MINUTES OF THE

METRO COUNCIL REGIONAL ENVIRONMENTAL MANAGEMENT COMMITTEE MEETING

Thursday, January 22, 1998

Council Chamber

Chair Morissette called the meeting back into session at 4:05 PM.

3.  RESOLUTION NO. 98-2590, FOR THE PURPOSE OF AUTHORIZING CHANGE ORDER NO. 23 TO THE CONTRACT FOR WASTE TRANSPORT SERVICES (Continued)

Bruce Warner, Director of Regional Environmental Management, said the January 20, 1998 REM Committee meeting was carried over to continue discussions of Resolution No. 98-2590A. He said as of 10:00 AM today, staff believes it has received all of the information and assurances necessary to recommend the committee approve the sale and transfer of assets from Jack Gray Transport (JGT) to Specialty Transportation Services, Inc. (STS).

Mr. Warner reported staff’s support of the transfer is due to their belief that the agreements provided by Mr. Goldberg along with the primary and secondary lenders provide Metro with more protection than it has under the current contract. Staff believes STS’s agreement to both Change Order No. 23 and the new language in the loan agreements provides Metro with increased protection in specific areas. Mr. Warner said the new change order and loan agreements provide that all the equipment necessary to transport the region’s waste to Arlington can be utilized by Metro in the event of a default. Before the change, the agreement covered only trucks and trailers, so protection has been increased. Further, the agreement extends the time Metro can utilize this equipment from 90 days to 180 days. The primary and secondary lending agreements provide that Gary Goldberg, President of STS, will continue as CEO of the firm for at least five years. Mr. Warner reported the financial fire walls that protect the new firm’s assets are sufficient, thorough, and are not provided under the current contract. Finally, STS has agreed to provide Metro with early notice of any default.

Mr. Warner referred the committee to the amended, engrossed version of the resolution, Resolution No. 98-2590A. A copy of this resolution is included as part of the meeting record. He reviewed the changes contained in the revised resolution. In response to an earlier request by Chair Morissette, Mr. Warner reported that Metro’s costs-to-date of processing the change in ownership, including inside staff time and outside consultants are about $7,360. He said Mr. Goldberg is very willing to pay these expenses, therefore, no reference to this figure is found in the resolution itself.

Councilor McLain asked why language was changed on page two regarding Aasche’s ability to access STS’s funds. She thinks it changes Metro’s position, and decreases its ability to ensure that Aasche is not dependent on the services of STS. Marvin Fjordbeck, Senior Assistant Counsel, responded that legal counsel had not seen the lending agreements, nor the commitment letters when the initial language was proposed. Upon review of these documents, has determined the original language was not completely accurate. Mr. Fjordbeck finds that the fire wall, including the voting trust agreement, will prohibit most funds from being diverted from STS to Aasche, except for a management fee. This is set forth in a letter he received from Mr. Goldberg’s legal counsel. The new language is designed to more accurately reflect the documents Metro obtained from STS. Mr. Fjordbeck said the firewall language is included not in the resolution, but within the lending agreements themselves, which is why he was so adamant about obtaining responses from the company about those agreements.

Chair Morissette said, while he believes the executive officer should consummate this agreement, he is concerned that the resolution language does not require the executive to return to the Council with any substantive change to the contract. Mr. Fjordbeck reported the current language will not require the executive to return to the Council with a substantive change if he believes the change sufficiently protects the assets of the new company from misuse. Chair Morissette said the resolution should be amended to require Council review of substantive changes. Councilor McFarland suggested the “Be it Resolved” portion of the resolution be amended to provide that any substantive modification of the agreements be presented to Council for review.

Mr. Fjordbeck suggested that Resolution No. 1 be amended by adding the language, “Any substantive modification of the lending agreement shall be presented to the Metro Council for further review.” He said this language would not require Council approval, but would provide for review. He said he is comfortable with this language because of the representation by Mr. Goldberg and both companies that they are unlikely to seek substantive modification, and it appears unlikely that the lender will seek to modify the lending agreements.

Councilor McFarland said she now believes staff and councilors have had the opportunity to review the documents, and she is ready to proceed.

It was decided to deal with all of the proposed amendments as one amendment package , including those set forth in 98-2590A and those set forth in the language recommended by Mr. Fjordbeck in the preceding paragraph pertaining to substantive review.

Although Councilor McLain appeared as an alternate at today’s portion of the meeting, and would not be voting, she said she agreed with the changes made to the resolution.

The resolution as amended became Resolution No. 98-2590B. Chair Morissette will carry the resolution to full Council.

There being no further business before the committee, Chair Morissette adjourned the meeting at 4:25 PM.

Prepared by,

Lindsey Ray

Senior Council Assistant

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