Okay, it is nine o'clock. We'll call to order the public utilities board meeting for the
city of Denton on Monday, January 11th, 2021. The first item on the agenda is a public comment
period. And my understanding is we did not receive any white card comments. And are there
any people waiting on the phone? Hi there, this is Tyler Smith. I am there are no public
comments at this time. Okay, thank you, Tyler. And the next item is going into the consent
agenda. Does any board member wish to pull an item from A through J? I had a question.
Do I have to recuse myself from the UNT items? Do Ed and I have to recuse ourselves? I'm
retired. I'm retired in a couple of weeks. Larry, Larry, could you answer? Yeah, if you're
still actively engaged in employment with UNT, then yes. Okay, so do we still have a
quorum? Oh, one, two, I guess we've got four. If we can count Ed, then we've got a quorum.
But we'll have to pull the UNT items. I'm not voting on them. So that is a yes. I think
that's it. Yes, I believe that's it. Okay. All right. So we'll pull item A. Barbara H.
Anyone else? All right. Do we have a motion to approve B through G and items I and J?
So moved. Second. All in favor say aye. Aye. Aye. Aye. Opposed? Close carry. Okay, item
A. And it's simply because Karen needs to abstain. Do we have a motion to approve item
A? Don't move. Second. All in favor say aye. Aye. And Karen? Abstain. The next item is
consider the approval of the December 14th minutes. Did anyone see any problems or corrections?
We need to address H. Oh, I'm sorry. We do. I'm so sorry. Thank you. Trying to be efficient,
I guess too efficient. Go ahead, Barbara. I just had a question about I don't understand
the piggyback option. Someone from purchasing? That was an option on the hog culling. If
we have Laurie Hewell or Christine Taylor on the phone, they can address that. I see
Christine Taylor's name. This is Laurie Hewell. Can you hear me? Yes. Hi. Yes. I'm the purchasing
manager and piggyback just means that the vendors will allow other cities to possibly
use our contract. So they're agreeing to say the City of Lewisville needed this heavy equipment
rental contract. They're agreeing to allow them to be able to piggyback and use our contract
and use our pricing. A little bit like cooperative purchasing? Yes. Correct. Okay. Thank you.
We have a second. All in favor say aye. Aye. Opposed? Thank you, Charlie, for keeping me
on track. Next item is consider the approval of December 14th, 2020 minutes. Are there
any changes or corrections? Yes, Karen. I just I had a question. I know we've talked
about this before, but the written agenda that we approve is pretty spare. It just says,
you know, so-and-so asked a question, staff answered it. The last time I brought this
up, staff said, well, the official record is the video. Makes sense because of course,
the video is complete. So is there a reason that we are approving a written agenda if it's
not the official agenda anyway, or the official minutes? Sorry. I'll defer to Larry. We're
doing what we need to, right? That's a really good question. We've always approved written
minutes and I don't think we've honestly looked into that as far as what the official record
base. So I would encourage y'all to go ahead and approve the minutes that I want to get
with the city's secretary and city attorney about that. Just one more question, Ed. Sorry.
The reason we haven't thought about this is because the complete video hasn't really been
available for all the different boards and commissions until recently. So something that
is new and it's definitely a look into it. Yeah. Thanks, Larry. Good point, Karen. Yes,
Ed. Oh, I was just going to say that perhaps if someone access the minutes off of the website
and was looked at that, that perhaps there should be something on the minutes themselves
that says for more detailed information regarding this particular discussion, please see such
and such a number or a place in the video as the official record. Because I don't know,
maybe a lot of people don't know that the official record is the video really. I'm sure
most don't, Ed. Okay. Having that discussion, do we have a motion to approve the minutes?
So moved. And a second. Thank you, Ed. All in favor say aye. Aye. Opposed. Next item,
consider recommending the adoption of an ordinance of the city of Denton to declare the intent
to reimburse capital program expenditures, the electric utility for 42 million 538108
flood waste for 3 million, water for 23 million 647184, wastewater 26,144,574 and the general
government for 72 million 608678 with the tax preferred obligations, certificates of
obligation and general obligation bonds with an aggregate minimum principal amount not
to exceed 167,938544 and providing an effective date. Good morning. My name is Cassie Ogden,
director of finance. Let me share my screen and I will have a brief presentation for you.
So I'm here today to discuss the reimbursement ordinance. This is an annual activity that
the city undertakes in order to sell our bonds for our capital program. So it is dictated
by federal law that we have to issue this intent to reimburse ourselves with tax exempt
bonds at a future date. This has to happen within 12 months before the end of the fiscal
year. So, and this is outlined in our debt policy that council annually adopts. They
just actually adopted it last week. So for water and before I get started on the projects,
we do have each department director on the line. If you have project specific questions,
I'll ask them to jump in. So for water projects, you can see the column for the budget we were
requesting in the budget 35 million, 35.5 million for capital projects for this year.
After reviewing all of the projects and going through the timeline associated with those,
we are requesting 23.6 million in funding for water for this fiscal year. And if you
don't question, yes, if I may, does that would I be correct in assuming that 35 minus 23
is 12 million? Is that essentially something we are funding within ourselves and not borrowing
money to do? We essentially those projects may have shifted timeline. So you see, for
instance, the regulatory performance upgrades, we budgeted 14 million, but we are not moving
forward with that project this year. The timing may have slipped. And so we'll continue to
re-budget that project in the upcoming fiscal year, if appropriate, if the department director
says we do need to move that. But these are projects that we just won't be doing this
fiscal year. >> Okay. What percentage of these projects
are we paying for out of operations and what percentage of these projects are we borrowing?
>> So these are all projects that we are borrowing. I've only listed the debt component of these
projects. So there may be a revenue-funded component that is not listed here. The only
listing that you see are debt. >> Okay. Thank you.
>> And how many of these are under the bonding approval that the citizens approved?
>> These are only water projects. So the citizen approved projects I've left off of this presentation,
even though it's in the ordinance and the caption, I had to have the caption match with the ordinance.
>> Okay. So the text dot ones are -- oh, those are because -- those were not citizen approved.
Never mind. Okay. >> Yes. The text dot are because the water
is relocating lines within the -- for the text dot projects.
>> Okay. >> Any other questions on this slide? Okay.
So wastewater, you can see we had several projects that were budgeted that were not
moving forward with either -- they're not being debt funded or we are going to use revenue
funding. And so I will continue to the next page. There's quite a long list for wastewater.
And then total overall, we budgeted $32.8 million, and we are requesting debt funding
for $26.1 million. So we had one project that we are moving forward with for $3 million
for their fleet facility. And then electric, same with electric, we had projects that we
are not moving forward with that are -- we're not moving forward with debt service. Total
of $61.4 million that we budgeted, and we are requesting $42.5 million for debt funding.
So you can see it's a total saving or total difference of about $37.5 million from the
budget to what we're actually selling debt for. Timeline for the bond sale, we will review
this with council tomorrow, then go to bond oversight committee for the geo-funded projects,
which were not listed in this presentation. And then we will review all of the projects
with audit finance committee before council adopts the official notice of intent and then
projected to close on the bonds in June and receive the funding.
>> Any other questions? Okay. Having none, do we have a motion to approve? No motion
to approve? Thank you, Barbara. Do we have a second?
>> I guess I'll second. >> Okay. All in favor say aye.
>> Aye. >> Opposed? Okay. Carries. Thank you.
>> Thank you. >> Next item is management reports.
>> So, PBA members, there's a -- this is Tony Puente, executive manager of utilities. We
have a couple of memos, a few memos that we had follow-ups for you. The first one being
the utility sole source procurement list. Then we also provided additional information
regarding the extendable commercial paper and some of the pricing that there was a question
about at your last meeting. And then also finally the response to a question about buy
America or American manufactured products. So we have Cassie here. We also have Christine
Taylor on the phone if any member has any questions about any of those three items.
>> Anybody have any questions? I know the two members that asked about the buy American
are not on. So anybody else have -- yes, Ed, go ahead.
>> I have a question about something on the -- this procurement list.
>> First item? >> Yeah. The largest item is I assume the
Wartsilla overhaul has to do with the deck. >> That's correct.
>> But my question is, what are swing sets? >> So I have Terry Nolte on here.
>> Capital spares. >> Okay. So Terry's telling me these are capital
spares. So basically it's a replacement parts for the engine, yeah.
>> That's all right. I couldn't see the guys out there playing on the swing. So I wanted
to -- >> That's a good question, Ed.
>> Okay. If there's no other questions, you know, we do have your future agenda items and
just have a list of a couple of items that are coming up here in the next few meetings
for you. The largest of that being, of course, a follow-up on the utility rates and budgets.
That's just a closeout of where we ended the previous fiscal year. And then have for you
as well new business action item and there's a number of items that we're still working
on. The largest being the comprehensive solid waste management strategy. We are working
on that and hope to have an update for you here in the next few weeks. But with that,
that concludes the management section. There's a question about any of these items.
>> Go ahead, Ed. >> Yeah. On my item under new business action
items, discussion and pilot project on recycling and residential composting, I think that needs
to -- I don't think I included recycling in this. It was just a discussion and pilot program
on municipal and residential composting. So I just type over whatever, but the recycling
doesn't need to be in that. And I would like to ask for a new -- a future business. I noticed
in the consent agenda there was a purchase of a bulldozer for the landfill. And in the
backup material for that, it said that since 2017, landfill waste has increased by more
than 31%, amounting to an additional 120,000 tons per day. What I would appreciate getting
information on is how much of that 31% increase is food waste.
>> Yeah. I don't know if Brian's on here, but we can certainly follow up with you and
get you that information. >> Thank you very much.
>> Brian's on. >> Yes. Mr. Stouff, Brian Burner, director
of solid waste. I appreciate the question. Your answer will be intimately answered as
part of the results of the comprehensive solid waste management strategy. As you may remember,
at the end of November, we undertook a very, very consistent and cohesive evaluation of
curbside garbage and recycling where we brought in a team that basically deconstructed what
was being thrown away, curbside, both residential, multifamily and from certain commercial settings.
As part of that, they're still pouring over the data trying to determine exactly how much
food waste is able to be set curbside, how much is actually able to be composted, and
those results will be used in the development of our strategy. So very shortly, we should
be starting getting some results out of that, and as they do start to come out and we start
discussing those in either online surveys, which should come out in the end of January,
and then our think tank/focus groups, which will occur in February and March, probably
Marchish, will have very more intimate discussions on those results and that project specifically.
Okay, that sounds great. Thanks very much, Brian. Thank you. I have a further question.
Are you going to keep the breakdowns of the waste by residential, multifamily commercials
so we know when we go to educate? Yes. Okay, good. Yes, okay. Thank you. Thank you. Any
other questions? I think Barbara has a question. Oh, I'm sorry. Go ahead, Barbara. I just wanted
to ask Brian, I noticed the other day that I saw a garbage truck going down some of the
narrow streets and it was a smaller size that I haven't seen before. Do we now have some
areas of Denton where the streets don't allow one of the big ones to go down? Do we have
some smaller trucks now or have we always had? These are the mini-rearloaders which we bought
to specifically address the valley service that was in the downtown area off Fry Street.
They also do some other specific type of collections. They'll go on missed garbage so we don't have
to send the big truck back, but they are used specific vehicles. Other than the downtown
and Fry Street valley routes, they are not assigned to a specific route or a specific
purpose or a specific need in the department itself. This was on Wainwright that I saw
and it seemed like a good idea anyway. Just comment. Karen, did you have your hand up?
Yeah, I just had a quick question. Brian, you just said that there was the valley service
on Fry Street, so that's been expanded to Fry Street now?
It was always that. After we got past the initial sort of pilot phase, we went into
downtown and then into the Fry Street service area. So what Lucky Loos and the bar area
in there, that's all been developed as part of the valley service because they were on
shared dumpster service and it made more sense to break it down that way.
Thanks. I didn't realize it had gone up into my neighborhood, so that's great. Thanks.
You're welcome. All right, then are we on new business items,
Tony? Ma'am. I've already covered...
Okay. This zooming is getting so awkward. So we're on to concluding items. Does any board
member wish to add another item to the agenda or say anything to staff? All right, then
we'll move into work session. This item is to receive a report and hold a discussion
and give staff direction regarding the potential sale of Texas and its power agencies Gibbons
Creek steam electric station and related assets in Grimes County, Texas, including a review
of the economics of the sale, the key provisions of the proposed asset purchase agreement and
the risks associated therewith. Okay. Good morning, PB members. Terry Nalti,
assistant general manager at DME and currently serving as interim director of water and wastewater.
This presentation is intended to provide you an opportunity to see an overview of the proposed
transaction as well as to answer any questions that you may have. This item will come back
to you for final recommendation on the 25th and action will be taken by the council on
the 26th. So with that, let me share my screen. Okay. Can everybody see that? Okay. So a little
background about Gibbons Creek steam electric generating station. It is owned by four of
the members of, sorry, it's owned by Texas municipal power agency. And you can see the
ownership percentages where a 21.45% owner of the agency. The agency was formed to construct
the Gibbons Creek power station as well as the transmission system to deliver power from
the plant to the member cities. It's a 470 megawatt lignite coal fire generator. Just
for comparison purposes, the Denton energy center is a 225 megawatt gas fired unit. The
property itself around the power plant is 6,170 acres, including the 2200 acre Gibbons
Creek reservoir. It did operate for 35 years. It was shut down in 2018 based upon economics,
could not compete in the wholesale market. And since that time it has been, staff has
been doing a number of studies around decommissioning and shutdown of the facility. This is an overview
of the site itself. If you can see the power plant itself is right in this area. There
are a number of coal combustion residual units or CCR units. These are the units where coal
ash was managed during the operation of the facility. We have the coal ash ponds where
the ash was conveyed. And then it was transported to one of the two landfill sites for permanent
disposal. We also have a scrubber sludge pond. The scrubber was used to remove sulfur dioxide
from the flue gas stream and produced at waste. All four of these sites are considered coal
combustion residual sites. So each of these sites are subject to EPA regulations. Those
regulations will require TMPA or the buyer to clean close or close the facilities consistent
with the regulations. And we estimate the cost of those to be $88 million of remediation
costs. In addition to that, the regulations require ongoing monitoring, sampling and reporting.
That is estimated at $500,000 a year for the next 30 years. So $15 million of additional
ongoing costs. And then there are some ongoing operations costs for the dam and natural gas
pipeline that goes through the site. The sale process, there was a request for proposal
issued in June of 2019. That RFP required the respondents to decommission the plant and
remediate all the CCR units and to provide certain financial security to assure that
the cleanup would be done and a demolition would be done in accordance with the requirements.
So there's two phases to the work. Phase one is the actual decommissioning and remediation.
That is covered by a surety bond. And then the post closure activities which are covered
by another surety bond called the post closure bond. Five proposals were received. The board
of TMPA directed staff to begin working with one of the groups, Chara Melt Solutions who
have formed the Gibbons Creek environmental redevelopment group and they've been negotiating
a transaction with this group for the last year. The original transaction included the
potential of restarting the coal fired power plant. That option has gone away and the current
deal requires a demolition of the coal plant and retains the economics of the original
deal. So there will not be any coal fire generation at the site in the future. The TMPA board
approved the asset purchase agreement on December 10th and subsequent to that time, the members
recommended the extension of the pollution liability insurance beyond the four years
of that are in the asset purchase agreement to 10 years, so additional six years. We thought
it was a good risk reward trade off and that amendment was approved by the TMPA board last
week on the seventh. The remediation project and decommissioning is anticipated to save
in excess of $48 million as compared to self performance of the remediation and demolition
activities. And I'll get into the specifics of the economics in a minute. The joint ownership
or sorry, joint operating agreement, which is the document that's been signed by the
four members requires that all cities approve the transaction for it to move forward and
you and you will see a concurrent ordinance that will be provided for your review and
recommendation on the 25th. That concurrent ordinance is an identical document that will
be executed by all four cities. The buyer is Gibbons Creek Environmental Redevelopment
Group. It is a wholly owned subsidiary of Chara Solutions. It's a Texas limited liability
corporation. Chara Solutions is a publicly traded company with over half a billion dollars
of revenues in 2019. They are the preeminent and leading provider of coal combustion by
product management in North America. They're doing this type of work at various sites throughout
the US and they also provide ash management, O&M services to many electric utilities and
they do nuclear O&M as well. However, from a risk perspective, the deal team thought
it was important to ensure that the performance under the contract was fully securitized and
not dependent upon the financial wherewithal of Chara Corporation on a going basis. So
there are performance bonds, pollution liability insurance and post-closure bonds that are
independently securitized to ensure that the work gets done properly, regardless of what
happens with Chara. The major terms of the agreement for TMPA, Chara assumes all the
environmental liabilities. They indemnify a TMPA. They will remediate all the CCRs and
decommission the plant. They will issue a performance bond or obtain a performance bond
of $36.5 million. That bond will be reduced as the remediation work is completed down
to a level of $2.84 million, which will be retained as security until the post-closure
bond is delivered. Post-closure bonding will be compliant with the requirements of TCEQ.
There are special warranty deeds that extend to the particular pieces of property in which
there are CCR units so as to not disturb the waste in the future. There is a $25 million
water pollution liability insurance, naming TMPA and the cities as additional insured,
and then we are express beneficiaries of all the obligations. What does Chara's GCERG get?
They get 6,200 acres, including all the structures, the reservoir and all equipment on the site.
They receive an initial payment from TMPA of $6.5 million. And then we fund, TMPA funds
an environmental escrow payment of $28.5 million. And that's to fund the remediation projects.
As I mentioned, the draws on that escrow will be based upon progress over a 34-month period,
and it's controlled by an environmental designee that's appointed by TMPA. And then we also
pay 50% of the initial performance bond. So here's the economics of the transaction.
As you can see, this first table on the left compares three scenarios. Scenario one is
the transaction that's in front of you today. Scenario two envisions a potential default
of Chara. See Gibbons Creek Environmental Redevelopment Corporation sometime during the remediation
activities. And scenario three is the self-performance by TMPA. So you can see in the table the out-of-pocket
cost to TMPA is $36.63 million for scenario one, the current transaction in front of you.
In event of a default, we estimate our out-of-pocket cost to be $78.9 million. And if we were to
perform the remediation ourselves, out-of-pocket costs of about $84.6 million, that results
in the savings of $48 million of option one compared to option three. For Denton, this
represents a $10.3 million savings as compared to what we've budgeted in, I'm sorry, a $10.3
million savings as compared to the self-performance. So our share of the self-performance versus
our share of the current transaction in front of you results in a $10.3 million savings
to the rate payers. So the five-year forecasted savings for City Denton are about $13.57 as
we had $21.3 million budgeted over the next five years for remediation and decommissioning.
For the fiscal year we're in currently, we project a savings of $1.8 million. We had
budgeted $9.5 million. Our out-of-pocket cost is $7.75 million, and that represents a $1.8
million savings in this fiscal year. Risk management is a key aspect of the transaction
because of the liability associated with these wastes that have been disposed of at the site.
So land use is a question that has come up. And as I mentioned, we will have perpetual
deed restrictions that will be placed on the CCR units to limit the future land use and
avoid any disturbance of the waste. To the extent any of these particular parcels that
have CCR units on them are transferred, TMPA retains a veto right to the extent that the
new buyer didn't meet the deed restrictions and insurance requirements. The rest of the
property will be assessed over the coming months as to whether it's clean or dirty.
Clean meaning there are no known environmental contaminants on the site. Dirty would be anything
that does have identified contamination on the site. We don't expect that any of the
other sites will have contamination. But if they do, the same type of deed restrictions
would be imposed upon those sections that contamination would be discovered on.
Accountability is key. So as I mentioned, we're appointing an environmental representative
to monitor and audit the site activities. And that environmental representative will
be the person that will be verifying the progress of the contractor of Chara to the milestones
for the cleanup schedule. And then we'll release funds from the escrow accordingly.
So in summary, it does represent this transaction represents a savings of about $48 million
to the members. For us, it's a $10 million savings versus the current plan. And it represents
the savings of $1.83 million in this fiscal year, $13.5 million versus the five-year plan.
Most importantly, the environmental risk profile is significantly reduced. And we don't have
any of the ongoing, as I mentioned, that $15 million projected 30-year cost of monitoring,
record-keeping, and reporting. That all now becomes an obligation of the buyer. There
is an additional 10,000-plus acres of mineland that's adjacent to the property that's being
sold that is owned by TMPA. That tract of land will be taken up by the TMPA board at
a later date for final determination of what will be done with that. That is not part of
this posting today. And importantly, we will retain all the transmission assets on the
plant site. They are a significant investment and have a lot of value. So TMPA will retain
all those transmission assets. And that concludes my presentation. I do have on the phone with
me four people from TMPA. Bob Kahn, the general manager of TMPA; Carl Shehady, the attorney
for TMPA; Al Axe, the environmental attorney for TMPA; and Robert McCormick, the primary
transaction attorney on this transaction. With that, I will stop sharing and will be glad
to answer any questions.
Right. Questions of the board? Yes, Karen, go ahead.
Hi, Terry. Thanks. It's clear on fourth reading of all this is much clearer to me, but my
initial reaction was I was wondering why TMPA was paying into an escrow account to guarantee
the behavior of somebody else. Why would that be called an escrow account?
It's an escrow account only because it's money that's put aside to cover the remediation
activities. We control the escrow to put in an escrow so that it can only be used for
that prescriptive purpose and it will be drawn down as the project is completed.
But it's guaranteeing the behavior of CHARA.
Yeah. I'll ask Bob or Robert to answer that question.
Sorry, I'm just going to figure out the terms.
Yeah, sure. Terry, can you hear me?
Yes, sir. Go ahead, Bob.
Okay. Yeah, Bob Kahn, general manager of TMPA. Yeah, the escrow account, we put it in an
escrow because we don't want to just get in the money. We don't want them to use it for
other purposes. So it guarantees that they'll only use it to remediate the plant site. And
as Terry indicated, we have an environmental designee who will be going out there. That
person works for us to make sure that they've completed the work and on schedule. And as
they complete the work on schedule, then they will get paid. If they don't complete the
work, they don't get paid. Okay.
Does that answer your question? Yeah. I was just kind of wondering of the terminology
of escrow. Since that's usually my experience with escrow accounts is when I had slacker
landlords that I've had to withhold rent from. Sorry. I was a graduate student once and so
it was to guarantee my... I had an escrow account to guarantee my behavior that I would
pay the rent if necessary. And so I was just wondering why this was called an escrow since
it's guaranteeing Chara's behavior. But I guess that makes sense. We don't pay them
unless they behave well. Correct.
Thank you. Thanks for clearing that up. Other questions. Go ahead, Ed.
Yeah. Bear with me. I've got a list here. One thing I noticed in the presentation that
there was really no indication of the extent of pollution at this facility. And I think
that would be good to know because it has a bearing, of course, on the remediation process.
What I found just doing some research, I found that in January of 2019, an outfit called
the Environmental Integrity Project did a study on groundwater contamination from Texas coal
ash dumps. And it specifically deals with Gibbons Creek and has measurements, et cetera.
But just briefly as an overview, all of the ash ponds were constructed in 1977 as we know,
and none of them meets the liner criteria of the coal ash rule. So they are formally
considered "unlined." Because of that, all three coal ash units are on or close to the
shore of the reservoir at Gibbons Creek. And as we know, the reservoir also serves as a
recreational fishing area. And the report says that all three coal ash units at Gibbons
Creek are contaminating the groundwater. And this is detailed in the report with measurements
of the pollutants. "Are contaminating the groundwater most or all of the contaminated
groundwater eventually discharges into Gibbons Creek Reservoir where it threatens aquatic
life and human life through any fish that are caught and consumed." So I think it's
important to know the scope of this project by understanding a little more what has to
be remediated. So I would like at some point to see a detailed paper or report on remediation
targets and the timeline that goes with it. I assume that there is such a plan.
Yes, Mr. Sofe, there is. TMPA has done extensive studies by engineering firms and environmental
firms to assess the extent of the limits of the CCR units. And the remediation project
itself involves the removal of any residual materials from the ash pond, from scrubber
sludge ponds, and then places them into permanent disposal sites in landfill F. And so that
landfill will be closed in accordance with TCEQ requirements. There will be ongoing groundwater
monitoring reporting and any action that would be required would be consistent with the regulations.
So as you're probably aware, TMPA posts all the information regarding its CCR units on
its website. It's a requirement under the CCR rules. And the site is in compliance with
those regulations at the current time. Bob, do you want to add anything? Or do you want
Alan to add anything? No, I mean, everything you said is correct.
We are in compliance. TCEQ monitors our website and we file reports with them. As far as the
cleanup goes, we do have a detailed schedule attached to the asset purchase agreement that
requires them to remediate it in a certain manner. And they will have to get signed off
by TCEQ before they can complete the project. Thank you. Is that schedule posted on the
TMPA website? It's actually an attachment to the documents
that you received, Mr. Sofe. There is a schedule on the asset purchase agreement. One of the
attachments is there. Okay, thanks. Can I continue or do you?
Absolutely. Go ahead. Okay. In reading the purchase agreement, obviously
I didn't go down far enough. I would have answered my first question. But I think to
go back to that, I think it's crucial that maybe council should know that that schedule
is on there just for transparency's sake. Because a lot of stuff, I mean, people are
often put off by these things. The second thing I wanted to ask about is
in reading the purchase agreement under section 5.10, a phrase jumped out at me which is this.
After closing, purchaser covenants that it will, I immediately begin and diligently pursue
in a commercially reasonable manner. That phrase, commercially reasonable manner is
not defined in the definitions of the document. And the reason why this stuck out to me is
because House Bill 40, which was the state law that was
He froze. Or I froze. Passed what? We missed part of what you said. You were
frozen. At least from my perspective. Oh, I'm sorry. Should I go back to the beginning?
Did you get the commercially responsible clause? Yes, you did that part. Yep.
Okay. And the reason why- HB 4.
HB 40. When you froze for me. Yeah, okay. House Bill 40, which banned
Denton's fracking ban, had a similar phrase. However, in the House Bill 40 document, that
phrase was defined. And this phrase is not defined in this document. And I think it's
pretty crucial to do that because for obvious reasons.
So Mr. Sof, I'm going to defer to the attorneys, but I will say that I've done a lot of transactions
in the power space and commercially reasonable measures is a term of art, a legal term of
art. It has meaning under the Uniform Commercial Code. And with that, I would ask one of the
attorneys, either Carl or Robert to weigh in on that. Robert, can you handle that, please?
Certainly. So the standard commercially reasonable matter is a term that not only in the environmental
space, but really in contracting in general, is a commonly used term such as diligent manner
or best efforts or something like that. So it is generally used to make sure that whoever's
performing a particular task is doing so continuously with an aim to getting it done. And it's
it's used in this section in particular, simply because TNPA wanted to make sure that CHARA
when they were out doing their environmental closure and post-closure compliance obligations,
were doing it in a in a reasonable manner, consistent with generally applicable standards
in the industry. And so that would include compliance with all laws and pursuing it.
So you'll also see other information or other language in those same phrases. So they're
diligently pursuing not only in a commercially reasonable manner, but also in accordance
with the project schedule. And that's the schedule that you were previously referred
to as being attached to the asset purchase agreement. So that's that 34 month project
schedule beginning on the closing date and then going out from there. So I hope that
answers your question. If not, I'm happy to address it further.
No, thank you very much. I still think it should be defined in the document. And I think
that I see no reason why it can't be expanded to reading commercially and environmentally
reasonable.
Environmentally reasonable would be a term to use simply because it doesn't really have
any meaning in general accepted use. So it's all we can say is really that it's commercial
that it is in compliance with environmental laws. And then we assume that the laws are
environmentally reasonable. Right. And that is that is their standard.
Right. But the point I'm making is that it's just as ambiguous as commercial is. The next
thing I'd like to address is there's talk of Texas is trying to as you know, Texas is
trying to get from the EPA the ability to do it's basically its own policing of coal ash. And there's
also the possibility that with a new administration that is perhaps a little more environmentally
conscious than the last one, that there will be further strengthening of federal regulations
or coal ash remediation. So I'm my question is, is that a consideration in this in this
remediation document? The possibility of these changes?
Yeah, Mr. Sof, this is a question that was asked by council as well. And, you know, the
normal course of regulatory matters, state versus federal is that a federal regulation
becomes enforced by the state after primacy is granted to the state once they demonstrate
that their program is at least as stringent as the federal requirements. And in this case,
the the request by TCEQ to take over primacy for this program does meet that standard.
It is at least as stringent. The state agency having primacy over the program allows specific
state issues, concerns that an individual state may have that could warrant regulations
that are more stringent than the federal regulations. It allows the state regulatory agencies to
promulgate those more stringent regulations. So it is a what I would term a normal course
of business and regulatory matters for this to happen. And then I would ask Bob or Al
to weigh in on what would happen under the terms of the agreement if the regulations
became more stringent. Well, I'll try that in the first instance.
The agreement requires them to do everything consistent with all the laws, whatever they
happen to be at the time. So if they change regulations, it's not unusual for regulations
to change over the years and travel will just have to follow whatever the requirements are.
Does that answer your question, Mr. Sof? Yes, it does. And thank you. Is there any it will
there be any transparency with the buyer on on the uses of the land that it might sell?
So under the terms of the agreement, there's no such requirement, with the exception of
the warranty deeds that I've mentioned previously. You know, the the buyer is not precluded from
using the property for whatever purposes it intends to as long as they're consistent with
Grimes County land use requirements, much as we would when we sell a home, we don't
impose new restrictions on the buyer of our homes. Once the new owner owns the home, it's
up to them to do what they will with the property. I think the same would would hold true here.
We have requested at the behest of counsel from the buyer some direction if they're willing
to share on future uses for the property and we will be issuing a ISR Friday report summary
of what what that response is. Can I ask a question and just following up? And is that
why we're doing the dirty versus the clean? Because if it had ash there before, we don't
want to allow them to sell that land to someone because we will still be held responsible
under the cradle to grave was with circular. Is that correct?
That is correct, essentially correct. And for just for clarification purposes, you know,
there are four parcels that have these CCR units, potentially six other parcels that
do not. It's not CCR waste that we would be concerned about. It's other types of contamination
that may have occurred. That's the the focus of the clean versus dirty determination.
Okay. All right. Thank you. I just have one more question, please. And that is, what exactly
is an environmental representative? Is he a scientist, an engineer? Are there certain
qualifications that that person has to have? I'm curious as to what a job description for
an environmental representative is? Yes, I'll ask Bob to give you the specifics
on the individual that TMPA has hired to fill that role. Thanks.
Sure. Sure. Can y'all hear me? I just want to make sure I'm not muted. Okay. So we hired
somebody his name is Joe Schultz. He's a engineer. And he's been working for us for many, many
years. He worked on our landfills. He's very familiar with what's going on at TMPA environmentally.
And so he will be the environmental destiny that is in charge of making sure they get
stuff done. We also have somebody that works directly for TMPA. His name is Daniel Metals.
He's an engineer. He's our compliance officer. And he's very familiar with all the environmental
laws also. And he is going to be more of the hands on going out there, making sure they're
clean closing or remediating the way they're supposed to. And he's been very close to this
agreement as far as what's required as far as remediating.
Great. Thank you very much. Yes, Barbara. Go ahead.
If this property, if the entity that's looking to purchase it, if they come up with a buyer,
the title search would turn up that there was the history of this. So that would be
called to the attention of the next buyer. I mean, that would be fully, you'd have to
be, it would be disclosed because it would be in the title search. Is that not correct?
I'll have to defer to one of the lawyers. I'm not a real estate expert.
Robert, do you want to handle that? Certainly. You are correct. The warranty
deeds that we put in place have references back to Char's obligations to remediate the
property and to indemnify TMPA and the member cities for environmental obligations. So those
obligations will be recorded in the chain of title through the warranty deeds that we
were recording at closing. And that's the primary purpose for having the forms of warranty
deeds that we have in place now, both for the quote unquote dirty parcels and for the
clean both of them, both forms disclose the ongoing release of indemnity obligations with
respect to TMPA. Other questions? Yes. Karen, this isn't,
I just had a question about the ladies trust is orchid. I know that's not on the land that's
under consideration. It's on the mine land. So is that what's the status of that orchid?
Is that a federally protected plant or a state protected plant or just a plant of interest?
My understanding is that it is a federally protected species.
So that's what we do with the mine land. Potentially. You know, there are conservation
easements in place where at least five conservation easements that are in place where those orchids
are found. And what happens with those conservation easements will be determined by whatever the
ultimate disposition of the properties are, whether they're sold. You know, three of the
five areas I understand are on lease properties. And once the leases expire, those will revert
back to the landowners from whom we've leased the property.
Okay. Thanks. Other questions? Discussion? Charlie, go ahead.
Terry, within the city of Denton, who are the folks that are most in the detail on monitoring
this agreement and following it through and reviewing? Would that be you?
That would be me, yes, sir. Okay. And how many hours would you say you've
spent working on this? Boy, that's hard to say. You know, TMPA has
a number of committees, and this has been the primary focus of most of the TMPA activities
over the last year and a half. So, you know, we meet at least quarterly as the planning
and operations group. There's the financial working group. There have been a number of
meetings to discuss the status of the transaction. I know Larry Collister has been involved with
the attorneys at length. So the city has invested a significant amount of time. I would say,
you know, I know personally I've spent well over 40 hours in the last year specifically
working on this particular transaction. Charlie, I would also point out that Mr. Billy
Cheek is also appointed to the TMPA board, as well as Chris Watts. Chris' term will expire
later this year and Billy in 2022. But they have also been heavily involved as part of
their responsibilities on TMPA board directors. Thank you for that follow-up. That was going
to be my next question so that people can understand we've had representation for a
very long time. So as a volunteer board member who is not
an attorney or familiar with all of the environmental applications and the financial implications,
I feel very comfortable with Terry being our point man and doing what's best for the people
of Denton. And so I appreciate knowing that. Did I hear you say, Terry, that the plant
shut down because it was not able to compete in the wholesale market at the time?
That's correct. Would I generally believe coal is the cheapest
power available? Is it just that the environmental compliance is expensive enough that it was
no longer economically feasible to operate the plant?
Amongst other things, yes. But you think about a coal plant. A coal plant is generally a
base load facility, runs around the clock at a fairly high output level. And as I think,
Mr. Parker, you have come to realize at night these prices are very, very low. So that unit
operating at a minimum level would be losing money every hour of the night and many hours
during the day as it was operating, variable cost being above the wholesale market. And
then on top of that, you'd have to add the fixed cost for debt and other depreciation
expense, other financial expenses. So that's in general coal fire generation does not compete
well in the Texas market. And quite frankly, doesn't compete well anywhere in the US today
with natural gas prices being as low as they are and renewables, the price that we're paying
for renewables. That helps me out a lot to know that we're
not doing this just for environmentally beneficial reasons. In addition, economically, this is
something that needed to be shut down. Have you made a recommendation on yourself personally?
Do you think this is a good deal and something that the four cities should pursue?
Absolutely. I think this is not only is this a better economic outcome for rate payers,
but most importantly, it is a way to reduce the risk profile of the city in a way that
can't be done in any other manner. Okay, thanks. That was what I was hoping you
would say. I'm done. That's what I was hoping he would say too.
Any other questions, comments? All right. We are not taking action today, are we? This
is just to work. No, this is just to answer your questions.
Again, this will be back in front of you on the 25th.
From my perspective, reducing the risk for the city, as well as the financial, that's
very important. Environmental cleanups can be time consuming and costly. I've been through
them in my past. I guess that's it. Do we have a motion to
adjourn? Go ahead, Ed. You motion? And I think Charlie second, so we are adjourned.
I did. Thank you.
Thank you. Bye bye.