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.