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HomeMy WebLinkAbout2023.02.27 Council Special Meeting Packet AGENDA City Council Special Meeting 7:00 PM - Monday, February 27, 2023 Pasco City Hall, Council Chambers & GoToWebinar Page 1. MEETING INSTRUCTIONS for REMOTE ACCESS - Individuals, who would like to provide public comment remotely, may continue to do so by filling out the online form via the City’s website (www.pasco-wa.gov/publiccomment) to obtain access information to comment. Requests to comment in meetings must be received by 4:00 p.m. on the day of this meeting. To listen to the meeting via phone, call (415) 655-0060 and use access code 307-404-066. City Council meetings are broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco- wa.gov/psctvlive and on the City’s Facebook page at www.facebook.com/cityofPasco. 2. CALL TO ORDER 3. ROLL CALL (a) Pledge of Allegiance 4. UNFINISHED BUSINESS 3 - 7 (a) Public Hearing Continued - Jubilee Foundation Right-of-Way Vacation (VAC 2022-009) PUBLIC HEARING CONTINUED FROM FEBRUARY 6th AND FEBRUARY 21ST Option A: MOTION: (Not recommended)I move to approve the vacation request and direct staff to prepare an ordinance vacating rights-of-way in Washington Addition to Pasco in the vicinity of East A Street and East Helena Street. Option B: MOTION: (Recommended): I move to continue the request to vacate rights-of-way in Washington Addition to Pasco in the vicinity Page 1 of 43 of East A Street and East Helena Street to a date after approval of a preliminary plat for the properties in question or until such time as adverse impacts to adjoining properties can be mitigated. 8 - 43 (b) Resolution No. 4311, Process Water Reuse Facility (PWRF) Draft Processor Wastewater Treatment Agreement (WTA) MOTION: I move to approve Resolution No. 4311, authorizing the Interim City Manager to enter into the Process Water Reuse Facility (PWRF) Industrial Wastewater Pretreatment Agreement with the Processors for the PWRF Pretreatment Improvements Phase 3 Project. 5. ADJOURNMENT Page 2 of 43 AGENDA REPORT FOR: City Council February 23, 2023 TO: Adam Lincoln, Interim City Manager City Council Special Meeting: 2/27/23 FROM: Rick White, Director Community & Economic Development SUBJECT: Public Hearing Continued - Jubilee Foundation Right-of-Way Vacation (VAC 2022-009) I. REFERENCE(S): Overview Map Vicinity Map II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: PUBLIC HEARING CONTINUED FROM FEBRUARY 6th AND FEBRUARY 21ST Option A: MOTION: (Not recommended) I move to approve the vacation request and direct staff to prepare an ordinance vacating rights -of-way in Washington Addition to Pasco in the vicinity of East A Street and East Helena Street. Option B: MOTION: (Recommended): I move to continue the request to vacate rights-of-way in Washington Addition to Pasco in the vicinity of East A Street and East Helena Street to a date after approval of a preliminary plat for the properties in question or until such time as adverse impacts to adjoining properties can be mitigated. III. FISCAL IMPACT: None. IV. HISTORY AND FACTS BRIEF: The applicant has submitted an application to vacate streets and alleys adjacent and within Blocks 5, 11, and 12 of the 1913 Washington Addition to Pasco plat. The plat contains 25'-wide lots and 80'-wide street rights-of-way, as well as 14' Page 3 of 43 wide north-south alleys and 20' wide east west alleys. The proposed vacation comprises approximately 3.87 acres. Applicant's objective is to reconfigure the rights-of-way to accommodate a subdivision and multi-family units along East Helena and East "A" Street to match similar existing developments to the east. This hearing was continued from the February 21, 2023, Council regular meeting. V. DISCUSSION: Per the Pasco Municipal Code (PMC) Chapter 12.40, the Council may require compensation for vacated rights-of-way. The compensation involves obtaining a title the and compensation the However, of appraisal and report value. requirements attached thereto may be waived if one or more of the following conditions apply: 1. The vacation is initiated by the City Council by Resolution; 2. The vacation is at the request of the City; 3. The right-of-way to be vacated was previously determined by the City Council not to be essential to public traffic circulation and available for vacation; 4. The grant of substitute right-of-way which has a value as a right-of-way at least equal to that right-of-way to be vacated; and 5. The resulting benefit to the community of the project requiring the vacation outweighs the appraised value of the right-of-way to be vacated. In order to justify a waiver under condition No. 4, Applicant would be required to grant substitute travel and access corridors which meet Pasco Municipal Code requirements and Comprehensive Plan goals and policies. While it is the applicant's intent to submit a preliminary plat application that will accomplish this condition, an acceptable preliminary plat has not yet been approved by the City. Staff also brings to Council attention the following: • Per PMC 21.15.010(1) "Streets shall normally continue as an extension of existing streets unless good planning dictates a different solution. Street patterns shall take into consideration access neede d to develop adjacent properties." The current proposal does not continue an existing street nor take into consideration access needed to develop adjacent properties. • Per PMC 21.15.070 "Cul-de-sacs will be permitted where topography or other conditions justify their use." The topography of the site, slightly sloping southward, does not justify a cul-de-sac. Page 4 of 43 • Per PMC 12.40.070(1)-(4), the City Council may approve a right-of-way vacation upon making findings that the vacation of the right-of-way will not adversely affect traffic accessibility and circulation within the immediate area or with the City as a whole; is not contemplated or needed for future use; no abutting property will become landlocked or have access substantially impaired; and the public needs shall not be adversely affected and the vacation will provide a public benefit or serve a public purpose. The proposed vacation would likely have an adverse impact on development of property to the northwest of the plat, leaving them with a non -standard right-of- way abutting their property. Applicant must ultimately submit a plan for travel and access corridors which meet the Pasco Municipal Code requirements and Comprehensive Plan goals and policies. The proposed plat must also provide mitigation measures for adverse impacts to neighboring properties. Since a plat application has not been received or appropriately considered and conditioned through the Hearing Examiner, it is premature to process the vacation. As such, Staff recommends the request to va cate rights-of-way in Washington Addition to Pasco in the vicinity of East A Street and East Helena Street be continued until an approved plat with acceptable mitigation measures has been received and approved. Page 5 of 43 Item:WashingtonAdditionStreetsandAlleysROWVacationApplicant(s):JubileeFoundationc/0SteveBaumanFile#:VAC2022-009OverviewPage 6 of 43 Item:WashingtonAdditionStreetsandAlleysROWVacationVlclnltyApplicant(s):JubileeFoundationc/0SteveBaumanMapFile#;VAC2022-009Page 7 of 43 AGENDA REPORT FOR: City Council February 23, 2023 TO: Adam Lincoln, Interim City Manager City Council Special Meeting: 2/27/23 FROM: Steve Worley, Director Public Works SUBJECT: Resolution No. 4311, Process Water Reuse Facility (PWRF) Draft Processor Wastewater Treatment Agreement (WTA) I. REFERENCE(S): Resolution Approving PWRF Processor WTA Pasco-Processor Wastewater Treatment Agreement (WTA) – Draft 2 Exhibit C – Projected Influent Criteria for each Processor Burnham Clarification Letter Gross-Wen Technologies Clarification Letter II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: MOTION: I move to approve Resolution No. 4311, authorizing the Interim City Manager to enter into the Process Water Reuse Facility (PWRF) Industrial Wastewater the for Processors PWRF with Agreement Pretreatment the Pretreatment Improvements Phase 3 Project. III. FISCAL IMPACT: Recent value engineering proposals and other potential cost saving efforts, have reduced the estimated Phase 3 cost to approximately $122 million. The overall cost to the PWRF Processors includes the benefits of revenues generated through the sale of renewable natural gas (RNG) and a 30% investment tax credit for all RNG-related facilities. Monthly Fee:Service Estimated for provisions with month per $850,000 adjustments based on final costs. Monthly fee to be proportionately allocated to Pasco Processing, Twin City Foods, Reser’s, Simplot, Grimmway, Freeze Pack, and Darigold. Estimated Renewable Natural Gas (RNG) Revenue: ~$6 million per year, with provisions for adjustment based on final RNG sales contract. Page 8 of 43 Potential Federal Income Tax Credit: $26+ million with provisions for adjustments based on final credit. (Available to reduce principal amount). Community Economic Revitalization Board (CERB): $5 million low-interest loan for the Phase 3 project. Potential Federal or State Grants: Staff continues to pursue grants for this project to help reduce final costs to the PWRF Processors. IV. HISTORY AND FACTS BRIEF: The City owns and operates an industrial wastewater treatment system to treat industrial wastewater from six agricultural food processors (Processors). The system includes the Process Water Reuse Facility (PWRF). The PWRF requires expansion in storage and treatment capacity, and the application of new technology, to allow existing Processors to expand their operations and provide capacity for Darigold’s future wastewater. Upgrades to the PWRF pretreatment system will significantly improve treatment capacity for the benefit six existing and one or two future Processors, customers, and the local community. The PWRF improvements also have a positive impact on the Municipal Wastewater Treatment Plant (WWTP) by redirecting a significant load of industrial wastewater away from the WWTP. This frees up much and residential increased for capacity WWTP at needed allowing commercial developments that can be served. In 2019, Ecology approved Pasco’s PWRF Facility Plan which identified a series of improvements to expand the PWRF to meet current and future needs. The scope of the PWRF recommended improvements included the following: • Extension of potable water and electrical services to the site (Phase 1) • Additional winter storage ponds (Phase 2) • Industrial wastewater pretreatment improvements (Phase 3) The PWRF stakeholders agreed to move forward with design and construction following this phased approach. The Phase 1 project is currently under construction. The Phase 2 project is in the design phase. On January 10, 2022, staff provided Council a presentation on proposed updates to the Process Water Reuse Facility (PWRF) with the potential to include a Renewable Natural Gas (RNG) option that will help reduce costs to the PWRF Page 9 of 43 Processors. Council indicated support to move forward with the proposed concept. Through processes outlined in Chapter 70A.140 RCW, Water Quality Joint Development Act, Burnham SEV, a renewable natural gas (RNG) Project Developer, was selected to privately finance, design, construct, and operate an upgraded industrial wastewater treatment plant that includes a renewable natural gas plant at the PWRF. This Phase 3 project is 70% complete with design and ready to move forward with final design and construction managed by Burnham SEV. Staff presented to Council on October 12, 2022, a draf t WTA between the City and Burnham SEV. On February 13, 2023 staff presented to Council the proposed draft WTA between the City and Processors. V. DISCUSSION: The attached draft WTA outlines the terms and conditions for payment of industrial wastewater treatment services. The PWRF Phase 3 facilities that will treat the Processor’s industrial wastewater include a low-rate anaerobic digester (LRAD), a biological nitrogen removal system (sequential batch reactor (SBR) or rotating algal biofilm (RAB)), and a renewable natural gas (RNG) system. The RNG produced from the Processor’s wastewater will be sold by Burnham SEV on the volunteer RNG market and revenue from the sale of RNG will be used to pay a portion of the capital cost of the Phase 3 project, subsequently reducing fees paid by the Processors. The proportionate fee for each Processor is still being finalized. The fee will be based on several factors including total annual and peak flows from each Processor to the PWRF, and concentrations of Biochemical Oxygen Demand (BOD), Nitrogen, Total Suspended Solids (TSS), and other factors. The City is utilizing the services of the FCS Group to develop a rate mode l to assist in determining the proportionate fee to each Processor. The rate model has been reviewed several times with the Processor group evaluating different alternatives. Included in the attachments is the latest cost distribution for all four phases of the PWRF Pretreatment project. Only the Phase 3 project is the subject of the Processor WTA. This item was discussed at the February 21, 2023, Council Regular Meeting. Staff recommends approval of the draft Processor WTA in substantially the same form as presented and to make substantive changes as necessary to execute the Agreements. Page 10 of 43 Resolution – Pasco Processors Wastewater Treatment Agr. - 1 RESOLUTION NO. _______ A RESOLUTION OF THE CITY OF PASCO, WASHINGTON, AUTHORIZING THE INTERIM CITY MANAGER TO ENTER INTO THE PROCESS WATER REUSE FACILITY (PWRF) INDUSTRIAL WASTEWATER PRETREATMENT AGREEMENTS WITH MULTIPLE PROCESSORS FOR THE PWRF PRETREATMENT IMPROVEMENTS PHASE 3 PROJECT. WHEREAS, the City of Pasco (City) operates a Process Water Reuse Facility (PWRF) to treat industrial wastewater from Food Processors (Processors) located in the vicinity of the City of Pasco; and WHEREAS, the City’s current PWRF system has reached its design life and capacity, such that upgrades and expansion are necessary to accommodate existing and new agricultural food processor wastewater from current and future processors; and WHEREAS, Burnham SEV, a renewable natural gas (RNG) Project Developer, is in the process of being selected, through processes outlined in Chapter 70A.140 RCW, to privately develop a new industrial wastewater treatment plant, utilizing a low-rate anaerobic digester and nitrogen removal system (System) along with a renewable natural gas plant at the PWRF; and WHEREAS, City and Burnham SEV entered an agreement on November 24, 2021, wherein the City (and Processors) agreed to support the cost of initial engineering for the System; and WHEREAS, Chapter 70A.140 of the RCW Water Quality Joint Development Act provides a mechanism for the City to provide service from water pollution control facilities by means of services agreements with public or private parties; and WHEREAS, pursuant to RCW 70A.140.040(9), prior to execution of the Wastewater Treatment Agreement, Burnham and the City understand the necessity of submitting the “proposed service agreement” to the Department of Ecology to review for consistency with RCW 90.46 and RCW 90.48, as a condition precedent to the City’s authority to execute the Wastewater Treatment Agreement with Burnham and have complied with this condition; and WHEREAS, Processors agree to pay City a Base Treatment Fee and/or an Adjustment Treatment Fee as described herein and shown in Exhibit B; and Page 11 of 43 Resolution – Pasco Processors Wastewater Treatment Agr. - 2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON: That the Interim City Manager is hereby authorized to execute the attached PWRF Industrial Wastewater Pretreatment Agreement in substantially the same form with each of the Processors for the PWRF Pretreatment Improvements Phase 3 Project, a copy of which is attached hereto and incorporated herein by reference as Exhibit A; and to make substantive changes as necessary to execute the Agreement. Be It Further Resolved, that this Resolution shall take effect and be in full force immediately upon passage by the City Council. PASSED by the City Council of the City of Pasco, Washington, on this ______ day of _______, 2023. _____________________________ Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM: _____________________________ __________________________ Debra Barham, CMC Kerr Ferguson Law, PLLC City Clerk City Attorneys Page 12 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 1 FG: 100895287.4 CITY OF PASCO – PROCESS WATER REUSE FACILITY (PWRF) INDUSTRIAL WASTEWATER PRETREATMENT AGREEMENT WITH [PROCESSOR NAME] 1.AGREEMENT. This Industrial Wastewater Treatment Agreement (“Agreement”) is entered as of the Effective Date by and between [Processor Name], a ______________ (“Processor”), with offices at [Processor address], and the City of Pasco, a Washington municipal corporation (“City”), with offices at 525 N 3rd Avenue, Pasco, WA 99301. The City and Processor are each a “Party” and collectively the “Parties” to this Agreement. The Parties agree as follows 2. RECITALS 2.1 The City owns and operates a wastewater utility, including a process wastewater reuse facility (“PWRF”) that operates for the benefit of the City and large agricultural food processors. The PWRF pretreats, treats, and disposes of approximately one billion gallons of agricultural industrial wastewater by land application on 1,854 acres of City-owned farmland. See Washington State Discharge Permit No. ST0005369. The existing PRWF consists of a primary treatment process (including two rotary drum screens, one modified clarifier, 12 septic tanks for solids collection from the clarifier, one screw press for solids removal from the rotary drum screens system), one approximately five million gallon pond previously used as solids storage, one eight million gallon pond used as an equalization pond, one 35 million gallon pond for winter storage, and one 115 million gallon (“MG”) pond for winter storage, and an irrigation system for land application of agricultural industrial wastewater. 2.2 The City’s current PWRF system has reached it design life and capacity, such that upgrades, and expansion are necessary to accommodate new and increasing agricultural food processor wastewater. To meet the Washington Department of Ecology’s (“Ecology”) permit requirements to expand the PWRF’s capacity, the City sought a contractor capable of treating agricultural and milk-processing industrial wastewater and using the biogas produced from such treatment to generate Renewable Natural Gas (“RNG”). Following a competitive selection process, the City selected Burnham SEV Pasco, LLC (“Burnham”) to develop, design, construct, and operate, a wastewater treatment and nitrogen removal system (the “System,” as more particularly described in Exhibit A) and integration of Burnham’s RNG production process. Burnham is to finance, construct, own, and operate the System on City-owned property. 2.3 The City is in the process of preparing and submitting a new Washington State Waste Discharge Permit (“Discharge Permit”) application to Ecology, to include the System and all other components of the agricultural industrial wastewater treatment and disposal process. The City will develop, operate, and maintain other facilities, including its storage ponds (equalization and winter storage), irrigation system, land application area, and all related assets (e.g., conveyance water pipes, pump stations, wells, and appurtenances) (“City Facilities”) and the City intends to be a joint permittee with Burnham under the Discharge Permit with roles and responsibilities for its implementation as defined in a separate Wastewater Treatment Agreement. 2.4 Under RCW 70A.140.040(9), prior to execution of the Wastewater Treatment Agreement with Burnham, Burnham and the City understand the necessity of submitting a “proposed service agreement” to Ecology to review for consistency with chapters 90.46 and 90.48 RCW, as a condition precedent to the City’s authority to execute the Wastewater Treatment Agreement with Burnham. Ecology has reviewed the proposed service agreement and found it consistent with referenced laws. 2.5 The System and City Facilities will be supported by rates and fees paid to the City by processors, including Processor. This Agreement provides for Processor agreement to pay City for a Base Treatment Page 13 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 2 FG: 100895287.4 Fee and Adjustment Treatment Fee as described herein and shown in Exhibit D, and for the City to provide for the System and the City Facilities to receive and process Processor’s wastewater. 3.DEFINITIONS 3.1 “Abnormal Substances” means substances or materials (including viscous, toxic or hazardous substances) that (i) were not reasonably anticipated by City as being in the Influent Industrial Wastewater, (ii) are present in the Influent Industrial Wastewater in a type, concentration or loading that was not reasonably anticipated by City; or (iii) exceed the design capacity of the System to adequately treat when operated in accordance with Prudent Industry Practices. 3.2 “Adjusted Treatment Fee” has the meaning given in Exhibit F. 3.3 “Base Treatment Fee” has the meaning given in Exhibit F. 3.4 “Change of Law” means after the Effective Date (i) the enactment, adoption, promulgation, modification or repeal of any law or regulation applicable to the System or the production or sale of RNG; (ii) the imposition of any material conditions on the issuance or renewal of any applicable Permit (notwithstanding the general requirements contained in any applicable Permit at the time of application or issue to comply with future laws, ordinances, rules, regulations or similar legislation), or (iii) a change by any governmental authority that establishes requirements affecting owning, supplying, constructing, installing, operating or maintaining the System, or other performance of the obligations of either Party hereunder. 3.5 “Changed Circumstances” has the meaning given in Section 4.2. 3.6 “City Facilities” has the meaning given in Agreement Section 2.3. 3.7 “City Obligation(s)” has the meaning given in Section 4.1. 3.8 “City Permits” means the Permits that must be obtained and maintained by Processor as set forth in Exhibit G. 3.9 “Commercial Operation” means the System is capable of processing Influent Wastewater sufficient to meet the Effluent Wastewater specifications on a regular, daily basis and in commercial quantities as determined by a third-party independent engineer selected by Burnham in its sole discretion. 3.10 “Consumer Price Index” means the United States Department of Labor’s Bureau of Labor Statistics Consumer Price Index, All Urban Consumers, All Items, West Region, (1982-84 equals 100), or the successor of such index. 3.11 “Discharge Permit” has the meaning given in Agreement Section 2.3. 3.12 “Ecology” means the Washington State Department of Ecology. 3.13 “Effective Date” has the meaning given in Agreement Section 13.3. 3.14 “Effluent Wastewater” means agricultural or dairy industrial wastewater, as measured at [the point at which the Effluent Wastewater is returned to the City as more particularly described in [Exhibit Page 14 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 3 FG: 100895287.4 A]1, that meets the specifications in Exhibit A. 3.15 “Effluent Wastewater Failure” has the meaning given in Section 7.1. 3.16 “Influent Wastewater” means agricultural and dairy processing industrial wastewater that does not contain industrial wastewater in excess of applicable federal and state industrial pre-treatment standards, does not contain Abnormal Substances, and otherwise meets the specifications in 1 NTD: monitoring locations for influent and effluent return(s). Page 15 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 4 FG: 100895287.4 Exhibit C, as measured at [the point at which the Influent Wastewater is delivered to the PWRF as more particularly described in Exhibit A2]. 3.17 “Initial Term” has the meaning given in Section 2.1. 3.18 “Insolvency Event” means with respect to any Party, when: (a) the Party commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of such Party or any substantial part of its property, or consents or agrees to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or makes a general assignment for the benefit of creditors, or becomes or is declared insolvent, or acknowledges, in writing, its inability to pay its debts as they become due, or takes any corporate action in any jurisdiction to authorize any of the foregoing; (b) an involuntary case or other proceeding is commenced against the Party seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of such person or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of ninety (90) days; or (c) an order for relief has been entered against that Party under the United States federal, state or other bankruptcy laws of any jurisdiction as now or hereafter in effect. 3.19 “Late Payment Rate” has the meaning given in Section 5.3. 3.20 “Major Maintenance Expenses” means all costs, fees, obligations and other liabilities incurred by Burnham and associated with maintaining System performance, including without limitation maintenance, repair, renewal, capital expenditures, reconstruction or replacement of any portion or component of the System, as applicable. 3.21 “Material Breach” has the meaning given in section 6.2. 3.22 “MG” means million gallon(s). 3.23 “Modifications” has the meaning given in Section 5.4. 3.24 “Non-Conforming Influent Wastewater” means agricultural or dairy industrial wastewater delivered or directed by Processor to the System that fails to meet in any respect or for whatever reason the specifications in 2 NTD: monitoring locations for influent and effluent return(s). Page 16 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 5 FG: 100895287.4 Exhibit C. 3.25 “Non-Material Breach” has the meaning given in Section 6.1. 3.26 “Pass-Through Costs” has the meaning given in Exhibit F. 3.27 “Permits” means the permits, licenses, certificates, clearances, approvals, authorizations, variances, or consents of any governmental authority, department, or agency, including all amendments thereto and replacements thereof, that must be obtained and/or maintained for construction and operation System. 3.28 “Processors” means the collective of all food product Processors that discharge their industrial wastewater to the PWRF, including Processor. 3.29 “Processor Obligations” means the obligations as set out in this Agreement specific to the processors which must be met as a condition of continued use of the PWRF system. 3.30 “Prudent Industry Practices” means any of the practices, methods and acts engaged in or approved by a significant portion of the wastewater treatment industry for facilities of similar size and characteristics to the System or any of the practices, methods or acts, which, in the exercise of reasonable judgment in the light of the facts known or that should reasonably have been known at the time a decision is made, could have been expected to accomplish the desired result at the lowest reasonable cost consistent with law, regulation, permits, [written notice from City]es, standards, equipment manufacturer's recommendations, reliability, safety, environmental protection, economy, and expedition. 3.31 “PWRF” has the meaning given in Agreement Section 2.1. 3.32 “Remedy” has the meaning given in Section 7.3(e) 3.33 “Renewable Natural Gas” or “RNG” means biomethane produced by the System that meets natural gas pipeline-quality standards such that the biomethane may blend with, or substitute for, geologic natural gas. 3.34 “Renewal Term” has the meaning given in Section 2.2. 3.35 “Services” means the services to be provided by the City, its subcontractors, agents, or assigns, under this Agreement, as set forth in Exhibit B. 3.36 “System” means the City- and Burnham-supplied industrial wastewater treatment and RNG production facility and ancillary components as set forth in Exhibit A. 3.38“Term” has the meaning given in Section 2.2. 3.38 “Total System Capital Cost” means actual costs incurred or payable by City or its affiliates in connection with the development, construction and completion of the System, excluding working capital required for System start-up and financing costs. 4.TERM 4.1 This Agreement shall commence on the Effective Date and continue thereafter for a period of thirty (30) years (the “Initial Term”) unless terminated in accordance with this Agreement or extended as provided in Section 2.2. Page 17 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 6 FG: 100895287.4 4.2 Upon expiration of the Initial Term, this Agreement shall automatically extend for two additional five (5)-year periods (each a “Renewal Term” and together with the Initial Term, the “Term”), unless terminated by either Party by sending written notice of termination to the other Party no later than one hundred and eighty (180) days before the end of the Initial Term or any Renewal Term, as applicable. 5. PROCESSOR OBLIGATIONS In addition to any other obligations set forth herein, including any obligations in Page 18 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 7 FG: 100895287.4 Exhibit C, Processor shall comply with the following obligations (each a “Processor Obligation” and together the “Processor Obligations”): 5.1 Influent Wastewater. Commencing on written notice from City and continuing throughout the Term, Processor shall at its sole cost and expense deliver to City the Influent Wastewater in accordance with the specifications in Page 19 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 8 FG: 100895287.4 Exhibit C. If at any time City becomes aware that Influent Wastewater delivered by Processor is Non-Conforming Influent Wastewater, City may, in its sole discretion, choose to refuse, accept or bypass such Non-Conforming Influent Wastewater; provided, however, that City’s acceptance of Non-Conforming Influent Wastewater shall not relieve Processor of any responsibility or any costs, damages, or liabilities associated with Non-Conforming Influent Wastewater, and City does not waive any other rights or remedies associated with Processor’s delivery of Non-Conforming Influent Wastewater. 5.2 Payment. Processor shall pay City in accordance with Section 5. 5.3 If there are any changes in Processor’s ability to comply with the Processor’s Obligations in Page 20 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 9 FG: 100895287.4 Exhibit C, any change in circumstances, or a Change of Law that necessitates a change to the System or the services to be provided by City in connection herewith (individually or collectively, “Changed Circumstances”), Processor shall be proportionally responsible for any increased costs incurred by City to operate the System due to such Changed Circumstances. 6. CITY OBLIGATIONS 6.1 In addition to any other obligations set forth herein, including any obligations in Page 21 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 10 FG: 100895287.4 Exhibit C, City shall comply with the following obligations (each a “City Obligation” and together the “City Obligations”): 6.2 Other Agreements. City shall enter into agreements with service providers to design, develop, construct and operate the System and the City Facilities if not operated by the City. 7. PAYMENT FOR SYSTEM AND SERVICES; CHANGE ORDERS 7.1 Commencing on written notice from City and continuing throughout the Term, Processor shall pay City the Adjusted Treatment Fee, Pass-Through Costs, and any applicable adjustments as calculated and invoiced by City on a monthly basis in accordance with this Agreement. City collection on delinquent Processor accounts is governed by Chapters 3.65 and Title 13 Pasco Municipal Code, as may be amended in the future. 7.2 Except in the case of Material Breach by City or as explicitly specified in this Agreement, commencing on written notice from City Processor shall pay to City the Adjusted Treatment Fee each month and through the end of the Term notwithstanding any failure by Processor to deliver Influent Wastewater or failure or inability of City to accept Influent Wastewater or deliver Effluent Wastewater. 7.3 At any time during the Term, Processor may request additional services from the City or request any alterations, additions, omissions, modifications, or changes in the scope, schedule, sequence, methods, or performance of the System or Services (together “Modifications”). City agrees to reasonably cooperate with Processor to evaluate and implement Modifications proposed by Processor and accepted by City. 8.NON-MATERIAL AND MATERIAL BREACHES OF THIS AGREEMENT 8.1 Any breach under this Agreement by either Party that is not a Material Breach shall be a “Non- Material Breach.” 8.2 The following circumstances shall constitute a “Material Breach” by the applicable non- performing Party: The Processor’s failure to make any payment required under this Agreement and invoiced by the City in accordance with Section 5 and Exhibit F; provided, however, that City shall provide written notice of such failure to Processor and [Processor name] shall have thirty (30) days to submit payment in full (including any interest or penalties) following such notice; An Influent Wastewater Failure (as defined in Section 7.2a) of cause and sufficient duration to be a Material Breach under Section 7.1(c) Processor’s relocation, alteration, addition, improvement, maintenance or repair of its system made without City’s written consent. In respect of either Party, the other Party’s material misrepresentation, fraud, or intentional misconduct in connection with this Agreement,. In respect of either Party, an Insolvency Event for that Party. 9. REMEDIES; CROSS-DEFAULTS 9.1 Remedies for Non-Material Breach Due to Effluent Wastewater Failure. The City’s failure or inability to meet the Effluent Wastewater specifications listed in Exhibit D (“Effluent Wastewater Failure”) shall be a Non-Material Breach of this Agreement. Page 22 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 11 FG: 100895287.4 9.2 Upon either Party’s determination that an Effluent Wastewater Failure has occurred, such Party shall provide a reasonably detailed notice to the other Party explaining the circumstances of such Effluent Wastewater Failure as soon as reasonably practical but no later than ten (10) days of such determination. The Parties will immediately cooperate and take steps to remedy such Effluent Wastewater Failure consistent with Section 0. 9.3 Notwithstanding the above, if the Effluent Wastewater Failure was caused by Processor’s delivery of Non-Conforming Influent Wastewater, such remedy shall be determined by Section 9.4. 9.4 Remedies for Non-Material Breaches of Certain Processor Obligations. 9.4.1 If Processor fails to deliver Influent Wastewater in accordance with Page 23 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 12 FG: 100895287.4 Exhibit C and Section 3.1A or delivers Non-Conforming Influent Wastewater, the City shall promptly notify Processor of such failure and Processor shall be solely responsible for any and all losses, damage to the System, or additional costs incurred by the City or its contractors that were caused by Processor ’s failure or delivery of Non-Conforming Influent Wastewater, including without limitation any additional costs of treating, handling, storing, and disposing of such Non-Conforming Influent Wastewater. 9.4.2 In the event of any damage to the System caused by Processor’s acts or omissions or breach of this Agreement, Processor shall remain obligated to perform all obligations under this Agreement and Processor shall reimburse City for the repair and restoration of the System to the same condition as existed immediately before such damage occurred. The City shall promptly notify Processor of any damage to the System caused by Processor’s acts or omissions. 9.4.3 Such remedies in this Section 9.4 shall be non-exclusive, and every other right and remedy be cumulative and in addition to every other right and remedy given under this Agreement or existing at law, in equity, or otherwise now or after the Effective Date, and the assertion or employment of any right or remedy under this Agreement should not prevent the concurrent assertion of any other right or remedy. 9.5 Remedies for Other Non-Material Breach by Either Party. As promptly as may be reasonably practicable, and in all circumstances no later than thirty (30) business days after becoming aware of a Non-Material Breach, the performing Party shall provide written notice of the Non-Material Breach to the non-performing Party (“Claim Notice”). The failure by the performing Party to give such prompt notice shall not constitute a waiver except to the extent, if any, that the non-performing Party is materially prejudiced by such failure. 9.5.1 Any Claim Notice sent by the performing Party to the non-performing Party shall set forth in reasonable detail, to the extent then known or reasonably available: (a) the facts and circumstances giving rise to such Non-Material Breach, including all relevant supporting documentation; (b) the nature of the losses suffered or incurred or expected to be suffered or incurred by the performing Party; (c) a reference to the provisions of this Agreement in respect of which such losses have been suffered or incurred or are expected to be suffered or incurred; (d) the amount of losses suffered or incurred and, to the extent the losses have not yet been suffered or incurred, a good faith estimate (to the extent reasonably possible, based on the information) of the amount of losses that could be expected to be suffered or incurred; (e) a reasonably detailed demand for the non-performing Party to take such actions or pay the performing Party any amounts due or reasonably expected to be due to cure the Non-Material Breach (the “Remedy”); and (f) such other information as may be necessary for the non-performing Party to determine whether any limitations under this Agreement may apply. Page 24 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 13 FG: 100895287.4 9.5.2 Upon receiving any Claim Notice, the non-performing Party shall perform or pay the Remedy, as applicable, as soon as reasonably practicable, but in any event no later than thirty (30) calendar days. If such Remedy is not reasonably capable of being implemented within thirty (30) calendar days, the Parties shall agree on a longer time to implement the Remedy. If the non-performing Party refuses to comply with the Claim Notice, any disagreements will be resolved by the dispute resolution procedures in Section 7. 9.5.3 The Parties agree that a Non-Material Breach will not result in a right for either Party to terminate this Agreement 9.6 Remedies for Material Breach of Either Party 9.6.1 Material Breach by the City. If the City is in Material Breach of this Agreement by its inability to accept Influent Wastewater from Processor, the Processor may, but is not required to, terminate this Agreement by providing the City one hundred eighty (180) days advance written notice of the Material Breach, during which one hundred eighty (180) day period the City shall have the opportunity to cure such Material Breach. If the City fails to cure Processor exercises its termination right, such termination shall be effective upon the date that each of the following conditions is satisfied: (a) Processor shall pay to the City a sum representing the total value of any Outstanding Debt, minus the value of any insurance proceeds received or owed to the City or Lender arising from a System casualty preceding the City’s Material Breach; and (b) Processor and City shall execute any agreements or documents necessary to complete the assignment and transfer of the Influent Wastewater to Processor. 9.6.2 Material Breach by Processor. If Processor is in Material Breach of this Agreement, the City may, but is not required to, terminate this Agreement by providing Processor one hundred eighty (180) days advance written notice of the Material Breach, during which one hundred eighty (180) day period Processor shall have the opportunity to cure such Material Breach. If Processor fails to cure and the City exercises its termination right, Processor shall owe to the City as direct damages, and not as a penalty: (a) The greater of (x) the undiscounted value of Processor’s payments to the City for the remainder of the Term (excluding Pass-Through Costs), as reasonably calculated by the City, in accordance with Exhibit F, or (y) a proportionate share of the Outstanding Debt; and (b) The total amount owed by the City to Burnham for impacts on PWRF, including RNG production caused by the need to terminate this Agreement as a result of Processor’s Material Breach. 9.7 In the case of any actual or anticipated breach of this Agreement, each Party agrees to use good faith efforts to take such commercially reasonable actions as necessary to expeditiously resolve the underlying circumstances including without limitation cooperating with the other Party to obtain any new or modified System Permits or other approvals necessary or appropriate in connection with the ownership, occupation, possession or use of the System; provided, however, that in all circumstances neither Party shall be required or be deemed to have waived any defenses it may have under any applicable law or contract. 10. REPRESENTATIONS AND WARRANTIES Each Party represents and warrants that it has full power and authority under the laws of the State of Page 25 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 14 FG: 100895287.4 Washington to enter into this Agreement. 10.2 All covenants and conditions of this Agreement shall run with Processor’s land and shall bind its successors and assigns, whether so expressed or not. 10.3 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY MAKES NO WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED. ALL IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED. 11. FORCE MAJEURE In the event either Party is rendered unable, wholly or in part, to carry out its respective obligations under this Agreement, except for any obligation to make payment, due to circumstances beyond its reasonable control, including, without limitation, riot or other civil disturbances, flood, natural disaster, acts of God, terrorist act, war or civil insurrection, an epidemic, pandemic or viral or communicable disease outbreak, quarantine, national emergency or other unforeseeable circumstances beyond its reasonable control (a “Force Majeure”), then written notice setting out the reason for non-performance shall be given to the other Party by the Party claiming Force Majeure promptly following discovery thereof. Upon receipt of such notice, the obligations of the affected Party shall be suspended during the period of the Force Majeure and any deadline or date certain for performance shall be extended by a period equal to the period of the Force Majeure. Every reasonable effort shall be made by the Parties to avoid delay and limit any period during which performance under this Agreement might be suspended. 12. GOVERNING LAW AND DISPUTES 12.1 This Agreement shall be interpreted in accordance with the laws of the State of Washington without giving effect to its choice of law principles. Venue for any court action under this Agreement shall be the Washington state superior court for Franklin County. 12.2 Any disagreement between the City and Processor which cannot be resolved in accordance with this Agreement shall be referred to the senior management of each Party who shall attempt to resolve the dispute in good faith. To aid resolution by the Parties’ senior management, the City’s and Processor’s representatives shall promptly prepare and exchange memoranda stating the issues in dispute and their positions, summarizing the negotiations which have taken place and attaching relevant documents. If the Parties’ senior management resolves the dispute, such resolution shall be reported in writing to and shall be binding upon the Parties. 12.3 If, despite the good faith efforts described in Section 15.2, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, the Parties may seek to agree on a forum for mediation to be held at a mutually agreeable site. 12.4 If, despite good faith efforts described in Section 15.2 and 15.3, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, (including the determination of the scope or applicability of this Agreement to arbitrate), shall be determined by arbitration in the Tri-Cities, Washington before a single arbitrator who is an experienced attorney in the discipline that is the subject of the dispute and whom shall be jointly Page 26 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 15 FG: 100895287.4 selected by the City and Processor. The arbitration shall be administered by JAMS or JDR pursuant to its Comprehensive Arbitration Rules and Procedures. The arbitrator shall issue a reasoned, written decision. Judgment may be entered upon the arbitrator’s decision in any court of competent jurisdiction, and each Party agrees to submit to the personal jurisdiction of any such court for the purposes of any such actions or proceedings to enter or enforce such judgement. 12.5 Should either party employ an attorney to enforce any of the provisions of this Agreement, the non-prevailing Party in any final judgment agrees to pay the other Party’s reasonable expenses, including reasonable attorneys’ fees and expenses in or out of litigation and, if in litigation, trial, appellate, bankruptcy or other proceedings, expended or incurred in connection therewith, as determined by a court of competent jurisdiction. 13. MISCELLANEOUS 13.1 Amendment and Waiver. No amendment or waiver of any provision of this Agreement shall be valid unless contained within a written executed by Processor and the City and which references the specific section to be amended or waived. No other amendment or waiver shall have any effect, regardless of its formality, consideration, detrimental reliance or conduct of one or more Parties. Any waiver of any term or condition hereof shall not be construed as a waiver of any subsequent breach or as a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. 13.2 Assignment. Either Party or assigns as applicable, may assign its rights under this Agreement without the consent of the other Party; provided that such Party will remain responsible for each of its obligations under the Agreement, the assignor shall promptly send written notice to the other Party. 13.3 Effective Date; Counterparts; E-Signatures. This Agreement shall take effect and be in force on the later date of each Party’s signature, below. This Agreement may be executed by the Parties in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement. A signature of a Party transmitted to the other Party by facsimile, PDF or other electronic means shall constitute the original signature of such Party for all purposes (“Electronic Signature”). 13.4 Merger. This Agreement, including any Exhibits, contains the total agreement of the Parties, and all agreements oral or written entered into prior to or contemporaneously with the execution of this Agreement are excluded. This Agreement shall be binding upon the Parties, their successors and assigns. 13.5 Notice. Any notices or other communications required or permitted hereunder shall be in writing and sent to the appropriate addresses designated below (or to such other address or addresses as may hereafter be furnished by one Party to the other Party in compliance with the terms hereof), by hand delivery, by electronic email (if listed below), by UPS, FedEx, or DHL next-day service, or by registered or certified mail, return receipt requested, postage prepaid. If to City: Attn: City Manager, City of Pasco 525 N 3rd Avenue PO Box 293 Pasco, WA 99301 If to Processor: With a copy to:With a copy to: efurguson@kerrlawgroup.net Page 27 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 16 FG: 100895287.4 13.6 No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties and their respective successors, Lenders, and permitted assigns and, and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 13.7 Severability. If any clause in this Agreement is deemed unenforceable or invalid, the balance of the Agreement shall remain enforceable. [signature page follows] Page 28 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 17 FG: 100895287.4 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date. PROCESSOR CITY OF PASCO, WASHINGTON By:_________________________________ By:______________________________ Name:_______________________________ Name: Adam Lincoln Title:________________________________ Title: City Manager Date:________________________________ Date:_____________________________ Page 29 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 18 FG: 100895287.4 Exhibit A System The System is composed of the following primary components, as may be modified from time to time as be necessary or convenient to treat Influent Wastewater and comply with System Permits: as may Headworks & Grit Removal; Equalization; Anaerobic Reactors and Bypass Stations, including a.Anaerobic Reactor System; b.Bypass - Equalization to Aerobic Reactors; and c.Bypass - Equalization to Pond Discharge Station. Aerobic Treatment and Bypass Station, including (a.) Aerobic Reactor System; and (b) Bypass – Aerobic Treatment to Pond Discharge Station. Effluent Pump Station Gas Processing; Multi-use Building; Page 30 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 19 FG: 100895287.4 Exhibit B CITY-OBLIGATIONS The City will provide, the following wastewater treatment services to Processor with respect to the System described in Exhibit A 1. Operation, Routine Maintenance, and Management of the System. 1.1. The City will be responsible for all operations and maintenance obligations required to ensure operation of the System in accordance with the Agreement and an Ecology-approved operations and maintenance manual. 1.2. The City will communicate with [Processor name] as is reasonable and necessary regarding the City’s operation, routine maintenance, and management of the System. 2. Capital Improvements 2.1. The City will perform capital improvements and any maintenance or modifications. 2.2. Should Ecology or other applicable regulatory authority establish new effluent limits under the Discharge Permit that potentially require modifications to the System, the City and Processor shall cooperate to evaluate modification to the System. Processor is responsible for paying for the costs of any such capital improvements as provided for in the Agreement and Exhibit F. 3. State Waste Discharge Permit Compliance, Generally The City is responsible for obtaining the State Waste Discharge Permit. Both the City and Processor shall be responsible for Permit compliance for each Party’s respective services. 4. Performance Standards and Regulatory, Reporting, and Recordkeeping Requirements 4.1 The City’s responsibilities for performance standards and regulatory, reporting, and recordkeeping requirements are solely and exclusively for the operation of the PWRF Systems. All aspects of Processor facilities, including but not limited to implementation and enforcement of the City’s pretreatment program, are the sole and exclusive responsibility of Processor . 4.2 For any monitoring and sampling requirements for Processor, including monitoring Influent Wastewater prior to discharge to the PWRF, Processor will perform any laboratory analysis through an accredited laboratory or as otherwise required by the Discharge Permit. 5. Metering; Wastewater Quality 5.1. City will install one or more meters as may be necessary to accurately measure the amount and composition of Influent Wastewater delivered by Processor to the City for purposes of billing Processor and other monitoring requirements as established in the Discharge Permit. Page 31 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 20 FG: 100895287.4 5.2. The City will calibrate and maintain meter devices to ensure the accuracy of the measurements is consistent with Prudent Industry Practices, the manufacturer’s recommendation, and approved operation and maintenance manual procedures for the device and the waste stream. The City will establish the calibration frequency for the Meter(s) that conforms to the frequency recommended by the manufacturer. 5.3. Subject to reasonable advance notice, City will provide the Processor with access to the Meter(s) during regular business hours for the purpose of inspecting or monitoring the quantity and quality of Influent Wastewater. 5.4. Processor may request periodic testing of any Meter by providing written notice of such request to the City. The City will conduct such testing; provided that the Processor may, at its sole cost and expense, hire an independent third-party to conduct such testing. If, during any such testing, the Meter is found to be within a five percent (5%) accuracy range, then the cost of such test shall be borne by Processor. If the meter is inaccurate by more than five percent (5%), the City shall at the City’s sole expense, cause the inaccuracy to be promptly corrected, and the Parties agree that any amounts due or paid for any Services shall be adjusted by the same percentage as the inaccuracy of the Meter, from the date of Processor name’s written request through the date upon which the inaccuracy is corrected, as verified by an independent third- party. 6. Payment of Permit Fees and Fines 6.1. The City is responsible for all State Waste Discharge Permit fees. 6.2. Processor is responsible for all City Permit fee and other rates and charges so long as uniform for the same class of customers or service and facilities furnished. In classifying customers served or service and facilities furnished by the PWRF, the City shall adhere to RCW 55, 67.020(2). 7. System Maintenance 7.1. Processor acknowledges that all City Obligations under this Agreement are subject to and conditioned upon the City’s right and obligation to perform routine and periodic maintenance on the PWRF systems and emergency maintenance as reasonably required from time to time. 7.2. The City shall provide Processor with advance notice of any routine and periodic maintenance activities within ten (10) calendar days of the commencement of such routine and periodic maintenance activities. 7.3.The City may perform emergency maintenance activities as reasonably required under the circumstances. In the case of emergency maintenance activities, the City shall provide notice to Processor as soon as practicable. Page 32 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 21 FG: 100895287.4 Exhibit C Processor Obligations Processor shall supply Influent Wastewater in accordance with the following specifications: Influent Characteristics to Wastewater Treatment System [ Parameter Influent Avg. Annual Daily Flow (MGD)TBD Max. 28-Day Flow (MGD)TBD BOD, Annual Avg. (mg/L)TBD BOD, Annual Avg. Daily Load (lb/d)TBD BOD, Load Max. Month (lb/d)TBD TSS, Annual Avg. (mg/L)TBD TSS, Annual Avg. Daily Load (lb/d)TBD TSS, Load Max. 28-Day(lb/d)TBD TN, Annual Avg. (mg/L)TBD TN, Avg. Daily Load (lb/d) TBD TN, Load Max. 28-Day (lb/d)TBD Temperature (°F)TBD Ph TBD Page 33 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 22 FG: 100895287.4 Exhibit D Pricing Schedule – Pretreatment Phase 3 System Costs Only 1. Base Treatment Fee: TBD 2. Adjusted Treatment Fee: TBD based on information from FCS Group 3. Annual Modifications to the Adjusted Treatment Fee The Adjusted Treatment Fee will be subject to further modification as follows: 1- Commencing on COD, the City will modify the Adjusted Treatment Fee to reflect any percentage adjustment in the Consumer Price Index measured from April 2022 to the month and year immediately preceding the month and year in which COD occurs. This first modification of the Adjusted Treatment Fee will be the Adjusted Treatment Fee calculated and invoiced by the City through March 31 of the first calendar year occurring after the calendar year in which COD occurs. 2- Commencing on April 1 of the first calendar year following the year in which COD occurs, and occurring annually on April 1 of each calendar year through the Term, the City shall modify the Adjusted Treatment Fee based on changes in the Consumer Price Index and/or increases in the amount of Influent Wastewater or Non-Conforming Influent Wastewater accepted by the PWRF system that occurred during the immediately preceding calendar year (e.g., a modified Adjusted Treatment Fee will be calculated and take effect on April 1, 2025 to reflect circumstances occurring from January 1, 2024 through December 31, 2024). The City will calculate such annual modifications to Adjusted Treatment Fee as follows: a. The then-current Adjusted Treatment Fee will be adjusted for any change in the Consumer Price Index occurring from January 1 through December 31 of the prior calendar year; provided, however, that on April 1 of the first calendar year occurring after COD, such Consumer Price Index adjustment shall be measured from the month COD occurred through December 31 of the prior year (e.g. if COD occurs Jun 1, 2024, the adjustment will be measured from June 1, 2024 through December 31, 2024); and b. If the System accepted more than [Processor Max annual flow] MG of Influent Wastewater or Non-Conforming Influent Wastewater during the prior calendar year, the Adjusted Treatment Fee will be increased by .03% per MG for each MG accepted above [Processor Max annual flow] MG. There will be no adjustment for volume of wastewater if the total volume of Influent Wastewater or Non-Conforming Influent Wastewater is less than [Processor Max annual flow] MG. Such annually modified Adjusted Treatment Fee shall remain fixed for the next twelve (12) months, through March 31 of the subsequent year. The City shall document any annual modifications to the Adjusted Treatment Fee and provide [Processor name] a form summarizing the annual modification to the Adjusted Treatment Fee with the first invoice issued after such modified Adjusted Treatment Fee goes into effect. Page 34 of 43 505985890.3 DRAFT 1/27/2023 CITY/FG 23 FG: 100895287.4 4.Pass-Through Costs: The following costs incurred by the City will be passed through to Processor for administrative costs, and will be invoiced to Processor on a monthly basis: o Electricity o Purchased natural gas for system heating use o Solid waste disposal (including anaerobic sludge and periodic digester scrapes and clean- outs) o Consumables (including replacement parts & associated rental equipment) o Major Maintenance Expenses Page 35 of 43 1201 Wilson Blvd, 27th Floor, Arlington, VA. 22209 732.284.4640 burnhamrng.com February 23, 2023 Steve M. Worley Public Works Director City of Pasco 525 N. 3rd Avenue Pasco, WA 99301 Dear Steve, I write in response to letters that were submitted to the Pasco City Council regarding the Council’s consideration of the Processor Wastewater Treatment Agreement for the PWRF Phase 3 Project. My intention is to offer some clarity around issues raised in those letters. First, I believe it’s important to highlight that while this project is complex, we have assembled a highly capable and experienced team to execute it. Burnham is responsible for the development, financing, and overall asset management for the project, as well as for assembling the various technical experts needed within each discipline. The combined Burnham team has years of experience in this exact role on a range of projects, including projects more complex and larger than the PWRF Phase 3 Project. We have brought in a world-class team to execute each technical discipline on the project, including to design the treatment system, engineer and construct it, and provide O&M services. I am confident the right team is in place to make this project successful. Second, it is evident that the renewable natural gas (“RNG”) element of the project continues to create confusion. First of all, we have already secured a 20-year fixed-price contract for the RNG with a large gas utility. This contract should eliminate concerns around potential pricing or demand volatility in the RNG market. Further, the concern that Burnham is taking $350,000 per month in RNG revenue is misplaced. There is a $350,000 base assumption on monthly RNG revenue that drives the calculations as to whether or not we are above or below expected base revenue each month. This was the number used to calculate the base treatment fee, which would have been higher if not for the presence of RNG sales. Both City staff and FCS have gone through the calculations in detail and understand and agree that all of the benefit of RNG sales is being provided to the project. While the focus of the project is clearly and unequivocally wastewater treatment, the RNG provides an enormous financial benefit. In the simplest terms1, the RNG system costs $25 million to build, generates an estimated federal tax credit $30 million and further generates ~$6 million per year of revenue ($180 million over 30 years). Finally, concerns have been raised about the Wastewater Treatment Agreement we have negotiated with the City. The contract is the result of a careful weighing of risks, benefits, trade-offs, and agreements between Burnham and the City. Processors have had access to draft agreements since May and have not previously taken the opportunity to comment to our knowledge. To the extent that the City wants to re- 1 Illustrative, round numbers used for simplicity Page 36 of 43 1201 Wilson Blvd, 27th Floor, Arlington, VA. 22209 732.284.4640 burnhamrng.com open commercial concerns at behest of the Processors, we will consider modifications. In this letter, however, I will only address clear misconceptions that have been raised. • Performance Guarantees on Gross Wen Process: Since drafting the agreement, Burnham has secured a performance guarantee on the Gross Wen process from Swinerton that will be passed through to the City via the provisions of 3.1(i). • No Financial Requirements of Burnham: We are required by the agreement to spend the estimated >$130 million to build this plant on behalf of the City and Processors. There are multiple firm obligations on Burnham (Section 3) and significant penalties for non-performance (Sections 6 and 7) including City’s ability to take over the facility (7.4a), wiping out Burnham’s equity investment. In addition, Burnham and the City have subsequently agreed to a contractual modification that will require Burnham to obtain a performance bond at the City’s request. • No Cost Containment Provisions: In Exhibit F, Item 1 “adjustments cannot exceed $170,000/month” which is a cap, albeit with negotiated exceptions. The exceptions would be unnecessary if we could finalize this agreement and move forward with the work. It’s also worth noting that Swinerton is on a Guaranteed Max Price contract with Burnham, further insulating the project from cost overruns. The intention of this letter is not to discourage important discussion nor is it to suggest that comments are not welcomed. We find these comments to be constructive and are grateful for the input. Our goal is to serve as a partner to the City and the Processors. We have always maintained an open approach to the ideas and requests of all parties, and we continue to stand ready to work with our partners as requested. Thank you, Chris Tynan CEO Burnham RNG, LLC CC: Blanche Barajas, Mayor Craig Maloney, Mayor Pro-Temp Joseph Campos, City Councilmember Irving Brown, Sr., City Councilmember Pete Serrano, City Councilmember David Milne, City Councilmember Zahra Roach, City Councilmember Adam Lincoln, City Manager Page 37 of 43 Pasco Processing Projected Design Criteria Parameter Influent Total Annual Flow (MGD)435 Avg. Annual Daily Flow (MGD)1.19 Max. Month Flow (MGD)2.50 BOD, Annual Avg. (mg/L)3,018 BOD, Annual Avg. Daily Load (lb/d)30,000 BOD, Load Max. Month (lb/d)65,000 TSS, Annual Avg. (mg/L)1,600 TSS, Annual Avg. Daily Load (lb/d)15,910 TSS, Load Max Month (lb/d)42,500 TN, Annual Avg. (mg/L)64 TN, Avg. Daily Load (lb/d)670 FDS, Annual Avg. (mg/L)475 FDS, Avg. Daily Load (lb/d)4,700 pH (s.u.)5.0 – 11.0 Freeze Pack Projected Design Criteria Parameter Influent Total Annual Flow (MGD)25 Avg. Annual Daily Flow (MGD)0.07 Max. Month Flow (MGD)0.11 BOD, Annual Avg. (mg/L)236 BOD, Annual Avg. Daily Load (lb/d)135 BOD, Load Max. Month (lb/d)225 TSS, Annual Avg. (mg/L)236 TSS, Annual Avg. Daily Load (lb/d)140 TSS, Load Max Month (lb/d)225 TN, Annual Avg. (mg/L)70 TN, Avg. Daily Load (lb/d)40 FDS, Annual Avg. (mg/L)515 FDS, Avg. Daily Load (lb/d)300 pH (s.u.)5.0 – 11.0 Page 38 of 43 Twin City Foods Projected Design Criteria Parameter Influent Total Annual Flow (MGD)225 Avg. Annual Daily Flow (MGD)0.62 Max. Month Flow (MGD)1.80 BOD, Annual Avg. (mg/L)7,197 BOD, Annual Avg. Daily Load (lb/d)37,000 BOD, Load Max. Month (lb/d)105,000 TSS, Annual Avg. (mg/L)2,640 TSS, Annual Avg. Daily Load (lb/d)13,580 TSS, Load Max Month (lb/d)50,800 TN, Annual Avg. (mg/L)117 TN, Avg. Daily Load (lb/d)620 FDS, Annual Avg. (mg/L)515 FDS, Avg. Daily Load (lb/d)2,600 pH (s.u.)5.0 – 11.0 Reser’s Projected Design Criteria Parameter Influent Total Annual Flow (MGD)127 Avg. Annual Daily Flow (MGD)0.41 Max. Month Flow (MGD)0.41 BOD, Annual Avg. (mg/L)2,130 BOD, Annual Avg. Daily Load (lb/d)7,300 BOD, Load Max. Month (lb/d)10,200 TSS, Annual Avg. (mg/L)2,130 TSS, Annual Avg. Daily Load (lb/d)7,310 TSS, Load Max Month (lb/d)10,800 TN, Annual Avg. (mg/L)80 TN, Avg. Daily Load (lb/d)230 FDS, Annual Avg. (mg/L)730 FDS, Avg. Daily Load (lb/d)2,500 pH (s.u.)5.0 – 11.0 Page 39 of 43 Simplot Projected Design Criteria Parameter Influent Total Annual Flow (MGD)255 Avg. Annual Daily Flow (MGD)0.70 Max. Month Flow (MGD)1.25 BOD, Annual Avg. (mg/L)3,467 BOD, Annual Avg. Daily Load (lb/d)20,200 BOD, Load Max. Month (lb/d)70,000 TSS, Annual Avg. (mg/L)2,120 TSS, Annual Avg. Daily Load (lb/d)12,360 TSS, Load Max Month (lb/d)20,000 TN, Annual Avg. (mg/L)91 TN, Avg. Daily Load (lb/d)410 FDS, Annual Avg. (mg/L)530 FDS, Avg. Daily Load (lb/d)3,100 pH (s.u.)5.0 – 11.0 Grimmway Projected Design Criteria Parameter Influent Total Annual Flow (MGD)254 Processing Period* Avg. Daily Flow (MGD)1.19 Max. Month Flow (MGD)1.65 BOD, Annual Avg. (mg/L)2,700 BOD, Processing Period* Avg. Daily Load (lb/d)26,730 BOD, Load Max. Month (lb/d)37,150 TSS, Annual Avg. (mg/L)1,000 TSS, Annual Avg. Processing Period Daily Load (lb/d)9,900 TSS, Load Max Month (lb/d)13,770 TN, Annual Avg. (mg/L)21 TN, Avg. Daily Load (lb/d)120 TN, Processing Period* Avg. Daily Load (lb/d)210 FDS, Annual Avg. (mg/L)360 FDS, Avg. Daily Load (lb/d)2,100 FDS, Processing Period* Avg. Daily Load (lb/d)3,560 pH (s.u.)5.0 – 11.0 *Processing period used is June Through December, which includes start- up and clean-up flow/loading Page 40 of 43 Darigold WW Projected Design Criteria Parameter Influent Total Annual Flow (MGD)256 Avg. Annual Daily Flow (MGD)0.70 Max. Month Flow (MGD)0.84 BOD, Annual Avg. (mg/L)3,009 BOD, Annual Avg. Daily Load (lb/d)17,600 BOD, Load Max. Month (lb/d)24,600 TSS, Annual Avg. (mg/L)397 TSS, Annual Avg. Daily Load (lb/d)2,330 TSS, Load Max Month (lb/d)2,790 TN, Annual Avg. (mg/L)197 TN, Avg. Daily Load (lb/d)1,150 FDS, Annual Avg. (mg/L)1,655 FDS, Avg. Daily Load (lb/d)9,700 pH (s.u.)5.0 – 11.0 Page 41 of 43 Gross-Wen Technologies Inc. 404 Main St. Slater, IA 50244 ALGAE.COM Mr. Steve Worley Pasco City Hall 525 N 3rd Avenue Pasco, WA 99301 RE: Response to Processor Letters Dated February 21, 2023 Mr. Worley, On February 21, 2023 you received two letters from resident processors, Simplot and Grimmway Farms. Please submit this letter to City Council in respectful response to those letters for the public record on behalf of Gross-Wen Technologies, Inc. History While GWT is a relatively new company, the RAB technology was originally developed in 2013. The first full-scale RAB system was deployed in 2016. Since then, multiple full-scale projects have been deployed which have demonstrated the efficacy of the technology. GWT is and will remain a wastewater treatment company. And the inclusion of the technology for this project is first and foremost to reduce the nutrient concentration in the wastewater. One of the many benefits of using the RAB system is the nitrogen-rich algae. However, this is not the primary focus for this or any project that GWT is involved. Scalability & Scrutiny concentrations of nutrients. The City, Burnham, 3rd Party Consultants Montrose and E3, and the Washington Department of Ecology have all taken measures to thoroughly scrutinize the RAB solution including pilot methodology, sizing models, and final design proposal. All parties have collectively decided that the RAB is the preferred solution. Page 42 of 43 Gross-Wen Technologies Inc. 404 Main St. Slater, IA 50244 ALGAE.COM Process Guarantee Additionally, GWT is providing a process guarantee, through Swinerton, to Burnham, and ultimately the City and Processors. The Process Guarantee states that GWT will meet the nitrogen removals required by Ecology, however, in the event that the solution does not meet requirements, predefined remedies will be implemented by GWT & Burnham. Life Cycle Cost Analysis Burnham developed a comprehensive 30-year life cycle cost analysis between nitrogen removal technologies. The analysis revealed that the RAB solution provides the least expensive nitrogen removal solution even with a higher capital cost, primarily due to the low energy required and the value of the algae biomass. This analysis did not include any grant funding that the City will possibly obtain exclusively due to the RABs inclusion in the project. Removal of Total Dissolved Solids (TDS) Metro Water Reclamation District (MWRD) of Chicago conducted a full- remove TDS from wastewater. While the RAB was not selected as a TDS removal technology, it is anticipated that some TDS will be assimilated by the algal biomass. Upon start up and commissioning, GWT will work with the City and Burnham to provide monitoring consistent with the anticipated TDS compliance schedule from Ecology. GWT makes no claim that compliance will be achieved without further treatment, but it is possible that the RABs inclusion will provide the additional benefit of TDS removal to the project. Lastly, as I mentioned at the City Council meeting on February 21st, we are grateful for your leadership and the opportunity to be a part of this important project. Sincerely, Philip Gates GWT - Vice President Martin Gross, PhD GWT President & CEO Page 43 of 43