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HomeMy WebLinkAbout11-16-87 SS . MINUTES OF THE SPECIAL SESSION OF THE CITY COMMISSION HELD ON NOVEMBER 16, 1987 Mayor Ison called the meeting to order at 7:43 p.m. and led in prayer and the pledge of allegiance. PRESENT: Mayor Ison; Commissioners Johnson, and Hager; City Manager Ryan; City Attorney City Clerk Catron; City Engineer Kelley; Financial Consultant Stanley Cohen. Dabbs, Bateman, Kruppenbacher; and Special ABSENT: None DISCUSSION ON THE ACQUISITION OF PRIMA VISTA UTILITIES e Mayor Ison presented a summary of the negotiations that had occurred between the City and Prima Vista Utilities (PVU) since the mid 1970s. He said the City originally planned to enter an arrangement with Winter Garden for a Joint sewer company but then decided against the deal. In 1981 the City began to negotiate a franchise agreement with PVU but by 1982, Ocoee had decided to pursue building its own plant. In 1983, the City considered building a plant off White Road, then in 1984, the City began negotiations with PVU for acquisition of the company but voted against that proposal. Then in 1985 the City began the process of purchasing PVU. There were further problems with the acquisition process but negotiations continued. Mayor Ison said the two most negative outcomes stemming from the length of time the proceedings have drawn out were the lack of commercial development and the strain on intergovernmental relations. City Engineer Kelley said his firm had assisted the City in the decision making process with on-site inspections of the plant. He discussed proJects presently served by PVU and future developments and commercial sites. The on-site inspections were done mainly to estimate the cost of repairs that need to be done to the two treatment plants. City Engineer Kelley detailed the results of the inspections in a formal written report to the Mayor and Commissioners but basically referred to a one-page table containing the summation of the costs involved (see Table 4-1 attached). . Barry Goodman of Altamonte Springs and President of Residential Communities of America -- which owned the sewer company stressed that any new State regulations that raised the cost of treating the sewage could be passed on directly to developers. Mr. Goodman also called attention to Mr. Kelley's cost estimate and said that the figures were not correctly totaled. Mr. Kelley said that Item 5 had been changed but was not changed on the handout. It should have read $502,000. Mr. Kelley said the bottom line figure was correct. 1 ~ - Page 2 Special Session City Commission Meeting November 16, 1987 City Manager Ryan told the Commission that in regards to Item 4 and Item 5, anything above $500,000 could be passed on to developers to help pay for improvements to the system. City Engineer Kelley introduced David Refling of Professional Engineering Consultants. Mr. Refling explained Table 6-1 (see attached) to the Mayor and Commissioners. The table showed the differences in the appraisal PVU had on its own company and the one done by P.E.C. Mr. Refling stressed that his company was not involved in Items 9-16 and that those issues would need to be addressed by Stanley Cohen, the City's special financial consultant. e Mr. Cohen presented a financial overview to the Mayor and Commissioners. Mr. Cohen said the City would have to pay $4 million in cash as the purchase price for the sewer company. He said the City and PVU had accomplished significant reductions in the complexities with this latest contract. For the $4 million in cash, Mr. Cohen said the City would receive all the operating assets and all the assets to encompass additional customers. The City would also receive $2,560.000 representing prepayments from specified developers and that this money would not have any restrictions to its usage. Mr. Cohen told the Commission that the only significant continuing obligation would be to make sure that there would be capacity available when needed to service the commercial and residential sites that would be coming on course in the future. The developers involved would be entering into new Developers Agreements with the City. These agreements would provide that developers get connections and the City would be obligated to give those connections. Mr. Cohen said the two maJor contingencies for dollar amounts changing were if the Department of Environmental Resources were to change its compliance requirements or if changes would need to be made in dealing with the effluent disposal system. He said if any changes were necessary due to environmental requirements, the City could charge the developers for any amount over $100,000. Similarly, in matters dealing with effluent disposal, developers would pay for any costs in excess of $500,000. At the time of the closing, all developers would be required to pay guaranteed revenues in the amount of $100 for each connection (ERU) that they wanted guaranteed connections to at a later time. e Mr. risk Cohen said these figures represented a minimal financial to the City and that he knew this because banks were 2 e Page 3 Special Session City Commission Meeting November 16, 1987 willing to lend the City the money with only the sewer company as collateral. Mr. Cohen recommended to the Mayor and Commissioners that they consider changing the rate structure from what was now a flat rate, to a variable rate, such as the City now does with the water customers. City Engineer Kelley said his company estimated the fair market value of the sewer system at $3,036,000 before deductions. Mr. Cohen said the system was presently run without a surge tank or sludge management system. The costs for those features are $375,000 and $150,000 respectively. PVU now hauls its sludge -- which was mostly water -- to another site. This method was costly since water was weight intensive. If the City were to build a new plant that managed the sludge, then most of the water would be filtered out and the City's expense to haul the sludge would be greatly reduced. e Mr. Cohen said the only "broken" part of the present system was the pipes, with an estimated repair cost of $100,000. All the other improvements being talked about were meant to make the system more cost efficient. The value of the system without the land was estimated at $2,936,000. The mid-point value of the land (incorporating the City's appraisal and the present owner's appraisal) was 2,260,000. These figures combined add up to approximately $5,200,000. In addition to that total value, the City would also acquire $2,560,000 in cash from the future developers. The total amounts to more than $7,700,000 for which the City was paying $4 million in cash. Mr. Cohen said this represented a minimal risk transaction. Mr. Cohen reminded the Commission that the banks were willing to advance the City the entire amount with nothing but the sewer system itself as collateral. Mr. Cohen asked Mr. Goodman if his presentation was an accurate summation of the agreement and Mr. Goodman agreed. The Mayor asked if any citizens wanted to speak. Since there were no comments from citizens, the Mayor then asked for comments from Commissioners. Commissioner Bateman asked the City Manager for a cost estimate to date of attorney fees, etc. City Manager Ryan said the amount totaled almost $500,000 in engineering, legal, and other fees. Commissioner Dabbs said he was pleased with what he had heard, that the system was generally in good repair and that the financing looked good. City Manager Ryan commented that Mr. Cohen and City Engineer Kelley should be commended for doing such a e 3 i __J e Page 4 Special Session City Commission Meeting November 16, 1987 good Job. Mr. Ryan urged the Commission to support the acquisition and felt it was a "win-win" arrangement. Mayor Ison wanted to correct Exhibit D-1 in the Developers Agreement for the record. He said under D-1(A), the GPD connected under Town Square Out Parcels should read "no" instead of "yes", and under D-1(C), the 140 connections from the Lake Olympia proJect had all been prepaid. e City Attorney Kruppenbacher said he had not been involved in the negotiations because his law firm had a conflict in representing either side. He said he was asked to review the documents last week and his questions were handled to a large extent through meeting with the City Manger. Mr. Kruppenbacher reminded the Commission that he was only looking at the documents from a legal standpoint and was not available to comment on any financial agreements because of his conflict. Attorney Kruppenbacher said the City also asked him to review a list of comments from Special Legal Counsel Jim Ade, but that he had Just received the list and did not have ample time to review it. He therefore asked to Commission to grant the authority to proceed further with the finalized Purchase and Sale Agreement. Attorney Kruppenbacher asked the Mayor and Commissioners if Staff could finalize the terms of the agreement in final written form for the Commission that they had discussed tonight, and in the meantime, Mr. Kruppenbacher would review the comments from Attorney Ade with guidance from City Manager Ryan, and present the entire package to the Commission in the next week or so. Attorney Kruppenbacher said he would meet with Mr. Goodman and then with City Manager Ryan to review Attorney Ade's comments. Mayor Ison asked the Commissioners to continue the Public Hearing to Monday, November 23, at 7:30 p.m. Attorney Kruppenbacher said the approval to continue should be put in the form of a motion and that the Commission was in affect accepting the concept of the financial terms outlined by Mr. Cohen and the engineering terms outlined by Mr. Kelley by agreeing to continue the hearing. Attorney Kruppenbacher said the final approval was subJect to the Staff having the necessary documents ready to conclude the deal by the November 23 meeting. Commissioner Johnson moved to accept conceptually the financial and engineering terms as outlined by Mr. Cohen and Mr. Kelley and Commissioner Dabbs seconded. Commissioners Johnson, Dabbs, and Hager all were in favor. Commissioner Bateman responded ney. Commissioner Hager moved e 4 . Page 5 Special Session City Commission Meeting November 16, 1987 to continue the Public Hearing to Monday, 7:30 p.m., Commissioner Bateman seconded, unanimous. November 23, at and approval was ADJOURNMENT: 9:11 P.M. ___~Lg__~______ MAYOR ATTEST: CITY CLERK e e 5