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01-09-01Minutes Board of Directors Room City Hall — 500 W. Markham Little Rock, Arkansas January 9, 2001 4:00 P.M. The Board of Directors of the City of Little Rock, Arkansas, met in a reconvened session with Mayor Dailey presiding. City Clerk Nancy Wood called the roll with the following Directors present: Directors: Hinton, Lichty, Cazort, Keck, Stewart, Graves, Kumpuris, Wyrick, Adcock. Director Pugh was absent at roll call but enrolled at 6:10 P.M. With a quorum present, Mayor Dailey declared the Board of Directors in session and the proceedings of the meeting are recorded as follows. A motion was made by Director Hinton to add the listed modifications to the reconvened meeting; Director Lichty seconded the motion. By unanimous voice vote of the board members present, Items M -1 and M -2 were added. Item M -1, replaced Item three on the printed agenda. M -1. Resolution to authorize a request from the City of Little Rock, Arkansas, to Little Rock Newspapers, Inc., to sublease property to the Arkansas Museum of Science and History, Inc., to ratify various documents to the lease; to authorize an increase in lease payments for certain space; and for other purposes. M -2. Abstract of Votes; To ratify the Abstract of Votes for City Directors and Municipal Judges at the General Election held November 7, 200. (Filed in the City Clerk's Office on January 9, 2001.) 1. PUBLIC HEARING & ORDINANCE - To annex additional lands to the St. Charles Municipal Lighting Improvement District No. 1 of Little Rock, Arkansas; declaring an emergency; and for other purposes. Mayor Dailey read the ordinance the second time, and re- opened the Public Hearing. Director Keck stated the board was waiting on a response in the Administrative Report as to whether the board had to approve this issue. Mr. Carpenter said yes, that was correct. Mr. Carpenter said there was some question last time whether the majority in value of the property owners were represented and that he had received a call from Mr. Stephens and they had missed connections, and had received some materials from him, but had not been able to get back in touch with him to make sure he understood the issues. Director Keck asked this item to be held on second reading. He stated he had heard from some of the residents, and all they wanted was to get their lights fixed, and because of that confusion there may have been agreement to this, that might not otherwise have taken place. Mr. McSpaddin, council to the St. Charles Water Improvement District was in agreement. The public hearing was closed. The item was held on second reading. 2. ORDINANCE NO. 18,410 - Authorizing the City of Little Rock, Arkansas to enter into an interlocal agreement with the City of North Little Rock, Arkansas providing for the consolidation of their water systems and creating a public body corporate on politic to own and operate the consolidated water systems; declaring an emergency; and for other purposes. (Third reading.) Director Lichty publicly recognized the water merger - planning group, and thanked them for their participation. Mr. Carney stated that each board member should have a copy of the Consolidated Water Agreement and a sheet of paper with one additional change that has been proposed. He stated that the agreement in front of the board incorporates that one change and its basically what he has talked about to each member individually over the last twenty four hours, and that modification speaks to the possible sale in the future of certain water related facilities owned by both utilities and what would happen to the proceeds of those assets that might be sold. The new piece that has been incorporated is that if in fact some of the water utility ownership assets are sold, related to the water supply, or the water treatment facility, those proceeds would go to the new utility and must be used and reinvested in the utility for those types of uses such as supply or treatment. If there were an asset deemed as administration, such as a building, the proceeds would be to the utility and used to reinvest in either supply or treatment or administrative assets. If an asset was sold that was labeled or determined to be distribution, like a water tower, or water storage facility, in Little Rock, then those proceeds would be re- invested in the distribution system in Little Rock or in North Little N Rock if the facility was located there. He stated that was the modification, and had been told that it was accepted by North Little Rock as well. The changes mentioned previously, namely the issues related to proceeds received by the city each year from cell tower leases, other sources, are satisfactory and do meet the current level of funds received by the City of Little Rock, and could exceed that in future years. The issue of the City continuing to own the assets, the existing real estate which Little Rock owns now and lease back to the new utility have been worked out and are listed in the document before the board tonight. Mr. Carney stated as a result of those negotiations over the last couple of weeks, stated that his concerns as he originally addressed are addressed and feels confident this is a solid document that should proceed and would recommend it to the board. The thing not addresses and still questioned by the board in meetings past is the issue of future rates. Mr. Carney said there is no information about future rates other than new language, language in this document that speaks to future rates related to the improvements in the distribution system, other improvements in North Little Rock, as those are identified and made then the cost of those improvements must be paid for by the North Little Rock rate payers and improvements on the Little Rock side must be paid for by Little Rock rate payers after studies are re -done. He stated there have been no rate studies done. He said the previous study, the Black and Beach Study, on the Little Rock side and others in North Little Rock, as he understands it, none of the studies address the question of cost of the future supply so that issues has not been costed, and therefore could not be applied to any kind of rate recommendation and must be studied in the future. Ms. Jane Dickey, Little Rock Water Commissioner, stated she would answer questions by the board. Director Adcock stated the board had just been handed three pages by Mr. Carpenter, City Attorney, and asked Mr. Carpenter if he could explain the memo he had given the board. Mr. Carpenter stated they were language issues, and recommendations for new language, and went on to explain what the language issues were and his concerns regarding those issues. Director Adcock moved to table the issue for one week. She stated she hoped in that time the City Attorney could come to the same agreement that Mr. Carney had, to work out all the details so that the draft that the board actually votes on is a final product and it does have the input of the City Attorney, The City Manger, and all the board. Director Wyrick seconded the motion. A roll call vote was taken on the motion and recorded as follows; Director Pugh, yes, Hinton, yes, Lichty, no, Cazort, no, Keck, no, Wyrick, yes, Kumpuris no, Graves, no, Adcock, yes, Mayor Dailey, no. The vote was 4 yes, 7 no. The motion failed. Director Adcock sated she could not support this until Mr. Carpenters concerns were addressed. Mayor Dailey stated there might be a way to resolve this as discussion takes place. Mr. Carpenter stated the memorandum sent to the board the other night raised certain issues with the board, one that was the equalization of rates issue. He sated there is a change in the statute that is substantially what he was recommending. The concern being whether rate equalization had to be immediate. He stated he thought the concern is real, but suggested if the legislature indicated that immediately upon a merger, if there were a discrimination in rates among similarly classed customers, that would be okay as long as the entity undertook a rate study and an engineering study to determine what led to the discrimination and how to get it equalized and what a rational time basis would be, and then statutorily indicated there would be no extension whatever a rational basis proved to be beyond at ten year period of time. He sated there is language in the proposed statute now that sets that up as alternatives, that you can do a rate study or you can do an engineering study allows the ten years, and has some good language about he fact that there is an equalization doesn't mean you are at risk. The problem he had, and said he would have worded it differently and worked through it a little bit differently, but did think that he concepts gets the city into more of a legislative determination as to how you have unequal rates when two entities merge and what is a reasonable time frame for getting there and that's much better than saying there will be an equalization of rates that will occur over ten years. That change has come forward. There was a concern about an aspect of rationalization that he stated he had discussed with the board, that is not in any of the documents and the concept was that when one of the boards studied the extension or the exterritorial extension of water utilities, the cities have had across the country is that as they extend to suburban areas, these areas become their own tax bases without many of the problems the downtown area has, then they refuse to participate in the needs of the community, so the question becomes what happens if and when Little Rock is surrounded, how can you deal with that. The idea discussed and found some currency, although they could not actually figure out a way to say it was what if a condition of the 2 extraterritorial extension of the utility service beyond the Little Rock and North Little Rock boundaries included with it a requirement that the customers receiving the monies would participate in those regional issues the local government said were such issues. A provision would be in the agreement where the discretion to give that water by the consolidated entity would include the ability to impose a special fee for this type of issue. The concept he had discussed with other attorneys is the fee would not exceed any franchise fee imposed by any of the participating governments. He stated he did not think it a good idea to have a situation it seemed where the North Little Rock City Council, or the Little Rock Board of Directors in conjunction with each other or separately started second guessing the decision of this joint commission to extend water. Their job needs to be to give clear, cool, cheap water to people and do that in the best way for all the people within this area. He stated it seemed counterproductive to have their decision to extend water, seconded guessed by the two cities. The concept of taking the two cities out of that was recommended and is in the Consolidated Agreement. Director Lichty asked Mr. Carpenter if there were anything in the agreements before the board, which would preempt achieving exactly what he (Mr. Carpenter) had just said, providing cheap drinkable water to everyone. Mr. Carpenter addressed the following issue saying, of the transfer of millions of dollars of assets to this entity, and what has been recommended and is in the agreement in some form, but not totally in there is that the city would maintain title to these properties and the use of the water would extend to the consolidated commission, what is not in the language before the board that caused him concern was in terms of development around water sources such as Lake Maumelle, Lake Winona; thought the commission should have an absolute veto as long as there is any rational believement the development could impact negatively the water supply. He stated that if the City keeps title to Lake Maumelle and wishes to develop hiking trails along the area, does the absolute veto, because of the concern about the water, still exist. The recommendation he stated he was trying to bring forward to the board which is not in these documents, is essentially the city should be able to say, that we wish to use the property for a park purpose, we can demonstrate it is not going to negatively impact the water quality, and produce the evidence, and present that to this joint commission, and unless that commission can refute the information then the part use would be allowed to be developed. Director Wyrick stated she was confused about what Mr. Carpenter had just said. She asked if he were saying in the event there is an issue to extend water outside of the city, that it is or it is not, the power of this new commission to do that. Mr. Carpenter stated that it is in their power. She then asked Mr. Carpenter if his issue was that there was no veto power from the Little Rock and North Little Rock Boards. Mr. Carpenter stated under the prior drafts, the extraterritorial extension of waters outside Little Rock's boundaries, could be stopped even though the commission thought it was a good idea, if both the Little Rock Board of Directors and the North Little Rock City Council vetoed it. That raised a series of concerns as to why should North Little Rock be making extraterritorial decisions for Little Rock and vice versa. The real issue is why should either city board be addressing the extraterritorial extension of water services by utility dedicated to that one issue. The concept is that you regionalize water, and you extend the utility because it's going to help the utility, which is going to help everyone receiving the water. Therefore neither city should be able to join together or separately or otherwise deal with the question. He said that amendment has been made that it is uniquely a commission decision. Director Wyrick wanted to know what impact the city boards would have in approving or disapproving those rate increases. Mr. Carney stated the same double veto power is in this document. If both the Little Rock Board and the North Little Rock City Council disapproved of the rate increase it could not be done. Director Wyrick stated there would be notices and public hearings and if both boards vetoed it would not pass, was this correct. Mr. Carpenter answered yes. Director Stewart stated she was under the impression, after talking with Mr. Carney, that Mr. Carpenter was pretty much on board with the agreement, and then they received more information today, and that Mr. Carpenter had been slow in providing them information. She said she was disappointed in how slow the information had come to them from Mr. Carpenter. Mr. Carney stated that just to clarify, as he had talked to several board members, each one, or several had asked about City Attorney concerns, and that he did not want to speak for Mr. Carpenter but just to clarify his statements, he believes, and Mr. Carpenter believes that much of the legal questions raised before have been addressed by some of the things that have been changed in the document, and he said he believed he responded to everyone that Mr. Carpenter still had some concerns related to some other issues, the �6J timing and other things, but in terms of the legal concerns much was addressed by the changes. Director Stewart stated that she had received information that at three o'clock, Mr. Carney would meet with the board, and anyone that wanted to meet to finish hashing out this issue, could meet. Director Stewart stated that apparently the meeting took place, and she was under the impression with that, it should have been pretty much ironed out by now. Mr. Carney stated to clarify that, he stated he was here at three o'clock and a total of five board members were here during different times, starting at three on and off to talk about the issue, to ask questions, and they were there, but it was not really a meeting. Mr. Carney stated they had just made themselves available, some board members came and some did not. Director Pugh stated she supported the water merger, and felt it should have been done a long time ago, but the reason she voted to table it, was because at the ninth hour the board got information they should have been getting all — along. Mr. Carpenter said he did not disagree and some of the concepts had been included but final language is not. Mr. Carpenter said there is noting about this document that is illegal, it is a policy document, the questions about trying to do the best you can to preserve the rate structure have been done, the questions about title to the property which created the question of sending all the assets over for no consideration have been addressed, the questions about how to deal with the trust fund in such a way that the city is not going to open itself up in such a way to some sort of ratepayer matching, are addressed adequately. He said he did have some problems with language, but there is nothing in the document if it is passed today, that he would not go home and ask how would he defend that lawsuit. Director Stewart said the board does care about what your opinion is, because you are our legal advisor. She said she did appreciate how Mr. Carpenter how dissected this issue and had given them this information, it is the time frame, that it was given. Director Graves stated she thought she was hearing some consensus on how Mr. Carney and Mr. Carpenter felt, and asked Ms. Dickey how she felt about the document. Ms. Dickey stated she felt very positive, the officials and the members of the water merger group in North Little Rock are all willing to live with, and was in favor of it. Director Keck stated he had some questions regarding a memorandum the board had received from Mr. Carpenter that had some proposed amendments to the ordinance approving the consolidation agreement, and asked Ms. Dickey if she had had a change to review it. Ms. Dickey said she had glanced at it briefly. Director Keck stated it has some statements and issues that besides the consolidation agreement; the board needs to make sure Ms. Dickey had a chance to review it, that some of it is some _ wordsmithing that has been done, but a portion of it requires the Attorney Generals review, which would probably have to be done anyway, which was not in the previous section, the severabilty clause is quite a bit different. Ms. Dickey said she would say the submission to the Attorney General is something that must be done under state law. She stated she would ask the board to consider the ordinance that has already been placed on first and second reading without any alterations. Director Adcock asked Mr. Carpenter if there was part of this that he would like to be put in the form of an amendment. Mr. Carpenter stated the parties have indicated a willingness to go forward with the language in the original ordinance, and they have been working on this a lot longer than he has and said there were two issues the board had not discussed that he was still concerned about, that were brought up but had not been addressed, one was the issue of service to areas annexed and one is the rationalization issues, but if the board is comfortable these two issues can go forward. Director Kumpuris asked how this principal before this group to see how these issues can be incorporated. Mr. Dickey stated that the UALR report did have two key things that had to be done, and the issue before the board include step one, and then think about step two as the process moves forward. Director Kumpuris said if the consolidated group was going to be given this much responsibility and power, then if people outside that we are extending to take our water then they need to take some responsibility to be regional in some other issues that have been discussed. Director Lichty stated he thought this board would have every opportunity once this combined board is constituted to communicate to them what the boards wishes and desires are. This board board is responsible for the appointment of four of the members of that combined commission. Mr. Carpenter stated if the board is interested in moving forward, to move forward and approve this, and then turn around and indicate by motion, that this concept is some sort of participation in regional issues as an additional aspect of the statute would not be deemed a material change or alteration that allows the parties a chance to put the language together. North Little Rock can be told about this and he was sure that Ms. Dickey would do so, and he said he could not image that they would disagree, and then M the actual amendment to the language as it goes to the legislature can go forward and the parties would be comfortable that they have addressed the issue. Mayor Dailey stated that was a great idea. Director Lichty stated lets approve it first, and stated he wanted to draw the attention to Section 601 that says the consolidated commission shall immediately announce its intention to begin planning for a third water source, acknowledge it recognizes other municipalities and other governmental and not for profit entities also will have interest in a new source and expresses desire to proceed in a board based process to arrive at a regional decision. Director Kumpuris stated he had read that, and that by acting as Mr. Carpenter suggested, adding the language, would make this even stronger. Director Lichty stated that if the board votes to approve the merger, then if Director Kumpuris makes the motion, he would second it. Mr. Don Darnell, citizen, asked a few questions about the utility, as far is if a better way comes along, is it possible for the two entities to divorce, so to speak. Mayor Dailey answered it was, and Ms. Dickey explained what the process would have to be, and asked about the rate structure, and if any alternate model was considered, such as the Southern California model. Director Lichty stated there was peripheral discussion about other types of regional or quasi - regional operations in the country. Director Lichty made two motions, the first, that the board adopt the current draft of the Consolidation Agreement dated today's date, (1- 9 -01), as being the official exhibit A to the ordinance that subsequently would be voted on. The motion was seconded by Director Cazort, and by unanimous voice vote of board members present, the motion was approved. Director Lichty stated his second motion was to read the ordinance the third time. Director Kumpuris seconded the motion, and by unanimous voice vote of board embers present, the motion for third reading was approved. The ordinance was read the third time. Director Lichty made the motion for adoption of the ordinance, seconded by Director Cazort, and by unanimous voice vote of board members present the ordinance was adopted. Director Kumpuris made the motion that the principals of Mr. Carpenters thought about extension of water being socially responsible for other regional issues be incorporated in the document that was just adopted. Director Lichty stated before he seconded the motion, he stated there was an emergency clause that needed to be acted on. Mayor Dailey asked for a vote on the emergency clause, by unanimous voice vote of the board members present, the emergency clause was adopted. Director Lichty then seconded Director Kumpuris' motion. By a unanimous voice vote of board members present, the motion was adopted. Ms. Dickey stated she was very gratified by the vote tonight and it was an incredibly significant step, not he last step, there are many, many things to be done. She stated that where this boards real control will be, is in communication with the new commission, and holding their feet to the fire in regionalism efforts. Mayor Dailey announced that Item M -I on the Agenda Modification would replace Item 3 on the printed agenda. M -1. RESOLUTION NO. 10,975- To authorize a request from the City of Little Rock, Arkansas, to Little Rock Newspapers, Inc., to sublease property to the Arkansas Museum of Science and History, Inc., to ratify various documents to lease; to authorize an increase in lease payments for certain space; and for other purposes. Director Keck motioned to adopt the resolution, with Director Adcock seconded the motion, and by unanimous voice vote of board members present, the resolution was adopted. M -2. To Ratify the Abstract of Votes for city directors and municipal judges at the general election held November 7, 2000. Director Adcock made the motion to ratify, Director Keck seconded the motion, and by unanimous voice vote of board members present the Abstract of Votes was ratified. There were various questions by some board members concerning cleanup from the recent ice storm. A motion was made by Vice Mayor Cazort to adjourn, Director Keck made a second, by unanimous voice vote of board members present, and the meeting was adjourned at 6:40 P.M. 10 ATTEST: •' � 1 1 CITY CLERK In APPROVED: JIV DAILEY MAYOR