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HomeMy WebLinkAbout1992 01 04 - GDU Discussion with Mr. FrancherHARTMAN & ASSOCIATES, INC. engineers, hydrogeologists, surveyors & management consultants January 4, 1992 Subject: General Development Utilities, Inc. Discussion with Charlie Faucher Dear Mr. McClary: HAI #92-023.04 On January 4, 1993, I had the opportunity to have a lengthy discussion with Charlie Fancher relative to the potential acquisition of General Development Utilities, Inc. (GDU) in the Sebastian system. He informed me that the City's latest offer was not acceptable to GDU and that is why they had not responded to date. Moreover, they were quite busy and in the process of continually loosing staff. I inquired from him, after some discussion, to find out what kind of deal we could possibly arrange. He stated the following: 1. $1 million down payment. 2. The payment of additional bonding capacity up to a maximum of $400,000.00 after debt financing is put in place within one (1) year, if such debt capacity is available at Indian River County rates and charges. 3. Payment of $1,214.00 per ERC for the next 3,000 ERC's as they accrue to the system within or outside of the GDU plat, including, but not limited to, those ERC's transferred to the City from the County with the repayment of those capital charges by the County to the City for those customers (those customers which have participated and have not defaulted in the County's capacity sale program to be off -set by County growth in payment of the capital charges to the City. 4. Mandatory connection where existing sewer lines are, including mandatory connection of existing homes and new homes, although there would be no commitment for vacant lots to be mandatorily connected or to be charged. 201 EAST PINE STREET • SUITE 1000 • ORLANDO, FL 32801 TELEPHONE (407) 839-3955 • FAX (407) 839-3790 PRINCIPALS: JAMES E. CHRISTOPHER • CHARLES W. DRAKE • GERALD C. HARTMAN • MARK I. LUKE • MARK A. RYNNING • HAROLD E. SCHMIDT, JR. , dh6'8s10 Mr. Rob McClary AVA City Manager City of Sebastian M Received P.O. Box 780127 CRY Mate Sebastian, Florida 32978 Subject: General Development Utilities, Inc. Discussion with Charlie Faucher Dear Mr. McClary: HAI #92-023.04 On January 4, 1993, I had the opportunity to have a lengthy discussion with Charlie Fancher relative to the potential acquisition of General Development Utilities, Inc. (GDU) in the Sebastian system. He informed me that the City's latest offer was not acceptable to GDU and that is why they had not responded to date. Moreover, they were quite busy and in the process of continually loosing staff. I inquired from him, after some discussion, to find out what kind of deal we could possibly arrange. He stated the following: 1. $1 million down payment. 2. The payment of additional bonding capacity up to a maximum of $400,000.00 after debt financing is put in place within one (1) year, if such debt capacity is available at Indian River County rates and charges. 3. Payment of $1,214.00 per ERC for the next 3,000 ERC's as they accrue to the system within or outside of the GDU plat, including, but not limited to, those ERC's transferred to the City from the County with the repayment of those capital charges by the County to the City for those customers (those customers which have participated and have not defaulted in the County's capacity sale program to be off -set by County growth in payment of the capital charges to the City. 4. Mandatory connection where existing sewer lines are, including mandatory connection of existing homes and new homes, although there would be no commitment for vacant lots to be mandatorily connected or to be charged. 201 EAST PINE STREET • SUITE 1000 • ORLANDO, FL 32801 TELEPHONE (407) 839-3955 • FAX (407) 839-3790 PRINCIPALS: JAMES E. CHRISTOPHER • CHARLES W. DRAKE • GERALD C. HARTMAN • MARK I. LUKE • MARK A. RYNNING • HAROLD E. SCHMIDT, JR. Mr. Rob McClary January 4, 1992 Page 2 5. A commitment by the City for an active water and sewer expansion program to provide services to those owners who presently do not have service in a defined program. Basically, what he was saying was that he would like to get the $1 million down, potentially as much as another $400,000.00 from the debt capacity once the rates are changed to a rate no greater than the County's rates, and the transfer of impact fees at a $1,214.00 per ERC rate for the next 3,000 ERC's, which would be expedited by the previous capacity sale of ERC's and growth, not only in the GDU development, but also throughout the City of Sebastian. Generally, this drives a total payment number between $4.6 and $5 million over time. Moreover, there are probably well in excess of 100 ERC's already connected to the County system, which are increasing all the time due to the County's capacity sale program. In this manner, the growth rate of ERC's and therefore, the discounted present value would not only be the growth rate within the City of Sebastian, but also the growth rate in the north County unincorporated area as substituted for the capacity sale ERC's. This makes the growth rate at a much higher rate for the short-term period and therefore, decreases the discount on the futures, in their opinion. I mentioned to Charlie that if that is their proposal, I would appreciate receiving a letter from him in writing as to their position, and then we would do our best to work to a reasonable negotiation in consideration of their position. Charlie talked about timing and that he was quite busy at this juncture with a limited staff, and would want to have a fruitful, yet quick, negotiation which had a reasonable period between the negotiation and final closing, such that the limited staff that he had could accomplish those necessary tasks to get to closing. Nonetheless, he did not want to have staff dedicated to this function for too long a period of time. A date of July 1st was thrown out, providing approximately six (6) months for the process. I requested from him that he also tell us when they may wish to renew negotiations and make such negotiations exclusive with the City. He said that he would get with us relative to that issue and then started talking about other matters. I guess our position at this time would be just to wait on Charlie's letter, unless the City would desire some other course of action. I would also recommend a conference discussion with City staff, ourselves, special counsel and City Council relative to the costs and probable value associated with exercising of our option of the contract in comparison with negotiations as outlined as shown herein. Mr. Rob McClary January 4, 1992 Page 3 My very best to you and your staff for 1993. Very truly yours, Hartman & Associates, Inc. Gerald C. Hartman, P.E. President GCH/ch C 17/McClary2.gch cc: Hal Schmidt, HAI Rob Ori, HAI Tom Cloud, GHR Charles Nash, City of Sebastian Michael Hudldns, City of Sebstian