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HomeMy WebLinkAboutOrdinances Book 14, Page 378, No Resolution NumberA RESOLUTION RATIFYING THE ACTION OF THE ELECTRIC PLANT BOARD OF THE CITY OF PADUCAH, KENTUCKY, FOR THE ACCEPTANCE OF THE OFFER OF STEIN BROS. & BOYCE OF LOUISVILLE, KENTUCKY, TO ACT AS ITS FISCAL AGENT IN CONNECTION WITH THE ISSUANCE OF REVENUE BONDS TO PAY THE PURCHASE PRICE OF THE ELECTRIC PLANT OF KENTUCKY UTILITIES COMPANY AND THE COSTS AND EXPENSES INCIDENT TO SUCH PURCHASE AND TO PLACING SAID ELECTRIC PLANT IN MUNICIPAL OPERATION; AUTHORIZING THE MAYOR AND CITY CLERK TO SIGN, FOR AND ON BEHALF OF THE BOARD OF COMtiMISSIONERS OF THE CITY OF PADUCAH, KENTUCKY, THE LETTER WRITTEN BY STEIN BROS. & BOYCE DATED NOVEMBER 30, 1960 WHEREAS, by resolution adopted by the Electric Plant Board of the City of Paducah, Kentucky, Stein Bros. & Boyce of Louisville, Kentucky, have been named as the Fiscal Agents of the Electric Plant Board in connection with the issuance of revenue bonds to pay the purchase price of the electric plant of Kentucky Utilities Company and the costs and expenses incident to such purchase and to placing said plant in municipal operation, and WHEREAS, it is the desire of the Board of Commissioners of the City of Paducah, Kentucky, to ratify such appointment insofar as is legally required and permitted. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COMSIISSIONERS OF THE CITY OF PADUCAH, KENTUCKY: SECTION 1. That the action of the Electric Plant Board of the City of Paducah, Kentucky, in accepting the offer of Stein Bros. & Boyce of Louisville, Kentucky, to act as its Fiscal Agents in connection with the issuance of revenue bonds to pay the purchase price of the electric plant of Kentucky Utilities Company and the costs and expenses incident to such purchase and to placing said electric plant in municipal operation, be, and the same is hereby ratified by the Board of Commissioners of the City of Paducah, Kentucky, insofar as the same is by law required and permitted. SECTION 2. The Mayor and City Clerk are hereby directed and authorized, for and on behalf of the City of Paducah and its Board of Commissioners, to execute the letter written by Stein Bros. & Boyce dated November 30, 1960, which is in words and figures as follows, to -wit: 379 Steih Bros. & Boyce Louisville 2, Ky. November 30, 1960 The Honorable Mayor, City Council, and Electric Plant Board taducah, Kentucky Gentlemen: For a considerable time there have been negotiations in progress for some form of public ownership and operation of the various utility properties now owned and operated by Kentucky Utilities Company, encompassing the electric distribution system properties in the City of Paducah, Kentucky. We are informed by counsel that the existing laws of Kentucky provide a method whereby the City of Paducah, Kentucky could acquire, finance and thereafter operate the electric distribution system properties in said city on a self- liquidating and self-sustaining basis without incurring any debt or obligation except that payable from the available earnings of the property itself. The City of Paducah has taken certain steps with regard to acquiring the electric distribution system, including the establishment of the cost to the City as provided by law, and has obtained a contract on favorable terms for the supply of electric energy. The voters of the City on November 8, 1960, overwhelmingly approved a ballot question with respect to the acquisition of the existing distribution system within the City. It would appear reasonable that extensive rate reductions could be put into effect when the distribution system is acquired. The negotiations and legal proceedings which have been carried on for the acquisition of the utility properties of the Company as a whole have now reached a point where further expensive legal and engineering investigations must be made. Of course, we should not be required or expected to underwrite these expenses without assurance from the City and the Electric Plant Board, to which the properties are to be conveyed, that they are favorable to the undertaking upon the basis as herein set out. We propose that we now be employed as the fiscal agent of the Electric Plant Board and the City to assist in the acquisition and financing of the electric properties you are entitled to acquire under your franchise option. If so employed, we will obtain at our expense nationally recognized municipal bond counsel, and Kentucky Bond Counsel experienced in proceedings in Kentucky Courts; and with the benefit of these counsel as to legal matters we will pre- pare and submit for your approval a comprehensive plan looking to the accomplishment of your objective. 380 Any such plan must necessarily be based upon your furnishing to us a report of nationally recognized consulting engineers, wk we are advised you have retained at your expense, showing to our satisfaction that the electric properties can be acquired and operated under municipal ownership on a self-liquidating and se] sustaining basis, at reasonable rates which are acceptable to yc which will permit accumulation of proper reserves incident to ma ability. We are informed that such are the conclusions of your engineers and entertain no doubt on this score. If such plan is acceptable to all concerned, appropriate legal proceedings will be drafted whereby your City would authorize and provide for the issuance of a sufficient principal amount of revenue bonds payable solely from the revenues of the property, which bonds would be dated approximately the first day of the month during which they are to be issued, would bear interest payable semi-annually, and would mature serially in such amounts that the total of principal and interest becoming due in each year would be substantially equal or uniform. Such proceedings would further provide for the issuance and delivery of any bonds to the successful bidder at competitive public sale at interest rates established at said sale provided said electric properties can be acquired by the City free and clear of all liens and encumbrances. Acceptance and approval of this proposal, as hereinafter pro- vided, shall constitute an agreement, provided that the bonds when issued and delivered must be accompanied by the unqualified approving opinion of counsel selected mutually by the City and us as to their legal issuance and validity in accordance with presently existing laws of Kentucky, and transfer of the properties to the City must be accompanied by the opinion of counsel selected and retained by the Plant Board or the City without expense to us, that the record title thereto will be, upon such transfer, vested in the City free and clear of all liens and encumbrances which would materially affect their value or their operability as an electric distribution system. Our proposal is that you enter into this agreement with us, with reference to the financial, legal and accounting work to be performed, under the terms of which agreement, we shall: 1. Cooperate with your engineers in: (a) Considering the total amount of bonds which will be needed to finance the acquisition of such electric properties in order to arrive at such an amount as would be proper to finance such project so that the charges for paying off the interest and principal of such amount will not be burdensome or unreasonable; • (b) Determining the amount of bonds which can be and should be issued by the City; (o) Formulating schedules of payments which will be required in order to amortize the interest and principal on such bonds; and (d) Preparing schedules of maturities of the proposed bonds and recommending redemption provisions and other details. 2. We shall retain recognized Municipal Bond Counsel and rec- ognized Kentucky Bond Counsel who will: (a) Guide each of you in the preliminary steps with reference to the authorization of the proposed bonds. (b) Prepare all minutes, ordinances, contracts, certifi- cates and other documents, for adoption in proper form and sequence, including if necessary the validating of the recent election and any other proceedings necessary in connection with said election. (c) Handle all proceedings which are necessary or become necessary in connection with the authorization, issuance and sale of the bonds; (d) Prepare the notices of sale, Official Terms and Conditions of Sale and Descriptive Circulars in connection with the sales of such bonds, for publication and distribution to all interested bidders; (e) Make available a consultation service and participate in the legal proceedings in connection with any phases of the financing, to such extent as the Electric Plant Board may request. 3. We will prepare and circulate widely a prospectus for each bond issue, in addition to the notices of sale, showing the infor- mation required by security dealers and rating agencies in order to enable them to prepare bids or determine the quality of the bonds, to the end that you will obtain the best possible price for the bonds at the public sale. 4. Upon your acceptance of the best bid for such bonds, we shall have lithographed bonds prepared for signatures, as well as coupons bearing facsimile signature. 5. We shall assist in the execution and delibery of each of the bond issues as soon as the final approving legal opinion and/or opinions is/are available. 6. We shall assemble and deliver complete transcripts of all legal proceedings incident to the bonds, to the successful bidder or bidders, including certifications as to the legality of each bond issue, which opinions are required for acceptable delivery of the bonds. 381 382 7. We shall pay all expenses incident to such work, including: (a) The cost of printing the bonds; (b) The cost of advertising the bonds for sale, by the City; (c) With the exception of obtaining proper title evidence, all other related legal expenses, including the cost of the services of the approving Municipal Bond Counsel, experienced Kentucky Bond Counsel together with the approving legal opinion or opinions issued in connection with such bonds, and all other expenses which may be incurred in connection with their issuance and sale. We shall proceed to have such bonds validated as required by law, and then issued, sold and delivered at the earliest date, consistent with the necessary legal proceedings. For our services as your fiscal agent, the expenses we herein undertake to assume and pay, and our risk of receiving no compen- sation or reimbursement in the event the proposed acquisition and financing of the electric properties should ultimately fail or be permanently abandoned, we are to receive compensation in the sum of $5.00 per $1,000 principal amount of all bonds actually sold, delivered and paid for, and our compensation will be earned and payable only when payment is actually received by you; provided, however, such rate of compensation is based upon the assumption that the electric properties can be acquired without.litigation, either by way of defending proceedings instituted by the owner of the properties, or by third parties, or by way of affirmative proceedings commenced by you in order to compel conveyance of the properties, and in any such event we will, with your concurrence, retain associate Kentucky Bond Counsel and our compensation will be increased to 06.50 per $1,000 principal amount of such bonds as are issued, delivered and paid for; provided however, this addition- al compensation in the sum of $1.50 per ;pl,000 principal amount will become effective only at such time.as, upon our recommendation, with your written concurrence, the necessity for incurring major litigation services and expenses arises. You are to cooperate with us and our Attorneys by furnishing any information which is needed and which is requested and in connection with any and all other matters pertaining to the proposed financing, including the adoption and execution of all necessary ordinances, resolutions, notices of sale, certifications and other papers, in order that such bonds may be actually authorized, issued, sold and delivered in accordance with all legal requirements. Such bonds shall be sold subject to their being approved as to legality by recognized Municipal Bond Counsel, and to the issuance of an opinion by such Counsel that such bonds and the interest there- on are not subject to Federal or Kentucky ad valorem or income taxation at the time of their delivery. Of course, although it is anticipated that full cooperation will exist between all parties to the matter, the final determination of all facts shall rest with the Electric Plant Board and the legislative body of the City. A contract shall be deemed to be entered into between us and you by our executing this letter of proposal and by each of you signing your acceptance to this proposal through your duly authorized officers immediately below same. If this proposal is accepted by both of you, it shall be binding on both. It is distinctly understood that by your acceptance of this proposal, you are incurring no liability unless a public sale is held and the proceeds of the bonds are received by you. Respectfully submitted, STEIN BROS. & BOYCE By James S. Levy This is to certify that the foregoing proposal was accepted and approved by resolution adopted by the Electric Plant Board of Paducah, Kentucky, on December , 1960. WITNESS our signature this day of December, 1960. Chairman of Electric Plant Board Secretary of -Electric ant oard This is to certify that the foregoing proposal was accepted and approved by resolution adopted by the City Commission of Paducah, Kentucky, on WITNESS Our signatures this day of December, 1960. Mayor City Glerk 383 384 SECTION 3. This Resolution shall be in full force and effect from and after its adoption. Mayor Passed by the Board of Commissioners December 13, 1960 Recorded by Sarah Thurman, City Clerk, December 13, 1960.