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Gavilon Grain, LLC_Salt Handling Contract (PULLED)Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Salt Handling Contract DATE: May 25, 2012 Dubuque bierd All-America City 1 2007 In 2010, the lease with Gavilon /Peavey for the salt stockpile site expired. The City took over operation of the salt business to accommodate the seasonal needs of the tri -state area. Since that time, the City has had two one -year contracts with Gavilon /Peavey for handling the salt (unloading from barges and reloading onto trucks). The most recent contract expired on April 30, 2012. Economic Development Director Dave Heiar recommends City Council approval of a salt handling contract with Gavilon Grain, LLC for the 2012 -13 season. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director Don Vogt, Public Works Director Gus Psihoyos, City Engineer John Klostermann, Street Maintenance Supervisor Steve Brown, Project Manager Masterpiece on the Mississippi TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Salt Handling Contract DATE: May 24, 2012 Dubuque bierd All-America City 1 2007 PURPOSE The intent of this memorandum is to present a Salt Handling Contract for 2012 -13 for City Council consideration and approval. BACKGROUND In 2010, the lease with Gavilon /Peavey for the salt stockpile site expired. The City took over operation of the salt business to accommodate the seasonal needs of the tri -state area. Since that time, the City has had 2 one year contracts with Gavilon /Peavey for handling the salt (unloading from barges and reloading onto trucks). The most recent contract expired on April 30, 2012. DISCUSSION The attached contract with Gavilon Grain, LLC would provide salt handling services for the 2012 -13 season. The contract language is nearly identical to that for the previous season, with the exception that the minimum quantity has been reduced from 25 thousand tons to 20 thousand tons at the City's request. In addition, the salt handling price increases from $5.00 per ton to $5.50 per ton. RECOMMENDATION /ACTION STEP To authorize the Mayor to sign the attached salt handling contract with Gavilon Grain, LLC for the 2012 -13 season. F: \USERS \Econ Dev \Cargill -North American - Peavey- Gavilon \Gavilon\20120524_Salt Handling Contract Council Memo - Gavilon.docx AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND GAVILON GRAIN, LLC FOR SALT HANDLING This Agreement, dated for reference purposes the 4th day of June, 2012, is made and entered into by and between the City of Dubuque (City) and Gavilon Grain, LLC, a Delaware limited liability company, with its principal office and place of business at Eleven ConAgra Drive, Omaha, NE 68102 (Handler). SECTION 1. LOCATION OF HANDLING FACILITY. 1.1. This Agreement is for salt handling services provided by Handler at the barge terminal facility at Dubuque, Iowa (the Facility) owned and operated by City and shown on Exhibit A attached hereto. This Agreement shall not be construed in any manner as a lease of the Facility nor as granting any interest in the Facility to Handler. 1.2. Handler shall have nonexclusive access to the Facility for the services provided herein and shall cooperate with City so that the Facility may be used by other parties who contract with City for the use of the Facility. The City shall provide a minimum of 24 hours prior notice of use by other parties. SECTION 2. TERM. This Agreement shall be in effect commencing on the 5th day of June, 2012, through and including June 30, 2013 (the Term). SECTION 3. HANDLER SERVICES. Handler shall provide the following services at the Facility: 3.1. Salt Handling. (1) Handler shall provide the following salt handling services for salt companies which City has identified as having contracted with City (the Salt Company[ies]): (a) Receive inbound delivery information and promptly unload barges for immediate delivery to the Salt Companies' customers or, if so directed, move salt to a storage pad at the Facility. Unloading of the barges shall include removing and replacing barge lids, unloading promptly and blade cleaning, and such other services as are customarily provided for barge operations. (b) Receive outbound orders from the Salt Companies and load trucks, as directed by the Salt Companies, to complete the orders. GavilonGrainLLC _SaltHandling_052412dih (c) Ensure that each and every truck that arrives at the Facility for loading is weighed empty, to obtain the tare weight, and that each and every truck after loading is weighed to obtain the gross weight. (d) Ensure that the operator of the scale is properly trained and is familiar with current and appropriate weight laws. (e) Load all trucks within the legal load limits. (f) Prepare and maintain shipping documents, barge receipts, weighing records, and inventory reports in accordance with City and the Salt Companies' specifications. (g) Unload barges in the order they are received (first -in, first -out), using best efforts to unload one (1) barge per day, but in no event shall Handler be required to unload more than three (3) total barges in any work week (i.e., Monday — Friday). If Handler is unable to unload the barges within the allowable time frame, Handler shall indemnify and hold City harmless from and against any demurrage costs. (h) Provide all of the necessary labor and equipment, including stevedoring, trucking to stockpile, stacking, and blade cleaning of barge, to unload the salt from the barges onto trucks for delivery to the Salt Companies' customers or to store and stack the salt on the storage pad. The attached Exhibit B is a listing of equipment provided by Handler. When unloading the barges, Handler agrees to inspect each barge and the salt for damage or contamination and report any such damage or contamination to City and the Salt Company. In the event the salt is damaged or contaminated, Handler shall suspend unloading immediately and notify City and Salt Company of such damage or contamination. The Salt Company will instruct Handler how to proceed. (i) When the City deems it necessary to protect the salt at the Facility by covering same, City shall, at its own expense, make arrangements with a third party to provide the covering material. Handler shall properly stack and shape the salt and do all the things necessary for a third party to cover the salt. Handler shall inspect the cover on at least a weekly basis and notify City if repairs to the cover are necessary. Repairs shall be made to the cover at City's expense. City shall be solely responsible for the removal and disposal of the covering and the expense related thereto. Q) Handler shall have no responsibility for screening salt received at the Facility, but will use reasonable efforts to break up small lumps with Handler's end loaders, provided that Handler determines in its sole discretion that such activities will not damage Handler's equipment. When requested by a Salt Company, Handler shall, at Salt Company's expense, remove, reduce or crush larger lumps of salt. (k) Handler shall provide the foregoing services Monday through Friday, 7:00 o'clock a.m. to 3:00 o'clock p.m. Central Prevailing Time, and shall assure that sufficient Handler personnel are at the Facility at all such times. Handler shall also be available other hours as directed by City during prolonged major snow events, provided that the "Outbound" handling fee set forth in Section 3.1(3), below, shall be increased to $1.00 per ton during such snow events for activities outside normal hours of operation, and provided further that City must present a minimum of 500 tons of salt to be loaded out daily during such snow events. (2) Salt Qualit (a) Any shortages of the salt in excess of an allowed shrinkage of 2 percent shall be Handler's sole liability, and Handler shall reimburse City or the Salt Company, as applicable, for such shortages at the then prevailing market price for the salt; provided, however, that Handler shall not be liable for loss due to an event of theft or force majeure, as defined in Section 17. (b) The amount of shrinkage shall be the difference between the tonnage shipped in, unloaded and stored (as determined by the barge freight bills) and the tonnage reloaded and shipped out (as determined by the truck scale tickets). (c) If City, Handler, or Salt Company protests the weights designated on the barge freight bills or on the truck scale tickets, the protesting party shall have the right and duty to check such weights by weighing such inbound or outbound shipments itself and shall inform the non - protesting parties of any discrepancies. In the event the parties are unable to resolve a dispute concerning weights, they shall have a mutually agreed upon third party determine the weights, whose determination shall be final and binding. (3) Salt Handling Fees. City shall pay to Handler the following salt handling fee(s): $3.50 per ton for salt off - loaded $2.00 per ton for salt truck loaded The foregoing fees shall be increased by $1.00 per ton for handling outside of Handler's regular hours of service as set out in Section 3.1(1)(1) above. 3 City shall pay handling fees within thirty (30) days of receipt of invoice. City shall present Handler with a minimum of 20,000 tons of salt for handling per year during the term of this Agreement. In the event City fails to present said tonnage for handling during any year of this Agreement, Handler shall invoice City at the end of that contract year period for the "Inbound by barge" and "Outbound" fees that would have been due on said shortfall, and City shall remit payment to Handler for said amount within thirty (30) days of the date of such invoice. 3.2. Handling Of Other Products. Handler may also handle products at the Facility other than salt with companies which have entered into agreements with City upon such terms and conditions as City and Handler may mutually agree by amendment to this Agreement. SECTION 4. WHARFAGE. 4.1. Handler is authorized to enter into agreements for the handling of products for customers other than City at the Facility but only upon the prior written approval of City of such agreement(s). Handler shall pay to City wharfage fees as set out below for all cargo transferred to the Facility by water transportation, rail or motor vehicle for Handler's customers other than City. Steel $0.50 per ton Other dry bulk $0.25 per ton Liquid bulk $1.50 per ton Salt $3.00 per ton Wharfage for all other products shall be negotiated with City prior to Handler entering into any agreements with other customers. 4.2. Handler shall pay wharfage fees to City monthly within 30 days of the last day of the previous month. 4.3. Handler shall provide City reasonable documentation showing the basis of the payments required by this Section. 4.4. Handler shall remove all products handled for customers other than City within 7 days of unloading such products onto the Facility. The temporary storage of such products during such seven -day period shall not interfere with City's operation of the Facility. SECTION 5. UTILITIES. Handler shall be responsible for the cost of all utilities necessary for the performance of this Agreement. 4 SECTION 6. INSURANCE. During the term of this Agreement, Handler shall, at its own expense, carry in full force and effect those insurance policies more fully described herein: 6.1. Commercial General Liability Insurance ( "CGL "), including personal injury, contractual liability and coverage for the property of others in Handler's care, custody and control, with limits of $1,000,000.00 per occurrence, as required by the Insurance Schedule attached hereto. 6.2. Handler shall either (i) delete the marine operations exclusion and the care, custody, and control exclusion in Handler's CGL policy, or (ii) obtain Wharfinger's Liability Insurance (to insure Handler's warranty of a safe berth and Handler's obligations as bailee of City owned or leased property) and Terminal Operator's Liability Insurance (to insure Handler against liability arising from its acts or omissions which cause personal injury or property damage to third parties) and Stevedore's Liability Insurance, with limits of $1,000,000.00. 6.3. Workers Compensation Insurance with statutory limits. 6.4. Employer's Liability Insurance with limits of $1,000,000.00 per occurrence. 6.5. U.S. Longshore and Harbor Workers' Act coverage with statutory limits. 6.6. If any work is subcontracted, Handler shall require each subcontractor to maintain the insurance described above. Handler shall not, however, subcontract services to be provided hereunder without the prior written consent of City to each such subcontract. Handler shall provide certificates of insurance evidencing the above coverages prior to commencement of this Agreement. All policies except Workers Compensation and Employer's Liability shall name City as an additional insured. SECTION 7. INDEMNIFICATION. Handler agrees that it shall be fully responsible for, and shall defend, indemnify and hold City, its officers and employees, harmless from and against, any and all losses and damages, any and all injuries to or death of any person(s) and any and all damage to or destruction of any property or properties caused by or arising out of the acts or omissions of Handler in the performance of or failure to perform under this Agreement and for any breach of any term of this Agreement. In addition, Handler shall be fully responsible for, and shall indemnify and hold City harmless from and against, all wages, unemployment compensation, and workers' compensation for Handler employees, agents, and independent contractors. SECTION 8. INDEPENDENT CONTRACTORS. Nothing contained herein shall be construed in such a manner as to deem the relationship between the parties as that of principal- agent, master - servant, partners, or joint venturers. Rather, Handler is an independent contractor and has no authority to make binding commitments for or on behalf of City, and each party shall be solely responsible for the acts and omissions of its own employees and agents and shall further be responsible for all wages, salaries, 5 social security, unemployment insurance, and all other obligations, whether compulsory or in the nature of fringe benefits, due its own employees and agents. SECTION 9. DEFAULT. 9.1. If either party breaches any of its obligations under this Agreement, the non - breaching party may give thirty (30) days notice of termination (except that the non- party may give five (5) days notice of termination in the event of a monetary breach), and if the breach has not been cured during the said period, the non - breaching party may terminate this Agreement. In addition, if a party commits three or more material breaches in any consecutive twelve -month period, even if cured in the applicable cure period, then this Agreement shall terminate at the option of the non - breaching party. 9.2. In the event either party (i) files a voluntary petition in bankruptcy; (ii) makes an assignment for the benefit of creditors; (iii) is adjudicated as bankrupt; (iv) becomes insolvent; (v) abandons the Facility; or (vi) breaches Section 11 herein, the other party may terminate this Agreement effective immediately. 9.3. Termination, pursuant to this Section, while being in itself a remedy for breach, shall not preclude any other legal or equitable remedy which is available to the terminating party. SECTION 10. ASSIGNMENT. This Agreement shall not be assigned, in whole or in part, by either party hereto without the prior written consent of the other, provided, however, that Handler may assign this Agreement without City's consent to any affiliate of Handler or to any successor that may acquire control of Handler. Any purported assignment not so consented to shall not relieve the assigning party from its obligations herein. Subject to this limitation, this Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns. SECTION 11. ACCESS TO FACILITY. 11.1. City shall have access to the Facility at all reasonable times for the purpose of verifying records, taking inventories, removing City owned salt or other purposes related to the operations contemplated herein. The City shall not remove salt from Salt Company piles unless a representative of the Handler is present. SECTION 12. REPAIRS. Handler shall not be responsible for any repairs to the Facility or any appurtenance thereto unless such repair is necessitated by Handler's negligence. SECTION 13. ALTERATIONS. Handler shall not, without City's prior written consent, which consent shall not be unreasonably withheld, make any alteration, addition, or modification to the Facility that exceeds Five Thousand Dollars ($5,000.00) in cost. Any alteration, addition, or modification of less than Five Thousand Dollars ($5,000.00) shall not require City's consent and shall be at Handler's expense. 6 SECTION 14. USE OF FACILITY. Handler shall not knowingly use or allow the Facility to be used or occupied for any unlawful purpose or in violation of any provision of this Agreement. Handler shall not suffer any act to be done or any condition to exist at the Facility, or permit any article to be brought therein, which is dangerous, unless safeguarded as required by law, or which, in law, constitute a nuisance, public or private, or which may make void or voidable any insurance in force with respect thereto. SECTION 15. COMPLIANCE WITH LAWS. 15.1. Handler shall comply with all present and future federal, state, and municipal laws, regulations, and ordinances, including without limitation those relating to the environment, covering facilities, equipment, and the services contemplated under this Agreement, including but not limited to the Americans with Disabilities Act and the Smokefree Air Act, Iowa Code Section 142D.3, during the performance of its handling responsibilities. Handler will not be responsible for any environmental laws, regulations, and ordinances related to the storage of salt at the Facility, except as expressly set forth in 15.2 below. Handler represents and warrants that it has (and will maintain throughout the Term of this Agreement) all permits from the governing local, state, and federal authorities necessary to perform the services contemplated herein. 15.2. Handler shall notify City of any environmental inspection with respect to the Facility, and shall notify City of Handler's receipt of any notice regarding any pending environmental inspection with respect to the Facility, no later than twenty four hours after said inspection or receipt of said notice. Handler shall notify City within twenty -four hours of Handler becoming aware of any actual, potential, alleged, or threatened violation of any environmental law, rule, regulation, or ordinance in connection with or relating to the storage and handling of the salt at the Facility. SECTION 16. DISPUTE RESOLUTION; GOVERNING LAW. 16.1. The parties shall submit any dispute, controversy or claim arising out of, relating to, or having any connection with this Agreement to arbitration in Dubuque, Iowa in accordance with the current commercial arbitration rules of the American Arbitration Association ( "AAA "), except to the extent modified herein, and agree to abide by the arbitral decision and award. Judgment upon the award shall be final and binding and may be entered by any court of competent jurisdiction. 16.2. The arbitrators shall be appointed as follows: each party shall appoint an arbitrator from a list to be prepared by the AAA. The arbitrator appointed by each party must be either (a) actively engaged in the buying or selling of industrial products and have been so engaged for a minimum of five years, or (b) retired after at least five years of active engagement in the buying or selling of industrial products. The party- appointed arbitrators shall select from the AAA's list a third arbitrator who meets the above requirement. If the party- appointed arbitrators fail to agree on a third arbitrator, the AAA shall appoint a third arbitrator who meets the above requirement. 7 16.3 This Agreement shall be construed in accordance with the laws of the State of Iowa. SECTION 17. FORCE MAJUERE. 17.1. If Handler or City is unable to perform an obligation under this Agreement by reason of a force majeure event, the time for performance of this obligation shall be extended until the force majeure event ceases. However, if the force majeure event lasts for more than ninety (90) days, the non - affected party may terminate this Agreement immediately by giving the other party written notice of such termination. 17.2. "Force majeure" shall mean any cause beyond the reasonable control of an affected party preventing said affected party in whole or in part from performing its obligations hereunder. Force majeure shall include, but is not limited to, the following: acts of God, acts of any governmental body, whether civil or military of foreign or domestic, acts of public enemy, riots, strikes, labor disputes, all perils and accidents of the seas or other waters, fires, explosions, floods, winds, embargoes and major mechanical breakdown. 17.3. Upon occurrence of a force majeure event, the affected party shall promptly notify the other party giving a description of the nature, cause, and probable duration of the force majeure event. Said affected party shall exercise due diligence to remedy and overcome the force majeure event. SECTION 18. WAIVER. No waiver by either party hereto of any breach by the other of any term, covenant, condition or agreement herein and no failure by any party to exercise any right or remedy in respect of any breach hereunder, shall constitute a waiver or relinquishment for the future of any such term, covenant, condition or agreement or of any subsequent breach of any such term, covenant, condition or agreement, nor bar any right or remedy of the other party in respect of any such subsequent breach. SECTION 19. SURRENDER. Handler shall, on the last day of the Term of this Agreement or upon any termination of this Agreement, surrender and deliver up the Facility, without fraud or delay and in good order, condition and repair, reasonable wear and tear excepted, free and clear of all lettings and occupancies, free and clear of all liens and encumbrances other than those existing on the date of this Agreement. Handler's trade fixtures, personal property and other belongings of Handler shall be and remain the property of Handler, and Handler shall have sixty (60) days after the expiration of the Term of this Agreement to remove the same after which time any property remaining shall become the property of City or will be removed at Handler's cost, as City determines in its sole discretion. SECTION 20. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement between the parties. There are no terms or conditions other than 8 those stated herein, and no agreements, understandings, representations, or warranties, oral or written, of any kind, except those expressly set forth herein. This Agreement shall supersede any other storage and handling agreement previously executed by the parties, or any amendment thereto, and all such previous agreements shall have no force and effect. SECTION 21. NOTICES. All notices, demands or other writings in this Lease provided to be given or made or sent, or which may be given or made or sent, by either party to the other, shall be deemed to have been fully given or made or sent when made in writing and deposited in the United States mail, registered and postage prepaid, and by facsimile addressed as follows: TO CITY: TO HANDLER: City of Dubuque, Iowa City Manager City Hall 50 West 13th Street Dubuque IA 52001 Fax: 319- 589 -4149 Gavilon Grain, LLC 505 East 7th Street Dubuque, IA 52001 With a copy to: Gavilon, LLC Attn: Contract Administration 11 ConAgra Dr., Ste. 11 -160 Omaha, NE 68102 Fax: 402 - 221 -0700 The address and /or fax number to which any notice, demand or other writing may be given or made or sent to any party as above provided may be changed by written notice given by the party as above provided. CITY OF DUBUQUE, IOWA GAVILON GRAIN, LLC By: By: Roy D. Buol, Mayor Attest: Kevin S. Firnstahl, City Clerk 9 EXHIBIT A BARGE TERMINAL STORAGE AND LANDING FACILITY ..▪ ..1 MM.. r �...........1.* k...xsldaefu..•v.w ▪ . -mow . - r..,..,..,�� ...r. MI .+. `.1.es ...... a MS NI min R, m .awry .^................... muds. mom 0 100 200 Available Site 1 inch ■ 200 Hut Feet 400 600 900 DAGIS DUBUQ( 10 EXHIBIT B EQUIPMENT PROVIDED BY HANDLER Excavator Portable Conveyors — 480 ft 1 - Salt Stacker Conveyor 1 - Endloaders 1 - Skidsteer 1 - Bulk Hopper Bunkers to hold up to 100,000 tons 11