HomeMy WebLinkAbout1990 04 16 City Commission Workshop Minutes
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WORKSHOP MEETING
CITY COMMISSION
CITY OF WINTER SPRINGS
APRIL 16, 1990
The Workshop Meeting of the City Commission of the City of Winter Springs, Florida,
was called to order by Mayor Leanne M. Grove at 7:00 p.m.
Roll Call:
Mayor Leanne M. Grove, present
Deputy Mayor Cindy Kaehler, present
City Manager Richard Rozansky, present
City Attorney Frank Kruppenbacher, present
Commissioners:
Arthur Hoffmann, present
Philip A. Kulbes, present
William A. Jacobs, present
Paul P. Partyka, present
Industrial Waste Services - Rates:
City Manager Richard Rozansky explained that Industrial Waste Services has asked to
give a small presentation this evening. They distributed reports to the Commission
for their information and then another meeting will be held. Mr. Tom Daley and
Mr. Julian Knackert spoke to the Commission. They spoke about some of the increases
over the last few years, the major increase was because Seminole County had closed
the landfill at Upsala.
The Commission discussed mandatory garbage service, and having it included on the
property tax rolls with Seminole County.
For the next meeting Mr. Daly was asked to provide figures as to what the cost would
be if the City did the billing, and also to include recycling. Another meeting will
be held next month.
Mayor Grove called a recess at 7:40 p.m. and called the meeting back to order at
7:50 p.m.
Seminole Utilities Acquisition:
Attorney Bill Sundstrom, Attorney John Jenkins, Terry Zaudtke, engineer and Stanley
Cohen with the firm of Rachlin & Cohen were present to speak to the Commission.
Attorney Sundstrom explained that about a year ago the City Council unanimously
approved a resolution indicating an intent to acquire the assets of Seminole Utility
through eminent domain proceedings. The lawsuit was filed in Circuit Court in Seminole
County against Seminole Utility Company, Citicorp which owns an interest and Good
Gulfstream Housing Corp. which owns a spray field. That lawsuit was filed in July of
1989.
Attorney Sundstrom explained that all of the remarks that are being made to the
Commission by himself, Attorney Jenkins, Terry Zaudtke and Mr. Cohen plus the
City Attorneys should be considered remarks being made to counsel in the process of
on-going litigation. Because he said technically we are still involved in litigation
and the comments they make to the Commission are relative to the negotiations settlement
of that litigation.
On Oct. 23, 1989 an Agreement of Settlement of Condemnation lawsuit was presented to
the Commission. That Agreement basically provided the mechanism by which the City
would have acquired the assets of Seminole Utility Company and a spray field from
Good Gulfstream Housing Corp. for a total of $12,300,000, being made up of a purchase
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Workshop Meeting, City Commission, April 16, 1990
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price of $10,500,000 for the utility and $1,500,000 for the spray field and $300,000
ancillary expenses to the defendants in the defense of that action. Attorney
Sundstrom said at that time the Settlement Agreement was presented to the Commission
and they suggested that they would carve out the terms and conditions of the trans-
actions that they would recommend to the Commission as fair, and then they would go
about the due diligence that was involved. The City was advised at that time that
Topeka Group Inc. which is a wholly owned subsidiary of Minnesota Power Corp. had an
option to acquire the assets of the Utility, and that that option would insure that
under certain terms and conditions that there was litigation involved, and that there
was a potential for additional litigation. True to that prediction, the City was sued
directly by Topeka Group under a claim of conspiracy and others. In December the
Commission was presented an amendment to the Settlement Agreement which disposed of
the interest of Topeka. That amendment was executed, and it provided that the
asset acquisition would be settled by April 15th. Attorney Sundstrom said "we are
here today to bring you up to date as to what has happened since December and April".
Mr. Terry Zaudtke then spoke to the Commission. He explained that previously he
reported to the Commission they had done some preliminary investigation of the assets
and found those to be in generally good condition. They have proceeded with some more
detailed investigations, comparing the actual facilities with criteria that has been
established for the City of Winter Springs to determine the capacity of each component,
high service wells, etc. No significant problems were found.
At the early part of the year there was a requirement by DER to load test all their
existing wastewater disposal facilities and they put a temporary moratorium on Seminole
Utilities. Seminole Utilities went ahead and did the testing,_ etc. and submitted a
final report by Jammal & Associates which backed up their disposal capacity of the
various sites and that was approved by D.E.R.
Mr. Zaudtke said that D.E.R. issued them an operational permit on their wastewater
site for 2.012 mgd which represents a capacity at their current usage of 8,000 per
month per customer of various different components, the smallest of which would be
the filtration which produces around 7400 customers. We have an agreement with
Seminole Utilities the future criteria is 7272 for both water and sewer.
The one remaining item that needs some additional improvements is the digester capacity.
That is the opinion of the City engineers. D.E.R. has permitted the whole facility
for 2.012 mgd. Mr. Zaudtke said we have an agreement to escrow future payments of
$500,000 should D.E.R. mandate any improvements to the wastewater system, whether it
be digester or other components.
Mr. Zaudtke explained on the water side, they had determined that based on our criteria,
that two additional high service pumps would be required to meet the 7272 futures and one
would be needed to meet the 5000 level. The developer agreed to supply, at closing,
$50,000 to cover one additional high service pump. The other high service pump would
be covered under future revenues and future fees. In addition it was also determined
that a well would be needed in the future, and the developer has agreed to provide a
well site. The well itself would be constructed and purchased under future revenues
and future impact fees.
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Workshop Meeting, City Commission, April 16, 1990
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Mr. Cohen reviewed the financial aspect of the transaction. The price to be paid
was $10,500,000 for the utility system properties, there was $300,000 added for
reimbursement of certain costs and $1,500,000 for land acquisition to be used for
effluent disposal. Mr. Cohen said they verified the accuracy of the projections that
had originally been made with respect to revenues and cash flows available to service
debt, and they came within a 1% variance.
Mr. Cohen said he received the final report filed for 1989 by this Utility with the
Florida Public Service Commission, and the depreciated cost, original cost, unadjusted
for any inflationary cycles, actual cost of this system as depreciated was $10,496,000
as of Dec. 31, 1989. He said we are purchasing the system for $10,500,000.
Mr. Cohen explained the financing of the transaction envisioned a five year Bond
Anticipation Note with a refunding at the end of the fifth year, at which time it was
anticipated having on board approximately 5,000 equivalent residential connections
as opposed to what was on stream when we first got into this thing, somewhere around
3,700 customers. It was further anticipated at the end of the first year we would
refund the $12,300,000 BAN and then go long term, and in order to payout $12,300,000
BAN, we would have had to issue approximately $14,195,000 in gross bonds, deduct from
that the bonding costs, the funding of the Bond Fund Reserve and that would leave
approximately $12,300,000 to payoff the debt.
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The investment bankers for the sellers did an analysis on a 35 year bond, interest only,
for the first five years which would allow the system to build up to the 5,000
level of equivalent connections that was needed. By going to the long term 35 year market
for $12,300,000 in bonds now we would save$1,895,000 in additional bonds five years from
today by locking in the interest rates and not taking any chances on variations in the
interest market.
Mr. Cohen said they have met with the two major insuring agencies for bonds, MBIA and
AMBAC, and are still awaiting their final commitment. The insurance costs will be
absorbed by the sellers. The sellers will also pay for the first few years of insuring
the bond fund reserve and they would also pay all the underwriters discounts and
issuance costs.
Mr. Cohen explained our contract with the sellers provides that after they reached a
threshold level of 5,000 customers on stream, we then will pay them out of connection
fees for future customers up to a maximum of an additional 2272 units. If it should
come to pass that D.E.R. orders the City to put in that additional digester which will
be several years from now before we reach even those early flow levels, we have an
agreement from the sellers that we will withhold the cost which is estimated to be
$500,000 from any future payments that they get from this City for new customers when
they come on line, so the City nor its customers will pay for that digester which may
be a contingency, will be paid for by the sellers out of the proceeds that they are
entitled to when future customers come on beyond the 5,000 unit level.
As to the additional pump that is needed at this time, that money is being taken out of
the closing proceeds from the seller. It is estimated to be $40 to$50,000, so again
the City will not pay for those two capital costs. One that will occur immediately
and the other is just a contingency.
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Regular Meeting, City Commission, April 16, 1990
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Mr. Cohen further explained the cost to pay for these futures at the rate of $2,000 for
equivalent residential connections will come from connection fees. There will be no
bonds issued nor will the City be required to bring out any other sources of funding.
So what happens is when a customer comes on or a permit application comes into being
we will collect approximately $2,500 pursuant to our uniform rates and at regular
accounting dates which is customary in this format, we will pay the sellers at the
rate of $2,000 to the maximum of 7272 units for the entire system, including 5,000
needed to meet the level to service the debt.
Mr. Cohen said he received this morning a financing proposal from Southeastern Municipal
Bonds for a 30 year proposal which is being analyzed.
Attorney Sundstrom explained that the amendment to the acquisition agreement had a
final date of April 15th. That date has been extended to the end of this month.
He explained that Topeka Group which is the parent of Southern States Utility now
owns Seminole Utility. An extension agreement has been received to close at the end
of the month providing a series of things take place. He said they are here this
evening to answer any questions and to indicate that a preliminary official statement
has been prepared, primarily the work product of Attorney Lang's office, Mr. Cohen's
office, Attorney Sundstrom's office, the Engineer, the Underwriter and the City
Manager's office. The anticipated closing schedule at this time is as follows:
On Monday, April 23rd we would begin the pre-closing of the asset side of the trans-
action assuming that on Monday evening the Commission approves the transaction. On
Tuesday, April 24th we would attempt to complete the closing of the asset side of the
transaction here in Seminole County, and if need be on Wednesday morning April 25th also.
The closing on the financing on the transaction will be Wednesday, April 25 and actually
close the funding on Thursday, April 26th.
Attorney Sundstrom said several things would be brought to the Commission the end of
this week: one would be a narrative of what was said here this evening, an index of
the closing documents on the asset side and a summary of all the significant documents.
Gary Akers, Southeastern Municipal Bonds, spoke about his 30 year bond issue proposal.
There was discussion of the contract with Southeastern Municipal Bonds. Attorney Lang
explained at the time the contract was terminated by the City it was on a representation
that we were going to a different type of transaction.
Attorney Lang suggested if there are no objections from the Commission, that the Mayor
and City Manager be given the ability to approve the preliminary official statement.
Mayor Grove asked the concensus of the Commission to "press on". And the Commission
was in agreement.
Meeting adjourned 10:10 p.m.
Respectfully submitted,
Mary T. Norton,
City Clerk