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CITY COUNCIL ITEM NO. 10

Meeting Date: April 23, 2002

Subject/Title: Approve a resolution authorizing the City Manager to execute a contract with Recycled Fibers for the sale of all secondary fiber produced at 375 Sunset Road, Brentwood, CA 94513 and a contract for the lease of a cardboard baler.

Submitted by: Jon Carlson, Solid Waste Manager

Approved by: John Stevenson, City Manager


RECOMMENDATION 

Approve a resolution authorizing the City Manager to execute a contract with Recycled Fibers for the sale of all secondary fiber produced at 375 Sunset Road, Brentwood, CA 94513 and a contract for the lease of a cardboard baler.

PREVIOUS ACTION

None

BACKGROUND

For the past year, the City of Brentwood Solid Waste Division has been collecting cardboard from its operations and loading it loose and unsorted to Recycled Fibers, a processing plant in Stockton. During that period, staff evaluated the possible purchase of a baler. A baler allows for better economies of scale in terms of trucking and a better price at the gate of the mill. 

Staff determined that purchasing a baler would not be the best option at this point in time. Considering the growth of the operation and the possible future reconfiguration of the transfer facility, a lease option would be a more favorable alternative. This lease provides for the installation, maintenance, training and trucking to be bundled together and paid for through the revenues from the sale of the cardboard. 

The lease provides the City a great opportunity to maximize its revenues for the next several years while we evaluate our future needs. 

FISCAL IMPACT

There are no additional expenses or costs to lease the baler. Costs are built into the revenues of the sale of the cardboard.

Unsorted, unbaled cardboard was generating approximately $13,000 annually at $25/ton. Baled and sorted cardboard will generate nearly double the revenue, $26,000 at $50/ton. Therefore, a net increase in revenues of roughly $13,000 per year will be generated for the Solid Waste Enterprise.

Attachment(s)
· Resolution
· Recycled Fiber Sale Agreement
· Recycled Fiber Baler Lease


RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT WITH RECYCLED FIBERS FOR THE SALE OF ALL SECONDARY FIBER PRODUCED AT 375 SUNSET ROAD, BRENTWOOD, CA 94513 AND APPROVE A CONTRACT FOR THE LEASE OF A CARDBOARD BALER.


WHEREAS, the City of Brentwood Solid Waste Division has been collecting cardboard and trucking it off site loose and unsorted; and

WHEREAS, Recycled Fibers, a paper mill that has been purchasing the City’s cardboard for the last year, has a baler for lease that will generate additional revenues for the SW Enterprise; and

WHEREAS, the City shall increase its revenues by $13,000 per year with the use of this baler.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood hereby approves the attached Secondary Fiber Purchase Agreement and Equipment Rider for lease of a baler from Recycled Fibers.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 23rd day of April, 2002 by the following vote:

AYES: 
NOES: 
ABSENT: 


_____________________________
Michael A. McPoland, Sr.
Mayor

ATTEST:

__________________________________
Karen Diaz, CMC
City Clerk

SECONDARY FIBER PURCHASE AGREEMENT/PROPOSAL


THIS AGREEMENT is made as of this thirty-first day of March, 2002, between THE NEWARK GROUP, INC., a New Jersey corporation d/b/a RECYCLED FIBERS DIVISION, WESTERN REGION having offices at 800 West Church Street, Stockton, CA, 95203 ("Buyer"), and the City of Brentwood, a California City, having its principal place of business at 375 Sunset Road, Brentwood, CA 94513 ("Seller").

For good and valuable consideration receipt of which is hereby acknowledged, the parties agree as follows:

1. AGREEMENT TO PURCHASE AND SELL

Buyer agrees to buy, and Seller agrees to sell, all secondary fiber produced by Seller at the following location(s): 375 Sunset Road, Brentwood, California, 94513, on the following terms and conditions:

Check box if a schedule of additional locations is attached.

A. Price. The purchase price (“Price”) will be determined by Buyer based upon the prevailing market conditions for purchasing the relevant grade of secondary fiber. Buyer shall endeavor to notify Seller of the Price by the fifteenth day of each calendar month. That Price shall be effective for purchases made, or to be made, during that full calendar month, unless Buyer notices Seller of a Price change due to changes in market conditions. If the Price for the relevant grade of secondary fiber should be a negative Price, Seller shall pay that Price to Buyer as consideration for Buyer’s services in removing the secondary fiber from Seller’s premises. 

B. Minimum Quantity. Seller agrees to sell to Buyer at least the following amounts of the following grades of secondary fiber, as referenced in the most recent Paper Stock Industries Scrap Specification Circular 2001-Guidelines for Paper Stock PS-2001 Domestic Transactions, as may be amended or superseded (the "PS Circular"):

GRADE MINIMUM TONS PER MONTH 
Baled Cardboard All Tons Generated


___ Initial here if the grade is not listed in the PS Circular. The grade is based on _________________________ (the "Other Standard").

C. Grade And Quality. The grade and quality specifications of secondary fiber to be purchased under this Agreement shall include the following:

GRADE PS CIRCULAR # OTHER STANDARD: OCC 11

Buyer shall only be obligated to buy secondary fiber that meets the quality specifications published in the PS Circular or, if applicable, the Other Standard specified above. Seller warrants that the secondary fiber that is being sold pursuant to this Agreement shall conform to those specifications. In addition, Seller 
agrees to make changes in procedures, production practices, grades and quality specifications requested by Buyer, in its reasonable discretion, to meet the requirements of the paper mills that purchase the secondary fiber from Buyer.


________ Initial here if Buyer is obligated to purchase only baled secondary fiber.

________ Initial here if Buyer will purchase non-baled fiber.

2. TERM OF THIS AGREEMENT

The initial term of this Agreement will begin on March 31, 2002 and continue until March 30, 2005. The term of this Agreement will continue to renew for successive terms of 30 days unless either party gives written notice to the other party of its intent to terminate the agreement 30 days prior to the date of termination.

3. PAYMENT TERMS; STATEMENTS

A. Buyer shall provide to Seller a monthly purchase statement reflecting the amount Buyer owes to Seller. That statement will reflect the scale weight determined by the receiving mill for secondary fiber accepted by that mill. Any adjustments made by a receiving mill due to the quality of the secondary fiber shall be charged to Seller. Upon Seller's request, Buyer shall make available to Seller copies of the mill's statement of the weight of each shipment that is covered by the current monthly statement. Buyer's monthly purchase statement shall be deemed to be accurate and approved by, and binding on, Seller unless Seller delivers to Buyer specific written objections within 20 days of the date of the statement.

B. Buyer will pay Seller as follows: (Initial One)

________ within ___ days of Buyer's monthly purchase statement 
________ within ___ days of receipt of Seller's invoice 
____X___ by the 15th day of each calendar for purchase made in the prior calendar month 

C. Should Seller have any indebtedness or other obligations that are due and owing to Buyer, Buyer may offset those obligations against the payments that are due Seller under this Agreement. 

4. TRANSPORTATION

Buyer shall provide a pickup schedule, which Buyer may revise from time to time in its reasonable discretion. Seller and Buyer shall mutually agree on the pick-up location. Seller shall provide unobstructed access to that location to Buyer's reasonable specifications. Seller shall also provide shipping information (including trailer, grade, certified weight ticket, etc.) for each shipment, as may be reasonably requested by Buyer. Unless otherwise agreed by Buyer and Seller in writing, all shipments shall be F.O.B. Seller's dock.

5. CONTAMINATION

Seller shall implement paper grading and, if Buyer is purchasing baled secondary fiber, baling procedures reasonably acceptable to Buyer that minimize the possibility of contaminating the secondary fiber and maximize Seller's revenues. 

6. INDEMNITY; LIMITATION OF LIABILITY

A. It is understood that each party under this Agreement has control of its respective activities to be performed hereunder. Accordingly, neither party shall be liable for injury or damage to persons or property caused by the other, its employees, agents or assigns. Each party, therefore, agrees to protect, indemnify and hold the other free and harmless from any claim, demand or liability (including legal fees and disbursements) arising from any injury or damage caused by said indemnifying party. 

B. Seller hereby waives any claim against Buyer (and its officers, employees and agents) relating in any way to the terms or performance of this Agreement for any special, indirect or consequential damages and, to the fullest extent permitted by law, for any punitive damages.

C. This provision shall survive any expiration or termination of this Agreement.

7. MISCELLANEOUS

A. Neither Buyer nor Seller shall be liable for its failure to perform its obligations hereunder (other than payment obligations) if that failure is caused by events or conditions reasonably beyond the control of the defaulting party, including, without limitation, fire, flood, strikes, threats of strikes, or other labor difficulties.

B. In the event of a change in control, sale, merger (if Seller is not the surviving entity), sale of substantially all the assets or acquisition of Seller, Buyer may terminate its obligation to buy secondary fiber under this Agreement upon 30 days' written notice to Seller. Within 30 days of that termination, the balances and other sums outstanding under this Agreement, and under any note or other obligation owing by Seller to Buyer, shall be paid in full.

C. This Agreement constitutes the entire agreement between Buyer and Seller with respect to the transactions contemplated hereby and supersedes all prior agreements and understandings with respect to the subject matter hereof. Neither Buyer nor Seller has made any agreements, representations nor warranties with respect to the subject matter hereof, except as specified in this Agreement. This Agreement may not be amended nor may compliance with its terms be waived, except pursuant to a writing signed by the party to be charged.

D. This Agreement is binding upon, and inures the benefit of, Buyer and Seller, and their respective successors and assigns, provided that Seller may not assign any interest in this Agreement without first obtaining the written consent of Buyer, in Buyer's absolute discretion. 

E. All terms of this agreement and the duties, rights and remedies of the parties hereunder shall be governed by the substantive laws of the State of California, without regard to its conflicts of law principles. 

F. Any notices shall be sent via certified mail, recognized overnight delivery service or hand delivered to the address for a party set forth in the caption of this Agreement, or to such other address as Buyer or Seller, as the case may be, shall designate in writing.

G. This Agreement may be executed in counterparts. 

H. Buyer and Seller hereby knowingly, voluntarily and intentionally waive any right to request a trial by jury in connection with any litigation or other proceedings relating in any way to this Agreement or to Buyer's purchase of secondary fiber from Seller.


____X__ _____ Rider. (Initial if a Rider is attached.) If a Rider is attached, any reference to this Agreement shall be deemed to include the Rider.


IN WITNESS WHEREOF Buyer and Seller have caused this Agreement to be executed as of the date first written above.


SELLER: BUYER: 
___________________________ THE NEWARK GROUP, INC.
CITY OF BRENTWOOD RECYCLED FIBERS DIVISION
375 Sunset Road WESTERN REGION 
Brentwood, CA 94513 

By: _____________________________ By: _____________________________
Name: John Stevenson Name: Crawford Carpenter
Title: City Manager Title: Vice President/General Manager


TO BE USED WITH SECONDARY FIBER PURCHASE AGREEMENT 
NO RENT IS CHARGED FOR USE OF EQUIPMENT


EQUIPMENT RIDER

Dated: March 31, 2002

USER: CITY OF BRENTWOOD, CALIFORNIA 94513

OWNER: THE NEWARK GROUP INC., a New Jersey corporation, d/b/a, RECYCLED FIBERS DIVISION, WESTERN REGION.

User and Owner hereby agree that the following provisions are hereby made part of the attached Secondary Fiber Purchase Agreement ("Purchase Agreement") of this date between Owner and User:

1. Bailment. The Owner hereby entrusts the following equipment (the "Equipment") to User, as bailee, subject to the terms and conditions in this Rider:

TYPE MAKE SERIAL NO. 
Marathon
Gemini

Any additions to, and substitutions for, the above listed items shall be deemed to be part of the Equipment. All Equipment shall at all times be and remain the exclusive property of Owner.

2. User's Duties. User agrees to do each of the following:

(a) Use the Equipment, solely to hold or bale the secondary fiber that Owner is purchasing pursuant to the Purchase Agreement and for no other purposes;

(b) Keep the Equipment at a mutually agreeable location at User's facility at and not move the Equipment without obtaining Owner's prior written consent, in Owner's absolute discretion;

(c) Maintain exclusive possession and control of the Equipment and permit no one else to use the Equipment;

(d) Use the Equipment only in accordance with the manufacturer's specifications and applicable law; 

(e) Keep the Equipment clean, safe and secure and promptly notify Owner in writing if the Equipment is damaged or not working properly so that the Owner may maintain the Equipment in good working order;

(f) Make no modifications or improvements to the Equipment without the Owner's prior written consent;

(g) Maintain casualty insurance on the Equipment for its full insurable value naming Owner as sole loss payee and liability insurance naming Owner as additional insured, all in form and substance reasonably acceptable to Owner and provide evidence of that insurance reasonably acceptable to Owner when and as requested by Owner;

____ ____ Initial here if User is not required to maintain insurance.

(h) At Owner's request, execute and cause to be filed in all appropriate jurisdictions UCC-1 financing statements and continuation statements that evidence Owner's ownership interest in the Equipment;

(i) At Owner's request, affix and maintain a plaque or sticker on the Equipment provided by Owner, clearly noting Owner's ownership interest in the Equipment;

(j) Protect Owner's interest in the Equipment and defend any claims with respect thereto with counsel satisfactory to Owner and indemnify and hold Owner harmless with respect to any such property ownership claims or loss relating thereto (including, without limitation, reasonable attorneys fees and disbursements);

(k) Permit Owner's employees and agents to inspect the Equipment during normal business hours, upon request.

(l) User agrees that during the Lease Term, in addition to the rent and all other amounts provided herein to be paid, it will promptly pay all taxes, assessments and other governmental charges (including without limitation penalties and interest, if any, and fees for titling or registration, if required) levied or assessed, (a) upon the interest of the User in the Equipment or upon the use or operation thereof; or on the earnings arising therefrom or, and (b) against Owner on account of its leasing the Equipment to the User, or the rent herein provided for, or the earnings arising therefrom, exclusive, however, of any taxes based on net income of Owner. 

3. Condition of Equipment. In accepting delivery of the Equipment, User shall be deemed to have acknowledged that the Equipment is in good condition and in good working order.

4. Termination. If (a) the term of the Purchase Agreement expires or is terminated, (b) Owner no longer has any duty to make purchases under the Purchase Agreement, (c) User breaches any provision of the Purchase Agreement (including, without limitation, any provision of this Rider), or (d) User defaults in any other existing or future obligation to Owner, then User's right to use and possess the Equipment shall be deemed to be automatically terminated.


5. Repossession. If User's right to use the Equipment under this Rider expires or is terminated for any reason, then User shall immediately follow Owner's instructions to make the Equipment available for repossession by Owner. If User violates this or any other provision of this Rider, Owner shall have all rights and remedies that are available at law or in equity.

6. Specific Enforcement. Without limiting Owner's rights or remedies, the parties hereto acknowledge that it would be impossible to measure the damages that would result if User should violate paragraph 5 of this Rider. Accordingly, if such a violation occurs and Owner institutes an action for the specific enforcement of paragraph 5 of this Rider, User hereby waives the defense that an adequate remedy at law exists and consents to the specific performance of that provision.

7. Indemnification: User shall hold harmless and indemnify Owner for all losses, costs, payments, expenses and liabilities (including, without limitation, reasonable legal fees and expenses) relating in any way to: (a) any claims for injury, including death to persons, or damage to property, resulting, or allegedly resulting, from operation or use of the Equipment; (b) any damage to the Equipment, other than ordinary wear and tear occasioned by the use of the Equipment in accordance with the terms of this Rider and Owner's instructions, (c) Owner's repossession of the Equipment after User's violation of this Rider or the Purchase Agreement (including without limitation, this Rider); (d) Any use of the Equipment to hold or bale secondary fiber that is sold to anyone other than Owner (which losses shall be deemed to include, without limitation, the revenues that Owner would have earned if the secondary fiber were sold to Owner); (d) Owners costs or expenses in enforcing its rights and remedies against User and (f) any fees, costs, expenses or taxes imposed or charged by any governmental entity in connection with User's use or possession of the Equipment. This provision shall survive any expiration or termination of this Agreement. 


8. No Warranty. OWNER MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, QUALITY, DESIGN OR PERFORMANCE OF THE EQUIPMENT. USER ACCORDINGLY AGREES NOT TO ASSERT ANY CLAIM AGAINST OWNER BASED ON ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED.


9. No Limitation of Agreement. This Rider is intended to supplement, and not to limit in any way, Owner's rights and remedies under the attached Secondary Fiber Purchase Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Rider as of the date first written above.

LESSEE: LESSOR:
CITY OF BRENTWOOD THE NEWARK GROUP, INC.
375 Sunset Road RECYCLED FIBERS DIVISION,
Brentwood, CA 94513 WESTERN REGION

By:_____________________________ By:_______________________________
Name: John Stevenson Name: Crawford T. Carpenter
Title: City Manager Title: Vice President/General Manager