03-14-77 Council Meeting Minutes

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41V REGULAR MEETING MARCH 14, 1977 COMMITTEE OF THE WHOLE MEETING (CONTINUED) Mr. Dan Manion, spoke on behalf of the Clay Concerned Citizens. He said he questioned whether this system could extend beyond a one mile limit from the City, since there is a State statutes - regarding this. He said that State statutes require all extensions and additions be paid by re- venue generated from the rates, and that means that regardless of whether the City buys it or not all extensions and additions are going to come from those funds. He said he did not know why the lease agreement says they can be from other funds, when they cannot. He said the people who are going to be subjected to this lease are the users, and the citizens and taxpayers of South Bend are not going to be paying for this, it is the users. He said the Council should look at the value of purchasing. Clay Utilities, the value to the City and the users. Council Member Szymkowiak spoke in favor of the purchase.of Clay Utilities. He said he wanted to help the residents of Clay Township. Council Member Kopczynski indicated he felt that buying Clay Utilities will be a liability. He indicated that aids in construction was not considered as part of the utilities expense, therefore, he did not see how they could ask for that amount of the system to be entered in the sale. He said the revenue will be committed to pay the bond and the City would be strapped for money to expand the.system. He said this system was not engineered to service the entire area we have proposed to annex. He indicated that in view of all questions that have been raised and statements made, he thought it was a high price. He said he would not vote to jeopardize the residents of South Bend by acquiring Clay Utilities, and subsidizing it. Council Member Taylor indicated he thought the Council should take a second look at this matter. He said he thought tha price of Clay Utilities is too high, and if the deal is lost the deal is lost. Council Member Serge indicated that in caucus he had asked for two appraisals of the system. He indicated he was not pleased with this purchase price. Council President Parent said he could not find where the Clay High School sewer system would be located on this map. Mayor Nemeth indicated that according to the terms of the contract all facilities west of Hickory Road are included. Council President Parent indicated this was not included in the computation of the cost. He indicated this raised a question about the comprehensiveness of the study. Mr. Stravinsl indicated that if that was a private line it would not be included. Council Member Adams indicat( that what the Council was doing tonight would give precedent in the future, since there were no lease purchase agreements in the State, except the one in Mishawaka. She asked Mr. Helling if he had any idea what the Mishawaka system was appraised at. Mr. Helling indicated he did not know, but he could look it up. Council Member Adams asked Mr. McMahon if he could tell them what Clay's cost was for water and return of sewage. Mr. McMahon indicated their rate was equivalent to what any one was paying in South Bend. Mr. Helling indicated that the Mishawaka appraisal was $259,272 for water, $16,000 land, $6,674 franchise, one -half of the meter adjusment $15,341. He said sewage was $400,059 and one -half of the meter adjustment $15,341. He said it was a total of $297,387 for water and $384,718 for sewage. Council Member Adams asked the final negotiated price. Mr. Helling indicated it was $211,000 for sewage and $221,000 for water, a total of $442,000. Council Member Adams asked if that would be a comparable appraisal. Mr. Helling in- dicated it is exactly the same. Council Member Adams commented that Mishawaka paid about two - thirds of the appraised value. Mr. Helling said the appraisal has to be adjusted to reflect de- preciation. Council Member Dombrowski indicated the price was too high for this system. He said he felt the Council was at a standstill on price. Council Member Horvath said that it had been indicated that Clay was at the point of starting to make money and their going to get more custo- mers. He asked someone to tell him how they were going to do this when they could not service what they already have without the City putting in boosters, pumps, etc. Mr. McMahon said that apparently Clay has evaluated what this will do with the system and feel they can live with the problem. Mayor Nemeth said that maybe the system was not as bad as the people here have lead you to believe. Council Member Horvath indicated that the Council should have been in on the negotiations with Clay from the start. He said he thought this was handled wrong. Mayor Nemeth said that the fact is they are going to continue paying the same rate if we buy the system or not Council Member Horvath indicated that if annexation does come to pass they will be paying the same rate as the City, and who will have to pay the upkeep. Council Member Miller asked Miss Cekanski if the proper price was the appraisal price on the replacement cost, minus depreciation. Miss Kathy Cekanski, Council attorney, indicated there are two standards, one whether the lease should be executed, and secondly whether the rentals are fair and just. She said that as far as how those are defined, that is left up to the Council. She said that what this presumes is that the value is set by the Council. She said she thought the key word, used and useful utility, is identical, both as far as setting a rate base and also as far as rental payments. I think it it important for the Council to weigh all facts, since this is a new precedent. Council Membe Miller indicated that what she was saying is that the rental is not applicable tonight, and the issue is what is fair and just rental for the lease. Miss Cekanski indicated this was correct, and that goes to the valuz -.of the property because this is what it is based on. Council President. Parent moved the debate be ended, seconded by Council Member Kopczynski. The motion carried. Council President Parent made a motion that public hearing be continued on this matter until April 12, 1977, meeting of the Council at 7:00 p.m., and refer it to the Committee of the Whole, seconded by Council Member Serge. The motion passed on a roll call vote of seven ayes (Council Members Serge, Taylor, Kopczynski, Adams, Dombrowski, Horvath and Parent) and two nays (Council Members Szymkowiak and Miller). BILL NO. 25 -77 A BILL OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, APPROVING THE LEASING OF SEWAGE DISPOSAL FACILITIES OF CLAY UTILITIES, INC. Council President Parent made a motion April 12, 1977 at 7:00 p.m., and refer Member Dombrowski. The motion passed Taylor, Kopczynski, Adams, Dombrowski, and Miller) . BILL NO. 26 -77 that public hearing be continued on this matter until it to the Committee of the Whole, seconded by Council on a roll call vote of seven ayes (Council Members Serge, Horvath and Parent) and two nays (Council Members Szymkowii A BILL APPROPRIATING $92,985.00 FROM FUND 30, COMMONLY KNOWN AS THE DEPRECIATION FUND OF THE BUREAU OF WATER, TO LINE 30.0710, COMMONLY DES- CRIBED AS BUILDING STRUCTURES AND IMPROVEMENT, ALL FUNDS BEING WITHIN THE BUREAU OF WATER OF THE CITY OF SOUTH BEND. Council President Parent made a motion that public hearing be continued on this matter until April 12, 1977, at 7:00 p.m., and refer it to the Committee of the Whole, seconded by Council Member Taylor. The motion carried.