Staff recommends that City Council approve the agreement with Knife River.

The City entered into a Purchase Agreement with Knife River (KR) on October 15, 2019, to purchase land near Hesper Road and Shiloh Road to construct a water treatment plant and storage reservoirs.  There were many conditions included in the Purchase Agreement. City staff and KR seek to enter into a new agreement to update the conditions that have been met and refine timeframes and terms for the conditions that have not been met to date.  This new agreement is the attached Mutual Release and Settlement Agreement (Settlement). The primary terms of the Settlement are as follows:

• The Settlement will replace the Purchase Agreement
• City agrees to use reasonable efforts to process and otherwise assist KR in obtaining approval of Annexation and Zoning requests submitted by KR.  This does not hold the City to a result for either annexation or zoning.
• Water and wastewater connections will be stubbed to several locations on the KR property.
• Right of way, private contract, reimbursement and construction fees associated with the connections will be waived. SDFs for individual buildings are not being waived. 
• Specifications for the movement of material from the City's property to the KR property are defined.
• The City will allow KR to discharge stormwater to the City's stormwater facility south of Hesper Road.  Water quality requirements for stormwater generated on the KR site are not waived.
• The City will pay KR $1.75M to move material from the reservoir site to KR's site.

City Council may:

• Approve the Agreement with Knife River; or,
• Not Approve the Agreement with Knife River.  If the Agreement is not approved, material cannot be moved from the West End reservoir site onto their property which will delay the completion of the reservoir project. 

The Agreement stipulates that the City will pay KR $1.75M to use their site as a disposal site for material removed from the reservoir site.  There are waivers of fees associated with the connection to the City's water and sewer system.  These fees were waived in the initial agreement that has been in place since 2018 so they are not new waivers.  The agreement does not waive system development fees for future site developments.  There are liquidated damages defined in the agreement for not completing tasks at agreed upon times.  City staff does not anticipate these liquidated damages being assessed as the timeframes to complete the work are adequate.