#09 Enter into a stipulation and settlement resolving claim associated with Janesville Disposal Facility
PUBLIC WORKS DEPARTMENT MEMORANDUM
April 11, 2011
TO: City Council
FROM: Carl J. Weber P.E., Director of Public Works
SUBJECT: Stipulation and Settlement Resolving the Claim of the City of
Janesville et al Relating to Liabilities Associated with the Janesville
Disposal Facility
Staff Recommendation
Staff recommends that the City Council approve the Stipulation and Settlement
Resolving Claim Numbers 2708 and 44759 in regards Motor Liquidation company,
et al., f/k/a General Motors Corp. et al. Debtors.
City Manager’s Recommendation
The City Manager recommends approval.
Request
Due to bankruptcy proceedings commenced by the Motors Liquidation Company
(MLC) on 6/1/09, the City of Janesville has filed a claim seeking participation by
MLC in the cost of future expenses related operation and maintenance work at the
Janesville Disposal Facility (JDF). In March of 2011 MLC et al. offered a
settlement payment to the city in response to the claim. Staff requests that the
Council review and approve the attached settlement as presented.
Background
The JDF includes three adjacent landfills and a waste processing facility, south of
Blackbridge Road and east of N. Parker Drive, which operated between 1952 and
1985. In 1986 the Federal Government commenced enforcement actions due to
environmental issues at the JDF. Since that time, the City of Janesville and five
major industrial users of the site have been working cooperatively under the
direction of the USEPA to remediate the environmental issues. The long term care
portion of the agreed work effort is expected to continue for sixteen more years.
In recent years the General Motors Corporation, one of the industrial users of the
JDF, has filed for Chapter 11 Bankruptcy reorganization. Although the City
currently maintains reserve funds which are held for the cost of future systems
operation, monitoring and maintenance at the JDF, additional funding may be
needed. The current Potentially Responsible Party (PRP) agreement between the
major parties allows for a portion of those costs to be charged to the five industrial
users. As the bankruptcy action will preclude future assessments of the former GM
Corp., the City filed its claim in an effort to access an appropriate share of the
assets to be disbursed by the bankruptcy process.
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Analysis
Attorneys for the City and for MLC, with input from City staff, have estimated the
cost of the remaining sixteen years of remediation and maintenance of the JDF to
be about $1,760,000. According to previous cost share calculations, MLC’s share
of the present value of those future costs is calculated to be approximately
$650,000. Based on the projected claims payout of the bankruptcy court, it is
estimated that the payout of the City’s claim could amount to a value of $240,000
to $300,000.
The Stipulation offered by the MLC attorneys and recommended by the City’s
representatives would make payment to the City in accordance with the
calculations provided above. The payment would be made in GM stock shares
which could be received in the next month or two. Once received, the stock could
be redeemed on the open market at the City’s discretion.
cc: Eric Levitt, City Manager
Jacob J. Winzenz, Assistant City Manager/Dir. of Administrative Services
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