June 14, 2010 - 6:00 PM - County Board of Commissioners Meeting Minutes (Special)

10 873 Meeting of the Johnston County Board of Commissioners June 14 , 2010 Special Meeting The Johnston County Board of Commissioners met in special session Monday , June 14 , 2010 at 6 00 pm in the Commissioners Meeting Room , Johnston County Courthouse Annex , Smithfield , North Carolina The following members were present Present Wade M Stewart , Chairman , Allen L Mims , Jr , Vice Chairman , Cookie Pope , Jeffrey P Carver , W Ray Woodall , DeVan Barbour , and Tony Braswell Absent None Also Present Rick J Hester , County Manager , Paula G Woodard , Clerk to the Board , J Chad McLamb , Finance Officer , David F Mills , County Attorney , and Melissa A Daughtry , Paralegal Deputy Clerk Chairman Wade M Stewart called the meeting to order and announced the purpose of the meeting is for the Commissioners to consider the adoption of the FY 2010 - 2011 County budget and related matters He thanked all the County Departments for their work and support during the budget process County Manager Rick Hester also took the opportunity to thank Chad McLamb , Tyson Radford , and Martha Lasater in the Finance Department for their assistance to him during the budget preparation process Mr Hester further thanked all the County Departments for their work , noting they had been involved since the very beginning 1 Adoption of 2010 - 2011 County Budget Commissioner Tony Braswell read the following prepared statement , followed by his motion to adopt the 2010 - 2011 County Budget First of all , I would like to thank County Manager Rick Hester , Director of Finance Chad McLamb and my fellow Commissioners for all of the time they have spent to get where we are in this budget It would be far too easy to say this has been a tough process , but that would not adequately describe all of the hours that have been spent to make certain we spend the taxpayers ’ money wisely My motion would reduce the budget 76 million from last year , and we must again appropriate funds from the reserves to balance this budget However , the return of 46 million from the Board of Education for the current budget year helps to offset the use of the fund balance The total proposed budget under my motion leaves a projected fund balance of approximately 132 on June 30 , 2011 I would like to thank our County employees that provide great service and hard work each day Once again , we must ask you to do more with less Please know that we have examined all possibilities , but unfortunately , the funds are not available for a cost of living increase this year I would like to express my appreciation to the Board of Education and Superintendent Dr Ed Croom for working as partners with us throughout this process We know and understand they work tirelessly to provide the children of Johnston County with the best possible education , and this Board of County Commissioners has been committed to their efforts as well The most recent North Carolina th Public School Forum report showed that this Board was ranked 10 in North Carolina in providing current expense funding to the school system My motion includes funding for Johnston County Schools at 514 million , which is what is needed to maintain the low - wealth status Johnston Community College continues to do an outstanding job in serving the needs of those seeking higher education as well as those needing to be retrained for new job opportunities We sincerely appreciate all their efforts and we understand that they too are struggling during these trying economic times My motion reduces funding for non - profits by approximately 20 from last year’s appropriations These groups provide much needed services to the citizens of our County , and they do it well However , I believe that reductions will continue , and I would encourage them to begin seeking alternative sources of revenue Page874 June 14 , 2010 – 6 00 pm Continued With all that said , my motion is to adopt the County Manager’s proposed budget with the following revisions • Appropriate 514 million to Johnston County Schools • Appropriate 3,723,631 to Johnston Community College • Appropriate 200,000 to Council on Aging includes match for the Home and Community Care Block Grant for Older Adults • Appropriate 75,000 to Johnston County Industries • Appropriate 1,000 to Not Just Another Community Center • Appropriate 2,400 to Reins from Above • Appropriate 2,400 to Boys and Girls Club • Appropriate 3,120 to Tobacco Farm Life Museum • Appropriate 6,000 to Johnston County Arts Council • Appropriate 6,000 to Harbor , Inc • Appropriate 7,200 to Special Olympics • Appropriate 9,120 to Johnston - Lee - Harnett Community Action • Reduce vehicle taxes by 500,000 • Approve to lower the Moccasin Creek District tax rate to 1 ½ cents per 100 of assessed value • Approve for the RTZ District to maintain tax rate of 8 cents per 100 assessed value • Approve and accept the Home and Community Care Block Grant for Older Adults as presented by Department of Social Services and Council on Aging Projected Fund Balance for June 30 , 2011 would be approximately 132 Total budget would be 1641 million Commissioner W Ray Woodall seconded the motion Discussion Commissioner Allen L Mims , Jr commented that the total budget under Commissioner Braswell’s motion would be 1641 million and he stated he could support the motion He noted it has been a tough budget process and he thanked the Board of Education for returning the June 2010 allotment of 468 million Commissioner Mims pointed out that without the return of the June allotment , he could not see how he could have supported anything other than what the County Manager originally proposed for the FY 10 - 11 budget Commissioner Mims stated that while he does not agree with all the actions in Commissioner Braswell’s motion , he feels that by adopting it , the Board will have done as good of a job as it can He added that the County’s fund balance is not trending up the way he would prefer , but he feels that the County Commissioners ’ working relationship with the Board of Education is better and he stated there will be further discussions between the two groups in the next few months to hopefully reach an agreement on how to increase the County’s fund balance next year while maintaining an emergency fund for Johnston County Schools Commissioner Jeffrey P Carver stated that if the motion is passed , then for the second year in a row , the Board will be breaking its own internal policy of keeping a 15 fund balance ; therefore , he will be voting against the motion Commissioner Carver thanked Commissioner Braswell and his fellow Commissioners for all their efforts ; however , he stated he just did not agree with all of the components Page875 June 14 , 2010 – 6 00 pm Continued Commissioner Cookie Pope indicated that she also would like to see the County’s fund balance at a higher percentage , but in light of the current economy , she feels Commissioner Braswell has done a good job on his work on the budget Commissioner DeVan Barbour stated that all of the Commissioners have concerns over different parts of the budget ; however , he noted it has been a difficult effort and he feels the proposed motion is as good as it can be Commissioner Barbour agreed with Commissioner Braswell that going forward in the future , the nonprofit organizations do need to begin looking at other revenue sources in that he is unsure how long the County can continue to provide them with funding Commissioner Barbour stated the County does not have a choice but to replenish the fund balance which is critical to the bond ratings He thanked Commissioner Braswell for his work on the budget and stated he would support it Vote The motion to adopt the FY 2010 - 2011 County Budget carried by the following vote Ayes Commissioners Wade M Stewart , Allen L Mims , Jr , Cookie Pope , W Ray Woodall , DeVan Barbour , and Tony Braswell Nays Commissioner Jeffrey P Carver Fire Tax Increase Requests Commissioner Tony Braswell reported that the Fire Tax Committee consisting of himself and Commissioners Barbour and Carver met with the Smithfield , Cleveland , Selma , and Four Oaks Fire Departments regarding their requests for increases in their respective fire tax rates Commissioner Braswell stated that the Board sincerely appreciated the efforts by all the fire departments and following the careful review of all the information , the Committee recommends granting a tax rate increase of one cent for the Selma Fire District only Motion – Selma Fire District Tax Rate Increase Commissioner Tony Braswell moved the Board approve the request by the Selma Fire Department to raise the Selma Fire District tax rate one cent from 8 cents to 9 cents per 100 valuation Commissioner W Ray Woodall seconded the motion Discussion Commissioner Allen L Mims , Jr stated it was his understanding that the Board was not going to raise taxes and asked for more information on the Selma Fire Department’s needs Commissioner Braswell stated the Selma Fire Department has not had a tax rate increase since 1992 and they have purchased a new truck that was badly needed to replace worn out equipment Commissioner Braswell stated the additional one cent would cover half of the debt service payment on the new truck and he felt they did show a need Commissioner Jeffrey P Carver reminded everyone that the Selma Fire Department has just achieved a better fire insurance rating which could in turn lower the cost of homeowners insurance for those in the district Chairman Wade M Stewart stated he appreciated the work of the Fire Tax Committee ; however , he would be voting against the motion because he did not believe it was the right time to raise any kind of taxes on the citizens He clarified that his decision to vote against the motion is no reflection on the Selma Fire Department and the good job that they do Vote The motion to increase the Selma Fire District Tax Rate by one cent from 8 cents to 9 cents carried by the following vote Ayes Commissioners Allen L Mims , Jr , Jeffrey P Carver , W Ray Woodall , DeVan Barbour , and Tony Braswell Nays Commissioners Wade M Stewart and Cookie PopePage876 June 14 , 2010 – 6 00 pm Continued The following budget ordinance for the Fiscal Year 2010 - 2011 was adopted BUDGET ORDINANCE FY 2010 - 2011 JOHNSTON COUNTY , NORTH CAROLINA BE IT ORDAINED by the Board of Commissioners of Johnston County , North Carolina SECTION I BUDGET ADOPTION There is hereby adopted the following Operating Budget for the County of Johnston for the Fiscal Year beginning July 1 , 2010 and ending June 30 , 2011 ; the same being adopted by fund and activity within each fund as listed GENERAL FUND EXPENDITURES GENERAL GOVERNMENT 10,393,169 PUBLIC SAFETY 22,512,789 PHYSICAL DEVELOPMENT 7,776,760 HUMAN SERVICES 34,181,178 EDUCATION 55,123,631 DEBT SERVICE 34,124,177 TOTAL 164,111,704 REVENUES CURRENT YEAR AD VALOREM TAX 93,455,989 SALES TAX 24,329,999 OTHER TAX REVENUES 1,906,000 STATE & FEDERAL 25,009,644 LICENSE , FEES , ETC 6,924,512 INVESTMENT INCOME 401,000 TRANSFER FROM OTHER FUNDS 431,000 FUND BALANCE APPROPRIATED 2,812,240 MENTAL HEALTH 1,700,000 NC EDUCATION LOTTERY 4,400,000 SALES AND SERVICE 2,741,320 TOTAL 164,111,704 TOURISM AUTHORITY EXPENDITURES 792,425 REVENUES OCCUPANCY TAX 769,925 INTEREST INCOME 1,000 MISCELLANEOUS INCOME 500 WEB ADVERTISING 1,000 REIMBURSEMENTS 20,000 TOTAL 792,425 REVALUATION FUND EXPENDITURES RESERVE FOR REVALUATION 1,018,260 REVENUES TRANSFER FROM GENERAL FUND 602,361 FUND BALANCE 415,899 TOTAL 1,018,260 SCHOOL BOND FUND EXPENDITURES TRANSFER TO GENERAL FUND 100,000 REVENUES INVESTMENT INCOME 100,000PagePage pageNumber5877 June 14 , 2010 – 6 00 pm Continued INDUSTRIAL INFRASTRUCTURE FUND EXPENDITURES INDUSTRIAL DEVELOPMENT 875,954 REVENUES TRANSFER FROM GENERAL FUND 870,000 FUND BALANCE 5,954 TOTAL 875,954 LEO SEPARATION FUND EXPENDITURES PROGRAM COST 235,275 REVENUES TRANSFER FROM GENERAL FUND 231,164 FUND BALANCE 4,111 TOTAL 235,275 HERITAGE COMMISSION FUND EXPENDITURES OPERATING EXPENSE 221,166 REVENUES TRANSFER FROM GENERAL FUND 165,388 OTHER REVENUES 55,778 TOTAL 221,166 SOCIAL SERVICE TRUST FUND EXPENDITURES PROGRAM COST 155,000 REVENUES TRUST RECEIPTS 155,000 MENTAL HEALTH FUND EXPENDITURES OPERATION OF CENTER 12,370,000 REVENUES FEDERAL GOVERNMENT 515,456 STATE GOVERNMENT 6,682,107 TRANSFER FROM GENERAL FUND 1,700,000 ABC - FIVE CENT PER BOTTLE TAX 30,000 ABC PROFITS 10,000 FEES AND CHARGES 2,729,900 INTEREST INCOME 50,000 FUND BALANCE 652,537 TOTAL 12,370,000 COMMUNICATION FUND EXPENDITURES E - 911 OPERATIONS 957,860 REVENUES ENHANCED 9 - 1 - 1 957,860 OTHER COLLECTIONS EXPENDITURES SPECIAL DISTRICT TAX 6,002,000 MOTOR VEHICLE TAX 12,929,100 MOCCASIN CREEK DISTRICT TAX 35,000PagePage pageNumber6878 June 14 , 2010 – 6 00 pm Continued TOTAL 18,966,100 REVENUES SPECIAL DISTRICT TAX 6,002,000 MOTOR VEHICLE TAX 12,929,100 MOCCASIN CREEK DISTRICT TAX 35,000 TOTAL 18,966,100 RESEARCH TRAINING ZONE EXPENDITURES OPERATIONS 533,000 REVENUES SPECIAL DISTRICT TAX 248,000 TRANSFER FROM GENERAL FUND 285,000 TOTAL 533,000 AIRPORT AUTHORITY FUND EXPENDITURES OPERATIONS 1,836,825 CAPITAL COST 6,556,204 TOTAL 8,393,029 REVENUES FEDERAL GRANTS 5,922,915 FEES AND SERVICES 1,877,625 INVESTMENT INCOME 9,600 TRANSFER FROM GENERAL FUND 582,889 FUND BALANCE 0 TOTAL 8,393,029 HOUSING ASSISTANCE PAYMENT PROGRAM FUND EXPENDITURES PROGRAM COST 3,975,265 REVENUES FEDERAL GOVERNMENT HUD 3,974,065 INVESTMENT INCOME 1,200 TOTAL 3,975,265 JOB TRAINING PROGRAM FUND EXPENDITURES PROGRAM COST 710,000 REVENUES FEDERAL GOVERNMENT 710,000 WATER DISTRICTS EXPENDITURES DEBT SERVICE 4,152,830 OPERATIONS 4,255,000 TRANSFER TO OTHER FUNDS 1,672,170 TOTAL 10,080,000 REVENUES RETAIL WATER 4,100,000 MONTHLY BASE FEE 4,900,000 OTHER REVENUE 1,080,000PagePage pageNumber7879 June 14 , 2010 – 6 00 pm Continued TOTAL 10,080,000 PUBLIC UTILITIES EXPENDITURES ADMINISTRATION 1,223,270 SOLID WASTE 6,782,800 WATER 8,724,275 WASTE WATER 4,188,950 TRANSFER TO GENERAL FUND 0 DEBT SERVICE - WATER 1,166,175 DEBT SERVICE - WASTEWATER 2,766,510 TOTAL 24,851,980 REVENUES ADMINISTRATION FEES 875,000 SOLID WASTE FEES 5,954,000 WATER FEES 8,712,170 WASTE WATER FEES 3,000,540 DISPOSAL TAX 305,290 FUND BALANCE - ADMINISTRATION 348,270 FUND BALANCE – SOLID WASTE 828,800 FUND BALANCE - WATER 1,178,280 FUND BALANCE - WASTEWATER 1,977,460 TRANSFER - WATER 1,672,170 TOTAL 24,851,980 SECTION II There is hereby levied a Tax Rate of seventy - eight 78 cents per one hundred dollars valuation of property listed for taxes as of January 1 , 2010 This rate shall be levied entirely in the General Fund The Tax Rate is based on an estimated total valuation of property for the purposes of taxation of 11,884,075,000 and an estimated collection rate of 9855 SECTION III All fees , including Inspection Fees , Fire Code Fees , and Environmental Sanitarian Fees shall be collected as per schedule in the Clerks Office Planning and Zoning Fees and Public Utility Fees are adopted as recommended and are on file in the Clerks Office GIS fees are approved to recognize cost and may be amended as needed SECTION IV Landfill Tipping Fees shall be levied at a rate of 45 per ton including State surcharges for asbestos waste Landfill Tipping Fees shall be levied at a rate of 35 per ton for municipal solid waste generated in Johnston County The minimum fee for any vehicle shall be 5 A rate of four times the inside rate shall be levied for all solid waste generated outside of Johnston County Solid Waste assigned to the Sheriffs Department and Planning Department to enforce Solid Waste Laws , Rules and Regulations in Johnston County to ensure compliance with Senate Bill 111 The Landfill tipping fee for construction and demolition waste shall be 27 per ton The Landfill tipping fee for non - commercial yard wastes shall be 16 per ton or 8 per pickup size load An ineligible illegal tire disposal fee of 65 per ton shall be levied SECTION V A fee of 65 per household shall be levied to all citizens in the county using the manned compaction sites and the landfill A vehicle identification sticker must be purchased prior to use of the sites in the County SECTION VI Salaries The following shall govern salary and wage compensation for Fiscal Year 2010 - 2011 A Pay Plan There is hereby adopted a pay plan which includes no cost - of - living or performance pay adjustments for FY 2010 - 2011 SECTION VII The Budget Officer is hereby authorized to transfer appropriations within a fund as contained herein under the following conditions as specified in North Carolina General Statute 159 A The Budget Officer may transfer amounts between objects of expenditure within departments listed in this Ordinance without a report PagePage pageNumber8880 June 14 , 2010 – 6 00 pm Continued B The Budget Officer may transfer amounts up to 5,000 between departments of the same fund and reported as part of the monthly financial statements C The Budget Officer may not transfer amounts between funds nor from the Contingency Fund without prior Board Action SECTION VIII Restricted Revenues The Finance Officer is hereby directed to fund appropriations which have specified revenues prior to funding with General Fund monies This is to include but not limited to Fines and Forfeitures , ABC profits , Sales Tax , State and Federal Grants , and Forestry Revenues That a non - profit corporation be continued to issue obligations to finance the purchase and or construction of fixed assets to include but not limited to utility lines and buildings SECTION IX State designated Sales and Use Tax is hereby designated for the payment of debt for new and renovated schools School Debt Service is to be paid from the General Fund as directed by the independent auditors Fines and Forfeitures are deposited directly with the Board of Education by the Clerk of Court SECTION X Encumbrances All outstanding encumbrances from Prior Fiscal Years are to be carried forward to Fiscal Year 2010 - 2011 All Project Ordinance appropriations are continued Operating and Capital Funds for Johnston County Community College not expended at the end of the fiscal year shall be placed by JCCC in their Special Capital Outlay Account and used as match for State funds SECTION XI Budget Control The Board of Commissioners in approving the Budget , have utilized to the fullest extent possible its revenue sources Over collections of revenue or unanticipated revenue sources cannot be expected to materialize during the year It is therefore , of utmost importance , and the County Manager is hereby directed , to initiate steps to insure that the budget as fixed herein is complied with The County Manager is further directed where it appears that costs may possibly exceed budget appropriations , to first take steps to contain costs by any necessary methods including reductions in services , prior to requesting budget amendment action by the Board of Commissioners SECTION XII The Board of Commissioners hereby authorizes the Johnston County Tax Administrator to collect taxes for the Towns of Clayton , Smithfield , Four Oaks , Pine Level , Micro , Princeton , Wilson’s Mills , Whitley Heights Sanitary District , Moccasin Creek Service District and Smithfield Downtown Development District in compliance with the contracts adopted by the various governing boards A charge of two percent 2 of all taxes collected for the governmental units will be payable to Johnston County for said billing and collection services Taxes for the Towns of Archer Lodge , Selma , Kenly , and Benson are collected by the Johnston County Tax Administrator also The charge of two and one half percent 2 ½ of all taxes collected will be payable to Johnston County for said billing and collection services SECTION XIII The Board of Commissioners hereby authorizes the Tax Administrator to bill and collect taxes for the Whitley Heights Sanitary District and for the Fire Departments listed below and to charge a uniform fee of two percent 2 of all taxes collected on their behalf Archer Lodge Fire District 7 cents Banner Fire District 9 cents Bentonville Fire District 8 cents Beulah Kenly Fire District 8 cents Boon Hill Princeton Fire District 5 cents Blackmons Crossroads Fire District 8 cents Brogden Fire District 7 cents Claytex 975 cents Corinth Holder Fire District 10 cents Elevation Fire District 10 cents McLemore - Cleveland Fire District 65 cents Meadow Fire District 6 cents Micro Fire District 10 cents Nahunta Fire District 6 cents Newton Grove Fire District 65 cents Oakland Fire District 7 cents ONeals - Antioch Fire District 8 cents PI - LE 7 cents Selma 9 cents Shoeheel 10 cents Smithfield 10 centsPagePage pageNumber9881 June 14 , 2010 – 6 00 pm Continued Strickland Crossroads Fire District 5 cents Thanksgiving 8 cents West Johnston Fire District 7 cents Wilsons Mills Fire District 6 cents Wynn Four Oaks Fire District 7 cents 50 - 210 Fire District 4 cents The above amounts are per one hundred dollar valuation of property listed for taxes as of January 1 , 2010 , located within these Special Fire Districts The Board of Commissioners hereby appropriates to the Special Fire Districts , sums collected for the use by the Special Fire Districts in such manner and for such expenditures as is permitted by law from the proceeds of the tax levy SECTION XIV The Board of Commissioners hereby authorizes the Tax Administrator to bill and collect taxes for the Research Training Zone District at a rate of eight cents per one hundred dollar valuation of property listed for taxes as of January 1 , 2010 , located within the district SECTION XV The Board of Commissioners hereby authorizes the Tax Administrator to bill and collect taxes for the Moccasin Creek Service District at a rate of one and one - half cents per one hundred dollar valuation of property listed for taxes as of January 1 , 2010 , located within the district th The ORDINANCE being duly passed and adopted this 14 day of June , 2010 JOHNSTON COUNTY BOARD OF COMMISSIONERS ______________________________________________ Wade M Stewart , Chairman ________________________________________________ Paula G Woodard , Clerk to the Board 2 Public Utilities Landfill Gas to Energy Contract – Closed Session action taken in open session Tim Broome , PE , Director of Utilities and Engineering , requested the Board to consider approving the Landfill Gas to Energy Initiative Contract County Attorney David Mills requested the Board to go into closed session on the basis of Attorney Client Privilege Upon a motion by Commissioner Jeffrey P Carver , seconded by Commissioner Cookie Pope , and carried by unanimous vote , the Board recessed regular session to sit in closed session in accordance with NCGS § 14331811 a 3 – Attorney Client Privilege Action Taken in Open Session Commissioner Tony Braswell moved the Board adjourn closed session and resume regular session Commissioner DeVan Barbour seconded the motion , which carried by unanimous vote Motion and Vote to Approve Contract for Landfill Gas to Energy Initiative Upon a motion by Commissioner Allen L Mims , Jr , seconded by Commissioner Jeffrey P Carver , and carried by unanimous vote , the Board approved the Landfill Gas to Energy Contract with Blue Source , as presented by staff and following Commissioner Cookie Pope instructed Mr Broome to look into and address any potential hazards that the County could face as a result of the project to ensure the citizens ’ safety Page0882 June 14 , 2010 – 6 00 pm Continued AGREEMENT This Agreement “ Agreement ” is effective this ____ day of June , 2010 the “ Effective Date ” , by and between Carbon Infrastructure Investment , LLC “ CII ” or “ Buyer ” or its assignee and Johnston County “ JC ” or “ Seller ” CII and JC are each referred to as a “ Party ” herein and are collectively referred to as “ the Parties ” RECITALS A WHEREAS , JC owns the rights to develop the JC County Landfill located at 680 County Home Road “ the Landfill ” west of Smithfield , North Carolina and desires to develop a Landfill gas capture , collection and utilization system , including a central flare , to capture methane emissions at the site , beneficially use such Landfill gas , and derive economic benefits from any Emissions Reductions Benefits ERBs or Energy Benefits generated thereby ; and B WHEREAS , CII is in the business of identifying , making , and managing investments in assets that derive value from Emission Reduction Benefits and Energy Benefits , and the sales and marketing of such benefits ; and C WHEREAS JC and CII wish to enter into this Agreement for the purpose of developing a Landfill Gas Capture and Collection System at the Landfill , capturing Landfill Gas , creating and marketing ERBs , and possibly developing one or more additional beneficial uses of Landfill Gas captured and creating and marketing Energy Benefits in conjunction with the Project ; D NOW , THEREFORE , for good and valuable consideration , the receipt and sufficiency of which is acknowledged by the Parties hereto , CII and JC hereby agree as follows “ Agreement ” AGREEMENT 1 DEFINITIONS a “ Beneficial End Use ” or “ BEU ” shall mean any commercial use of LFG other than flaring LFG captured by the LFGCCS and generating carbon credits Beneficial End Use may include , but is not limited to , development of a LFGTES or any other product or products derived from LFG captured by the Project such as electric power , thermal energy , direct - use gas , pipeline quality gas , and any associated environmental attributes , any or all of which are made available through the Project b “ BEU Project ” shall mean the evaluation , development , and or operation of the BEU c “ BEU Project Operational Date ” shall mean the date a BEU Project begins continuous operation d “ CII Available BEU Levered Pre - Tax Cash Flow ” shall mean the amount of cash available to CII from the BEU Project including revenues from the sale or monetization of Energy Benefits after paying all development , construction , and cash operating Expenses other than taxes payable but including working capital uses , royalties and partner compensation including the JC BEU Royalty , servicing all debt and making any interest payments , and making investments in the BEU Project and any BEU expansions CII Available BEU Levered Pre - Tax Cash Flow shall be calculated as shown in Exhibit 2 e “ CII Available LFGCCS Levered Pre - Tax Cash Flow ” shall mean the amount of cash available to CII from the LFGCCS Project including Net ERB Revenue after paying all development , construction , and cash operating Expenses other than taxes payable but including working capital uses , royalties and partner compensation ; servicing all debt and making any interest payments ; and making investments in the LFGCCS Project and any LFGCCS expansions CII Available LFGCCS Levered Pre - Tax Cash Flow shall be calculated as shown in Exhibit 1 f “ CII BEU Internal Rate of Return “ IRR ” ” means the internal rate of return to CII from the BEU Project This figure is used to measure the potential growth rate of a BEU Project after investment , operating expenses , cash compensation to JC , partners , and other third party compensation CII BEU IRR is calculated as the discount rate at which the net present value of CII Available BEU Levered Pre - Tax Cash Flow for the BEU Project’s life initial investment and all future CII Available BEU Levered Pre - Tax Cash Flow is equal to zero , as determined by the XIRR function in Excel This is used to determine overall BEU project economics and whether the BEU Project is Economically Unfeasible g “ CII LFGCCS Internal Rate of Return “ IRR ” ” means the LFGCCS internal rate of return to CII This figure is used to measure the potential growth rate of the LFGCCS stage of the Project after investment , operating expenses , cash compensation to JC , partners and other third party compensation CII LFGCCS IRR is calculated as the discount rate at which the net present value of CII Available LFGCCS Levered Pre - Tax Cash Flow for the LFGCCS Project’s life initial investment and all future anticipated CII Available LFGCCS Levered Pre - Tax Cash Flow is equal to zero , as determined by the XIRR function in Excel This is used to determine overall LFGCCS project economics and whether the LFGCCS is Economically Unfeasible h “ CII Project IRR ” means the discount rate at which the net present value of CII Available LFGCCS Levered Pre - Tax Cash Flow plus CII Available BEU Levered Pre - Tax Cash Flow for the Project’s anticipated life is equal to zero , as determined by the XIRR function in Excel CII Project IRR is used to determine whether the Project is Economically Unfeasible i “ Economically Unfeasible ” shall mean i with respect to a LFGCCS , that the Project’s actual or reasonably anticipated CII LFGCCS IRR after all partner allocations over a period of ten years from the LFGCCS Project Operational Date fails to meet a minimum CII LFGCCS return threshold of at least 15 , orPage1883 June 14 , 2010 – 6 00 pm Continued will otherwise not be sufficient to allow Buyer to economically develop or operate the LFGCCS , in either case as determined by Buyer acting reasonably ; or ii with respect to a BEU , that the Project’s actual or reasonably anticipated CII BEU IRR after all partner allocations over a period of ten years from the BEU Project Operational Date fails to meet a minimum CII BEU return threshold of at least 15 , or will otherwise not be sufficient to allow Buyer to economically develop or operate the BEU , in either case as determined by Buyer acting reasonably ; or iii with respect to the Project , that the Project’s actual or reasonably anticipated CII Project IRR after all partner allocations over a period of ten years from the BEU Project Operational Date fails to meet a minimum CII Project return threshold of at least 15 , or will otherwise not be sufficient to allow Buyer to economically develop or operate the Project , in either case as determined by Buyer acting reasonably j “ Effective Date ” shall mean the date that this Agreement is fully executed by both CII and JC k “ Emission Reduction Benefit ” and “ ERB ” means all benefits and all associated rights , title , and interest , without limitation , in or arising out of the environmental and financial benefits associated with a reduction in or avoidance of Greenhouse Gas emissions , whether such right , benefit , title , or interest is in existence as of the date of this Agreement or arises thereafter , including , without limitation , any emission reduction credits , verified emission reductions , voluntary emission reductions , carbon offsets , allowances , voluntary carbon units , avoided compliance costs , emission rights and authorizations under any ERB Regime , carbon credits , benefits or releases , and including any Reporting Rights l “ Energy Benefit ” means all benefits and all associated rights , title , and interest , without limitation , in or arising out of the financial benefits associated with the beneficial use of LFG , whether such right , benefit , title , or interest is in existence as of the date of this Agreement or arises thereafter , including , without limitation , any revenue from the sale of energy , renewable energy credit , monetized tax credit or other monetized federal incentive as reasonably associated with the BEU Project m “ Energy Benefit Revenue ” shall mean revenue or cash associated with the sale or monetization of Energy Benefits For the avoidance of doubt , federal incentives in the form of energy tax credits or other similar incentives shall only count towards Energy Benefit Revenue to the extent they are monetized and available to the Project in the form of cash Energy Benefit Revenue shall be recorded at the time payment or cash is actually received from the sale or monetization of each respective Energy Benefit n “ ERB Revenue ” means revenue or cash associated with the sale or monetization of ERBs generated from the Project ERB Revenue shall be recorded at the time payment or cash is actually received from the sale or monetization of each respective ERB to a third party purchaser o “ Equipment ” means either i any individual piece of equipment used in the Project or ii the total of such equipment used in the Project p “ Exhibit 1 ” sets forth the financial calculations of ERB Net Revenue and CII Available LFGCCS Levered Pre - Tax Cash Flow q “ Exhibit 2 ” sets forth the financial calculations of CII Available BEU Levered Pre - Tax Cash Flow r “ Expenses ” means all third - party costs reasonably incurred by CII in conjunction with its development , operation and maintenance of the Project and pertain to each phase independently s “ Facility Site ” means the portion of the property on the Landfill leased to CII t “ JC BEU Royalty ” shall mean the payment to JC as compensation for right and title to use the gas collected in the LFGCCS for the BEU Project The JC Royalty shall be a dollar value equal to 12 of Energy Benefit Revenue less any monetized tax credits or grants , either state or federal To the extent the LFGTES is a direct - use , high - BTU gas system , other type of BEU , or any combination thereof the JC BEU Royalty may need to be restated and quoted relative to MMBTU sold or other reasonably applicable basis u “ JC LFGCCS Post Five Year Allocation ” shall be a dollar value equal to fifteen percent 15 of the ERB Revenue payable to JC in connection with its ownership in the Landfill and participation in the LFGCCS Project during the period of operation of the LFGCCS beginning after the fifth anniversary of the LFGCCS Project Operational Date until the end of the Term v “ JC LFGCCS Initial Five Year Allocation ” shall be a dollar value equal to five percent 5 of the ERB Revenue payable to JC in connection with its ownership in the Landfill and participation in the LFGCCS Project during the period of time from the LFGCCS Project Operational Date until the fifth anniversary of such date w “ Landfill ” means the Johnston County Sanitary Landfill located at 680 County Home Road west of Smithfield , North Carolina x “ LFG ” shall mean landfill gas y “ LFGCCS ” shall mean a Landfill Gas Capture and Collection System which may be installed by CII in the first development phase of the Project , including the network of LFG recovery wells and interconnecting pipes together with attendant valves , LFG blower , flare , condensate collection and distribution system , condensate sumps and pumps , monitoring devices and other relatedPage2884 June 14 , 2010 – 6 00 pm Continued Equipment installed by CII for the purpose of extracting , collecting and transporting LFG to the flare and , if constructed , to the BEU Project for its ultimate combustion by CII z “ LFGCCS Contractor ” shall mean the CII contractor s and sub - contractors who design , permit , furnish , install , operate and maintain the LFGCCS Project aa “ LFGCCS Due Diligence Period ” shall mean a three - month period beginning upon the Effective Date and ending on the three - month anniversary thereof bb “ LFGCCS Project ” shall mean the development of the LFGCCS cc “ LFGCCS Project Operational Date ” shall mean the date the flare begins combusting LFG on a continual basis for the LFGCCS Project , and all major components of the LFGCCS Project have been installed and placed in service dd “ LFGTES ” shall mean the Landfill Gas to Energy System which may be installed by CII in the second development phase of the Project Such system may include , but is not limited to , LFG metering Equipment and flow meters , compression Equipment , an oil and gas cooler , a condensate knockout tank , scrub areas , generating Equipment , electric generation , pipeline quality processing Equipment , electric transmission and interconnect Equipment and other related facilities ee ff “ Net Book Value ” means initial capital cost less straight line 10 year depreciation prior to CII terminating operations at all or part of the Project gg “ Net ERB Revenue ” shall mean ERB Revenue less either the JC LFGCCS Initial Five Year Allocation or the JC LFGCCS Post Five Year Allocation , whichever is applicable hh “ Normal Routine Landfill Operations ” shall include all incoming waste loads , daily cover operations and alternate daily cover operations ii “ Permits ” shall mean certificates , letters , permits , consents , authorizations , licenses , approvals and registrations required by relevant government authorities for construction and operation of the Project jj “ Project ” means the development , permitting , construction , and operation of a LFGCCS Project , a BEU Project , or a combined LFGCCS BEU Project kk “ Project Facility Site ” shall mean at least two 2 acres of area located within the Landfill property upon which CII may access , install , construct , operate and maintain the BEU Project along with the flare and blowers for the LFGCCS Project ll “ Register or Registration ” means registering ERBs generated from any Project with a reputable as determined by CII North American Emission Reduction registry such as but not necessarily limited to the Climate Action Reserve and the Voluntary Carbon Standard mm “ Reporting Rights ” means the exclusive right to claim and or report the benefits of any ERB to any governmental entity , ERB Regime or private entity , including the exclusive rights to claim and or report the benefits of any form of acknowledgement or certification related to the ERB or ERB Creation Activities by any government agency or other entity , whether arising under local , state , national , or international laws or regulations relating to climate change , renewable energy , or otherwise nn “ Term ” shall mean the term of this Agreement , which begins upon the LFGCCS Project Operational Date and continues through the later of i the tenth anniversary of the LFGCCS Operational Date , provided that such Term shall be automatically extended for two consecutive five year terms , or ii the twentieth anniversary of the BEU Project Operational Date , or until such earlier time as this Agreement is terminated pursuant to Section 5 or 12 of this Agreement oo “ Validation and Verification ” includes all efforts , including all third - party efforts , relating to the quantitative and qualitative evaluation of data that confirm the existence , quantity , and quality of ERBs generated by any Project pursuant to this Agreement 2 NATURE AND PURPOSE OF AGREEMENT ; OWNERSHIP OF LFG AND ERBS a Pursuant to the terms of this Agreement , CII will evaluate the feasibility of a LFGCCS at the Landfill If development of the LFGCCS is successful , CII will evaluate the feasibility of a Beneficial End Use If CII proceeds with development of either the LFGCCS or the Beneficial End Use , CII will advance all funds necessary for such development , subject to the terms of this Agreement b If developed , the LFGCCS is intended to capture LFG from which CII will develop ERBs Notwithstanding any other provision in this Agreement i CII will be entitled to all rights to collect and combust all LFG captured by the Project throughout the Term ; and ii CII shall have title to all LFG captured by the Project throughout the Term ; and iii CII shall have title to and all rights to market all ERBs generated in conjunction with the Project throughout the Term c JC hereby grants , conveys , and transfers to CII title to i all LFG captured by the Project throughout the Term and ii title to all ERBs generated in conjunction with the Project throughout the Term CII or its designated marketing agent shall have title to and the exclusive right to market all ERBs , which are created in conjunction with the Project throughout the Term 3 PROJECT PHASES a The Project will consist of two phases In the first phase , CII will evaluate the feasibility of and , if such evaluation is favorable , develop the LFGCCS In the second Phase , CII will evaluate thePage3885 June 14 , 2010 – 6 00 pm Continued feasibility of and , if such evaluation is favorable , develop a BEU Project subject to the feasibility standards outlined above b Subject to Section 5 a , in the LFGCCS Phase , CII and or its authorized representatives will construct the LFGCCS at the Landfill i CII shall purchase , install , own , operate and maintain the LFGCCS ii CII shall use commercially reasonable efforts to complete the installation of the LFGCCS within the latter of twelve months of the Effective Date of this Agreement or eight months from the date CII obtains all necessary Permits , provided that CII has submitted applications for such Permits in a timely manner but no later than six months from the Effective Date iii The Parties anticipate that vertical LFG extraction wells will be installed to sufficiently cover the Landfill in areas of the Landfill that have been brought to final or intermediate grades and expanded as active areas of the Landfill reach waste grade Design of the extraction wells will take into account the type of final cover anticipated for the Landfill iv The Parties anticipate that the vertical wells will be connected to lateral LFG conveyance piping that will be installed based on final design criteria to take into account the type and thickness of the final cover system The design will adapt as necessary to the site conditions v Development of the LFGCCS is voluntary and is not intended to satisfy any statutory , regulatory , or other governmental requirements vi CII will operate the LFGCCS Project to maximize methane collection efficiency to the extent commercially practicable vii The Parties anticipate that LFG will be conveyed to a central blower flare station , and that the Project would combust LFG to produce ERBs c Subject to Section 5 c , in the BEU Project phase , CII and its authorized representatives will evaluate an option to identify and develop , after consultation with JC , a BEU Project Any development of a Beneficial End Use would be based on the confirmed quantities and quality of LFG collected with the flaring system and the overall economic feasibility of the BEU Project and or the Project i CII will determine the feasibility of a BEU Project CII must make this determination no later than six 6 months after the LFGCCS Project Operational Date , unless the Parties mutually agree to extend this deadline for a period of up to three 3 months due to unanticipated technical issues related to the Project ii In the event CII elects to develop and operate the BEU Project , CII will design such BEU Project and will use commercially reasonable efforts to install the BEU Project and have it operating within the latter of twenty - four 24 months of the LFGCCS Project Operational Date or fifteen months from the date CII obtains all Permits , provided that CII has submitted applications for such Permits in a timely manner but no later than twelve months from the LFGCCS Operational Date Notwithstanding the foregoing , if the quantity of Landfill Gas from the Landfill is not sufficient to allow CII to operate the BEU Project at the currently anticipated capacity , CII may reduce the BEU Project capacity to a level necessary to economically utilize the quantity of Landfill Gas actually being delivered If , in CII’s sole opinion , the Landfill Gas delivered hereunder is insufficient for the BEU Project , CII may forego development and or operation of a BEU Project iii If the Beneficial End Use includes development of a LFGTES , the LFGTES is currently anticipated to include the LFG processing Equipment and engine generator set rated at 19 MW iv The Parties anticipate that processing Equipment will include LFG compression and treatment Equipment as necessary to meet LFG supply requirements to the engine genset v CII will use commercially reasonable efforts to ensure that air emissions from the engines will satisfy Best Available Control Technology BACT limits vi The BEU Project shall be fenced , gated and locked during construction and operations and such fences shall have appropriate signage Employees of JC shall not be permitted within the fenced boundaries of the BEU Project area while this Agreement is in force , except in the event of an emergency or disaster , unless accompanied by an individual authorized by CII d CII will provide timely notification to JC ahead of all significant construction and commissioning activities in the event JC may want to inspect or witness , but in no event shall be less than 24 hours prior to the occurrence of such event e CII will finance , permit , design , construct , and operate the Project in substantial compliance with all applicable laws , regulations , rules , ordinances and Permits and maintain all associated Equipment in accordance with standard engineering practices f CII will provide to JC monthly data including but not limited to the volume and energy content of LFG flared in the LFGCCS Project or combusted in the BEU Project JC may install and place such meters and measuring devices as determined by JC to be necessary for measuring LFG flow and methane content at its own cost of placement and operation at a location outside the CII Facility Site to the extent they do not interfere with the operation of the Project Page4886 June 14 , 2010 – 6 00 pm Continued g CII will work with JC and provide the specifications and engineering drawings for the Project to JC for their review and approval which shall not be unreasonably withheld or delayed prior to beginning any construction activities or obtaining any Permits for the Project h CII will make commercially reasonable efforts to develop and operate the Project so as not to unreasonably or materially interfere with JC’s activities on the Landfill i JC will make commercially reasonable efforts , taking into account the need to conduct Normal Routine Landfill Operations , to operate the Landfill so as not to unreasonably or materially interfere with CII’s development and operation of the Project j CII will maintain all records , monitoring data and other documentation including , but not limited to , Permits for the Project and all other documentation relating to the operation of the Project for the Term and three years thereafter CII shall make all such documentation available for inspection to JC and any State regulatory agency including , but not limited to , the North Carolina Department of Environment and Natural Resources 4 REAL PROPERTY LEASE During the Term , CII will lease the Facility Site from JC CII shall pay JC rent in the amount of One and No 100 Dollars 100 per year for each calendar year or partial year during the Term , payable on or st before each December 31 during the Term , pursuant to a Lease to be negotiated between the Parties Any improvement placed upon the Facility Site by CII , as well as fixtures and articles of personal property attached to or used in connection with the Facility Site , shall be the property of CII 5 EVALUATION PERIODS a During the LFGCCS Due Diligence Period , CII shall assess the viability of the LFGCCS Project at CII’s expense This review will include a thorough review of the Landfill and its design features ; the waste placed , with careful consideration to the impact of inorganic materials and their placement within the Landfill ; the location of impermeable boundaries that may be segregating wastes and dividing the fill areas ; and field verification of the modeled LFG production potential The gathered information will be used to select , size , and locate the final LFGCCS components and to establish the first phase of Project financial expenditures At any time during the LFGCCS Due Diligence Period , CII shall have the unilateral right to terminate this Agreement if CII determines that the LFGCCS Project and or the Project is Economically Unfeasible If CII does not notify JC of its decision to go forward with the Project within one hundred and twenty days after the Effective Date , JC may at its sole discretion terminate this Agreement If CII or JC terminates this Agreement pursuant to this Section 5 a , neither Party shall have any further obligation to proceed under this Agreement b In the event CII does not proceed with the LFGCCS Project , CII will provide JC with the data and analysis collected during the due diligence period and used by CII in making this determination c In the event that CII proceeds with the LFGCCS Project , CII shall conduct at CII’s expense a due diligence assessment on the viability of a Beneficial End Use Such assessment shall be completed within six 6 months from the LFGCCS Operational Date , unless the Parties mutually agree to extend this deadline for a period of up to three 3 months due to unanticipated technical issues related to the Project 6 REMUNERATION AND COSTS a If CII constructs and operates an LFGCCS Project , following the LFGCCS Project Operation Date , JC shall be entitled to either the JC LFGCCS Initial Five Year Allocation or the JC LFGCCS Post Five 5 Year Allocation , whichever is applicable For the avoidance of doubt , at no time shall JC be entitled to recover both the JC LFGCCS Initial Five Year Allocation and the JC LFGCCS Post Five Year Allocation simultaneously b The JC LFGCCS Initial Five Year Allocation or JC LFGCCS Post Five Year Allocation , if any , will be calculated by CII upon the sale , recording and receipt of ERB Revenue from each respective ERB and paid to JC within 30 days of receipt of such ERB Revenue together with documentation explaining the basis for such calculation c If CII develops the LFGCCS Project and there is a subsequent substantial change to the frequency or composition of waste deposited at the Landfill prior to closure , the Parties shall renegotiate the JC LFGCCS Initial Five Year Allocation and or the JC LFGCCS Post Five Year Allocation d If CII develops the LFGCCS Project and subsequently determines it to be Economically Unfeasible , CII may terminate this Agreement and dispose of the Equipment pursuant to Section 12 , and JC will not be entitled to either JC LFGCCS Initial Five Year Allocation or JC LFGCCS Post Five Year Allocation after the date of termination of the Agreement and CII shall not be obligated to develop a Beneficial End Use e If CII develops a BEU Project , JC will be entitled to the JC BEU Royalty and CII will be entitled to CII Available BEU Levered Pre - Tax Cash Flow f In the event CII elects not to develop a BEU Project pursuant to the terms of this Agreement , JC may develop , at its own cost and subject to all of CII’s rights granted with respect to the LFGCCS , a Beneficial End Use of the capt