HomeMy WebLinkAboutUtility Sale-1990 Utility sale
under fire
by official
By Elaine Bennett IV'
D
OF THE SEMMa STAFF
WINTER SPRINGS — Hoping
to "settle the matter once and for
all," City Commissioner Bill Ja-
cobs has renewed his call for an
independent investigation into
the city's purchase of Seminole
Utilities.
In July,other commissioners re-
jected Jacobs' request for an in-
vestigation.
Last week,though,commission-
ers decided to reconsider. After
they review a six-page report Ja-
cobs submitted, they will decide
whether the questions he raises
about the utility deal justify fur-
ther investigation.
Based on his review of numer-
ous documents, including city re-
ports and court records on the
utility deal, Jacobs said, "It is my
opinion this commission may
have been misled, given misinfor-
mation and/or purposely misdir-
ected as to what was relevant and
pertinent to make an informed de-
cision on the purchase."
He said that when he approved
the acquisition he believed the in-
formation provided him "up to
that point was true and complete.
Under further scrutiny, however,
that appears to not be the case."
Reading his report to commis-
sioners, Jacobs said he believed it
might be in the best interest of
the city to have "the [state] audi-
t for general, or someone complete-
ly independent and not politically
tied"to continue his investigation
"in order to get to the truth and
settle the matter once and for all."
The city,which already provides
90 / o A r
Please see UTILITIES, K-4
Official has questions about utility sale
with Florida statutes.Wet,he said, was$7.5 million in February 1989.
from K-1 - the city paid'about $6,000 to the Jacobs questioned how the price
law firm of Rose, Sandstrom and could have doubled in that period.
water and sewer services for the Bentley for research and expenses He also expressed concern that
west side, purchased the private to attend an Aug. 13 meeting to the city could end up paying more
company for$12.3 million in April. brief the commission on the back- than $17 million for the utility.
Seminole Utilities serves the ground of the acquisition. .Besides the $12.3 million,the city
city's east side, including Rozansky was on vacation last has agreed to pay $2,400 each for
Tuscawilla week and could not be reached for an additional 2,000 future custom-
'Too many important questions comment ere and the yet to be determined
concerning the management—or • He wants cost of maintaining the parks in
should I say mismanagement — to know why Tuscawilla.
of this transaction leave one won- city staff ex- . • Tuscawilla residents face
dering if the tergdayers of Winter ceeded its au three utility rate increases by Oc-
Springs got a good deal or a bad thority by in- tober 1991. Jacobs questions
debt,"he said. eluding several t, whether the rate increases would
Jacobs began his inquiry after parks in the have been necessary if the city
commissioners rejected his earlier utility acquisia had paid $6.5 million or $7.5 Mil-
request for an investigation. He tion.without It..3:. lion for the utility.
also said Ma inquiry VMS initiated city commis- • Jacobs questions why the city
after City Attorney Frank Krup- sion knowledge - s'm. agreed to have the seller's invest-
penbacher failed to give him a sat- or approval. Ja- Inaba merit banker and financial advisor
isfactory answer to why $25,000 cobs said that act as the city's financial advisor
earmarked as a portion of$147,800 although Rozansky has said he for the transaction. Jacobs said
to be paid to bond underwriters learned the park property was part the relationship as"akin to hiring
Donaldson, Lufkin and Jenrette of the deal only a few weeks be- the fox to guard the chicken
Securities Corp. of New York was fore the city closed on the acquisi- coup."
returned to the owner of Seminole tion in April,records revealed that' He added that "to farther corn-
Utility. The underwriters were he knew about the parks in Janu- plicate the issue, the seller paid
given the $147,600 to sell Semi- ary. our advisor for his services.While
nole's utility bonds at the best in- • He also questions why corn- we saved around $150,000 by
terest rate,and utility representa- missioners were told Seminole agreeing to this unorthodox ar-
tives said they advanced the Utilities had requested a 50 per- rangement with the underwriter,
$25,000 to the underwriters for ex- cent rate increase when no such we did pay over $8 million more
penses. - formal request had been made to for the utility than Topeka had
Jacobs also asked why the city's the Public Service Commission: previously agreed to."
auditors, Coopers and Lybrand, Jacobs questioned whether the • The city relied on appraisals
refased to give him written an- misinformation was "a tactic to by the utility owners to justify the
ewers to questions about whether substantiate the value of the util- price, rather than obtain its own
the city followed all state require- ity" and if it influenced commis- appraisals,He added that the city
ments and laws pertaining to the sioners to make a hasty decision paid more than the the seller's
utility purchase. One law in par- to close on the utility. own expert appraisers said,the
dealer, he said, is whether each • Jacobs contends the commis- utility was worth.
entity that received a portion of sion was "deliberately kept in the • The city attorney, financial
the proceeds from the sale should dark" about an agreement that al- advisor and bond council haven't
have divulged the names of corpo- lowed Southern States Utilities or billed the city or provided records
ration principals and stock hold- its parent company, Topeka of services they said they pro-.
era.. Group, to buy Seminole Utilities vided the city during the acquisi-
Among Jacobs'other concerns: for $8.5 million through a par- lion proceedings between January
•:Jambs said auditors told him chase agreement or stock option. and the present. Jacobs has re-
City Manager Dick Rozansky About 14 months before Topeka's quested those records, even if the
would not pay them to answer Ja- deal,the city made its first offer to attorneys don't plan to bill the
cobs' questions about compliance buy the utility. The city's offer city.
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