title
Asset Purchase Agreement between Gainesville Renewable Energy Center, LLC and the City of Gainesville d/b/a Gainesville Regional Utilities (B)
explanation
Initial review and discussions: In June 2015, under the direction of a new General Manager for Utilities, Utilities staff undertook an exhaustive review of the Power Purchase Agreement (PPA) between Gainesville Renewable Energy Center, LLC (GREC) and the City. In the course of this review, staff analyzed the financial and operational impact of the PPA. The core of the PPA's financial impact is the City's obligation to pay GREC $212,000 a day for what is termed "Available Energy." This cost represents GREC's cost of ownership and fixed cost of operations. Put simply, the cost of ownership is GREC?s debt payment and the return to its investors. The fixed costs of GREC's operations are effectively GREC's costs of being available to generate (staff, rolling stock and other monthly bills, excluding fuel and consumables). Utilities staff determined that a buyout of the PPA could generate savings in the hundreds of millions of dollars if the City could negotiate a reasonable buyout price.
In late October 2016, the General Manager desired to begin discussions with GREC's Manager regarding a potential purchase of the biomass facility. GREC Management required a Non-Disclosure Agreement ("NDA") in order for those discussions to begin. At varying points in November and December 2016, Utilities Management and a Utilities consultant signed the NDA. In short, the NDA required each party to "keep confidential all aspects of its oral communications with the other Party."
In January 2017, Utilities Management requested the City Attorney's Office assist with an offer to purchase document. In order to enable Utilities Management to freely discuss the matter and receive legal counsel without causing Utilities Management to violate the terms of the NDA, two attorneys with the City Attorney's Office signed the NDA. A...
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