The URL can be used to link to this page

2000-01-18 APIC minutesMINUTESOFTHESPECIALJOINTCITYCOUNCILANDALAMEDA PUBLICIMPROVEMENTCORPORATION(APIC)MEETING TUESDAY--JANUARY18.2000--8:00P.M. Mayor/ChairAppezzatoconvenedtheSpecialJointMeetingat11:35 p.m. ROLLCALL-Present:Councilmembers/BoardMembersDaysog, DeWitt,Johnson,KerrandMayor/Chair Appezzato-5. Absent:None. APICAGENDAITEM (00-01)ResolutionNo.2000-9,"Approving,Authorizingand DirectingtheExecutionandDelivery.·ofCertainInstallmentSale FinancingDocumentswithAlamedaPower&Telecom(AstheBureauof ElectricityActingByandFortheCityofAlameda)withRespectto theAcquisition,Construction,Equippingandstartupof.aTelecom System,theFinancing-of.CertainElectric••DistributionSystem AssetsinConnectionwithaPartialDefeasanceofCertain ObligationswithRespecttotheNorthernCaliforniaPowerAgency andtheFinancingandRefinancingofElectricDistributionSystem ImprovementsandCertainOutstandingInstallmentSaleObligations, andAuthorizingandDirectingCertainActionswithRespect Thereto."Adopted. TomEvans,AlamedaPowerandTelecom(AP&T)/BureauofElectricity (BOE),statedBondSeries2000ATand2000Awillrefinancecurrent debt:powerplantsandtheBOEBuilding;$6MillionofSeries 2000ATand2000AisnewdebtandwillprovidetheBOEtsshareof electricinfrastructurecosts,whichwillhelpwiththeeconomic developmentatAlamedaPointandincreaseelectricsystemcapacity onBayFarmIsland;Series2000ATand2000Aaresupported exclusivelybyelectricrevenues;therefinancingofcurrentdebt changesthetimeframeoverwhichsaiddebtwillbepaid;customers willbepayingforthebenefitoftheSystemastheyreceive·it,as opposedtothecurrentplanofcollectingextrafromcustomersin ordertoretirethestrandedcostsinmid-2002;restructuring providesformorecompetitivepricessooner;in1984and1985,the CityCouncilissuedapproximately$188Millionindebt,partof whichisbeingrefinancedtodaYithenewdebtbeingconsideredthis evening,relatestoSeries2000BBondsfor$20.5Million, specificallytobuildoutthe.telecommunicationsinfrastructure necessarytoprovidecable,internet,andbroadbandservices throughouttheCitYisaiddebtisspecificallysupportedby telecommunicationsrevenue,the$10Millioninvestmentintermsof reservesthatwillbeestablished,and$16MillionPutAgreement establishedwithSIGCORPithe$16Millionisaninsuredinstrument byanA+insurancecompany;therevenuesupportforSeries2000Bis SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting 1 January18,2000 telecomrevenue,$10Millioninequity,andthe$16MillionPut AgreementwithSIGCORP;noelectricrevenuewillbeaffectedby thatbusinessactivity,assuming.theBOEexitsthebusiness;the PutAgreementisinsuredwithanA+insurancecompany;BOEhas untilOctober31,2003toexercisesaidAgreement,whichprovides ampletimetobuildtheSystemand.establish<customers;BOEwill knowforsurewhetheritisinapositiontoexercisethePut Agreementorelecttocontinuewiththebusiness;theErnst&Young Reportindicatestheproposalrepresentsanordinarybusinessrisk andthePutAgreementisastrengthtotheoverallPlanithe.Report alsostatesexecutionisthekey;municipalitieswhichcompetewith localcableprovidersaregenerallysuccessfl.ll,moresuccessful thanaprivatebusiness;<municipalitiesaresuccessfulbecausethey arewellknownandcustomersrespectthemi.BOEhas100%ofthe customerstodaysellingelectricityto••them;BOEhasregular contactwithcustomersfromamarketingstandpoint;AP&TandCity employeeshavehighcustomersatisfactionratingsitheresponsible SeniorTeamhasover100yearsofexperienceinimplementing, sellingandservingcustomersonaday-to-daybasiswitha commodity;core.financialfactorshavebeenaddressedand.theTeam isinplacetoimplementandexecutethePlan. ViceMayorDaysogrequestedGeneral··ManagerEvanstoexplain strandedcostsforthebenefitofthepublic. GeneralManagerEvansstated.withderegl.llationofthe<electricity marketinCalifornia,electricity.canbeboughtonasomewhat state-widebasis;inAP&T I scase,thec9st.••ofgeneration.and currentdebtstructureis>inexcess.ofmarket>priceithe>amount which.is.abovemarketisdefineclc:ts.strandedCOS'tiallutilities.in Californiaarefacedwithit;utilitieshavetakensimilar approachesof.findingwaystorefinancesaiddebtandspreadcosts outoverfutureyearstoenableelectricityprice{s)tobe competitive. ViceMayorDaysogdiscussedtheconnectionbetweenstrandedcosts, fiberopticsandthegenerationofrevenues.to.maintainAP&T.asa prudentbusiness. councilmemberJohnsonrequestedGeneralManagerEvanstoreview services. GeneralManagerEvansstatedapproximatelyonehalfofthetotal revenueprojectionrelatesto.cable.orentertainmentservices i thereisafranchisewhichexplicitlyprovidesforopenaccess.for internetserviceproviders;.broadbandisa.generictermunderwhich avarietyofactivitiestakeplace,includingbusinessesthatmay needmorecapacitythanatypicalinternetconnection;AP&Thas beencontactedbyatleastonecompanythatprovideslocal telephoneservice;AP&Twillinstalltheinfrastructure,bethe directproviderofcableservice,andmarketbroadbandinternet. SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting 2 January18,2000 viceMayorDaysogstatedhigh-capacitybandistheabilityto transmitlargevolumesofdatarapidlyanditistheinfrastructure fortheeconomicdevelopmentenginebeingsoughtforAlameda. GeneralManagerEvansstatedagoodexampleispilotNetworks, whichchosetoremaininAlamedaspecificallybecauseAP&Tcould providesaidservice. FollowingthepresentationbyGeneralManagerEvans,Mayor Appezzatoannouncedthenamesofindividualswhodidnotwishto addressthecityCounciljAPIC,however,didindicatetheywerenot infavorofrecommendation:LesterClark,Alameda;GordonDupree, Alameda;CeliaCruz,Alameda;MichaelAnderson,Alameda;Kenny Fong,Alameda;JoannaAnderson,Alameda;ShellRaginar,Alameda; John·Padbury,Alameda;AndreaAnderson,Alameda. LenGrzanka,Alameda,statedwhenMeasureA[November3,1998 Election]wasplacedbeforethevoters,theCitystatedthe.Cable TVplanwouldcostonly$7.9Million;thathe[Grzanka]informed thevotersintheSampleBallottheplanwouldcost$15-$20 Million;thecurrentCertificatesofParticipationarefor$20.5 MillionfortheCableTVplan,notincludinginterest.expense; Ernst&YoungexaminedtheBOE'srevenueprojectionsinits businessplanandfoundtherisk"withinthelevelofordinary businessrisk;"publicfundsarebeingdealtwith,not.ordinary business;theBOEisownedbytaxpayersandratepayers,not stockholderswholosewhenanordinarybusinessfails;Alameda's taxpayersandratepayersareliableforanyshortfallsif.the Bureau'splangoesSouth;Ernst&Young'sanalYsisstatesifthe planfailsearlyon,·thetaxpayers<andratepayerswill·beonthe hookfor $4 Million,plusoperatinglo$ses;saidlosses.would equateto$125.00perhousehold,.whichwould.eitherbe·aparceltax orcomeoutoftheelectricrates;Ernst&Youngblessedtheplan's $32.80percustomermonthlyrevenuefromCableTV;AT&Ttoldhim theaveragebillforAlamedacustomers.comesto$31.79;whenAT&T encounteredcompetitionrecently,theycuttheirratesin··half i Ernst &YoungdidnotexamineBOE'sexpenseplan;questioned whetherBOEwouldbeabletocutmarketingandadvertisingexpenses assubscribersriseform5,000in2001tomorethan12,000in2010; themarketingexpensesdonotjibe;urgedtheCityCouncilto assumeitsfiduciaryresponsibilityforpublicfundsandreject approvalofthebondsfortheCableTVplan. DonLanders,Alamedaresidentandbusinessowner·ofIntegrity by Design,statedthatheis·inthe·graphicscommunicationsbusiness, andtherefore,veryinterestedin·widebandwidthtransmissionof largedatafiles;thathehasbeeneagerlywaitingtopurchase internetandcableservicesfromlocalutility;importantfor Alamedatohaveinfrastructureinplacetocompeteinadigital worldforbusiness;thatheknowsandtrustsAP&T. SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting January18,2000 3 SebastianBaldassarre,VicePresident,PublicutilitiesBoard (PUB),statedAP&Thasprovidedreliable,lowcostandtrusted utilityservicetothecommunity;PUBandstaffarecommittedto providingstateofthearttelecommunicaticinsservicestoAlameda; theResolutionsbeforethecityCouncilhave.beenfullyreviewed, debatedandconfirmedbaseduponsubstantialvaluablecommunityand Councilinput;AP&Tisinanexce.llentpositiontomeet projections;Councilhasreviewedthe$16,000Millionguarantee backedbyinsurance,whichprovidesforanexitstrategy;Council hasseenmarket-andproductsurveys;CouncilknowsAP&T's directionfromtheCityCounciltogenerate.newrevenuesfor Alameda;asignificantnumberofAlamedacitizenswantthe opportunitytobuytelecommunicationsservicesfromAP&T;the ContractwithSIGCORPmeans.designandconstructionof.asuperior stateoftheartbroadbandfiberopticsystemin.ajoint"marketing andsalescampaignthatwillbeprofessionallyeffectiveand customertargetedtolocalAlamedamarketplace;Alamedawillhave asuccessfulCity-ownedtelecommunications.businesswith.revenues abovecostprovidingsupportforseniors,publicsafety,recreation andothergreatcityprograms;urgedCounciltosupportResolution. *** viceMayorDaysogmadeamotiontocontinuethemeetingpast12:00 midnight. councilmemberJohnsonsecondedthemotion,whichcarriedby unanimousvoicevote-5. *** RonBasarich,Alameda,statedthathewas.opposedtoCouncilvoting toproceedwiththethirdphaseofthebondingissueforthe$20.5 Millionforvariousreasons;thematterisunderstudied, misunderstood,or urider-acood.'in.awaythat.isnotcompatiblewith reality;theDeloitte&ToucheReportcounteractstheErnst&Young Report;therearecountervailingopinionsandviews;theissueis whetherBOEhastheviabilitytostayinbusiness;BOEistryingto findsomeothersourceof.revenuethatisuncertain,unprovenand notwellanalyzed. ShaunDaniels,Alameda,localbusinessowner.andvideoproducer, statedCouncil.shouldsupportAP&T'sbondissuebecauseitisnot ariSk;giventhechoice,Alamedanswillsupporthavingachoiceof whatkindofinformationcomestothem. ChristopherHanson,Alameda,statedthathe..wasopposedtothe propositioninthefirstplace,whenitwasbudgetedat$8Million; heisstillopposed.whenitisbudgetedat$20..Million;government shouldnotbeinbusiness;governmentistoprovideservices citizensneedthatbusinessesdonotprovide;theriskhereistoo SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting January18,2000 4 greatforagovernmentalagencytotakeon;iftheriskwere reasonableforabusinessventure,therewouldbeanotherventure heretakingthatriskiifonethinksthatcabletelevisionisa publicutility,thenhewouldaskCounciltoconsiderspending.the $20Millionandcondemn.theexistingsystem;itis.probablycheaper todothat,thantobuildasecondsystemandputtaxpayers'money atrisk;taxpayersdonothavethesamerecourse.togovernmental officialsthatshareholdershaveagainstdirectors;shareholders electtotakesaidriskinthecompany;ataxpayer,ifthebondis approved,doesnot;taxpayerswillpaythebilliftheproposition goeswrongwithouttheopportunitytomakethedecisionto participateornot. MayorAppezzatostated,fortherecord,StanleyandDiane Lichtenstein(publicspeakersunavailabletoaddresstheCity Council)wereinfavoroftheResolutions. LouiseLum,Alameda,residentandemployeeofAP&T,statedthatshe wasveryexcitedaboutthestartupofatelecomsystemfor businessesandhomesinAlameda;itisabigstepforwardin keepingabreastwithmoderntechnologyandprovidingAlamedanswith stateoftheartoutsourcingforinternetaccessandcabletv;it willprovideadditionalrevenueforAP&Tand,inturn,forthe City;urgedCounciltoconsideradoptionofResolution. AlbertFong,Alameda,wasnotavailabletoaddresstheCity Council.Mr.FongwasnotinfavoroftheResolution. JohnRedding,RanchoCordova,statedthepurposeforthisevening [attendingthemeeting]istomemorialize,fortherecord,aletter senttoCouncilhavingtodowithfinancialaffairsoftheBOE.Mr. ReddingdistributedcopiestotheCityCouncil. MayorAppezzatonotedthathehadacopyoftheletterinfrontof himandthathewasgoingtorequesttheCityManagertopreparea response. Mr.Reddingreadtheletterintotherecord:"January12,2000, MayorRalphAppezzato,cityofAlameda;DearMayorAppezzato: AmericanstatesWaterCompany[630EastFoothillBlvd.,SanDimas, CA91733;(909)394-3600]ispleasedtomakethefollowingproposal totheCityofAlamedatole.aseandoperatetheCity'selectric transmissionanddistributionsystem.Thisproposalisintendedto serveasthefoundationfordiscussing,withCityrepresentatives, thenumerousdetailsinvolvedinsuchatransactionwiththegoal ofdevelopingacomprehensiveagreementthatwill.benefitboth parties.Foratotalpaymentof.$58,500,OOO,consistingofanup frontpaymentof$21,000,000cashand.annual.lease.paymentsof $2,500,000,AmericanStatesWaterCompanyproposes.toleasethe electrictransmissionanddistributionsystemincludingall associatedfixedandmobileplant,equipmentandproperty,fora SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting January18,2000 5 periodof15years.AWRwillassumealloperating,maintenance, customerserviceandadministrativeresponsibilitiesofthesystem includingreceiptofrevenuesgeneratedbytheprovisionof electricservicetoresidencesandbusinessesinAlameda.This offerissubjecttotheacceptanceofamutuallyagreeablecontract betweenAmericanstatesWaterCompanyandtheCity.ofAlameda includingtheapprovaloftheCityCouncilandAmericanstates WaterCompany'sBoardofDirectors.AWRisavailableattheCity's conveniencetobegindiscussionsregardingthemanydetails involvedinsuchanagreement.Yours.Truly,JoelDickson,Vice President,BusinessDevelopmenti.Cc:CityCouncil,CityManager." Mr.ReddingstatedthatAWRisreadytocommitanyandall resourcesnecessarytoprovideasignedcontractandacheckfor $21Millionwithin90days. MayorAppezzatostatedthecityManagerwouldgetbacktoMr. Redding. L.KayGuffy,Alameda,wasnotinattendancetoaddresstheCity Council;GuffywasnotinfavorofResolution. GeorgeEdwards,Alameda,telecommunicationsconsultant,statedthat hewasinfavoroftheResolution;peopleinvolvedaretechnically competent;cannotspeaktothefinanciaLpart[oftheproposition]; manypeoplewillbemorethan.happytohavetheopportunitytogo intocompetitionwithAT&T;thereisnodoubtabouttheproject technically;AlamedavoterspassedMeasureA,whichhethought indicatedresidentswant.theirowntelevisionsystem;andurged CounciltoadopttheResolution. IrvHamilton,Alamedaresident,AvisoMarkingCommunications, statedtheavailabilityofanup-to-datetelecommunications infrastructureisanimportantsiteselectioncriterionicompanies arelookingfor[telecommunications]capabilitywhenconsidering locations;there.are.anumberof.benefits:choiceofproviders, oversightbytheCityCouncilandPUBofdirectionandlong-term goals,AP&T'sability,andattractionofnewbusinesses;encouraged supportofResolution. ViceMayorDaysogstatedderegulationcreatedcompetition;stranded costsmustbedealtwith;[thesuccessoflMeasureA[1998General MunicipalElection]indicatedpeoplehadbenefittedbytheBOEfor overacenturyandwantedto.giveHOEachancetobringforwarda proposal:aproposalstatingtherearemeansbywhichgoalsofthe BOEcanbecontinued;thechallengeiswhatcanbedonetoensure BOE'sviabilityintothe21stCentury;cableisimportant;fiber opticsshouldbeconsideredasanetworkthatallowsrapid transmissionofhigh.volumesofdataandeconomicdevelopment;if perceivedthatway,onebeginstoseetheinterconnectionsbetween economicdevelopment,requiredrevenuegeneration,andnew services;alsoseenareinterconnectionsbetweentheseitemsand SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting January18,2000 6 otherissues,e.g.howtodevelopthebaseand/orHarborBayIsle; theyareallintegrated;totheextentpursuedinthatregard,we canbegintomakesurethatBOEisviable;atagenericlevel, thereisaneconomicdevelopmentpotentialinregardtothefiber opticslinesandrevenuesgeneratedtoensuretheelectricside remainsviable;ultimately,itisaboutexecutionintermsof ensuringthatwhenSIGCORPorthecitylaysdownthelines,itis beingdoneonacosteffectivebasis;executionintermsofgetting marketsneeded;executioninterms.ofprovidingtypesofquality servicesthatBOEhasalwaysprovided;fundamentally,~whentalking aboutexecution,credibilitymustbetalkedabout:istheBOEan organizationwhichhasdemonstratedthelevel.ofmanagerial capacitytodeliver?;BOE/AP&Tcandoit;intermsoffinances, muchofthedollarsaretoretireexistingdebtandstrandedcosts; retiringthedebt,creatingnewbusinessopportunities,and generatingmorerevenuepotentialareallrelated;onabroad financialmacro-scaleevaluation,itseemsthesmartthingtodo, e.g.replaceolddebtwithhigherrateswithnewdebt,atlower rates,andfinancingfortelecommunicationsinfrastructure;for saidreasons,hecontinuestobesupportiveofAP&T. councilmemberJohnsonstatedthatshesupportedtheprocessthrough itsphases;witheachphase,theplangotbetterandstronger; thatshesupportstheproposalandtheresidentsofAlameda supportit;inregardtotheissueofgovernmentandbusiness competing,BOEhasbeenabusinesseversinceit.existect113.years ago;theGolfCourseisoperatedasabusines.s;operatinga businessisnotnewtoAlameda;theissuehasbeenwhetherAP&T shouldbeallowedtooperateasabusiness;thatshebelievesit mustbeoperatedasabusinessifthecityisgoingtocontinuein thefuturewith.AP&T;shewouldnotsupporttheplanifitwasjust forcable;itwould·notbeworthincurringthatkindOf.debtand puttingtogetherahugeplanjustforcableservice;thepr.-0posai isnotjustaboutcable.,itis.aboutalotof.otherservices;•.such serviceswillhelpwithbusinessdevelopment;theplanis.sound; thereisagoodexitstrategy;thefirewallhasbeenmaintained betweenelectricandtelecommunications;andshewillsupportthe proposal. councilmemberDewittstatedAlamedalikesitsownbusinesses, SchoolBoard,GolfCourses,andBureauofElectricity;thereis somethingaboutthetown.thatsayswewouldratherdoitourselves; thevotersmadeiteasyforCouncilandsaidtheywerewillingto taketherisk;theproposalhasbeendiscussedfortwoyears;and thatheisinfavoroftheproposal. CouncilmemberKerrstatedoneofthethingscontinuallyheardis completeseparationoffinancesbetweentheBOEoperationandthe telecomoperation;however,.thefinancingplanincludesputtingup $10Millionofcurrentreserves:moneythatcamefromtheelectric payers;thefirewallhasa$10Millionholeinit;duringa SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting January18,2000 7 presentationonoctober13,1999,astatementwasmadethe$10 Millionwouldbeusedtopayoperatinglossesoftelecomifthey weregreaterthanprojected;or,asnotedintheExitstrategy,the $10Millionoftheratepayers'moneywouldbeusedtohelppayoff thedebtifthefacilitywassold;inregardtosaturation,the Citywouldbegoingupagainstacompetitorwithmuchdeeper pocketsthantheCity;theprojectionsareoverlyoptimistic;in onereport,AP&Texpectstohaveover2,500subscribersbyJune, 2000;thereareotherreasons,howeverduetothelatehour,she willnotexpandanyfurther. ViceMayorDaysogstated$22Millioniscurrentlysetasideas reservestopayfortheproblemsofstrandedcosts;partoftheBOE paymentsgotowardthereserves;iftheBOEneverwentinto businessandsaidportionofBOEpaymentscontinuedtoaccumulate, theReservewouldgrowto$32Millionin2003/2004;thestranded costsatthattimewouldbe$36Million;asnow,therewouldbea deficitin2003/2.004;refinancingallowsgeneratingsavings,which allowsaportionofthe$22Milliontobegiventotelecomasan $10Millionoperatingreserve;technically,fundingdoescomefrom thestrandedcost.reserve;however,itonlycomesfromstranded costreservesbecausethemoneyhasbeen.freedupasaresultof refinancing;thepointistorefinanceolddebt,whichhashigher rates,withnewdebtatlowerrates,whichiswherethe$10Million comesfrom. MayorAppezzatostatedthatheopposedthematterlasttimeand willcontinuetoopposeforthesamereasons:thefinancialrisk andthetechnicalrisk;thetechnicalriskmaybemorecritical; thathehopesthecitythewherewithal,talentandabilityto competewithalltheexpertiseoutthere;limitedsalariesmight notbeabletocompete;thecitywillreviewtheproposalfromAWR, however,itwillhavetositonthebackburnerforawhile. viceMayorDaysogmovedadoptionoftheResolution. CouncilmemberDewittsecondedthe.motion,whichcarriedbythe followingvoicevote:Ayes:BoardMembersDaysog,Dewittand Johnson-3.Noes:BoardMemberKerrandChairAppezzato-2. CITYCOUNCILAGENDAITEM (00-44)ResolutionNo.13175,"ApprovingPublicutilitiesBoard ActionandAuthorizingExecution,SaleandDeliveryofCertificates ofParticipationinCertainInstallmentSaleFinancingDocuments withtheAlamedaPublicImprovementCorporationinThreeSeriesAs Follows: I.NottoExceed$13,000,000AggregatePrincipalAmountof ElectricRevenuecertificatesofParticipation,Series2000A, fortheExpansionandImprovementoftheElectricSystemand SpecialJointCityCounciland AlamedaPublicImprovementCorporationMeeting 8 January18,2000 theRefinancingofoutstandingInstallmentSaleObligationsof AlamedaPower &Telecom(BeingthecityofAlamedaActingBy andThroughItsBureauofElectricity) II.NottoExceed$40,000,000AggregatePrincipalAmountof DistributionSystemRevenueTaxablecertificatesof Participation,Series2000AT,£orthePartialDefeasanceof certainObligationsofAlamedaPower &Telecom(Beingthecity ofAlamedaActingByandThroughItsBureauofElectricity) withRespecttotheNorthernCaliforniaPowerAgency III.NottoExceed$20,500,000AggregatePrincipalAmountof TelecomSystemTaxableRevenuecertificatesofParticipation, Series2000B,fortheAcquisition,Construction,Equippingand StartupofacitywideHybridFiber-Optic/CoaxialTelecom System."Adopted. councilmemberDaysogmovedadoptionoftheResolution. CouncilmemberDewittsecondedthemotion,whichcarriedbythe followingvoicevote:Ayes:CouncilmemberDaysog,DeWittand Johnson-3.Noes:CouncilmemberKerrandMayorAppezzato-2. ADJOURNMENT Therebeingnofurtherbusiness,Mayor/ChairAppezzatoadjourned theSpecialJointMeetingat12:40p.m. Respectfullysubmitted, ~tM~,U£ DianeB.Felsch,CMC CityClerkandSecretary, AlamedaPublicImprovement Corporation TheagendaforthismeetingwaspostedinaccordancewiththeBrown Act. SpecialJointMeeting CityCouncilandAlameda PublicImprovementCorporation January18,2000 9