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Record No: CB 119845    Version: 1 Council Bill No: CB 119845
Type: Ordinance (Ord) Status: Passed
Current Controlling Legislative Body City Clerk
On agenda: 8/17/2020
Ordinance No: Ord 126135
Title: AN ORDINANCE granting Onni DEU (John Street) LLC permission to construct, maintain, and operate a below-grade private thermal energy exchange system under and across John Street, east of Boren Avenue and west of Fairview Avenue North, for a 15-year term, renewable for one successive 15-year term; specifying the conditions under which this permit is granted; and providing for the acceptance of the permit and conditions.
Sponsors: Alex Pedersen
Supporting documents: 1. Summary and Fiscal Note, 2. Summary Att A – 1120 John Street Thermal Exchange Area Map, 3. Summary Att B – 1120 John Street Thermal Exchange Fee Assessment, 4. Central Staff Memo, 5. Signed Ordinance 126135, 6. Affidavit of Publication

CITY OF SEATTLE

ORDINANCE __________________

COUNCIL BILL __________________

title

AN ORDINANCE granting Onni DEU (John Street) LLC permission to construct, maintain, and operate a below-grade private thermal energy exchange system under and across John Street, east of Boren Avenue and west of Fairview Avenue North, for a 15-year term, renewable for one successive 15-year term; specifying the conditions under which this permit is granted; and providing for the acceptance of the permit and conditions.

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WHEREAS, Onni DEU (John Street) LLC applied for permission to construct a below-grade private thermal energy exchange system between the buildings located at 1120 Denny Way and 1120 John Street in the South Lake Union neighborhood (“Thermal Energy Exchange System”); and

WHEREAS, the purpose of the Thermal Energy Exchange System is to capture waste heat and distribute between the buildings located at 1120 Denny Way and 1120 John Street, reducing energy usage and carbon emissions that would otherwise be discharged to the atmosphere; and

WHEREAS, the obligations of the ordinance remain in effect after the ordinance term expires until the encroachment is removed, or Onni DEU (John Street) LLC is relieved of the obligations by the Seattle Department of Transportation Director, or the ordinance is renewed; and

WHEREAS, the Seattle City Council adopted Resolution 31899 and conceptually approved the Thermal Energy Exchange System; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Permission. Subject to the terms and conditions of this ordinance, The City of Seattle (“City”) grants permission (also referred to in this ordinance as a permit) to Onni DEU (John Street) LLC, and its successors and assigns as approved by the Director of the Seattle Department of Transportation (“Director”) according to Section 14 of this ordinance (the party named above and each such approved successor and assign is referred to as the “Permittee”), to construct, maintain, and operate a below-grade thermal energy exchange system under and across John Street, east of Boren Avenue North and west of Fairview Avenue North (collectively referred to as “Thermal Energy Exchange System”), adjacent in whole or in part to the property legally described as:

Lots 7-12, Block 110, D.T. Denny’s 5th Addition to North Seattle, as per plat recorded in Volume 1 of Plats, Page 202, Records of King County, Washington; together with those portions of the donation claim of D.T. Denny and Louisa Denny, his wife, and Government Lot 7 in the SE 1/4 of Section 30, Township 25, Range 04, W.M., in King County.

Section 2. Term. The permission granted to the Permittee is for a term of 15 years starting on the effective date of this ordinance and ending at 11:59 p.m. on the last day of the fifteenth year. Upon written application made by the Permittee at least 180 days before expiration of the term, the Director or the City Council may renew the permit once, for a successive 15-year term, subject to the right of the City to require the removal of the Thermal Energy Exchange System or to revise by ordinance any of the terms and conditions of the permission granted by this ordinance. The total term of the permission, including renewals, shall not exceed 30 years. The Permittee shall submit any application for a new permission no later than 180 days before the then-existing term expires.

Section 3. Protection of utilities. The permission granted is subject to the Permittee bearing the expense of any protection, support, or relocation of existing utilities deemed necessary by the owners of the utilities, and the Permittee being responsible for any damage to the utilities due to the construction, repair, reconstruction, maintenance, operation, or removal of the Thermal Energy Exchange System and for any consequential damages that may result from any damage to utilities or interruption in service caused by any of the foregoing.

Section 4. Removal for public use or for cause. The permission granted is subject to use of the street right-of-way or other public place (collectively, “public place”) by the City and the public for travel, utility purposes, and other public uses or benefits. The City expressly reserves the right to deny renewal, or terminate the permission at any time before expiration of the initial term or any renewal term, and require the Permittee to remove the Thermal Energy Exchange System or any part thereof or installation on the public place, at the Permittee’s sole cost and expense, if:

(a) The City Council determines by ordinance that the space occupied by the Thermal Energy Exchange System is necessary for any public use or benefit or that the Thermal Energy Exchange System interferes with any public use or benefit; or

(b) The Director determines that use of the Thermal Energy Exchange System has been abandoned; or

(c) The Director determines that any term or condition of this ordinance has been violated, and the violation has not been corrected by the Permittee by the compliance date after a written request by the City to correct the violation (unless a notice to correct is not required due to an immediate threat to the health or safety of the public).

A City Council determination that the space is needed for, or the Thermal Energy Exchange System interferes with, a public use or benefit is conclusive and final without any right of the Permittee to resort to the courts to adjudicate the matter.

Section 5. Permittee’s obligation to remove and restore. If the permission granted is not renewed at the expiration of a term, or if the permission expires without an application for a new permission being granted, or if the City terminates the permission, then within 90 days after the expiration or termination of the permission, or prior to any earlier date stated in an ordinance or order requiring removal of the Thermal Energy Exchange System, the Permittee shall, at its own expense, remove the Thermal Energy Exchange System and all of the Permittee’s equipment and property from the public place and replace and restore all portions of the public place that may have been disturbed for any part of the Thermal Energy Exchange System in as good condition for public use as existed prior to constructing the Thermal Energy Exchange System and in at least as good condition in all respects as the abutting portions of the public place as required by Seattle Department of Transportation (SDOT) right-of-way restoration standards.

                     Failure to remove the Thermal Energy Exchange System as required by this section is a violation of Chapter 15.90 of the Seattle Municipal Code (SMC) or successor provision; however, applicability of Chapter 15.90 does not preclude any remedies available to the City under this ordinance or any other authority. If the Permittee does not timely fulfill its obligations under this section, the City may in its sole discretion remove the Thermal Energy Exchange System and restore the public place at the Permittee’s expense and collect such expense in any manner provided by law.

Upon the Permittee’s completion of removal and restoration in accordance with this section, or upon the City’s completion of the removal and restoration and the Permittee’s payment to the City for the City’s removal and restoration costs, the Director shall issue a certification that the Permittee has fulfilled its removal and restoration obligations under this ordinance. Upon prior notice to the Permittee and entry of written findings that it is in the public interest, the Director may, in the Director’s sole discretion, conditionally or absolutely excuse the Permittee from compliance with all or any of the Permittee’s obligations under this section.

Section 6. Repair or reconstruction. The Thermal Energy Exchange System shall remain the exclusive responsibility of the Permittee and the Permittee shall maintain the Thermal Energy Exchange System in good and safe condition for the protection of the public. The Permittee shall not reconstruct or repair the Thermal Energy Exchange System except in strict accordance with plans and specifications approved by the Director. The Director may, in the Director’s judgment, order the Thermal Energy Exchange System reconstructed or repaired at the Permittee’s cost and expense because of: the deterioration or unsafe condition of the Thermal Energy Exchange System; the installation, construction, reconstruction, maintenance, operation, or repair of any municipally owned public utilities; or any other cause.

Section 7. Failure to correct unsafe condition. After written notice to the Permittee and failure of the Permittee to correct an unsafe condition within the time stated in the notice, the Director may order the Thermal Energy Exchange System be closed or removed at the Permittee’s expense if the Director deems that the Thermal Energy Exchange System has become unsafe or creates a risk of injury to the public. If there is an immediate threat to the health or safety of the public, a notice to correct is not required.

Section 8. Continuing obligations. Notwithstanding the termination or expiration of the permission granted, or closure or removal of the Thermal Energy Exchange System, the Permittee shall remain bound by all of its obligations under this ordinance until the Director has issued a certification that the Permittee has fulfilled its removal and restoration obligations under Section 5 of this ordinance. Notwithstanding the issuance of that certification, the Permittee shall continue to be bound by the obligations in Section 9 of this ordinance and shall remain liable for any unpaid fees assessed under Sections 15 and 17 of this ordinance.

Section 9. Release, hold harmless, indemnification, and duty to defend. The Permittee, by accepting the terms of this ordinance, releases the City, its officials, officers, employees, and agents from any and all claims, actions, suits, liability, loss, costs, expense, attorneys’ fees, or damages of every kind and description arising out of or by reason of the Thermal Energy Exchange System or this ordinance, including but not limited to claims resulting from injury, damage, or loss to the Permittee or the Permittee’s property.

The Permittee agrees to at all times defend, indemnify, and hold harmless the City, its officials, officers, employees, and agents from and against all claims, actions, suits, liability, loss, costs, expense, attorneys’ fees, or damages of every kind and description, excepting only damages that may result from the sole negligence of the City, that may accrue to, be asserted by, or be suffered by any person or property including, without limitation, damage, death or injury to members of the public or to the Permittee’s officers, agents, employees, contractors, invitees, tenants, tenants’ invitees, licensees, or successors and assigns, arising out of or by reason of:

(a) The existence, condition, construction, reconstruction, modification, maintenance, operation, use, or removal of the Thermal Energy Exchange System or any portion thereof, or the use, occupation, or restoration of the public place or any portion thereof by the Permittee or any other person or entity;

(b) Anything that has been done or may at any time be done by the Permittee by reason of this ordinance; or

(c) The Permittee failing or refusing to strictly comply with every provision of this ordinance; or arising out of or by reason of the Thermal Energy Exchange System, or this ordinance in any other way.

If any suit, action, or claim of the nature described above is filed, instituted, or begun against the City, the Permittee shall upon notice from the City defend the City, with counsel acceptable to the City, at the sole cost and expense of the Permittee, and if a judgment is rendered against the City in any suit or action, the Permittee shall fully satisfy the judgment within 90 days after the action or suit has been finally determined, if determined adversely to the City. If it is determined by a court of competent jurisdiction that Revised Code of Washington (RCW) 4.24.115 applies to this ordinance, then in the event claims or damages are caused by or result from the concurrent negligence of the City, its agents, contractors, or employees, and the Permittee, its agents, contractors, or employees, this indemnity provision shall be valid and enforceable only to the extent of the negligence of the Permittee or the Permittee’s agents, contractors, or employees.

Section 10. Insurance. For as long as the Permittee exercises any permission granted by this ordinance and until the Director has issued a certification that the Permittee has fulfilled its removal and restoration obligations under Section 5 of this ordinance, the Permittee shall obtain and maintain in full force and effect, at its own expense, insurance and/or self-insurance that protects the Permittee and the City from claims and risks of loss from perils that can be insured against under commercial general liability (CGL) insurance policies in conjunction with:

(a) Construction, reconstruction, modification, operation, maintenance, use, existence, or removal of the Thermal Energy Exchange System or any portion thereof, as well as restoration of any disturbed areas of the public place in connection with removal of the Thermal Energy Exchange System;

(b) The Permittee’s activity upon or the use or occupation of the public place described in Section 1 of this ordinance; and

(c) Claims and risks in connection with activities performed by the Permittee by virtue of the permission granted by this ordinance.

Minimum insurance requirements are CGL insurance written on an occurrence form at least as broad as the Insurance Services Office (ISO) CG 00 01. The City requires insurance coverage to be placed with an insurer admitted and licensed to conduct business in Washington State or with a surplus lines carrier pursuant to chapter 48.15 RCW. If coverage is placed with any other insurer or is partially or wholly self-insured, such insurer(s) or self-insurance is subject to approval by the City’s Risk Manager. Minimum limits of liability shall be $5,000,000 per Occurrence; $10,000,000 General Aggregate; $5,000,000 Products/Completed Operations Aggregate, including Premises Operations; Personal/Advertising Injury; Contractual Liability. Coverage shall include “The City of Seattle, its officers, officials, employees and agents” as additional insureds for primary and non-contributory limits of liability subject to a Separation of Insureds clause.

Within 60 days after the effective date of this ordinance, the Permittee shall provide to the City, or cause to be provided, certification of insurance coverage including an actual copy of the blanket or designated additional insured policy provision per the ISO CG 20 12 endorsement or equivalent. The insurance coverage certification shall be delivered or sent to the Director or to SDOT at an address as the Director may specify in writing from time to time. The Permittee shall provide a certified complete copy of the insurance policy to the City promptly upon request.

If the Permittee is self-insured, a letter of certification from the Corporate Risk Manager may be submitted in lieu of the insurance coverage certification required by this ordinance, if approved in writing by the City’s Risk Manager. The letter of certification must provide all information required by the City’s Risk Manager and document, to the satisfaction of the City’s Risk Manager, that self-insurance equivalent to the insurance requirements of this ordinance is in force. After a self-insurance certification is approved, the City may from time to time subsequently require updated or additional information. The approved self-insured Permittee must provide 30 days’ prior notice of any cancellation or material adverse financial condition of its self-insurance program. The City may at any time revoke approval of self-insurance and require the Permittee to obtain and maintain insurance as specified in this ordinance.

In the event that the Permittee assigns or transfers the permission granted by this ordinance, the Permittee shall maintain in effect the insurance required under this section until the Director has approved the assignment or transfer pursuant to Section 14 of this ordinance.

Section 11. Contractor insurance. The Permittee shall contractually require that any and all of its contractors performing work on any premises contemplated by this permit name “The City of Seattle, its officers, officials, employees and agents” as additional insureds for primary and non-contributory limits of liability on all CGL, Automobile and Pollution liability insurance and/or self-insurance. The Permittee shall also include in all contract documents with its contractors a third-party beneficiary provision extending to the City construction indemnities and warranties granted to the Permittee.

Section 12. Performance bond. Within 60 days after the effective date of this ordinance, the Permittee shall deliver to the Director for filing with the City Clerk a sufficient bond executed by a surety company authorized and qualified to do business in the State of Washington that is in the amount of $45,000, and conditioned with a requirement that the Permittee shall comply with every provision of this ordinance and with every order the Director issues under this ordinance. The Permittee shall ensure that the bond remains in effect until the Director has issued a certification that the Permittee has fulfilled its removal and restoration obligations under Section 5 of this ordinance. An irrevocable letter of credit approved by the Director in consultation with the City Attorney’s Office may be substituted for the bond. If the Permittee assigns or transfers the permission granted by this ordinance, the Permittee shall maintain in effect the bond or letter of credit required under this section until the Director has approved the assignment or transfer pursuant to Section 14 of this ordinance.

Section 13. Adjustment of insurance and bond requirements. The Director may adjust minimum liability insurance levels and surety bond requirements during the term of this permission. If the Director determines that an adjustment is necessary to fully protect the interests of the City, the Director shall notify the Permittee of the new requirements in writing. The Permittee shall, within 60 days of the date of the notice, provide proof of the adjusted insurance and surety bond levels to the Director.

Section 14. Consent for and conditions of assignment or transfer. When the Property is transferred, the permission granted by this ordinance shall be assignable and transferable by operation of law pursuant to Section 20 of this ordinance. Before the transfer, the successor owner of the Property shall accept in writing all of the terms and conditions of the permission granted by this ordinance and the new owner of the Property shall be conferred with the rights and obligations of the Permittee by this ordinance. Other than a transfer to a new owner of the Property, the Permittee shall not transfer, assign, mortgage, pledge or encumber the same without the Director’s consent, which the Director shall not unreasonably refuse. The Director may approve assignment or transfer of the permission granted by this ordinance to a successor entity only if the successor or assignee has accepted in writing all of the terms and conditions of the permission granted by this ordinance; has provided, at the time of the acceptance, the bond and certification of insurance coverage required under this ordinance; and has paid any fees due under Sections 15 and 17 of this ordinance. Upon the Director’s approval of an assignment or transfer, the rights and obligations conferred on the Permittee by this ordinance shall be conferred on the successors and assigns. Any person or entity seeking approval for an assignment or transfer of the permission granted by this ordinance shall provide the Director with a description of the current and anticipated use of the Thermal Energy Exchange System.

Section 15. Inspection fees. The Permittee shall, as provided by SMC Chapter 15.76 or successor provision, pay the City the amounts charged by the City to inspect the Thermal Energy Exchange System during construction, reconstruction, repair, annual safety inspections, and at other times deemed necessary by the City. An inspection or approval of the Thermal Energy Exchange System by the City shall not be construed as a representation, warranty, or assurance to the Permittee or any other person as to the safety, soundness, or condition of the Thermal Energy Exchange System. Any failure by the City to require correction of any defect or condition shall not in any way limit the responsibility or liability of the Permittee.

Section 16. Inspection reports. The Permittee shall submit to the Director, or to SDOT at an address specified by the Director, an inspection report that:

(a) Describes the physical dimensions and condition of all load-bearing elements;

(b) Describes any damages or possible repairs to any element of the Thermal Energy Exchange System;

(c) Prioritizes all repairs and establishes a timeframe for making repairs; and

(d) Is stamped by a professional structural engineer licensed in the State of Washington.

If a natural disaster or other event has damaged the Thermal Energy Exchange System, the Director may require that additional reports be submitted by a date established by the Director. The Permittee has the duty of inspecting and maintaining the Thermal Energy Exchange System. The responsibility to submit structural inspection reports periodically or as required by the Director does not waive or alter any of the Permittee’s other obligations under this ordinance. The receipt of any reports by the Director shall not create any duties on the part of the Director. Any failure by the Director to require a report, or to require action after receipt of any report, shall not waive or limit the Permittee’s obligations.

Section 17. Annual fee. Beginning on the effective date of this ordinance the Permittee shall pay an Issuance Fee, and annually thereafter the Permittee shall promptly pay to the City, upon statements or invoices issued by the Director, an Annual Renewal Fee, and an Annual Use and Occupation fee of $5,900.40, or as adjusted annually thereafter, for the privileges granted by this ordinance.

Adjustments to the Annual Use and Occupation Fee shall be made in accordance with a term permit fee schedule adopted by the City Council and may be made every year. In the absence of a schedule, the Director may only increase or decrease the previous year’s fee to reflect any inflationary changes so as to charge the fee in constant dollar terms. This adjustment will be calculated by adjusting the previous year’s fee by the percentage change between the two most recent year-end values available for the Consumer Price Index for the Seattle-Tacoma-Bellevue Area, All Urban Consumers, All Products, Not Seasonally Adjusted. All payments shall be made to the City Finance Director for credit to the Transportation Operating Fund.

Section 18. Compliance with other laws. The Permittee shall construct, maintain, and operate the Thermal Energy Exchange System in compliance with all applicable federal, state, County, and City laws and regulations. Without limitation, in all matters pertaining to the Thermal Energy Exchange System, the Permittee shall comply with the City’s laws prohibiting discrimination in employment and contracting including Seattle’s Fair Employment Practices Ordinance, SMC Chapter 14.04, and Fair Contracting Practices Code, SMC Chapter 14.10 (or successor provisions).

Section 19. Acceptance of terms and conditions. The Permittee shall not commence construction of the Thermal Energy Exchange System before providing evidence of insurance coverage required by Section 10 of this ordinance, the bond as required by Section 12 of this ordinance, and the covenant agreement required by Section 20 of this ordinance. Providing these documents shall constitute the Permittee’s acceptance of the terms of this ordinance.

Section 20. Obligations run with the Property. The obligations and conditions imposed on the Permittee by this ordinance are covenants that run with the land and bind subsequent owners of the property adjacent to the Thermal Energy Exchange System and legally described in Section 1 of this ordinance (the “Property”), regardless of whether the Director has approved assignment or transfer of the permission granted herein to such subsequent owner(s). At the request of the Director, the Permittee shall provide to the Director a current title report showing the identity of all owner(s) of the Property and all encumbrances on the Property. The Permittee shall, within 60 days of the effective date of this ordinance, and prior to conveying any interest in the Property, deliver to the Director upon a form to be supplied by the Director, a covenant agreement imposing the obligations and conditions set forth in this ordinance, signed and acknowledged by the Permittee and any other owner(s) of the Property and recorded with the King County Recorder’s Office. The Director shall file the recorded covenant agreement with the City Clerk. The covenant agreement shall reference this ordinance by its ordinance number. At the request of the Director, the Permittee shall cause encumbrances on the Property to be subordinated to the covenant agreement.

Section 21. Section titles. Section titles are for convenient reference only and do not modify or limit the text of a section.

Section 22. This ordinance shall take effect and be in force 30 days after its approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.

Passed by the City Council the ________ day of _________________________, 2020, and signed by me in open session in authentication of its passage this _____ day of _________________________, 2020.

____________________________________

President ____________ of the City Council

Approved by me this ________ day of _________________________, 2020.

____________________________________

Jenny A. Durkan, Mayor

Filed by me this ________ day of _________________________, 2020.

____________________________________

Monica Martinez Simmons, City Clerk

(Seal)