Memorandum 14-151 Spit Land RFP Proposals - Chip Pad

Memorandum 14-151

TO:                        MAYOR BETH WYTHE & HOMER CITY COUNCIL

FROM:                  LEASE COMMITTEE

CC:                        PORT & HARBOR ADVISORY COMMISSION

DATE:                   SEPTEMBER 17, 2014

SUBJECT:           SPIT LAND RFP PROPOSALS REVIEW & RECOMMENDATIONS

The City of Homer issued a Request for Proposals for Homer Spit lots that were made available per the Land Allocation Plan.  Proposal deadline was August 28, 2014 at which time two lease proposals were received.  The Lease Committee met on September 16, 2014 for the purpose of discussing the two proposals, both of which were for Lot 12 (the concrete pad).  The Lease Committee graded both proposals according to Chapter 6 of the City’s Lease Management Policy.

Proposal #1: Waterway Scrap Metals, LLC/AK Go Green

The committee found this application to be incomplete for the following reasons:

No references were given and the committee had no knowledge of this company’s track record in their type of proposed activity, i.e. stock piling and shipping of scrap/steel materials.
Partnership confusion: the committee was unsure who the responsible party was in the proposal, or if Waterway Scrap Metals, LLC was intending to sublease to AK Go Green.
Minimal financial record.
Minimal insurance: no worker’s comp, auto, or environmental insurance shown.

The Lease Committee also has serious concerns about the concept of allowing two scrap steel operators to occupy the same area.  It is easy enough to see how they could be separated by a fence, but the bigger issue is that they would be sharing the same waste water system as there is only one drain for the whole pad.  When it rains, the water sheet drains towards the SE corner of the pad and it would be impossible for staff to definitively tell where the source of a spill came from if they are all mixed together.  As it stands now with one operator, we know who to call if an issue arises.

The Committee also expressed concern about the fact that the proposal was for a short term lease and the applicant wanted to occupy the pad immediately.  Harbor Staff could not physically accommodate that request because the pad is currently occupied and being used for staging for harbor construction projects, among other things.

For these reasons the Lease Committee does not recommend approving this proposal.

Proposal #2: Alaska Scrap & Recycling

The Committee found this application to be mostly complete.  We do have questions about the corporate ownership in that the shareholders listed only add up to 90%, leaving 10% still in question.  The application did provide a solid financial background for the committee to review along with references.  Their insurance documentation shows that the company is insured for general, auto, worker’s comp, pollution, and has an umbrella clause as well.  Alaska Scrap & Recycling has a proven track record preforming this kind and type of work on City facilities.  They are seeking approval for a five year lease term.

The committee recommends approving the proposal from Alaska Scrap & Recycling.

Recommendation

The Lease Committee recommends City Council approve the proposal from Alaska Scrap & Recycling, and instruct staff to move forward with lease negotiations for a five year lease.