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HomeMy WebLinkAbout6.C.(6)(I c (�) ENVIRONMENTAL AGREEMENT REGARDING IVY TOWER BUILDING THIS ENVIRONMENTAL AGREEMENT REGARDING IVY TOWER BUILDING (the "Agreement ") is made and entered into by and between the City of South Bend, Indiana Board of Public Works and the South Bend Redevelopment Commission (collectively the "Board ") and Union Station Properties, LP, a limited partnership, existing under the laws of the State of Indiana ("Union Station ") (the Board and Union Station are collectively the "Parties "). WHEREAS, Union Station is a party to a certain Contract for Purchase and Sale (the "Purchase Agreement ") for the purchase by Union Station of certain property located at 600 United Drive and 635 South Lafayette Boulevard, in South Bend, Indiana, consisting of 3 land parcels, 2 of which have been developed with larger industrial facilities, and the third parcel encompassing a thin tract of land located between the existing buildings and the adjacent Penn Central Railroad property (collectively "Ivy Tower Building" or "Property "); and WHEREAS, Union Station intends to adaptably reuse the Ivy Tower Building as part of the Union Station Technology Center; and WHEREAS, after the Purchase Agreement was executed, the Board produced an environmental site assessment for the Property indicating certain contamination is possible at and /or under the Property in certain instances in excess of the Indiana Department of Environmental Management's ( "IDEM ") commercial/industrial clean-up criteria or screening levels; and WHEREAS, Union Station will be taking steps to qualify as a Bona Fide Prospective Purchaser ( "BFPP ") under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ( "CERCLA ") and analogous Indiana laws, and intends to apply for a comfort letter from the Indiana Finance Authority's Brownfields Program (the "Brownftelds Program ") that details Union Station's liability protection for pre- existing contamination at the Property and the continuing obligations Union Station must satisfy to maintain its BFPP liability protections under CERCLA and analogous Indiana Laws (the "Comfort Letter'); NOW, THEREFORE, for and in good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Existina Environmental Conditions. Union Station acknowledges that there are certain Hazardous Materials (as defined herein) on, at, or under the Property which are in excess of IDEM's clean -up criteria or screening levels, as described in the Phase Il Environmental Site Assessment dated March 23, 2012, Lead Based Paint Survey dated March 21, 2012, and Asbestos Inspection Report dated March 21, 2012, all prepared by Wightman Petrie, Inc. (collectively the "WP Reports "), copies of which, together with all attachments and enclosures referenced in the WP Reports, are found on a disk attached hereto. Union Station has previously received and reviewed the WP Reports. Union Station acknowledges that there may be PCB contamination on certain parts of the Property as described in the WP Reports. (Collectively, the "Existing Environmental Conditions. ") to: 2. Hazardous Materials Defined. As used herein, "Hazardous Materials" shall refer (a) Any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 ( "RCRA "), as amended from time to time, and regulations promulgated thereunder; (b) Any "hazardous substance" as defined by CERCLA, as amended from time to time, and regulations promulgated thereunder; (c) Any oil, hydrocarbon, petroleum, and related compounds; (d) Any substance that is a pollutant or contaminant or is toxic, ignitable, reactive, or corrosive that is regulated by the City of South Bend, St. Joseph County, the State of Indiana, or the United States of America; (e) Any dry cleaning, laundry or similar cleaning chemicals, solvents, fluids or compounds; (f) Any and all material or substances that are defined as "hazardous waste." "extremely hazardous waste," or a "hazardous substance" pursuant to the applicable state, federal or local governmental law, including asbestos and polychlorinated biphenyls; and (g) Any other matter or material that is a pollutant or contaminant as determined by any government authority applicable to the Property. 3. Indemnification. Subject to the terms of this Agreement, the Board agrees to defend, release, indemnify and hold harmless Union Station and its partners, officers, agents, employees, and any assignees approved under Paragraph 14 (the "Indemnitees ") against and with respect to any and all damages, claims, losses, liabilities and expenses, including without limitation legal fees and environmental consulting or sampling fees or expenses (the "Environmental Costs ") which may he imposed upon, incurred by or asserted against Union Station pursuant to the requirements of any governmental authority, including but not limited to the IDEM and the United States Environmental Protection Agency, and any unrelated third party, arising out of, in connection with or relating to the Existing Environmental Conditions described in paragraph I above, or any other Hazardous Materials, known or unknown, that contaminated the Property on or before the date of Closing as defined in the Purchase Agreement, including without limitation, the Environmental Costs which may be imposed upon, incurred by or asserted against Union Station as a result of the Existing Environmental Conditions (the "Indemnity "). This Indemnity shall not include, and the Indemnitees shall remain solely responsible for, any and all damages, claims, losses, liabilities and expenses, including without limitation legal fees and Environmental Costs arising from (i) any release of Hazardous Materials at the Property `1 or other environmental contamination occurring after the date of Closing as defined in the Purchase Agreement or (ii) any exacerbation by any Indemnitee of the Existing Environmental Conditions or any other environmental contamination covered by the Indemnity. 4. Covenant Not to Sue. The Board hereby covenants not to sue, and releases Union Station and its subsidiaries, divisions, shareholders, members, officers, directors, attorneys, agents, employees, spouses, relatives, heirs, successors and assigns, and any of their respective affiliates, past, present and future from any claims of recovery of, contribution toward, or reimbursement of any costs, fees or expenses incurred by on behalf of the Board to investigate or remediate all Existing Environmental Conditions at the Property, except as may be necessary to assert, and solely for the purpose of asserting, a claim against Union Station's insurance policies. In any such case, the Board shall not seek to recover from Union Station any portion of any judgment against Union Station, and the Board explicitly waives any right to do so. 5. Claims. The Indemnitees shall give the Board prompt written notice of any claim asserted against one or more Indemnitees including, but not limited to, any notice of claim, demand, action, controversy or suit which may give rise to a claim of indemnification under this Agreement. If the claim is covered by the Indemnity, the Board shall undertake the defense of such claim by counsel of its choosing at its sole cost and expense. The Indemnitees shall give the Board and its counsel reasonable assistance and cooperation with respect to such defense. The Board shall not be obligated to pay any legal or defense costs for claims not covered by the Indemnity. If investigative or remedial work is required to resolve any claim covered by the Indemnity, the Board shall have the right to select the environmental consultant and shall pay for such work at its sole cost and expense. The Board shall not be obligated to pay any costs for investigative or remedial work not covered by the Indemnity. Except as provided in this Paragraph 5, Union Station shall not hire any legal counsel or environmental consultant to address any claim covered by the Indemnity, unless it is at Union Station's sole cost and expense. If the Board, within 30 days after notice of any claim covered by the Indemnity, fails to undertake defense, the Indemnitees shall have the right to undertake defense, including compromise or settlement thereof with counsel of their choosing, and to select an environmental consultant to perform environmental investigation and remediation work required to address such claim by an applicable government authority. The Board shall be responsible for reimbursing the Indemnitees for these legal fees and Environmental Costs. The Board shall retain the right to assume such defense and environmental work, with legal counsel and an environmental contractor of its choosing. 6. Termination of Indemnity: Liquidated Damages. The Indemnity set forth in Paragraph 3 above shall automatically terminate on the earlier of: a. The date that is 35 years from the date of this Agreement; or b. The date that Union Station, its successors or assigns, remains in non- compliance with its obligation under the Development Agreement dated (the "Development Agreement "), beyond the Cure Period (as defined herein); provided, however, that for purposes of (ii) hereof, the following subparagraphs shall apply and control in determining whether Union Station, its successors or assigns is in non - compliance: i. For every One Dollar ($1.00) expended by Union Station, its successors or assigns, in accordance with Section 2 of the Development Agreement, Union Station, its successors or assigns, shall receive a "dollar for dollar" credit for each One Dollar ($1.00) expended by the City for environmental and related remediation costs to address contaminants and /or chemicals of concern existing on the Property as of the date this Agreement is executed. To the extent the City spends more in environmental and related remediation costs than Union Station spends in accordance with the provisions of the Development Agreement, the difference, if any, shall constitute liquidated damages. For example, and by way of illustration only, and subject to subparagraph 6(b)(ii) below, if the City spends $8,000,000 for environmental and related remediation costs, and Union Station spends $8,000,000 in accordance with the provisions of the Development Agreement, then Union Station will have met its obligations under this Agreement and the City's obligation under Paragraph 3 above shall not be subject to termination, except as provided by paragraph 6(a) herein. By way of a second example, and subject to subparagraph 6(b)(ii) below, if the City spends $8,000,000 for environmental and related remediation costs, and Union Station spends only $5,000,000 in accordance with the provisions of the Development Agreement, then the difference of $3,000,000 would constitute liquidated damages. ii. Upon notice by the City, Union Station, its successors or assigns, including, without limitation, any lender to any of them, shall have the right to either expend the remaining obligation of the original obligation in accordance with the Development Agreement, or, in the alternative, pay the liquidated damages to the City. In either event, once the committed obligation of $10,000,000 is spent for improvements in the Renaissance District, whether within or without the 10 year time period set forth in the Development Agreement, or the liquidated damages is paid, the Indemnity shall not be subject to termination, except as provided for by paragraph 6(a) herein. Notwithstanding anything to the contrary herein, the City's obligation under Paragraph 3 above shall not be abrogated or otherwise limited once the obligation of Union Station set forth in subparagraphs 6(b)(i) or 6(b)(ii) hereof are met. 4 Before the indemnity may be terminated for non - compiiance, the Board shall notify Union Station in writing of the non-compliance and Union Station, its successor or assigns, shall have 30 days from the date of notice to cure said non- compliance (the "Cure Period ") or, in the alternative, to reach agreement with the Board on a plan to cure the default, which agreement will not be unreasonably withheld. The Indemnity cannot be terminated for non - compliance until the 10 year time period set forth in the Development Agreement for completion of the original obligations of Union Station, its successors or assigns, has expired by its terms, provided, however, that Union Station has complied with the requirements set forth in Section 2.2 of the Development Agreement. 7, Remediation. Subject to the terms of this Agreement, the Board agrees to promptly perform the environmental investigations and corrective actions necessary to remediate the Hazardous Materials at the Property preexisting the date of Closing as defined in the Purchase Agreement (including, but not limited to, the Existing Environmental Conditions) to the extent required by the IDEM and any other governmental authorities with jurisdiction over the Hazardous Materials and contamination at the Property to commercial /industrial standards. The Parties agree that the Board will undertake a study to ascertain whether it is reasonably feasible to remediate to residential standards. The Board shall have 6 months from the date it receives access to the Property in which to determine whether remediating to residential standards will result in an incremental cost of more than $250,000 over the cost to remediate to commercial/industrial standards under Indiana law, it being understood that the Board shall have an obligation to remediate to residential standards if such incremental cost is $250,000 or less, but shall have no obligation to remediate if such cost is more than $250,000. As used herein, "Remediation" means (i) performing environmental property assessment activities (which may include taking soil borings and the installation, sampling and maintaining of groundwater monitoring wells and/or other monitoring points and related activities) on the Property to complete an assessment of the Property as required by IDEM or other governmental authorities; (ii) performing corrective action to diligently remediate such Hazardous Materials consistent with the rules, regulations and requirements of IDEM or other governmental authorities. If such remediation requires the installation, maintenance and operation of any remediation structures that will materially interfere with the interior operations of buildings on the Property, the size and location of such structures shall be approved by Union Station prior to any installation, provided that such approval shall not be unreasonably withheld and shall not prevent compliance with any requirements imposed by IDEM or other governmental authorities. Any remediation shall be considered complete upon the issuance of a letter from IDEM or other governmental authority stating that no further action, or the equivalent, is necessary concerning the Property (an "NFA Letter"). Upon termination of the remediation, the Board shall decommission any remaining monitoring points and other corrective action equipment and restore the surface of the Property affected by the decommissioning to substantially the same condition which existed prior to such decommissioning in accordance with the rules and regulations of IDEM or other applicable government authority. During any environmental remediation, the Parties shall work together and take reasonable steps not to disrupt the businesses of the existing tenants in the Ivy Tower Building, 8, Exposure Controls, Union Station acknowledges that in the Board's performance of any remediation required under this Agreement, the Board may propose applying corrective action standards (including, without limitation, risk -based corrective action standards) and /or the use of exposure controls, which are predicated on the assumptions that (i) the Property will be used for commercial /industrial purposes, unless the Board has remediated the Property to residential standards as provided for in Paragraph 7 herein, at which point the exposure controls will reflect residential use; and (ii) no water wells used to supply water for human consumption, farming or irrigation will be installed or used on the Property. Subject to the foregoing, Union Station acknowledges and agrees to accept any such real property covenants, restrictions or environmental notices that are required or permitted by IDEM or any other applicable governmental authority as part of a particular remediation plan to address Hazardous Materials contamination (collectively, a "Restrictive Covenant "). The parties agree that such Restrictive Covenant shall be set forth in an appropriate instrument approved by IDEM or other applicable government authority to be recorded in the public records as part of any remediation plan that the Board formally proposes to address Hazardous Materials at the Property. 9. Access. Union Station shall cooperate in allowing the Board and its agents and contractors access to and use of the Property at all reasonable times to enable the Board and its agents and contractors to obtain reasonable and necessary soil and groundwater data and to fully implement any remediation the Board is required to perform under this Agreement. This license to access the Property shall continue for as long as is necessary to complete the remediation. The Board will provide Union Station with reasonable prior notice of its access to the Property. Union Station will take due care to ensure that its agents, employees, and invitees are aware of the location of the monitoring wells in order to avoid damage thereto and potential exacerbation of any Hazardous Materials. 10. Samplina and Tests by Union Station. Union Station agrees that it shall not, directly or indirectly, either itself or through its agents, employees or contractors, conduct, order, or permit any sampling, tests or inspections of any kind relating to the possible presence of Hazardous Materials contamination of any soil, water, aquifer or other environmental media in, on, or under, or in the vicinity of the Property during the term of the Indemnification unless required to do so by law. This paragraph notwithstanding, Union Station may permit inspections in an emergency, but must notify the Board immediately after such inspection. If Union Station desires that any sampling, testing, or inspections not required by law be performed on or under the Property, Union Station shall notify the Board in writing of such desire and the basis for its request. The Board may thereafter, in its reasonable sole discretion, determine whether and how to (i) permit Union Station to perform such sampling, testing or inspections; or (ii) conduct any sampling, testing or inspections, using such environmental consultants of the Board's choice, and provide split samples for independent analysis at Union Station's expense. 11. Waiver of Board Defenses Based on Union Station Knowledge of Environmental Defects at the Property. The Board expressly waives any legal defenses, either in law or equity, 0 to the Indemnity set forth herein based on Union Station's actual or constructive knowledge of the existence or potential existence of environmental defects on, at, or under the Property. 12. Board Responsibility for Additional Construction Costs. The Board agrees to reimburse Union Station for the reasonable costs of additional preconstruction and construction work required by IDEM or another applicable governmental authority due to the Existing Environmental Conditions or other contamination by Hazardous Materials covered by the Indemnity (the `Incremental Costs "), but only to the extent such Incremental Costs would not be incurred by Union Station for preconstruction or construction activities at another property which was not contaminated by such Hazardous Materials. The Board acknowledges that Union Station is considering the use of a portion of the Ivy Tower Building above the 5'h Floor for residential use. This paragraph, however, shall not apply to, and the Board shall have no obligation to pay for, any costs associated with any additional reconstruction or construction work related to residential use that is performed above the 4' Floor of the Ivy Tower Building. The Board shall have the right to review and approve any and all activities or plans that may result in such Incremental Costs in order to minimize such Incremental Costs, provided that if the Board objects to any such activities, plans or Incremental Costs, the Board shall propose an alternative that is consistent with: a) all applicable federal and Indiana laws, including without limitation, implementing regulations and guidance; and b) Union Station's redevelopment and use of the Property. The Board's review of activities and plans that may result in Incremental Costs shall not exceed 30 business days and approval shall not be unreasonably withheld. 13. Board Responsibility for Additional Costs of Obtaining Comfort Letter. Union Station shall use commercially reasonable efforts to (i) qualify as a BFPP under CERCLA and analogous Indiana laws and (ii) to obtain a Comfort Letter from the Indiana Finance Authority's Brownfields Program detailing Union Station's liability protection for pre- existing contamination at the Property and the continuing obligations Union Station must satisfy to maintain its BFPP liability protections under CERCLA and analogous Indiana Laws. All costs of applying for and maintaining the Comfort Letter shall be Union Station's sole responsibility. Notwithstanding the foregoing, if IDEM or the Indiana Finance Authority Brownfields Program require environmental investigation or remediation work, either on the Property or off -site as a condition for granting the Comfort Letter or as a necessary condition to maintain the liability protections provided therein, Union Station shall promptly notify the Board in writing and the Board shall determine in its sole discretion whether (i) the Board will have the required work performed by an environmental consultant of its choice; (ii) Union Station should perform the work with the Board reimbursing Union Station for all reasonable costs; or (iii) the Board will release Union Station from its obligation hereunder to seek the Comfort Letter and BFPP status after which time Union Station will be solely responsible for any additional costs it incurs to obtain any of the protections outlined in this Paragraph. In the event of subparagraph (iii), the Board will reimburse Union Station up to $15,000 for legal costs and up to $15,000 for all other costs including environmental consultant's costs. 14. Assignment of A.a_reement. This Agreement is personal to Union Station but may be assigned by Union Station (or any other person) subject to the express written approval of the Board, which approval shall not be unreasonably withheld. 7 15. No Third Party Benefit. This Agreement is not intended to inure to the benefit of any third party, against whom the Board reserves any and all rights, claims and defenses. 16. Notices. All notices to be given under this Agreement shall be in writing and shall be deemed to have been given and served when delivered in person, by Federal Express, UPS or similar overnight carrier, or by depositing in the United States mail, postage pre -paid to the address set forth below or such other address as either party may have last specified by written notice to the other: If to the Board: City of South Bend, Indiana Board of Public Works Attn: Don Inks 12'h Floor, County -City Building, South Bend, Indiana 46601 With a copy to: Thao T. Nguyen Plews Shadley Racher & Braun LLP 53732 Generations Drive South Bend, Indiana 46635 -1539 If to Union Station: Union Station Properties, LP Attn: Kevin M. Smith 6561 Lonewolf Drive, Suite 100 South Bend, Indiana 46628 With a copy to: Stephen A. Studer Krieg Devault LLP 4101 Edison Lakes Parkway Suite 100 Mishawaka, Indiana 46545 17. Multiple Counterpart s. This Agreement may be executed in multiple counterparts, each of which shall be considered an original with counterparts signed by one party when combined with counterparts signed by other parties to this Agreement constituting an original contract. 18. Paragraph Headings. This Agreement shall be construed without reference to paragraph headings which are inserted only for convenience of reference. 0 19. Entire Agreement. This instrument contains the entire agreement of the parties relating to environmental investigation, remediation, and indemnification for the Property and supersedes all prior oral or written understandings, agreements or contracts, formal or informal, between the parties hereto pertaining to said subject. 20. Controlling Effect of This Agreement. To the extent that any provision in this Agreement conflicts with any provision of the Purchase Agreement, this Agreement shall control. 21. Most Favored Nations Provision. Notwithstanding anything to the contrary in this Agreement, the parties recognize and agree that the agreements set forth in this Development Agreement represent substantial compromises on the part of both parties with respect to their respective obligations and responsibilities. In particular, in response to a request by Union Station for an extended term on the indemnification obligation by the Board, the Board has stated that its obligation in this Agreement to indemnify the Property for a term of thirty -five (35) years represents the longest indemnification term that will be offered by the Board and the Board has further represented that the thirty -five (35) year term will not be exceeded in subsequent transactions with other parties in connection with environmental contamination associated with Brownfield properties within the City of South Bend with which the Board offers indemnification. Accordingly, the Board has agreed in good faith that it shall not offer to any other similarly situated property owner, contingent or otherwise, an indemnification term in excess of thirty -five (35) years on Brownfield property that is within the City of South Bend. If the Board offers an indemnification term more favorable to any other property owner, contingent or otherwise, then the term of thirty -five (35) years set forth in Section 6.a. of this Agreement shall be revised so that Union Station, its successors or assigns, shall obtain a term at least as favorable. IN WITNESS WHEREOF, the undersigned executed and delivered this Environmental Agreement Regarding Ivy Tower Building on the date set forth below the name of each. UNION STATION, LP Its: Dated: CITY OF SOUTH BEND, INDIANA BOARD OF PUBLIC WORKS Gary A. Gilot, President Donald E. Inks, Member Kathryn Roos, Member Michael Mecham, Member Mark Neal, Member Linda M. Martin, Clerk SOUTH BEND REDEVELOPMENT COMMISSION i President ATTEST: Secretary 10