Memorandum of Agreement

Between

The State of Alaska Department of Transportation and Public Facilities

and

Kenai Peninsula Borough

for

Kenai Spur Road Extension

Preliminary Engineering and Environmental Phase

This Agreement is effective upon execution by the State of Alaska, Department of Transportation and Public Facilities, hereinafter called the Department, and the Kenai Peninsula Borough, hereinafter called the Borough.

The Department and the Borough do hereby agree to the following:

1. SCOPE OF WORK

This project will extend the existing Kenai Spur Highway north from its current terminus at milepost 38.42 in Captain Cook State Park, 26 miles through Borough land that has been subdivided and sold for use by the public. The Borough will prepare and obtain approval for the environmental document, obtain all required permits, obtain any required right of way, design, advertise and construct the project. The Borough will own and maintain the road. The Borough will assign a project manager to administer the work, assisted as needed by Borough employees and consultants with expertise in the required areas.

The Department will assign a coordinator to prepare initial documents for FHWA approval and then provide guidance, approval and concurrence as needed to maintain conformance with FHWA and other applicable requirements. Specific work items and responsibility for actions are listed in Appendix A. All other unspecified actions that are required for a completed project will be handled through a similar division of work.

2. MAINTENANCE AND OPERATIONS

A. The Borough agrees to maintain and operate the project in perpetuity.

1. The Borough agrees to maintain and operate the project consistent with 23 CFR 1.27, the Alaska Highway Maintenance and Operations Manual (HMOM), and the applicable rules and regulations of the Kenai Peninsula Borough.

2. The Borough shall perform its activities under this agreement at its sole cost and expense and without reimbursement from DOT&PF.

3. PROPERTY MANAGEMENT

The Borough agrees that its management of the right of way is subject to the provisions of 23 CFR �1.23 in perpetuity.

The Borough may not allow any encroachment within the right of way of the project without the prior consent of the Federal Highway Administration. The Borough may not sell any portion of the right of way without the prior consent from the Federal Highway Administration.

4. Funding

A. The Borough acknowledges that the transfer of FHWA funds is accomplished on a reimbursable basis. This requires that the Borough provide the initial funds necessary to sustain the project costs until payment requests are processed.

B. The Borough and the Federal Government shall pay the total cost of the project, including all project chargeable review and engineering costs and other expenses incurred by the State. The Federal Government shall pay in accordance with the Intermodal Surface Transportation Efficiency Act 1991, Title 23, United States Code, as amended, and Office of Management and Budget circulars A-102 and A-128. Nothing in this agreement shall be construed as a promise by the State as to the amount or nature of federal participation in this project.

The Federal Government will determine the federal aid participation rate in this project. The parties expect that it will be 80 percent of the project's costs. The parties agree that if the expected rate of participation is revised by the federal government, the parties may renegotiate this agreement.

C. In the event costs incurred by the Borough are determined to be non-reimbursable by the Federal Government, the State shall immediately notify the Borough of that determination and the actions required of the Borough to change the determination.

D. Federal funds which are to be obligated for the project may not exceed the amount shown on Line m, Column 3 of the chart set forth in Appendix B, Project Budget, without written authority by the State, subject to the approval of the Federal Highway Administration.

5. Billing

A. The Borough will bill the Department using Form 25A591 not more than once per month. The Billing will include supporting documentation consisting of:

� A summary of the names of each Borough and consultant employee charging time during the billing period, their title or classification, their hourly billable rate, and their total hours and cost.

� Overhead is to be included in the hourly billable rate, and is not to be listed separately.

� Reimbursable miscellaneous expenses will be those customarily not included in standard overhead rates, and will be itemized in enough detail to identify what the charges are and if they are appropriate.

A. Following receipt of the invoice from the Borough, the State shall bill the Federal Government, as applicable, for reimbursement of those costs eligible for federal participation to the extent that such costs are attributable and properly allocable to this project.

B. The State will reimburse the Borough for those costs up to the amounts allowed in the Federal aid Project Agreement between the State and the FHWA (line m, Column 3 of Project Budget, Appendix B), to the extent that such costs are directly attributable and properly allocable to this project.

C. If match funds are supplied by the Borough, the State shall bill the Borough for that portion of State costs not reimbursed by the Federal Government, up to a maximum of 20% of the eligible costs or the un-reimbursed costs, whichever is less. The Department will bill the Borough not more than once per month for project chargeable activity. The parties recognize that in 2001 SCA Ch. 61 a $250,000 match was appropriated by the Alaska State Legislature as the Borough's Kenai Spur Road Extension TEA-21 high priority match and that DOT/PF is in receipt of those funds on the Borough's behalf.

D. The Borough agrees that if payment or arrangement for payment of any of the State's billings relative to the project (including, but not limited to, State force work, project cancellation, overpayment, or cost ineligible for federal participation) is not made to the State within 45 days after the Borough has been billed, no additional Federal project funding will be approved until full payment is received.

4. Availability of Records

The Borough shall retain all project records that document all costs incurred and actual expenditures in accordance with accepted accounting practice, procedures of the U.S. Department of Transportation, and the Alaska Department of Transportation and Public Facilities. The records shall be open to inspection by the State and Federal Government at all reasonable times and shall be retained and made available for such inspection for a period of not less than three years from the final payment of any federal aid funds to the Borough. Copies of any of these records shall be furnished to the State or Federal Government upon request.

5. Funding Authorization and Phases

A. The Borough shall not incur any costs eligible for federal participation on any classification of work on this project until authorized in writing by the State for each classification. The classifications of work for projects are:

1. Preliminary engineering up to and including environmental approval;

2. Preparation of plans, specifications;

3. Right-of-way acquisition; and

4. Project construction.

B. This memorandum of agreement is for preliminary engineering and environmental phase (7-A-1).

6. AUDIT OF PROJECT

A. State and Federal Single Audit Requirements

The Borough shall provide an audit meeting state (2 AAC 45.010 - .090) and federal (OMB Circular A-133, Audits of States, Local Governments and Non-profits) requirements for a single audit of the Borough's books and records covering their annual operations or this agreement specifically if $300,000 or more of State or federal financial assistance is received during the fiscal year. An audit prepared under this paragraph shall be performed by an independent CPA firm, or at the Borough's option, by the Departments' Auditor, using generally accepted government auditing standards. One audit covering both State and Federal requirements is acceptable. The audit should be completed within one year after the close of the Borough's fiscal year for which the audit is required. The report should be in the Borough's files and available to both State and Federal representatives. Under applicable regulations additional copies are required for the Governor's Office and the Federal Government.

B. Consultant Audit Requirements

The Borough shall perform an audit of a consultant's rates, including, but not limited to, overhead, salaries, rent, equipment rates, and vehicle use rates, performed prior to approving a consultant contract in accordance with the Department's Professional Service Agreement (PSA) Manual.

C. Local Agency Indirect Rates

If the Borough charges an indirect cost rate (overhead rate) to this agreement, the rate is subject to audit and should meet the requirements of OMB Circular A-87 to be eligible for reimbursement.

D. Other

Any overpayments or ineligible costs identified during these audits, or from not using proper procedures, are the responsibility of the Borough to reimburse to the Department as appropriate. Any costs associated with audits required under this section are the Borough's responsibility and a project expense eligible for reimbursement under this agreement. The Department also reserves the right to conduct its own audit of the project records at any time.

7. PROJECT STANDARDS

The Borough agrees to comply with the terms and conditions set forth in (1) Title 23, U.S. Code Highways, (2) the regulations issued pursuant thereto, (3) Office of Management and Budget Circular A-102, (4) Alaska Statute 35.15.080, and (5) the Department manuals listed below:

Highway Preconstruction Manual

Alaska Construction Manual

Standard Drawings Manual

Right of way Manual

Utilities Manual

Standard Specifications for Highway Construction

8. INDEMNIFICATION

The Borough shall indemnify, defend and hold harmless the State, its officers, agents, employees and contractors for any claims or suits arising out of any local assumption of planning, design and construction responsibilities to the extent the borough has assumed those responsibilities.

9. PERMITS

The Borough shall coordinate all regulatory agency review and obtain all necessary written approvals from regulatory agencies.

10. COMPLIANCE WITH LAWS

The Borough, and any contractor engaged by the Borough, shall comply with the provisions of any affirmative action plan applicable to the project, AS 35, AS 36, AS 44.27.060, and 17 AAC in constructing public works.

11. Contract Provisions Regarding Nondiscrimination

A. The Borough agrees that it will include in any advertised bid proposal and in each contract the provisions of Appendix A of 23 CFR Part 230, Subpart A (2001).

B. The Borough agrees it will comply with the requirements of 23 CFR �230.101 to �230.121 during the performance of any contract executed to complete the project.

12. TERMINATION FOR CAUSE

A. If a municipality that has assumed control of a public works project under AS 35.15.080 is in substantial violation of an agreement executed under 17 AAC 55.020, or if the municipality has failed to fulfill its responsibilities under the agreement in a proper and timely manner, the department will, in its discretion, notify the municipality of the violation or failure. If the municipality fails to correct the violation within a reasonable time, or to offer assurance satisfactory to the department that the violation or failure will be remedied or the work defects cured, the department will, in its discretion, terminate the agreement and assume control of the project. The department will give written notice to the municipality at least 15 days before the effective date of termination, and will state the reasons for the termination. The municipality may appeal the department's decision to the commissioner within 10 days. Pending the commissioner's decision, no work may proceed on the project. The commissioner's decision is final.

B. If an agreement is terminated for cause under this section, the department will compensate the municipality for satisfactory work on the project to the extent that the municipality has not been compensated. However, the municipality is not relieved of any liability to the department for damages caused by the contract breach, and the department will, in its discretion, withhold compensation due under this subsection until the amount of damages owing to the department can be determined and deducted against the department's obligations.

C. The department will, in its discretion, waive the requirements of this section in an agreement if the municipality must sell revenue bonds to provide money for construction of a public works project as proposed in that agreement.

13. Termination for Public Convenience

A. The Commissioner of the Alaska Department of Transportation and Public Facilities may terminate this agreement if:

1. the requisite federal funding becomes unavailable through failure of appropriation;

2. a contractor is prevented from proceeding with the work as a direct result of an Executive Order of the President with respect to the prosecution of war or in the interest of national defense, or an Executive Order of the President or Governor of the State with respect to the preservation of energy resources;

3. a contractor is prevented from proceeding with the work by reason of a preliminary temporary restraining order, special, or permanent injunction of a court of competent jurisdiction where the issuance of such order is primarily caused by the acts or omissions of persons or agencies other than the contractor; or

4. the Commissioner of the Department of Transportation and Public Facilities determines that such termination is in the best interests of the State.

B.

1. The department will, in its discretion, at any time, terminate an agreement executed under 17 AAC 55.020 and assume control of the project itself, if the department determines that termination is in the best interests of the state as defined in Section 11(A). The department will give written notice to the municipality of its decision to terminate the agreement not less than 15 days before the effective date of termination. The written notice will include a statement of why the decision to terminate was made.

2. If an agreement is terminated for the convenience of the state under this section, the department will reimburse the municipality for that portion of its expenses which was not otherwise reimbursed under the agreement, and which is directly attributable to performance under the agreement. The department will also reimburse the municipality for any costs properly incurred by the municipality in honoring convenience termination clauses in its agreements with its contractors, as long as those clauses conform to the standard convenience termination clause used by the state for similar type contracts.

3. The department will, in its discretion, waive the requirements of this section in an agreement if the municipality must sell revenue bonds to provide money for construction of a public works project as proposed in that agreement.

14. Dispute Resolution

1. If a dispute arises under this agreement between the Borough and the State, and the parties cannot resolve the matter between them within 45 days after notice is given by the aggrieved party to the other party, the aggrieved party may request that the matter be resolved by arbitration.

2. Each party shall appoint an arbitrator to hear the dispute. The two arbitrators acting together shall select a third arbitrator to join them on the arbitration panel. The three arbitrators shall hear the matter under such rules and procedures, as they deem necessary to conduct the proceedings.

3. Each party shall pay the expenses of the arbitrator it appoints. The party against whom a decision is rendered shall pay the costs of the arbitrator selected by the arbitrators appointed by the parties, and all expenses incurred in the conduct of any hearing on the dispute.

4. Except when the provisions of this paragraph provide otherwise, an arbitration under this paragraph is subject to AS 09.43.010 - 09.43.180, the Uniform Arbitration Act.

5. A decision by the Federal Government denying, or limiting, federal participation in project costs may not be arbitrated under this agreement. The Borough may only pursue such claims under federal law and procedure.

15. FHWA Project Agreement Provisions

The Borough accepts and will comply with the provisions of 23 CFR 630.307.

16. Waiver of Provisions

The failure of either party to insist upon strict performance by the other party of any provision in this Agreement is not a waiver or relinquishment of the provision for the future. Any waiver of a provision in this Agreement cannot be enforced or relied upon by the waiver unless the waiver is in writing and signed by both parties.

17. NOTICE TO PROCEED

The State will notify the borough in writing after the agreement is fully executed, when reimbursement for the work described herein may begin. The Notice to Proceed will be made retroactive to the date of Federal Highway Administration authorization, March 12, 2002.

18. Amendment of Agreement

This agreement may only be modified or amended by written agreement on the prescribed Supplemental Agreement forms signed by both parties.

19. PROJECT COORDINATORS

The project coordinator for the department is:

Miriam Tanaka P.E.

P.O. Box 19600

4111 Aviation Avenue

Anchorage, AK 99519-6900

The project coordinator for KPB is:

Wayne Aderhold

Project Manager

47140 E. Poppy Lane

Soldotna, AK 99669

KENAI PENINSULA BOROUGH ALASKA DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES

By: By:

Its: Its:

Dated: Dated:

ACKNOWLEDGMENTS

STATE OF ALASKA )

) ss.

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ____ day of , 200__, by , Mayor of the Kenai Peninsula Borough, an Alaska municipal corporation, for and on behalf of the corporation.

_________________________________

Notary Public for State of Alaska

My Commission Expires: __________

STATE OF ALASKA )

) ss.

THIRD JUDICIAL DISTRICT 

The foregoing instrument was acknowledged before me this ____ day of , 200__, by _(name)_________________________, the _(title)____________________________ of Alaska Department of Transportation and Public Facilities, for and on behalf of the Department.

_________________________________

Notary Public for State of Alaska

My Commission Expires: __________

Appendix A Delegation Matrix

1. Approve for use as a contracting method.

Appendix B Project Budget, PHASE I

The federal-aid participation rate in this project will be determined by the Federal Government. The parties expect that it will be 80 percent; however, it is understood that the rate may vary. The parties agree that if the expected rate of participation is revised by the federal government, the parties may renegotiate this agreement. All costs not reimbursed by the Federal Government shall be the responsibility of the Borough.

Attachment 4-B

The Borough desires to supplement the agreement entered into and executed

on . Except as expressly modified by this supplement, all provisions in the basic agreement remain in effect.

Reason for Supplement:

The Borough further stipulates that pursuant to said Title 23 regulations and policies and procedures, and as a condition to payment of the federal funds obligated, it accepts and will and comply with the applicable provisions.

Borough Department of Transportation and Public Facilities

By: By:

Title: Title:

Date: Date: