2008-11-18 Joint CC APFA MinutesMINUTES OF THE SPECIAL JOINT CITY COUNCIL AND
ALAMEDA PUBLIC FINANCING AUTHORITY (APFA) MEETING
TUESDAY- - NOVEMBER 18, 2008- -7:32 P.M.
Mayor /Chair Johnson convened the Special Joint Meeting at 11:36
p.m.
ROLL CALL - Present: Councilmembers /Authority Members deHaan,
Gilmore, Matarrese, Tam, and Mayor /Chair
Johnson - 5.
Absent: None.
AGENDA ITEM
(08 -493 CC) Resolution No. 14287, "Authorizing the Execution and
Delivery of an Escrow Deposit and Trust Agreement Related to the
Partial Prepayment and Defeasance of the Alameda Public Financing
Authority's Series 2004 Revenue Bond Anticipation Notes (Alameda
Power & Telecom) , and Approving Related Documents and Actions."
Adopted; and
(08 -05 APFA) Resolution No. 08 -18, "Authorizing the Execution and
Delivery of an Escrow Deposit and Trust Agreement Related to the
Partial Prepayment and Defeasance of the Authority's Series 2004
Revenue Bond Anticipation Notes (Alameda Power & Telecom), and
Approving Related Documents and Actions." Adopted; and
(08 -493 CC A) Ordinance No. 2986, "Approving and Authorizing the
Execution of All Necessary Agreements and Documents for the Sale of
the Alameda Power & Telecom Telecommunications Business Line to
Comcast of Alameda, Inc." Passed.
The Alameda Power & Telecom (AP &T) General Manager gave a Power
Point presentation.
(08 -494 CC) Vice Mayor Tam moved approval of continuing the meeting
past midnight.
Councilmember Matarrese seconded the motion, which carried by
unanimous voice vote - 5.
Mayor /Chair Johnson inquired whether tonight's presentation was
provided to the Public Utilities Board last night.
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The AP &T General Manager responded in the affirmative; stated the
presentation was provided to the public at a workshop last
Wednesday.
Vice Mayor /Authority Member Tam inquired what the projected net
loss would be after repaying loans, transaction costs, and the
employee severance agreement; stated that she is trying to
understand potential impacts on electric rates.
The AP &T General Manager responded the $44 million interfund
transfer would be written off and carried as an asset on the
electric books and a debt on the telecom books; electric assets
would be reduced by approximately $40 million for a total of $120
million; rating agencies look at AP &T as a cash flow business;
asset value is a factor, but not a primary factor; the main concern
is whether the electric business would have telecom interfund
transfers in the future; the sale would remove said possibility;
telecom interfund transfers are a negative; the positive side is
having a powerful portfolio, which is mostly renewable power; most
utilities need to buy additional renewable power; the impact will
most likely be positive.
Councilmember /Authority Member deHaan requested information on the
$2.2 million transfer from the General Fund.
The AP &T General Manager stated the $2.2 million is part of the
litigation; that he will need to defer comment until litigation is
complete; the $2.2 million was advanced to AP &T from the General
Fund as part of the financing for system construction.
Councilmember /Authority Member deHaan inquired whether the $2.2
million would not expire because of the proposed transaction.
The AP &T General Manager responded the issue would be discussed
with the external auditors and would be influenced by pending
litigation.
Councilmember /Authority Member deHaan requested information on
litigation exposure.
The City Attorney /Legal Counsel stated that she would provide
information in a confidential, attorney- client privileged memo;
currently, there are two lawsuits; the City has been sued by
Vectren who was the original partner; Vectren sued the City because
of allegations that the system should have made a larger net
profit; the City is also in litigation with Nuveen because Nuveen
would be receiving fifty cents on the dollar if the system is sold.
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Mayor /Chair Johnson opened the public portion of the meeting.
Proponents (In favor of the staff recommendations) : Kevin Kennedy,
City Treasurer; Former Councilmember Hadi Monsef, Alameda.
There being no further speakers, Mayor /Chair Johnson closed the
public portion of the meeting.
Councilmember /Authority Member deHaan stated that he wholeheartedly
supports selling the system; employees have been exceptional; a lot
of people think that the system should not be sold, but he
disagrees; the industry is more competitive than expected; that he
commends everyone for putting the matter into prospective.
Councilmember /Authority Member Gilmore complimented the AP &T
General Manager and employees; stated that she is in support of the
sale, but the issue is bitter sweet; the proposed sale is the
fiscally responsible thing to do; customer service has been
personable, attentive, and timely; the service has been great for
the community.
Councilmember /Authority Member Matarrese thanked the AP &T General
Manager and employees for all the work and great service; stated
there is no other choice than to sell the system; the note exceeds
the value of the system; AP &T is unable to compete in the telecom
market.
Mayor /Chair Johnson thanked the Public Utilities Board for the hard
work and exceptional advice.
Vice Mayor /Councilmember Tam stated the environment was different
ten years ago when the community voted to enter the telecom
business; fifteen thousand residents subscribe to the system;
thanked subscribers for support; stated the City Council will work
with the Public Utilities Board to provide opportunities to
increase competition in order to provide competitive rates for
Alameda residents; thanked the City Manager /Executive Director,
City Attorney /Legal Counsel, and AP &T General Manager for the
intense effort to get the best deal; stated that she is in favor of
the sale.
Mayor /Chair Johnson stated that she appreciates the AP &T General
Manager's comments regarding current and future re- organization to
ensure that AP &T is operating in the most efficient way; that she
appreciates the pro- active approach.
Councilmember /Authority Member Gilmore moved adoption of
resolutions and passage of ordinance.
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Councilmember /Authority Member Matarrese seconded the motion, which
carried by unanimous voice vote - 5.
ADJOURNMENT
There being no further business, Mayor /Chair Johnson adjourned the
Special Joint Meeting at 12:26 a.m.
Respectfully submitted,
Lara Weisiger, City Clerk
Secretary, Alameda Public Financing
Authority
The agenda for this meeting was posted in accordance with the Brown
Act.
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