(2)AR 032007 Lease Agreement (Biosolids)

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provides that Biosoils will initially treat up to 40 wet tons per day of the City's biosolids. Upon the earlier of (i) the final due date of the bonds used to finance the Biosolids Drying Facility; or (ii) an approval in expansion of the Biosolids Drying Facility by the City, Biosoils will treat up to 81 wet tons per day of the City's biosolids or the equivalent of 125% of the average wet tons generated by the City in the prior year, whichever is greater. 5. Biosolids would pay the City lease payments in the form of a host fee that would equal $1.00 per ton for additional municipal sewage that is treated at the Biosolids Facility (the "Host Fee") up to its initial capacity of 1,260 wet tons per day. The $1.00 per ton Host Fee would increase in stages depending on the amount of biosolids accepted for processing and the authorized capacity of the facility. If the Biosolids Drying Facility is expanded beyond the initial capacity or 20 years pass, then the Host Fee is established at $2.00 plus an additional amount calculated based upon inflation rates using the Producer Price Index for Intermediate Materials, Supplies and Components published by the U.S. Department of Labor. In sum, the primary benefits to the City are (1) that Biosoils will treat all of the City's biosolids at no cost to the City; and (2) the City will receive lease payments equal to $1.00 to $2.00+ per wet ton of biosolids received from other sources. Other Benefits According to Biosoils, other benefits to the City include the following: 1. CMFA Issuance Fee (25% of first year fee): $25,000 2. Community Development and Planning Department Fees (Plan Check & Permits): $185,000 3. Sewer Hookup Fees: $2,400,000 4. Annual water and sewer payments: $200,000. 5. Annual purchase of electric power and sale back to City's Utility as renewable energy: $350,000. Biosoils has also agreed, to the extent possible, to require contractors to make Colton the point of sale for equipment purchases so that the City gets additional sales tax credit. FINANCIAL IMPACT: