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HomeMy WebLinkAboutSecondary Operator AgreementSECONDARY OPERATOR AGREEMENT FOR THE CITY OF LARSEN BAY BULK FUEL STORAGE FACILITY WHEREAS, the Denali Commission (“Commission”) has provided, or will provide, funds to the Alaska Energy Authority (“Authority”) for a grant by the Authority to the City of Larsen Bay (“City”) for the upgrading of the City’s bulk fuel storage facilities at Larsen Bay, Alaska (the “Facility”) owned by the City; and WHEREAS, grant funds will may also be provided by HUD and/or the State of Alaska, and the financial aspects of those separate grants will be managed and the Facility construction will be overseen by the Commission (which term shall include HUD and/or the State of Alaska in this Secondary Operator Agreement for the Facility, hereinafter the “Agreement”); and WHEREAS, the Commission has adopted Sustainability Criteria that apply to the use of Commission funds for the Facility, in order to ensure the long-term economic sustainability of the Facility; and WHEREAS, the Commission and the City have agreed to a Business Plan consistent with the Sustainability Criteria for the operation of the Facility, as contained in the City of Larsen Bay Bulk Fuel Facility Business Operating Plan dated November 17, 2003 (“Plan”); and WHEREAS, the Plan specifies that the City shall act as the Primary Operator of the Facility, as specified therein, and shall operate the Facility in compliance with the terms and conditions of the Plan; and WHEREAS, the Commission and the City agree that, if the Primary Operator is not operating the Facility in compliance with the terms and conditions of the Plan, the Commission may designate a Secondary Operator to assist the Primary Operator or to take over such functions of the Facility operations that the Commission determines are necessary for such time as it determines is necessary, pursuant to the terms and conditions of this Agreement; NOW THEREFORE, the Commission and the City agree as follows, in consideration for the mutual promises contained herein and the benefits to the parties resulting from the completion and operation of the Facility: 1. The Primary Operator shall operate the components of the Facility specified in the Plan in accordance with the terms and conditions of the Plan and the requirements contained herein. 2. In addition to, and consistent with its duties specified in the Plan, the Primary Operator shall, in a timely manner: 2.1 properly establish and maintain accurate books and records; 2.2 account for, bill for, and use its best efforts to collect all fuel sales and all other receivables; Secondary Operator Agreement for the City of Larsen Bay Bulk Fuel Facility Page 2 of 4 2.3 deposit moneys into the appropriate accounts, including deposits into the Operations & Maintenance Fund account as well as deposits into the Renewal & Replacement invested escrow account (as such accounts are defined in the Plan); 2.4 maintain adequate cash reserves for fuel purchases so that emergency fuel shipments are not necessary; 2.5 obtain annual audits showing the absence of any management or financial irregularities; 2.6 perform necessary maintenance of and repairs to the Facility; 2.7 provide or obtain necessary training for Facility operations; and 2.8 meet its financial obligations. 3. If the Commission determines, in the exercise of its sole discretion, that the Primary Operator has failed or is unable to operate the Facility in accordance with the Plan and this Agreement and that this failure or inability significantly threatens the long-term economic sustainability of the Facility, the Commission may contract with and utilize a Secondary Operator. 4. The Commission has the sole right to transfer the full custody and control of the assets and business operations of the Facility, including but not limited to, the cash, receivables, and inventory of the Facility, to the Secondary Operator and assign the Secondary Operator responsibility for partial or total management of the Facility. 4.1 The Commission may appoint the Secondary Operator to assist the Primary Operator in some or all aspects of the Facility operations or to take over some or all aspects of Facility operation from the Primary Operator, in such a manner and for such period of time as the Commission determines to be necessary and appropriate for operation of the Facility in compliance with the Plan and the long-term economic sustainability of the Facility. (For example, the Secondary Operator may be asked to assist the Primary Operator for a short period of days or weeks in bringing certain aspects of the operations back into compliance. Alternatively, the Secondary Operator may be asked to replace the Primary Operator as Facility operator. The foregoing are intended only as illustrative examples, without limiting the effect of this Agreement.) 4.2 If the Commission utilizes a Secondary Operator, the Primary Operator will transfer the complete control and authority over the following assets to the Secondary Operator: the books and records relating to the Facility operations, accounts receivable, and all account funds. The City agrees to cooperate with the Commission and the Secondary Operator in the release of the stated assets and the transfer of operations to the Secondary Operator. 4.3 The Secondary Operator will be entitled to reasonable compensation for its services. This compensation will, at a minimum, reimburse the Secondary Operator for any and all expenses associated with their duties as Facility operator, plus a reasonable profit. The profit will not exceed what is considered normal and customary for like service, as determined by the Commission in the exercise of its sole discretion. Secondary Operator Agreement for the City of Larsen Bay Bulk Fuel Facility Page 3 of 4 4.4 The parties anticipate that, if a Secondary Operator is appointed, the Commission will appoint (to be determined), which will joint venture with an establish bulk fuel operator. However, the parties acknowledge that (to be determined) may not exist or be willing to serve in this capacity at the time a Secondary Operator is needed, or other circumstances may prevent (to be determined) from serving as Secondary Operator. Therefore, the City acknowledges and agrees that the Commission may appoint any qualified entity or entities to serve as Secondary Operator. The Commission will consult with the City on the replacement to the Secondary Operator; however, the Commission maintains final approval authority for the replacement Secondary Operator. 4.5 The Commission will act reasonably and responsibly in its enforcement of the Plan and this Agreement and its designation of a Secondary Operator, consulting with the City and taking into account the needs and interests of the community of Larsen Bay as well as the general public interest. If the Commission employs the Secondary Operator, the Commission shall oversee the operations of the Secondary Operator to make sure that it is conducting its operations reasonably, in a cost-efficient manner, and consistent with the needs and interests of the community as well as the general public interest. 5. If a dispute or controversy arises between the parties to this Agreement or among the parties to an agreement with the Secondary Operator, application or enforcement of this Agreement shall be decided through mediation. If mediation is unsuccessful, any party to this Agreement may bring an action to resolve the dispute in the Superior Court of the State of Alaska. 6. This Agreement may be executed simultaneously in two (2) or more counterparts, each of which will be considered an original, but all of which together will constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by fax shall be sufficient to bind the parties to the terms and conditions of this Agreement. 7. No delay on the part of a party in the exercise of any right, power, or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude other or further exercise thereof or the exercise of any other right, power, or remedy. No amendment, modification, or waiver of, or consent with respect to, any provision of this Agreement shall be effective unless it shall be in writing and signed and delivered by the parties hereto. 8. All notices, demands or requests required or allowed under this Agreement or applicable law from one party to another shall be in writing and delivered in person or sent by mail, certified or registered, postage prepaid, to the parties hereto at the addresses set forth in this Agreement or to such other persons and addresses as either party may designate. Notice shall be deemed to have been given three (3) days after the day of mailing. 9. This Agreement is a contract made under and governed by the laws of the State of Alaska. All obligations and rights of the parties stated herein shall be in addition to, and not in limitation of, those provided by applicable law. 10. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto, and their respective heirs, successors, and assigns. Secondary Operator Agreement for the City of Larsen Bay Bulk Fuel Facility Page 4 of 4 11. This Agreement represents the entire agreement between the parties, and there are no other agreements, either oral or written, with respect to the subject matter of this Agreement. This AGREEMENT has been reviewed, agreed to, and executed by the following parties: for the CITY OF LARSEN BAY by ___________________________ _____________________ (Signature) (Date) ___________________________ _____________________ (Name Printed) (Title) for the DENALI COMMISSION by ___________________________ _____________________ (Signature) (Date) ___________________________ _____________________ (Name Printed) (Title) for (TO BE DETERMINED) by ___________________________ _____________________ (Signature) (Date) ___________________________ _____________________ (Name Printed) (Title)