09241986 Emergency Meeting - Laserfiche WebLink

Home Browse Search

4 Emergency Meeting September 24, 1986 Page 4 Chuck Smith, representing the Lowman Ranch M.U.D., stated he objects to the City acting on this matter by emergency without public review, he does not think it is a wise use of public funds, that it is diffi- cult for development when the City's Ordinances change so rapidly and requested the Council to not act so quickly but to wait for the audit. Mr. Gonzalez pointed out the water system utility plan study is a matter that has been public information for a number of years and that Mr. Smith's client has been given the opportunity to participate financially and otherwise in the development of that plan and has not chosmto become a part of that effort (Cottonwood). Mr. Farr pointed out this matter had not been acted on in a matter of 48 hours but the negotiations have been developing over a considerable period of time. Mr. Gonzalez stated the matter has not been publicly discussed because of the nature in which the negotiations have been carried out, but that it is apparent to him that M.U.D.s developing in the area would not particularly view this acquisition by the City as being to their inter- est. Public discussion of this acquisition which would have allowed developers the opportunity to get involved in the process would not have been to the City's best interest. Mr. Coddington pointed out the Council did not have anything in writing until September 19, and that all negotiations and information had been verbally given to Council in Executive Session. Mr. Brown advised Mr. Smith the Council was working under a deadline on this matter and that the Council did not have the option to delay act- ing on this matter as is his understanding. Jeff Hill stated the City should not buy this system without an audit. He stated he knows Ms. Hoch is stating if the City does not buy the system by September 25, the deal is off, but he stated the City needs more information before making a decision to purchase the system. Mayor Younger stated Ms. Hoch had earlier pointed out Elim has a very high water rate, and he stated with infrastructure not in place, a developer would have to come in and put in the infrastructure and then pay a very high water rate, and in his opinion, this would squelch the development of that area. Mr. Farr stated there was a warranty from the current owners to warrant the financial aspects, and Mr. Farr's support of this would be contingent upon a proper audit that would take action against their war- ranty if discrepancies were found, and asked Mr. Don Laine how long it would take to prepare a proper audit. Mr. Laine stated they had approxi- mately two weeks to prepare the special purpose audit of cash receipts and disbursements. He stated to prepare a balance sheet audit would take six to eight weeks to verify all the costs of the fixed assets. He stated the cost of the fixed assets is not really indicative to the value of the system. What a balance sheet audit would provide is sup- posedly what the supplemental information is giving you, which is the cash on hand, accounts receivable, accounts payable, notes and deben- tures. The system itself would have to be valued on the lines, wells, flows, reserves, pumps, etc., and historical cost will not be of much benefit to the City. That is why they prepared the cash receipts and disbursements to show whether or not it has the ability to pay, and did it sustain what Ms. Hoch projected. Mr. Coddington stated that Mr. Laine was stating the real value of the system is in the permits, to which Mr. Farr added he concurred with Mr. Coddington's statement and added the certificated area as a part of the value. Mr. Laine stated he does think the revenues could finance the notes. Mr.. Gonzalez said it is not common for the Texas Water Commission to allow dual certifications. Mr. Gonzalez and Mr. Barrera reviewed needed amend- - ments with the Council. Mr. Farr reoved to amend Exhibit H on Page lO.k. to add the following sentence at the end of that paragraph: "Nothing in this Contract shall be construed to be a breach of any prior promis- sory note, deed of trust or security agreement," and Ms. Kissler second- - ed the motion, which passed unanimously. Mr. Coddington moved to amend Exhibit E on Page 5 to add the following wording to the last sentence in Section 13: " . . . deeds of trust and security agreements," and Ms. Kissler seconded the motion, which passed unanimously. Mr. Barrera