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