09-12081
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CITY O
Presented
Whereas; RockTenn is a papermaking company with facilities located in the Midway neighborhood of
Saint Paul and is considered a Permitted Indusirial User under the Service Availabiliry Charge ("SAC")
policies and procedures of the Metropolitan Council, Environmental Services division ("MCES"); and
Whereas; RockTenn has implemented over the yeazs a number of pollution prevention and water use
reduction initiatives resulting in permanent process changes to its papermaking operations at a cost to
RockTenn in excess of $25 million; and
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Requestedy�B artment o£
By:
Approved by the Office
BY� i?
Approved by -' Attorn
By:
Adoption Certified by Counc' Secretary By:
BY� / f ( ,//L/ ` -
Approve y : Date �� /.�J
By: � �
Whereas; As a result of these permanent process changes, RockTenn has succeeded in reducing the volume
of industrial waste discharges to the metropo]itan sewer system; and these r.eductions, in turn, have resulted
in the accumulation by RockTenn of site-specific SAC credits; and
Whereas; In the past, RockTenn has supported and assisted the City in the assignment by MCES of
RockTenn's site-specific credits to the City as city-wide credits; and
Whereas; MCES has announced a change to its SAC Procedure Manual, which will become effective
January 1, 2010 that will preclude additional city-wide credits and sit�specific credits after December 31,
2009; and
Whereas; The number of remaining site-specific credits in excess of those currently needed by RockTenn
to pay for its current, ongoing operations is in dispute between RockTenn and MCES, and RockTenn is
appealing MCES' determination of credits; and
Whereas; the assignment of additional city-wide credits will benefit the City; and
Whereas; RockTenn will invest time and resources in appealing MCES' determination.
Now therefore be it resolved that the council hereby ratifies the Memorandum of Understanding dated
October, 2009 with RockTenn, a copy of which is attached hereto.
Council File # d
Green Sheet # 3085576
RESOLUTION
41NT PA1J�. MINNESOTA �p
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Adopted by Council: Date �����p' �
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
FS —Financial
ConWM Person & Phone:
Marqaet Kelly
266-8796
Must Be on Council F�qenda by (Date):
04-NOV-09
Doc. Type: RESOL1IffON
E-DoeumentRequired: Y
Doeument Co�aet: Margaet Kslly
Contact Phone: 266-8796
ToWI # of Signature
23 OCT 2009
y
Assign
Number
For
Routing
Order
Ail Locations for Sgnature)
�l'l-/�U.o�'
Green Sheet N�: 3085576
2 �"mancialServices II DepartmentDireUor I �
3 ' Attoioe (� CityAttornev
4 aYOPS Offire Mavor/Assistaet
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Resolution seeking CouncIl nrification of a Memorandum of Understanding (MOUj between the City of Saint Paul and RockTenn
regazding an appeal of SAC credits for the benefit of the City.
Recommendations: Approve (A) or Reject (R):
Planning Commission
CIB Committee
Civil Service Commission
Personal Service Contracts Must Answer the Following Questions:
1. Has this person/firm ever worked under a contrect for this department?
Yes No
2. Has this pe�son/firm ever been a dty employee?
Yes No
3. Does this person/firtn possess a skill not nortnalry possessed by any
curtent city employee?
Yes No
Explain all yes answere on separete sheet and attaeh to green sheet.
Initiating Problem, Issues, Opportuniry (Who, What, When, Where, Why):
The attached Memorandum of Understanding obligates the City to cooperate with RockTenn as they appea( Met Commcil's SAC credit
determination, and fiuther obligates the City, if city-wide ccedits become available, to compensate RockTenn as the credits are used
AdvanWges If Approved:
The Ciry and RockTenn will be bound to the terms of the ageement. The City could benefit from additionat city-wide SAC credits
DisadvantagesifApproved:
Noneknown
Disadvantages If Not Approved: �
The City would not benefit from additional city-wide SAC credits should they become available.
Total Amount of
Transaction:
Funding Source:
Financial Infortnation:
(Euplain)
CostlRevenue Budgeted:
Activity Number:
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October 23. 2009 10:58 AM pa„p �
�s i���
MEMORANDUM OF UNDERSTANDING
CTTY OF ST. PAUL AND ROCK TENN COMPANY
This Memorandum of Understanding ("MQU") is entered this _ day of October, 2009, by and
between the City of St. Paul (the "Cit�') and Waldorf Corporation, d/b/a Rock-Tenn Company, a
Delawaze corporation ("RockTenn"}. The City and RockTenn may be referred to collectively from time
to time in this MOU as "the Parties."
PRELINIINARY STATEMENT OF FACTS
1. RockTenn is a papermaking company with facilities located in the Midway District of the
City. RockTenn employs 470 people at its facilities in the City and is considered a
Permitted Industrial User under the Service Availability Charge ("SAC") policies and
procedures of the Metropolitan Council, Environmental Services division ("MCES").
2. RockTenn has unplemented over the years a number of pollurion prevention and water use
reduction initiatives resulting in permanent process changes to its papexmaking operations
at a cost to RockTenn in excess of $25 million. As a result of these permanent process
changes, RockTenn has succeeded in reducing the volwne of industrial waste dischazges to
the metropolitan sewer system. These reductions, in turn, have resulted in the
accumulation by RockTenn of site-specific SAC credits. These SAC credits currently
exceed the credits needed by RockTenn to pay for its current, ongoing opera�ions.
In 1986-87, the City requested RockTenn's assistance and cooperation in seeking a SAC
credit review froxn MCES to facilitate an assignment to the City for City-wide use of
RockTenn's site-specific SAC credits beyond those needed for ongoing operations at that
time. RockTenn did provide such assistsnce and cooperation in the form of supplying the
City with discharge information and information concerning permanent process changes
that RockTenn had implemented to reduce its industrial waste discharges into the
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metropolitan sewer system. In huv, the City submitted information to MCES, resulting in
MCES assigning to the City for City-wide use 11,788 site-specific SAC credits thaz were
available as a result of RockTenn's changed operations. In 1987, the 11,788 SAC credits
were fully assigned to the City, in accordance with SAC Procedures, without payment to
RockTenn.
4. At the beginning of 2009, the City again expressed the willingness to have any excess site-
specific SAC credits attributable to RockTenn's operations reassigned by MCES to the
City for City-wide use. RockTenn was and is willing to cooperate with and facilitate the
City's efforts to obtain such reassignment from MCBS.
5. In Febniary 2009, MCES sent to RockTenn a letter detailing its findings from the
requested SAC credit review to determine and confrm RockTenn's site-specific SAC
credits. MCES made the determination that it had been miscalculating such eredits for the
past 10 years. MCES stated it had erroneously reported a potential grandpazent credit and
that the corrected "modified SAC Baseline is 5,970 Units: '
6. In May 2009, RockTenn wrote to MCES challenging its revised SAC credit deternunation
and providing explanation and documentation supporting its posifion that 18,183 SAC
credits were a�ailable because of permanent process changes made over the years by
RockTenn. On June 8, 2009, MCES made a final agency decision rejecting RockTenn's
position and reaffirming its February 2009 determivation that only 5,970 site-specific SAC
credits are attributable to RockTenn's operations. In response to a request by RockTenn
for reconsideration of its final decision, MCES agreed to meet with RockTenn on August
5, 2009, at which time RockTenn submitted addifional historical documents conceming
wastewater discharges and permanent process changes that it had implemented.
J� i�o�
7. On August 7, 2009, within 60 days of MCES' s final agency decision as required by law,
RockTenn filed a petition for writ of certiorari in the Minnesota Court of Appeals, seeking
judicial review of MCES's finai aaency decision (the "Appeal"). The Appeal is currenfly
pending before the court of appeals.
8. On August 13, 2009, MCES denied RockTenn's request for reconsideration and advised
that it intended to stand by its final decision that RockTenn has 5,970 SAC credits and not
18,183 SAC credits.
9. The Parties recognize the MCES has announced a change to its SAC Procedure Manual,
which wilI become effective January 1, 2010 that will preclude additional city-wide credits
and site-specific credits after December 31, 2009. Therefore, tune is of the essence in
resolving the SAC credit dispute and it is in the best interests of both Parties to take a11
reasonabie and prudent action to save and preserve any and all rights the Parties may have
under the current SAC policy to effectuate the assignment of site-specific 5AC credits
attributable to RockTenn's operations to the City for City-wide use. Such reasonable and
pmdent action includes, but may not be limited to, seeking a stay of MCES's final agency
decision on the SAC credits from MCES and, 3n the event such stay request is denied,
from the Minnesota Court of Appeals (the "Stay"). This action will be undertaken solely
by RockTenn and the City will not be a party to or provide legal services towazd the
action.
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T7NDERSTANDIN& OF THE PARTIES
VJHEREFORE, based upon the above Preliminazy Statement of Facts, which is incorporated into
and made a part of this Understanding, the City and RockTenn expressly understand as follows:
1. The Parties recognize that a favorable outcome of the Appeat will be mutually beneficial
to the City and RockTenn. Accordingly, RockTenn shall continue to employ the
considerable time and resources it has already eapended in prosecuting the Appeal.
2. The City shatl provide its continuing cooperation with RockTenn in connection with the
Appeat and the Stay request, in RockTenn's effart to ensure that the current SAC policy
shall continue to govem the SAC credits that aze determined to be auailable as site-specific
SAC credits arising from RockTenn's operations.
3. Upon the conclusion of the Appeal and the final deteruiination of the number of site-
specific SAC credits available as a result of RockTenn's operations, the Parties shall
review the result If excess SAC credits are available, the City shatl resume its 2009
request to MCES, seeking an assignment to the City for City-wide use, of RockTenn's
site-specific SAC eredits. The ParGies agree t�at the assignment requested by the City
sY�all consist of all site-specific SAC credits over and above the approximately 4,000 SAC
credits that RockTenn requires for current and future operations (the "Assigned Credits").
4. In the event SAC credits are assigned to the City £or City-wide use, City agrees to
compensate RockTenn at the rate of 50 percent of the Base SAC unit charge at the time of
the use of any of the Assigned Credits. Compensation will be paid as credits are used.
In the event SAC credits aze assigned to the City for City-wide use, the City agrees tA give
priority to the use of the Assigned Credits over any other City-wide SAC credits and
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Or �ada�
agrees to use the Assigned Credits before using any other City-wide SAC credits, so that
compensation to RockTenn will not be delayed.
6. The adminishation of the City shall prompfly and in good faith take all action necessary to
effectuate the understandings and ageements stated in this MOU by seeking whatever
approvals are legally necessary to allow the City to fulfill the obligations contained in tbis
MO�J.
7. In the event that MCES changes its rules, policies or procedures in a manner that impaus
or eliminates the use of the Assigned Credits, the City's obligation to compensate
RockTenn for the Assigned Credits shall cease.
WHEREFORE, the Pazties to this MOU, intending to be legally bound, execute this document as
of the date first stated above.
WALDORF CORPORATION dlbta
ROCKT �ANY
By:
Its:
CTTY OF ST. PAUL �
By: 'e7�,�.�.. >., , ,.� BY.
Its: I��
Mayor Director, Office of Financial Services
Approved as to form: �
�
Ass taut City Attomey