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HomeMy WebLinkAboutRailbelt Grant Administration Agreement 2 1994LAW OFFICES BIRCH,HORTON,BITTNER AND CHEROT A PROFESSIONAL CORPORATION 1127 WEST SEVENTH AVENUE ¢ANCHORAGE,ALASKA 99501-3563 ¢«TELEPHONE (907)276-1550 -TELECOPIER (907)276-3680 THOMAS L.ALBEAT*tt WILLIAM P.HORN'TIMOTHY J.PETUMENOS OF COUNSEL KEY BANK BUILDING THOMAS ?.AMOODIO HAL R.HORTON ELIZABETH A.PHILLIPS JOHN J.RHODES.1°100 CUSHMAN STREET.SUITE 311J.GEOFFREY BENTLEY'=STEPHEN HW.HUTCHINGS GLEN PRICE FAIRBANKS,ALASKA,99701-4672 RONALO G.BIRCH™*ROY S.JONES.JR."MICHAEL V.REUSING (907)452-1666 WILLIAM H.BITTNER MARC W.JUNE ELISABETH H.ROSS**¢A :TELEMOPIER (907)458-5055 KATHRYN A.BLACK BRAD S.KANE JONATHAN 8.RUBINI uU i |PHILIP BLUMSTEIN CRISTINA D.LEE E.BUDD SIMPSON ik WY '<=elseagasKa PLAZA,SUITE 301CORYA.BORGESON STANLEY T.LEWIS STEPHEN F.SORENSEN 1UNEAD.ALASKA 9ea01-1209OOUGLASSBURDIN'LESLIE LONGENBAUGH JONATHAN K,TILLINGHAST °D.C.BAR oor)see 2000JOHNJ.BURNS RONALD W LORENSEN JEFFERY 0.TROUTT °**0.C.AND ALASKA BAR sy 3)Q COPIER (907)586-9814SUZANNECHEROTL.MERRILL LOWDEN 0.KEVIN WILLIAMS,t MARYLAND BAR MAR rm {99.4 JOHN J.CONNORS ANNE E.McINERNEY'S JOSEPH E.WRONA #O10 BAR - KIM DUNN GREGORY A.MILLER SUSAN E.WUORINENS *ARIZONA @AR 1155 CONNECTICUT AVE .NW RALPH V.EATZ GAIL A.OBA JOSEPH A.WEBEA +VIRGINIA BAR Alaska Industriel Developments 1200JOSEPHWEVANSMICHAELJ.PARISE ANNE W.YATES*ALL OTHERS ALASKA Bal ASHINGTON,D.C.20038-4308 STEPHEN K.GARDNER*7 (202)659-5800andExportAuthority,gs (202)659-1027 WRITER'S DIRECT DIAL NO.March 28,1994 (907)263-7220 WRITER'S DIRECT "FAX"NO. VIA_TELECOPY AND U.S,MAIL (907)276-3680 Ronald L.Saxton,Esq. Julie Simon,Esq. Ater Wynne Hewitt Dodson &Skerritt 222 S.W.Columbia Street,Suite 1800 Portland,Oregon 97201-6618 Re:Grant Administration Agreement Our File No.503,357.59 Dear Ron and Julie: I apologize for the delay in providing the enclosedreviseddraftGrantAdministrationAgreement. With reference to your memorandum to me of January 19,please note the following: (a)Sections 2.02 and 2.03(d). The Authority declines to amend the draft to submit the cost of custodial and investment service to the IPG for review and approval.Indeed,new language proposed under Section 4 specifically excludes such costs.Please note however that the Agreement limits the Authority to "reasonable"costs for such services. AIDEA concurs that its administrative costs are not subject to reimbursement.As a drafting matter,however,I do not think it appropriate to include a selective list of "excluded" costs. (b)Unexpended Funds. The suggestion to expand the definition of "completion" to include costs arising after the date of commercial operation is rejected.The appropriation specifically provides funds for the"design and constructionof a power transmission intertie ..." BIRCH.Hoes ENG hg.Julie Simon,Esq. March 28,1994 Page 2 Further,the appropriation is contingent on the agreement of theparticipatingUtilitiestopayoperationandmaintenancecosts. The specific terms of the appropriation and general principles of "appropriation law"thus precludes the requested revision. (c)Project Phase Ceiling. The concept of "phase ceilings"was one of the principal negotiated points which enabled AIDEA and the State to transfer thegrantfunds.With that background in mind,I think it difficult tomakeSection4.02(a)"more flexible"as you suggest.It may be more fruitful,however,to revisit your concerns once the IPG submits a draft Schedule A to the Authority for review.I add that the Authority shares the IPG objective that this "ceiling"approach not unduly interfere with the common-sense,cost-effective development of the interties. (ad)Section 4.03. AIDEA intends to promptly pay all IPG-approved invoices incurred for Project expenses providing that such expenditures are within the scope of the grant and do not exceed "phase ceilings" established under Schedule A.While we are thus in agreement as toAIDEA's minimal role,I believe the Agreementmust include languagetoenableAIDEAtoconfirmthatanIPG-approved invoice is indeed consistent with the grant and Schedule A. (e)Waiver. I deleted the reference to AIDEA's "agents"as proposed. Your request to delete the Utilities'indemnification of AIDEA is rejected.We think it appropriate for the Utilities to bothreleaseandindemnifyAIDEAforclaimsordamagesarisingfroma relationship which AIDEA would not otherwise have entered into. Please feel free to contact me in California,(310)456- 7239,or Alaska,(907)263-7220,if you have any further questions. Sincerely, BIRCH,HORTON,BITTNER and CHEROT Ee Mibi4,By: JohMathan B.Rubini JBR:ke Enclosure cc:Mr.William R.Snell James L.Baldwin,Esq. Roger R.Kemppel,Esq. Fs \AIDEA\ENERGY\KAE 1917 GRANT ADMINISTRATION AGREEMENT THIS AGREEMENT (the ""Agreement")is made and entered into this ___-s-_day +oof November,1993,by and between the ALASKA INDUSTRIAL DEVELOPMENT &EXPORT AUTHORITY ("AIDEA"),GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.("GVEA"),FAIRBANKS MUNICIPAL UTILITIES SYSTEM ("FMUS"),ANCHORAGE MUNICIPAL LIGHT AND POWER ("ML&P"), CHUGACH ELECTRIC ASSOCIATION,INC.("CEA"),ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC.("AEG&T")on behalf of its members (Matanuska Electric Association,Inc.and Homer Electric Association,Inc.),and the CITY OF SEWARD ("Seward") (ML&P,CEA,AEG&T and Seward hereinafter collectively referred to as the "Southern Participating Utilities";GVEA and FMUS hereinafter collectively referred to as the "Northern Participating Utilities";the Southern Participating Utilities and the Northern Participating Utilities hereinafter collectively referred to as the "Participating Utilities"). RECITALS WHEREAS,pursuant to Section 1 ch.19,SLA 1993,the Legislature appropriated $43,200,000 to the Department of Administration ("DOA")for payment as a grant under AS 37.05.316 to GVEA for the purpose of constructing a power transmission intertie between Healy and Fairbanks ("Healy-Fairbanks Intertie")to benefit all utilities participating in the intertie;and Grant Administration Agreement:March 28,1994,Draft Page 1 WHEREAS,pursuant to Section 2 of ch.19,SLA 1993 (Sections 1 and 2 of ch.19,SLA 1993 hereinafter referred to as the "Intertie Appropriation"),the Legislature appropriated $46,800,000 to DOA for payment as a grant under AS 37.05.316 to CEA for the purpose of constructing a power transmission intertie between Anchorage and the Kenai Peninsula ("Anchorage-Kenai Intertie")to benefit all utilities participating in the intertie (the two intertie appropriations are hereinafter collectively referred to as the "Intertie Grants");and WHEREAS,pursuant to Section 1(b)and (c)and Section 2(b)and (c)of the Intertie Appropriation,DOA,AIDEA,and the Participating Utilities were to enter into a written agreement satisfying certain statutory conditions precedent to DOA's transfer of the Intertie Grants;and WHEREAS,in order to satisfy such requirement,DOA, AIDEA,and the Participating Utilities have entered into an Intertie Grant Agreement (the "Intertie Grant Agreement"),which among other things,provides that the Intertie Grants are to be transferred to AIDEA for the benefit of the Participating Utilities,and that certain conditions are to be met prior to AIDEA releasing any of the grant funds to the Participating Utilities; and Grant Administration Agreement:March 28,1994,Draft Page 2 WHEREAS,also as part of the Intertie Grant Agreement, the Participating Utilities have agreed to form an Intertie Participants Group ("IPG")to,among other things,oversee the construction of the interties and address grant expenditure matters;and WHEREAS,pursuant to the Intertie Grant Agreement,DOA and AIDEA have entered into a Grant Transfer and Delegation Agreement ("Grant Transfer Agreement")whereby the Intertie Grants were transferred to AIDEA to act as custodian and administrator of the Intertie Grants;and WHEREAS,Section 7 of the Intertie Grant Agreement requires that AIDEA and the Participating Utilities enter into a Grant Administration Agreement which shall set forth the terms and conditions to be satisfied by the Participating Utilities in order for there to be a disbursement of the Intertie Grants,and which shall also provide for AIDEA's obligations with respect to the Intertie Grants. AGREEMENT NOW,THEREFORE,in consideration of the recitals above (which are hereby incorporated into and shall be deemed part of this Agreement),and of the covenants and agreements hereinafter Grant Administration Agreement:March 28,1994,Draft Page 3 set forth,it is agreed by and between the parties hereto as follows: Section 1.Custodian and Administrator.The parties acknowledge that pursuant to the Grant Transfer Agreement,DOA has delegated all its powers and duties with respect to the administration of the Intertie Grants to AIDEA and that the Intertie Grants have been transferred from DOA to AIDEA for the benefit of the Participating Utilities.The Participating Utilities have requested that AIDEA serve as custodian and administrator of the Intertie Grants.AIDEA hereby accepts such appointment and agrees to act as custodian and administrator of the Intertie Grants for the benefit of the Participating Utilities, subject to the terms and conditions of,and authority and powers granted by,this Agreement and applicable law,including but not limited to those statutes and regulations applicable to the administration of grants to named recipients under AS 37.05.316 by the DOA. Section 2.Custody/Investment of Grant Funds. 2.01.Appropriation Accounts.AIDEA shall establish two <main>appropriation accounts to account for and to disburse the Intertie Grants.One account shall be designated the "Healy-Fairbanks Intertie Account"which shall be comprised of the Grant Administration Agreement:March 28,1994,Draft Page 4 $43,200,000 appropriation made by Section 1 of the Intertie Appropriation and all interest and other income to be earned thereon.The other account shall be designated the "Anchorage- Kenai Intertie Account"which shall be comprised of the $46,800,000 appropriation made by Section 2 of the Intertie Appropriation and all interest and other income to be earned thereon (the monies collectively comprising the Healy-Fairbanks Intertie Account and the Anchorage-Kenai Intertie Account hereinafter referred to as the "Intertie Funds").AIDEA shall have the authority to create and designate subaccounts for these two accounts as it deems necessary from time to time. 2.02.Institutional Custodian.In order to carry out its custodial duties under this Agreement,AIDEA may designate and hire one or more institutional trustees to act as custodian for all or any portion of the Intertie Funds and any securities which such funds may be invested in.Such institutional custodian shall hold the Intertie Funds and any securities subject to the terms and conditions of this Agreement and applicable law.AIDEA shall ensure that any institutional custodian provide the appropriate procedures to separately account for the monies,and interest and other income earned thereon,in each of the intertie accounts established pursuant to Section 2.01. Grant Administration Agreement:March 28,1994,Draft Page 5 2.03.Investment of Intertie Funds. (a)Generally.AIDEA shall develop and implement an investment strategy (the "Investment Strategy")in cooperation with GVEA and CEA for the investment of the Intertie Funds.In developing the Investment Strategy,AIDEA may also consult with and hire the services of professional investment advisers.AIDEA is hereby authorized,on behalf of the Participating Utilities,to make,execute,acknowledge and deliver any and all documents or instruments that may be necessary or appropriate,to exercise all other rights and powers,and to take all appropriate actions which it deems necessary,to implement the Investment Strategy. (b)Limitations.The Investment Strategy shall be consistent with the principles set out in AS 37.10.071.Investment of the Intertie Funds shall be limited to United States Treasury debt obligations,or obligations insured by or guaranteed by the United States or agencies or instrumentalities of the United States.The Investment Strategy shall take into consideration the cash flow needs of the Participating Utilities.The IPG shall submit to AIDEA a <eenstruction--draw>schedule for the use of grant funds,and any amendments or changes thereto as necessary from time to time,<te-AEDEA>to assist AIDEA in developing the Investment Strategy. Grant Administration Agreement:March 28,1994,Draft Page 6 Grant Administration Agreement:March 28,1994,Draft Page 7 <{d)}>(c)Institutional Investor.In order to implement the Investment Strategy,AIDEA may designate and hire either the institutional custodian hired pursuant to Section 2.02 or another institutional entity<,>to invest the Intertie Funds pursuant to the Investment Strategy,the terms and conditions of this Agreement and applicable law.AIDEA shall provide the necessary direction <and-enter-inte-any-agreements-it-deens apprepriate>to provide for the investment of the Intertie Funds. Section 3.Use of Intertie Funds. 3.01.Healy-Fairbanks Intertie Account.Monies in the Healy-Fairbanks Intertie Account and any designated subaccounts of such account shall only be used for the following purposes: (a)all costs reasonably related to the design, permitting,and construction of the Healy-Fairbanks Intertie; (b)to pay the costs associated with any institutional custodian and/or investor hired pursuant to Sections 2.02 and 2.03(d);and Grant Administration Agreement:March 28,1994,Draft Page 8 (c)to pay the costs associated with any professional investment adviser hired pursuant to Section 2.03(a). 3.02.Anchorage-Kenai Intertie Account.Monies in the Anchorage Kenai Intertie Account and any designated subaccounts of such account shall only be used for the following purposes: (a)all costs reasonably related to the design, permitting,and construction of the Anchorage-Kenai Intertie; (b)to pay the costs associated with any institutional custodian and/or investor hired pursuant to Sections 2.02 and 2.03(d);and (c)to pay the costs associated with any professional investment adviser hired pursuant to Section 2.03(a). 3.03.Unexpended Funds. (a)Project Completion.Any monies remaining in either the Healy-Fairbanks Intertie Account or the Anchorage-Kenai Intertie Account at the completion of the respective intertie Grant Administration Agreement:March 28,1994,Draft Page 9 project and payment of all outstanding obligations for the applicable project shall be returned to DOA and deposited in the State General Fund. (b)No Construction of Project.As required by Section 7 of the Intertie Grant Agreement,in the event the IPG notifies AIDEA that one or both of the intertie projects will not be constructed,the monies in the account associated with the respective intertie,after the payment of all outstanding obligations,shall be returned to DOA and deposited in the State General Fund. (c)Unreasonable Delay of Projects.As required by Section 2.4(b)of the Grant Transfer Agreement,in the event that AIDEA determines,in its reasonable discretion,that development of either intertie project is unreasonably delayed by the affected Participating Utilities,the unobligated and unexpended monies in the account associated with the respective intertie shall be returned to DOA and deposited in the State General Fund.AIDEA shall give fifteen (15)days prior notice of such decision to the affected Participating Utilities. Section 4.Disbursement of Intertie Funds.<Any> paymentsofcostsincurredby the Authority underforthe Sections 3.01(b),3.01(c),3.02(b),and 3.02(c),any disbursement, Grant Administration Agreement:March 28,1994,Draft Page 10 release,encumbrance,assignment or pledge (hereinafter collectively referred to as "disbursement"for purposes of this Section 4)of the Intertie Funds from the intertie accounts shall be subject to the procedures,conditions precedent,and limitations/ceilings set forth in this Section 4. 4.01.Conditions Precedent.<Ne-disbursement-eft anytntertieFunds-shali-be>The disbursement of Intertie Funds for the purposes described in Section 3.01(a)and _3.02(a is not permitted until the following conditions precedent have been satisfied by the Participating Utilities: (a)the Participating Utilities have entered into and executed a Participation Agreement,in a form satisfactory to AIDEA,as required by and in accordance with the Intertie Grant Agreement and Section 2.4(c)of the Grant Transfer Agreement,and transmitted a copy of the signed and executed agreement to AIDEA; and (b)the Participating Utilities have determined and agreed upon which contractual obligations related to the Intertie Grants and Intertie Funds must be submitted to the Alaska Public Utilities Commission for its review and approval,and provided written notice to AIDEA of such determination and agreement. Grant Administration Agreement:March 28,1994,Draft Page 11 4.02.Disbursement Schedules.Any disbursement of the Intertie Funds shall be subject to the limits and ceilings set forth in this Section 4.02. (a)Project Phases Ceilings.The Schedule A,which is attached to and hereby incorporated into this Agreement,and has been approved by AIDEA and the IPG,sets forth certain dollar ceilings for the various phases of development for each of the intertie projects.No disbursement of Intertie Funds for each of the respective interties which exceeds the established ceilings set forth in Schedule A shall be permitted.The parties agree that the IPG is authorized to request amendments to Schedule A,subject to AIDEA's approval,to provide for upward adjustment only of the ceilings set for the project phases.The IPG shall submit any requests for amendments to Schedule A to AIDEA in writing.The submittal shall include appropriate findings and an explanation as to why the existing ceiling is not sufficient.AIDEA agrees to consider any request for amendment within fifteen (15)days of the receipt of such request.No amendment shall be effective until approved by AIDEA. (b)Grant Transfer Agreement §2.4(e)Schedule. Pursuant to Section 2.4(e)of the Grant Transfer Agreement,the attached Schedule B,which is hereby incorporated into this Agreement,sets forth a schedule which limits the expenditure of Grant Administration Agreement:March 28,1994,Draft Page 12 Intertie Funds until the applicable Participating Utilities have demonstrated their ability to raise all additional amounts needed to complete construction of their respective interties.No disbursement of Intertie Funds for each of the respective interties which exceeds the established ceilings set forth in Schedule B shall be permitted for a specific intertie until the affected Participating Utilities (either the Northern Participating Utilities or the Southern Participating Utilities)have demonstrated,to the satisfaction of AIDEA,the ability to raise all additional amounts necessary to complete construction of their respective intertie. 4.03.Disbursement Procedures.Subject to the conditions,limitations,and ceilings set forth in Sections 4.01 and 4.02,and the terms and conditions of this Agreement, disbursement of the Intertie Funds shall be subject to the following procedures: (a)All invoices shall be initially submitted to the IPG for its review and approval. (b)After IPG review and approval,the IPG shall submit,on a monthly basis all approved invoices to AIDEA for payment.Each invoice shall be referenced to a particular intertie project and a specific phase for that project to allow AIDEA to Grant Administration Agreement:March 28,1994,Draft Page 13 properly charge the invoice against the appropriate project and to determine if payment is authorized pursuant to the disbursement schedules set forth in Section 4.02.AIDEA may request further documentation or explanation with respect to any invoice and is authorized to withhold payment until documentation,acceptable to AIDEA,is submitted. (c)If payment of an invoice is authorized,AIDEA shall pay such invoice within fifteen (15)days of receipt of the invoice. Section 5.Audit Requirements. 5.01.General.The parties acknowledge that the audit requirements of 2 AAC 45.010 apply to the Intertie Grants, Intertie Funds,and the use of such monies for the purposes set forth in this Agreement.The Participating Utilities,through the IPG,agree to have performed annual audits as required by 2 AAC 45.010,and to submit to the state coordinating agency,as such term is defined in 2 AAC 45.010(0)(4),separate audit reports,as required by and in accordance with 2 AAC 45.010,on an annual basis,for both the Healy-Fairbanks Intertie project and the Anchorage-Kenai Intertie project.Each audit and the resulting audit report shall cover the preceding ___year,and the audit report shall be submitted no later than of each year, Grant Administration Agreement:March 28,1994,Draft Page 14 beginning on .A copy of each audit report shall be transmitted to AIDEA at the same time each audit report is transmitted to the state coordinating agency.The Participating Utilities shall also submit copies to the state coordinating agency to the extent required by 2 AAC 45.010(h). 5.02.Audit Standards and Report Contents.The audits required by Section 5.01 shall be conducted by an independent auditor in accordance with the audit standards set forth in 2 AAC 45.010(c).The audit reports shall address at a minimum the items set forth in 2 AAC 45.010(d)through (g). 5.03.Additional Requirements.The audits and audit reports required by this Section 5 shall comply fully with all requirements imposed by 2 AAC 45.010,and any amendments or modifications thereto,regardless of whether such requirements are specifically set forth in this Agreement.In addition,the Participating Utilities shall ensure that the requirements of 2 AAC 45.010(j)are satisfied by any applicable third party recipients. 5.04.Books and Records.In addition to complying with the audit requirements of Sections 5.01-5.03,the Participating Utilities and the IPG shall permit AIDEA to have reasonable access upon request to all books and records related to Grant Administration Agreement:March 28,1994,Draft Page 15 the (a)design,permitting and construction of the interties;(b) Intertie Grants;and (c)Intertie Funds. Section 6.Waiver of Liability/Indemni fication. 6.01.Waiver of Liability/Indemnification on Custodial/Investment Duties.The Participating Utilities,and all their successors and assigns,hereby waive and release AIDEA,and all its officers,directors<;>and employees,<and-agents;>from any and all claims and liabilities of any nature and kind whatsoever which are related to or may arise out of AIDEA's obligations and duties as custodian and investor under this Agreement,except those which may arise from the gross negligence or willful misconduct of AIDEA.The Participating Utilities agree to and shall indemnify,defend and hold harmless AIDEA,and all its officers,directors<;>and employees,<and-agents;>from and against,any and all demands,claims,causes of action,losses, fines,penalties,judgments,damages (including punitive and consequential damages),or liabilities of any nature and kind whatsoever (including attorney's fees,and other legal fees and expenses)incurred in connection with or resulting from or arising out of or in any way related to AIDEA's obligations and duties as custodian and investor under this Agreement,except those which may arise from the gross negligence or willful misconduct of AIDEA. Grant Administration Agreement:March 28,1994,Draft Page 16 6.02.Indemnification on Contractor Claims.The Participating Utilities agree to and shall indemnify,defend and hold harmless AIDEA,and all its officers,directors<;>and employees,<and-agents;>from and against,any and all demands, claims,causes of action,losses,fines,penalties,judgments, damages (including punitive and consequential damages),or liabilities of any nature and kind whatsoever (including attorney's fees,and other legal fees and expenses)incurred in connection with or resulting from or arising out of or in any way related to the design and construction of the interties,which may be asserted against AIDEA,or its officers,directors<;>or employees,<er agents,;>by any contractor,subcontractor,consultant,or third party or entity. Section 7.Miscellaneous/General Terms. 7.01.No Third-Party Beneficiaries.Nothing in this Agreement shall be interpreted or construed as creating any rights or privileges of any kind whatsoever in persons or entities who are not parties to this Agreement. 7.02.Applicable Law and Venue.This Agreement shall be construed under the laws of the State of Alaska and any dispute shall be resolved in the Superior Court for the State of Alaska,Third Judicial District,at Anchorage,Alaska. Grant Administration Agreement:March 28,1994,Draft Page 17 7.03.No Strict Construction.This Agreement was drafted in accordance with the wishes of all parties and after negotiation and discussion between all parties,and all parties have been represented by counsel in such negotiations.The rule of construction that a contract shall be construed against the party who drafted it shall not apply to construction of this Agreement. 7.04.Counterparts.This Agreement may be executed in counterparts,in which case all such counterparts'shall constitute one and the same Agreement. 7.05.Successors and Assigns.This Agreement shall be binding upon the parties and their successors and assigns. 7.06.Modifications/Amendments.This Agreementmay not be modified or amended except by a writing signed by all the parties. 7.07.Captions/Headings.All captions and headings used in this Agreement are for the convenience of reference only and shall not be construed as part of the Agreement. IN WITNESS WHEREOF,the parties have caused this Agreement to be executed on the date first above written. Grant Administration Agreement:March 28,1994,Draft Page 18 ALASKA INDUSTRIAL DEVELOPMENT &EXPORT AUTHORITY By: Its: GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. Grant Administration Agreement:March 28,1994,Draft Page 19 ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC.on behalf of its members (Matanuska Electric Association,Inc.and Homer Electric Association,Inc.) CITY OF SEWARD F:\AIDEA\ENERGY\KAE1919 Grant Administration Agreement:March 28,1994,Draft Page 20