Fort Walton Beach Council minutes — 02-04-1991 Workshop — reading text

MINUTES OF THE COUNCIL WORKSHOP MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA FEBRUARY 4, 1991 INTRODUCTION CALL TO ORDER UTILITIES A Budget Task Force workshop meeting of the City Council of Fort Walton Beach, Florida, was held on Monday, February 4, 1991, at 4:30 p.m., in the Council Chambers at City Hall, with the following members present: Councilmen: J. C. "Buck" Smith Sidney Rosenbaum C. Thomas Maney Nick Nicholson Absent: Mayor William J. Roberts, III Councilmen: Jim Wyatt, Mayor Pro Tempore David deVaux Cissy Wyninegar Also Present: Chuck Keeler, City Manager; Helen Spencer, City Clerk; Charles Evans, Finance Director; media Mr. Smith called the Budget Task Force workshop meeting to order to discuss and explore the potential of owning and leasing utilities. The City Manager first noted he provided copies of the results received on the utility survey sent to 27 municipal owned power systems in the State of Florida. He then introduced Charlie Shreve, Executive Vice-President of Florida Municipal Electric Association, who is present to speak on municipal owned electric utilities. Mr. Shreve first gave a brief history on his background experience with municipal utilities and information on the functions of the Association, which include, lobbying in Tallahassee with the Florida Legislature, and some lobbying in Congress; regulatory representation with the Florida Public Service, and to a lesser extent, with the Department of Revenue, the Department of Environmental Regulation, and the Department of Natural Resources; educational programs for the employees of municipal systems; annual conferences; workshops for engineering and operating personnel, communication, and energy conservation personnel; and a strong safety group among the municipal systems, as well as a safety and awards program. 209 210 Budget Task Force Workshop UTILITIES (CONT. ) 2-4-91 Mr. Shreve next spoke briefly about the possibility of purchasing the facilities of Guif Power that serve Fort Walton Beach, and gave an overview of the issues to be considered in purchasing a facility, the expertise needed to determine where the City is, where they want to be, and how much money it will take to get there, as well as the political issue to be considered. Some of the points covered included; if the City had a very strong financial water and sanitary sewer system, and ean afford to buy the electric system, it might be a good deal; it would then give the City the ability to make their own decision as to the level of rate, to set the rules and regulations, and set the deposit for the electric system customers as well as for the water and sanitary sewer system customers; it would give the opportunity to share employees between departments; it would require some considerable work on the City's part and on the part of a consultant to determine what the company's facilities, within the corporate limits, are worth; in order to initiate discussion, the City has to know how many dollars they are talking about and will want to have a consultant make an appraisal of the system to tell the City what they would have to do in order to isolate the facility to serve Fort Walton Beach, and the City would have to determine where a point of service would be established; then the City would have to have someone tell the City whether they can afford to make the payments on the debt; and it will take a good bond rating in order for the City to borrow enough money. The other side of the question is political, and perhaps the strongest obstacle the City would have to overcome, such as the length of years the company has served the area, as well as the concern of corporate officials over the possibility of diminished returns on their investments. Foliowing some questions, discussion ensued which included the definition of municipal utilities and their overall operation, the franchise agreement, the need of a consultant to determine the worth of a facility, and the possible need of an arbitrator to make the final determination on the fair market value. During discussion on the arbitration process, Tony Mallini, of Gulf Power, said they are not going to be willing to sell; but what they would do, if the City decided they definitely wanted to buy and they cannot agree on a figure, then it would go to arbitration; the fair market value would have to be determined, and probably in that business fair market value would be more closely related to replacement cost than book cost. 211 Budget Task Force Workshop 2-4-91 UTILITIES (CONT. ) Following a few more questions and discussion on the arbitration process, as well as the need for continued growth and expansion in order to operate at a profit, Mr. Shreve expressed appreciation for the opportunity to address Council and offered his availability to answer additional questions that may arise in the future. ADJOURNMENT There being no further business, the meeting adjourned at 5:15 p.m. APPROVED: Se, Zoo, LIV. wae _|/V f) Ht N v ¥ ATTEST: ‘ai Uh. “A —- 7 CITY CLERK 212