09/04/84 Board of Public Works Minutes

Home Browse Search

355 REGULAR MEETING SEPTEMBER 4. 1984 RECESS Upon a motion made the regular meeting five minutes. MEETING RECONVENED by Mr. Hill, seconded by Mr. Vance and carried, of the Board of Public Works was recessed for After a short five minute recess, Mr. Leszczynski reconvened the regular meeting of the Board at 10:19 a.m. APPROVE LEASE PURCHASE AGREEMENTS FOR CLAY UTILITIES, INC. WATERWORKS FACILITIES AND.SEWAGE DISPOSAL FACILITIES Mr. Al M.N. Jacobs, Director of Utilities, addressed the Board and made a recommendation that the City purchase Clay Utilities which includes water and sewage facilities. Mr. Jacobs advised that the purchase price for both facilities is $1,560,666.00 with the water- works facilities costing $496,640.00 and the sewage facilities costing $1,064,026.00. The Lease Purchase Agreements being recom- mended for approval today are for both facilities and are for a sixteen year period with the payments for the waterworks facilities being $64,740.00 per year paid semi-annually and the payments for the sewage disposal facilities being$138,706-00 per year paid semi-annually. Mr. Jacobs advised.that revenues coming in on the facility will be used to pay off the debt and no City funds will be used for the purchase. He stated that this is an extremely good investment for the City and stated that Clay Utilities is a system the City knows as it has been managed by the City for the past seven (7) years and has shown a substantial increase in customer service. Mr. Robert M. Parker, Attorney at Law, Parker, Brunner and Hamilton, 120 West LaSalle Avenue, South Bend, Indiana, special counsel to oversee this transaction, was present and addressed the Board. Mr. Parker reiterated that the Board must execute two (2) leases, one (1) for the waterworks facilities and one (1) for the sewage dis- posal facilities. Both leases provide that the Board of Public Works must sign the documents and have a deadline date of November 12, 1984 for execution by the Board of Public Works, Water Board, Wastewater Board and the Common Council. Mr. Parker also advised that a section in both agreements relating to approval by the. Internal Revenue Service has been deleted from the documents. In response to a question from Mr. Hill as to what the current arrangement is with the City and Mr. Fitterling, the present owner of the utilities, Mr. Parker stated that a Lease Purchase was presented in 1977 and approved by the Board. However, the Public Service Commission at that.time did not approve the Lease Purchase. The City continued to operate Clay Utilities water and sewage facilities under the management clause in the Agreement and con- tinued to do billings, repairs and were paid at the rate of eight (8) cents per one -hundred (100) cubic feet of water pumped and sewage treated. Mr. Parker further stated that a substantial increase in customer growth has occured since 1977 with those profits going to Mr. Fittering. With the purchase of the utilities by the City, the City will benefit by any future growth. Mr. Hill stated that in 1977 the denial by the Public Service Commission was based on customer complaints regarding construction costs and contributions to that construction cost. In response to Mr. Leszczynski's inquiry, Mr. Parker advised that those objections at this time have been eliminated. Upon a motion made by Mr. Leszczynski, seconded by Mr. Hill and carried, the Lease Purchase Agreements for the purchase of Clay Utilities, Inc. Sewage Disposal Facilities and Waterworks Facilities were approved.