278880 _ .
WHI7E - CITV CLERK COLLRCII �//� h
PINK FINANCE GITY OF S�IINT PA<1L (J� �/ j
�LUERr, MAVORTMENT Flle NO. � ` ���V}`
Gity Attny/PBB _ y�/� • / /; �f
/ f�Ii nce Ordinance N�. �(��/
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Presented By
Referred To Committee: Date
Out of Committee By i Date
A legislative ord�inance granting to the
District Heating Devel�opment Company a non-
exclusive franchise tq use public streets and
property to constructiand operate a district
ZZeating system.
THE COUNCIL OF THE CITY OF �AINT PAUL DOES ORDAIN:
Sect�.on 1.
The District Heating Develo�ment Company, a non-profit Minnesota
corporation, hereinafter referre� to as "DHDC" , is hereby granted a
franchise to use the streets andiother public property within the City
� � of Saint Paul for the purpose of constructing and operating a district
heating system within said City. Said franchise may not be sold,
transferred, assigned, pledged, �nortgaged, or in any way disposed of
of encumbered without the consen� of the City by ordinance, any of
the foregoing to be treated as aI modification of this franchise;
provided, however, that this sentence shall not apply to revenue
bonds issued to finance construc�ion or expansion of the district
heating system. I
Sect�ion 2.
The franchise granted hereil shall extend to the construction
of the district heating system b� DHDC in the City of Saint Paul.
DHDE shall, prior to commencemenit of any construction or usage of
the public streets or other publlic property within the City of
Saint Paul shall file with the C�ity of Saint Paul a detailed
COU[VC[LMFN
Yeas Nays Requested by Department of:
Fletcher
�evine In Favor —
Masanz
Nicosia Against BY
Scheibel
Tedesco
Wilson
Form Ap oved by City Attorney
Adopted by Council: Date
Certified Passed by Council Secretary By � `/����
By
Approved by Mayor: Date Approved by Mayor for Submission to Council
By gY .-- �
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routing map showing the construction of the district heating system.
Such franchise to use the streets and other public property located
in such city shall include such u�e for the purpose of constructing,
ma.intaining, and operating a syst�m of pipes, subways and ma.nholes
with all other necessary appurtenances for carrying on a district
heating system. Expansion of the district heating system beyond
that contained in said routing ma.� shall be governed by and in accor-
dance with the applicable provisipns of the Hot Water Delivery Agree-
ment. All of the foregoing are subject to the provisions of Section
5 hereof.
SectJion 3.
In locating its district heat�ing facilities, DHDC shall not
unreasonably interfere with the �afety and convenience of ordinary
travel along and over said street�s and public property nor inter-
fere with other uses to which su¢h places ma.y be put by the City
of Saint Paul, and in the event �1t shall become necessary during
the term of this franchise to rer�ove or relocate the physical proper-
ty of DHDC located within or upoYi4 any of the streets or public proper-
ty in the City of Saint Paul, be¢ause of such interference or use
by the City, or as a result of amy public improvement undertaken by
the City, DHDC shall, when so ad�ised by the City, remove and relocate
said facilities without cost to �he City, and shall place the streets
or other public property in the �ame condition as they were prior
to said removal or relocation. Qny relocation or removal of DHDC' s
facilities ma.de necessary becaus� of the extension through or into
the City of a Federally-aided st�.te trunk highway, included within
the National System of Interstate Highways, shall be governed by
the provisions of the Minnesota Statutes 1981, Section 161.46.
Sec�tion 4.
DHDC in the installation, majintenance, and operation of its
facilities shall be subject to s'uch reasonable regulations, not
inconsistent with this Ordinanc�, as may be provided by the City.
No pipe or other appurtenances �hall hereafter be installed or laid
by DHDC upon the streets and public property of the City, except
upon application to the Departm�nt of Public Works or other persons
designated by the City, and wri�ten permission therefor granted by
said department or person. i
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Sect�on 5.
(a) During the term of the f anchise hereby granted, DHDC
shall pay the City an annual dist ict heating franchise fee in
the amount of 8% of DHDC' s annual gross earnings, except as
further provided in this section. Said payments shall be ma.de
in monthly installments, after th� accumulation of the amounts
required by subsection (b) hereinl. Said payment, when ma.de,
shall be 8% of the gross earningslof DHDC for that month which
is the thirteenth month precedinglthe month in which payment is
ma.de, it being the intention of slubsection (b) and of this sub-
section that the franchise fees flor the most recent 12-month
period be accumulated thereunder lin the Franchise Fees Account.
The payment shall be due on or be�fore the 25th calendar day of
the month in which payment is ma.d�e. The payment obligation shall
be met if the payment is ma.iled a�nd postmarked on or before the
due date. Gross earnings for the purposes of this Ordinance, shall
mean all sums received or receiv ble by the Company from the sale
of hot water to customers of DH . In no event shall DHDC be
required to pay a franchise fee in excess of the amount which it
can legally collect from its cust�omers in the City by means of a
surcharge on its rate schedule fdr the purpose of collecting the
franchise fee.
(b) Such franchise fee shall be accumulated by DHDC in an
account held and ma.intained by DI$DC (the "Franchise Fees Account") .
Said accumulation shall be in anlamount at least equal to the
franchise fees for the precedingjtwelve (12) months' period (such
accumulated amount to be called �he "Franchise Fee Requirement")
for so long as bonds issued by t�ne HRA for financing the district
heating system rema.in outstandin�.
(c) DHDC is exempt from the� franchise fee and is specifi-
cally relieved of the payment th�reof in any month in which there
are insufficient funds in the Re enue Account established by those
certain Loan Agreements between �he HRA and DHDC, and City and
DHDC (the "Loan Agreements") to fnake the payments required by
the Loan Agreement or to pay theldebt service on bonds issued
pursuant to the Loan Agreements.l In such case, DHDC or the
Trustee as identified in the Loa1n. Agreements may withdraw from
the Franchise Fees Account such ja.mounts as ma.y be necessary to
pay said debt service, providedjthat no withdrawals for debt service
payment shall be made if there a�re sufficient funds available there-
for in funds or accounts from wl�ich prior withdrawals are to be ma.de
under the Loan Agreements.
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(d) The franchise fee hereur�der shall be paid from funds
in the Franchise Fees Acco unt in excess of the Franchise Fees
Account Requirement and not requi�red to pay debt service.
(e) DHDC shall determine for�l each such month the exact
amount of the franchise fee whicH would have been paid to the
City but for the operation of sul�section (c) hereunder. In
any subsequent month in which th re are sufficient funds avail-
able for debt service in the Rev nue Account and subsection
(b) has been complied with, the ranchise fee required by sub-
section (a) herein shall be paid to the City, together with an
additional amount computed by dividing the total of all fran-
chise fees not previously paid b� the number of months in which
such franchise fees were not pai�l. Such total unpaid franchise
fees shall be reduced in like ma ner each month when sufficient
funds are available and when sub�ection (b) herein has been
complied with, until all unpaid �ranchise fees have been paid.
Sect�on 6.
(a) All rates made, demande¢l or received by DHDC shall be
just and reasonable. Rates shall not be unreasonably preferential,
unreasonably prejudicial or disc�iminatory, but shall be sufficient,
equitable and consistent in appl'cation to a class of consumers.
Rates shall generate sufficient �evenue to allow DHDC to recover
its reasonable operating costs a�d expenses; to provide for the
timely and orderly payment of co ts and expenses; to provide for
the timely and orderly retiremen� of debt, including those bonds
issued for financing the System;lto pay the debt service on such
bonds; and to provide for improvlements, enlargements and extensions
necessary to adequately service the territory of the City, in-
cluding the principal and interelst to become due on obligations
issued or to be issued therefor.j
(b) The rates, together wit�h Rules and Regulations govern-
ing Hot Water Heating Service no�t inconsistent with the Hot Water
Delivery Agreement, contained ir� Schedule "A" attached to this
Ordinance and incorporated herein by reference, shall rema.in and
continue in force until amendedlor changed as provided herein.
(c) DHDC shall not directl� or indirectly charge, demand,
collect or receive from any con�umer or person a greater or less
compensation for any service re dered or to be rendered by it
than that prescribed in Schedul� A; nor shall any person know-
ingly receive or accept any ser�ice from DHDC for a compensation
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greater or less than that prescribed in Schedule A. DHDC shall
not, as to rates or service, make or grant any unreasonable pre-
ference or advantage to any person or subject any person to any
unreasonable prejudice or disadv tage. Nothing contained in
this subsection shall be construed to impair the tax-exempt
status of bonds issued to finance the System. "Service" as
used herein does not include cust�omer connection charges and
practices. I
(d) DHDC shall keep and ren er its books, accounts, papers
and records accurately and faith�ully in the manner and form
prescribed by the City, and shall comply with all directions of
the City relating to these books,l accounts, papers and records,
including furnishing of such infdrma.tion or compilations and
permitting an audit of the books, accounts, papers and records,
as may be requested by the City.
(e) After 60 days ' notice t the City, DHDC ma.y file in
the office of the City Clerk a n�w or amended Schedule A, con-
taining new or amended rates, rules or regulations, together
with Rules and Regulations gover ing Hot Water Heating Service
not inconsistent with the Hot Wa�er Delivery Agreement. Such
notice is jurisdictional to a ch�inge in Schedule A and shall
include statements of facts, sub tantiating documents, and
exhibits supporting the changes �equested, and further shall
state the changes proposed to be made in the rates then in
force, and the time when the cha�ges will go into effect.
Such new or amended rates shall e effective and ma.y be charged
on the tenth day (or such later date that DHDC shall designate on
its filing) after the filing of he new or amended Schedule A in
the office of the City Clerk, an� shall continue in effect until
approved or denied by resolution, or until deemed approved, pur-
suant to the terms of this Ordin�nce and the Charter, which
Charter requires a public hearin after proper notice.
(f) The proposed changes sh 11 be approved if they are
just, reasonable and nondiscrimi�atory. The City shall be
required to take into account the need of DHDC for revenue suf-
ficient to enable it to meet the�cost of furnishing the service;
to provide for the timely and or erly retirement of debt; including
those bonds issued for financing the initial system; to pay the
debt service on such bonds; and �o provide for improvements,
enlargements and extensions nece sary to adequately service the
territory of the City, including the principal and interest to
become due on obligations issued�therefor. The City
shall also be required to take i to account the operation of
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the terms and conditions of the I�ot Water Delivery Agreement,
including sections 6.7, 7 .3 and 21. 2 thereof, which is the
uniform contract entered into byIDHDC and DHDC customers
providing for a detailed method oIf charges for dema.nd and
energy related costs. The uniform Hot Water Delivery Agree-
ment shall be filed in the OfficeI of the City Clerk at the
same time as the written acceptan!ce required by Section 14
herein. Amendments to the Hot Wa,ter Delivery Agreement shall
be filed with the �ity Clerk at lleast ten (10) days prior to
the effective date of such an ame dment or amendments; provided,
however, that no amendment to sec�tions 6.7, 7.3, or 21. 2 of
said Agreement shall be effective unless and until approved
by the City Council by ordinance. Amendments to other sections
of said Agreement are effective without approval ten (10) days
after filing.
(g) At the request of DHDC a�.d in order to assist in
determining whether the proposed �changes in Schedule A shall
be approved or denied, the City y require a public hearing
before a hearing examiner who sha 1 be selected by mutual
agreement of City and DHDC within 10 days of DHDC' s request.
The hearing examiner shall hold a hearing as a contested case
and make recommendations to the C�ty. Upon receipt of such
recommendations, the City shall b resolution approve or deny
the propose d changes in Schedule �A. If no such action is taken
by the City within 30 days after receipt of the hearing exam-
iner' s recommendations, such propbsed changes are deemed approved.
(h) Proposed changes to Sche�ule A can only be approved,
approved in part if severable, or denied; and cannot be modi-
fied or amended. The City ma.y no�withstanding require DHDC
to refund or credit to its customers any increases in rates which
are in excess of the lawful and r�asonable rates as finally
determined.
Section 7.
For the purpose of assisting the City in the regulations
of the activities and rates of DH�C as provided in this fran-
chise, the City Attorney shall ap oint an assistant or other
attorney to perform the duties th$t such regulation necessitates.
Sect�.on 8.
DHDC shall pay the City durin the term hereof an annual
amount of $15,000.00 payable on O�tober 1 of each year herein,
which sum shall be used to pay th�t part of the annual salary
����s��
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of the individual appointed by the City Attorney, his assistant
or assistants, clerical help and office expenses, outside accoun-
tants, hearing examiner, attorneys, advisors, and consultants '
fees, reasonably related to the r�gulation of DHDC, its rate
schedules, and other matters and perations under this franchise.
The amount of such payment or pay ents shall be allowed as an
operating expense of DHDC in the �City of Saint Paul . Such sum
shall be increased each year by a�dollar amount expressed in
percentages equal to the percenta e increase in the Consumer
Price Index (or its successor ind x) for that year, the increases
to be cumulative and based on the�amount of such sum plus the
nrevious years' increases.
Secti�n 9 .
DHDC shall file during each �nonth with any person designated
by the City, a report of the number of customers, sales and
revenues by classes of service fo the preceding month based upon
its utility operations within the�City of Saint Paul.
DHDC shall also file with su h person as may be designated
by the City within three months a�ter October 1 of each vear, a
complete detailed statement on forms to be approved by said
person, covering the utility oper tions within the City of Saint
Paul for the preceding year, incl�iding all revenues, expenses
and plant investment, together wi�h such breakdown an analysis
of operating statements as the sa�d person may request. The
said person designated by the Cit shall have the right to re-
quire additional information concerning operations under this
ordinance from time to time in su�h form as may be prescribed
by said person.
Any person or persons design ted for that purpose by the
City shall have the right, at all reasonable times and upon
reasonable notice, to examine the books of account, records,
vouchers, disbursements, rates, r venues, contracts, purchases,
sales and other transactions bear ng on and relevant to the
rates DHDC charqes and the servic it provides to its customers
in the City of Saint Paul . �
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Sectidn 10.
Before this ordinance shall b�e finally adopted by the Council,
a public hearing shall be held upjon ten (10) days ' published notice
in the official newspaper and after said hearing the Council may
pass this ordinance, revise or amend the same. DHDC shall bear
the costs of publication of the f�ranchise ordinance and shall ma.ke
a sufficient deposit with the Cit�r Clerk to guarantee publication
before the ordinance is published.
Sectio� 11.
DHDC shall defend, indemnify �.nd save the City whole and
harmless from any and all dama.ges or claims for injury or damage
to persons or property occasioned by or arising out of the con-
struction, maintenance, operation or repair of DHDC' s business
in the City. DHDC shall insure i s obligations in this section
with an insurer authorized to do usiness in the State of Minnesota
in form, coverage and limits appr�ved by the City Attorney and
the Director of the Department ofiFinance and Management Services.
Sectio� 12.
Every section, provision, or �art of this ordinance is
declared separate from every othe section, provision, or part;
and if any section, provision or �art shall be held invalid,
it shall not affect any other sect�ion, provision or part.
Sectior� 13.
DHDC shall, within thirty (30�, days after the passage, approval
and publication of this ordinance,l file with the City Clerk of
said City its written acceptance i�hereof in form to be approved
by the City Attorney, and therein shall agree to abide by, keep,
and perform all the terms, limitat�ions, conditions, and provisions
of this ordinance.
I
�NHITE - CITV CLERK
PINK - FINANCE GITY OF S�INT PAUL COUI1C11 �//� y�/ /�
CANAR-j - DEPARTMENT Fll@ NO. ✓• �v ��/
�9Lt1E - MAVOR
Ordinl�nce Ordinance N 0._� l�.,7��
Presented By I
Referred To Committee: Date
Out of Committee Bv Date
-9-
Se�tion 14 .
This franchise herein grant d shall not be exclusive nor
irrevocable, but may be terminat d and forfeited after notice
and hearing for any breach or fa lure by DHDC to comply with
the terms, limitations or condit�ons hereof.
Se�tion 15 .
This franchise is granted f r a term not to exceed Thirty-
One (31) years from and after th effective date of this
Ordinance, pursuant to the provi ions of Minn. Laws 1981, ch.
334, sec. 6, subd. 5 .
Section 16 .
This ordinance shall be cod�ified as an Appendix to the
Saint Paul Legislative Code at t e time of its next printing.
COUIVCILMEN
Yeas Nays Requested by Department of:
Fletcher � _
�E In Favor
Masanz �)
Nicosia lV Against BY
Scheibel
�ee
Wilson
J�JI 2 Q ��8� Form Appro ed by City Attorney
Adopted by Council: Date ' _
Certified a Cou cil re By ?_!�� 2"
Approv Mayor: Date Approved by Mayor for Submission to Council
By BY
�SHEO J U L 2 41982
� DEPARTMEIIT: P E D
� ROUTING AqD EXP TIpN SNEET COMTACT: �1 n�� pa r;.��
(GREEN SH ET) PH�E% 292-608?
For Administrative Orders, Resoluti ns, Ordinsnces snd Agreements ���
ROUTING ORDER - ROUTE BY AS32BNE� NUMSER!
2 DIRECTOR OF MANA�EMENT
MAYOR
_L DEPARTMENT DIRECTOR DIRECTOR, FINANCE $ MIGT. SERVICE3
CITY ATTORNEY CITY CLERK
BUDGET DIRECTOR
.
.
Approval for submission to Council
,
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Implement the District Heating project.
.
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The City will be assured a competitive d wntown heating system, The City will ;keep
its $7.7 million UDAG.
ATTACHMENTS �LIST ALL ATTACHMENTS):
1, Opdinance
2,
3,
Qa,ae nev.ce�u nece,a o� o e o auppoa.tcrg
� . . . � �'
1. Counc.i.L Reao.G�ti.ore Requ.i�c¢df VES NO 1. Re6o.Cuxi`oKY yES NO
2. Inew�ance tteq;wr.edf YES NO 2. Inauna►tce Su6�.i.C.i.en.tY YES NO
3. In4unance A#achedY Y�S NO
Rnvis3ai aM:4/29/82
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DISTI2IC'T HEATING 4 1 6 4 ' '
DEVELOPb1ENT CO., INC.
22-1
_���_ 13 ,s8� Xaso
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� TO THE / _ ,_ (�j �i ;
l � � . �( c� �- P $ ��. `7 b_ _ �i �
UHllER OF c � ������ � C i
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' ' -- -- - OLI.ARS II �
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�, 'I�I' First Bank Saint Paul ! r
wmes�Flm e���snrom
�I Firat National Benk of Saint Paul .i �
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I I 332 Minnesotn SL �.i -
St.Paul,MN 55101
� FoH ��.�(� �l _ — !� ;
��'004 L64��'� �:0960000 L4�: 20���9� 249ii' � �
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. PURCHASE RDER °���
I
4079
To City of St . Paul SHIP TO District Heating
Development Co.
ADDRESS ADDRESS
��nr CITY
FOR REO. NO. HOW SHIP DATE REQUIRED TERMS DATE
�US G' �� 8-10-82
� : .
� Publishin of franchis ranted to DHDC
2 430 ublished lines at . 222� per line 95 46
3
4
5
6
1
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OUR ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, P�ASE S ND COPIES OF YOUR INVOICE WITH ORIGINAL Blll OF LADING,
ETC.
PLEASF NOTIFV US tMMEDIATEIY IF YOU ARE UMABIE TO SHIP COM-
PIETE ORDER BY DATE SPECIFIED. PURCHAStNG AGENT
IREDIFORM�. 1 S 144 ORIGII�AL
POLY PAK (50 SETS) iP I41
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a78'8'�'0
APPENDIX A
The rates that shall be eff ctive upon adoption of this
Ordinance and until subsequentlylamended shall be : .
Demand Rate: $ . 89 per kilowatt per month
Energy Rate: $ . 0148 per kilowatt hour
PROMPT PAYMENT PROVISION: A chaxge of $5 .0� will be added to
net bill computed at the rate shlwn above, which charge shall
constitute a discount from gross bill for payment within the
discount period, all as more specifically provided in the Hot
Water Delivery Agreement. �
FUEL CLAUSE: As provided in the Hot Water Delivery Agreement,
the Energy Charge may be appropr�ately adjusted (i.e. , spread
over the remaining months in the fiscal year) from time to time
during fiscal year to cover cost increases (or decreases) occurring
subsequent to the establishment f Projected Energy-Related Costs
for such period regarding energy',, purchased by DHDC, to the extent
such costs are in excess of (or elow) those costs projected by
DHDC in establishing the Energy harge for such period.
SURCHAIZGE: A surcharge of 8 . 7� ill be included in the gross
and net monthly bills computed u der this rate schedule .
.�`' � �?" �''" �-�
DISTRICT
H EATING
DEVELOPMENT
COMPANY
J��O a private, non-profit company
��d ��
L,f " ���� �� 138 Bremer Building
T}' �+r ,� �Z 417 North Robert
July 29, 1982 rk�t;�l��,� Saint Paul, MN 55101
"` '`'�S i,+L ,�;�F^f�+� 612-297-8955
' �.
Mr. Albert B. Olson
City Clerk
City of Saint Paul
Ci ty Hal l I
Saint Paul , MN 55102
Re: DHDC FRANCHISE
I
Dear Mr. Olson:
Pursuant to Section 13 of Ordina�hce No. 16947 (Council File No.
278880), that legislative Ordinance, granting to the District Heating
Development Company hereby files and submits to you its written
acceptance of the terms and con�itions of such Ordinance. The
District Heating Development Compa y agrees that it will abide by,
keep, and perform all the terms, liroitations, conditions and provi-
sions of that Ordinance as required therein.
District Heating Development Compa� also agrees that the provisions
of Section 2 of such Ordinance re subject to the provisions of
Section 4 thereof, and will complJ� with those provisions as though
the reference to Section 5 were Changed to read Section 4. It is
further agreed that the City Council may at some future date amend
Section 2 of such Ordinance to ct�ange the number 5 to a 4 in the
last entenc of said Section 2. I
Ver uly ours,
� �
H NS 0. NY N,
President
I
�_
. � . � ..�:: � f' t"„p:^Y";_+ A�"l
�1 d
r,.�ti' C �
DISTRICT
H EATING
I DEVELOPMENT
COMPANY
a private, non-profit company
138 Bremer Building
AUCJUSt 6� 1982 417 North Robert
Saint Paul, MN 55101
612-297-8955
Mr. Albert B. Olson
City Clerk
City of Saint Paul
City Hall
Saint Paul, MN 55102
Re: DHDC FRANCHISE
Dear Mr. Olson:
Pursuant to Section 13 of Ordina ce No. 16947 (Council File No.
278880) , that legislative Ordina�ice granting to the District
Heating Development Company a franchise for purposes of the
District Heating System, the Dis rict Heating Development
Company hereby files and submits�to you its written acceptance
of the terms and conditions of such Ordinance. The District
Heating Development Company agre s that it will abide by,
keep, and perform all the terms,�limitations, conditions,
and provisions of that Ordinance as required therein.
The District Heating Development Company also agrees that
the provisions of Section 2 of such Ordinance are subject
to the provisions of Section 4 t�ereof, and will comply with
those provisions as though the r ference to Section 5 were
changed to read Section 4. It is further agreed that the
City Council may at some future �ate amend Section 2 of such
Ordinance to change the number 5, to a number 4 in the last
sentence of said Section Z.
Very ruly yours,
"'���
HA S O. N MAN, =``°
Presiden ��-`' `�
_��'> �a
_��r-
,--i
",� ._.... �
I ,•,+'.:.i: t..�J
cc: Philip B. Byrne _�=<<� � �
William Mahlum .�'`'
.�� �4
��
t'r� �i3
v
�,:
�. �-= �_ ��� � �
,,�•*� �. � CITY OF SAINT PAUL
;� a '� OFFICE OF THE CITY ATTORNEY
+ "�"��° o EDWARD P. STARR, CITY ATTORNEY
. �
,... 647 City Hall,Saint Paul,Minnesota 55102
612-298-5121
GEORGE LATIMER '
MAYOR
August 4 , 1982
Mr. Hans O. Nyman
President
District Heating Development Com any
138 Bremer Building
417 North Robert Street ; ._
St. Paul, Minnesota 55101
RE: DHDC Franchise Ordinance
Dear Hans :
The letter of acceptance of the erms and conditions of the fran-
chise ordinance was incorrectly yped and omitted a portion of
the first sentence in the first paragraph. I am enclosing a copy
of both my suggested draft and t e letter which was sent to Mr.
Olson, and I would suggest that ou have it retyped and resubmitted
to the City Clerk so that it is omplete .
Very truly yours,
PHILIP B. BYRNE '
Assistant City Attorney
c-> ,��'"
-=,i �:°�
Encs. �^-.;
_�
� :� �..
-o r
r-r-.�
cc: Albert B. Olson, City Clerk �--"'�' -- ,.—�'-
�-- :�
William Mahlum i�" �' o
�� �
�� �
� �
" � rv
...M �,
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WHITE - CITV CLERK
PINK - FINANCE r � GITY OF SIAINT PAITL Council (��� /
CANARY - DEAAR�fMENT File NO. �i��
BLUE - MAYOR
City Attny/PBB .
� OrGLZ �nce Ordinance N 0.
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�
Presented By
Referred To Committee: Date .
Out of Committee By Date
A legislative o dinance enacting Appen ix F
o the Saint Paul Le�islative Code, grant' g to
t District Heating Development Compan a non-
ex usive franchise o use public str ts and
prop ty to construc and operate a istrict
heatin system. '
BE IT ENACTED BY THE UNCIL OFITHE CITY OF SAINT PAUL:
HOT W ER F NCH SE — DHDC
S n 1.
The Saint Paul Legislativ de is hereby amended by adding
new Appendix F as follows.
Sec ion 2 .
The District Heatin Devel�pment Co any, a non-profit �
Minnesota corporation, ereinaf er referr to as "DHDC" , is
hereby granted a franc ise to u$e the stree s and other public
property within the C' ty of Sair�t Paul for t purpose of con-
structing and operat'ng a distr ct heating sy em within said
City. Said franchi e may not b sold, transfe ed, assigned,
pledged, mortgaged or in any �a y disposed of or encumbered
�aithout the conse t of the City by ordinance, any f the
foregoing to be reated as a mo ification of this anchise.
.
.
COUNCILMEN i Requested by Department of:
Yeas Nays �
In Favor II
Against I By
II Form A roved by City Attorney
Adopted by Council: Date - �, c�'2 Z�p�i
Certified Passed by Council Secretary BY
BY I
Approved by Mayor: Date Ap �o ed by Mayor for Su ' s'on to C uncil
II
By
� � �88�t�
�2-
Section 3.
The franchise granted herei shall extend to the initial
construction of the district heating system by DHDC which will
consist of approximately 50, 000 feet of twin piping throughout
50 square blocks i the City of Saint Paul . DHDC shall, prior
to commencement of ny construct�ion or usage of the public
streets or other pub ic property within the City of Saint Paul
shall file with the C ty of Sai�t Paul a detailed routing map
showing the initial co tructio of the distric,� heating system.
Such franchise to use t stree s and other p �lic property
located in such city sha incl�de such use r the purpose of
constructing, maintaining, and operating a ystem of pipes,
subways and manholes with a 1 o�her necess ry appurtenances
for carrying on a district h t'ng syste . Expansion of the
district heating system beyon hat con ined in said routing
map shall be governed by and in accord ce with the applicable
provisions of the Hot Water Deli ry reement. All of the
foregoing are subject to the prqv i s of Section 5 hereof.
Sect�i 4
In locating its district h ting cilities, DHDC shall in
no way unreasonably interfere th the s fety and convenience
of ordinary travel along and o r said st eets and public prop-
erty nor interfere with other u es to whic such places may be
put by the City of Saint Pau , �nd in the e nt it shall become
necessary during the term o th' s franchise remove or relocate
the physical property of D DC l�cated within upon any of the
streets or public propert in t e City of Sain Paul, because
of such interference or e by �he City, or as result of any
public improvement under aken b the City, DHDC all, when so
advised by the City, re ove and relocate said fac ities without
cost to the City, and hall pla�e the streets or p lic property
in the same condition as they w re prior to said re oval or re-
location. Any reloc ion or re$noval of DHDC' s facil ' ties made
necessary because of the extensl�on through or into th City of
a Federally-aided state trunk highway, included withi the
National System of Interstate Highways, shall be gover ed by the
' provisions of the Minnesota Statutes 1981, Section 161 . 6 .
• • • • I�, /'�• V V�'./
III
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Sec ion 5.
DHDC in the installation, aintenance, and op ration of its
facilities shall be subject to uch reasonable r ulations as
may be provided by the City, an no pipe or oth appurtenances
shall hereaft` be installed or laid by DHDC u on the streets
and public prop rty of the City� except upon pplication to
the Department o Public Works r other pers ns designated by
the City, and wri en permissio therefor anted by said
department or perso .
Sec ion 6 .
(a) During the te of th fran ise hereby granted, DHDC
shall pay the City an an ual di tric heating franchise fee in
the amount of 8� of DHDC' annu 1 g ss earnings , except as
further provided in this s tio . aid payments shall be made
in monthly installments. T p y nt for each month shall be
due on or before the 25th cal n a day of the month and shall
be 8� of the gross earnings fo e preceding month as actually
determined or reasonably estima d. Adjustments shall be made
when actual figures become ava ' ble to replace said estimates.
The payment obligation shall b m t if the payment is mailed
and nostmarked on or before t e du date.
(b) Such franchise fee sh 11 b accumulated by DHDC in
an account held and maintai ed y DH (the "Franchise Fees
Account") . Said accumulat' n s all be in an amount at least
equal to the aggregate ann al f anchis fee (such accumulated
amount to be called the " ranch se Fee quirement") for so
long as bonds issued by e H�tA for fina ing the Initial System
for district heating rem ining utstandin .
(c) DHDC is exemp from tN�e franchise ee and is speci-
fically relieved of the paymentlthereof in a month in which
there are insufficient funds inithe Revenue A ount established
by that certain Loan A reement etween the HRA nd DHDC (the
"Loan Agreement") to ma e the p yments required y the Loan
Agreement or to pay the debt se vice on bonds is ed by the HRA
i
�I
� • • �V�VO
4-
pursuant to the Loan Agreement. In such case, DHDC or the
Trustee as identi ied in the Lo n Agreement may withdraw from
the Franchise Fees Account such amounts as may be necessary
to pay said debt se vice, provided that no withdrawals for
debt service payment hall be made if there are sufficient
funds available there r in funds or accounts from which prior
withdrawals are to be de unde the Loan Agreement.
(d) The franchise f e her under shall b$ paid from
funds in the Franchise Fee Acc unt in exces of the Franchise
Fees Account Requirement an not required pay debt service.
(e) DHDC shall determine ' or each uch month the exact
amount of the franchise fee whi woul have been paid to the
City but for the operation of s ect'on (c) hereunder. In
any subsequent month in which t e re sufficient funds
available for debt service in t e venue Account and Subsection
(b) has been complied with, the f n hise fee required by
Subsection (a) herein shall be p d t the City, together with
an additional amount computed b divi 'ng the total of all
franchise fees not previously id by t e number of months
in which such franchise fees e not pa 'd. Such total unpaid
franchise fees shall be redu d in like nner each month when
sufficient funds are availa e nd when S section (b) herein
has been complied with, un 1 all unpaid f nchise fees have
been paid.
Sec ion 7.
(a) Al1 rates m e, deman ed or received DHDC shall be
just and reasonable. Rates shall not be unreaso ably prefer-
ential, unreasonably prejudicial or discriminator , but shall
be sufficient, equi able and co sistent in applica ion to a
class of consumers Rates shall generate sufficien revenue
to allow DHDC to cover its re sonable operating co ts and
expenses, to prov de for the ti ely and orderly paym t of
costs and expens s, to provide for the timely and ord ly
retirement of d t, including those bonds issued by th Housing
and Redevelopment Authority of the City of Saint Paul , ' nnesota
(hereafter "HRA" ) , for financi g the Initial System, and to pay
the debt service on such bonds .
- � � �� 2�888
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(b) The rates, together w' th Rules and Regulations govern-
ing Hot Water Heating Service n t inconsistent with the Hot Water
Delivery greement, contained i Schedule "A" attached to this
Ordinance d incorporated here 'n by reference, shall remain and
continue in orce until amended� or changed as provided .herein.
�
(c) DHD shall not direct�Ly or indirectly c ge, demand,
collect or rece 've from any con umer or person greater or less
compensation for any service re�dered Qr to rendered by it
than that prescri ed in Schedul A; nor sh any person know-
ingly receive or a cept any ser ice from DC for a compensation
greater or less tha that presc ibed in chedule A. DHDC shall
not, as to rates or ervice, ma e or g ant any unreasonable pre-
ference or advantage o any per on o subject any person to any
unreasonable prejudice or disad ant e.
(d) DHDC shall ke and r n er its books, accounts , papers
and records accurately an fait ully in the manner and form
prescribed by the City, a sha 1 comply with all directions of
the City relating to these oo , accounts , papers and records,
including furnishing of suc ' n ormation or compilations and
permitting an audit of the b k , accounts , papers and records,
as may be requested by the i
(e) After 60 days' tice to the City, DHDC may file in
the office of the City C rk a or amended Schedule A, con-
taining new or amended r tes, r 1 or regulations , together
with Rules and Regulati ns gove ni Hot Water Heating Service
not inconsistent with he Hot W ter elivery Agreement. Such
notice is jurisdictio al to a c ange in Schedule A and shall
include statements o facts, su stant ating documents , and
exhibits su�porting he changeslreques ed, and further shall
state the changes p oposed to b made i the rates then in
force, and the tim when the ch nges wil go into effect. Such
ne�,a or amended rates shall be effective o the tenth day (or
such later date that DHDC shall designate its filing) after
the filing of the new or amende Schedule A 'n the office of the
City Clerk; subject to the obli ation by DHDC to refund or
credit to its customers any inc eases in rates hich are in
excess of the lawful and reason ble rates as fin lly determined.
�
II
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�`t8880
�6-
(f) The roposed changes �hall be approved if t ey are
just, reasonab e and nondiscrim'natory. The City s 11 be
required to tak into account tY�e need of DHDC for evenue
sufficient to en le it to meet the cost of furni ing the
service; to provi e for the tim ly and orderly r tirement
of debt, including those bonds �ssued for fina ing the
initial system; and to pay the ebt service o such bonds.
The City shall also e required to take into ccount the
operation of the term and condi�tions of th Hot Water Delivery
Agreement which is the uniform contract en red into by DHDC
and DHDC customers pro ' ding fo a detail method of charges
for demand and energy re ated c�sts . Th uniform Hot Water
Delivery Agreement shall e fil�d in th Office of the City
Clerk at the same time as the w itten a ceptance required by
Section 14 herein. Amendm ts �o the ot water Delivery
Aareement shall be filed wi the Cit Clerk at least ten
(10) days prior to the effec 'v� dat of such an amendment
or amendments .
(g) At the request of DHD a d in order to assist in
determining whether the propose anges in Schedule A shall
be approved or denied, the City y require a public hearing
before a hearing examiner who s 1 be selected by mutual
agreement of City and DHDC with'n 0 days of DHDC' s request.
The hearing examiner shall hol a h aring as a contested case
and make recommendations to th City Upon receipt of such
recommendations, the City sha l by re olution approve or deny
the proposed changes in Sche le A. no such action is taken
by the City within 30 days te� recei of the hearing exam-
iner' s recommendations, suc px posed c nges are deemed approved.
(h) Proposed changes to Schedule A an only be approved,
approved in part if sever ble, ar denied; nd cannot be modi-
fied or amended. DHDC h s the sole power t initiate or request
changes in Schedule A r es, rules or regula ions .
Section 8 .
For the purpose f assisting the City in th regulations
of the activities an rates of D�3DC as provided i this fran-
chise, the City Atto ey shall a�ppoint an assistan or other
attorney to perform the duties that such regulation necessitates.
�
2�8880
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Sec�tion 9 .
DHDC shall ay the City d ring the term hereof an annual
amount of $15,00 .00 payable o� October 1 of each year :herein,
which sum shali b used to pay that part of the annua salary
of the individual pointed by the City Attorney, h' assistant
or assistants, cleri al help and office expenses, utside
accountants, hearing xaminer, 'attorneys, adviso , and consul-
tants' fees , reasonab related to the regulati of DHDC, its
rate schedules, and ot r matt rs and operatio s under this
franchise. The amount such�payment or pa ents shall be
allowed as an operating pense of DHDC in e City of Saint
Paul.
ection 10.
DHDC shall file during ea h mon with any person designa-
ted by the City, a report of th n er of customers, sales and
revenues by classes of service r he preceding month based upon
its utility operations within t�he ity of Saint Paul.
DHDC shall also file with s ch person as may be designated
by the City within three months aft October 1 of each year, a
complete detailed statement on forms to be approved by said
person, covering the utility p ratio s within the City of Saint
Paul for the preceding year, in�Cluding all revenues, expenses
and plant investment, toget er ith suc breakdown an analysis
of operating statements as he �aid pers n may request. The
said person designated by he City shall ave the right to
require additional inform tion �oncerning perations under
this ordinance from time to tim in such f rm as may be pres-
cribed by said person.
Any person or per ons designated for th t purpose by the
City shall have the r' ght, at a 1 reasonable imes and upon
reasonable notice, t examine t�ie books of acc unt, records,
vouchers, disbursem ts, rates, revenues , cont cts, purchases,
sales and other tr sactions be�ring on and rel�vant to the
rates DHDC charges and the servi ce it provides tb its customers
in the City of Sa nt Paul.
I
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Sect�on 11.
Before this ordinance shal� be finally adopted y the
Council, a blic hearing shall be held upon ten 0) days'
published not ' ce in the officia newspaper and a ter said
hearing the Co ncil may pass th' s ordinance, r ise or amend
the same. DHD shall bear the osts of publi ation of the
franchise ordina ce and shall m ke a suffici nt deposit with
the City Clerk to uarantee pub�ication be re the ordinance
is published.
Sect�on 12.
DHDC shall defend, indemni�y an save the City whole and
harmless from any and al damag s o claims for injury or
damage to persons or prop rty o ca oned by or arising out
of the construction, maint nanc , peration, or repair of
said transmission and distr'but' system or by the conduct
of DHDC' s business in the Ci y.
Se ' on 13.
Every section, provisio , � part of this ordinance
is declared separate from e ery o her section, provision,
or part; and if any sectio , pr vi ion or part shall be
held invalid, it shall no affe t a y other section, pro-
vision or part.
�� Section 14 .
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DHDC shall, with' thirty l(30) day after the passage,
approval, and publica ion of this ordina ce, file with the
City Clerk of said C' ty its wri�ten accep ance thereof in
form to be approved y the City Attorney, nd therein shall
agree to abide by, eep, and perform all t terms, limit-
ations, conditions, nd provisi�ns of this rdinance.
1
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WHI7E - CITV CLERK I 17• VV"�J
PINK - FIyAN6.E GITY OF S�AINT PAUL Council
CANp'RV- DEAARTMENT �
BLUE -.MAYOR � Fll@ NO.
O/ �.(�Z I �.y/``iG Ordinance 1��.
�
Presented By_ I
Referred To Committee: Date
Out of Committee By Date
�9-
Sec�ion 15 .
This franchise erein gran�ed shall ot be exclusive nor
irrevocable, but may e termina ed and rfeited after notice
and hearing for any br ch or f ilure y DHDC to comply with
the terms, limitations condi ions ereof.
ec io 16 .
This franchi.se is granted r a term not to exceed Thirty-
One (31) years from and after t effective date of this Ordinance,
pursuant to the provisions of n . Laws 1981, ch. 334, sec. 6 ,
subd. 5.
�
COUIVCILMEN I Requested by Department of:
Yeas Nays
[n Favor II
Against BY
I Form Appr by City Attorney
Adopted by Council: .Date
Cer�ified Passed by Council Secretary BY
sy I
Approved by Mayor: Date II Ap o by Mayor for u m sio�to Council
By B
I
.
� � �ssaa
AP�ENDIX A
The rates that shall be effective upon adoption of this
Ordinance and until subsequentl�y amended shall be:
Demand Rate : I $2 . 89 .
Energy Rate : I
Prompt payment provision: A ch�rge of 5. 0% will be added to
net bill computed at the rate s�own above , which charge shall
constitute a discount from gros� bill for payment within the
discount period, all as more sp�cifically provided in the Hot
Water Delivery Agreement. I
I
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WILLIAM M. IMAHLUM, P. A.
ATTORI�EY AT LAW
NINTH FLOOR,COMMERCE BUILDING
SAINT PAUL,fv�INNE50TA 55101
TELEPHONE �Qntemb�r �3 p OFCOUNSEL
�612) 2�1-8044 r � ��o� RICHARD L.MATYKIEWICZ
Mr. Albert B. Olson
City Clerk
City of Saint Paul
Ci ty Hal l
Saint Paul , MN 55102
Re: DISTRICT HEATING DEVELOPI�ENT COMPANY FRANCHISE
ORDINANCE N0. 278880 I
Dear Mr. Olson:
Enclosed herewith is yet anothel copy of the Hot Water Delivery
Agreement. Upon reviewing the �ranchise file this date, I was
unable to locate a copy of the Hqt Water Delivery Agreement that we
understood was forwarded to your Office on or about the 30th day of
July, 1982.
In order to clarify this matter,� I would appreciate if you would
incorporate this letter and the � copy of the Hot Water Delivery
Agreement in your file.
Thanking you in advance for your cdnsideration, I am
Very truly yours, I
WILLI M. MAHLUM, P.A. I
r
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��7 � � 'i
: WI LIAM M. HLUM
; �-�,
WMM:j b - .
Enc. . �=;-
.
...-�x �
cc: Mr. Philip B. Byrne , � �
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HOT WATER DEL L�VERY AGREEMENT
a
District Heatin evelo ment Com an , Minnesota
g �I P P Y
� non-profit corporation ( "DFIDC!' ) and
Customer agree as o ows: �
ART�,CLE I
CUSTOMER''�S PURCHASE
1.1 Customer represents thait it owns a building called
located at
, St.
Pau , Minnesota e B i ing an is not an "exempt
person" within the mean�.ng of Section 103(b) (3 ) of the
Internal Revenue Code of 1�954.
.
1.2 Customer' s Point of Deliuery, as used in Article IV, is
1.3 Customer's Com letion Dat , as used in Articles IV and V, is
October 1, 19P Cust�ner shall diligently proceed to
complete its BuiYding Co�version prior to the Completion
Date, however, such Comp]�etion Date shall be extended for
reasonable period(s ) of �ime up to a total of sixty (60)
days in the event compl$tion of Building Conversion is
delayed by reason of an a�t of God, or other event similarly
beyond Customer' s control•',
1.4 Customer' s "Initial Dem� nd" , as estimated based on
Customer' s past and pres�nt utilization of electricity,
steam, oil, natural gas, o'�ther fuels or a combination of the
foregoing for heating pur`,poses, is kilowatts,
based on a "Utilization Fa�tor" of ours .
1.5 Subject to the continge�cies, terms, and conditions
hereinafter set forth in tlhis Agreement, Customer agrees to
buy from D�IDC and pay fo$ heat energy ( "Thermal Energy" )
derived from hot water fu�rnished by DI�C hereunder ( "Hot
Water" ) . If an "Additiona',1 Uses Rider" is attached hereto,
DFIDC shall furnish Hot Wa�,ter for the additional purposes
� stated therein and subjedt to the terms and conditions
therein a Customer shall �ave the right to draw out and
purchase by volume water rom the District Heating System
(as hereinafter defined) . I
� ---______.____._..__ ._.__.._...�
< .
, �
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� ART�CLE II
D�IDC�� SERVICE
2.1 D�IDC represents that it, intends to construct and operate a
hot water distributionisystem under a franchise from the
City of Saint Paul, Min�esota (the "Franchise" j and that it
owns a coal-fired gene�+ating plant, and, as necessary has
access to and may utili�ze sufficient additional sources of
energ� in the generat' on of Hot Water, giving it the
capability to produce �11 Hot Water needed to meet the
Aggregate Demand (as h�ereinafter defined) of all DFIDC
Customers purchasing Ho�t Water ( "Hot Water Customers" ) at
the design condition of rt19° Fahrenheit.
2 .2 DFIDC represents that it �will construct and place such piping
and equipment as necess�ry to connect its heat sources to
Customer' s Point of Del�.very by no later than Customer's
Completion Date.
2.3 DIIDC acknowledges that�i Customer's Initial Demand is
reasonable, based upon L��-IDC' s estimates or verification of
Customer' s records .
� 2 .4 DFIDC agrees to continuo�sly furnish needed I3ot Water and
sell Thermal Energy �o Customer, subject to the
contingencies, terms, an conditions herein set forth.
ARTI�LE III r
TERM; COI�TINGENCIES
3 . 1 Subject to Section 3 .2, ithe term of this Agreement shall
commence on the date he�eof and continue, subject to the
terms and conditions here�iof, for a term of thirty (30) years
following the earlier ofiCustomer' s Completion Date or the
date on which Customerifirst receives Hot Water for
continuous heating purpo�es at Customer' s Point of Delivery
( "First Service Date" ) , �nless this Agreement is terminated
earlier as provided hereir�.
3 .2 Unless otherwise agreed t� in writing by Customer, if any of
the following shall not have occurred on or prior to
September 30, 1982, this�� Agreement shall become null and
void:
(1 ) D�IDC shall have o�tained a comprehensive final
feasibility study (�the "5tudy" ) from a qualified
consulting firm stlating that the construction,
financing, and opera ion of the District Heating System
� (hereinafter defined� is feasible as proposed and D�C
shall have notifiediCustomer in wrlting thereof and
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offered Customerlthe opportunity to inspect and/or copy
such report. I
(2 ) D�-IDC shall have �ntered into with Hot Water Customers,
(who have an Agc�regate Demand not less than ninety
percent (90%) o� the minimum total Demand deemed
necessary in the Study) Agreements in form compara.ble
hereto in all m�terial respects, including but not
limited to term lof Agreement and Energy and Demand
� Charge rates, prpvided that any variance herefrom in
respect of a Hotl '�Iater Customer shall not adversely
affect other HotlWater Customers as a whole in any
material way. An�y increase in Demand Charge or Energy
Charge rates set� forth in 6 .2 shall be considered
material . Custom�r shall be notified in writing of the
satisfaction of �is 90% condition. At Bond Closing,
DHDC shall have cntered into with Hot Water Customers
(who have an Aggr�gate Demand not less than one hundred
percent (100%) of the minimum total Demand deemed nec-
essary in the S�udy) Agreements in form compara.ble
hereto in all malterial respects, including but not
limited to term 1of Agreement and Energy and Demand
Charge rates, and provided further that any variance
� herefrom in respe�t of a Hot Water Customer shall not
adversely affect ther Hot Water Customers as a whole
in any material w�y. The parties hereto recognize that
the Agreements Iwith federal, state or local
governmental cust�mers with exception of Rate Charges
may vary in form and content; therefore, those
Agreements are e�xcepted from any requirements of
material conformit�y with other Agreements . No Customer
other than the fe�3era1 government shall be allowed to
enter into a Hot 4�ater Delivery Agreement for a shorter
term than this Agr�ement.
(3 ) Customer shall ha�ve obtained a firm commitment for
financing Custome�' s total estimated costs for Building
Conversion (herei�after defined) upon terms acceptable
to Customer, or Customer shall �ave waived this
condition. Failu�e of Customer to notify D�IDC by
September 1, 1982Ithat Customer has been unable at that
point to obtain a firm commitment for financing
Customer' s total e�stimated cost for Building Conversion
will result in a w�iver of this contingency.
ART�ICLE IV
CONVERSI0�1 OF BUILDING
� 4. 1 "Building Conversion" �hall mean such modification of or
alteration to the Building and its heating system ( "Building
Heating System" ) as sh�ll be required to make the Building
Heating System compat$ible with (a) the performance
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specifications requirec� by D�IDC, as specified in that
certain document entit�ed "Standards and Guidelines for
. Designing Heating Syst ms in Buildings Connected to a Hot
Water District Heatinc� System" prepared by D�IDC and
' published in January 1982 (the "Standards" ) , and (b)
utilization of Thermall Energy in accordance with this
Agreement. To the e tent not inconsistent with the
Standards, Customer may� design the Building Conversion to
the specifications desirled by Customer.
4.2 "Point of Delivery" sh�ll mean the point established in
Article I to which Hot 4�ater shall be delivered through the
District Heating Systeml to the Customer and the point at
which such water shalll be returned from the Customer' s �
Building Heating System to the District Fieating System; a
Point of Delivery shall demarcate the Building Heating
System and the District eating System.
4.3 Customer shall complete its Building Conversion prior to the
� Completion Date, subjec� to Section 1 .3, so that it may
receive Hot Water from Ithe Point of Delivery and utilize
Thermal Energy.
� ART,I CLE V
CONNECTION TO DIS�'RICT HEATING SYSTEM
5. 1 "District Heating Syst�m" shall mean all equipment, .
facilities and materials including boiler, heat exchangers,
heating sources, pumps, �pressurizers, pipes, lines, gauges
and controls, and any other type of property now or
hereafter owned, operat�d, or controlleu by D�C for the
purpose of or incidentaljor useful to heating, distributing,
receiving, collecting, onitoring and metering Hot Water,
excluding any part of �any Customer' s Building Heating
System.
5.2 Prior to the Completion �ate, D�IDC shall cause the District
Heating System to be c nstructed or expanded in such a
manner as may be requir�d to enable the delivery of Hot
Water to Customer' s Poin� of Delivery and the return of Hot
Water therefrom to the D' strict Heating System in accordance
herewith.
5 .3 All property constitutin�g a part of the District Heating
System in or on the Building, or its surrounding premises,
shall at all times be t�e property of DHDC; and upon the
earlier of termination ol expiration of this Agreement, D�IDC
shall have the right at its option to remove such property
from the Building and it premises, provided that promptly
� after such removal D�ID� shall cause the Building and
premises to be returned t�o substantially the same condition
as would have existed b�t for such removal. D�-IDC shall
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inform Customer of its �intention to remove the property from
the Building and prem�ses within thirty days after the
. earlier of the terminat�ion or expiration of this Agreement,
or such property shallibecome the property of Customer. If
D�-IDC shall elect to ca�se the removal of its property (and
thus, also restoration f Customer' s Building and premises) ,
it shall do so withinisixty days following the date of
notice of its intentioxi to remove, or such property shall
become the property of C�ZStomer.
5.4 Customer shall have th��e right to purchase Hot Water by
volume. D�IDC shall owniall Hot Water until sold to Customer
as set forth in any "Additional Uses Rider" attached hereto,
which establishes the p�kice, metering and terms of payment
therefor.
ART�CLE VI
DEMAI�D CHARG�
6 .1 Subject to Article XXII�I , commencing on the earlier of
Customer' s First Servi�e Date or Completion Date and
thereafter during the te of this Agreement, Customer shall
� incur D�IDC Demand Charge�as determined in this Article VI .
6 .2 For the following rate p�eriods subsequent to the earlier of
First Service Date or C�mpletion Date and prior to October
1, 1986, ( "Switchover ate" ) Customer shall pay D�IDC a
"Demand Charge" in each illing Period (hereinafter defined)
equal to the product a,f Customer' s Demand (hereinafter
defined) for such periiod multiplied by the following
applicable Demand Chargeirates :
Demand Charge Rates
per Kilowatt of
Applicable Rate Per�od Customer' s Demand
June 1, 1983-Septembe� 30, 1984 $2 .89
October 1, 1984-Septembe� 30, 1985 $3 .15
October 1, 1985-September 30, 1986 $3 .38
6 .3 Subject to Sections 1.4, 6.4, and 6 .5, Customer' s "Demand"
, in respect of a D�IDC �'iscal year (October 1 through
September 30) shall meaniCustomer' s maximum rate of Thermal
Energy utilization, expr�essed in kilowatts, in any hour
during the twelve-month �eriod ending May 31 immediately
prior to such fiscal year.i
6.4 Until such time as equip�ment capable of directly measuring
� Demand is available on a easonably cost-justified basis and
installed for Customer, �ustomer' s Demand for a given D�IDC
fiscal year shall be de�med to be the greater of (a)
Customer' s Demand as actu�lly measured or determined by D�-IDC
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at any time during s��uch year or (b) Customer s weather
normalized annual The�mal Energy utilization (in kilowatt
' hours) for the twelvetmonth period ending the previous May
31, divided by Custom�r' s Utilization Factor as established
in Section 1 .4. For p�rposes of this Sectian, for each DfIDC
fiscal year beginning� less than sixteen (16) months after
Customer' s First Serv�.ce Date, Customer' s Demand for such
year shall be deemed �o be the same as Customer' s Initial
Demand.
6 .5 Notwithstanding any o�her provision herein, Customer may
request, not later tha� May 31, a Demand different from that
established under Sections 6.3 or 6 .4 for the D�-IDC fiscal
year beginning the fo',llowing October 1 if Customer can
establish prior thereto, to the reasonable satisfaction of
D�IDC, that Customer' s ', utilization and Demand for Thermal
Energy during the entire D�IDC fiscal year next commencing
will be reduced by f',ifteen percent (15%) or more in
comparison with the the� current fiscal year.
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6.6 "Aggregate Demand" for '� a DFIDC fiscal year shall be the sum
of the Demand for Thermal Energy of all Hot Water Customers .
� 6. 7 "Demand-Related Costs" �� in respect of a given D�IDC fiscal
year shall .mean the fol;lowing charges or allowances and all
D�IDC costs other than �nergy-Related Costs defined in 7 .3
incurred or made in s ch year: (a) all D�IDC operating,
maintenance and repair� costs, but excluding any costs
defined as Energy-Relat�d Costs; (b) reasonable D�IDC general
and administrative cos�s, including legal and engineering
costs related to hooku of additional Customers; (c) all
D�IDC debt service net �f DFIDC interest income other than
that allocated to the �xpansion Fund pursuant to section
21.4; (d) net increases, (with reductions in Demand-Related
Costs to the extent of decreases) in D�-IDC working capital
and fuel inventory d�Zring such year; (e) capital
expenditures not amort'zed through debt service and net
increases (with a reduc�ion in Demand-Related Costs to the
extent of decreases} d�ring such year for reserves for
replacements and capita improvements, including increases
(or decreases ) with res�ect to the Expansion Reserve Fund
defined in 21.2; (f) a�ounts not collectable for Demand
Charges due (with credit, for charges col' ected that in other
fiscal years were expen�sed as uncollectable) ; (g) prompt
payment discounts in res�ect of Demand Charges; (h) amounts,
if any, required to be � collected by DIIDC from Hot Water
Customers to meet minimum debt coverage requirements under
the Indenture or any fi�,ancing agreement related to Revenue
Bonds, substantially all� the proceeds of which are used by
� or on behalf of D�IDC p,rovided such amounts under this
provision 6 . 7(h) shall r�ot be used for expansion purposes;
provided that Demand-Re�lated Costs shall not include
depreciation.
I�i 6 .
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Customer' s Building and the difference in temperature of the
Hot Water received atl the Point of Delivery from the
District Heating Syste� and the Hot Water returned from the
� Customer' s Building Hea�ing System to such point.
7.3 "Energy-Related Costs" iin respect to a given DF�C fiscal
period shall mean all costs or allocations of costs
projected by DFIDC for Isuch period relating to: (a) DF�C
consumption of fuels, including but not lintited to, coal,
oil and natural gas, o�r purchases of thermal energy; (b)
consumption of electrilcity used in the production and
distribution of Hot Wa'ter; (c) reasonable allowances for
amounts not collectablelfor energy charges due (with credit
for charges collected t�at in other periods were expensed as
uncollectable) , and (d)I prompt payment discounts in respect
of Energy Charges. Foripurposes of valuing or pricing fu�l
consumed from inventory under clause (a) above, the weighted
average method shall ble employed; normal storage losses
shall be prorated according to the rate of fuel use. Not
later than June 30 eachlcalendar year, DFIDC shall cause its
staff to prepare an e timate of DFIDC' s total projected
Energy-Related Costs f�r the next succeeding D�IDC fiscal
year, a copy of which� report, upon request, shall be
furnished to Customer. Not later than July 31 in each
� calendar year, DFIDC' s �oard of Directors shall approve a
fiscal budget for all �nergy-Related Costs expected to be
incurred in the next su ceeding fiscal year which shall be
the "Projected Energy-R�elated Costs" . The proposed rates
generated thereby shall be forwarded for such rate review,
approval or modificatio� by the City Council of Saint Paul,
Minnesota, or such othe� public body, as may be required by
the Franchise.
7.4 D�IDC's Metering Equipme�t shall be capable of accurately
recording Customer' s uti�ization of Thermal Energy.
7.5 Customer' s Energy Chargelfor a given Billing Period shall be
equal to all Pro�ected �nergy-Related Costs for such fiscal
year divided by the numLer of all kilowatt hours of Thermal
Energy estimated to be ulsed by all DHDC Hot Water Customers
during such fiscal year (which yields an Energy Charge per
kilowatt) , multiplied b� the number of kilowatt hours of
Thermal Energy utilized y Customer for such Billing Period.
The Energy Charge may �be appropriately adjusted (i.e. ,
spread over the remainir}g months in the fiscal year) from
time to time during fischl year to cover cost increases (or
decreases ) occurring su�sequent to the establishment of
Projected Energy-Related; Costs for such period regarding
energy purchased by DFIDCI, to the extent such costs are in
� excess of (or below) t ose costs projected by D�-IDC in
establishing the Energy C�arge for such period.
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ARTIICL� VIII
. MISCELLANEOUS �2ATE CONSIDERATIONS
8.1 Annually after Septemb�er 30, 1986, when it is shown by
independent, qualified nd competent consultants that Demand
Charge and Energy Cha ge procedures d� not accurately
reflect the cost of p oviding services DFIDC may, where
reasonable, practical a d necessary, revise such procedures
provided such revision are appproved by D�-IDC' s Board of
Directors and by a minirhum of fifty percent (50%) of all Hot
Water Customers and Cu�tomers constituting at least fifty
percent (50%) of Aggregalte Demand.
8.2 If during any year the� maximum temperature of Hot Water
returned from Custome�' s Building Heating System to
Customer' s Point of Del�very exceeds 160° Fahrenheit during
the months of November �hrough March, Customer' s Demand for
such year may be increa ed by D�IDC by an amount appropriate
to reflect the increas d rate of Hot Water delivery to
Customer at such time, nd Customer' s Demand Charge shall be
increased accordingly. DHDC shall not deliver Hot Water to
Customer at a temperatur� exceeding 260° Fahrenheit.
� 8.3 D�IDC shall promptly infdrm Customer in writing of the basis
on which D�-IDC establish�d Customer' s Demand Charge, Energy
Charge and Demand for a�y time during the three (3 ) years
preceding the date that Qustomer requests such information.
ARTI�CLE IX
MET RING
9 . 1 Prior to Customer' s Com �letion Date, D�-IDC shall install, at
D�IDC' s expense, all �quipment ( "Metering Equipment" )
necessary to accurately measure and record (a) Customer' s
Thermal Energy utilizati�n and (b) Customer' s Demand (to the
extent such equipment �.s availa.ble and reasonably cost
justified) . I
9 .2 Customer shall permit DH�C to install Metering Equipment in
Customer' s Building or qn Customer' s premises in the area
adjacent to the Point oflDelivery or such other area as may
be specified by mutual ac�reement of the parties, taking into
account accessibility a�d Customer' s need for Building
security.
9 .3 D�IDC shall own and maint in D�IDC Metering Equipment in good
repair and operating cond' tion at D�IDC ' s expense.
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9.4 Any electricity requir�d for the operation or maintenance of
the Metering Equipmen� shall be supplied by Customer at
. Customer' s expense. �
9.5 Customer shall promptl� notify D�IDC if at any time Customer
has reason to believ the Metering Equipment is not
accurately measuring e Thermal Energy used by the Building
Heating System or Custo er' s Demand.
9 . 6 D�IDC shall cause sucY� testing and calibration of the
Metering Equipment as a Customer shall request, provided
that the cost of any sluch testing and calibration shall be
borne by the Customer lif such testing does not disclose an
inaccuracy of more th�n five percent (5%) in measuring
utilization of ThermallEnergy or Demand. Upon the discovery
of any such inaccurac�, the Metering Equipment shall be
promptly adjusted or eplaced at DI�C' s sole expense to
accurately measure uti�ization of Thermal Energy or Demand.
If any measuring inacquracy of greater than five percent
(5%) is discovered, n appropriate adjustment to the
Customer' s Service Bil shall be made in respect of the
month immediately prec ding such discovery and until the
time of repair or repl cement, based on the assumption that
� the same degree of inac uracy existed throughout such period
until repair or replaclement unless a particular event or
accident is reasonably� shown to have caused the meter
inaccuracy, in which e�tent the date for billing adjustment
shall be established t�ereby. No other adjustment shall be
made except an appropr�.ate adjustment may be also made to
earlier Service Billsl (hereinafter defined) at DFIDC' s
election if D�IDC has rjeasonable cause to believe that a
Customer did not timelyjact in good faith to notify DFIDC of
a suspected measuring ir�accuracy.
9 . 7 Notwithstanding the fo egoing Section 9.6, in any Billing
Period during which th Metering Equipment shall fail to
register utilization o Thermal Energy by a Customer, the
amount of Thermal Ener utilized by such Customer during
such period shall be es imated by D�IDC based on the Thermal
Energy utilized by the �ustomer in the past and the Thermal
Energy utilized by otl�er customers with similar usage
characteristics during t�he period in ques�,.ion.
AR�ICLE X
BILLINGI4AND PAYMENT
10 .1 Unless Customer is othe�wise notified by DHI3C, the Metering
Equipment shall be read to determine the Customer' s Thermal
� Energy utilization at least once each Billing Period. A
"Billing Period" shall l�e a "month" which may be any period
between 28 and 33 consecutive days (except for February
I 10 .
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which may be 26 days) ; Iprovided that in any calendar year
there shall be twelve (ll2 ) such discrete consecutive months.
10.2 Unless Customer is oth�rwise notified by D�IDC, D�IDC shall
within thirty (30) days following the end of a Billing
Period send to Custome�} by U.S. Mail, or otherwise deliver
to Customer, a bill ( "Service Bill" } bearing the date of
sending or delivery a�d setting forth amounts due by
Customer to DFIDC hereun�er in respect of such Billing Period
or any prior Billing Per ods.
10.3 DFIDC shall have the r` c�ht, upon notice to Customer, to
estimate Customer' s uti�ization of Thermal Energy during any
Billing Period and sub it to Customer a Service Bill based
on such estimate, prov�ded that at least quarterly, DHDC
shall read the Mete�ing Equipment and thereafter
appropriately credit o charge Custome:- for the Thermal
Energy it actually u�ilized in comparison with the
previously estimated u�ilization which was billed to and
paid by Customer.
10.4 Following any D�IDC fis�al year, if D�IDC should determine
that the actual Energ�-Related Costs or actual Demand-
� Related Costs for such year varied from the originally
Projected Energy-Relate�d Costs or the original Projected
Demand-Related Costs, Irespectively, used by D�IDC in
establishing the Energy Charges or Demand Charges, as the '
case may be, during s�ch year, DFIDC may promptly bill
Customer for its share of any excess of actual Energy�-
Related Costs, Demand-R�lated Costs, or both, and D�IDC shall
promptly credit or refur}d Customer its share of any underage
of actual Energy-Relateld Costs, Demand-Related Costs, or
both; and under no cire stances shall D�IDC transfer funds
or balances as between �otal Energy-Related Costs and total
Demand-Related Costs; Clustomer' s share of any excess or
underage of Energy-Rela�ed Costs shall be an amount which
causes Customer' s total Energy-Related Cost payments for
such year to bear the same proportion to total of all
aggregate Energy-Relatedl Costs as Customer' s total purchases
of Thermal Energy for st�ch year bear to the total purchases
of Thermal Energy by all, Customers; Customer' s share of any
such excess or underagelof Demand-Related Costs shall be an
amount which causes Customer' s total Demand-Related Costs
payments for such year to bear the same proportion to total
of all aggregate Demand�Related Costs as Customer' s Demand
(averaged over such year) bears to the sum of the demand of
all DHI�C customers (ave�aged over such year) . In no event
shall DFIDC charge Custo er in accordance with this section
more than once in any ca�endar year, and Customer shall have
� up to ninety (90 ) days tp pay any excess found to be due and
billed as provided hereir�.
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10.5 A Service Bill shall be due and payable immediately upon
receipt by Customer �without set-off, counterclaim,
. abatement, or reductio by Customer. Customer' s prompt
payment of Service Bill shall not diminish or constitute a
waiver of, Customer' s c aims or remedies in arbitration, in
subsequent legal procee ings, or in any other way, including
challenging the billed a�hount itself.
10.6 Customer shall receive discount of five percent (5%) for
making full payment of 11 amounts due pursuant to a Servic�
Bill within ten (10 ) day of the date of such bill.
10.7 If the Service Bill of ICustomer has not been paid in full
within forty-five (45) ays after the date thereof; D�IDC may
thereupon or thereafter suspend the delivery of Hot Water to
Customer, provided Cust mer has been given written warning
thereof at least fifteen� (15) days prior to such suspension,
and take such lawful ac�tion to effect collection of such
bill, including commenc ment of legal proceedings, as D�C
shall deem desirable: �Customer shall be liable for all
costs and expenses (including attorneys ' fees ) personally
incurred by DI�C in co ction with any attempt to make such
collection (whether or n�t a lawsuit is commenced) .
� ARTI�LE XI
ADDITIONAL CUSTOMER C VENANTS AND OBLIGATIONS
11.1 Without the consent of 'DF-IDC, Customer shall not cause or
voluntarily permit any odification or alteration to any
part of the Metering E�uipment or the District Heating
System, ex�ept in an em rgency situation where life, health
or property is threatene�.
11.2 Without the consent of 'D�-IDC, Customer shall not cause or
voluntarily permit any action which interferes with the
delivery or return of Ho�t Water, the utilization of Thermal
Energy or the operation, maintenance, repair, replacement,
construction, installati n, expansion, removal or alteration
of the District Heating System or the Metering Equipment,
except in an emergency situation where life, health or
property is threatened.
11.3 No Hot Water Customer, including Customer, shall provide
heating service from it Building Heating System to any
other building other t2�an such CustomCr' s Building or
buildings and appurtenant structures without the consent of
DHDC.
� 11 .4 D�IDC shall not be liabl to Customer or such Customer' s
officers, agents, employ�es, lessees, licensees, invitees or
trespassers in respect of, and each Customer shall hold
harmless and indemnify Ip�IDC from and against liabilities,
12 .
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losses, damages, costs, expenses (including attorneys '
fees) , claims, actions, judgments, and settlements of any
� nature whatsoever for any personal injury, death, or
property or economic d age arising out of or incidental in
any manner whatsoever to the operation of the Custon►er' s
Building Heating System,, but only to the extent such injury,
death or damage was ot caused by the negligence,
recklessness or intent'onal misconduct of DHI�C or its
officers, employees, ag nts, lessees, licensees, invitees,
trespassers or contracto�s.
11.5 Customer shall not be iable to DFIDC or DF�C' s officers,
agents, employees, le sees, licensees, invitees or
trespassers in respect f, and DFIDC shall hold harmless and
indemnify Customer from ia.bilities, losses, damages, costs,
expenses (including at orneys ' fees) , claims, actions,
judgments, and settleme ts of any nature whatsoever for any
personal injury, death or property or economic damage
arisinc� out of or incide tal in any manner whatsoever to the
operation of the Dist ict Heating System or Metering
Equipment, but only to the extent such injury, death, or
damage was not caused b� the negligence, recklessness, or
intentional misconduct of Customer or its officers,
� employees, agents, lesse�s, licensees, invitees, trespassers
or contractors.
ARTI LE XII
ADDITIONAL D�IDC CO NANTS AND OBLIGATIONS
12 .1 D�IDC shall maintain the District Heating System in good
repair and operating con ition and cause it to be operated
in a safe and effieient m nner.
12 .2 Subject to Article XIV, D�IDC shall deliver Hot Water to
Customer on an uninterrup�tible basis.
12 .3 D�IDC shall use its bestlefforts to secure and maintain in
good standing all neces ary permits, easements, licenses,
franchises and rights n cessary or desirable to make and
continue the delivery o Hot Water to all D�IDC Hot Water
Customers .
12 .4 D�IDC agrees to annually ave a complete audit conducted by a
qualified Certified Publi Accounting (CPA) firm.
12 .5 D�-IDC agrees to maintain he District Heating System and the
Metering Equipment, ut lizing Preventive Maintenance.
"Preventive Maintenance" means undertaking, where
� economically practicable, to repair existing D�IDC equipment
to minimize the need f r costly major repair work or
replacement.
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12 . 6 At least once every f�ive (5) years after October 1, 1985,
DFIDC shall engage a � qualified professional engineer to
. completely inspect th� District Heating System and Metering
Equipment, to investi ate the physical condition of D�IDC' s
property and equipmen�, operating procedures, and Preventive
Maintenance practices� and to prepare a written report of
such inspection, whic� report shall be made available to
Customer; provided, h�owever, the preventative maintenance
practices shall be re�iewed and evaluated by an independent
qualified professional� engineer and a written report shall
be filed with D�IDC no l�ater than December 31, 1986 .
12 . 7 Subject to Article XI�V, commencing on the earlier of
Customer' s Completion� Date or First Service Date and
thereafter while this � Agreement is in effect, D�IDC shall
deliver to Customer' s �oint of Delivery sufficient Hot Water
to meet all Customers ' � Thermal Energy requirements from time
to time as establishe� in Article VI hereof, provided that
D�IDC shall not be obli�gated to deliver Thermal Energy at a
rate in excess of Custo�ner' s Demand.
12 .8 Subject to the provis ons hereof, D�IDC agrees to provide
Customer with a contin�aous, non-interruptible supply of Hot
Water at Customer' s Po nt of Delivery. D�IDC shall not rely
on interruptible energ�i sources to provide necessary Hot
Water. �
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ART I�CLE X I I I
BOARD 0�' DIRECTORS
13 .1 D�-IDC represents that prior to September 1, 1982, DIIDC' s
Articles of Incorporat+'�on and/or By-Laws will have been
amended to conform to t�he provisions of this Article. For
purposes of this Artic��le, Customers shall be defined as
persons executing this A�greement.
13 .2 The Board of Directors �hall be the decision-making body of
D�IDC and shall be comprised of a total of seven (7)
authorized members.
13 .3 Three (3 ) members of the� Board of Directors shall be persons
of demonstrated experl�nce, skill, or knowletige in the
fields of energy, util�.ties, or financial matters. The
Mayor of the City of St�. Paul shall appoint each of these
directors, one of which '� may be the mayo�, with approval by
the City Council � of St. ; Paul . The initial terms for these
directors shall expire: !
Director 1, Selltember 1985
� Director 2, Se�tember 1986
Director 3, Se�tember 1987
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Upon the expiration of the initial term, each director' s
term thereafter shall be three (3 ) years.
13 .4 The following DI�C cust mer categories shall each elect one
representative Board me er: small customers (less than 2
megawatts Demand) ; med'um customers (2 megawatts to 8. 999
megawatts Demand) ; and arge customers (9 or more megawatts
Demand) ; such Board me ers shall serve staggered, three
year terms and shall be elected by members of their
respective categories ith each customer having one vote.
The initial terms for th se directors shall expire:
Director/small cus omers, September 1985
Director/medium cu tomers, September 1986
Director/large cus omers, September 1987
Upon the expiration of the initial term, each term shall
thereafter be three (3 ) ears.
13 .5 The seventh Director, w ich shall not be the mayor, shall be
a person of demonstrate experience, skill, or knowledge in
the fields of energy, u ilities, or financial matters. The
seventh Director s�a11 e elected by a majority vote of the
� six members of the Boa d from among the nominees of the
Board. If an impasse i reached, and ha�s not been resolved
within thirty-five days after the initial vote on a nominee
or nominees, then each f the nominees receiving two (2 ) or
more votes will be sub itted by the Board of Directors to
the Chief Judge of the Second Judicial District for the
State of Minnesota or h' s designee who shall be requested to
promptly appoint the se enth Director from the nominees for
the remaining term. Th Chief Judge or his designee shall
endeavor to select the ore qualified nominee based on tlle
above criteria. The i itial term of the seventh Director
shall expire in Novemb�r, 1987, and each term thereafter
shall be three (3 ) years
13 .6 Notwithstanding anythi g to the contrary herein, this
Agreement is not bindi g upon Customers until D�IDC has
obtained a written ind' cation that the Internal Revenue
Service has no objectio to the structure of the Board of
Directors as contemplat d in this Article. Nothing in this
subsection shall releas Customer of the tice provisions
of Article III , Paragrapn 2, Subsection 3 (3.2(3��.
ART CLE XIV
INTERRUPT ON OF SERVICE
� 14. 1 Customer' s obligation h reunder to make payments, and DI�C ' s
obligation to charge, i respect of a Demand Charge shall be
adjusted by appropriat reduction with respect to any
15.
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Billing Period during which Dffi�C is unable for 24
consecutive hours to �ully perform its obligations to
deliver Hot Water in ccordance herewith; to the extent
' reasonably determinable in good faith by DI�C, any such
Demand Charge, as adju�ted, shall equal an amount which
bears the same ratio to the Demand Charge, before
adjustment, in a given Billing Periad, as the amount of
Thermal Energy utilized by Customer in such Billing Period
bears to the total The al Energy Customer would have used
if DIIDC had fully perf�rmed in accordance with Customer' s
Agreement.
14.2 In the event that the District Heating System is unable to
supply all Thermal Energy to meet the needs of all Hot Water
Customers in accordance with their respective Ac�reements,
D�C shall reasonably attempt to allocate delivery of
Thermal Energy first to each such customer in such amounts
as necessary to maintain the maximum warmth possible for all
Fiot Water Customers, and thereafter in vroportion to the
Demand of each Hot Wat r Customer, subject only to such
exceptions as are neces�ary to protect human life, health,
and safety.
� 14.3 Notwithstanding anything to the contrary herein, DFIDC shall
have the right without any liability to Customer, or its
officers, employees, ag�nts, or any person to interrupt,
reduce or discontinue the delivery of Hot Water (a) for
purposes of inspection, maintenance, repair, replacement,
construction, installation, removal or alteration of the
District Heating System or the Metering Equipment, and (b)
to prevent the delivery of Hot Water to Customer from
causing any bonds which have financed any acquisition or
construction of the Dis rict Heating System ( "Bonds" ) to
become Industrial Devel�pment Bonds within the meaning of
Section 103 of the Internal Revenue Code, or its successor
provisions . DFIDC shall �se its best efforts to give written
notice to Customer of an� expected interruption of delivery
of Hot Water at least s xty (60) days prior to the date of
such interruption and sh�ll use its best efforts to inform
Customer of the expected length of any interruption. D�IDC
shall reasonably atter�pt to schedule non-emergency
interruptions during the months from May through September.
D�IDC shall not be requir d to supply Hot Water to Customer
at any time D�IDC reason�ly believes Customer' s Building
Heating System to be uns fe, provided D�IDC shall have given
written notice of the ba is for such belief at least thirty
(30 ) days prior to suspe sion or termination of Hot Water
delivery for such reason unless such condition constitutes
an emergency condition i� which case DI�C shall have the
immediate right to inter�upt service. In the event, during
such 30 day period Custo�ner cures, or demonstrates to the
�� reasonable satisfaction bf D�IDC that it has made progress
toward cure of such unsa e condition, then such suspension
or termination shall be c�ncelled or delayed by D�-IDC.
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14.4 Notwithstanding anyth�.ng to the contrary herein or in any
Agreement, D�IDC sha1L not be required to deliver to any
� person who is not an ',"exempt person" within the meaning of
Section 103 of the Ir�ternal Revenue Code or its successor
provisions more than� twenty-five percent (25%) of tYie
"output" (within the !� meaning of such section) of the
District Heating System.
14.5 In the event DI�C intlrrupts service and this Agreement has
not been terminated, �FIDC agrees to use its best efforts �to
provide Customer with '� a temporary source of heat, such as
mobile boilers unles� such Customer' s service has been
disconnected for nonpa�ment, unsafe conditions in Customer' s �
equipment, by order of1 lawful authority, or by operation of
Article 14.4 of this Ag�reement.
AR�ICLE XV
TEI�MI NAT I ON
15.1 Notwithstanding anythir�g to the contrary herein, if one or
more of the following �events or conditions shall exist or
occur, D�IDC may elect', at its option to terminate this
� Agreement by giving not�ice to Customer of such fact not less
than thirty (30) days p�zior to the date of such termination:
(a) Customer fails to �!pay any amounts due under a Service
Bill to such Custd,mer within forty-five (45 ) days f�am
the date thereof e�cept as provided in Section 10 .4;
(b} Customer fails to '�duly observe or perform any covenant
or obligation to b�e observed or performed by Customer
pursuant to this l�greement (other than nonpayment of
Service Bills ) and'� Customer fails to cure such failure
or so observe or � perform (or demonstrate to the
reasonable satisfa�tion of D�IDC that Customer has made
progress toward cu�e with a reasonable expectation of
full cure within �a reasonable period) within the
aforesaid forty-fi�e (45) days following a written,
specific request from DFIDC to do so;
(c) Customer' s Building�, or any substantial portion of the
District Heating �System is abandoned, destroyed,
demolished, substa�tially destroyed or demolished,
becomes permanently� inoperable or is taken by right of
eminent domain; or ',
(d) It becomes unlawfuli under any valid federal or state
law, regulation or ',rule for either DF-IDC to deliver to
� the Customer or the � Customer to rec�.ive and pay for Hot
Water.
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15.2 If one or more of the ! following events or conditions shall
exist or occur, Cust mer may elect at its option to
' terminate this Agreem nt by glving notice to D�IDC of such
fact no less than thir y (30) days prior to the date of such
termination:
(a) Prior to December� 31, 1982 there are not duly issued
and sold Bonds or �other evidence of issued indebtedness
to secure capit�l, the proceeds of which are
sufficient, alonc� with other committed funds, to
finance constructilon of the District Heating System;
(b) Customer's Build�ing is permanently � abandoned,
destroyed, or demglished; or substantially destroyed or
demolished for wh�ch rebuilding or substantial repairs
are not commenced �within six (6) months following such
destruction;
(c) Customer' s Build�,ng, or any substantial portion
. thereof, is taker} by right of eminent domain or
becomes, in substjantial part, permanently inoperable
and has been so for a period in excess of six (6)
� months;
d It becomes unlawf 1 under an va '
O � y lid federal or state
law, regulation or� rule for either D�IDC to deliver to
Customer or Customler to receive and pay for Hot Water;
or i
(e) For a continuous pleriod of thirty (30) days, D�IDC is
unable to deliver Hot Water to the Customer in
substantial compli�nce with this Agreement.
15 .3 Notwithstanding anythink� to the contra:=y herein, to the
extent the same does no�t conflict with, violate or cause a
default, penalty, new llien or acceleration of performance
under any indenture pur$uant to which Bonds originally used
to finance construction of the District Heating System are
issued ( "Indenture" ) , Culstomer in any year may at its option
terminate this Agreemelnt on any anniversary (evenl
devisable by five) of �he Completion Date, provided the
Customer gives notice t� D�IDC no later than May 31 of such
year of such fact, and provided that as of the date such
notice is received by D C the Aggregate Demand, excluding
such Customer' s Demand a d the Demand of all other Hot Water
Customers who have on s ch date or prior thereto given due
notice of their termina ion of their respective Hot Water
Delivery Agreements, ex eeds 125% of the Minimum Demand
fixed in Article XXI I he ieof.
� 15 .4 Without prejudice to any party' s rights to such damages for
breach by the other par�.y of any term or condition hereof,
upon termination of this� Agreement for any reason prior to
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the expiration of itsl term, DIIDC shall promptly bill
Customer and the Custo�er shall pay D�IDC within thirty (30)
� days after receipt of such bill for all unpaid amounts
otherwise due pursuan� to this Agreement, plus the
unamortized portion of the cost incurred by DFIDC in causing
Customer' s Building to �e connected to the District Heating
System; such cost shall be the total amount of expense
actually paid, expensedl or incurred by DF�IDC for materials,
labor or services, or t�.e financing thereof, with respect to
constructing that port' on of the District Heating System
which but for the ne�d to deliver Hot Water to the
Customer' s Point of pelivery would not have been
constructed. Within nihety (90) days of Customer' s First
Service Date, DFIDC sha 1 inform Customer of: (a) DFIDC' s
cost (explained above) �n causing Customer' s Building to be
connected to the Distri4t Heating System, and (b) the number
of years the costs in I(a) are to be amortized over. All
atnortization shall be on a straight-line basis .
ARTTCLE XVI
RIGHT-OF-WAY; P,�CCESS TO BUILDING
� Duly authorized ag nts, officers, and employees of D�IDC
shall have the right to ent�r into the Building or onto the
surrounding premises of Cu�tomer at reasonable times when
necessary for inspection, repair, replacement, construction,
installation, removal, alter�tion or calibration of the Metering
Equipment and the District H ating System, subject to reasonable
supervision and control by C�stomer. Customer shall duly grant
such access, to the Building and surroundinc� premises to the
extent reasonably necessary tb cause and continue delivery of Hot
Water hereunder, and so longlas same do not impair the continued
use of the premises .
ARTIC�E XVII
RECORDS A�TD ACCOUNTS
17.1 D�IDC shall keep and mair�tain such true and complete books,
records and accounts a$ shall be necessary to compute
Service Bills, Demand, IEnergy-Related Costs, and Demand-
Related Costs preserving the same for a period not less than
three (3 ) years followi g the fiscal period to which they
apply. Unless otherwise determined by D�'�C, the fiscal year
of D�IDC shall be the per�iod from October 1 of each year to
September 30 of the follotaing year.
17.2 Customer shall have thelright at any time during D�IDC ' s
� business hours, upon thr�e (3 ) days prior notice to D�IDC to
examine, audit or copy, at Customer' s expense, all books,
records and accounts of ID�IDC applicable to, or having any
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impact upon Demand Ch�rges or Energy Charges, or upon
Customer' s account or Customer' s required performance of
this Agreement; provid�d that D�C shall not be required by
' this provision to isclose confidential operating
information of other C stomers unless such information is
germane to, and is re ested by 25% of all Customers by
number and Demand, ba�sed on, an allegation that any
Customer(s) are receiving any favored treatment not in
strict accordance with �his Agreement.
ARTI�LE XVIII
ARB�TR.AT I ON
Any dispute or c�ontroversy between D�IDC and any
Customer arising out of or r�lated to the execution, performance,
interpretation or breach of this Agreement, or any of its terms
or conditions including thelcorrectness of the computational or �
measurement process relatedlto calculation of Customer' s Energy ,�"
Charges or Demand Charges sl�all, at the election of either such
party, be submitted for resolution by an arbitrator selected and
acting in accordance with t�e arbitration rules promulgated by
the American Arbitration Ass ciation as outstanding from time to
time. Any decision by such n arbitrator shall be final, subject
� to any rights of appeal, mod' fication, vacation, or confirmation
before a court of competent j�risdiction.
ART�CLE XIX
AMENDMEN� AND WAIVER
19.1 Except as otherwise expjressly provided herein, neither this
Agreement, nor any term herein, may be terminated, amended,
altered, or modified e�cept by an instrument in writing
executed by Customer an�i D�-IDC or except as may be agreed to
in writing by D�IDC andj at least a majority of Hot Water
Customers in number and a majority of such customers on the
basis of their demand; Iprovided no such amendment shall be
made which shall confli t with, or cause a default, penalty,
new lien or accelera�ion of performance, under any
Indenture. I
19.2 Any waiver at any time I by either D�-ID� or Customer of its
� rights concerning a deflault or any matter arising from or
incidental to this Agre�ment shall not constitute a waiver
concerning any subsequen'It default or other matter.
19 .3 Failure of DHDC or Cus�tomer to enforce at any time any
provision of this Agr ement to require at any time
performance by the othe� party of any provision herein shall
� not constitute or be de�emed a waiver of such provision nor
affect in any manner th validity of this Agreement or the
right of such party th�reafter to enforce any provisions
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herein unless such waQVer be in writing and specifically
referring to such matt�rs .
� AR�ICLE XX
ASSIGNMENT; SUCCESSORS
20 .1 This Agreement shall i�iure to the benefit of and be binding
upon the successors and assigns of the parties hereto.
Customer may transfer� sell, convey or assign Customer' s
interest in his or itl� Building or the premises on which
such Building is locat d only in a transaction which is not
a sham designed primar' ly or principally for the purpose of
� avoiding performance o Customer' s obligations hereunder, as
follows: (a) all or s�stantially all such interest if the
person acquirinc� such nterest shall fully and enforceably
assume in writing a11I Customer' s obligations under this
Agreement; and (b) le�s than substantially all Customer' s
interest, if such persan acquiring such interest shall fully
and enforceably assume in writing an appropriate portion of
Customer' s obligations �ereunder.
20.2 To the extent Custome�i' s obligations under this Agreement
� are transferred and as�umed in accordance with this Article
XX, and to that extent �ionly, Customer shall be released from
such obligations . i
.
20 .3 Except by the writteniconsent of D�-IDC, Customer (if a
corporation or business�i entity) shall not consolidate with
or merge into any otheriperson or convey or transfer all or
substantially all of it� properties and assets to any person
unless: (a) such persoin shall fully and enforceably assume
in writing all Customen' s obligations under this Agreement,
and (b) such transac�,ion is not a sham transaction
designated primarily o'�r principally for the purpose of
avoiding performance ofiCustomer' s obligations hereunder.
ART�CLE XXI
E� ANSION
21.1 The parties hereto acl�nowledge that substantial public
support has been provi�ded for the development of the
' District Heating Systemiwith the intention that its benefits
be extended to other cu�tomers in St. Paul as economically
feasible. Therefore, DHDC may extend the District Heating
System to sell Thermali Energy to additional customers,
provided that the follow�ng conditions are met:
(1) All such DF�IDC cust�omers shall enter into agreements
� with D�IDC meeting tihe requirements of contracts as set
forth in Section 3 .�(2 ) .
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(2 ) Prior to the co�unencement of any Major Expansion
Project, a comprelhensive final feasibility study shall
be obtained from a qualified consulting firm stating
� that the construc ion, financing, and operation of such
Major Expansion P oject, taking into account projected
, new customer hook�p fees, committed public subsidies,
and advances fro the Expansion Reserve fund estab-
lished below, an� any other committed sources, are
feasible and wil7� not cause any increase in Demand
Charges to the tY�.en D�IDC Customers. "Major Expansion
Project" means a�n�r project or projects undertaken
within any D�-IDC �iscal year, which, when aggregated,
result in constr�}ction costs exceeding Two Million
Dollars ($2, 000, 0(DO) increased by a sum representing a
percentage thereo equal to the percentage increase in
the Consumer Pric Index from October 1, 1982 to such
time. "Consumer rice Index" shall mean that index
published from t me to time by the United States
government reflec�ing changes in costs of goods or
services to consw�ners or any successor substantially
similar index.
(3 ) E�ansion as used herein shall not limit in any way
DFIDC' s ability t�o expand unless said expansion
� constitutes a Major Expansion Project; provided further
that nothing co�tained herein shall limit the
construction of alhot water line from the D�IDC Third
Street Plant to NSP' s High Bridge facility upon such
terms and conditlions and at such time as the �
construction is defined necessary and desirable by D�IDC.
21.2 Notwithstanding anythi g to the contrary herein, beginning
October 1, 1986, Deman -Related Costs in each DHDC fiscal
year shall include a amount to be allocated to an
"Expansion Reserve" fur�d equal to seven (7) percent of the
total of other Demand-�telated Costs for such year, unless
the total D�IDC resultir�g projected rates would cause Demand
and Energy Charges projected for a D�IDC Customer (assuming
average Demand and Thezfmal Energy use) to exceed the total
projected cost to provi�ie the same Demand and Thermal Energy
using firm natural gas, lin which case the seven (7 ) percent
amount shall be reducec� until hot water rates are equal to
firm natural gas rate's or the seven (7) percent is
eliminated, whichever �'irst occurs . For purposes of this
determination, the annu 1 combustion efficiency of natural
gas shall be deemed to b� 65 percent.
21.3 The charge described inlSection 21.2 above, shall terminate
at the end of the term o� this Agreement.
� 21.4 The Expansion Reserve f�nd shall include amounts allocated
pursuant to Section 21 . , together with any interest earned
thereon. Amounts in s�ch fund shall be advanced only for
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the purpose of expandi g the District Heating System by
action of the DFIDC Board of Directors or for debt coverage
. as provided in the Inde ure.
ARTI LE XXII
CONTINGENT CU TOMER OBLIGATION
22 .1 Notwithstanding anythi g to the contrary herein, in the
event Aggregate Demand, as determined in Section b.6, falls
below 100 percent of the minimum total Demand deemed
necessary in the Study, hereinafter "Minimum Demand" in any
D�IDC fiscal year comme cing on or after October 1, 1986,
then Customer' s Demand Charge for that fiscal year shall be
calculated pursuant to e provisions of this Article XXII .
22 .2 Customer' s "Contingent emand" is defined to mean the higher
of (a) Customer' s Initi�,al Demand, as specified in Section
1.4 or (b) Customer' s most recent Demand as determined
pursuant to Article VI .
22 .3 The sum of all the "Co�tingent Demand" for all Hot Water
Customers shall be the " ggregate Contingent Demand" .
22 .4 Notwithstanding anythin to the contrary herein but subject
to the provisions of Se tion 22 .6, for any D�IDC fiscal year
commencing on or after October 1, 1986 in which Aggregate
Demand is expected to �be less than thE Minimum Demand,.
subject to any adjustm nt or changes pursuant to Section
6.11 or 10 .4 Customer' s' total Demand Charge shall equal the
Projected Demand-Relat�d Costs divided by Aggregate
Contingent Demand as f such October 1 (which yields
Contingent Demand Charye per kilowatt) , multiplied by
Customer' s Contingent Demand as of such October 1 .
Customer' s foregoing De�nand shall be determined preceding
the fiscal year it is a ticipated that the Aggregate Demand
will be less than the inimum Demand. Customer sha11 pay
this annual Demand Char e in the next succeeding fiscal year
in twelve equal Billing period installments .
22 .5 CUSTOMER EXPRESSLY ACKN WLEDGES AND RECOGNIZES THAT EXCEPT
AS MAY OTHERWISE BE PR VIDED IN SECTION 22 . 6, UNTIL THE
� EARLIER OF EXPIRATION pR TERMINATION OF THIS AGREEMENT,
CUSTOMER SHALL PAY DE CHARGES THAT WILL, WHEN ADDED TO
THE DEMAND CHARGES OF 0 R CUSTOMERS, BE SUFFICIENT TO PAY
ALL DEMAND-RELATED COST , EVEN IF THE CUSTOMER NO LONGER
USES HOT WATER IF THE TOTAL DEMAND OF ALL HOT WATER
CUSTOMERS FALLS BELOW MINIMUM DEMAND.
22 . 6 Notwithstanding any pro isions herein to the contrary, the
i:: Customer shall be relieved of its contingent obligation
under Sections 22 .4 or 2 . 5 to pay Initial Capital Demand
Charges in excess of wh t it is otherwise required to pay
23 .
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under this A reement �.f and to the extent D�IDC is r�quirec'
g
under the Indenture by� specific reference to such contingent
obligation to relieve the Customer of the same in order to
� preserve the tax exem t status of revenue bonds issued to
finance the District H ating System.
AR�ICLE XXIII
+ DFIDCI MANAGEMENT
D�IDC may take an�r and all steps necessary to operate
and maintain the hot water District Heating System in accordance
with all applicable Feder�l and State laws and regulations,
unless otherwise restricte herein. D�C shall be governed at
all times with the overalll goal of providing competent and
effective management and co�servation of the resources of D�IDC to
assure uninterrupted, eff}cient and economical service to
Customers.
AR�ICLE XXIV
PORTING
24.1 Upon request, D�IDC sh�ll mail to Customer a copy of DHI�C ' s
� audit report, conductec� as required in Section 12 .4.
24.2 Upon request, D�IDC sh�ll mail to Customer a copy of the
engineering consultin report, conducted as required in
Section 12 . 6 .
�
ART�CLE XXV
SEV�RABILITY
If any of the te s, covenants or conditions of this
Agreement shall be held inv�lid by any court having jurisdiction
all other terms, covenants and conditions of this Agreement and
their application shall r�main valid, enforceable and not
affected thereby.
ART l�l CLE XXV I
APPLI�CABLE LAW
The validity, perf�rmance, construction, interpretation
and enforcement of this Agr ement and all terms, covenants and
conditions therein, shall Ibe governed by and construed in
accordance with the laws of t�he State of Minnesota.
� I
I 24.
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� ARTICLE XXVII
NOTICES
Any notices, demands or requests to a party permitted
or required under this A reement, or incidental thereto, shall
(if in writing containi g such information as is otherwise
required) be deemed given to a party on the earlier of the date
on which such notice, dem�nd or request is actually delivered or
on which the same is mail d with postage prepaid by registered or
certified mail, addressed o such party' s billing address .
ISCLAIMER
This Agreement ncompasses the full understanding of
the parties hereto with r spect to the transaction contemplated
hereby, except for the Ad itional Uses Rider, if any. Customer
acknowledges that no agree�nents, representations or understanding
of a legal, engineering r other nature have been made and/or
relied upon by Customer ex�ept as contained herein.
IN WITNESS W�REOF, Customer and D�C have executed and
delivered this Agreement a of the day of , 198
CUSTOMER: �
DISTRICT HEATING DEVELOPMENT
COMPANY
r
By g
Y
I ts I s
By gy
• Its Its
Address: Address :
�
25 .
.,�.�.,�.,,�.. � ,.. ,.. . .,.�. . _ _,.,. ��-;�-
� � � ��g�
� WILLIAM M. MAHLUM, P. A.
ATTORNE�S AT LAW
SUITt 2200,NORTH C[NTRAL LIFE TOW[R
TOWN�qUARE
445 MINNE TA STR[ET
SAINT PAUL,M�NESOTA 55101
s�2-a 2-ta6t
oF couNSt�
WILl1AM M.MAHLUM �� RICHARD �,.MATYKItWICZ
KEN R.ERICKSON June 2� 1983 lDWA11D A.TOWlV
Mr. Albert B. Olson
City Clerk, City of Saint Paul I
Room 386, City Hall
Saint Paul, MN 55102 I
Re: DISTRICT HEATING DEVEL�PMENT COMPANY
Dear Mr. Olson:
Enclosed please find the revi�ions to the Hot Water Delivery
Agreement necessitated after �he District Heating Development
Company Bond Sale. Pursuant to the Hot Water Franchise,
Section 6 (f) , I have enclosed these revisions for filing with
your office.
I have also forwarded a copy o� these revisions to Philip Byrne
for his review.
If you have any questions, please call me.
Very truly yours,
WILLIAM M. MAHLUM, P.A.
� 1 � - �
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. WILLI M M MAHLUM r
C.d)
WMM: j b �.::;, ''
Enc.
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cc: Mr. Philip B. Byrne I �'°
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� ` �* POST BOND SALE REVISIONS 4/1/83
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�
HOT WATER DELIV�ERY AGREEMENT 'i
District Heating Delvelopment Company, a Minnesota `'
non-profit corporation ("DfIDC" � and
Customer agree as o ows:
� ARTIC�LE I
CUSTOMER'� PURCHASE
1.1 Customer represents tha it owns a building called
� located at
' St.
au , Minnesota e Bu ing an is not an � "exempt
person" within the meani g of Section 103(b) (3) of the
Internal Revenue Code of 1�54.
EXEMPT � � ��
1.1 Customer represents that it owns a building called
located at
' , St. ..Pau� , '
M�nnesota t e Bu> >ng n �s an exempt person" within
the meaning of Section 10$(b)(3 of the I�ternal Revenue
Code of 1954. I
1.2 Customer's Point of Deliv�ery, as used in Article IV, is
. �
1.3 Customer's Completion DateI, as used in Articles IV and V, is
October 1, 19 Customler shall diligently proceed to
complete its Building Con�ersion prior to the Completion
Date, however, such Compl tion Date shall be extended for
reasonable period(s) of t'me up to a total of sixty (60)
days in the event comple�ion of Building Conversion is
delayed by reason of an ac� of God, or other event similarly
beyond Customer's control.
1.4 Customer's "Initial Demand", as estimated based on
Customer's past and pres nt utilization of electricity,
steam, oil, natural gas, o�er fuels or a combination of the
foregoing for heating pu�oses, is kilowatts,
based on a "Utilization Fac!tor" of ours.
1.5 Subject to the continge�cies, terms, and conditions
hereinafter set forth in is Agreement, Customer agrees to
buy from D�IDC and pay fo� heat energy ( "Thermal Energy" )
derived from hot water fu nished by DHI�C hereunder ( "Hot
Water" ) . �
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ART�CLE II
.
DFIDC �SERVICE
2.1 DI�C represents that it�l intends to co�struct and operate a
hot water distribution system under a franchise from the
City of Saint Paul, Min�esota (the "Franchise" j and that it
owns a coal-fired generlatinq plant, and, as necessary has
access to and may utili�e sufficient additional sources of
energX in the generat"on of Hot Water, giving it the
capability to produce 11 Hot Water needed to meet the
Aggregate Demand (as reinafter defined) of all D�C
Customers purchasing Hot Water ("Hot Water Customers" ) at
the design condition of �19° Fahrenheit.
2.2 D�C represents that it lill construct and place such piping
and equipment as necess ry to connect its heat sources to
Customer's Point of Del 'very by no later than Customer' s
Compl.etion Date. I �
2.3 D�C acknowledges thatl Customer's Initial Demand is
reasonable, based upon D��C's estimates or verification of
Customer's records.
C 2.4 DFIDC agrees to continuo�sly furnish needed Hot Water and
sell Thermal Energy �o Customer, subject to the
contingencies, terms, anc� conditions herein set forth.
ARTIG�LE III
TERM�
i ' • , . ".."ee��_-�-�'-ci,oir-�-z- �he term of this Agreement shall
commence on the date he eof and continue, subject to the
terms and conditions her of, for a term of thirty (30) years
following the earlier oflCustomer' s Completion Date or the
date on which Customerl first receives Hot Water for
continuous heating purpo�es at Customer's Point of Delivery
("First Service Date" ) , nless this Agreement is terminated
earlier as provided herei�.
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specifications require by D�C, as specified in that
certain document entit ed "Standards and Guidelines for
Designinc� Heating Syste s in Buildings Connected to a Hot
Water District Heatin System" prepared by D�IDC and
published in January 982,�,�in_cludi.nq any subsequent amend me�ts, i
(the "Standards" ) , and (b)
utilization of Thermal Energy in accordance with this
Agreement. To the e ent not inconsistent with the
Standards, Customer ma design the Building Conversion to
the. specifications desi d by Customer.
4.2 "Point of Delivery" sh 11 mean the point established in
Article I to which Hot ater shall be delivered through the
District Heating Syste to the Customer and the point at
which such water shall be returned from the Customer's �
Building Heating Syste to the District Heating System; a
Point of Delivery sha 1 demarcate the Building Heating
System and the District eating System.
4.3 Customer shall complete its Building Conversion prior to the
Completion Date, subje t to Section 1.3, so that it may
receive Hot Water from the Point of Delivery and utilize
Thermal Energy.
AR ICLE V
� CONNECTION TO DI TRICT HEATING SYSTEM
5.1 "District Heating Sys em" shall mean all equipment,
facilities and material , including boiler, heat exchangers,
heating sources, pumps, pressurizers, pipes, lines, gauges
and controls, and any other type of property now or
hereafter owned, opera ed, or controlled by D�C for the
purpose of or incidenta or useful to heating, distributing,
receiving, collecting, monitoring and metering Hot Water,
excluding any part of any Customer's Building Heating
System.
5.2 Prior to the Completion Date, D�C shall cause the District
Heating System to be onstructed or expanded in such a
manner as may be requi ed to enable the delivery of Hot
Water to Customer' s Poi t of Deliver� and the return of Hot
Water therefrom to the istrict Heating System in accordance
herewith. �
5.3 All property constitut'ng a part of the District Heating
System in or on the Bu' lding, or its surrounding premises,
shall at all times be e property of DFIDC; and upon the
earlier of termination r expiration of this Agreement, DIIDC
shall have the right a its option to remove such property
from the Building and ' ts premises, provided that promptly
� after such removal D C shall cause the Building and
premises to be returned to substantially the same condition
as would have existed ut for such removal. DFIDC shall
4.
� � � i
' inform Customer of its i�tention to remove the property from
the Building and premis�es within thirty days after the
earlier of the terminatipn or expiration of this Agreement,
. or such property shall blecome the property of Customer. If
D�C shall elect to cau e the removal of its property (and
thus, also restoration o Customer's Building and premises) ,
it shall do so within ixty days following the date of
notice of its intentionito remove, or such property shall
become the property of Cu�stomer.
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5.4 Customer sh 11 'r 11 Servic C
Char es related to.� con ectin Customer's Buildin to the
istr c H vi e Connection Cha s a
used herein shall
�construction costs de i n and other rofessional fees
ermi t i n n n
the connection The p.�,rties acknowledge that the Ser�ti�e
Connection Cha m be the ub' c of ne ot tion be-
tween the oarties he to and Customer acknowledaes bv .
exe i
to the con r
said Service Co� c _
- ARTI�LE VI �
DEM CAARGE
6.1 Subject to Article XXI�, commencing on the earlier of
Customer's First Servi e Date or Completion Date and
thereafter during the te� of this Agreement, Customer shall
incur DFIDC Demand Charg�s as determined in this Article VI .
6.2 For the following rate �eriods subsequent to the earlier of �
First Service Date or C mpletion Date and prior to October
1, 1986,. ("Switchover l�ate" ) Customer shall pay DI�C a
"Demand Charge" in each Billing Period (hereinafter defined)
equal to the product o�f .Customer' s Demand (hereinafter
defined) for such peri�od multiplied by the following
applicable Demand Charg� rates:
�
i Demand Charge Rates
per Kilowatt of ,
Applicable Rate Pe�iod Customer's Demand
;
June 1, 1983-Septemb�r 30, 1984 -
October l, 1984-Septemb r 30, 1985 ��
october 1, 1985-Septemb�r 30, 1986 � -�3:-38—
June 1, 1983-Septemberi30, 1984 A t2.45
October 1, 1984-September 30, 1985 �_
October 1 , 1985-Septemberl30, 1986 �3.20
5.
� ___ -- __
.
6.3 Subject to Sections 1.4, 16.4, and 6.5, Customer' s "Demand"
in respect of a DI�C iscal year (October 1 through
September 30) shall mean�Customer' s maximum zate of Thermal
Energy utilization, expressed in kilowatts, in any hour
during the twelve-month period ending May 31 immediately
prior to such fiscal year�
6.4 Until such time as equipinent capable of directly measuring
Demand is available on a reasonably cost-justified basis and
� installed for Customer, �ustomer's Demand for a given DFIDC
fiscal year shall be de�emed to be the greater of (a)
Customer's Demand as act ally measured or determined by DfIDC
at any time durinq suc year or (b) Customer's weather
normalized annual Therm 1 Energ� utilization (in kilowatt
hours) for the twelve:-mqnth �eriod ending the previous May
31, divided by Customer'I,s Utilization Factor as established
in Section 1.4. For pur�oses of this Section, for each DF�C
fiscal year beginning l�ss than sixteen (16) months after
Customer's First Servic� Date, Customer's Demand for such
year shall be deemed to ' be the same as Customer's Initial
Deman�i. I
6.5 Notwithstanding any oth�r provision herein, Customer may
request, not later than �!ay 31, a Demand different from that
established under Sectidns 6.3 or 6.4 for the D�C fiscal
year beginninq the foll�owing October 1 if Customer can.
establish prior thereto, to the reasonable satisfaction of
DfIDC, that Customer's u�tilization and Demand for Thermal
Energy during the entir D�C fiscal year next commencing .
will be reduced by fi�teen percent (15�) or more in
comparison with the thenlcurrent fiscal year.
6.6 "Aggregate Demand" for � D�C fiscal year shall be the sum
of the� Demand for Therma7� Energy of all Hot Water Customers.
� 6.7 "Demand-Related Costs" �in respect of a given D�C fiscal .
year shall mean the fol]lowing charges or allowances ;'and all
D�C costs other than ergy-Related Costs defined. in 7.3
incurred or made in su h year: (a) all D�C operating,
maintenance and repair costs, but excludinq any costs
defined as Energy-Relat d Costs; (b) reasonable D�C general
and administrative cost�, including legal and engineering
costs related to hooku of additional Customers; (c) all I
DFIDC debt service net f D�C interest income other than I
that allocated to the xpansion Fund pursuant to section I
21.4; (d) net increa�es (with reductions in Demand-Related '
Costs to the extent of Idecreases) in DI�C working capital '
and fuel inventory d�ring such year; (e) capital
expenditures not amortlzed through debt service and net
increases (with a reduc�ion in Demand-Related Costs to the
extent of decreases) d ring such year for reserves for
replacements and capita� improvements, including increases
(or decreases) with res�p ect to the Expansion Reserve Fund
defined in 21.2; (f) ainounts not collectable for Demand
Charges due .(with credi� for charges collected that in other
fiscal years were expeised as uncollectable) ; (q) prompt
6.
I
. .
, ,
� �ayment discounts in res�ect of Demand Charges; (h) amounts,
if any, required to be Icollected by D�IDC from Hot Water
Customers to meet minimu�n debt coverage requirements under
I` Tr.rlori�-..,�... j.
� vr�indenture � or any finl,ancing agreement related to Revenue
Bonds, substantially alll the proceeds of which are used by
� or on behalf of D�C p�rovided such amounts under this
provision 6.7(h) shall n�ot be used for expansion �urposes;
� provided that Demand-Re�lated Costs shall not include
depreciation. j
6.8 Not later than June 30 e�ch calendar year, D�C shall cause
its staff to prepare an I estimate of D�C's total projected
Demand-Related Costs fo the next succeeding DF�C fiscal
year. Not later than Ju�y 31 in each calendar yea=; D�C's
Board of Directors shal�, approve a fiscal budget for all
Demand-Related Costs ex�ected to be incurred in the next
succeeding fiscal year (Projected Demand-Related Costs) .
The proposed rates gener�ated thereb� shall be forwarded for
such rate review, appro�val or modification by the City
Council of Saint Paul, Minnesota, or such other public body,
as ma be required by th� Franchise. A written statement of
the •�rojected Demand-Rel�ated Costs shall be forwarded to
Customer upon request. �
6.9 For each fiscal year com�lencinq on or after Switchover Date, �
Customer's Demand Charge� shall be equal to the Projected
Demand-Related Costs div�.ded by Aggregate Demand as of such
October 1 (which yiel� Demand Charge per kilowatt)
multiplied by Customer' Demand as to such October 1.
Customer shall pay the alnnual Demand Charge in the fiscal
�ear beginninq such Octo}�er 1 in twelve equal Billing Period
installments.
C 6.10 If Customer does not hav� a Demand established on October 1
of any D�C fiscal year, Customer's Demand Charge for each
Billinq Period commencinc� in such year on or subsequent to
the earlier of Customer' First Service Date or Completion
Date shall be equal to C stomer's Demand multiplied by the
Demand Charge per kilowa t for that year adjusted for the
number of months Custom�r is connected to the District
Heating System in that ye�r.
6.11 Notwithstandinq anything to the contrary herein, upon
approval by at least ixty percent (60�) of D�C's
directors, for the last �ix months of any D�C fiscal year,
Customer's monthly Dem�nd Charge payments may be
appropriately pro�ortion lly increased if, but for such
increase, the Pro�ected D�mand-Related Costs for such fiscal
year are reasonably expec�ted to be materially less than the
actual Demand-Related C�sts reasonably expected to be
incurred in such year. '
_
��
I
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� � ARTI I CLE V I I
ENER�GY CHARGE
7.1 Customer shall pay for �iThermal Energy in accordance with a
formula based in part µpon an Energy Charqe as determined
under this Article VII . j
� 7.2 Customer's Thermal Energy utilization shall be calculated by
measuring the volume �of Hot Water delivered to the
Customer's Building and� the difference in temperature of the
Hot Water received at� the Point of Delivery from the
District Heating System� and the Hot Water returned from the
Customer's Building Heat;ing System to such �oint.
7.3 "Energy-Related Costs" iin respect to a given D�C `fiscal
period shall mean alli costs or allocations of costs
projected by D�C for �uch period relatinq to: (a) D�C
consumption of fuels, i�ncluding but not limited to, coal,
oil and natural gas, o� purchases of thermal energy; (b)
consumption of electri�ity used in the productiofl and �
distribution of Hot Watter; (c) reasonable allowances for
amounts not collectablelfor energy char�es due (with credit
for c�arges collected thlat in other periods were expensed as
uncollectable) , and (d) iprompt payment discounts in respect
of Energy Charges. Foripurposes of valuing or pricing fuel
consumed from inventory i'under clause (a) above, the weighted
average method shall b� employed; normal storage losses
shall be prorated according to the rate of fuel use. Not
later than June 30 each '�alendar year, D�C shall cause its
staff to prepare an esitimate of D�C's total projected
Energy-Related Costs fof the next succeeding D�C fiscal
year, a copy of which � report, upon request, shall be
furnished to Customer. Not later than July 31 in each
( calendar year, D�C's B�ard of Directors shall approve a
fiscal budget for all E�ergy-Related Costs expected to be
incurred in the next sudceeding fiscal year which shall be
the "Projected Energy-R lated Costs" . The proposed rates
qenerated thereby shall e forwarded for such rate review,
approval or modification by the City Council of Saint Paul,
Minnesota, or such other ��public body, as may be required by
the Franchise.
7.4 D�C's Metering Equipme !t shall be capable of accurately
recording Customer's uti�zation of Thermal Energy.
7.5 Customer's Energy Charge �for a given Billinq Period shall be
equal to all Projected Er�ergy-Related Costs; for such fiscal
year divided by the numbe�r of all kilowatt hours of Thermal
Energy estimated to be us d by all D�C Hot Water Customers
during such fiscal year �which yields an Energy Charge per
kilowat�ultiplied byithe number of kilowatt hours of
Thermal nergy utilized by� Customer for such Billing Period.
The Energy Charge may }�e appropriately adjusted (i.e. ,
s�read over the remainin months in the fiscal year) from
time to time during fisca�. year to cover cost increases (or
decreases) occurring sub�equent to the establishment of
Frojected Energy-Related ICosts for such period regarding
energy purchased by DFIDC, j to the extent such costs are in
excess of (or below) thqse costs projected by DfIDC in
establishing the Energy Chprge for such period.
�.
. �
� ��
,
�
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ART�ICLE VIII
MISCELLANEOUS �2ATE CONSIDERATIONS
8.1 Annually after Septembjer 30, 1986, when it is shown by
independent, qualified {and competent consultants that Demand
Charge and Energy Cha ge procedures do not accurately
reflect the cost of p�oviding services D�C may, where
reasonable, practical d necessary, revise such procedures
provided such revision are ap�proved by D�C's Board of
Directors and by a mini um of fifty percent (50�) of all Hot
Water Customers and Cu tomers constituting at least fifty
percent (50%) of Aqqregalte Demand.
8.2 If during any year thel maximum temperature of Hot Water
returned from Custome�'s Building Heating System to
Customer's Point of Deljivery exceeds 160° Fahrenheit during
the months of November �hrough March, Customer's Demand for
such. ,year may be increa�ed by D�C by an amount ap�ropriate
to reflect the increas�d rate of Hot Water delivery to
Customer at such time, �nd Customer's Demand Charge shall be
increased accordinqly. D�C shall not deliver Hot Water to
_ Customer at a temperatur� exceeding 260° Fahrenheit.
8.3 DFIDC shall promptly infbrm Customer in writing of the basis
� on which DI�C establish�d Customer's Demand Charge, Energy
Charge and Demand for a#iy time during the three (3) years
preceding the date that �ustomer requests such information.
ARTIjCLE IX
ME RING
9.1 Prior to Customer's Com letion Date, D�C shall install, at
D�C's expense, all quipment ("Metering Equipment" )
necessary to accurately measure and record (a) Customer's
Thermal Energy utilizati n and (b) Customer's Demand (to the
extent such equipment s available and reasonably cost
justified) .
9.2 Customer shall permit DHDC to install Metering Equipment in
Customer's Buildinc� or dn Customer' s premises in the area
adjacent to the Point of� Delivery or such other area as may
be specified by mutual ac�reement of the parties, taking into
account accessibility a�d Customer's need for Building
security.
9.3 DfIDC shall own and maint in D�IDC Metering Equipment in good
repair and operating cond' tion at DFIDC' s expense.
C �I
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9.4 Any electricity required for the operation or maintenance of
the Metering Equipment shall be supplied by Customer at
Customer's expense.
9.5 Customer shall prom�tly notify D�C if at any time Customer
has reason to believe the Metering Equipment is not
accurately measuring the Thermal Energy used by the Building
Heatinq System or Custom�r's Demand.
9.6 DFIDC shall cause such testing and calibration of the
Meterinq Equipment as Customer shall request, provided
that the cost of any su h testing and calibration shall be
borne by the Customer i such testing does not disclose an
inaccuracy of more th five percent . (Sy) in measuring
utilization of Thermal E�nergy or Demand. U�on the discovery
of any such inaccuracyr the Metering Equipment shall be
promptly adjusted or r placed at D�C's sole expense to
accurately measure util�zation of The�nal Energy or Demand.
If any measuring inaccu�racy of great�r than five percent
(5%) is discovered, a�h appropriate adjustment to the
Customer's Service BillI shall be made in respect of the
month immediately precekiing such discovery and until the
time of repair or repla ement, based on the assumption that
the same degree of inac�uracy existed throuc�hout such period
( until repair or replac ment unless�� a particular event or
accident is reasonably� shown to haqe caused the meter
inaccuracy, in which ev nt the date for billing adjustment
shall be established th�reby. No other adjustment shall be
made except an appropri te ad�ustment may be also made to
earlier Service Bills �(hereinafter defined) at D�C's
election if D�C has r asonable cause to believe that a
Customer did not timely�act in good faith to notify D�C of
a suspected measuring inficcuracy.
9.7 Notwithstanding the fo goinq Section 9.6, in any Billing
Period during which th Metering Equipment shall fail to
register utilization o Thermal Energy by a Customer, the
amount of Thermal Ener utilized by such Customer during
such period shall be es imated b� DI�C based on the Thermal
Energy utilized by the ustomer in the past and the Thermal
Energy utilized by o er customers with similar usage
characteristics during t�he period in question.
AR�ICLE X
BILLINGIAND PAYMENT
10.1 Unless Customer is othe�wise notified by DfIDC, the Metering
Equipment shall be read to determine the Customer's Thermal
Energy utilization at east once each Billing Period. A
� "Billing Period" shall �e a "month" which may be any period
- between 28 and 33 cons�ecutive days (except for February
' 10.
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which may be 26 days) ; provided that in any calendar year
there shall be twelve (1 ) such discrete consecutive months.
10.2 Unless Customer is othexwise notified by DFIDC, DFIDC shall
within thirty (30) day� following the end of a Billing
Period send to Customer by U.S. Mail, or otherwise deliver
to Customer, a bill (" ervice Bill" ) bearinq the date of
sending or delivery a d setting forth amounts due by
Customer to D�C hereun er in respect of such Billing �eriod
or any prior Billing Per�.ods.
10.3 D�C shall have the r"'c�ht, upon notice to Customer, to
estimate Customer's uti ization of Thermal Energy during any
Billing Period and subm't to Customer a Service Bill based
on such estimate, prov'ded that at least quarterly, D�C
shall read the Mete ing Equipment and thereafter
appropriately credit o� charge Customer for the Thermal
Energy it actually u�ilized in comparison with the
prev�.ously estimated u ilization which was billed to and
paid by Customer.
I
10.4 Following any D�C fis al year, if D�C should determine
that the actual Ener -Related Costs or actual Demand-
_ Related Costs for such' year varied from the originally
C Projected Energy-Related Costs or the original Pro�ected
Demand-Related Costs, 'respectively, used by DFIDC in
establishing the Enerqy Charges or Demand Charges, as the
case may be, during s ch year, D�C may promptly bill
Customer for its share of any excess of actual Energy-
Related Costs, Demand-R lated Costs, or both, and D�C shall
promptly credit or refund Customer its share of any underage
of actual Energy-Relatqd Costs, Demand-Related Costs, or
both; and under no cire stances shall D�C transfer funds
or balances as between otal Energy-Related Costs and total
Demand-Related Costs; ustomer's share of any � excess or
underage of Energy-Rela ed Costs shall be an amount which
causes Customer's total, Energy-Related Cost payments for
such year to bear the same proportion to total of all
aggregate Energy-Related Costs as Customer's total purchases
of Thermal Energy for s ch year bear to the total purchases
of Thermal Energy by al Customers; Customer's share of any
such excess or underage of Demand-Related Costs shall be an
amount which causes Customer's total Demand-Related Costs
payments for such year o bear the same proportion to total
of all aggregate Demand�Related Costs as Customer's Demand
(averaged over such yea�) bears to the sum of the demand of
all D�C customers (ave aged over such year) . In no event
shall D�C charge Custo er in accordance with this section
more than once in any c lendar year, and Customer shall have
up to ninety (90) days o pay any excess found to be due and
C billed as provided herei .
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10.5 A Service Bill shall e due and payable immediately upon
receipt by Customer without set-off, counterclaim,
abatement, or reductio� by Customer. Customer's prompt
paxment of Service Bills shall not diminish or constitute a
waiver of, Customer's laims or remedies in arbitration, in
subsequent legal �rocee ings, or in any other way, including
challenging the billed ount itself.
10.6 Customer shall receive a discount of five percent (5�) for
making full payment of all amounts due pursuant to a Service
Bill within ten (10) day�s of the date of such bill.
10.7 I f the Service Bil_ o `__---- _-_ . . _ -- -___
Service Connectio� Charge � ' ; �
. . . _. . . . .
. . „ _ _ , : _ . .. . .
. . . ; . .
. . : . . . .. .. :♦ , _ _
. _
. . . . _
. . ._ . . pf Customer has not been paid in full
within forty-five (45) �ays after the date thereof; D�C may
the�eupon or thereafter suspend the delivery of Hot Water �o
Customer, provided Cust' mer has been given written warning
thereof at least fiftee (15) days prior to such suspension,
and take such lawful a tion to effect collection of such
bi11,� including commenc ment of legal proceedinqs, as D�C
shall deem desirable. Customer shall be liable for all
costs and expenses (in�luding attorneys' fees) personally
incurred by D�C in conmection with any attempt to make such
collection (whether or ot a lawsuit is commenced) .
( ART CLE XI
ADDITIONAL CUSTOMER OVENANTS AND OBLIGATIONS
11.1 Without the consent of D�C, Customer shall not cause or
voluntarily p�rmit any ' modification or alteration to any
part of the Metering quipment or the �District Heating
System, eacept in an em rgency situation where life, health
or property is threatene .
11.2 Without the consent of D�C, Customer shall not cause or
voluntarily permit any action which interferes with the
delivery or return of H t Water, the utilization of Thermal
Energy or the operation, maintenance, repair, replacement,
construction, installat on, expansion, removal or alteration
of the District Heatin S�stem or the Metering Equipment,
except in an emergency situation where life, health or
property is threatened.
11.3 No Hot Water Customer, ' including Customer, shall provide
heating service from i s Building Heatinq System to any
other building other han such Customer' s Building or
buildings and appurtena t structures without the consent of
DFIDC.
11.4 D�C shall not be liable to Customer or such Customer's
� officers, agents, emplo ees, lessees, licensees, invitees or
trespassers in respect of, and each Customer shall hold
harmless and indemnify DI�C from and against liabilities,
12.
. - ��
� losses, damages, cost , expenses (including attorneys '
fees) , claims, actions, �udgments, and settlements of any
nature whatsoever for any personal injury, death, or
property or economic d age arising out of or incidental in
an� manner whatsoever o the operation of the Customer' s
Building Heating System but only to the extent such injury,
death or damage was not caused by the negligence,
recklessness or intent'onal misconduct of D�C or its
officers, employees, a ents, lessees, licensees, invitees,
trespassers or contractors.
11.5 Customer shall not be iable to D�C or D�C's officers,
agents, employees, 1 ssees, licensees, invitees or
trespassers in respect f, and D�C shall hold` harmless and
indemnify Customer from liabilities, losses, damages, cos�s,
expenses (includinq a orneys ' fees) , claims, actions,
judgments, and settleme ts of any nature whatsoever for any
personal injury, death or property or economic damage
arisinc� out of or incid ntal in any manner whatsoever to the
operation of the Dis ict Heating System or Metering
Equipment, but only to the extent such injury, death, or
damage was not caused y the negligence, recklessness, or
intentional misconduct of Customer or its officers,
� emplo�iees, agents, less es, licensees, invitees, trespassers
or contractors.
ART CLE XII
ADDITIONAL DFIDC CO ANTS AND OBLIGATIONS
12.1 D�C shall maintain th District Heating System in good
repair and operating co dition and cause it to be operated
in a safe and efficient anner.
12.2 Subject to Article XIV, D�Cj��'n—�•r:°�-��o�;��t-e� �e
� � ' �-�g� e -� nrQVi de Customer
____- ---
'� with a continuous no�-in erru tible su 1 of Not Water at
Customer's Point of Del 've . DHOC shall not rely on
�interru ti e ener sou es to rovt e necessa ot r.
12.3 D�C shall use its best efforts to secure and maintain in
good standing all nece sary permits, easements, licenses,
franchises and rights ecessary or desirable to make and
continue the delivery f Hot Water to all D�C Hot Water
Customers.
12.4 DI�C ac�rees to annualIy have a complete audit conducted by a
qualified Certified Publ 'c Accounting (CPA) firm.
12.5 D�C agrees to maintain the District Heating System and the
Metering Equipment, u ilizing Preventive Maintenance.
"Preventive Maintenanc " means undertaking, where
economically practicabl , to repair existing D�C equipment
� to minimize the need or costly major repair work or
replacement.
13 .
, . , 12 .6 At least once every fi�e (5) years after October 1, 1985,
' ' . DFIDC shall engage a c�ualified professional engineer to
completely inspect the District Heating System and Metering
Equipment, to investigate the physical condition of D�IDC's
property and equipment, operating procedures, and Preventive
Maintenance practices, and to prepare a written report of
such inspection, which report shall be made available to
Customer; provided, however, the preventative maintenance
practices shall be reviewed and evaluated by an independent
qualified professional engineer and a written report shall
be filed with D�C no la er than December 31, 1986.
12.7 Subject to Article XI , commencing on the earlier of
Customer's Completion Date or First Service Date and
thereafter while this c�reement is in effect, D�C shall.
deliver to Customer's P int of Delivery sufficient� Hot Water
to meet all Customers�' hermal Energy requirements from time
to time as established in Article VI hereof, provided that
D�C shall not be obli ated to deliver Thermal Energy at a
rate in excess of Custom r's Demand.
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ARTI�LE XIII
BOARD OI DIRECTORS
, '
In accordance with D DC Articles of Incor oratio� a�d '
- 11 b ' ed of seven
members. Three members f th Bo h
erm a r v
be elected, one by each Custom�r Class� (Sma11, Medium and Large)
and shall serve their elected te;rmt as provided �� thp �;-Lawe_ Th
seventh member shall be elected by m�j�rity vote ef the Board and
, shall serve the elected term as ;�rovided in the Bv-Laws_
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Billing Period during ! which D�C is unable for 24
consecutive hours to ully perform its obligations to
deliver Hot Water in a�cordance herewith; to the extent
reasonably determinable! in good faith by D�IDC, any such
Demand Charge, as adju�ted, shall equal an amount which
bears the same ratio ito the Demand Charge, before
adjustment, in a qiven Billing Period, as the amount of
Thermal Energy utilized !by Customer in such Billing Period
bears to the total The al Energy Customer would have used
if D�C had fully perfo ed in accordance with Customer's
Aqreement.
14.2 In the event that the D I'strict Heati
supply all Thermal Ener to meet thenneeds tof all Hot Wa er
Customers in accordance with their respective Ac�reements,
D�C shall reasonably �ttempt to allocate delivery of
Thermal Energy first toleach such customer in such amounts
as necessary to maintain the maximum warmth possible for all
Hot Water Customers, an�i thereafter in proportion to the
Demand of each Hot Wat r Customer, subject only to such
exceptions as are neces�ary to protect human life, health,
and safety.
14.3 Notwithstanding anything� to the contrary herein, D�C shall
C have the right without �any liability to Customer, or its
officers, employees, ag nts, or an
reduce or discontinue t�ie deliver yofeHot Waternterrupt,
purposes of inspection, � maintenance, repair, replacement,
construction, installati�On, removal or alteration of the
District Heating System pr the Metering Equipment, and (b)
to prevent the delivery� of Hot Water to Customer from
causing any bonds which � have financed any acquisition or
construction of the Dis�rict Heating System ("Bonds" ) to
become Industrial Develofpment Bonds within the meaning of
Section 103 of the Inter�nal Revenue Code, or its successor
provisions. DFiDC shall t�se its best efforts to
notice to Customer of an e give written
of Hot Water at least s xt �ected interruption of delivery
su c h in terruption and sh�ll use �its bestleffortsh to inform
Customer of the expectedl length of any interruption. D�C
shall reasonably atten►pt to schedule non-emergency
interruptions during thelmonths from May through September.
D�C shall not be requir+ed to su�ply Hot Water to Customer
at any time DFIDC reason�bly believes Customer's Building
Heating System to be uns�fe, provided DFIDC shall have given
written notice of the ba�is for such belief at least thirty
(30) days prior to suspe�sion or termination of Hot Water
delivery for such reasoniunless such condition constitutes
an emergenc� condition iln which case DFIDC shall have the
immediate right to intertupt service. In the event, during
such 30 day period Custoiner cures, or demonstrates to the
� reasonable satisfaction bf DFIDC that it has made progress �
toward cure of such unsa�'e condition, then such suspension
or termination shall be c�ncelled or delayed by DFIDC.
h.6.
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14.4 Notwithstanding anythinr� to the contrary herein or in any
Agreement, DI�C shall t be required to deliver to any
person who is not an "e�cempt person" within the meaning of
Section 103 of the Inte�rnal Revenue Code or its successor
provisions more than t�aenty-five percent (25%) of tYie
"output" (within the mleaning of such section) of the
District Heating System. _
14.5 In the event D�C inter�pts service and this Agreement has
not been terminated, DI�C agrees to use its best efforts to
provide Customer with aI temporary source of_-3�eat, such as
mobile boilers unless such Customer's service has been
� disconnected for nonpa ent, unsafe conditions in Customer' s
equipment, by order of awful authority, or by operation of
Article 14.4 of this Agr¢ement.
ARTI'CLE XV
- ( TE INATION
15.1 Notwithstanding anythinc� to the contrary herein, if one or
more of the following e�vents or conditions shall exist or
occur, D�C may elect at its option to terminate this
Agreement by giving not'ce to Customer of such fact not less
� than thirty (30) days pr or to the date of such termination:
(a) Customer fails to ay any amounts due under a Service
Bill to such Custo er within forty-five (45) days from
the date thereof ex�ept as provided in Section 10.4;
(b) Customer fails to �uly observe or perform any covenant
or obligation to b observed or performed by Customer
pursuant to this �greement (other than nonpayment of
Service Bills) and Customer fails to cure such failure
or so observe or ' perform (or demonstrate to the
reasonable satisfa�tion of DI�C that Customer has made
progress toward cu e with a reasonable expectation of
full cure within a reasonable period) within the
aforesaid forty-fi�ve (45) days following a written,
specific request from DFIDC to do so;
. (c) Customer's Buildin�, or any substantial portion of the
District Heating System is abandoned, destroyed,
demolished, subst ntially destroyed or demolished,
becomes permanentl inoperable or is taken by right of
eminent domain; or
(d) It becomes unlawf 1 under any valid federal or state
law, regulation or rule for either D�C to deliver to
C the Customer or th Customer to receive and pay for Hot
Water.
17.
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15.2 If one or more of the Ifollowing events or conditions shall
exist or occur, Custo er may elect at its option to
terminate this Agreeme t by giving notice to D�IDC of such
fact no less than thirt (30) days prior to the date of such
termination:
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/�---Fb-j Customer's Building is permanently abandoned,
I destroyed, or dem�lished; or substantially destroyed or
(a demolished for wh ch rebuilding or substantial repairs
i are not commencediwithin six (6) months following such
! destruction;
%�—fe-�� �Customer's Build�.ng, or any substantial portion
. thereof, is take by right of eminent domain or
�(b)' becomes, in subs antial part, permanently inoperable
� and has been so or a period in excess of six (6)
�
months;
��- It becomes unlaw ul under any valid federal or state
�L law, regulation o rule for either DI�C to deliver to
, Customer or Custo�ner to receive and pay for Hot Water;
' or
�- For a continuous �period of thirty (30) days, D�C is
�� unable to deliv�r Hot Water to the Customer in
, substantial compl�ance with this Agreement.
15.3 Notwithstanding anyth'Ing to the contrary herein, to the
extent the same does �ot conflict with, violate or cause a
default, penalty, newllien or acceleration of performance
under any indenture p�rsuant to which/�Bondsi""' ""'-"- used
to finance constructiqn of the District Heating S�stem are .
issued,z'!� , !Customer in any year may at its option
terminate this Agree�nent on any anniversary (evenly
devisable by five) o� the Completion Date, provided the
Customer gives noticelto D�IDC no later than May 31 of such
year of such fact, a�d provided that as of the date such
notice is received by DFIDC the Aqgregate Demand, excluding
such Customer's Demanc� and the Demand of all other Hot Water •
Customers who have onlsuch date or prior thereto given due �
notice o£ their termi�nation of their respective Hot Water
Delivery Agreements, exceeds 125% of the Minimum Demand
fixed in Article XXI I l�ereof.
� 15.4 Without prejudice to �ny party' s rights to such damages for
breach by the other p� �arty of any term or condition hereof,
upon termination of this Agreement for any reason prior to
18 .
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the expiration of its � term, DI�C shall promptl� bill
Customer and the Custom�r shall pay D�C within thirty (30)
days after receipt of such bill for all unpaid amounts
otherwise due pursuant� to this Agreement, plus the
unamortized portion of the cost incurred by DFIDC in causing
Customer's Building to ]be connected to the District Heating
Syste� 1p�� *hp tpr�;�p (}enn ction charaed actually paid
,,,(�y CucQomer•
such cost shal�. be the total amount of expense
actually paid, expensed or incurred by D�C for materia�s,
labor or services, or tt�e financing thereof, with respect to
constructing that port'on of the District �ieating System
which but for the ne� to deliver Hot Water to the
Customer's Point of belivery would not have been
constructed. Within ni�iet� (90) days of Customer's First
Service Date, D�C sha�l inform Customer of: (a) D�C's
cost (explained above) p.n causinq Customer's Building to be
connected to the Distri�t Heating System, and (b) the number
of years the costs in I(a) are to be amortized over. All
amortization shall be on� a straight-line basis.
- ART�CLE XVI
RIGHT-OF-WAY; �CCESS TO BUILDING
Duly authorized ag�nts, officers, and employees of D�IDC
� shall have the right to eni�er into the Building or onto the
surrounding premises of C�istomer at reasonable times when
necessary for in�pection, �repair, replacement, construction,
installation, removal, alte�ation or calibration of the Metering
Equipment and the District �eating System, subject to reasonable
supervision and control by ¢ustomer. Customer shall duly grant
such access, to the Buildi�}g and surroundinc� premises to the
extent reasonably necessary �to cause and continue delivery of Hot
Water hereunder, and so lonc� as same do not impair the continued
use of the premises .
ARTIICLE XVII
RECORDSIAND ACCOUNTS
17.1 D�C shall keep and ma'�ntain such true and complete books,
records and accounts las shall be necessary to compute
Service Bills, Demand,j Energy-Related Costs, and Demand-
Related Costs preservi�}g the same for a period not less than
three (3 ) years follow�ing the fiscal period to which they
apply. Unless otherwi e determined by DFIDC, the fiscal year
of D�IDC shall be the eriod from October 1 of each year to
September 30 of the fol owing year.
17.2 Customer shall have t�e right at any time during DFIDC's
business hours, upon t ree (3 ) days prior notice to DF�IDC to
examine, audit or cop , at Customer' s expense, all books,
records and accounts f D�IDC applicable to, or having any
19.
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impact upon Demand Cha�ges or Energy Charges, or upon
Customer's account or C�ustomer' s required performance of
this Agreement; provide� that DFIDC shall not be required by
this provision to di�close confidential operating
information of other Cu�stomers unless such information is
germane to, and is req�ested by 25% of all Customers by
number and Demand, bas�ed on, an allegation that any
Customer(s) are receiv ng any favored treatment not in
strict accordance with �his Agreement.
ARTI�LE XVIII �
� ARB 7 TRAT I ON
Any dispute or c�ntroversy between DfIDC and any
� Customer arising out of or r�lated to the execution, performance,
interpretation or breach oflthis Agreement, or any of its terms
or conditions including thejcorrectness of the computational or
measurement proces.s relatedlto calculation of Customer's Energy
Charges or� Demand Charges s2�a11, at the election of either such
party, be submitted for res lution by an arbitrator selected and
acting in accordance with e arbitration rules promulgated by
the American Arbitration As ociation as outstanding from time to .
time. Any decision by such n arbitrator shall be final, subject
to any rights of appeal, moc�ification, vacation, or confirmation
, before a court of competent I�urisdiction.
ART�ICLE XIX
AMENDMEI�T AND WA I VER
� 19.1 Except as otherwise ex�ressly provided herein, neither this
Agreement, nor any tends herein, may be terminated, amended,
altered, or modified e�xcept by an instrument in writing '
executed by Customer a$�d DfIDC or except as may be agreed to
. in writing by DfIDC an�i at least a majority of Hot Water
Customers in number and a majority of such customers on the
basis of their demand;� provided no such amendment shall be
. made which shall confl ct with, or cause a default, penalty,
new lien or accelera�ion of performance, under any
/Lndenture.
19.2 Any waiver at any tim by either D�C or Customer of its
rights �concerning a d fault or any matter arising from or
incidental to this Ag eement shall not constitute a waiver
concerning any subsequ�nt default or other matter.
19.3 Failure of DFIDC or Culstomer to enforce at any time any
provision of this Ag�eement to require at any time
performance by the oth�r party of any provision herein shall �
not constitute or be �.eemed a waiver of such provision nor
affect in any manner �he validity of this Agreement or the
. right of such party t}hereafter to enforce any provisions
20.
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; , herein unless such waiv� r be in writing and specifically
' • referring to such matters¢
ARTI�LE XX
ASSIGNMENT� SUCCESSORS
20.1 This Agreement shall inulre to the benefit of and be binding
upon the successors and assigns of the parties hereto.
Customer may transfer, Isell, convey or assic�n Customer' s
interest in his or itslBuilding or the premises on which
such Building is located� only in a transaction which is not
a sham designed primaril�y or principally for the purpose of
avoiding performance of �Customer's obligations hereunder, as
follows: (a) all or s stantially all such interest if the
person acquirinc� such i terest shall fully and enforceably
assume in writing all Customer's obligations under this
Agreement; and (b) less� than substantially all Customer' s
interest, if such person� acquiring such interest shall fully
and enforceabl� assume �.n writing an appropriate portion of
Customer's obliqations hlereunder.
20.2 To the extent Customer'Is obligations under this Agreement
are transferred and ass�med in accordance with this Article
� XX, and to that extent Qnly, Customer shall be released from
such 'obligations. �
20.3 Except by the written �consent of DfIDC, Customer (if a
corporation or businessjentity) shall not consolidate with
or merge into any other person or convey or transfer all or
substantially all of it� properties and assets to any person
unless: (a) such persoh shall fully and enforceably assume
in writing all Customer!'s obligations under this Agreement,
and (b) such transactlion is not a sham transaction
designated primarily olr principally for the purpose of
avoiding performance oflCustomer' s obligations hereunder.
ART�CLE XXI
E ANSION
21.1 The parties hereto ac owledge that substantial public
support has been prov'ded for the development of the
District Heating System with the intention that its benefits
be extended to other c�stomers in St. Paul as economically
feasible. Therefore, DIFIDC may extend the District Heating
System to sell Thermall Energy to additional customers,
provided that the follo�ing conditions are met:
� 8 �-�6iitE�9 '"s=ra=rE�3�—i n t n _�--�,,,�,�•�,•
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, • t? m:�-�l�l�-r����-1�E'�EA�''s 6r�.-vl�t£���–zcv–ac-�
/I (1 ) All such DHDC Custom�rs shall enter into Agreements
'r with DHDC in a form omuarable hereto in a1T—material
_ res�p��s, The oart��es' hereto recognize that the
A reements with federtal state or local overnme�tal
customers with exceat on of Rate arqes may vary �n
� form and content• �herefore those Aareements are
. excepted from any reauireme�ts of material conformitv i
with other Aqreement�. No Customer other than the ,
federal ov nm 1 be allowed to ent
Hot Water Deliverv A reement for a shorter term than
� this Agreement. _
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(2) Prior to the co�encement of any Major Expansion
Project, a compreh nsive final feasibility study shall
be obtained from �, qualified consulting firm stating
that the construction, financing, and operation of such
Major Expansion Pr�ject, taking into account projected
new customer hookup fees, committed public subsidies,
� and, advances fromlthe Expansion Reserve fund estab-
lished below, andiany other committed sources, are
feasible and will not cause any increase in Demand
Charges to the th n D�C Customers. Major Expansion
Project" means an project or projects undertaken
within any DFIDC f scal year, which, when aggregated,
result in constru tion costs exceeding Two Million.
Dollars ($2,000,00 ) increased by a sum representing a
percentage thereof equal to the percentage increase in
the Consumer Price Index from October 1, 1982 to such
time. "Consumer rice Index" shall mean that index
published from ti e to time b� the United States
government reflec ing changes in costs of goods or
services to consun�ers or any successor substantially
similar index.
(3 ) Expansion as usedlherein shall not limit in any way
D�C s ability t� expand unless said expansion
� constitutes a Ma�o�r Expansion Project; provided further
that nothing cor�tained herein shall limit the
construction of a hot water line from the D�C Third
Street Plant to N�P's High Bridge facility upon such
terms and condit'ons and at such time as the
construction is de med necessary and desirable by DfIDC.
21.2 Notwithstanding anythi g to the contrar� herein, beqinning
October 1, 1986, Deman�-Related Costs in each DI�C fiscal
year shall include a amount to be allocated to an
"Expansion Reserve" fu d equal to seven (7) percent of the
total of other Demand- elated Costs for such year, unless
the total D�C resulti g projected rates would cause Demand
and Energy Charges pro�jected for a D�C Customer (assuming
average Demand and The�mal Energy use) to exceed the total
projected cost to provilde the same Demand and Thermal Energy
using firm natural gas, in which case the seven (7) percent
amount shall be reduce until hot water rates are equal to
firm natural gas rat s or the seven (7) percent is
eliminated, whichever irst occurs. For purposes of this
determination, the ann�al combustion efficiency of natural
gas shall be deemed to l�e 65 percent.
21.3 The charge described i�h Section 21.2 above, shall terminate
at the end of the term qf this Agreement.
� 21.4 The Expansion Reserve �'und shall include amounts allocated
pursuant to Section 21.2, together with any interest earned
thereon. Amounts in s�uch fund shall be advanced only for
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the purpose of expandir�g the District Heating System by
action of the DFIDC Boar�3 of Directors or for debt coverage
as provided in .
any indent res.
ARTI LE XXII
CONTINGENT CU5ITOMER OBLIGATION
22.1 Notwithstanding anythin� to the contrary herein, in the
event Aggregate Demand, as determined in Section 6.6, falls
below 100 percent of �the minimum total Demand deemed
necessary in the Study, lhereinafter "Minimum Demand" in any
DFIDC fiscal year comme�cing on or after October 1, 1986,
then Customer's Demand�harge for that fiscal year shall be
calculated pursuant to e provisions of this Article �II .
22.2 Customer' s "Contingent l�emand" is defined to mean the higher
of (a) Customer' s Initilal Demand, as specified in Section
1.4 or (b) Customer'slmost recent Demand as determined
pursuant to Article VI . I
22 .3 The sum of all the "Cdntingent Demand" for all Hot Water
Customers shall be the "�Aggregate Contingent Demand" .
� 22 .4 Notwithstanding anything to the contrary herein but subject
to the provisions of Se�Ction 22.6, for any DI�C fiscal year
commencing on or after October 1, 1986 in which Aggregate
Demand is expected to be less than the Minimwn Demand,
subject to any adjustm�nt or changes pursuant to Section
6.11 or 10.4 Customer' � total Demand Charge shall equal the
Projected Demand-Relat}ed Costs divided by Aggregate
Contingent Demand as of such October 1 (which yields
Contingent Demand Cha�ge per kilowatt) , multiplied by
Customer' s Contingent Demand as of such October 1.
Customer's foregoing D�mand shall be determined preceding
the fiscal year it is �nticipated that the Aggregate Demand
will be less than the jMinimum Demand. Customer shall pay
this annual Demand Charge in the next succeeding fiscal year
in twelve equal BillinglPeriod installments.
22 .5 CUSTOMER EXPRESSLY ACK1�iOWLEDGES AND RECOGNIZES THAT EXCEPT
AS MAY OTI�RWISE BE P�OVIDED IN SECTION 22 .6, UNTIL TI�
. EARLIER OF EXPIRATION OR TERMINATION OF THIS AGREEMENT,
CUSTOMER SAALL PAY DE CHARGES THAT WILL, WHEN ADDED TO
THE DEMAND CHARGES OF THER CUSTOMERS, BE SUFFICIENT TO PAY
ALL DEMAND-RELATED COS S, EVEN IF THE CUSTOMER NO LONGER
U5ES HOT WATER IF TH� TOTAL DEMAND OF ALL HOT WATER
CUSTOMERS FALLS BELOW T�iE MINIMUM DEMAND.
22.6 Notwithstanding any pr�visions herein to the contrary, the
Customer shall be rel ' eved of its ' ' '
under Sections 22 .4 0� 22 .5 to pa�y�'�-'rm�a=—�r� Demand �
Charges in excess of w�hat it is otrn�e �e�tYed to pay
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under this Agreement if j and to the extent D�IDC is required
under/�e—�dent-�e- I
/� an inden,ture by sjpecific reference to such contingent
obligation to relieve t�e Customer of the same in order to
preserve the tax exempt status of revenue bonds issued to
finance the District Hea�ing System.
ARTI�LE XXIII
DfIDC 1�ANAGEMENT
DF�C may take any land all steps necessar� to operate
and maintain the hot water D�strict Heating System in accordance
with all applicable Federall and State laws and regulations,
unless otherwise restrictedlherein. DfIDC shall be governed at
all times with the overallj goal of providing competent and
effective management and con�ervation of the resources of DI�C to
assure uninterrupted, effi�ient and economical service to
Customers.�
1
ART�CLE XXIV �
RE�ORTING
24.1 Upon "request, DFIDC sha]ll mail to Customer a copy of DFIDC' s
audit report, conductedlas required in Section 12.4.
24.2 Upon request, D�IDC sha�ll mail to Customer a copy of the
engineering consultingl report, conducted as required in
Section 12 .6.
ARTIjCLE XXV
SEVF�RAB I L I TY
If any of the ter�ns, covenants or conditions of this
Agreement shall be held inv�lid by any court having jurisdiction
all other terms, covenants land conditions of this Agreement and
their application shall r�main valid, enforceable and not
affected thereby. I
ART�CLE XXVI
APPL CABLE LAW
The validity, per ormance, construction, interpretation
and enforcement of this Ag eement and all terms, covenants and
conditions therein, shall be governed by and construed in
accordance with the laws of �the State of Minnesota.
24.
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AR�ICLE XXVII
NOTICES
Any notices, demands or requests to a party permitted
or required under this Ag eement, or incidental thereto, shall
(if in writing containin� such information as is otherwise
required) be deemed given to a party on the earlier of the date
on which such notice, dema�nd or request is actually delivered or
on which the same is maile�d with postage prepaid by registered or
certified mail, addressed �o such party' s billing address.
DISCLAIMER
This Agreement ncompasses the full understanding of
the parties hereto with r�spect to the transaction contemplated
hereby, except for the Adc�.itional Uses Rider, if any. Customer
acknowledges that no agree ents, representations or understanding
of a legal, engineering c�r other nature have been made and/or
relied upon by Customer ex�ept as contained herein.
IN WITNESS WSEREbF, Customer and DFIDC have executed and
delivered this Agreement as of the day of , 198
C CUSTOMER:
DISTRICT HEATING DEVELOPMENT
COMPANY
By BY
Its Its
Y B
Y
I ts I ts
Address : Address:
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�lT� o. CITY OF SAINT PA
UL
"4~ ' � ' OFFICE OF THE CITY ATTORNEY
o . �� �
� n�uiuiu ,:
'�,,: 1° �� ° �� il EDWARD P. STARR, CITY ATTORNEY
G�Ir�•��°� 647 CityHall, Saint Paul,Minnesota 55102
GEORGE LATIMER 612-298-5121
MAYOR
June 7, 1983
Mr. Albert B. Olson
City Clerk ,
386 City Hall i
Saint Paul, Minnesota 55102 ,
Re: Amendments to Hat Water Delillery Agreement
Dear Mr. Olson:
You have received for filing on o about June 3, 1983, a series
of amendments to the Hot Water De ivery Agreement. That Agreement
was filed in your office at the s me time as the written acceptance
by the District Heating Developme t Company of the terms of the
hot water franchise 'ordinance (Or inance No. 16947 ; Council File
No. 278880) .
Section 6 (f) of the Ordinance req ires all amendments to the Hot
Water Delivery Agreement ta be fi ed with your office at least ten
days before their effective date. No Council action is required,
unless such amendments change sec ions 6 .7 , 7. 3 or 21. 2 of the
Agreement.
One alteration in section 6.7 is ade, changing the words "the
Indenture° to "any indenture" . I my opinion, this does not change
the sense, meaning or effect of s ction 6. 7 and is more in the
nature of a clerical or housekeep'ng amendment, which would not
in my view require Council action.
Very truly yours,
. /.J� �1��
PHILIP B BYRNE = '�
Assistan City Attorney .. �� �-�' r—�'.
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cc: William M. MahTum II ' �` �
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William A. Buth
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1'�(IQ'Y OP iAQ�li' AOG�lD�IN680TA ,
To n6om 1t mq c�anaem:�
x�uc��.��q��,.e s�as�oo�n�n
d We Qt�M St.A�ul,![il�mta w1II m�etis � �3
t6eCaundlC�mben. Floorott6eGit�
HaH�nA Cwtt I{ouse the Cit�of SaSnt '
Pwl.�Qanesot��tIO:DO .(CDTIonJu1�13. �
1962 to carbder � P�PP+ad le�W�tive on ; ..
dinaoce met�Appm ' F b t�e 9dnt Paut .
Z.ed�l�Uve'Codq � to t�e Dldi�ce �
Haat►n� Devdopmmt �COmp�p� • OOY-
ezdudve ir�fae to publk ttteeta and'
P�4 to ooustruct�q�erate a dlstt�kt
n�.uoi,�. . _
A mq of the propa�ad Wdio�nae tor a oao-
exlusive traoehise to��with�ttacha►eats
and ahiMts tAaeto,b av lrbk(orpublic ia
sp�ctloo bqimin[Juae�0. 19l2 trom��C
oYladc a.m.W�:�D p.m. ondq tbcu,P�id�.
�t We OHke o[fhe Clty .Room�lB.Clt� �
Hdl and CouAhouae!n t.Paul.llinnesota. �
At the tlme and plaee tix [w Public Hacio� �
the Gty CounMl ot the C tq ot St.Paul writt
' dve�11 penans aho app at we hea��n S
opportuaity to acpres their v/ewt with �
rapect to the proposed in�nce' - f
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WILSON �
MR. PRESIDENT TIDESCO �
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