TITLE
Recommendation to authorize City Manager to purchase additional property and boiler/machinery insurance for the Southeast Resource Recovery Facility (SERRF) related to the re-appraisal of SERRF associated with the Assignment of the Operating Agreement to Covanta, in an amount not to exceed $150,000, payable to Covanta Holding Corporation. (District 2)
DISCUSSION
The purchase of property and boiler and machinery insurance is required under the terms of the Southeast Resource Recovery Facility (SERRF) revenue bonds and lease, currently with Covanta Holding Corporation.
On August 18, 2009, the SERRF Operating Agreement was transferred from Veolia to Covanta in association with Covanta's purchase of Veolia's worldwide refuse-to-energy assets. Simultaneous with this transfer, the SERRF property and boiler/machinery insurance purchased through Veolia for SERRF as part of Veolia's master refuse-to-energy property insurance program was cancelled, and SERRF obtained new coverage through a similar program through Covanta. Veolia refunded SERRF its insurance payment for the period from August 18, 2009 to December 31, 2009; the return premium (pro rata) was $206,106.53. Covanta's initial replacement insurance for the period from August 18, 2009 to October 20, 2009 was $41,490. If the prior Veolia annualized premium had been used, the premium for this period would have been $96,183. Thus, this generated a net savings for SERRF for this period of $54,693.
On October 20, 2009, in coordination with its master refuse-to-energy property insurance program's renewal, Covanta renewed the Property and Boiler/Machinery Insurance for the Southeast Resource Recovery Facility (SERRF) based on its thencurrent appraised value of $232,784,059 for $650,000. This purchase was approved and paid pursuant to City Council action on October 20, 2009.
As part of its transition to operating SERRF, Covanta arranged for an appraisal and probable maximum loss (PML) study of SERRF concurrent ...
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