17-07 INTEK/INKOT Special Rate Agreement

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IN Tek IN Dote 30755 Edison Road New Carlisle, Indiana 46552 -9695 February 22, 2017 The Honorable Council of the City of South Bend 4th Floor County -City Building South Bend, IN 46601 Filed in Clerk's Office FEB 2 2 2017 KAREEMAH FOWLER CITY CLERK, SOUTH BEND, IN Re: Resolution Approving Special Rate Agreement between the City of South Bend, Indiana and UN Tek L.P., a Delaware Limited Partnership ( "I N Tek ") & UN Kote, L.P., a Delaware Limited Partnership ( "UN Kote ") ( "UN Tek and I N Kote are collectively referred to as" UN Tek & Kote ") regarding Waste Water Fees, Section 17 -29 of the City Code ( "Agreement ") Dear Council Members: I am submitting the Agreement described above which was approved by the Board of Public Works ( "Board ") at its February 14, 2017 meeting. A public hearing was held and no one from the public spoke against the approval of the Agreement. This Agreement is tendered now to the Council for approval under Section 17 -29 of the City Code, ( "Ordinance ") a copy of the Ordinance is also provided. The Ordinance provides in pertinent part: The Board is authorized to enter into a special rate contract where customers can show clearly definable reductions in costs to the sewage works. Any reduction in rates are limited to such reduced costs The contract is only effective after the Council approves it by Resolution UN Tek & Kote provided the Board with written information substantiating the "clearly definable reduction in costs to the sewage works." This information shows two (2) sewer trunk lines with a present replacement value of 16 million dollars were constructed without any City contribution. I N Tek & Kote paid through the increment in property taxes generated by the construction of their facilities the full cost of the construction. The annual savings to the City for these costs is $ 320,000 per year over a 50 year useful live of the sewer lines. That savings is more than the annual reduction which UN Tek & Kote will have under the ten (10) year Agreement. The reduction is 5% in 2017 of the Base Rate as defined in the Agreement; 10% in 2018 and 14 % for 2019 through December 31, 2026. In addition to the savings the City received from not having to construct these 2 Sewer lines, I N Tek & Kote pay 8 % of its Base Rate for PILOT for services it does not require or use from the City and the 49.5 % of the Capital Plan of the City for sewer separation allocated to the Base Rate is not necessary for I/N Tek & Kote waste water since a dedicated line directly to the Waste Water Treatment Plant prevents any need for sewer separation. Nonetheless UN Tek & Kote pay in Page 1 Partnerships between subsidiaries of ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation