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05-13-85 v I :-. ' AGENDA CITY OF ATLANTIC BEACH May 13, 1985 Call to Order Invocation and Pledge to Flag 1. Approval of the Minutes of April 22, 1985. Approval of the Minutes of the specially called Meeting of April 30, 1985. 2. Recognition of Visitors. 3. Appearances: A. James Runnels requesting permission to operate a taxicab service in Atlantic Beach. B. Mr. Pete Dowling of Dowling-Morrow, Inc. requesting water service for 104 connections on Seminole Road between 18th and 19th Streets. C. Mr. Jack Taylor, member of the Board of Directors of Friends of the Beaches Library, regarding participation by the City of Atlantic Beach in the purchase of library books. 4. Advisory Planning Board - Meeting of April 16, 1985: A. Request from Bull Brothers, Ltd. for the rezoning of 4 parcels east of Mayport Road and north of the City's #2 Water Plant. 5. New Business: A. Discussion by the City Commission on the procedures to be followed in developing a short list of Auditors for performing the City audit for the fiscal year end- ing September 30, 1985. B. Action by City Commission to reject all bids for the construction of 2 Tennis Courts and authorize re- advertisement. C. Action by the City Commission to approve a Budget Adjustment to allow the use of law enforcement confiscated funds, to be used for confidential investigations work. D. Discussion and action by the City Commission on the claim of trooper Bruce Brown. E. Discussion of request from David Cole for the extension of water service to property located at Tulip Street and Levy Road. F. Appointments to the Advisory Planning Board for one member for a four (4) year term and a member of the City Commission for the term of one (1) year. P -• • 6. Action on Resolutions: A. Introduction of a Resolution relative to the proposed construction of a new Beaches Hospital. 7. Action on Ordinances: A. Public Hearing and Final Reading of an Ordinance rezoning the Chateau property frau "Residential Single Family and Commercial General" to "Residential General 3" (RG-3) . B. Consideration by the City Commission of adopting an Ordinance accepting the offer of the stockholders of Buccaneer Service Company to sell all of its stock to the City and authorizing the execution of a purchase agreement; authorizing the issuance of Bonds; authoriz- ing payment of the Bonds from the gross revenues of the system which will serve water and sewer District 1. 8. Miscellaneous Business. ADJOURN Minutes reflect correction made on 5/27/85 - Line 1,2nd paragraph Page 14 MINUTES OF THE REGULAR MEETING OF THE ATLANTIC BEACH CITY COM- MISSION HELD AT THE CITY HALL ON MAY 13, 1985 AT 7:15 P.M. V V O O T T PRESENT: William S. Howell, Mayor/Presiding Officer E E Robert B. Cook, Sr. D D William I. Gulliford, Jr. John W. Morris, Jr. M S Catherine G. Van Ness, Commissioners O E AND: Richard C. Fellows, City Manager T C I 0 Y Claude L. Mullis, City Attorney OF NAMEONEN Adelaide R. Tucker, City ClerkCONAME RS. N D S 0 The meeting was called to order by Mayor Howell. The invocation,offered by Commissioner Cook, was followed by the pledge to the flag. Approval of the Minutes of April 22, 1985 Motion: Move for approval of the minutes of the regular Commission Cook x x Meeting of April 22, 1985 as presented. Gulliford x Morris x x No discussion before the vote. Motion carried unanimously. Van Ness x * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Howell x Approval of the Minutes of the Special Called Meeting of April 30,1985 Motion: The minutes of the Special Called Meeting of April 30, 1985 Cook x be approved as written. Gulliford x x Morris x No discussion before the vote. Motion carried unanimously. Van Ness x x * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Howell x Recognition of Visitors The Chair recognized Mr. Stanley Schwalenberg, 427 Sargo Road. Mr Schwalenberg stated on the previous Sunday he had been bitten on the leg several times by a German Shepard that was running loose. The in- cident was reported to the police at the time. He requested the Commis- take stronger action on stray dogs. Mayor Howell recognized Mr. Paul Steckla, 1570 Park Terrace West. Mr. Steckla noted "I trust the Commissioners, in their deliberations this evening, will adhere to the principles of serendipity". Mayor Howell thanked him for his comment. Appearances A. James Runnels requesting permission to operate a taxicab service in Atlantic Beach Mr. Runnels requested permission to obtain a letter authorizing him to operate one taxicab in Atlantic Beach to pick up and drop off passengers. Oe was advised that all he needed was a decal from the City of Jackson- ville/and or Duval County, and suggested Mr. Runnels contact the Sheriff's office for further information. PAGE TWO V V MINUTES NAME OF MAY 13,1985 COMMRS. MSYN Appearances - continued B. Mr. Pete Dowling of Dowling-Morrow, Inc. requesting water service for 104 connections on Seminole Rd. between 18th and 19th Streets. Mr. Dowling furnished the Commission a letter serving as an amendment tc his request from 104 water connections to 65, reflecting a change in the project from multifamily to a single family subdivision or PUD. (Outside the city) . Mayor Howell reminded him the city could not serve him sewer at the present time. Mr. Dowling was advised to check with the City Manager before construction re the moratorium as it could possibly be lifted by then. Mayor Howell advised Mr. Dowling that all costs of the water lines would be at his expense and would be constructed according to the city's specifications. Upon completion all lines would become the property of the City of Atlantic Beach and Mr. Dowling would receive no reimbursement at any time. Motion: Allow Mr. Dowling the requested 65 water connections on Cook x x Seminole Road bewteen 18th and 19th Streets, and water Gulliford x connections when available. Morris x Van Ness x x No discussion before the vote. Motion carried unanimously. Howell x .•,ayor Howell suggested Mr. Dowling contact the City Manager as soon as possible to complete the necessary contract, etc. is * * * * * * * * * k * * * * * * * * * * * * sY * * * * 9c :: * C. Mr. Jack Taylor, member of the Board of Directors of Friends of the Beaches Library, regarding participation by the City of Atlantic Beach in the purchase of library books. Mayor Howell announced Mr. Taylor had requested that he be deleted from the meeting and defer his appearance until June 10, 1985. Advisory Planning Board - Meeting of April 16, 1985 A. Request from Bull Brothers, Ltd. for the rezoning of 4 parcels east of Mayport Road and north of the City's #2 Water Plant. The Chair recognized Mr. Louis MacDonell, 1535 Selva Marina Drive, who represented Harcourt, William and Jane Bull, owners of the land fronting on the east side of Mayport Road. Mr. MacDonell requested rezoning from Open Rural to Commercial General (CG) on the portions fronting Mayport Road and running easterly to the creek, and the portions remaining east of the creek be rezoned from Open Rural to Residential General (RG-2) . Commissioner Morris reported the Advisory Planning Board met and unan- lously voted not to allow the rezoning for a variety of reasons. Several ire listed below: 1. There were four (4) parcels involved to be rezoned in one package. 2. The RG-2 parcels are to be divided by a property not involved in the rezoning request. PAGE THREE V V MINUTES NAME OF MAY 13, 1985 COMMRS. M S Y N Advisory Planning Board - continued 3. The ingress and egress that was proposed by Mr. McDonell at the Advisory Planning Board would be through the middle of the pro- perty, and was not involved in the request for rezoning. A great concern was for the density Mr. McDonell had proposed with only one way in and out because of the ditch. Concern of the density in general also had to do with the compatibility of CG zoning along with RG-2 residential zoning simply divided by a ditch. Fourteen (14) units per acre were to be considered in the development. Mr. McDonell presented a deed he just received from Mr. Bull granting a 60' right-of-way that would be an easterly extension of Assis Lane and connect the pieces of property. He said it was his understanding the present crossover and weir that controls the water level in the canal will be relocated in that area. The right-of-way was given to the city to assist in reconstructing the weir and to provide ingress and egress for the future development of the parcels of land east of the creek. The 60' right-of-way was a part of the north parcel that was being rezoned, and runs approximately 516' mostly north and south. That would be the main ingress and egress, off to the right at Mayport and Assis Lane. As to the south, the developers have concluded negotiations with owners of the center portion to buy the easterly portion of their property which had an easement reserved connecting to the new right-of-way. Mr. Rod O'Steen, of Stokes O'Steen Company, explained they had been working for some time to assemble the land and it had only been in the past week they had been able to assemble the four tracts of land for devel- opment at one time. Following discussion on the fact Mr. McDonell's written zoning application did not make any reference to the center portion or the connecting right-of-ways and the Advisory Plannning Board had not considered the new information, the City Attorney advised the request should be re-referred back to the Advisory Planning Board for their recommendation at the next Commission meeting. He added a Public Hearing would have to be held eventually. Motion: Refer the rezoning request back to the Advisory Planning Cook x Board and give Mr. O'Steen an opportunity to present to Gulliford x x them the information omitted from the original request. Morris x The Board to bring back recommendation to the Commission Van Ness x x at the next meeting. Howell x No discussion before the vote. Motion carried unanimously. * * * * * * * * * * * * :: * * * * * * * * * * * * * New Business A. Discussion by the City Commission on the procedures to be followed in developing a short list of Auditors for performing the City audit for the fiscal year ending September 30, 1985. The City Manager reported, by authority of the City Commission, the City PAGE FOUR V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN New Business - continued had requested proposals from twelve (12) firms to perform the city audit for the fiscal year ending September 30, 1985. Ten firms had responded. In accordance with Chapter 473 FS, he said it was now required that the city select from those ten firms the three firms that seem most qualified to perform the audit and conduct interviews with them and rank them in order of preference, one, two, three. Mr. Fellows requested guidance from the Commission as to whether they want the ten firms to come and make a presentation to the City Commission or whether they preferred the City' s Administration to review the list of ten and come back with a list of six for consideration by the Commission with oral interviews. The City Manager reported he had some guidelines furnished to him by the Board of Accountancy in Tallahassee which could be used to shorten the list. Motion: The City Administration review the list of ten and come Cook x back with a short list of approximately six for considera- Gulliford x x tion by the Commission. A short oral presentation by each Morris x of the firms to be made to the Commission. Following that, Van Ness x x the Commission itself,or the Administration will rank the Howell x firms one, two,three, and the final decision will be in the hands of the Commission. ;ommissioner Morris asked if they would be furnished information on the proposals. The City Manager replied they would be furnished a copy of of each proposal on the short list. The question was called and the motion carried unanimously. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B. Action by City Commission to reject all bids for the construction of 2 tennis courts and authorize re-advertisement. The City Manager stated they had advertised for the construction of two tennis courts and only one bid was received. The price was in excess of the amount of money budgeted. He suggested the bids be rejected and the Commission authorize the City Manager to re-advertise. Motion: Bids for construction of two tennis courts be rejected and Cook x authorize the City Manager to re-advertise. Gulliford x x Morris x No discussion before the vote. Motion carried unanimously. Van Ness x x * ;'c * * * * * * * * * ;: * * * * * * .. * * * * * * * * * * * * * * Howell x C. Action by the City Commission to approve a Budget Adjustment to allow the use of law enforcement confiscated funds, to be used for confidential investigations work. The City Manager reported the Statutes provide for vehicles and other capital items which are confiscated by law enforcement agencies, to be sold and the monies used for special law activities and special investigations. The Police Dept. recently confiscated and sold an automobile in accordance with the Statutes for $1,000 which PAGE FIVE V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN New Business - continued had been put into a special account. He requested authority to use those monies in accordance with the terms of the Statutes for in- vestigations, etc. Motion: Passage of Resolution No. 85-11, a Resolution transferring Cook x certain monies between funds. Gulliford x x Morris x No discussion before the vote. Motion carried unanimously. Van Ness x x * 9c * ;: * * * * * * :c * * * * * * * ;4 * * * * * * Howell x D. Discussion and action by the City Commission on the claim of Trooper Bruce Brown. The City Attorney explained the request from Mr. Coxe was the cul- mination of a claim against the city by Trooper Bruce P. Brown some two years ago as a result of a letter written by the former City Manager on City stationery. Mr. Coxe formally requested the amount of $2,000.00 for compensation as satisfaction of Trooper Brown's legal fees, costs, lost time, etc. The City Attorney express- ed the opinion there was a possibility the city could be held liable `_or some damages as a result of the letter being written on city Stationery, and the fact there was some question as to whether it was done on behalf of the city. Motion: Accede to the request by Mr. Coxe. Cook x Gulliford x Commissioner Gulliford asked the City Attorney for an approximate cost to the city if the case should go to court. He replied approxi- mately $15,000 (civil rights case) Substitute Motion: Advise the City Attorney to go back and offer Van Ness x $1,000 in consideration of a complete release from any Morris x further claim for liability whatsoever. Following discussion, the question was called and the motion carried Cook x unanimously. Gulliford x Morris x Van Ness x * ., * * * * * ;: * * * * * * * * ;c * * * * * * * * * Howell x E. Discussion of request from David Cole for the extension of water service to property located at Tulip Street and Levy Road. Mr. Cole was not present. By letter, he offered to pay $4,500.00 (estimated cost of a two inch line) if the city would pay the balance Dn the cost of a six inch line that is required. New tap-in's will be charged accordingly. Estimated cost of a six inch main would be $7,200. PAGE SIX V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN New Business - continued- E Motion: Approve the installation of a six inch water line on Blocks Cook x 252 and 253 of Section H, subject to the payment of $4,500. Gulliford x by Mr. David W. Cole, Sr. , owner of the property in question, During discussion before the vote, Mayor Howell expressed concern over the possibility of setting a precedent. Commissioner Gulliford offered an alternative to run a line and assess all property owners that would be served by that line. Another alternative offered was for the owner/ developer to pay for the total installation, and as other lots hooked up, they were charged a special fee which was returned to the person or developer that originally paid for the installation. Commission agreed a policy should be set. Commissioner Cook withdrew his motion and Com- missioner Gulliford withdrew his second. Following discussion, Commis- sioner Morris moved for the following: Motion: The Mayor appoint a Committee to study the situation. Morris x Gulliford x Amended Motion: Refer the matter to the City Manager for study Cook x and report back at the next meeting. Gulliford x x Morris x x No discussion before the vote. Motion carried unanimously. Van Ness x Howell x F. Appointments to the Advisory Planning Board for one member for a four (4) year term and a member of the City Commission for the term of one (1) year. Mayor Howell announced that Greg McCaulie's term expired on December 31, 1984 and asked for recommendations. Motion: Re-appoint Mr. Greg McCaulie to serve on the Advisory Plan- Cook x ning Board for a term to end on December 31, 1988. Gulliford x Morris x x No discussion before the vote. Motion carried unanimously. Van Ness x x Howell x Motion: Re-appoint Commissioner Morris to serve on the Advisory Cook x x Planning Board for a term to end on December 31, 1985. Gulliford x Morris x No discussion before the vote. Motion carried unanimously. Van Ness x x „ * * * * * * ;,c Howell x Action on Resolutions: A. Introduction of a Resolution relative to the proposed construction of a new Beaches hospital. Proposed Resolution 85-12 was presented in full, in writing, by Commis- sioner Van Ness. PAGE SEVEN V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN Action on Resolutions - continued Motion: Move for passage of Resolution No. 85-12. Cook x Gulliford x Morris x x During discussion before the vote, Commissioner Van Ness stated she Van Ness x x was not saying she was not in favor of the new hospital, but the Howell x people who were going to end up paying for it should have a voice. When the people agreed to the taxing district there was a 1.5 mills cap put on. At that time the people were being taxed .75 mills and were assured it would never go up. Discussion of the new hospital was started almost immediately. Commissioner Van Ness expressed the opinion it was a tax burden the Beach communities did not need, es- pecially in the location of St. Johns County that was being discussed. She said it was an injustice to the citizens of the Beaches and they should be allowed to speak for themselves. Mayor Howell stated he had no quarrel with Commissioner Van Ness's opinions and she had every righ: to appear before the Hospital Board and express her opinions, but he was not sure that was an official function for the governing body of the city. Commissioner Van Ness said the Commission appointed their representative and felt that was one way of letting the representative know the Commission's desires. The question was called and the motion carried with a three to two vote. Mayor Howell and Commissioner Cook --oted no. Commissioners Gulliford, Morris and Van Ness voted aye. * * * * * * * * * * * * * * * * * * * * * * * * * ;° * Action on Ordinances A. Ordinance No. 90-85-88 - Second and Final Reading-Public Hearing Rezoning the Chateau property. AN ORDINANCE AMENDING THE ORDINANCE CODE OF THE CITY OF ATLANTIC BEACH, FLORIDA; AMENDING THE LAND DEVELOPMENT CODE BY AMENDING THE OFFICIAL ZONING MAP TO REZONE LAND HEREIN DESCRIBED FROM RS-2 AND CG TO RG-3; PROVIDING AN EFFECTIVE DATE. Said Ordinance was presented in full, in writing by Mayor Howell on second and final reading. The Ordinance was posted in line with Charter requirements. The Mayor then opened the floor for a Public Hearing. As no one spoke for or against, the Mayor declared the Public Hearing closed. Motion: Move for passage of Ordinance 90-85-88 on second and Gulliford x final reading. Van Ness x During discussion before the vote, Commissioner Morris asked the City Manager if he had any more information on the cupolas on the proposed buildings, and how high they would be. Mr. Vermay, architect, said they would be approximately eight feet. The question was called Cook - - - and the vote was by roll call. Commissioner Cook declared a conflict Gulliford x of interest and abstained from voting thereon. His conflict was that Morris x e was in the Real Estate Business. Form 4 was filed. Commissioner Van Ness x L-,orris voted aye with the proviso of height objection, and Commission- Howell x ers Gulliford, Van Ness and Mayor Howell voted aye. Motion carried. • PAGE EIGHT V V MINUTES NAME OF MAY 13, 1985 COMMRS. M S Y N Action on Ordinances - continued B. Consideration by the City Commission of adopting an Ordinance accept- ing the offer of the stockholders of Buccaneer Service Company to sell all of its stock to the City and authorizing the execution of a purchase agreement; authorizing the issuance of Bonds; authorizing payment of the Bonds from the gross revenues of the system which will serve water and sewer District 1. Commissioner Morris requested a short recess. Before the Mayor declared a recess, Commissioner Gulliford moved for the following: Motion: The Purchase Agreement be amended to reflect the city will Gulliford x be acquiring only the assets of the Corporation Buccaneer Morris x Service Co.Inc. , namely those assets used in conjunction with the operation of the sewer and water systems such as plants and distribution, at a price of $2,800,000 and an interest rate of 9%, and subject to the terms and conditions of the documents submitted. Commissioner Gulliford passed out copies of the document and offered to discuss his motion for an amendment to the Purchase Agreement. Couuitis- sioner Morris withdrew his second to the motion. Commissioner Cook seconded the motion. Cook x * * * * * * * * * * * * * The Mayor declared a five minute recess at 9:00 p.m. The Mayor declared the meeting back to order at 9:05 p.m. * :: * * * * * * * * * * * * Commissioner Gulliford stated he had met with Mr. Strayve on same date for discussion on the above proposed amendment. His proposed amendment and Statement of Forecasted Revenues and Expenses are attached hereto and made a part thereof. The revenues and operating and maintenance figures were based on the report from Jax Utilities Management, Inc. prepared by Mr. Buddy James, and were discussed in detail. Commissioner Gulliford explained the figures were very realistic because Mr. James had been involved in nineteen acquisitions of systems for the City of Jacksonville and he operates and maintains systems on a contract basis for the City of Jacksonville and other private utilities. During the discussion, Mr. Strayve was asked how much expansion would the parcel of land he had agreed to acquire handle. Mr. Strayve replied three treatment tanks, 400,000 gallons per day each. Commissioner Morris read a letter from former Mayor Robert B. Persons,Jr. , attorney, PA regarding use of impact fees. (copy is attached) . A lengthy discussion followed. Commissioner Morris presented his objections to the purchase of Buccaneer Service Company,Inc. by the City of Atlantic Beach. His objections are ,attached hereto and made a part hereof. PAGE NINE V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN Action on Ordinances - continued Commissioner Gulliford took exception to the statement that the purchase was of no benefit to the citizens of Atlantic Beach. He said he believed the system would have a substantial benefit to the citizens and listed his reasons. He explained that the system was expected to generate a net revenue of 15% which the city can put in its coffers. Jax Utilities Management, a firm recognized by professionals throughout the city and the region as being the best in their business at managing and operating utility systems, and does so for the City of Jacksonville and others, endorsed the purchase. Commissioner Gulliford stated he had no problem with the report furnished him by Jax Utilities on the projected revenues nor the projected expenses. Another point he brought out was the last acquistion of a system by the City of Jacksonville that took place sev- eral years ago. That price based on per connection was approximately $700. The present cost and interest rate offered in his amendment was $576.84 per connection. He said Mr. James had commented, in a compari- son of other systems, Buccaneer was a cadillac. Commissioner Gulliford reminded the Commission they faced the potential at some point in the future of annexing adjacent property, some or all of which may in fact be serviced by Buccaneer. He said he did not think :hat anyone could see it would not be of significant benefit for the :ity to own the utility that operates within an area adjacent to the community that would in fact be annexed at some point in the future. He said it was of significant benefit for any municipality to acquire and make sure they own all of the utilities operated within the confines of their boundaries, and any investigation would show that the trends throughout the nation is to go in that direction. The point that it infringed on the free enterprise system was also addressed by Commissioner Gulliford. He said he was involved every day in the free enterprise system and was an advocate, defender, and support- er of the the free enterprise system, but did not think they were con- sidering a true free enterprise entity with the Buccaneer utility systen. Not in light of the fact they were given an exclusive franchise which precludes anyone else from operating on a competitive basis within the confines or boundaries of that area, and are regulated by one or more bodies which limit everything including the ability for them to make an excess profit or any profit beyond what that body will allow them to mace. That might be defined a monopoly. He expressed the view a city probably functions better because of the ability to circumvent regulatory legislation that is not applicable for a community like ours if they operated in that area and service district. Another point that was brought up was what benefit would the purchase be to our citizens and what responsiblities the city had as a legislative body to those citizens. He said if there was good legitimate reason to believe that the city could introduce additional revenues in the future into the general fund of the city,that they had an obligation and moral • PAGE TEN V V MINUTES NAME OF MAY 13,1985 COMMRS. MSYN • Action on Ordinances - continued responsibility to do so, and although the statement had been made it was limited potential gain, he said he did not think there was a business man in the community that would turn their nose up to a net revenue of 15% and take what was projected for gross revenues and take off the expenses over the span of the projection, there would be a net revenue after all expenses, debt service and the like, of 15% and that did not anticipate any increase in revenues due to rate increases nor the investment of any excess funds available until expenses came due. Commissioner Gulliford mentioned the inter-connections of the systems had been precluded from the agreement and thought it was very logical to do so. That had been addressed initially and circumstances demanded the inter-connection not be made, however, it did not in any way prohibit Cie city at some time in the future, particularly after the debt service had been eliminated, to connect that system into the city's. Should some annexation take place in the future, the city would certainly want to be able to inter-connect. He remarked that all of the points and arguments Commissioner Morris had brought up had a very very valid impact on the price, terms, etc. that :hey considered relative to the purchase, and could go on until "Dooms Day" addressing each particular point, but felt they had to rely to a certai:i degree on the expertise that had been secured by both Buccaneer and the Commission, and at some point, say "it's decision time, one way or anotzer". He closed by offering some prose to Commissioner Morris: "When you are faced with a decision, make that decision wisely as possible, then forget it. The moment of absolute certainty never arrives." Commissioner Cook commented that he admired the prodigious amount of work that Commissioners Morris and Gulliford had put into the details of the proposed purchase. He expressed the view the city could not lose because they could not take any money out of their income. Philosophically, cities have always been in the business of providing water and sewer to their citizens. He said they had all voted that night to provide water to people outside of the city, so they were doing it anyway. Commissioner Van Ness stated she was not in favor of purchasing the system and was sure it was a secret to no one sitting at the table. She did not feel it was going to be the benefit to the citizens of the City of Atlantic Beach that they felt like, although she would like to see it be. The City certainly needed a source of income. She expressed her appreciation for everything that had been said by Commissioners Morris and Gulliford, and said a lot of work had gone into the purchase. She said she would like to have a chance to go over the stock agreement with the Commission before a final vote was taken to get everything in line. She felt that was part of what Commissioner Gulliford had just said, "when you make a decision to do that, you have to have all of your ducks in a row, and she was not ready to get in a shooting gallery and start shooting them down to vote PAGE ELEVEN V V MINUTES NAME OF MAY 13, 1985 COMMRS. M S Y N Action on Ordinances - continued on it without having a chance to shoot them down". She expressed the view they were still not ready to take a final vote on that big an issue. She was not in favor of the purchase and thought it was a liability for the city and a liability for the citizens, maybe not in their tax pocketbooks, but would hit them somewhere within the next twenty years. Sewer systema are not profitable. Water systems are. She said she did not know if the water system could offset the sewer system, and closed by saying there were too many unanswered questions for her to vote for it. Mayor Howell explained he wanted to clear up one or two points. He and the City Manager and City Attorney were in Tallahassee last week and talked to Mr. Richard Smith, head of the Grant Division. There had been continuous remarks about the charges to outside the city customers be- cause of getting into problems with the grant, etc. Mr. Smith advised them he was positive that the Buccaneer Service system, if purchased by the city, had absolutely nothing to do with any grant. As far as they were concerned the city could charge Buccaneer's customers 500 times. They were totally disinterested in the purchase. That came under Statute 180 which allows municipalities to charge up to 150% outside the city. Mayor Howell added that Mr. Smith told them inasmuch as when the city's latest rates were presented to them, there was some confusion as to the :harges the city had been making outside the city. Unfortunately they lid not know anything about that until just a couple of weeks back when Commissioner Morris pointed it out that the former City Manager had re- ceived such communication back in August. The Mayor said to correct that, they had to present to DER justification of the rate increase outside tie city which he felt could be done. Mr. Smith indicated he felt that was a very good likelihood, that it could be shown that the additional charge was justified on the basis the people outside the city do not pay any ad valorem taxes. They are not paying anything towards the support of the Police and Fire Departments, City Hall employees, etc. which all go into the running of a sewer plant. The Mayor commented the Commission considered the Ordinance at the last Special meeting. While they were in Tallahasee, they picked up a copy of the prospectus of the bonds for the City of Atlantic Beach which will be sold on Tuesday,May 14, 1985. In the prospectus, he said could be found every objection that was raised about the proposed Buccaneer Ordinance at the last meeting, including such things as a deposit into an account of the amount equal to the maximum one year's payment on the bonds, and that had to be deposited immediately out of the $1,500,000. The Mayor stated that one of the unfortunately parts of all the hours of discussion the Commission had on the purchase, they had not really been able to have a positive discussion on the subject because of opinions presented by others that had not practiced municipal law, or were not bond attorneys, etc. such as the letter presented from Mr. Persons, former Mayor of Atlantic Beach. He said that seemed to be the gospel. He asked whose opinion should they take, others that had been offered or the City Attorney, who was a former Assistant General Counsel for the City of Jacksonville, former City Attorney for Orange Park,former General Counsel for Fla.League of Cities, • PAGE TWELVE V V MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN Action on Ordinances - continued and Mr. Dan Livermore, who was a former General Counsel for the City of Jacksonville, and was a recognized Bond Attorney. Commissioner Morris stated they should take the opinion of the Supreme Court over any of the Attorneys. The question was unanswered as to who would determine what the opinion of the Supreme Court was. Commissioner Morris said it was a risky gamble. He said that Commis- sioner Gulliford sat there saying "I suppose, I think, or I assume" and everything he had presented during the hours of debate was backed up with fact. Commissioner Gulliford said he did not think or suppose the report into existance. It was based on somebody who was experi- enced much more so than they were in the business, and was recognized as such. Discussion followed on the water capacity in the system. The question was called on the motion to amend the Purchase and Sales Agreement after Commissioner Gulliford was asked to restate his motion. A Roll Call vote was requested. The motion carried with a three to two Cook x vote. Mayor Howell and Commissioners Cook and Gulliford voted aye, Gulliford x and Commissioners Morris and Van Ness voted no. Morris x Van Ness x * * * * ;t :ti * * * * * * * * * * ;e * x * ;: * * * * * * Howell x Motion: All references to Sewer and Water District I be changed to Gulliford x Buccaneer Water and Sewer District in both the Ordinance Cook x and Purchase Agreement. Commissioner Morris asked what the purpose was for changing the name and Commissioner Gulliford said it was just practical as people asso- ciate with the name and pay the name. Substitute Motion: Call the system the William I. Gulliford, Jr. Morris x Sewer Works. Van Ness x The question was called and the motion failed. Commissioners Morris Cook x and Van Ness voted aye, and Mayor Howell and Commissioners Cook and Gulliford x Gulliford voted no. Morris x Van Ness x • * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Howell x The question was called on the orginial motion. The motion carried Cook x unanimously. Gulliford x Morris x Van Ness x * * * * * * :: * * * * * * * * * :: * * * * * * * * * * * * * * * Howell x Commissioner Morris asked for changes to be made on the Stock Purchase agreement, such as changing the dollar offering, and where it showed gross revenues change to net. Also, possibly studying some of the factual information that might be very pertinent as to whether they had all of the agreements and leases, etc. For example, on Page 3, he suggested to add "net revenues", and on page 3, the Purchase Price PAGE THIRTEEN V V MINUTES NAME OF MAY 13, 1985 COMMRS. M S Y N Action on Ordinances - continued be changed from $3,900,000, and the closing date be changed. Commis- sion Gulliford said that was part of the motion. Commissioner Morris continued: page 4, the Water and Sewer District I will be changed to Buccaneer District and the word gross be changed to net. On page 5, first paragraph, $3,900,000 will change. Page 7, item 5, the furnishing of documents Exhibit A thru I- consider those prior to signing. On page 13, the ten day inspection, change 10 day inspection to 30 or 60 day inspect- ion period. No further discussion. Mayor Howell presented Ordinance No. 80-85-26 as amended on 5/8/85 on second and final reading. Motion: Ordinance No. 80-85-26 as amended on 5/8/85 be passed on Cook x second and final reading. Gulliford x Commissioner Morris registered his complaint that it was very improper- ly handled, and said Rule 15 should once again be invoked in that he had just received the changed Ordinance to study, and under the normal procedure for passing Ordinances, the Commission is allowed three days grace period for study. Commissioner Gulliford agreed with him and asked how long it would take to redraft the Ordinance. Mr. Liver- more stated within the week. Commissioner Cook withdrew his motion dor passage and Commissioner Gulliford withdrew his second. Motion: Call a Special Meeting simply to address any suggested Cook x x changes in the Ordinance after Commissioner Morris and Gulliford x x other Commissioners reviewed it,and a draft of the newly Morris x amended Purchase Agreement be provided for a review by Van Ness x the Commission. Howell x Mayor Howell set the Special Call Meeting for Monday, May 20, 1985 at 7: 15 p.m. to go over the final amendments and consideration for passage. Miscellaneous Mayor Howell stated he had just received a special Warranty Deed from Mr. William A. Bull deeding to the city a right-of-way approximately 60' x 558' which would be the location of the new weir and a cross over at the creek. Motion: Accept the warranty deed from Mr. William A. Bull deeding Cook x x a right-of-way to the city for the rebuilding of the weir Gulliford x approximately 60' x 558' . Morris x Van Ness x x No discussion before the vote. The motion carried unanimously. Howell x * * * * * * * * * * * * * * * * * * * * * * * * * * * Commissioner Morris commented, in reviewing the 1984 Annual Report that Buccaneer submitted to the Public Service Commission, he noticed a legal fee in the amount of $2,673.00 to Mahoney, Hadlow, etc. He asked • PAGE FOURTEEN V V Corrected Line 1, 2nd par. May 28,1985 MINUTES NAME OF MAY 13, 1985 COMMRS. MSYN Miscellaneous - continued Mr. Mullis if he would have performed any of that service for Buccaneer at that time. Mr. Mullis asked when, and Commissioner Morris said 1984. Mr. Mullis replied no. Commissioner Morris asked him if he would have been familiar with the performance set by a firm he was associated with at that time. Mr. Mullis said he had no knowledge of any representation or legal services performed by Mahoney, Hadlow, and Adams with Buccaneer until the City began negotiations to acquire the utility. That was the only thing which he really had any relationship with Buccaneer Utility at all. Commissioner Morris asked that the record reflect the above. Mr. -Strayvc Hurwitz mentioned that he could answer what the fee was for, It was an income tax matter going back to 1978 and 1979. Commissioner Morris thanked him for the information. Commissioner Gulliford noted there was a tow-away zone at the intersect- ion of First and Ocean. The prior Sunday he pulled out heading west on first and turning south on Ocean and because the visibility was blocked by four cars parked in the tow-away zone (he added they were all ticket,- ed) he was nearly hit by a car moving north on Ocean. He said if the city was going to put up signs that said tow-away zone, then tow them way. If they were not going to tow them, then take the sign down. There as no sense in being hypercritical about it. He guaranteed before the summer was out there would be a collision at Ocean and First. Commissioner Gulliford said there was a service that was being provided throughout the state and country that required developers that dedicate their lines to the cities to have TV monitoring done and tapes of that monitoring provided. He expressed the opinion that was a good idea for the City of Atlantic Beach. Dade County just passed the requirement that it be done before the lines are accepted because what it does is prevent future problems in those areas you cannot see. * * * * * * * * * * * * * * * * * * * * * * ;: * Commissioner Gulliford moved for the following: Motion: Direct the City Manager to draft specifications in order Cook x to solicit competitive proposals from outside firms to Gulliford x operate and manage the Buccaneer Sewer and Water District with consideration of the existing employees of the Buccaneer system. Commissioner Gulliford explained that he was not asking the City Man_ ager to go out to bid, but to secure some criteria guidelines to allow the city to do that. He said if the city operates that system as part of the City of Atlantic Beach you throw yourself into a position where you arbitrarily allocate expenses that are incurred by both systems. He felt strongly enough about his vote or his feeling that he would like to see it totally separated. He wants to see what the profits • PAGE FIFTEEN V V MINUTES NAME OF MAY 13, 1985 COMMRS. M S Y N Miscellaneous - continued of that system are. Commissioner Gulliford said that was the only way he could see the City could possibly do it. Commissioner Morris said the only problem he found with hired on experts or service providers was the fact it was always a cost plus situation. Service providers do for you what you are supposed to be able to do for yourself. For tha= they get a tack-on profit. Commissioner Gulliford said that allowed the free enterprise system to work. He also expressed the opinion that an investigation would show there are people out there that will quote an annual fee for maintenance and operation based on a dollar amount per connection. The question was called and the motion carried unanimously. Cook x Gulliford x Morris x Van Ness x * * * * * * * * ;: ;e * * * * * * * * * * * * * ;e * * * * ;ti * Howell x Commissioner Cook said the intersection at tenth and East Coast Dr. had recently been converted from a three way stop to a four way stop and asked that some white lines be painted on the street to remind the citizens of the new four way stop. The City Manager said he would :ake care of it. There being no further business to come before the Commission, the Mayor declared the meeting adjourned at 10:50 p.m. (SEAL) i� , )4/' William S. Howell Mayor/Presiding Officer ATTEST: Adelaide R. Tucker City Clerk ATTACHMENT MAY 13, 1985 OBJECTIONS TO THE PURCHASE OF THE BUCCANEER SERVICE COMPANY, INC. BY THE CITY OF ATLANTIC BEACH I. No Direct benefit to the Citizens of Atlantic Beach A. No inner connect of the systems proposed 1. Due to the Federal Aid money received by Atlantic Beach to inner connect the systems would require one flat rate (no discrimination in rate charges) for the entire system. Based on projections, the only way the Buccaneer system would be "profitable" would be at 12 times (legally allowed in certain instances that meet State Requirements) the Atlantic Beach rate. 2. The Buccaneer System could not be used to relieve any water and/or sewer problems inside the City of Atlantic Beach without destroying the rate advantage and eliminating the "profitable" aspects of the purchase. II. Purely a Speculative Business Venture A. No guarantees of "Profits" 1. The projections of revenues are based on assumed growth in the area. If the growth does not develop, then the revenue does not develop. 2. The bond issue to finance the purchase of the system is not a "Projection". It is real - with guarantees that the principal and interest will be paid - whether the "Profits" materialize or not. Even with an option to defer certain of the bond payments to later years, the payment will ultimately have to be made. III. Inadequate Provisions in the Original Ordinance for Future Expansion A. Only two expansions projected - three will be required to meet projections. 1. In order to meet the projected "Profits", certain numbers of customers must hook into the system in certain years. Between the years 1988 and 1990, the projections do not indicate enough plant expansion to serve the required number of customers to meet the "Profit" projections. During this period, additional land would have to be purchased to accommodate the larger treatment facilities. Neither the land or the expansion are programmed in the Projection. 2. With the covenants and restrictions on the original Bond Ordinance, any future borrowing - or bond issues would be junior obligations and carry much higher interest rate to finance this "overlooked" expansion. 1. TV. Purchase price unreasonably high ($3, 100,000) A. Buccaneer's asking price includes $1,700,000 of Dedicated water & sewer lines that have been Given to them by Builders and Developers. 1. The City of Atlantic Beach ( and most other cities) do not purchase water & sewer lines from Developers. They are Dedicated to the City and in return, the City agrees to maintain them for the users. 2. Buccaneer, in the $3,100,000 asking price includes the $1,700,000 of dedicated lines that they expect the City to pay them for -- and then-- the City will obligate to-maintain these lines that should pass at no cost to the city. 3. In the purchase of the Buccaneer System under the proposed arrangement - the developers and builders that dedicated the distribution and collection lines to Buccaneer--built into the mortgage payments the cost of these lines to the Home Buyers in their area. For Atlantic Beach to purchase these lines will require these homeowners to pay (in Rates to meet Bond Payment) twice for the lines. Even though these homeowners are not inside the City Limits of Atlantic Beach, they may have some recourse under State Law that requires a "Just and Equitable" basis in determining rates. Should the State determine that purchasing the distribution lines is not a "Just and Equitable" basis for the 12 times rate charge. There is a possibility the State may not allow the rate differential and if they didn't, the Projections on "Profits" would not be possible. V. Legal Concerns involved in the Purchase A. Buccaneer lies entirely outside the City of Atlantic Beach 1. Buccaneer is in the City of Jacksonville.. There is a question as to whether Atlantic Beach "corporate powers can extend or apply within the corporate limits of another municipality". (F.S. 180.02). 2. When expansion would be required, the City of Jacksonville would have to "Consent to Such Construction" (F.S. 1080.06). (a. ) The City of Jacksonville could object to such expansion there is an "odor" problem in the neighorhood. If the system could not expand, then "profit" projection could not be met, but Bond Principal and Interest payments would still have to be paid. 3. There are "Limitations on rates charged Consumer outside City Limits" (F.S. 180. 191) . Rates must be "Just and Equitable" and are based on the same factors used in fixing inside City Rates. In addition, the City may add a surcharge not to exceed . 25% of the City rate, so long as this 25% surcharge does not result in a total of 11 times the in city rates. (a. ) In the event there is not enough revenue to cover Bond Principal and interest for the Buccaneer purchase, all rates will have to be increased in-and-out of the city. The only way to raise rates outside of the city is to raise rates inside the city. 2. • 4. Supreme Court rulings indicate that impact fee revenue must be used only for expansion of the system for future requirements. If this be the case, net revenues would be cut to the point that consideration of the purchase would be pure Folly. There would not be enough "Profit" to justify any investment that would not return to Atlantic Beach some reasonable per- centage of profit. VI. Stability of the System Questionable A. Certain Major Components in Need of Repair 1. The outfall pier and bridge - built in 1983 - with a thirty (30) year life - needs major repairs ($30,000 estimated by Jax Utilities Manage- ment,Inc. - letter of 4/12/85) . 2. The 250M gal. sewer treatment plant - built in 1976 requires overhaul (See 7/16/84 letter to DER by Braid) 3. Old collection and distribution lines will need replacing. 4. Through June, 1982, the plants, distribution system and collection systems were without exception in total disarray and disrepair. Material wise, the assets of the Company could be best described as having been deformed from birth or worn out, or both. (letter 6/21/82 Strayve to P.S.C.) VII. A Thorough Study of the System Has Not Been Performed A. There remains several unanswered questions: 1. The Bond Payments are proposed to continue for 15 years yet the project- ions for purchase consideration are only a 6 year span. What happens after 6 years? 2. In the Stock Purchase Agreement, Section 5 (page 7, many of the exhibits required should properly be studied, verified and tested prior to signing the agreement. This agreement requires the information to be furnished after the agreement is signed. At best, this would be considered an irresponsible business practice in private industry. 3. The entire stock purchase agreement needs the same type of review, cor- rection and amendment as the Ordinance. Example: (Section 5) Exhibit A - description of all the real estate owned and/or legally used by the company; Exhibit B - description of all private easements and rights-of-way owned and/or legally used by the company; Exhibit D - inventory of all equipment; Exhibit F - Plans and Specifications, including profiles, -- of distribution and collection lines (and how old they are) (and verification - through testing - that they are what they're supposed to be, and where they're supposed to be) ; Exhibit H - copies of permits, applications or other documents, together with effective date and expiration date (if any) demonstrating approval 3. of the facilities of the Utility system by all applicable Federal, State and local authorities; Exhibit K - a list of contracts and agreements to be assumed by the City. - to repeat - all of the foregoing items are proposed to be answered after signing the Stock Purchase Agreement. In Exhibit I - Copies of the annual reports - 1980 through 1984 are proposed to be studied after the Stock Purchase Agreement is signed. 4. After signing the Stock Purchase Agreement the city has only 10 days to inspect, and 15 days to advise the company of any claimed deficiency (See page 13 and 14 of agreement) . VIII Final Consideration of the Ordinance Before the final decision on the Ordinance (80-85-26) can be responsibly con- sidered, a documented engineering determination of the percentage of the value of the existing facility that is available to future customers must be made. This determination will point out the percentage of impact fee revenues that can legally be used to buy the system. If this indicates 100% - then Atlantic Beach cannot expect any "Profits" from this venture by way of impact fee revenue - and according to the Supreme Court concerns - there may not be any possibility of using impact fee revenue for Bond Principal and interest payments. 5-6-85 4.