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HomeMy WebLinkAboutFormalizing the intent of the Council with regards to the aquisition of Clay Utilities as proposed by the Mayor of South BendRESOLUTION NO. 558 -77 Passed by the Common Council of the City of South Bend, Indiana May 9 Attest: Attest: 6- 1977 City Clerk President of Common Council. Presented by me to the Mayor of the City of South Bend, Indiana May 10 In 77 Approved and signed by me City Clerk Mayor RESOLUTION NO. A RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA FORMALIZING THE INTENT OF THE COUNCIL WITH REGARDS TO THE ACQUISITION OF CLAY UTILITIES AS PRO- POSED BY THE MAYOR OF SOUTH BEND. WHEREAS, the South Bend Common Council has judged that the acquisition of Clay Utilities would be beneficial to the City, but are left unconvinced due to the insufficiency of evidence that it should be purchased at any price; WHEREAS, the Council by a 7 -2 vote on March 14, 1977, and an 8 -1 vote on April 13, 1977, clearly showed that the Mayor should continue to negotiate down the purchase price by excluding contribution in aid of construction and lower- ing the rate of interest to a figure similar to interest rates on municipal bonds; and WHEREAS, a more reasonable and justifiable price should be sought especially in light of the inconclusive data show- ing that the acquisition will have any significant impact on pending annexations. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of South Bend, Indiana: SECTION I. That the Common Council formally proposes that the Mayor and all Administrative officers continue in their efforts to acquire the waterworks and sewage disposal facilities of Clay Utilities, Inc., at a price which excludes contributions in aid of construction and includes a lower in- terest rate. Should negotiations fail to attain significant reductions in the overall cost of Clay Utilities, Inc., steps should be taken by the City to acquire Clay Utilities through the condemnation procedure. SECTION II. That the Common Council recommends that the formal steps be taken by the Administration to introduce a bill which would appropriate up to five percent (50) of the total estimated cost of acquiring the facilities. Such a procedure is necessary and required by Indiana law to pay the expenses of a preliminary investigation, a proper survey, en- gineering plans and cost of acquisition. SECTION III. That the Common Council rededicate its efforts in supporting the Administration in acquiring Clay Utilities, Inc., at a fair and equitable price which is founded on both sound economic and humanistic principles. SECTION IV. That this resolution shall be in full force and effect from and after its adoption by the Common Council and approval by the Mayor. FILED IN CLERK'S OFFICE PRESENTED 1977 NOT APPROVED ADOPTED .s -— Irene Gammon CITY CLERK, SOUTH VEND, MD be of the Common Council Irene K. Gammon City Clerk Chief Deputy Clerk Jo Ann Harper Mary Ann Ryback CITY of SOUTH BEND PETER J. NEMETH, Mayor COUNTY -CITY BUILDING SOUTH BEND, INDIANA 46601 May 24, 1977 Mayor Peter J. Nemeth City of South Bend County -City Building South Bend, IN 46601 Dear Mayor Nemeth: Re: Resolution No. 558 -77 ��� AOI.UTID,ydi Q c� L Z w Z INDIANP Reply To: Office of the City Clerk At the May 23, 1977, meeting of the Common Council, a motion was duly made, seconded and passed by a vote of seven to two to override your veto of the captioned resolution. IKG:jh Sincerely, Irene K. Gammon City Clerk OFFICE OF THE MAYOR CITY of SOUTH BEND PETER J. NEMETH, Mayor COUNTY -CITY BUILDING SOUTH BEND, INDIANA 46601 May 16, 1977 Mr. Roger O. Parent, President South Bend Common Council County -City Building South Bend, Indiana 46601 Dear Council President Parent: AREA 219 284 - 9261 Please be advised that I am vetoing Resolution No. 558 -77 of the Common Council regarding Clay Utilities which was passed at the Council meeting held on May 9, 1977. I am vetoing the resolution for the following reasons: First, the resolution requests me to pursue purchase of Clay Utilities at a price of approximately $1.2 million with an interest rate of less than 7 %. You are very aware of the fact that Mr. Homer Fitterling has already turned down your offer (or proposal or whatever you wish to call it) of $1.7 million at 7% interest. For the Council to make such a request of me is ridiculous, to say the least. Second, as I indicated to you in my office a couple of weeks ago, I do not favor condemnation as a means of acquiring Clay Utilities. My administration worked out an arrangement whereby the purchase of Clay Utilities (excluding Aqua, Inc.) would not have cost city residents anything, but the purchase price would have been funded by the rates presently being paid by the Clay Township residents who are customers of Clay Utilities. To the contrary, condemnation would require the residents of South Bend to bear the brunt of whatever purchase price might be established in court. It is my opinion that the purchase price would most likely be higher than the $2.1 million figure which my administration negotiated. In addition to the eventual purchase price, the following costs would be incurred entirely by the residents and taxpayers of South Bend: 1. Petition circulated for 5% of signatures $ 1,000 Roger 0. Parent Page 2 May 16, 1977 2. Cost of city referendum (1975 city election primary and fall election cost was $240,000) $120,000 3. Appraisal for purpose of making good faith offer 12,000 4. Three appraisals by court appointed appraisers at $12,000 each 36,000 5. Two additional appraisals by city to attempt to substantiate any lower appraisal figure available, including court testimony, at $15,000 each 30,000 6. Expenses of revenue bond issue 40,000 Total $239,000 The above figures were furnished me by Chief Deputy City Attorney Robert Parker who also advises me that the bond cost estimate was taken from the last Wastewater bond issue in 1969 for $3,000,000 in which accounting, legal, P.S.C., printing and miscellaneous costs were $41,629. If part of the condemna- tion bond issue were revenue and part G.O., there would then be additional bond issue costs. Attributable costs of engineering review, trial costs and appeal costs done by city personnel are not included as a separate expense of the con- demnation procedures. As you may know, Indiana law requires that before condemna- tion could begin, a good faith offer must be made, a petition to condemn signed by 50 of the voters must be obtained, and a referendum must be held to obtain the approval of the voters. This is an extremely expensive and time - consuming process. Such an undertaking and expenditure of taxpayers' money would be questionable under normal curcumstances, but, in view of the Council's refusal to pay more than $1.7 million, it is foolhardy. For what would it gain the city to spend $239,000, occupy the time of many city officials, and gain a court appraised price in excess of $2.1 million which you and a majority of Council members have consistently refused to approve? Roger O. Parent Page 3 May 16, 1977 I submit that it $239,000 of the South respectfully submit my PJN /bib would gain nothing and would waste Bend taxpayers' money; therefore, I veto of the aforesaid resolution. Very truly yours, Jq& 9 Peter J. Nemeth Enclosure: Council Resolution No. 558 -77 cc: Common Council Members City Clerk