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HomeMy Public PortalAbout01-18-1965 117 MINUTES OF THE MEETING OF THE COMMON COUNCIL OF THE CITY OF RICHMOND, INDIANA, SERVING AS A COMMITTEE .IN CHARGE OF THE OPERATION OF THE RICHMOND POWER AND LIGHT... The Common Council of the City of Richmond, Indiana, serving as a committee in charge of the operation of. the Richmond Power and Light, met in regular session in the City Hall Monday, January 18th, 1965, at, the hour of 7:OO.o'clock p.m. (est). Councilman Youngflesh presiding with the following members being present: Messrs. Backmeyer, Bell, Henn, Hilligoss, Hollingsworth, Marino, Paust and Yount. The following business was had to-wit: - IIICouncilman Yount moved the minutes of the previous meeting be dispensed with, seconded by Councilman Marino and on voice vote was carried. Councilman Bell moved the following claims be allowed, seconded by Councilman Young- flesh and on voice vote was carried. Payment of 1953 Revenue Bonds and Accrued Interest $123,875.00 Bills in the amount of $164,847.75 Councilman Bell moved the following transfers be allowed, seconded by Councilman Henn and on voice vote was carried. Transfer from Cash Operating Fund to: Utility Bond Fund 25,420.63 Cash Reserve Fund 58,237.38 Depreciation Reserve Fund $ 36,000.00 Chairman Youngflesh announced the following committees for the year 1965: Executive Committee, Youngflesh,Ch., Yount and Backmeyer Finance Committee, Henn,Ch., Hilligoss and Backmeyer Employees Relation, Bell,Ch., Marino and Hollingsworth Street Lighting, Hilligoss,Ch., Bell and Paust Buildings and Grounds, Ma.rino,Ch., Paust and Hollingsworth. III Mr. Beck reported that the present Underground Service Policy needs to be revised. He said he was now in the process of working on a new formula and will present the same to this body when completed. Mr. Beck reported that General Electric Company has submitted a proposal he is studying and will report on a later date. This proposal involves possible install- ation of a gas or jet engine be installed on the present 10,000 K.W generating,unit located in the Johnson Street generating- station. , Mr. Beck reported that a preliminary report of the Black and Veatch Engineering Company had been received and is being studied. There are some facts and figures to be clarified before it will be submitted to this body. Mr. Beck requested that this body give study to a proposed site for a Drive-in office building for the Richmond Power and Light. He has received several pro- posals of sites that could be studied. Chairman Youngflesh requested tna c one Buildings and Grounds Committee work with Mr. Beck on this. Councilman Henn reported a total of $149,141.93 was earned on investments of more than $-3 Or8@©:00 cyf. Richmond Power and Light funds during the year 1964. This re- presen-NQanJ nerease of more than $32,000.00 in such earnings over the year 1963. The following letter was presented: January 15, 1965 A.E.Beck III General Manager The Finance Committee met yesterday and approved the following investments. Depreciation Reserve Fund $300,000.00 Consumers Deposit Fund 10,000.00 The above to be invested in U.S.Treasury notes, 3 5/8% maturing in February, 1966, quoted at 99.22, to yield 3.92%. Cash Reserve Fund $310,000.00 The Cash Reservelmc)ney is to be invested in U.S. Treasury bills, maturing November 30, 1965, yield-•3.87%. /s/E.S.Porter,Office Manager 18 Councilman Henn moved that Mr. Bedk be authorized and directed to invest the sum of $300,000.00 from the Depreciation Reserve Fund of the Richmond Power and Light into U.S.Treasury Notes at 3 5/8%, maturing in February 1966, quoted at 99.22, to yield 3.92%, with stipulation that the above amount of $300,000.00 will not be needed until the date of February 1966. Councilman Yount seconded this motion and on voice vote was unanimously carried. Councilman Henn moved that Mr. Beck be authorized and directed to invest the sum of $10,000.00 from the Consumers Deposit Fund of the Richmond Power and Light into U.S.Treasury Notes at 3 5/8%, maturing February 1966, quoted at 99.22, to yield 3.92%, with stipulation that said above amount- of $10,000.00 will not be needed until the date of February, 1966. Councilman Yount seconded this motion and on voice vote was unanimously carried. Councilman Henn moved that Mr. Beck be authorized and directed to invest the sum of $300,000.00 from the Cash Reserve Fund of the Richmond Power and Light into U.S.Treasury Bills, maturing November 30, 1965, yield 3.87%, with stipulation that said above amount in the stun of $300,000.00 will not be needed until the date of November 30, 1965. Councilman Backmeyer seconded this motion and on voice vote was unanimously carried. Councilman Hollingsworth requested that the following be made a record of this " meeting: Since I am retired as a member of the Finance Committee, I have one bit of unfinish- ed business which' I suppose I will have to finish from the floor. As most of you know I do not approve of the present practice of redeeming our future maturing 1953 Revenue Bonds at or near par value, I have two reasons: 1. Ie pay 3.25% interest on these bonds, whereas we are earning approximately 3.75% interest on our investment. As I pointed out late last year we redeemed a number of these bonds at yield of 3.27%, we could have invested this money at 3.8% in Treasury Bills and gained .53%. In the last 5 years we have not had an investment yielding less than 3.25% and up to 4%. Last Friday we could have gotten 3.9%. I do not know what percent of the $2,500.00 worth of bonds we have redeemed were of future maturity, but I will point out that 2-% interest on $1,000,000.00 for 20 years is $100,000.00 without compounding. • 2. Iccording to our future plans as outlined by Black and Veatch in 1959, we will install a new turbo-generatorin a year or two. In order to do this we will have to offer a new issue of revenue bonds to cover a part of the expense. A:L_.the present high rate of interest we can expect to.sell the new issue to yield around 4.5%. Therefore, in redeeming these 3.25% 1953 bonds we are giving up money that could save 4.5%, and we are losing 1.25% in the deal. 1.25% of $1,000,000:00 for 30 years is 075,000.00 without even compounding. One reason given me for re- deeming these bonds was that it would improve our rating. We have a Moody's rating of A which is the same as most utilities, private or public. American Electric Power, a "blue chip" has the same rating and I do not believe there is anything that would improve ours. If the Finance Committee still feels that they should redeem these bonds, I suggest that a more realistic price be established and maintained. There being no further business presented, on motion duly made, seconded and carried, the meeting adjourned. Charles 04 gflesn,Chairman Attest: _ A er J.Reeg,C y Cl rk Councilmen Henn and Hollingsworth on the February Claims.