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REQUEST FOR COUNCIL CONSIDERATION Meeting Date: September 13, 2016 Resolution- Approving an Amendment to 1989 Settlement Agreement Between the City and Army OVERVIEW: In front of you this evening is a Resolution to adopt a First Amendment to the 1989 Settlement Agreement between the City and the Army related to the Twin Cities Army Ammunition Plant (“TCAAP Agreement”), and authorizing the Mayor to execute the First Amendment on behalf of the City. As the Council is aware, the City and Army have been negotiating potential resolution of claims since the contaminant 1,4 Dioxane was discovered in the Jordan and Prairie du Chien aquifers in the Spring of 2015. The City’s staff and Army have reached an agreement on further payments by the Army to fund additional treatment of groundwater. The TCAAP agreement funded construction of the City’s existing carbon filtration system, which treats tetrachloroethylene (TCE) originating from TCAAP. Carbon filtration cannot treat 1,4 Dioxane. The TCAAP Agreement reserved the City’s rights to bring additional claims to new capital projects (but not operating expenses) necessary to treat contaminants not discovered as of the 1989 settlement. All parties agree that 1,4 Dioxane is a newly-discovered contaminant, and the City and Army have been negotiating potential resolutions since the discovery. The First Amendment will provide $10,565,317 to the City in a lump sum payment. The payment reflects the following components: • 100% of the presently-estimated capital costs of the ultraviolet-oxidation treatment system described to the City in the December 2015 Feasibility Study; • A 20% contingency on the estimated capital costs to reflect future expense uncertainties in constructing the treatment system; • 100% of the City’s staff, administrative, engineering, testing, and legal costs incurred through June, 2016; • 100% of the costs of installing variable pumps to efficiently blend groundwater until the new treatment system comes on-line; and • Costs associated with lost water revenues arising from the irrigation ban and interim lost use of the City splash decks. In exchange for the settlement payment, the City will release the Army from all claims related to 1,4 Dioxane that comes from TCAAP. The City reserves all its rights regarding other possible contaminants and for 1,4 Dioxane from other possible sources. 49