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HomeMy WebLinkAbout07/11/83 Tape 42 Unapproved c 1T¥ couNcmn M~ST~ Ml~TSS July 11} 1983 Special meeting of the City Council of the City of Bremerton, Washington, regarding bond sales and financing information for the Wastewater Treatment Plant, was held in the Council Chambers, 239 Fourth St., Bremerton, Washington, Monday, July 11, 1983 at 5:30 p.m. with Council Vice President R. Mosely presiding. Also present were: Spencer Horning, Clyde Pachek, Phil Drouin, Bill Amo, Jim Adrian, Russ Johnson, Attorney Broughton and Clerk McCluskey. E. Sturdivant and A. Anderson were absent. The meeting opened with the Pledge of Allegiance, and the invo- cation was given by Clyde Pachek. Bob Card, CH2M Hill briefly reviewed upcoming events that require Council consideration and/or action as listed below: July 13th withdrawal of two bids. July 20th intent to award. July 25th Council meeting on claims and change orders. Aug. Brd award of contracts. Bob Ye~sting, Foster & Marshall, discussed details of financing the project and sale of revenue bonds. They recommend the City issue $14,500,000 water and sewer revenue bonds. Foster & Marshall will negotiate sales to investors through con- centrated marketing. These bonds would be secured by total revenues of existing water and sewer utility. Foster & Marshall further recommend the city issue a short term bond for the Navy's share, to mature January 1, 1988. If the Navy has not paid by date of maturity, the city would refinance a long term bond which would be retired from monthly installments beginning January 1, 1988, which would result in the Navy paying more in the long run. Mr. Yeasting discussed the city's outstanding $109,000 bonds purchased by EDA, which are a junior lien on revenues of the sys- tem, and recommended taking approximately $100,000 from the pro- ceeds to provide for retirement of the EDA bonds. Mr. Yeasting discussed authorization for Foster & Marshall to form a group of underwriters to market the bonds. A bond ordinance will be drafted, documents forwarded to New York and rating will be assigned, in approximately the first week of August. Mr. Yeasting discussed advantages of negotiated bonds sales in favor of public bid sale. If bid sale is advertised, the city must stay with that date even if the market is unfavorable. Negotiated sale date can be flexible which enables the seller to seek the lowest bid. Negotiated bond sale method is the most advantageous with consis- tently lower interest rates. Foster & Marshall is recommending immediate issuance of water and sewer revenue bonds, and they propose to submit a firm offer as soon as all documents are in order and a rating has been assigned. Richard Weld discussed the option of individual advance payment by homeowners for their share of costs. Mr. Yeastlng discussed difficulty of assessments due to the financing structure developed. Bill Duffy, Water Supt. discussed his concern to use water revenues and subsequent effect on large water bonds to come before the Council in the near future. Mr. Yeasting felt there would be no negative impact. Harold Plckerd questioned the negotiated sales concept and urged Council to proceed with caution and not make a decision until all Council members and the Mayor are present. City Council Mee~_ng Minutes July 11, 1983 Page Two Mr..Dro~in discussed the advantages of the negotiated sales con- cept. versus public bid sale. Motion by P. Drouin and J. Adrian to accept the principal proposed by Foster & Marshall. Discussion followed regarding decision to pursue. It was stressed that this is an advisory motion° Question called, carried unanimously. Recess 7:10 until 7:20 p.m. Mike Stump, CH2~ Hill discuss~ privatization financing. Due to problems in allocating grant funds to various elements and private ownership of the plant, it appears difficult to allocate grant funds between private and public parts of the project. Also, the need to pay personal property taxes on a privately owned plant offset some of the economic advantages of the federal income tax deduc- tions. Risks would remain during the approximate five month period it would take to form a partnership and arrange private financing. There is no assurance of availability of financing for some months after committing to the construction program. The City should have a firm committment for financing at the time the contractor is given notice to proceed. Chuck McElroy, OMI, citing $100,000 saving to the city the first year of operation of the new plant, presented a proposal for his f'~rm to operate the present treatment plant, starting September 1983, to prove they can operate the new plant more economically. At completion of the year, the contract would be renegotiated, with payment in the second year representing a savings of at least $100,000. Increases would be limited by CPI adjustments. Mr. McElroy discussed advantages of OM~ operation of the plant, in- cluding better response time to emergencies. Mr. McElroy discussed a number of plants throughout the country which OMI operates and ability to buy supplies at a lower price. Mr. Card presented Council with a prepared resolution and discussed 0MI's need to get a trial program together for a 1 year demonstra- tion, and stated approval of the resolution is a "show of faith". Mr. Drouin expressed concern that private operation could cos~ current personnel their Jobs and asked Don Proctor, Wastewater Supt. to respond. Mr. Proctor discussed ~he need for a decision ~hat will be in the best interest of the city and to look at several firms. B. Broughton cautioned Council on approving CH2M Hill's resolution due to possible bid call requirements, and discussed his concerns with jeopardizing the bid process. Mr. Broughton urged Council to move slowly. Mr. Card expressed opinion this operation does not require a bid call and discussed the city's best interest in continuing discussions with OMI. Discussion followed regarding tabling to allow Mr. Broughton to research bid requirements. Motion by B. Amo and J. Adrian to table for 9 days and place on the July 20th agenda, carried as follows: 6 affirmative, 1 opposed (Drouin). Meeting adjourned at 8:50 p.m. KATHLEEN L. McCLUSKEY, City Clerk APPROVED