HomeMy Public PortalAbout10-21-1996 PROCEEDINGS OF THE COMMON COUNCIL OF THE
CITY OF RICHMOND.INDIANA.SERVING AS A BOARD
IN CHARGE OF THE OPERATION OF THE RICHMOND POWER&LIGHT PLANT
MONDAY. OCTOBER 21.1996
1 The Common Council of the City of Richmond, Indiana, serving as a Board in charge of the operations of the
2 Richmond Power & Light Plant met in regular session at 7 p.m. Monday, October 21, 1996, in the Council
3 Chambers in the Municipal Building in said City. Chairperson Larry Parker presided with the following
4 Councilmenibers in attendance: Howard "Jack" Elstro, Etta Lundy, Bruce Wissel, Sarah "Sally" Hutton, Robert
5 Dickman,Alan Stamper, Bing Welch and Geneva"Gene"Allen. The following business was had to-wit:
6
7 APPROVAL OF MINUTES
8
9 President Parker made a correction to the minutes of the October 7, 1996 meeting,changing the word"load"to
10 "low"in line 27, page 2.With that correction the October 7 minutes were approved as well as the minutes of
11 September 23 on a motion by Councilmember Hutton,second by Councilmember Dickman and was carried on a
12 unanimous voice vote.
13
14 APPROVAL OF BILLS. INVESTMENTS AND TRANSFERS
15
16 Upon recommendation of the Finance Committee, Councilmember Stamper moved to approve the following bills
17 for payment,seconded by Councilmember Hutton and by unanimous voice vote the motion carried.
18
19 Bills Already Paid
20 Payroll and Deductions 223,021.91
21
22 Investments Purchased From:
23 Cash Operating Fund
24 Bond Sinking Fund
25 Utility Bond Reserve Fund
26 Depreciation Reserve Fund 91,000.00
27 28
Insurance Reserve Fund
Consumer Deposit Fund
29 Cash Reserve Fund 168,025.00
30 Group Insurance Fund
31
32 Total Investments 259,025.00
33
34 Transfer from Cash Operating Fund to;
35 Cash Reserve Fund for Payment 168,025.00
36 to City in lieu of taxes
37
38 Transfer from Cash Operating Fund to:
39 Depreciation Reserve Fund 91,000.00
40 for Property&Plant
41
42 Transfers from Depreciation Reserve to:
43 Cash Operating Fund
44
45 Transfers from Consumer Deposit to:
46 Cash Operating Fund
47
48 Transfers from Utility Bond Reserve Fund to;
49 Bond Sinking Fund
50
51 Transfers from Cash Operating to :
52 Interest and Bond Principal
53 Bond Sinking Fund
54 Cash Reserve Fund
55 56
Utility Bond Sinking Fund
Depreciation Reserve Fund
57 Insurance Reserve Fund
58 Consumer Deposit Fund
59 Interest and Bond Principal
60 End of Month Petty Cash
61 Revenue Bonds
62 Interest Coupons Redeemed
63 Bond Coupons
64 Miscellaneous Prepaid Invoices 148,645.06
65 Total Prepaid Invoices 899,716.97
Less EFT/Direct Deposit of Payroll (41,624.89)
Total Prepaid Invoices 848,092.08
Total Bills Not Paid 415,940.29
Grand Total 1,264,032.37
RP&L Minutes Cont'd
October 21, 1996
Page 2
1 REMARKS BY CHAIRPERSON
2
3 President Parker announced there will be no RP& L meeting October 28, 1996.
4
5 UNFINISHED BUSINESS
6
7 There was none.
8
9 STREET LIGHT COMMITTEE REPORT
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11 There was none.
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13 MISCELLANEOUS BUSINESS
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15 There was none.
16
17 REPORT BY GENERAL MANAGER
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19 General Manager Irving Huffman reported on the Whitewater Valley Station planned outage, noting that it lasted
20 about 30 days for Unit No. 1.He explained that the new feeders for coal unloading were installed, adding that the
21 low nitrous oxide burners were installed, also, by ABB.These were a test-type burner,he said, and ABB gave RP
22 &L an extremely low price for the equipment and they went on line Sunday night and in a very short time it looks
23 like they are doing an excellent job. He said the test will continue on the low nitrous oxide burners possibly for the
24 next 30 days. He added that the same burners which were installed in Unit No.2 when it was down for 30 days
25 are considered very successful.
26
27 He said today there is a lot of off peak cheap power and IMPA is taking advantage of that because coal cost is
28 roughly around 1.8 cents per kilowatt hour and some of the cheaper power that is available is 1.3 cents per
29 kilowatt hour. He said he feels that the outages of both units were successful and he feels ABB has done a
30 tremendous job as a supplier and advisor. He added that this has been a successful demonstration area for both
31 ABB and EPA.
32
33 Councilmember Dickman asked what caused the power outage today. Huffman said the outage lasted 16 minutes
34 but no problem was found as the workers patrolled the lines.He said they will be using the diagnostic equipment
35 to try to determine what the cause was.
36
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38 NEW BUSINESS
39
40 Chairperson Parker said that tonight the general manager's increase will be postponed in order to get on with
41 Resolution No.7-1996. He asked for an amendment to the agenda to get that added. Councilmember Hutton so
42 moved,second by Councilmember Elstro and the motion was carried on a unanimous voice vote.
43
44 Chairperson Parker asked the Clerk to read the resolution in its entirety.
45
46 "WHEREAS, Richmond Power and Light,a municipally owned utility under the direction of the members of
47 Richmond Common Council serving as its Board of Directors (hereinafter"RP&L) is currently the holder of a
48 Promissory Note in the sum of$2,500,000 executed on or about June 25, 1993 by the City of Richmond through
49 its Boad of Public Works and Safety (hereinafter"City");and
50
51 "WHEREAS, pursuant to the terms of the above note, interest only payments are required annually with principal
52 not due and owing until the sale of certain real estate owned by the City to Carpenter Manufacturing (hereinafter
53 "Carpenter property");and
54
55 "WHEREAS,the sale of the Carpenter property is currently scheduled for closing on or about October 30, 1996,
56 but that in lieu of a cash closing,the City intends to accept a promissory note and first mortgage upon the property
57 for the sum of the purchase price, payable over a period of ten years with interest only payments monthly at the
58 fixed rate of 4.5 percent per annum, and principal due in full at the end of the two year period;and
59
60 "WHEREAS, City has requested and RP&L is willing to extend the principal payment date upon the above note
61 to coincide with the principal payment date of Carpenter's note to the City, in conjunction with making interest
62 payments also due monthly similar to the Carpenter note;and
63
64 "WHEREAS,the City has requested and RP&L is also willing to modify interest terms of the above note to
65 coincide with the fixed 4.5 percent per annum interest within the Carpenter note.
RP&L Minutes Cont'd
October 21,1996
Page 3
1 "NOW,THEREFORE, BE IT RESOLVED THAT RP& L agreeds to modify an/or renew the terms of the
2 promissory note executed by the City on or about June 25, 1993 in the sum of$2,500,000 to provide that all
3 interest thereon is due and payable monthly beginning thirty(30)days after the date of execution by Carpenter
4 upon its promissory note to the City in the same amount, and that all principal thereon shall be due and payable
5 ten years from the date of the Carptenter note to coincide with the same.
6
7 "BE IT FURTHER RESOLVED that if for any reason the Carpenter note is prepaid early to the City,the City shall
8 be required to also prepay at the same time the note to RP& L.
9
10 "BE IT FURTHER RESOLVED that the interest rate upon the City note shall be modified to coincide with the
11 Carpenter note, at the fixed rate of 4.5 percent per annum.
12
13 "BE IT FURTHER RESOLVED that the General Manager of RP& L is hereby authorized and directed to execute
14 any and all promissory note addendum or other documents with the City to effectuate the provisions of this
15 Resolution."
16
17 In response to Chairperson Parker asking for comments, City Attorney Bob Bever said as indicated in the letter to
18 Councilmembers,the current promissory note from the Board of Works to RP&L for the$2,500,000 has a"due
19 on sale"clause that requires that payment in full upon the time of closing on the property from the City to
20 Carpenter.As has been earlier published and discussed, he said,the City has entered into the purchase
21 agreement with Carpenter and they have exercised their option early to the benefit of the City to take the City's
22 responsibilities of paying insurance,taxes and maintenance. Bever said closing is now scheduled tentatively for
23 October 30, 1996 and the provisions for that sale,for the City to take back the note and first mortgage on the sale
24 payable over a 10-year period. Needless to say, he said,the City will not be receiving that$2,500,000 on that
25 closing date which would, if the promissory note was kept as it is now,create a problem for the City in not having
26 that$2,500,000 that is due on the promissory note on due on sale.Consequently, either an addendum or renewal
27 of the current promissory note would be necessary so that the City could pay that$2,500,000 when they receive
28 their$2,500,000 from Carpenter on the final payment of their note and mortgage.
29
30 Bever added that the second aspect of this would then be that interest which is going to be payable on the
31 Carpenter note,would coincide with interest payments on the promissory note from the City to RP& L and thirdly,
32 the City's requesting up to this board,that the fixed interest rate that the City's agreed to with Carpenter on the 4.5
33 percent be the new interest on the addendum or renewal of the promissory note now from the City to RP &L. He
34 added that the current interest is a flexible annual adjustable interest equal to the 12-month U.S.Treasury bill
35 rate. He said Councilmember Welch had contacted Herschel Philpot, RP&L financial manager,who said this
36 year it is 5.2 percent.
37
38 Bever said five percent interest rate on$2,500,000 a year is$125,000 and 4.5 percent is$112,500 so that would
39 be a$12,500 difference if the RP& L Board agrees to adjust the interest rate to coincide with what the City will be
40 receiving from RP& L Bever said those are the three aspects of Resolution No.7- 1996, along with authorizing
41 the general manager to sign any documents necessary that have been presented to this Board.
42
43 In answer to a question by Councilmember Hutton about the due date of the interest payment, Bever said the
44 interest on the Carpenter note will be payable monthly, interest only,so that when the balloon comes due in 10
45 years there would be just the principal because the interest would have been payable monthly throughout the
46 entire 10 year period of that note. He said this resolution would put the interest payable on the same date monthly
47 interest payment only on the note from the City to RP&L.
48
49 Councilmember Elstro said he voted against the original contract with Carpenter because he felt it was a bad one
50 and still feels the same way. He said he thinks the ratepayers are really getting ripped off, adding that he figures
51 over the next 10 years they will lose$258,000. He said he talked with Bever about the fact that it is a big liablity
52 and Bever assured him that he has it covered. Councilmember Welch commented that in talking with Philpot he
53 learned the City has been continuing to pay the interest on the RP& L loan on a regular monthly basis. He said
54 he questioned as to whether or not the interest payment has been received on a monthly basis and Philpot said
55 that money has been transferred to RP& L monthly and he will be able to invest that money and recover part of
56 that percentage at the end of the 10 year period so part of that loss will be recovered.
57
58 Councilmember Allen said she feels this is a good arrangement and the best under the circumstances that the
59 administration could do. She said she commended them for negotiating this and even though she feels it is not
60 the best deal it should be accepted. Councilmember Lundy agreed with President Allen.Councilmember Stamper
61 said he would be interested in Huffman's opinion on the matter. Huffman answered that this decision is being
62 made by this Board. He said as far as the Public Service Commission is concerned,they frown on what is being
63 done and he knows RP&L will get a letter from the State Board of Accounts saying it is in violation, but, he said,
64 they have been getting these letters for the past three years. He added that the interest of PSC lies in the
65 ratepayer. Huffman said this way the ratepayer is at least getting some interest.
•
•
RP&L Minutes Cont'd
October 21, 1996
Page4
1 Councilmember Allen said the City needs to recognize the contribution Carpenter has made to the City in the past
2 three years as far as employment is concerned and taxes from the employees. She said it has been a good deal for
3 the City.
4
5 Councilmember Hutton commended Mayor Andrews and Bever for an excellent job, noting that this is going to save
6 the citizens money over the years.She said the City will gain far more in comparison with what it will lose.She
7 moved to approve the resolution, second by Councilmember Stamper and the motion was carried on a unanimous
8 voice vote.
9
10 Bever distributed to Councilmembers information about the Wayne County Geographic Information System (G.I.S.),
11 explaining that he had been in negotiations with IU East for an agreement of participation for the City as a whole.
12 He said he has finalized a draft of that agreement on behalf of the City and at the next meeting for RP&L there will
13 be discussion entered into regarding how the annual fee of the City as a participant would be handled between the
14 City general,the Board of Works, RP&L and the Sanitary District as a third entity. He said no action and no
15 discussion needs to take place tonight, he merely wanted this Board to be aware of this information and RP&L will
16 be approached about its involvement in G.I.S. Huffman said RP&L has spent a tremendous amount of money in
17 the system that it now has and to convert to this system would be prohibitively expensive.
18
19 PUBLIC COMMENTS
20
21 There were none.
22
23 ADJOURNMENT
24
25 There being no further business,on a motion duly made,seconded and passed the meeting was
26 adjourned.
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34 Larry Parker,Chairperson
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40 ATTEST:
41 Norma Schroeder, Clerk
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