to leading the community through innovative
communication.
IS A PUBLIC HEARING REQUIRED?
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
In 1999, the City was in the process of constructing the East WWTF and entered into a Sewer Use
Is a social community with diverse housing, service options, and employment opportunities.
Dayton to flow to and subsequently be treated at the East WWTF.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending the City Council approve an amendment to the Sewer Use Agreement between
the City of Otsego and City of Dayton.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No
BACKGROUND/JUSTIFICATION:
In 1999, the City was in the process of constructing the East WWTF and entered into a Sewer Use
Agreement with the City of Dayton. The agreement allows for sewage from certain portions of the City of
Dayton to flow to and subsequently be treated at the East WWTF.
Section 9 of the Agreement (Fee Formula) outlined terms for equitable sharing of the operating costs of the
East WWTF based upon allocated capacity and variable expenses based upon flow volumes. This section of
the agreement is in excess of 3 pages, which made the fee calculation time consuming, inconsistent from
year-to-year, and not easily understandable to the City of Dayton. Staff from both cities met in early 2020
to discuss methods to improve the fee formula, with staff agreeing that a formal rate study defining a new
structure would be best.
In 2020, the City of Otsego commissioned a utility rate study with Ehlers. Included within that study was a
deliverable to examine and revise the rate structure for wholesale customers (i.e. City of Dayton). This
revised rate structure was adopted by the City Council in February 2021.
With a new rate structure in place, City Attorney Kendall has drafted an amendment to the Agreement and
has provided his approval of the documents for City Council consideration. Dayton staff have reviewed the
amendment, are agreeable to the terms, and will be obtaining respective council approval.
SUPPORTING DOCUMENTS ATTACHED:
• Sewer Use Agreement
• First Amendment to the Sewer Use Agreement
POSSIF31_F MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THEM IN UTES:
Motion to approve the First Amendment to the Sewer Use Agreement between the City of Otsego and the
City of Dayton.
BUDGET INFORMATION
FUNDING: BUDGETED:
N/A N/A
SEWER USE AGREEMENT
CITY OF OTSEGO AND CITY OF DAYTON
WHEREAS, the City of Otsego (hereinafter "Otsego") is in the
process of constructing a wastewater treatment plant (hereinafter
the "plant") near its border with the City of Dayton (hereinafter
"Dayton"); and
WHEREAS, the Plant will be designed to have capacity for the
disposal of sewage from portions of Dayton and Otsego, and Otsego
wants to allow Dayton to use the plant for the disposal of sewage
originating within portions of Dayton; and
WHEREAS, both Dayton and Otsego will assume responsibility for
the costs of original construction of the Plant, including land
acquisition, engineering, and costs related to reviewing the site
and obtaining necessary permits; and
WHEREAS, Otsego will own and operate the plant, with Dayton
being guaranteed .the right to dispose of sewage, at the Plant,
subject to the terms and conditions of this agreement; and
WHEREAS, Otsego and"Dayton shall have exclusive ownership and
control of all sewer lines lying within their respective
jurisdictions, with the exception of that sewer line identified in ,.
Exhibit A to this Agreement which is that sewer line located within
the City of Otsego .which will be the. primary line, for delivery of
sewer service to Dayton (hereinafter referred to as the "Dayton
Service Line"), and which shall be under 'the .ownership of Dayton;
and
WHEREAS, the parties by this agreement intend to establish an
equitable means. of paying the ongoing costs of operating the plant
based upon capacity and usage, with the fee being charged to
residents of each community for, operation being equal, and
including costs_for.operation and maintenance of the plant.
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Construction, and Completion. Otsego will construct a Sewage
Treatment Plant at the location shown on Exhibit B. Otsego
will construct the plant in accordance with the Plans and
Specifications by Bonestroo, Rosene and Anderlik dated January
8, 1999. Otsego will complete the Sewage Treatment Plant no
later than June 30, 2000, and have it available for service to
the City of Dayton on said date. Otsego's obligation to
construct the Plant is contingent upon its obtaining all
necessary permits for construction and operation of the Plant.
Otsego also, has the right to not proceed with construction
of the Plant in the event of termination under paragraph 7 of
this agreement.
2. Use Allowed. For the term of this agreement, and any renewals
thereof, Otsego hereby grants to Dayton the non -transferable
right and license to dispose of sanitary sewage from within
that sanitary sewer service area within the City of Dayton as
defined in the June, 1997, Study done by Bonestroo, Rosene,
Anderlik & Associates (Figure 1), attached as Exhibit C, and
to have said sanitary sewage treated at the Plant. Waste
treatment done shall be in conformance with all applicable
laws and regulations which apply to the Plant and its
operation. The initial disposal capacity at the Plant that
Dayton will be allowed is 40,000 gallons per day for the first
phase of plant operation. The disposal capacity that Dayton
may use may be expanded pursuant to paragraph -12. The total
amount of said sanitary sewage from Dayton shall not exceed
1.0 million gallons per day, nor shall it at any time exceed
49% of the available plant capacity at any given time, subject
to approval by Otsego and further restrictions as contained
within this Agreement. If requested by Otsego, Dayton shall
adopt an ordinance governing use of sewers; provided any such
ordinance shall not be any less restrictive than the sewer use
ordinance in effect in Otsego.
3. ownership. -Dayton shall own, maintain and repair, at its sole
expense, those sewer lines within the borders of the City of
Dayton which connect to the Otsego sewer system. Otsego shall
own, maintain and repair, at its sole expense, the sewer lines
lying within the borders of Otsego, exclusive of the Dayton
Service Line. Otsego shall acquire the easement for the Dayton
Service Line no later than June 1, 1999. All costs and
liability associated with the Dayton Service Line, including
land acquisition costs, engineering, construction and
maintenance shall be paid for solely by the City of Dayton. In
the event Otsego acquires more property, or property rights,
than is necessary for a sanitary sewer easement, Otsego and
Dayton shall share the cost of the acquisition in proportion
to the value of the property interest each is retaining. Upon
acquisition by Otsego of the easement necessary to construct
the Dayton service lines and upon receipt of full payment of
all land acquisition costs related to the Dayton service line
by Dayton to Otsego, Otsego agrees to convey by warranty deed
an easement for sanitary sewer service purposes (with right of
reversion in the event that Dayton terminates this Agreement,
in the form attached hereto as Exhibit D) to Dayton the
acquired easement for the Dayton service line. Necessary
maintenance and repair of the Dayton service line shall be
paid for solely by the City of Dayton. Otsego hereby grants
the City of Dayton a right of entry to repair and maintain the
line, or Dayton may request that Otsego repair and maintain
the line with all costs for the same being the responsibility
of Dayton.
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4.. Otsego Property Served By Dayton Service Line. The areas shown
on the attached Exhibit E are lots which are within the
municipal boundaries of the City of Otsego. These lots,
however will receive service through connection with the
Dayton system of sewer lines. Dayton is obligated to provide
service to the lots shown on Exhibit E only in the event that
Otsego levies assessments against all said lots in an amount
requested by Dayton and all lots waive in writing appeal of
assessment, or no appeal is has been filed from said
assessments or any appeal filed has been dismissed. All
assessments or payments of assessments received by Otsego for
the lots on Exhibit E shall be paid within 30 days to the City
of Dayton. Otsego shall pursue all means of collection of
delinquent assessments, and shall advise Dayton of all
delinquencies and efforts being made to collect delinquent
assessments. Otsego shall assess and bill the property owners
and pay directly to Dayton any applicable assessment or fee
for use of the Dayton service line. The portion of treatment
capacity represented by the Otsego residents will be counted
as a portion of Otsego's capacity. In the event service is
provided Otsego, Dayton shall bill the Otsego for all fees for
sewer service for the lots on Exhibit E on a quarterly basis
and Otsego shall pay all amounts billed within 30 days of
billing. Unpaid bills shall carry interest at the rate
specified in paragraph 5 of this agreement. In the event of
billing other than bills for service on a quarterly basis
(i.e. payment for repair, meters, etc.) the same shall be sent
to Otsego, which shall pay the same within 30 days of billing.
All residents receiving service from and through the Dayton
service line shall be subject to regulations established by
Dayton.
5. Initial Capital Contribution. Dayton shall pay one-fifth (1/5)
of the initial construction cost of the Plant. The initial
construction cost shall be costs associated with the Plant
which includes all preliminary engineering studies, plans and
specifications, all costs associated with environmental review
and obtaining a discharge permit, all costs of land
acquisition for the plant site and discharge facilities to the
Crow River, construction inspection costs, and all costs for
actual construction of the Plant facilities as set forth in
the approved plans and specifications as well as any approved
change orders, which are necessary to allow for the
construction and operation of the Plant (hereinafter change
order) .
It is the intention of the parties that Dayton shall be kept
abreast of information on the progress and cost of
construction on an ongoing basis. Consequently, Dayton shall
be provided with information on the progress of construction,
all proposed change orders when the same are received by
Otsego and other information that will keep Dayton updated on
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the project. If any proposed change order equals or exceeds
5% of Dayton's contribution to the initial construction cost
Dayton shall be given at least 14 days notice of the proposed
change order and, in its discretion, may terminate its their
obligations under this agreement, subject to the retention by
Otsego of all funds received to that date by Otsego from
Dayton, by providing written notice within 21 days of the
notice provided by Otsego.
Otsego shall provide Dayton with an itemized billing of all
costs listed above which have already been paid by Otsego to
the date of this Agreement. Dayton shall make payment to
Otsego for 20% of those costs previously paid by Otsego within
30 days after final execution of this Agreement. In the event
that payment is not made by that date interest on that amount. ..
will accrue at a rate of interest 10% above the rate of any
bonds sold by the City of Otsego for financing the project and
commencing upon the date of this Agreement. If final payment
of this amount is not made within 90 days after final
execution of this Agreement Otsego, at its discretion, may
terminate this Agreement and neither Dayton nor Otsego shall
have any further obligation to the other with respect to the
project. Payment as provided herein shall entitle it to the
capacity allocation set forth herein.
All other bills received by the City of Otsego for any of the
above mentioned costs after shall be immediately copied to
Dayton along with a statement indicating the amount of that
bill to be paid by Dayton. Dayton shall within thirty (30)
days of receipt of such a statement make payment to Otsego for
its portion of the bill submitted. If any such payment is not
made within 30 days of receipt of said billing, interest will
accrue as set forth above.
6. Preliminary Costs. All of those costs associated with land
acquisition, and construction of the Dayton service line shall
be borne by Dayton. If Otsego is requested to acquire the
needed easements for construction of said line, in conjunction
with its proceedings for land acquisition, all costs related
to acquisition of necessary sanitary sewer easement for the
Dayton service line shall be billed to Dayton at the time of
expenditure, and Dayton agrees to promptly pay all such
billings. The parcels for the Dayton service line shall be
separately appraised and any settlement shall be subject to
review by Dayton prior to acquisition.
7. Agreement Termination. The parties shall receive an updated
estimate of initial construction costs and land acquisition
costs (as defined previously in Paragraph 4 of this Agreement)
for the facility two weeks prior to advertisement for bids. In
the event that the actual construction cost, based upon bids
received, and easement costs exceed that estimate by 10% of
said estimates, either Otsego or Dayton may terminate this
Agreement and all future obligations thereunder. Dayton must
exercise it rights of termination within fourteen (14) days of
the receipt of the actual cost, based on bids received, and
negotiated, or adjudicated settlements of easement acquisition
costs. Otsego shall provide said costs within seven (7) days
of its receipt of the same. In the event that Dayton
terminates the Agreement, Otsego shall retain all funds
received from Dayton prior to the date of termination.
8. Ongoing Service. Otsego hereby warrants and covenants that the
Plant and necessary lines and appurtenances, shall be
available to Dayton for the treatment and disposal of sewage
in at least the amount of the capacity granted under this
Agreement from time to time and as such capacity may be
increased from time to time in conformance with this Agreement,......
and in conformance with all applicable laws and regulations,
except for periods of necessary or emergency maintenance, or
in the event that the plant is forced out of operation by
catastrophic events, including, but not limited to fire,
flood, storm, war, or any other natural or man made
catastrophe. The warranty is only to the extent of capacity as
defined in this agreement. Otsego further warrants and
represents that the Plant will be properly licensed for the
disposal of sewage to the limits set forth in this Agreement
9. Fee Formula. Dayton shall pay a fee to Otsego for its share of
l operating expense of the Plant. It is the intent of this
Agreement that the two communities equitably share ongoing
costs of wastewater treatment operation and maintenance with
fixed operating expenses shared based upon allocated capacity
and variable expenses shared based upon flow volume. The .fee
to be paid by Dayton shall consist of two components; a
portion of the fixed operating expense and a portion of the
variable operating expense. Fixed Operating Expense shall
include:
(a) Wages, salaries and related expense of all on-site
employees while engaged in the operation of the Plant.
(b) Insurance premiums for property damage to the plant.
(c) The cost of heating, air conditioning and lighting
necessary for the operation of the Plant.
(d) Laboratory and testing expense necessary for the
operation of the Plant
(e) A11 regular plant maintenance and repair, including
the costs of any contracted or additional costs
necessary to affect proper maintenance and repair.
Repairs are those actions necessary to maintain the
structural integrity of the facility and its various
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components, including maintenance and repair of access
j roads and fencing or other means of protecting or
screening the facility. Due to the term of this
Agreement, and potential extensions of the same, it is
understood that proper maintenance and repair of the
facility may from time to time include full replacement
of certain facility components or structures. It is the
intention of this Agreement that the facility be
maintained and repaired so that it is in the same
condition as a similar well maintained and repaired
facility which has been in use for the same period of
time (hereinafter "operating condition"). Otsego shall
give at least thirty (30) days notice to Dayton of any
proposed repair or replacement which will cost more than
$10,000. If Dayton does not agree to pay its share of
said cost, it shall notify Otsego within 30 days of
receipt of the notice. In the event Otsego still wants
to proceed with the repair or replacement and to have
Dayton share in the cost as provided herein, the same
shall be submitted for determination the panel as
established in paragraph 10 of this agreement. The panel
shall decide if the proposed repair or replacement is
necessary to maintain the plant's "operating condition."
Variable Operating Expense shall include the following:
(a) The cost of materials and chemicals consumed in the
treatment and disposal process at the Plant.
(b) The cost of sludge hauling and disposal.
(c) Other expenses incurred as a direct result of a
statutory or State regulatory requirement.
(d) The cost of providing power for that machinery and
equipment which may vary based upon the flow of sewage
to the plant, for example aerators for the oxidation
ditch and recirculation pumps.
1. Dayton, for its share of the Fixed Operating Expense, _
shall pay: an amount equal to the proportion of the
capacity which is available to Dayton. Dayton is
currently allocated 1/5 of the capacity of the plant and
will thus pay 1/5 of the Fixed Operating Expense for the
Plant. In the event Dayton is allocated additional
capacity under the terms of this agreement, then its
share of operating expenses shall be in the same
proportion as the capacity it is allocated.
2. Dayton for its share of the Variable Operating Expense
shall pay an amount equal to the proportion of the
number of gallons of sewage Dayton places into the Plant
in relation to the overall flow to the Plant. By way
example, if the overall flow to the Plant is 200,000
0
gallons and Dayton contributes 40,000 gallons to the
overall flow, it would be responsible for 20% of the
Variable Operating Expense. The amount of flow to the
plant in total, or by either party, shall be determined
by the flow meters at locations agreed by the City
Engineers. The parties recognize that the variable
expense can be impacted by the strength of the sewage
and that the assumption for the sharing of variable
expense set forth herein is that the strength of the
sewage for each party is approximately the same.
3. An operating fund shall be established upon commencement
of operation of the wastewater treatment plant and
availability of sewer service to Dayton. At that time,
and prior to any service delivery, Dayton shall deposit
into that fund the estimated cost of one quarter -of
payment for operation of the facility. Thereafter,
payments shall be made by the City of Dayton into the
fund on a quarterly basis in an amount estimated by
Otsego as the amount to be charged in that next quarter.
Each year the fund shall be adjusted by additional
charge to Dayton, or refund, based upon actual use. Any
interest earned by Otsego on funds paid to it by Dayton
under this paragraph, shall be credited to Dayton.
4. The items listed above for fixed and variable operating
expenses are intended by the parties to be a
comprehensive list of expenses that will be incurred in
the plant operation. The parties recognize, however,
that there may be expenses which neither can anticipate
at the time of this agreement. The parties therefore
agree that if there is an expense necessary for the
operation of the Plant that is not listed above, it
shall be proportionally shared by the parties as set
forth above. The parties shall agree as to whether the
expense is an operating expense and if so, whether it is
a fixed or variable expense. In the event the parties
cannot agree on whether it is a necessary operating
expense or whether it is a fixed or variable expense,
the matter shall be submitted to binding arbitration
pursuant to paragraph 10 of this agreement.,
10. Right to Review. If either party wishes to challenge any the
amount of payment due, it shall be free to do so at its own
expense, with the following conditions:
Flow determination. Either party may challenge the amount or
percentage of flow that goes into the sewer line(s) serving
Dayton by arranging for and paying the cost of flow
monitoring. The results of said flow monitoring shall be
provided to the other party, along with all supporting
documentation. The non -challenging party shall have 30 days to
accept the results as presented or to undertake, at their
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expense, their own flow monitoring. If no action is taken by
j the non -challenging party within that time period, the flow
determination as presented shall be deemed binding on both
parties. If the non -challenging party decides to challenge the
results, it shall have 45 days within which to complete the
monitoring and present the results. If the second monitoring
produces a different result, the matter shall be submitted to
panel consisting of the city Engineer from Dayton, the City
Engineer from Otsego and a third party chosen by the two
Engineers. The cost of the third engineer shall be split
evenly between the parties. The determination of the panel
shall be final as to the amount of flow attributable to
Dayton. The panel shall prescribe its own procedure for
reaching a decision, provided that each side will be afforded
the reasonable opportunity to present evidence and make
inquiry of the opposing party.
Fee determination. If Dayton wishes to challenge the fee
claimed by Otsego or the calculations associated with it,
Otsego will make available to Dayton all the records necessary
to complete its review within two weeks of the request. In the
event Dayton and Otsego cannot agree on the fee to be charged
to Dayton, the dispute shall be submitted to binding
arbitration before a panel to be selected by the parties at,
the time of the dispute.
11. Ownership and Maintenance of Lines. Dayton shall pay for, own
and maintain all sewer lines constructed within its
boundaries, and the Dayton service line. Dayton shall
regularly maintain said lines so as to keep them in good
operating order. Dayton shall regularly inspect the lines and
immediately correct any problem which could adversely affect
Otsego's facilities or the Plant or which could result in
inaccurate readings of flow through said lines.
Otsego shall pay for, own and maintain the sewer lines
constructed within its boundaries, with the exception of the
Dayton service line. Otsego shall regularly maintain said
lines so as to keep them in good operating order. Otsego shall
regularly inspect the lines and immediately correct any
problem which would adversely affect or interfere with
delivery of service to Dayton. All services provided at the
Plant by Otsego shall be done in compliance with all
applicable laws and regulations.
12. Expansion. It is the intention of the parties to freely allow
the expansion of the Plant capacity by Dayton or Otsego for
its use, but to limit the use of unused capacity assigned to
either party to an agreement between the parties. Dayton may
request expansion of the facility to accommodate additional
sewage disposal needs of Dayton, under the following
conditions:
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(a) Dayton, on behalf of Otsego has Minnesota Pollution
Control Agency (MPCA) approval for the proposed expansion of
the Plant, if any is required. Otsego shall cooperate with
Dayton in obtaining any necessary MPCA approval.
(b). Dayton has secured plans for the expansion of the Plant
from an engineer/ architect approved by Otsego and properly
licensed by the State of Minnesota to design such a facility
and the plans are approved by Otsego, which approval shall not
be unreasonably withheld.
(c). Dayton has demonstrated that it has the financing to pay
for the proposed expansion, by either an approved bond issue,
cash, or loan.
(d). The expansion shall not cause the overall capacity to
Dayton to exceed 1.0 million gallons per day, nor shall it at
any time cause Dayton to have more than 49% of the available
capacity of the plant.
(e) If the request for expansion is to utilize unused
capacity, approval by Otsego.
If, at the time of Dayton's request for expansion of capacity,
the Plant has unused capacity, the City of Dayton shall be
allowed use of that capacity, provided conditions (a), (d) and
(e) are met.
Dayton shall be allowed the expanded capacity within ninety
(90) days of notice to Otsego, in the event there is unused
capacity available. In the event Dayton is requesting Plant
expansion, Otsego shall act on any necessary building or other
required permits from Dayton within 120 days of the request,
upon satisfaction of (a) - (d) above. Provided, however, that
Dayton shall, if requested by Otsego within 10 days of Otsego
getting notice from Dayton of a proposed expansion, meet and
confer on the advisability of a plant expansion in a greater
amount, to accommodate a use of the additional capacity by
Otsego. In the event Otsego determines a need for additional
capacity, the cost of any plant expansion shall be borne by
the parties jointly in proportion to the amount of capacity
each is receiving from the expanded plant. For example, if
Dayton is receiving an additional 20,000 gallons and Otsego is
receiving and additional 10,000 gallons, Dayton shall bear 2/3
of the expense and Otsego 1/3 of the expansion expense. In the
event either party does a plant expansion without the other,
that party shall be solely responsible for the cost of the
expansion. Otsego shall make a determination as to whether it
wants additional capacity no later than 90 days after receipt
of notice of proposed expansion by Dayton. Regardless of which
party is expanding the Plant, the parties agree to cooperate
to the extent necessary to accomplish the Plant expansion
authorized by this Agreement.
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If Dayton has expanded the Plant as provided above and there
is unused capacity, Otsego may request utilization of any
unused capacity. Authorization to use such unused capacity
shall be subject to approval by Dayton.
In the event either party uses unused capacity of the other,
it shall pay to the other party a portion of the initial
construction cost for said capacity in proportion to the
capacity used. For example, if Dayton is utilizes another
40,000 gallons of original plant capacity, it shall pay an
additional 1/5 of the initial construction costs. If Dayton
expands and Otsego uses 1/5 of the expanded capacity, Otsego
shall pay to Dayton 1/5 of Dayton's cost for the expanded
capacity. Such amount shall be paid before either party has a
right to use the additional capacity.
It is the intent of the parties to provide for equitable cost
sharing of plant construction as a whole, recognizing that the
initial construction cost will likely be higher than
subsequent expansions of capacity. Therefore, in the event of
expansion, an adjustment shall be made to take into account
the overall plant cost. This shall be accomplished by adding
the cost of the expansion to the initial construction cost to
determine an overall plant cost. The overall plant cost shall
then be divided by the gallon capacity of the plant, to arrive
at a per gallon cost. Each party shall be responsible for the
per gallon cost times the number of gallons of capacity
allocated to it after expansion of the plant. After the
payment for the construction of the expansion as set forth
above, one party shall make a payment to the other so that
both parties have paid an amount equal to their gallon
capacity times the per gallon cost. The party required to make
payment to the other under this formula shall not use any
additional capacity until the amount owed to the other party
is paid.
13. Otsego Remedies. In the event Dayton violates any provision of
this agreement by non-payment, Otsego shall have the right to
bring an action for payment after giving 30 days written _
notice of the default. If Dayton does not fulfill its
obligations under this agreement in any other way, Otsego
shall give 10 days written notice of the default. Dayton shall
have 10 days to cure the default or to set forth a plan for
curing the default within a reasonable time, in light of the
nature of the default and other relevant circumstances. If
Dayton fails to cure the default or put forward a reasonable
plan for curing the default, Otsego may seek appropriate
injunctive or other appropriate equitable relief. The
foregoing is not a limitation on other legal or equitable
remedies which Otsego may have available to it.
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14. Dayton Remedies. In the event Otsego fails to fulfill its
obligations, warranties and representations the City of Dayton
shall provide 30 days written notice of said failure to
Otsego. Otsego shall have 10 days to cure the default or to
set forth a plan for curing the default within a reasonable
time, in light of the nature of the default and other relevant
circumstances. Provided, however, that if a default by Otsego
results in sewer service to the City of Dayton below Dayton's
allocated capacity under this agreement, Otsego must
immediately correct the problem upon Written Notice by the
City of Dayton. If Otsego fails to cure said default, Dayton
may seek appropriate injunctive or other equitable relief The
foregoing is not a limitation on other legal or equitable
remedies which Dayton may have available to it.
15. Notice and Termination. Dayton shall have the right to
terminate this Agreement at any time, but not until initial
construction of the plant has been completed and Dayton has
paid all of its share of initial construction costs. If a
scheduled or requested expansion of the plant has been
undertaken, Dayton shall not be able to request termination of
this Agreement until after completion of construction of any
such expansion and payment of Dayton of all of its share of
capitol costs and related expenses incurred due to the plant
expansion. The termination shall take effect two (2) years
after written notice is given by Dayton of its intention to
terminate the Agreement. In the event of termination, all
obligations of Dayton to make payment to Otsego, except for
funds expended prior to the date of termination shall cease
upon the effective date of the termination. In the event that
this Agreement is terminated prior to its term, for whatever
reason, ownership of the Dayton service line shall immediately
revert to Otsego.
In the event this Agreement is terminated prior to its terms,
for whatever reason, Otsego shall be obligated to pay to
Dayton a sum equal to 1/75th of the original price of the
sanitary sewer easement times the number of years remaining at
the time of termination from the year of execution of this
Agreement and a date 75 years therefrom, if that price is
acceptable to Dayton. Dayton shall have 30 days to accept the
foregoing sum. In the event of acceptance, Dayton shall
execute a deed conveying its interest in said sanitary sewer
easement. While Otsego is obligated to pay the foregoing
minimum sum, it is free to make an additional offer if it
chooses. Upon termination of the agreement, neither the
sanitary sewer easement or improvements constructed therein
may be used by Dayton to convey sewage to or from any sewage
to or from any sewage treatment facility other than the Plant.
16. Land Application of Sewage Sludge. In the event that Otsego is
not able to find adequate areas outside of both Cities for
land application of sewage sludge, by contract or otherwise,
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and sewage sludge must be applied to lands within its
boundaries, Dayton agrees to provide appropriate disposal
capacity for application of sludge in proportion to its share
of the existing plant capacity at that time. Dayton's
responsibility to provide such disposal capacity shall
increase or decrease over time in relation to its proportion
of existing plant capacity.
17. Term. This agreement shall be in effect for twenty five (25)
years from the date hereof and shall be renewable by Dayton
upon the same terms and conditions for two (2) additional
twenty five (25) year terms following the initial term. Dayton
must give written notice of its intention to renew the
agreement at least six (6) months prior to the end of the
initial or renewal term. Following the initial three (3) terms
set forth above, Otsego agrees to enter good faith
negotiations with Dayton concerning extension of this
agreement if requested by Dayton. Any such request shall be
made at least 1 year prior to termination date of this
agreement.
16. Indemnity. Dayton shall defend and indemnify Otsego for any
claims arising from Dayton's operation of sewer lines within
the boundaries of Dayton and the Dayton service line. Otsego
shall defend and indemnify Dayton for any claims arising from
its operation of the Plant or sewer lines located within the
boundaries of Otsego, except for claims arising from the
Dayton service line.
19. Modification Of Agreement. This Agreement may be modified only
by written agreement of both parties.
20. Notice. All notices required by this Agreement shall be in
written form and shall be deemed delivered upon its receipt by
the City Clerk of either party. Notice may be made by personal
delivery, mail or facsimile.
WHEREFORE, the parties have agreed to the foregoing terms.
THE CITY OF OTSEGO
Dated: _ 2
Its: Mayor
C�✓L� Dated:
Its: City Clerk
12
THE CITY OF DAYTON
Dated: 1-3
By:
Its: Mayor
C?n,Cr�1 Xdj 6q � Dated:
By:
Its: City Clerk
13
1�-
EXHIBIT A
Sewer Line Exception
PID 118-802-011100
Permanent easement for utility purposes over, under and across the north 30.00
feet of the NE'/4 of Section 1, Township 120, Range 23, except the road.
Temporary construction easement for construction purposes over, under and
across the north 90.00 feet of the NE 1/4 of Section 1, Township 120, Range 23,
except the north 30.00 feet thereof and the road.
PID 118-802-012401
Permanent easement for utility purposes over, under and across the north 30.00
feet of the east 383.64 feet of the west 933.64 feet.
Temporary construction easement for construction purposes over, under and
across the north 120.00 feet of the east 3 83. 64 feet of the west 933.64 feet, except
the north 30.00 feet thereof.
REVISED /22/99
90' TEMPORARY
CONSTRUCTION EASE MEN-, - 66'
60' TEMPORARY
CONSTRUCTION EASEMENT
North Lkie of 5ectla11,1120, X23
30' PERMANENT DRAINAGE
i AND UTILITY EASEMENT
I
OTSEGO rz
TREATMENT
V
PLANT�
ZOSITE
383.64'
933.64'
Elsie Lahn
PID 118-802-012401
Wayne & Beverly Lahn
PID 118-802-011100
--------
�` PID 118-802-011100 wait & �5Y2
Permanent ea5cm�:! nt for utility purposes over, under and across the north
50.00 feet of Uie N� I/ 9 of 5echon 1,1120, P25, except the road.
femporant construction easement for construction purposes over, under and
Ja across U -e north 90.00 Feat of the f E 1/ 9 of 5ecticn 1, NO. M. except
v; ilia narth 30.00 feet thereof and the road.
c=
PID 118-802-012101 Nslel.alin
Permanent easement for utility purposes over, under and across the _
naUi 10.00 feet of the east 385,69 feet of the west 935.69 feet.
%mperanl ccnstnnctlon ea5�rn=t for caistmchon purposes over, under and
across 11w nu lh 120.00 feat of One east 585.69 feet of the west
9"5.69 Feet, except the north 30.00 feet Uiereof.
36
e IIan ..--
0 100 8
Scale h feet
AGO
v
Lahn Property Description
The north 800.00 feet of the west 550.00 feet of the following described property:
That part of the Northwest Quarter and that part of the Southwest Quarter of
Section 1, Township 120, Range 23, Wright County, Minnesota, described as
follows: Commencing at the Southwest corner of said Northwest Quarter; thence
on a bearing of North (assumed bearing) at the west line of said Northwest
Quarter, a distance of 466.18 feet; thence South 83 degrees 7 minutes 30 seconds
East, a distance of 237.23 feet; thence South 78 degrees 11 minutes 10 seconds
East a distance of 466.11 feet; thence South 78 degrees 32 minutes 37 seconds
East, a distance of 1012.22 feet to the actual point of beginning said point being on
the center line of Wright County Highway Number 36; thence North 0 degrees 13
minutes 39 seconds West, a distance of 2203.94 feet to the north line of Northwest
Quarter; thence North 89 degrees 41 minutes 03 seconds East along said north
line, a distance of 941.80 feet to the northeast corner of said Northwest Quarter;
thence South 0 degrees 13 minutes 39 seconds East along the east line of said
Northwest Quarter, a distance of 2359.48 feet to the centerline of said Wright
County Highway Number 36; thence North 88 degrees 52 minutes 34 seconds
West along said centerline, a distance of 77.97 feet; thence westerly along said
centerline on a tangential curve concave to the north, having a radius of 1591.87
feet and a central angle of 10 degrees 20 minutes 17 seconds, a distance of 287.23
feet; thence North 78 degrees 32 minutes 37 seconds West along said centerline.
tangent to said curve, a distance of 45.50 feet; thence South 23 degrees 30 minutes
58 seconds West, a distance of 155 feet more or less to the waters edge of the
Crow River; thence northwesterly and westerly along said waters edge, a distance
of 500 feet more or less to a line which bears South 0 degrees 13 minutes 39
seconds East from the point of beginning; thence North 0 degrees 13 minutes 39
seconds West along said line, a distance of 124 feet more or less to the point of
beginning.
Together with a permanent easement for utility, ingress and egress over, under and
across the west 50.00 feet of the above described property lying southerly of the
north 800.00 feet thereof and northerly of the centerline of County State Aid
Highway No. 36.
Together with a permanent easement for utility purposes over, under and across
the east 40.00 feet of the west 80.00 feet of the above described property lying
southerly of the centerline of County State Aid Highway No, 36.
Page 1 of 2
Together with a permanent easement for utility purposes over, under and across
the east 30.00 feet of the west 80.00 feet of the above described property lying
northerly of the centerline of County State Aid Highway No. 36 and southerly of a
line 40.00 feet northerly of, as measured at right angles, and parallel with said
centerline.
FIRST AMENDMENT TO THE
SEWER USE AGREEMENT
This First Amendment to the Sewer Use Agreement (the "First Amendment") is made and
entered into this day of 2021 (the "Effective Date"), by and between THE
CITY OF OTSEGO, a Minnesota municipal corporation, ("Otsego') and THE CITY OF
DAYTON, a Minnesota municipal corporation ("Dayton").
RECITALS
A. Otsego contracted with Ehlers, Public Finance Advisors, to complete a utility rate study
("Study"). On October 26, 2020, Ehlers presented the Study to the Otsego City Council.
B. Otsego City Code Chapter 7, Section 2 provides the City the authority to impose just and
equitable charges upon users of those systems. These charges allow Otsego to pay for the
costs associated with the Water and Sanitary Sewer utility systems.
C. On February 8, 2021, the Otsego City Council adopted Resolution No. 2021-07
Establishing Water & Sanitary Sewer Utility Rates for 2021.
D. Otsego and Dayton now desire to amend the Sewer Use Agreement in accordance with
the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and
promises contained herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Section 9 shall be replaced in its entirety with the following language:
9. Fee Formula. Dayton shall pay a fee to Otsego for its share of operating expense of the
Plant. This fee shall be developed using a cost service model per the American Water
Works Association (AWWA) (wholesale basis). Rates are subject to change on an annual
basis. Otsego shall bill Dayton on an annual basis for the aforementioned fee.
2. No Other Changes. Except to the extent amended by the terms of this First Amendment,
all other terms and conditions of the Agreement are hereby affirmed to be unchanged by the terms
hereof and shall remain in full force and effect.
IN WITNESS WHEREOF, this First Amendment to Agreement has been made and executed by
Otsego and Dayton as of the day and year first above written.
CITY OF OTSEGO
By: _
Attest:
Mayor Jessica Stockamp
City Clerk
CITY OF DAYTON:
By:
Mayor Dennis Fisher
Attest:
City Clerk
DRAFTED BY:
CAMPBELL KNUTSON, P.A.
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
Telephone: (651) 452-5000
SNC