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HomeMy WebLinkAboutPR 22391: LETTER OF INTENT FOR LANDFILL GAS RECOVERY PROJECT City of 7-4 rrI'1 /'Mill" Texas INTEROFFICE MEMORANDUM PUBLIC WORKS DEPARTMENT- Date: February 8,2022 To: The Honorable Mayor and City Council Through: Ronald Burton, City Manager ./ From: Flozelle C. Roberts,EIT, MEng,MBA, Director of Public Works RE: PR 22391 —Approve the Execution of a Letter of Intent for Landf I as Recovery Project contingent on Methane Feasibility Analysis Introduction: The intent of this Agenda Item is to seek City Council approval pertaining to a Letter of Intent concerning a landfill gas recovery project contingent on methane feasibility analysis. Backjround: The City of Port Arthur's Public Works Department operates and maintains a landfill along Highway 73 and desires to improve services for its citizens and customers. Methane is a by- product of landfill operations, is a valuable commodity, and has many alternate uses. Management wishes to research the feasibility of methane recovery for sale to commercial vendors. The letter of intent (LOI) for landfill gas recovery project will research the possibility of an additional revenue source. OCI Beaumont, LLC (OCI) proposes to engage in a landfill gas recovery project, and management wishes to enter into a limited, three (3) month, exclusive agreement with OCI. OCI has presented a letter of intent (LOI) for the City of Port Arthur to sign, authorizing the study of methane recovery at the landfill. The LOI is intended to be a document outlining a preliminary agreement between the City and OCI before a formal agreement is finalized and executed if both parties agree to the terms of the agreement. Budget Impact: No impact on the budget. OCI Beaumont, LLC will incur all costs of the methane feasibility analysis. Recommendation: It is recommended that City Council approve PR 22391 pertaining to the execution of a letter of intent concerning a landfill gas recovery project contingent on methane feasibility analysis as outlined above. "Remember,we are here to serve the Citizens of Port Arthur" P. R. No. 22391 2/8/22 bw Page 1 of 2 RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A LETTER OF INTENT CONCERNING A LANDFILL GAS RECOVERY PROJECT CONTINGENT ON A METHANE FEASIBILITY ANALYSIS FOR A POTENTIAL SOURCE OF REVENUE. WHEREAS, the Public Works Department of the City of Port Arthur operates and maintains a landfill along Highway 73; and, WHEREAS, the Landfill Division of the Public Works Department desires to improve services for its citizens and customers; and, WHEREAS, methane is a by-product of landfill operations that has many alternate uses and is a valuable commodity; and, WHEREAS, management wishes to research the feasibility of methane recovery for sale to commercial vendors; and, WHEREAS, OCI Beaumont, LLC (OCI) proposes to engage in a landfill gas recovery project, contingent on a methane feasibility analysis; and, WHEREAS, management wishes to enter into a limited, three (3) month, exclusive agreement with OCI; and, WHEREAS,OCI has presented a Letter of Intent(LOI), attached as Exhibit"A", for the City of Port Arthur to execute, authorizing the study of methane recovery at the landfill; and, WHEREAS,the LOI is intended to be a document outlining a preliminary agreement of the City and OCI before a formal agreement is finalized and executed. NOW THEREFORE, BE IT RESOLVED BY CITY COUNCIL OF CITY OF PORT ARTHUR: THAT, the facts and opinions in the preamble are true and correct; and, P. R. No. 22391 2/8/22 bw Page 2 of 2 THAT, the City Manager of the City of Port Arthur is hereby authorized and directed to execute a Letter of Intent (LOI) between the City of Port Arthur and OCI Beaumont, LLC, for a gas recovery project contingent on a methane feasibility analysis, in substantially the same form as attached hereto as Exhibit"A", as it pertains to the City's Landfill along Highway 73. THAT, a copy of the caption of this resolution be spread upon the minutes of City Council. READ, ADOPTED, AND APPROVED THIS day of 2022 at a Regular Meeting of City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor • Councilmembers: NOES: Thurman"Bill" Bartie Mayor ATTEST: APPROVED FOR ADMINISTRATION: Sherri Bellard Ronald Burton City Secretary City Manager APPROVED AS TO FORM: Valecia Tizeno Flozelle Roberts City Attorney Public Works Director P. R. No. 22391 EXHIBIT A (Letter of Intent) Letter of Intent January 24,2022 City of Port Arthur 444 4th Street Port Arthur,TX 77640 We are pleased to provide this letter of intent(the"Letter of Intent")regarding a proposed transaction of a landfill gas recovery project (the "Transaction") between OCI Beaumont, LLC ("OCI"), or one of its affiliates,and City of Port Arthur(the"Owner"). OCI and Owner are collectively referred to as the"Parties" and each individually as a"Party". OCI would like to engage a third party to perform additional site study services at Owner's landfill located in Port Arthur,TX(the"Landfill)before the Parties discuss the commercial terms on which they would enter into the Transaction. In consideration for the time and expense involved in conducting such a study,OCI proposes the Parties agree to Limited Binding Obligations below. The Parties acknowledge and agree that,except for the provisions appearing below under the heading "Limited Binding Obligations,"this Letter of Intent is intended to,and does not create any binding obligations on the part of either Party. This Letter of Intent is not yet a commitment to engage in the Transaction. The ultimate terms of the Transaction are subject to negotiation, diligence, agreement on definitive transaction documents,and approval by the Parties. Limited Binding Obligations In consideration of the time and effort contemplated to be expended by each Party in pursuit of the Transaction and for other good and valuable consideration,the sufficiency of which is hereby acknowledged, the Parties agree that the following provisions(the"Limited Binding Obligations")are the legally binding and enforceable agreements of OCI and Owner: 1. Exclusivity. (a) Exclusivity Period. For the next three (3) months after the date Owner delivers a signed counterpart of this Letter of Intent to OCI, the "Exclusivity Period"), Owner and its affiliates will suspend any existing discussions or negotiations,and not initiate any new discussions or negotiations,with any person other than OCI regarding any proposal,offer or inquiry the purchase or sale of landfill gas. Upon the expiration or earlier termination of the Exclusivity Period,the Parties will have no further obligations under this Letter of Intent. 2. Confidentiality. Subject to the dictates of the Texas Public Information Act,each Party agrees to keep the existence and terms of this Letter of Intent and any discussions regarding the Transaction confidential,disclosing them only:(i)to their employees,consultants and advisors who require the information for the purpose of evaluating and negotiating the Transaction,(ii)to potential lenders and/or investors,(iii)as required by applicable law,or(iv)in response to a request from a regulator with jurisdiction over the disclosing Party.The Parties'obligations under this confidentiality provision shall expire or terminate upon the expiration or earlier termination of this agreement. 3. Due Diligence. The Owner will provide OCI with reasonable access during such times and at such locations that do not interfere with the operation of the landfill and all documents, information, (including, without limitation, governmental reports and filings, documents relating to compliance with law, and contracts and agreements), books, records and files relevant to the Transaction, in each case, as OCI may request for due diligence purposes. 1 4. Costs and Expenses. OCI will be responsible for and pay its own costs and expenses incurred in connection with this Letter of Intent, including costs to produce documents in accordance with the Texas Public Information Act.. 5. Governing Law. This Letter of Intent will be governed by, and construed and enforced in accordance with, the laws of the State of Texas without regard to conflict of laws provisions that would require the application of laws other than those of the State of Texas. Each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of any State or federal court sitting in the County of Jefferson,State of Texas,over any action,suit or proceeding arising out of or relating to this Letter of Intent. Each Party hereby irrevocably and unconditionally waives any objection to the laying of venue of any such action,suit or proceeding brought in any such court and any claim that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each Party hereby agrees that a final judgment in any such action, suit or proceeding brought in any such court will be conclusive and binding upon it and may be enforced in any other courts to whose jurisdiction it is or may be subject,by suit upon such judgment. 6. Entire Agreement. This Letter of Intent supersedes any prior written or oral agreements or understandings between the Parties with respect to the subject matter hereof and constitutes the entire understanding of the Parties with regard to the subject matter hereof. To the extent definitive transaction documents are entered into for the Transaction,this Letter of Intent will be superseded by them. 7. No Consequential or Punitive Damages. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, WHETHER BY STATUTE,IN TORT OR CONTRACT OTHERWISE,UNDER OR AS A RESULT OF THIS LETTER OF INTENT. 8. Relationship of the Parties. No provision in this Letter of Intent will be considered to create the relationship of employer and employee,partnership,joint venture or other association between the Parties. Except as expressly provided in this Letter of Intent,this Letter of Intent is not intended to restrain the Parties from engaging in any other present or future business activities. Neither Party may bind the other Party without the express written consent of that Party. 9. Interpretation. No provision of this Letter of Intent will be construed against any Party,and no consideration will be given or presumption made, on the basis of who drafted the Letter of Intent or the provision in question. Each Party agrees that this Letter of Intent is a product of negotiation and correctly reflects its understanding of the transactions contemplated by this Letter of Intent and waives the application of any law or rule of construction providing that ambiguity in an agreement or other document will be construed against the Party drafting the agreement or document. 10. Dispute Resolution. In the event a dispute arises out of or in connection with the Parties' obligations hereunder, senior executives of the Parties who have the authority to settle such disputes will negotiate in good faith for a period of at least 15 business days after written notice requesting such negotiation from either Party in an attempt to achieve a resolution of the dispute prior to either Party taking any action to enforce its rights under this Letter of Intent. 11. Assignment. This Letter of Intent will inure to the benefit of the Parties and their respective successors and permitted assigns. This Letter of Intent may not be assigned by either Party without the prior written consent of the other Party unless assigned to an affiliate. 2 12. Counterparts. This Letter of Intent may be executed in multiple counterparts, all of which, taken together, will be considered one and the same instrument, and will become effective when counterparts have been signed by each Party and delivered to the other Party.Delivery by email of a".pdf copy of a signature will be considered due execution and will be binding upon the signatory thereto with the same force and effect as if the signature were an original. [Signature pages follow.] 3 If the foregoing is acceptable to you,please sign the attached counterpart of this Letter of Intent in the space provided and return such counterpart to OCI. Sincerely, OCI USA Inc. By: Name: Title: [Signature Page to Letter of Intent] Acknowledged and agreed as of this day of ,2022: l 1 By: Name: Title: