Eagle Point Energy 1 LLC_License Agreement Amendment
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Eagle Point Energy - 1, LLC: Amendment to License Agreement
DATE: September 12, 2012
City Attorney Barry Lindahl is recommending an amendment to the Eagle Point
Energy — 1, LLC License Agreement for the solar power cells on the Municipal Services
Building.
The License Agreement Regarding Solar Photovoltaic Equipment between the City of
Dubuque, Iowa, and Eagle Point Energy, dated October 3, 2011, allows Eagle Point
Energy to install, operate and maintain a solar panel array on the Municipal Services
Building owned by the City.
Section 11 of the License Agreement provides that "at the completion of the 22 year
term of this Agreement, as provided for in Section 2, all right title and interest in the
System shall be transferred to Lessee without further action by either party." Eagle
Point Energy has applied for certain federal renewal energy tax credits.
Eagle Point Energy has been advised by the U.S. Treasury Department that the License
Agreement is considered a financing lease and as a result Eagle Point Energy is not
eligible for those credits. In order for Eagle Point Energy to be eligible for the credits, an
amendment to the License Agreement is necessary providing that at the expiration of
the License Agreement, the City will have the option of purchasing all of the equipment
in the System at its fair market value.
If the City does not wish to purchase the system, Eagle Point Energy is required to
remove it from the building. The agreement is also being amended to allow the City to
revert to the former structure if, at a later date, power purchase agreements are
permitted.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
/ AAh kt1&1
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Barry Shear, Eagle Point Energy
Don Vogt, Public Works Director
Cori Burbach, Sustainable Community Coordinator
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THE CITY OF
DUB E
Masterpiece on the MAsissippi
BARRY LIND HU
CITY ATTORNEY
MEMORANDUM
To: Micha7 C. Van Milligen
City Manager
DATE: September 12, 2012
RE: Eagle Point Energy — 1, LLC: Amendment to License Agreement
The License Agreement Regarding Solar Photovoltaic Equipment between the City of
Dubuque, Iowa and Eagle Point Energy — 1, LLC, dated October 3, 2011, allows Eagle
Point Energy — 1, LLC (Eagle Point) to install, operate and maintain a solar panel array
on the Municipal Services Building owned by the City.
Section 11 of the License Agreement provides that "at the completion of the 22 year
term of this Agreement, as provided for in Section 2, all right title and interest in the
System shall be transferred to Lessee without further action by either party." Eagle
Point has applied for certain federal renewal energy tax credits.
Eagle Point has been advised by the U.S. Treasury Department that the License
Agreement is considered a financing lease and as a result Eagle Point is not eligible for
those credits. In order for Eagle Point to be eligible for the credits, an amendment to
the License Agreement is necessary providing that at the expiration of the License
Agreement, the City will have the option of purchasing all of the equipment in the
System at its fair market value.
Attached is an Amendment to the License Agreement which provides that at the
expiration of the License Agreement, the City has the option of purchasing the System
at its fair market value, fair market value being determined by the Parties. If the City
desires to purchase the System, it must notify Eagle Point prior to the expiration of the
License Agreement. The purchase price must then be paid by the City in cash if it is
less than $10,000.00 or in five equal annual installments if it is greater than $10,000.00.
If the City does not wish to purchase the system, Eagle Point will be required to remove
the system from the Municipal Services Building and pay all costs associated with such
removal.
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001 -6944
TELEPHONE (563) 583 -4113 / FAx (563) 583 -1040 / EMAIL balesq @cityofdubuque.org
Section 44 of the License Agreement is also amended to provide that, if the City elects
to reinstate the original Lease Agreement between the Parties, dated August 1, 2011,
then Section 11 of that original Agreement will also be amended to give the City the
option of purchasing the System at fair market value. The City has in its sole discretion
the option to revert to that original agreement should a power purchase structure be
allowed by Alliant Energy or determined by the Iowa Utility Board to be acceptable.
I recommend that the Amendment to the License Agreement be submitted to the City
Council for consideration.
BAL:tIs
Attachment
cc: Dave Heiar, Economic Development Director
John O'Connor, Esq.
Barry Shear, President, Eagle Point Solar
F: \USERS \tsteckle \Lindahl \Eagle Point Solar- Maintenance Garage\ MVM_ AmendmentToLicenseAgreement _091212.doc
RESOLUTION NO. = 261 -12
APPROVAL OF AN AMENDMENT TO THE LICENSE AGREEMENT REGARDING
SOLAR PHOTOVOLTAIC EQUIPMENT BETWEEN THE CITY OF DUBUQUE, IOWA
AND EAGLE POINT ENERGY —1, LLC
Whereas, the City of Dubuque, Iowa (City) and Eagle Point Energy — 1, LLC
(Eagle Point) entered into a License Agreement Regarding Solar Photovoltaic
Equipment between the City of Dubuque, Iowa and Eagle Point Energy — 1, LLC dated
the 3rd day of October, 20122: and
Whereas, the parties now desire to amend certain sections of the License
Agreement; and
Whereas, the City Council finds that it is in the best interests of the City to
approve the License Agreement, a copy of which is attached hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The Amendment to License Agreement attached hereto is hereby
approved.
Section 2. The City Manager is authorized to execute said Amendment on
behalf of the City of Dubuque.
Passed, approved and adopted this 17thday of September
Attest:
K
in S. Firnsta
erk
, 2012.
Roy D. uol, Mayor
F: \USERS \tsteckle \Lindahl \Eagle Point Solar- Maintenance Garage \Resolution AmendmentToLicenseAgreement 091212.doc
AMENDMENT TO LICENSE AGREEMENT REGARDING
SOLAR PHOTOVOLTAIC EQUIPMENT
BETWEEN THE CITY OF DUBUQUE, IOWA AND EAGLE POINT ENERGY —1,
LLC
This Amendment to License Agreement is entered into this17th day of
September , 2012, by and between the City of Dubuque, Iowa ( "Lessee "),
and Eagle Point Energy — 1, LLC, an Iowa limited liability company, located at 923
Peru Road, Dubuque, Iowa 52001 ( "Lessor ") (together referred to as the "Parties ").
WHEREAS, the Parties entered into a License Agreement regarding Solar
Photovoltaic Equipment on October 3, 2011; and
WHEREAS, the Parties desire to amend the License Agreement and they
wish their amendment to be in writing.
NOW, THEREFORE, the Parties agree as follows:
Section 11 of the License Agreement is deleted and replaced with the
following:
SECTION 11. EXPIRATION OF AGREEMENT. At the completion of the 22
year term of this Agreement, as provided in Section 2, Lessee shall have the option
to purchase all of the equipment which comprises the System at its fair market
value. The fair market value will be determined by the Parties. To assist the Parties
in determining fair market value, an appraiser selected by Lessee and approved by
Lessor, which approval shall not be unreasonably withheld, shall appraise the
equipment. If Lessee desires to exercise its option to purchase, it shall notify Lessor
sixty (60) days prior to the completion of the 22 year term. The Parties shall agree
on the fair market value prior to the end of the term of the Agreement. The option
price shall be paid to Lessor at the end of the 22 year term in cash if the appraisal
price is Tess than $10,000. If the option price is $10,000 or more, Lessee shall have
the right to pay the option price in five (5) equal annual payments. The first payment
will be due on the last day of the 22 year term and subsequent payments on the
anniversary date of the first payment. The equipment shall be valued as though the
equipment is not in place and less the cost of removing from the Lessee's roof.
If Lessee does not wish to purchase the System, Lessor will remove the
System from the Premises and pay all costs associated with such removal.
In all other respects, the License Agreement is hereby ratified and confirmed.
091212
Term of this Agreement, that Lessor is not a "public utility" as defined in Iowa Code
Section 476.1 and that Lessor would not be in violation of any law or regulation if
Lessor engaged in selling the power generated by the System to Lessee on the
basis of the amount of power actually generated by the System, Lessee may in its
sole discretion and upon not less than 30 days written notice to Lessor elect that
this Agreement shall be deemed null and void and the Agreement entered into and
executed by and between the Parties on August 1St, 2011, attached hereto as
Exhibit C, shall be reinstated as the binding agreement between the Parties, and in
such event, Section 11 of the August 1St, 2011 Agreement shall be deemed
amended as follows:
SECTION 11. EXPIRATION OF AGREEMENT. At the completion of
the 25 year term of this Agreement, as provided in Section 2, Licensee
shall have the option to purchase all of the equipment which
comprises the System at its fair market value. The fair market value
will be determined by the Parties. To assist the Parties in determining
fair market value, an appraiser selected by Licensee and approved by
Owner, which approval shall not be unreasonably withheld, shall
appraise the equipment. If Licensee desires to exercise its option to
purchase, it shall notify Owner sixty (60) days prior to the completion
of the 25 year term. The Parties shall agree on the fair market value
prior to the end of the term of the Agreement. The option price shall be
paid to Owner at the end of the 25 year term in cash if it is less than
$10,000. If the option price is $10,000 or more, Licensee shall have
the right to pay the option price in five (5) equal annual payments. The
first payment will be due on the last day of the 25 year term and
subsequent payments on the anniversary date of the first payment.
The equipment shall be valued as though the equipment is not in
place and less the cost of removing from the Licensee's roof.
If Licensee does not wish to purchase the System, Owner will
remove the System from the Premises and pay all costs associated
with such removal.
In all other respects, the License Agreement is hereby ratified and confirmed.
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IN WITNESS WHEREOF, the Parties have duly executed this Amendment
as of the date first written above.
CITY OF DUBUQUE, IOWA
LESSEE
EAGLE POINT ENERGY —1, LLC
LESSOR
By:
By: /I� UX/
y `',�
Roy D uol, Ma or Barry S ar, Member /Manager
C4∎�,�'
By: A
K-vin S. Firnst -hI, Ci y Clerk
F: \USERS \tsteckle \Lindahl \Eagle Point Solar- Maintenance Garage \AmendmentToLicenseAgreement SolarPhotovoltaicEquip _091212.doc
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