HomeMy WebLinkAbout9D Water Purchase Agreement SMSC II IS II I0 O�
CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 27, 2014
AGENDA #: 9D
PREPARED BY: FRANK BOYLES, CITY MANAGER AND
KATY GEHLER, PUBLIC WORKS /NATURAL RESOURCES DIRECTOR
PRESENTED BY: KATY GEHLER, PUBLIC WORKS /NATURAL RESOURCES DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING A WATER
PURCHASE AGREEMENT AND AN ESCROW AGREEMENT BETWEEN
THE CITY OF PRIOR LAKE AND THE SMSC AND AUTHORIZING THE
MAYOR AND CITY MANAGER TO EXECUTE SAME ON BEHALF OF
THE CITY
DISCUSSION: Introduction
The purpose of this agenda item is to determine whether the City Council is
prepared to enter into a Water Purchase Agreement and Escrow
Agreement with the SMSC.
History
The City and SMSC both require additional quantities of domestic water to
serve their respective growing communities. Approximately two years ago
an engineering report was prepared evaluating the comparative
advantages in developing well 10 versus developing a joint well /water plant
with the SMSC. The conclusion was that we should begin by developing a
joint facility.
Work on the SMSC well addition and plant expansion is nearly complete.
The target date for pumping water is June 1, 2014. The development of an
acceptable Water and Escrow Agreement to both parties has proved to be
more complex and time consuming than anyone originally contemplated.
We have agreed to the attached Agreements including the attorneys
representing each entity. Both agreements will be added to Dropbox by
Friday night or this item will be removed from the agenda.
Current Circumstances
The Water Agreement confirms that the water facility is wholly owned and
operated by the SMSC. The City does have access and inspection rights
given that the City's system and SCADA terminate at this location so the
City and SMSC systems are automated to work with one another.
The Agreement provides that the City may purchase water commencing on
June 1, 2014, at a cost of $1.10 per 1,000 gallons. No annual minimum
water purchase is required by the Agreement. The Agreement does limit
the total purchase to no more than 700 gallons per minute for 24 hours per
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
day for 365 days per year. This amounts to 1,000,000 gallons per day not
to exceed 365,000,000 gallons per year for up to 25 years. The
Agreement can be terminated by either party upon submission of a four
year written notice to the other.
If the SMSC fails to deliver water under the terms of the Agreement (except
for instances of force majeure) or terminates the Agreement inconsistent
with the four year termination provision, then the City may demand an
escrow amount of up to $500,000 which is called for by a the Escrow
Agreement (attached). The escrow agreement is managed by an escrow
agent.
The SMSC may challenge the City's right to the escrow amount in the
State Courts. To do so requires them to waive sovereignty — at least for
this limited purpose.
The cost per thousand gallons will be fixed for the first four years. After the
fourth year, operational and use data will be evaluated against the initial
assumptions and potentially adjusted annually based upon actual
operational and maintenance experience and based on a predetermined
methodology. The SMSC will bill monthly for the City's water consumption.
Conclusion
The City Council should determine if the City should enter into the
Agreements so we can purchase water from the SMSC.
ISSUES: The SMSC would sell the City water without an Agreement if we desire.
The problem with such a proposal is the water could go to the highest
bidder eliminating any longer term dependability associated with an
agreement.
Staff and the City Attorney's Office believe that the 25 year term of the
Agreement with a four -year termination clause (the approximate length of
time for the City to construct a new well) is better for the City as it provides
greater dependability of water availability barring an act of God.
Our expectation is that we will purchase enough water to address our
needs during the thirty day +/- peak usage period each year. The number
of days and gallons consumed are expected to increase as our community
grows or as impacted annually by Mother Nature.
If the City purchased the maximum number of gallons available under the
Agreement, the annual cost would be $401,500. If everything remained
the same for the 25 years of the Agreement, the total cost of water would
be $10,037,500.
Because the initial rate per thousand gallons exceeds our cost by about 20
cents per thousand we do not see a significant impact upon citywide sewer
and water rates. On the other hand by using SMSC capital, the city can
avoid bonding with the associated costs for at least one well. Inflationary
pressures or increasing water demands could alter that projection.
Our water needs projections call for a new well in 2016, and an additional
water treatment plant in 2019. In additional recent issues were discovered
with the Tong -term performance of Well #7. To assure that the City
continues to have domestic water to serve our growing community we
intend to take the following actions in addition to entering into these
cooperative agreements with the SMSC:
• SMSC has approved the construction of a third well feeding the
north treatment plant that will allow up to 1.6 Million Gallons of
water a day to the City of Prior Lake as soon as July 2014.
• Proceed to develop well 10 with completion in 2016.
• Encourage use of water from the lakes for irrigation of riparian
properties.
• Enter into a new agreement with the City of Savage for emergency
water connection.
• Maintain and repair existing wells to maximize their productivity and
dependability.
• Update the City's water plan to assure our projections with respect
to system needs, water usage and rates are accurate.
The SMSC staff have worked to keep the Business Council apprised with
the key policy issues which this collaboration entails. To the best of our
knowledge they are prepared to approve both agreements at their next
meeting. We will know for sure by May 27.
This is the level of collaboration is unique and indicative of the many
collaborative fruits born by our participation in SCALE. It is staff's hope that
we can expand upon this template.
FINANCIAL The financial impact will be incorporated in the Capital Improvement
IMPACT: Program and where appropriate the 2015 budgets.
ALTERNATIVES: 1. Approve the attached resolution which approves the Water Purchase
and escrow agreements.
2. Take no action and provide direction to the staff.
RECOMMENDED Alternative #1.
MOTION:
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4646 Dakota Street SE
411 AINESo` 0P Prior Lake, MN 55372
RESOLUTION 14 -xxx
A RESOLUTION APPROVING A WATER PURCHASE AND ESCROW AGREEMENT WITH THE
SHAKOPEE MDEWAKANTON SIOUX COMMUNITY
Motion By: Second By:
WHEREAS, In xxx 2012 The City completed an evaluation of available options for additional water supply;
and
WHEREAS, The study noted the most cost effective option was to purchase water from the Shakopee
Mdewakanton Sioux Community (SMSC) north water plant; and
WHEREAS, The SMSC is constructing an expansion their North Water Treatment Facility. The Facility will
be capable of supplying water to the City as contemplated by the Agreement; and
WHEREAS, The City is authorized to enter into contracts pursuant to Minnesota Statutes Chapter §
412.221; and
WHEREAS, The Parties desire to enter into an Agreement regarding the City's long term purchase of water
from the SMSC.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The City Council hereby approves a Water Purchase and Escrow agreements with the Shakopee
Mdewakanton Sioux Community for the purchase of water and authorize the Mayor and City Manager
to execute the same.
PASSED AND ADOPTED THIS 27th DAY OF May 2014.
VOTE Hedberg Keeney McGuire Morton Soukup
Aye ❑ ❑ ❑ ❑ ❑
Nay ❑ ❑ ❑ ❑ ❑
Absent ❑ ❑ ❑ ❑ ❑
Abstain ❑ ❑ ❑ ❑ ❑
Frank Boyles, City Manager
The Water Purchase Agreement and the Escrow Agreement will
be added to this agenda report on Friday.
WATER PURCHASE AGREEMENT BETWEEN
THE CITY OF PRIOR LAKE AND THE SHAKOPEE
MDEWAKANTON SIOUX COMMUNITY
THIS WATER PURCHASE AGREEMENT (the "Agreement") is made and entered
into this day of , 2014, by and between the CITY OF PRIOR
LAKE, a Minnesota municipal corporation ("City") and the SHAKOPEE MDEWAKANTON
SIOUX COMMUNITY,a federally recognized Indian Tribe ("SMSC").
RECITALS
A. The SMSC is constructing an expansion("Expansion") of the SMSC North Water
Treatment Facility(collectively the Expansion and the SMSC North Water Treatment Facility are
the"Facility"). The Facility will be capable of supplying water to the City as contemplated by this
Agreement.
B. The Parties desire to enter into this Agreement regarding the City's long term purchase
of water from the SMSC.
C. The City is authorized to enter into this Agreement pursuant to Minnesota Statutes
Chapter 412 and in particular § 412.221. The SMSC has been authorized by General Council
Resolution 09-10-13-010 to enter into this Agreement.
D. Definitions. For purposes of this Agreement,the following terms have the assigned
meaning.
Force Majeure. Force majeure means a condition beyond the reasonable control of the
SMSC and which it could not, by reasonable diligence, have avoided. Such conditions include
natural disaster, a lack of sufficient water in the required amount from the aquifer used by the
SMSC,fire,accidents,actions or decrees of governmental bodies,acts of God,wars(declared and
undeclared), acts of terrorism, riots, embargoes, civil insurrection, and other events of force
majeure,but shall not include a lack of funds or insufficiency of resources caused by lack of funds.
Peak Demand. The right of the City to purchase from the Facility 700 gallons of water
per minute for 24 hours a day for 365 days a year up to 1,000,000 gallons per day for a period of
25 years.
Water Sales Unit or Unit. A quantity of 1000 gallons of water provided to the City.
Unit Rate. The cost in dollars to the City for one Unit.
E. Contemporaneous with the execution of this Agreement the City, the SMSC and
Guaranty Commercial Title, Inc. (Escrow Agent) have entered into that certain document entitled
"Escrow Agreement"dated _, 2014 ("Escrow Agreement").
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NOW, THEREFORE, in consideration of their mutual covenants the Parties agree as
follows:
1. FACILITY. The SMSC will be solely responsible for the construction and maintenance
of the Facility and all related costs.
2. TERM. This Agreement shall have a term starting on June 1, 2014 and ending on June
30, 2039, subject to early termination pursuant to paragraph 31 hereof
3. WATER ALLOCATION. The City shall have the right to purchase from the Facility 700
gallons of water per minute for 24 hours a day for 365 days a year up to 1,000,000 gallons per day
(hereinafter "peak demand") for a period of 25 years. The SMSC's failure to provide the water
required by this Agreement shall be excused on account of an event of force majeure, the City's
default, or the City's draw on the escrow funds in accordance with the Escrow Agreement. The
SMSC shall immediately give notice to the City of a condition of force majeure and shall resume
timely performance as soon as such condition is terminated. If peak demand lasts more than 60
consecutive days the City's water purchases may be limited by the SMSC, upon written notice to
the City, to 840,000 gallons per day until the City's water purchases drop below 840,000 gallons
per day. If the SMSC declares a force majeure on account of a lack of water from the aquifer the
City's purchases of water from the Facility Shall be limited to no more than 65% of the available
aquifer production capacity. The City's right to purchase up to the peak demand will be restored
as soon as reasonably possible after such condition is terminated. The City has the right to
purchase additional capacity based on new or additional sources of water. The City's right to
purchase such additional capacity shall not become effective until it is agreed to in writing by both
the Tribal Administrator and City Manager.
4. PURCHASE PRICE. All water sales shall be completed in 1,000 gallon units (Unit).
The Unit Rate beginning on June 1, 2014 and running until December 31, 2018 shall be $1.10 per
Unit. Before June 1,2018,the parties shall review the actual cost of water and the Unit Rate shall
be reset to reflect the actual cost of producing water plus the incremental capital recapture amount.
The Unit Rate paid shall be increased on January 1 of 2019 and shall remain at that rate for the
subsequent 12 months. In June of each subsequent year for the life of this Agreement the Parties
shall meet and review the actual cost of water and the Unit Rate shall be reset to reflect the actual
cost of producing water plus the incremental capital recapture amount. That new Unit Rate shall
take effect January 1 of the following year.
The initial and subsequent review of the Unit Rate shall be completed by updating the initial
calculation spreadsheet attached hereto as Exhibit C.
The SMSC shall invoice the City monthly for water provided to the City from the Facility. The
invoice shall detail the amount of water purchased by the City for the invoice month and for the
year to date. The City shall pay each invoice within 35 days of receipt of the invoice.
5. OPERATION AND MAINTENANCE. The SMSC shall operate and maintain the
Facility in a manner consistent with all applicable Tribal, Federal, State of Minnesota, and City
laws, rules and regulations. The SMSC shall operate and maintain the Facility in a manner that
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ensures the City is supplied water from the Facility as set forth above. The SMSC shall also ensure
that the water delivered under this Agreement complies with the EPA's Safe Drinking Water Act
as may be amended.
6. ACCESS TO THE FACILITY. The City shall have the right to access the Facility in
order to inspect the Facility to ensure water quality and in order to maintain the City's property
including the City's SCADA system, the water main serving the City, and the fiber serving the
City. The City shall provide the SMSC with at least 24 hours' written notice prior to any such
access,provided,however that in an emergency the City shall not be required to provide 24 hours'
written notice but will provide as much notice as is reasonably possible. At a minimum, in an
emergency,the City shall call the two telephone numbers supplied by the SMSC to provide notice
of access.
7. DAMAGE,DESTRUCTION AND INSURANCE. The SMSC shall maintain insurance
coverage for the Facility in amounts deemed appropriate by the SMSC but in no event less than
the replacement cost of the Facility. If all or any part of the Facility is damaged or destroyed by fire,
casualty,the elements or any other cause the SMSC shall immediately notify the City of such fact and
the SMSC shall immediately commence and diligently pursue repair to return the Facility to its
condition prior to such damage or destruction.
8. SMSC DEFAULT AND CITY REMEDIES. If the SMSC fails to operate or maintain
the Facility, fails to provide the required water or maintain the required water quality, terminates
or takes any action attempting to terminate this Agreement or the Escrow Agreement in any
manner other than as provided in paragraph 31 hereof, or in any other way breaches the terms,
conditions, representations or warranties contained in this Agreement or the Escrow Agreement
then the City shall have the right, as its sole and exclusive remedy and right of recourse, to make
a draw on the escrow funds as set forth in the Escrow Agreement.
9. CITY DEFAULT AND SMSC REMEDIES. If the City fails to make the required
payments or in any other way breaches the terms or conditions contained in this Agreement,then
the SMSC's sole and exclusive remedy and right of recourse is to cease providing the required
water allocation to the City upon thirty days' written notice to City of failure to make said
payment(s). If,with-in twelve(12)months after the SMSC has ceased providing water to the City,
the City makes all required past due and current payments, the SMSC shall immediately resume
providing City with the allocated water.
10. GOVERNING LAW. This Agreement is governed by and must be construed in
accordance with the laws of the State of Minnesota without regard to Minnesota's conflict-of-law
provisions.
11. WAIVER OF TRIBAL COURT JURISDICTION AND EXHAUSTION-OF-
TRIBAL REMEDIES DOCTRINE. In connection with any matter pertaining to this
Agreement, the Escrow, the Escrow Agreement, or the City's draw on the Escrow, the SMSC
expressly waives the right to have disputes resolved in the Tribal Court and waives application of
the doctrines of exhaustion of tribal remedies, abstention, or comity that might otherwise require
that a claim be heard first in the Tribal Court. In addition to the above and not as a limitation
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thereof, if the SMSC desires to contest any matter relating to this Agreement, the Escrow, the
Escrow Agreement, or the City's draw on the Escrow including but not limited to the Escrow
Agent's actions under the Escrow Agreement (hereinafter referred to as a "Claim"), the SMSC's
sole and exclusive remedy and right of recourse is to bring any action relating thereto in Minnesota
State District Court, Scott County. Each party shall bear its own costs and expenses, including
attorney's fees, incurred in the proceeding. The parties acknowledge that if SMSC initiates any
claim in State court,under established law the claim will act as an express and irrevocable waiver
of its sovereign immunity and all defenses based thereon for itself and its agents, with respect to
the clam and all defenses of the City, whether arising during or after the expiration of this
Agreement.
12. AUTHORIZATION. This Agreement and all of its terms, including but not limited to
the governing law, disclaimer of Tribal Court jurisdiction and waiver of application of Tribal
Exhaustion doctrine also known as tribal exhaustion of remedies doctrine, have been authorized
and approved by the SMSC's Business Council Resolution No. 05-21-14-01, adopted the 21st day
of May, 2014, attached hereto as Exhibit A. This Agreement and of its terms, including but not
limited to the governing law, disclaimer of Tribal Court jurisdiction and waiver of application of
Tribal Exhaustion doctrine also known as tribal exhaustion of remedies doctrine, have been
authorized and approved by the City Council of the City of Prior Lake by Resolution adopted the
day of , 2013, attached hereto as Exhibit B.
13. NON-IMPAIRMENT. The Business Council will not initiate enactment of any law,
ordinance,rule or regulation that would impair the obligations of the SMSC under this Agreement
or under the Escrow Agreement. This provision shall not impair the right of the SMSC to terminate
this Agreement under paragraph 31 hereof.
14. REPRESENTATIONS AND WARRANTIES REGARDING IMPAIRMENT. The
Business Council represents and warrants that except for taking steps to terminate this Agreement
as allowed under paragraph 31 hereof, it will not initiate any action to impair this Agreement or
the Escrow Agreement,to include an action to rescind this Agreement, the Escrow Agreement or
any waiver contained in this Agreement or the Escrow Agreement.
15. TAXES,FEES AND PERMITS. No taxes or fees shall be imposed by the SMSC on the
City on account of this Agreement. The City is not required to obtain any permit from the SMSC
to purchase water under this Agreement.
16. EMPLOYEE STATUS. Any and all persons engaged in the work to be performed by the
SMSC related to this Agreement or the Facility shall not be considered employees of the City for
any purpose, including Worker's Compensation or any and all claims that may or might arise out
of said employment context on behalf of said employees while so engaged. Any and all claims
made by any third party as a consequence of any act or omission on the part of said SMSC
employees while so engaged on any of the work contemplated herein shall not be the obligation
or responsibility of the City. Any and all persons engaged in the work to be performed by the City
related to this Agreement shall not be considered employees of the SMSC for any purpose,
including Worker's Compensation or any and all claims that may or might arise out of said
employment context on behalf of said employees while so engaged. Any and all claims made by
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any third party as a consequence of any act or omission on the part of said City employees while
so engaged on any of the work contemplated herein shall not be the obligation or responsibility of
the SMSC.
17. AUDITS. Any books, records, documents, and accounting procedures and practices of a
party related to this Agreement are subject to examination by the other party and either the
Legislative Auditor or the State Auditor, as appropriate. The parties agree to maintain these
records for a period of six years from the date of performance of all services covered under this
Agreement.
18. INDEMNIFICATION. Each party is responsible for its own acts and omissions and the
results thereof to the extent authorized by law. The SMSC will indemnify the City and hold it
harmless from and against all judgments, claims, damages, costs and expenses, including a
reasonable amount as and for its attorney's fees paid, incurred, or for which it may be liable,
resulting from the negligent acts and omissions of the SMSC, its subcontractors, employees, or
agents. The City's liability is subject to the limits applicable to a municipality as set forth in Minn.
Stat. Ch.466.The SMSC's tort liability is subject to the limits set forth in and subject to the SMSC
Tort Claims Ordinance.
19. DATA PRACTICES. All data created, collected, received, maintained or disseminated
by the City for any purpose in the course of this Agreement is governed by the Minnesota
Government Data Practices Act, Minn. Stat. Ch. 13, any other applicable state statute, and any
state rules adopted to implement the act, as well as federal regulations on data privacy.
20. DISCRIMINATION. In performance of this Agreement,neither Party shall discriminate
on the grounds of or because of race, color, creed, religion, national origin, sex, marital status,
status with regards to public assistance,disability, sexual orientation,or age against any employee,
subcontractor, or any applicant for employment. Both Parties shall include a similar provision in
all contracts with subcontractors to this Agreement. Both Parties further agree to comply with all
aspects of the Minnesota Human Rights Act, Minn. Stat. Section 363.01, et seq., Title VI of the
Civil Rights Act of 1964,and the Americans with Disabilities Act of 1990. The parties understand
and agree that pursuant to 42 USC Subchapter VI,the SMSC's qualifying Indian preference laws,
policies, and practices do not constitute discrimination.
21. CONFLICTS. No salaried officer or employee of City shall have a financial interest,
direct or indirect, in this Agreement. The violation of this provision renders the Agreement void.
22. LIMITATION OF REMEDIES. In the event of a breach of the Agreement neither party
shall be entitled to recover punitive, special or consequential damages or damages for loss of
business.
23.ASSIGNMENT. Neither party shall assign this Agreement,nor any interest arising herein,
without the prior written consent of the other party.
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24. SEVERABILITY. The provisions of this Agreement are severable. If any portion hereof
is, for any reason, held by a court of competent jurisdiction to be contrary to law, such decision
shall not affect the remaining provisions of this Agreement.
25.WAIVER. No action nor failure to act by the City or the SMSC shall constitute a waiver
of any right or duty afforded any of them under the Agreement,nor shall any such action or failure
to act constitute an approval of or acquiescence in any breach thereunder, except as may be
specifically agreed in writing.
26. DISPUTE RESOLUTION. The parties agree to use their best efforts to negotiate an
amicable resolution of any dispute arising from this Agreement. If the parties are unable to
negotiate an amicable resolution of a dispute within fourteen days from the date written notice of
the dispute is provided to the other party, or such other period as the parties agree to in writing,
the parties may enter into mediation. Upon service of a written notice requesting mediation, the
parties shall have ten days to select one person to act as a mediator. If the parties are unable to
agree upon a mediator,the Chief Judge of the Scott County District Court of Minnesota shall select
a mediator. The mediation shall be conducted pursuant to the procedures used by the mediator.
Each party shall bear its own cost of the mediation process. The parties shall share equally the
fees and expenses of the mediator. Mediation is a voluntary process. The mediator does not have
the authority to bind either party absent the party's consent.
27. NOTICES. Any notice required to be given to City or the SMSC pursuant to this
Agreement shall be in writing and shall be deemed duly given: (i)on the date of personal delivery;
(ii)on the date and time of confirmation if sent via facsimile(with verification of receipt); (iii)one
business day following dispatch by Federal Express or equivalent; or(iv)three business days after
mailing certified or registered mail, postage prepaid, return receipt requested, to respective
addresses of the parties set out below:
SMSC: With copies to:
Shakopee Mdewakanton Sioux Community Shakopee Mdewakanton Sioux Community
Attn: Chairman Attn: Tribal Administrator
2330 Sioux Trail NW 2330 Sioux Trail NW
Prior Lake, MN 55372 Prior Lake, MN 55372
FAX: 952-445-8906 FAX: 952-445-8906
Shakopee Mdewakanton Sioux Community
Attn: Special Staff Legal Council
2330 Sioux Trail NW
Prior Lake, MN 55372
FAX: 952-445-8906
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CITY OF PRIOR LAKE: With copies to:
City of Prior Lake City of Prior Lake
Attn: Public Works Director Attn: City Manager
4646 Dakota Street SE 4646 Dakota Street SE
Prior Lake, Minnesota 55372 Prior Lake, Minnesota 55372
Fax: 952-447-4245 Fax: 952-447-4245
Gregerson, Rosow, Johnson&Nilan
Attn: Richard F. Rosow
650 Third Ave South, Suite 1600
Minneapolis, MN 55402
Fax: 612-349-6718
28. SIGNING OF AGREEMENT. This Agreement may be signed in counterparts and on
different dates by each party without affecting the validity thereof.
29. INTEGRATION. The entire and integrated agreement of the parties contained in this
Agreement shall supersede all prior negotiations, representations, or agreements between the
parties regarding the subject matter hereof, whether written or oral.
30. CROSS DEFAULT. A default by either party under this Agreement is a default under the
Escrow Agreement.
31. TERMINATION. This Agreement may be terminated by either party by four (4) years
prior written notice delivered to the other party at the address written above.
IN WITNESS WHEREOF,this Agreement has been executed as of the day and year first above
written.
[Remainder of Page Intentionally Left Blank Signature Pages Follow.]
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CITY OF PRIOR LAKE
BY:
Kenneth L. Hedberg, Mayor
BY:
Frank Boyles, City Manager
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of
, 2014, by Kenneth L. Hedberg and Frank Boyles, the Mayor and City Manager,
respectively, of the City of Prior Lake, a Minnesota municipal corporation, on behalf of the
corporation and pursuant to the authority granted by its City Council.
Notary Public
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SHAKOPEE MDEWAKANTON SIOUX COMMUNITY
By: Charlie Vig
Its: Chairman
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of ,
2014, by Charlie Vig the Chairman respectively, of the Shakopee Mdewakanton Sioux
Community, a federally recognized Indian Tribe, on behalf of the tribe and pursuant to the
authority granted by its General Council.
Notary Public
DRAFTED BY:
Gregerson, Rosow, Johnson&Nilan, ltd
650 Third Avenue South
Suite 1600
Minneapolis, MN 55402
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ESCROW AGREEMENT
BETWEEN THE CITY OF PRIOR LAKE,
THE SHAKOPEE MDEWAKANTON
SIOUX COMMUNITY AND GUARANTY COMMERCIAL TITLE, INC.
THIS ESCROW AGREEMENT is made and entered into this day of
, 2014, by and between the CITY OF PRIOR LAKE, a Minnesota
municipal corporation("City"),the SHAKOPEE MDEWAKANTON SIOUX COMMUNITY,
a federally recognized Indian Tribe ("SMSC"), and Guaranty Commercial Title, Inc. ("Escrow
Agent").
RECITALS
A. The City and the SMSC have entered into that certain document entitled "Water
Purchase Agreement between the City of Prior Lake and the Shakopee Mdewakanton Sioux
Community" ("Water Purchase Agreement") which requires the parties enter into an Escrow
Agreement to establish an escrow relating to purchase and sale of water from the SMSC to the
City and to set terms and conditions of disbursement.
B. The City and the SMSC have agreed in the Water Purchase Agreement that the
SMSC will establish an escrow account with Escrow Agent that will be available to the City to
draw upon in the event of a default by the SMSC under the Water Purchase Agreement.
NOW, THEREFORE, in consideration of their mutual covenants the Parties agree as
follows:
1. DEFINITIONS. For purposes of this Escrow Agreement, unless the context otherwise
requires, all words used herein which are defined in the Water Purchase Agreement shall have the
same meaning as is given to them in the Water Purchase Agreement.
2. ESCROW AGENT. Escrow Agent agrees to hold and disburse the Escrow Funds in
accordance with the terms of this Escrow Agreement.
3. DEPOSIT WITH ESCROW AGENT. Upon execution of the Water Purchase
Agreement,the SMSC shall deposit with Escrow Agent an escrow("Escrow Funds")in the amount
of $500,000.00. Failure to deposit the Escrow Funds shall constitute a breach of this Escrow
Agreement and the Water Purchase Agreement.
4. AUTHORIZATION TO ESCROW AGENT TO MAKE DISBURSEMENTS.
Subject to the terms of this Escrow Agreement, Escrow Agent is authorized and directed to
disburse the Escrow Funds upon a draw by the City complying with the conditions set forth in
paragraph 5 below.
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5. CONDITIONS OF EACH DISBURSEMENT. The City may draw upon the Escrow
Funds by submitting a demand ("Draw Demand") to the Escrow Agent in any amount up to the
total amount of the Escrow Funds. The City shall submit the Draw Demand directly to the Escrow
Agent in the form attached hereto as Exhibit A and stating the amount of the draw and that there
has been a breach or default by the SMSC of the Water Purchase Agreement, including but not
limited to the SMSC terminating or taking any action attempting to terminate this Agreement or
the Water Agreement in any manner other than as provided in paragraph 31 of the Water Purchase
Agreement. A Draw Demand must be signed on behalf of the City by the Mayor and City
Manager. A copy of the Draw Demand shall be sent to the SMSC at the same time as it is sent to
the Escrow Agent.
6. DISBURSEMENT. Within one business day of receipt of a Draw Demand,Escrow Agent
shall disburse the requested funds to the City.
7. NO RIGHT TO DIRECT ESCROW AGENT. The SMSC shall have no right to direct
the Escrow Agent to dishonor the Draw Demand.
8. GOVERNING LAW. This Escrow Agreement is governed by and must be construed in
accordance with the laws of the State of Minnesota without regard to Minnesota's conflict-of-law
provisions.
9. WAIVER OF TRIBAL COURT JURISDICTION AND EXHUASTION-OF-
TRIBAL-REMEDIES DOCTRINE. In connection with any matter arising under this Escrow
Agreement,the Escrow or the City's draw on the Escrow, the SMSC expressly waives the right to
have disputes resolved in the Tribal Court and waives application of the doctrines of exhaustion
of tribal remedies, abstention, or comity that might otherwise require that a claim be heard first in
the Tribal Court. In addition to the above and not as a limitation thereof, if the SMSC desires to
contest any matter relating to this Escrow Agreement, including but not limited to a draw on the
Escrow Agreement by the City or the Escrow Agent's actions under this Escrow Agreement
(hereinafter referred to as a"Claim"),the SMSC's sole and exclusive remedy and right of recourse
is to bring an action relating thereto in Minnesota State District Court, Scott County. Each party
shall bear its own costs and expenses, including attorney's fees, incurred in the proceeding. The
parties acknowledge that if SMSC initiates any Claim in State or U.S. Federal court, under
established law the filing of the Claim will act as an express and irrevocable waiver of it sovereign
immunity and all defenses based thereon for itself and its agents,with respect to the Claim and all
defenses of the City, whether arising during or after the expiration of this Agreement.
10. AUTHORIZATION. This Escrow Agreement and all of its terms, including but not
limited to the governing law, disclaimer of Tribal Court jurisdiction and waiver of application of
Tribal Exhaustion doctrine also known as tribal exhaustion of remedies doctrine, have been
authorized and approved by the SMSC's Business Council Resolution No. 05-21-14-01, adopted
the 21St day of May, 2014, attached hereto as Exhibit B. This Escrow Agreement and of its terms,
including but not limited to the governing law, disclaimer of Tribal Court jurisdiction and waiver
of application of Tribal Exhaustion doctrine also known as tribal exhaustion of remedies doctrine,
have been authorized and approved by the City Council of the City of Prior Lake by Resolution
adopted the_day of , 2013, attached hereto as Exhibit C.
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11. NON-IMPAIRMENT. The Business Council will not initiate enactment of any law,
ordinance, rule or regulation that would impair the obligations of the SMSC under the Water
Purchase Agreement or under this Escrow Agreement. This provision shall not impair the right of
the SMSC to terminate the Water Purchase Agreement under paragraph 31 thereof.
12. REPRESENTATIONS AND WARRANTIES REGARDING IMPAIRMENT. The
Business Council represents and warrants that except for taking steps to terminate the Water
Purchase Agreement as allowed under paragraph 31 thereof,it will not initiate any action to impair
this Escrow Agreement or the Water Purchase Agreement, to include an action to rescind this
Escrow Agreement, the Water Purchase Agreement or any waiver contained in this Escrow
Agreement or the Water Purchase Agreement.
13. TAXES,FEES AND PERMITS. No taxes or fees shall be imposed by the SMSC on the
City on account of this Escrow Agreement. The City is not required to obtain any permit from the
SMSC on account of this Escrow Agreement.
14. ESCROW AGENT AND ESCROW CHARGES. The SMSC shall pay the charges for
the Escrow Funds as said charges are determined by Escrow Agent. Escrow Agent shall invoice
the SMSC for all such charges,which invoices the SMSC shall pay within thirty days of the invoice
date.
15. INTEREST. Any interest earned on the Escrow Funds shall be added to the Escrow Funds
to be disbursed.
16. TERM. This Escrow Agreement shall have a term starting on June 1, 2014 and ending on
June 30, 2039. Upon expiration of this Escrow Agreement, or expiration of the 4 year notice
period for termination of the Water Purchase Agreement under paragraph 31 thereof, Escrow
Agent shall refund any remaining Escrow Funds to the SMSC.
17. BOOKS AND RECORDS. Escrow Agent will keep and maintain, at all times, full, true
and accurate books and records, in sufficient detail to reflect the disbursements made by it
hereunder. Any books, records, documents, and accounting procedures and practices of a party
related to this Escrow Agreement are subject to examination by the other party and either the
Legislative Auditor or the State Auditor, as appropriate. The parties agree to maintain these
records for a period of six years from the date of performance of all services covered under this
Escrow Agreement.
18. DUTY OF ESCROW AGENT. The sole duties of Escrow Agent shall be those described
herein, and Escrow Agent shall be under no obligation to determine whether the other parties
hereto are complying with any requirements of law or the terms and conditions of any other
agreements among said parties. Escrow Agent may conclusively rely upon and shall be protected
in acting upon any notice, consent, order or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties, consistent with reasonable due
diligence on Escrow Agent's part. Escrow Agent may consult the advice of counsel with respect
to any issue concerning the interpretation of its duties hereunder. The City and the SMSC hereby
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acknowledge such fact and indemnify and hold harmless Escrow Agent from any action taken by
it in good faith in reliance thereon. Escrow Agent shall have no duty or liability to verify any such
notice, consent, order or other document, and its sole responsibility shall be to act as expressly set
forth in this Escrow Agreement. Escrow Agent shall be under no obligation to institute or defend
any action, suit or proceeding in connection with this Escrow Agreement. If any dispute arises
with respect to the disbursement of any monies, Escrow Agent may continue to hold the same or
commence an action in interpleader and in connection therewith remit the same to the Scott County
District Court in resolution of such dispute.
19. INDEMNIFICATION. Each party is responsible for its own acts and omissions and the
results thereof to the extent authorized by law. Escrow Agent will indemnify the SMSC and the
City and hold each harmless from and against all judgments, claims,damages, costs and expenses,
including reasonable attorney's fees, paid, incurred or for which it may be liable resulting from
the negligent acts and omissions of Escrow Agent, its subcontractors, employees, or agents.
20. DATA PRACTICES. All data created, collected, received, maintained or disseminated
by the City or Escrow Agent for any purpose in the course of this Escrow Agreement is governed
by the Minnesota Government Data Practices Act, Minn. Stat. Ch. 13, any other applicable state
statute, and any state rules adopted to implement the act, as well as federal regulations on data
privacy.
21. ASSIGNMENT. Neither party shall assign this Escrow Agreement, nor any interest
arising herein, without the written consent of the other party.
22. NOTICE. Any notice required to be given to the City, the SMSC or Escrow Agent
pursuant to this Escrow Agreement shall be in writing and shall be deemed duly given: (i) on the
date of personal delivery; (ii) on the date and time of confirmation if sent via facsimile (with
verification of receipt); (iii)one business day following dispatch by Federal Express or equivalent;
or(iv)three business days after mailing certified or registered mail,postage prepaid,return receipt
requested, to respective addresses of the parties set out below:
SMSC: With a copy to:
Shakopee Mdewakanton Sioux Community
Attn: William Rudnicki
2330 Sioux Trail SW
Prior Lake, MN 55372
FAX: FAX:
CITY OF PRIOR LAKE: With a copies to:
City of Prior Lake City of Prior Lake
Attn: Public Works Director Attn: City Manager
4646 Dakota Street SE 4646 Dakota Street SE
Prior Lake, Minnesota 55372 Prior Lake, Minnesota 55372
Fax: 952-447-4245 Fax: 952-447-4245
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Gregerson, Rosow, Johnson&Nilan
Attn: Richard F. Rosow
650 Third Ave South, Suite 1600
Minneapolis, MN 55402
Fax: 612-349-6718
ESCROW AGENT:
Guaranty Commercial Title, Inc.
Renaissance Square
520 Nicollet Mall, Suite 400
Minneapolis, MN 55402
FAX: 612-337-5966
23. SEVERABILITY. The provisions of this Escrow Agreement are severable. If any portion
hereof is, for any reason, held by a court of competent jurisdiction to be contrary to law, such
decision shall not affect the remaining provisions of this Escrow Agreement.
24. WAIVER. No action nor failure to act by the City or the SMSC shall constitute a waiver
of any right or duty afforded any of them under the Escrow Agreement, nor shall any such action
or failure to act constitute an approval of or acquiescence in any breach thereunder, except as may
be specifically agreed in writing.
25. GOVERNING LAW. This Escrow Agreement shall be controlled by the laws of the State
of Minnesota.
26. SIGNING OF ESCROW AGREEMENT. This Escrow Agreement may be signed in
counterparts and on different dates by each party without affecting the validity thereof.
27. INTEGRATION. The entire and integrated agreement of the parties contained in this
Escrow Agreement shall supersede all prior negotiations,representations, or agreements between
the parties regarding the subject matter hereof, whether written or oral.
28. CROSS DEFAULT. A default by either party under this Escrow Agreement is a default
under the Water Purchase Agreement.
IN WITNESS WHEREOF,this Escrow Agreement has been executed as of the day and
year first above written.
[Remainder of Page Intentionally Left Blank Signature Pages Follow.]
GUARANTY COMMERCIAL TITLE,INC
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By:
Its:
By:
Its:
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of
, 2014, by the President of Guaranty Commercial Title, Inc.,
, a Minnesota corporation , on
behalf of the corporation
Notary Public
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CITY OF PRIOR LAKE
BY:
Kenneth L. Hedberg, Mayor
BY:
Frank Boyles, City Manager
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of
, 2014, by Kenneth L. Hedberg and Frank Boyles,the Mayor and City Manager,
respectively, of the City of Prior Lake, a Minnesota municipal corporation, on behalf of the
corporation and pursuant to the authority granted by its City Council.
Notary Public
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SHAKOPEE MDEWAKANTON SIOUX COMMUNITY
By:
Its:
By:
Its:
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of
, 2014, by and , the
and ,respectively, of the Shakopee Mdewakanton Sioux
Community, a federally recognized Indian Tribe, on behalf of the tribe and pursuant to the
authority granted by its .
Notary Public
DRAFTED BY:
Gregerson, Rosow, Johnson&Nilan, ltd
650 Third Avenue South
Suite 1600
Minneapolis, MN 55402
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