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HomeMy WebLinkAboutmin 04-23-80168 CITY COUNCIL MINU%~S CITY COUNCIL CHA~BERS UKIAH, CA. o. 111 W. Church April 23~ 1980 ADJOURNED MEETING a) Introduction of Ordinance No. 745 authorizing NCPA to issue revenue bonds Mayor Hickey read a letter from NCPA announcing that they had received final approval on April 11 to proceed with the construction of the Shell project. Councilmember. Snyder stated she was very much against the parent document two years ago and cannot be comfortable with this offspring. She questioned whether this should go to the vote of the people considering the increase. Mayor Hickey stated that the vote of the people was on a referendum, not on the contract. M/S: Snyder/Feibusch that Council refer this to the vote of the people. The matter could be placed 'on the November ballot.. Councilmember Feibusch's objections were based on increased costs since the project began two years ago. He felt that as people conserve energy the revenues are going to go down with the unit price for energy increasing. As solar energy rapidly advances, the people who can't afford solar, will have to carry the burden of these costs. Councilmember Snyder felt geothermal is a gre~t Solution and would only question some of the light wording sin the contract. Her main objective was her inability to see how we can pay for this project. City Manager Swayne made a point about the existing agreement as a subject of the referendum. The City cannot unnecessarily withhold actions to hinder the proceedings. The City wo~ld expose itself to litigation. Councilmember Riley asked the City Attorney what the legalities were. City Attorney Orchard stated he felt, if the previous membership agreement committed us, anything thereafter to cause obstacles could put the City in a vulnerable position. Mayor Hickey stated that, at this point, he felt no~ extension would be given. In his opinion, some members, like Santa Clara, would be happy to get our kilowatts. He also pointed out that we are acting on a~ new agreement which obligates us to less money than previously. City Manager Swayne pointed out that the cost of the project is not up because of a change in the agreement. This agreement is now possible, because of cheaper cost of financing. Councilmember Riley stated she felt there is a fundamental difference between the people setting up a referendum and an elecfed body setting dp a referendum. Councilmember Myers stated he had concerns about the large undertaking. He felt it was definitely the will of the people to continue In the project; it is a viable alternative for our energy needs and we should proceed with the project. Mayor Hickey stated he too was of the opinion that it is the will of the people to stay with this project. The prince;pie difference is instead of 'obligating the Cit~ to $48 mill~on, it is obi. J.g,'iCing the City to 5% of $28 millions. Adj .bit g. 4 / ~: '.~/,'~0 l'ag~., ] 169 Barry Woods, former Councilmember, stated that the referendum in 1978 was simply a yes do we participate, or no we don't participate, tte felt the facts were put before the public at that time. The real issue is the same as it was three years ago - whether or not the City will continue to maintain it or sell it to PG&E. Councilmember Feibusch stated he is of the opinion there is no guarantee that this project will do everything it is supposed to do. He questioned the wording of a portion of the proposed ordinance pertaint, ng to cost. Council discussed the proposed cost of $28 million and the possibility of an increase farther along on the project. /from the Calif. Energy Commission. Councilmember Riley/stated she has made some inquiries about NCPA and received favorable comments~/ She was advised that a plant· of this size is bound to have increased costs and changes. She referred to the wheeling power and stated it was her understanding that FERC has jurisdiction over this.| Mr. Dashen, representative of R.L. Beck, stated that NCPA has a letter fr~m PG&E that it will wheel power. There is no question about PG&E's right or,willingness to wheel. Mr. Marcus, NCPA, stated that PG&E is committed by previous agreements to wheel the power for us. She also expressed/ concern over Costs, financing and the risks involved were discussed. the price of wheeling. Mayor Hickey stated we have actually paid out $75,000 to date and are obligated for 5% of the additional amount borrowed from'the Bank o'f Montreal. City Manager Swayne stated that the project is underway. There have been expenses incurred and 'capital expended for equipment. Mayor Hickey pointed out that the motion is to submit this to the voters for .a decision whether or not Ukiah will sign this agreement and stated it would be an ordinance of theCity of Ukiah authorizing NCPA to issue revenue bonds to go on the ballot. City Attorney Orchard asked, assuming the referendum gets on the November ballot, what would the position of Ukiah be? Mr. McDonough stated NCPA has ordered equipment costing several million dollars and this will be coming due in mid summer.. If we are not able to fund the obligation in order to meet these payments, we will have to call the members for direct contributions. We had anticipated issuing the bonds, but it will require the consent of the cities and their adhering to the contract. It would take an extreme emergency for NCPA to delay. City Attorney Orchard asked how this referendum is placed on the ballot? Mr. McDonough stated that if a referendum petition is filed, the City would either call a special election or defer until a general election. If Ukiah elected to get out of the project, then someone would buy the City out. The City would not get paid until the bonds are sold and the postponement will result in a substantial bill for the member cities. Councilmember Snyder stated if Ukiah has a referendum, the bonds and the financing will progress, whether we are in it or not and will not hold up the sale of the bonds. Mr. McDonough stated the financing costs for the issuance of revenue bonds can only be issued with the consent of the members and borrowing money under the old agreement is very difficult and very expensive. Councilmember Snyder asked what would occur if we delay the action for three months. Mr. McDonough stated the plan would be to pass the bond ordinance so we could issue the bonds. If the City decides not to go, the members would pick up the City's share of the power and share of the costs. Councilmember Snyder was of the opinion that when the people voted on the contract, it was their vote and if there is a change, it should be their vote. Mr. McDo.nough stated the people could still vote if they wanted to. It seemed to him just because they voted before, they might not.want to vote on it again. He stated there was nothing in the original referendum that stated you could not amend it. Councilmcmb, i~r Snyder expressed her concern with.Council's responsibilities to tl~e citizens of Uki;'ll~. · 170 Mayor Hickey stated there seems to be some concern that this is a major change. He asked Mr. McDonough to sun~aarize the changes, lie stated the two principle changes are 1) if one of the. member cities defaults in its obligation to pay for power, the other members agree to step up their payments by whatever is necessary but not to exceed 25% and get the defafilt share of the power. 2) Limit on the incurring of additional indebtedness. The principle reason was the bondholders and under+~, r{ters wanted some assurance that we wouldn't incur additional expenses that would impair us from meeting' our liabilities on these bonds. These conditions are quite customary in revenue bond issuance. Councilmember Myers stated that the amendments presented have not substantially changed the original contract. The meaning and interpretation is still the same that the voters of Ukiah voted on two years ago. Mr. McDonough stated that the obligations are the same. We are making changes in order to satisfy the people who will buy bonds. Motion failed by the following roll call vote: AYES: Feibusch, Snyder. NOES: Riley, Hickey, Myers. ABSENT: None M/S: Myers/Riley to introduce Ordinance No. 745 by title only. Unanimously carried. M/S: Myers/Riley to introduce Ordinance No. 745 .authorizing NCPA to issue revenue bonds, Motion carried by the following roll call vote: AYES: Riley, Myers, Hickey. NOES: Feibusch, Snyder. ABSENT: None c) Resolution No. 80-73 approving electric supply project capacity agreement 'M/S: Myers/Snyder to adopt Resolution N~. 80-73. approving electric supply project capacity agreement. Questions were raised pertaining to the capability agreement and what constituted a default. Mr. Troudt and Mr. McDonough explained. Motion carried by the following roll call vote: AYES: Riley, Myers, Hickey NOES: FeibUsch, Snyder. ABSENT: None. b) Resolution No. 80-74 approving member agreement for construction, operation & financing of the NCPA geothermal generating Unit No. 2 M/S: Myers/Snyder to approve Resolution No. 80-74 amending member agreement for construction, operation and financing of NCPA geothermal generating Unit No. 2. Motion carried by the following roll call vote: AYES: Riley, Myers, Hickey NOES: Feibusch, Snyder ABSENT: None · REQUEST FROM CULTURAL ARTS.. COMMISSION Councilmember Snyder stated that the Cultural Arts Commission is asking if they might use the City seal when issuing certificates for homes of historical significance. It was the consensus of the Council that they could use the City seal. ADJOURNMENT - 2: 45 PM MARY MELVIN Deputy City Clerk Adj. Mt:g. 4/?. 3/80