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HomeMy Public PortalAbout035-1993 - VETOED - GENERAL ORDINANCE AUTHORIZING THE CREATIONUi-f-0,5--D -q19'93 ORDINANCE NO. 35-1993 A GENERAL ORDINANCE AUTHORIZING THE CREATION OF A HOLDING CORPORATION TO OWN AND FINANCE A FULLY INTERACTIVE CABLE COMMUNICATIONS AND CONTROL SYSTEM WHEREAS the City of Richmond (the "City") intends to acquire, lease, construct and equip a fully interactive cable communications and control system (the "System"), and WHEREAS the City, acting through its Board of Public Works & Safety ("Board"), reasonably expects to reimburse certain costs of the System with proceeds of a financing to be incurred by or on behalf of the City, and WHEREAS the City, acting on its own behalf or through a leasing entity, expects to enter into a lease financing for the System and to use up to $6,900,000.00 of proceeds to reimburse costs of the System, and WHEREAS the Common Council of the City intends that this Declaration of Official Intent to Reimburse Expenditures constitutes a declaration of official intent pursuant to Treas. Reg. 1.103-18 (1992), NOW, THEREFORE, Be it ordained by the Common Council of the City of Richmond, Indiana, that: 1. The Common Council hereby declares its official intent pursuant to Treas. Reg. 1.103-18 (1992) to acquire, construct and equip the System and to reimburse up to $6,900,000.00 of the costs of acquiring, constructing and equipping the System with proceeds of debt to be incurred by or on behalf of the City for purposes of paying or reimbursing costs of the System; and to approve debt issued by a leasing entity that will lease the System to the City. 2. The Common Council hereby authorizes the creation of the Richmond Cable Communications Corporation, a not -for -profit corporation, which shall be managed by a Board of Directors consisting of five persons who are residents of the City and who are appointed by the Council as follows: one such director initially appointed for one year; one such director initially appointed for two years; one such director initially appointed for three years; one such director initially appointed for four years; one such director initially appointed for five years, and all successor directors appointed for terms of five years each, provided that no director shall serve more than nine consecutive years at any time. 3. Said corporation shall issue bonds and use the proceeds to acquire and construct the System. 4. Said corporation shall negotiate and obtain a franchise to operate the System from the Board consistent with the Board's existing contractual obligations to the incumbent provider of cable television services. 5. Said corporation shall lease the System to the Board for the term of the bond issue with lease payments sufficient to cover debt service on the bonds and trustee fees. Said lease payments shall be payable from operating revenues of the System and, if necessary, from a property tax levied throughout the City. 6. The Board shall enter into a management agreement for operating the System with Richmond Power & Light. Passed and adopted this 3rd day of May, 1993, by the Common Council of the City of Richmond, Indiana. _ d ,President (Etta J Lundy) ATTES ity Clerk orma Carnes} PRESENTED to the Mayor of the City of Ric nd, Indiana, s 4th day of ay, 1993, at 9:00 a.m. ity Clerk (Norma Carnes) APPROVED by me, Roger Cornett, Mayor of the City of Richmond, Indiana, this 4th day of May, 1993, at 9:05 a.m. ,Mayor (Roger Cornett) ATTEST: ,City Clerk (Norma Carnes) CITY OF RICHMOND 50 North Fifth Street Richmond, Indiana 47374 Phone (317) 983-7207 Fax (317) 966-2255 May 19, 1993 Common Council of Richmond, Indiana c/o Mrs. Etta Lundy, President 50 North 5th Street Richmond, IN 47374 Dear Members of Common Council: �r t L.iv Co P y SLOT LoPt�S Gr�n`}LZ t� ROGER CORNETT Mayor Pursuant to Indiana Code 36-4-6-16 (a) (2), I hereby veto Ordinance No. 35-1993 which was adopted May 18, 1993, and return it to you. My reasons for the veto are set forth in my letter to you dated May 11, 1993, which is attached. A copy of the referenced statute is also attached. Sincerely, Roger Cornett Mayor Attachments (2) CITY OF RICHMOND ROGER CORNETT Mayor 50 North Fifth Street Richmond, Indiana 47374 Phone (317) 983-7207 Fax (317) 966-2255 May 11, 1993 TO: All Members of Common Council I have been asked by several of you to. state my position on Ordinance #35-1993. Therefore, this letter is to inform you of my intent to veto the Ordinance should it require my consideration. As you know, I have repeatedly stated in public my support for competition to TCE through RP&L involvement. This was based on personal frustration with TCl as a cable subscriber and from prior experience in dealing with the corporation in the marketplace. All during that time I was under the impression that the entire project would be financed by RP&L as an RP&L subsidiary. The attached information from a letter to you dated July 23, 1991 stipulates no risk to the city or the taxpayer. Ordinance #35 does not address whether or not RP&L should be in the cable TV business but only how it should be organized and financed. That's what I am opposed to. I am opposed to the City of Richmond contracting with RP&L through any kind of a separate corporation, and I am opposed to the method of financing which calls for city issued tax backed bonds. Since the time- that the financing plan was made public and it appeared I might be involved I have listened to many arguments, both pro and con. I was particularly impressed with the testimony at the last Council Meeting from many knowledgeable citizens. Following are several of the reasons they gave against RP&L entering this market: 1. A valid philosophical argument was raised that government should not be in competition with the private sector. 2. Cable TV is entirely a different marketplace than the electric utility market. The question of expertise in a totally separate marketplace is valid in that new positions must be created and special training and education must take place in order to be successful All Members of Common Council - Page 2 - May 11, 1993 3. Tax backed bonds would have a negative impact on other city financing. Although the city has a tremendous capacity to sell bonds for worthy projects there is an ultimate limit to what the taxpayer is willing to face. Any bond issue that results in higher taxes has an accumulative negative effect on future Issues simply because. as taxpayers there is a limit to our willingness to support higher taxes. This unwillingness to go further into debt could therefore endanger some future investment. As you all know, going in debt has its limits whether you are a household or a government. Also, increasing debt threatens the city's credit rating as well as it does mine or yours. Therefore, several economic development projects that will require tax backed bond financing could be threatened. 4. 1 have spent most of my life in the private sector and 1 know what competitors do when a new company enters the marketplace with a low price. Price is the easiest thing in the world to react to and I think it's 100% predictable that TCI will react and lower their prices. That will place all the financial assumptions presented by RP&L at risk which will then dramatically increase the risk of the investment. 5. There are many taxpayers in our community who have no interest or involvement with cable TV. As elected officials we are obligated to represent their interests as well as the interests of others. The proposed financing recommendations places that entire group of people at risk of subsidizing cable TV subscribers. Any time you subsidize one group at the expense of another you increase the risk of charges of discrimination. 6. Technology is changing at a dramatic rate. Whatever system is installed is subject to being obsolete in a short period of time. In order to compete effectively any company must commit to ongoing capital investments in order to properly maintain the system. In addition, this -industry requires a great deal of costly entertaining to keep up. to -date on industry status. If the two companies compete head to head over a period of time on price they will both be weakened, which minimizes their respective ability to reinvest in updating. The city then runs the risk of- having a modern system for a few years but ending up well behind the rest of the world in the long run. Of the two companies it is obvious that TCI has the capacity to win this battle if it wishes since it can subsidize the Richmond system at the expense of other systems over a long period of time. The RP&L system cannot be subsidized with RP&L funds, therefore, the taxpayers are once again left at even higher risk if they are to keep up the system with advancing technology. 7. In spite of what has been said about cable TV having a'positive impact on economic development I must say that in my experience that has never happened. in my opinion, there is no justification for saying an improved cable TV system will attract job creating investment. All Members of Common Council - Page 3 - May 11, 1993 8. The possibility exists that potential in would see the RP&L effort as a community negative. If the city is quick to jump into. competition with a private sector company in the cable TV business does that mean it would seek the same solution in other areas? This is not a very probable situation but could have an impact on some investors who are sensitive to community attitudes toward business. 9. 1 am not a lawyer but it makes sense to me that the basis for a significant lawsuit exists if Ordinance #35 or some form of it is adopted. A city giving itself a franchise to compete with someone who must have a franchise from the same city certainly raises moral and ethical issues as well as legal ones. When outstanding lawyers such as Andy Cecere and Doug Oler present this argument one has to pay attention. This, of course, would cost a lot of money and drain the city of already inadequate funds. Following is a summary of the reasons for RP&L entering the cable TV market as I understand them: 1. The system would be a better system than the one we have now. 2. The service would be better than the service we have now. 3. It would eliminate cable TV subscriber frustration. 4. It would support the recommendations of RP&L management and give a vote of confidence to the utility. I simply feel the arguments against outweigh the arguments for. Finally, I want to raise the issue of community priorities. I realize each of us have our own view of what those priorities should be. There are so many things that need to be done in the community to create jobs, to repair the infrastructure and expand it, to improve relationships among the citizens through neighborhood development and to beautify and protect our environment that I have great difficulty in placing the need for additional entertainment at the top of the list. I realize everyone is entitled to their own opinion on the subject. As I have told you before, I would fight to protect your right as an American to express your opinions in a free n manner. I beg each of you to do the same for me. Ro Cornett, Mayor Attachment 36-4-6-16 Ordinance, order or resolution; power of city executive to approve or veto Sec. 16. (a) Within ten (10) days after an ordinance, order, or resolution is presented to him, the city executive shall: (1) approve the ordinance, order, or resolution, .by entering his approval on it, signing it, and sending the legislative body a mes- sage announcing his approval; or (2) veto the ordinance. order, or resolution, by returning it to the legislative body with a message announcing his veto and stat- ing his reasons for the veto. The executive may approve or veto separate items of an ordinance appropriating money or levying a tax. (b) If the executive fails to perform his duty under subsection (a); the ordinance, order, or resolution is considered vetoed. (c) Whenever an ordinance, order, or. resolution is vetoed by the city executive, it is considered defeated unless the legislative body, at its first regular or special meeting after the ten (10) day period pre- scribed by subsection (a), passes the ordinance, order, or resolution over his veto by a two-thirds (2/3) vote. As added by Acts 1980, P.L.212, SEC.3.