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• � <br /> LEGAL DEPARTMENT MEMORANDUM <br /> No. 2003-12 <br /> September 10, 2003 <br /> TO: Honorable Mayor Osborne and City Council Members <br /> FROM: Steve Garm n, ity Manager � <br /> John W. C ut Corporation Counsel <br /> RE: Incubator Property - Carveout Area Termination Agreement <br /> As the Council is aware, the City is a party to an agreement with Borg-Warner, Zexel <br /> and Mueller regarding the investigation and remediation of environmental problems at an <br /> area encompassing the Zexel property and the City's Business Center (the "Incubator"). <br /> Part of that area, belonging to Zexel, has been labeled by the parties as the Carveout Area <br /> because it lies at the edge of the City's property and has been treated separately from the <br /> remainder of the Zexel property because of its physical characteristics. <br /> The investigation phase of the entire property has now reached a point where <br /> remediation of the Carveout Property is possible. Under the current agreement, costs for <br /> the investigation phase were allocated among the parties (subject to later re-allocation, <br /> depending on the findings), but not the costs for the remediation phase. In order to move <br /> things to a conclusion, Borg-Warner and the others have said to the City that if the City will <br /> waive its rights to possible reimbursement for investigation costs, the other parties will <br /> absolve the City of any responsibility for the remediation costs. In other words, the City <br /> would give up the chance to recover some or all of its investigation costs to avoid any cost <br /> for the remediation. <br /> As the accompanying letter from McGuireWoods Ross & Hardies (the City's outside <br /> environmental counsel) states, it appears that such a deal would be in the City's best <br /> interests. The City's investigation costs ($20,000) are less than its possible share of the <br /> remediation costs ($35,000 - $60,000), and there is no guarantee that we would be <br /> successful in obtaining any reimbursement of those investigation costs at all. And, there <br /> would be legal costs incurred in attempting reimbursement. To contest the other parties on <br /> this point would be to risk paying up to $80,000 (plus legal costs), when by accepting the <br /> deal the City's share is capped at $20,000. <br /> Staff recommends approval of the Carveout Area Termination Agreement. <br /> JWC:ps <br /> cc: Wendy L. Morthland <br /> Steven G. Jones <br />