Loading...
HomeMy WebLinkAbout14 DISSOLUTION T H2O 06-17-96AG EN DA NO. 14 6-17_-96 DATE: ~I~TE 7~ 2996 Inter-Com TO: FROM: SUBJECT: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL REX COMBS, CHAIRMAN, CITY OF TUSTIN WATER CORPORATION DISSOLUTION OF THE CITY OF TUSTIN WATER CORPORATION RECOMMENDATION: The Board of Directors of the City of Tustin Water Corporation recommend that the City Attorney be directed to take appropriate action to dissolve the Corporation in accordance with Article II, Section 6.05, of the Corporation By-Laws. BACKGROUND: The City of Tustin Water Corporation was organized as a non-profit public benefit corporation in March of 1980, to assist the City in the acquisition of the Tustin Water Works. The primary purpose of the Corporation was to incur indebtedness to pay the stockholders of the Tustin Water Works for the purchase of the Water system. The City entered into a lease agreement with the Corporation to make lease payments equal to the Debt service over the twenty year life of the bonds. Once the bonds were defeased, the assets would revert to the City and the Corporation would dissolve. The day to day operation of the Water system was the responsibility of the City. In 1993 when the new Water bonds were issued, they were in the form of Certificates of Participation (COPs) and they refunded the old lease revenue bonds. The COPs do not require a lease arrangement between the City and the Corporation to support the balance payments. Section 6.05 of the by-laws states that the Corporation can dissolve itself on a 2/3 vote and the "adequate provision for the payment of its debts and liabilities". DISCUSSION: During the Water Corporation meeting held on April 25, the Board of Directors had a detailed discussion regarding the past and current role of the Corporation. The consensus, supported by a 4-1 vote of the Board, was that the Corporation has fulfilled its obligation to the City as identified at its incorporation and it should be dissolved. The Board makes an additional suggestion that if it is the desire of the City Council'that there be oversight of the Water Enterprise, that the responsibility be assigned to an existing group such as the Audit Committee. I will be happy to meet with the City Council to discuss the Water Corporation's decision or I can be reached at 832-8533, at your convenience.' Rex Combs Chairman, City of Tustin Water Corporation RC:ts RAN5: QlaterCor. Jun 39433 Colleen Way, Temecula, CA 92592 (909) 699-3225 Fax (909) 676-9747 TO: Mayor Worley and Members of the City Council DATE: 6-7-96 From: Rex Combs, Chairman, City of Tustin Water Corporation RE: City of Tustin Water Corporation '! Although the staff report is complete in regard to the meeting and vote, I would like to add a personal comment. The majority clearly felt the Tustin Water Corporation should be dissolved. I was and am in agreement with that issue. That is why I voted with the majority. A separate issue is whether or not another established group in Tustin, such as the Audit Committee, should take upon itself the duties to oversee the Tustin Water Department, or whatever it is to be called, after the Tustin Water Corporation is dissolved. It may be of benefit to have a separate committee for the purpose of overseeing the water department made up only of citizens who receive Tustin water. A volunteer group to review rates and become the appeal group between staff and the council could possibly be beneficial. Other committees generally are comprised of citizens of Tustin, regardless of where they buy their water. It is my opinion that those citizens being billed by the Tustin Water Department would take rate hikes more easily if it were known an independent citizens committee, also getting the increase, had reviewed rates and found the increase necessary. This becomes a potential political liability for a council comprised mostly of citizens who get water from anOther district. Just because another district raises their water rates, it does not necessarily follow that Tustin has to raise theirs. I would recommend serious review and discussion of having a separate advisory board appointed to assist the staff and council. Whether or not you deCide to establish another committee, I leave to the pleaSure of the council. The exemplary performance by Ron Nault, Gary Veeh, and their staffs can not be praised enough. They have performed very well and continued to provide for the water needs of Tustin through droughts and with a positive program for replacing worn out pipelines, reservoirs, and equipment. Through their efforts Tustin was able. to receive the first desalter unit in Orange County. In the next few years we will have an even better water department as upcoming projects are completed. At least one board member served from the beginning, Lloyd Robbins. He has served as Secretary since March 1980. I would ask that he be considered for a proclamation from the council. He has served the community for years and I feel is deserving of recognition. I want to thank the council for the opportunity to serve my community since September 1989 as a member and since May 1991 as Chairman. It has been a pleasure working with the staff and councils. Finance Department City of Tustin CITY OF TUSTIN WATER CORPORATION BOARD MEETING " THURSDAY, APRIL 25, 1996 COMMUNITY DEVELOPMENT CONFERENCE ROOM 300 Centennial Way Tustin, CA 92680 Director (714) 573-3061 AttenQing Water BoarQ: MINUTES Staff: Secretary (714) 573-3060 Water Billing (714) 573-3075 FAX (714) 832-0825 Rex Combs, President John M. Beringer, Jr. Dee A. Hunter Lloyd Robbins William A. Guthrie Guests: Ronald A. Nault, Finance Director Larry Schutz, Asst. Fin. Director Tim Serlet, Public Works Director Gary Veeh, Water Services Manager Lois Jeffrey, City Attorney Serene Tang, Senior Accountant Teresa Skaff, Secretary Donnie Smith, Audit Committee Vice-Chair Absent: None I. The meeting was called to order at 6:02 p.m. by the President of the Board, Rex Combs. II. MINUTES It was moved by Robbins, seconded by Hunter, to approve the minutes of the March 20, 1995 Water Board meeting. Motion carried 5-0. III. FINANCIAL STATEMENT Staff discussed the June 30, 1995 Financial Statement and answered questions asked by the Board. It was moved by Combs, seconded by Hunter, to receive and file the June 30, 1995 Financial Statement. Motion carried 5-0. IV. SEVEN-YEAR WATER CAPITAL IMPROVEMENT PLAN Staff presented the Seven-Year Water Capital Improvement Plan and responded to questions and comments from the Board. V. ROLE OF WATER CORPORATION The Board and Staff reviewed the memorandum from the City Manager, outlining the history of the Water Corporation and its possible future role. It was stated that the Water Board had met its original obligation to the City, and discussion followed regarding whether the Board would continue to function as a citizen advisory group or turn its remaining duties over to the City's Audit Committee. It was moved by Robbins, seconded by Guthrie, to approve dissolution of the Tustin Water Corporation entirely. Motion carried 4-1, Beringer opposed. Staff and Mr. Combs will prepare a report presenting the Water Board's recommendation to the City Council for action. The meeting was adjourned at 6:59 p.m. by the President of the Board. Respectfully submitted, Finance Director RAN:ts AUO2:gaterMin. May -- 2 -- Section 6.04. Fiscal Year. The fiscal year of the CorPoration shall begin ~/ and end _~_~_ '7<~ of each year, except the first fiscal year which shall run from the date of incorporation to ~-~-~. -~ ~ , 1981. .Section 6.05. Dissolution. The Corporation shall not be.voluntarily dis.solved except by the affirmative vote of two-thirds (2/3)' of alt members. In the event of dissolution of the Corporation in any manner and for any cause, after the payment or adequate provision for the payment of all of its debts and liabilities, all of the remaining funds, assets and properties of the Corporation shall be paid or distributed to the City of Tustin. Section 6.06. Construction and Definitions. Unless the context othe~-ise requires, the general provisions, rules of construction and definitions contained in the Nonprofit Cor- poration Law of the state of California shall govern the construction .of these Bylaws. Without limiting the generality of. the foregoing.the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation as well as a natural person. ARTICLE VIII. ~endments Section 7.01. Power of Members. New Bylaws may be adopted or these Bylaws may be amended or repealed by the -16-