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HomeMy WebLinkAboutMinutes - December 29, 1960 - CC (2)175 CiTY HALL, AZUSA,CALIFORNIA THURSDAY, DECEMBER 29, 1960 7:30 P.M. MINUTES The City Council of the City of Azusa met in special session at the above time and place. Mayor Ortuno called the meeting to order at 7:35 P.M. Present at Roll Call : Councilmen Paul, McLees, Johnson, Teasley, Ortuno Also present: City Attorney Williams, Light & Water Superintendent Smith, Deputy City Clerk -Acting Administrative Officer George Caswell. Special legal counsel Edward Taylor was also present. Councilman Johnson presented a letter to the City Council which was read in full by the Deputy City Clerk, George Caswell: "TO THE MEMBERS OF THE AZUSA CITY COUNCIL: With reference to the Notice of Special Meeting, dated December 27, 1960, the notice states "By order of the mayor..." the mayor as listed upon the stationery used is shown to be L. G. Memmesheimer, who is no longer a member of this Council, and is certainly not the mayor. No place on this notice does the signature of the actual mayor appear and the notice is signed only by the deputy city clerk of the City of Azusa. 1 do not consider this notice to be valid under these circumstances. Secondly with respect to this notice, Item 1 reads " Purchase Agreement - Azusa Agricultureal Water Company." It is not stated whether the purpose of the meeting is to discuss the subject purchase agreement or to vote upon, or instead to talk or act upon fhe purchase of the shares of stock of the aforesaid company now held by the Foothill - Citrus Company. Since the meeting is illegally called and the purpose for which it is called is uncertain, I believe that as long as we are here we can discuss what we all know we came to discuss, but I doubt if we can take any formol action. presume you all have copies of Mr. Williams letter to me dated December 28, 1960, in which he says there is no question of a gift of public funds under two sets of circumstances which I inquired about. The first question I inquired of was whether the purchase by the City of a number of shares of this 'stock at an average price of about $10 a share did not establish anorket value which we could not exceed withoutftking a gift of public funds. Mr. Williams states that it appears to him that the City has from time to time purchased a few isolated shares of stock and refers to the owners of one or two shares, whose owners were willing to abandon them. This belittles the point tremendously, since the City now owns 1,650 shares of this stock which it has acquired over the years at the price mentioned, namely, about $10 a share. On the second point the question was whether the City could pay a substantial sum in excess of an expert appraisal without that constituting a gift of public funds. Mr. Williams quotes a law suit in which the City of Los Angeles paid more than the appraised value; and then Mr. Williams admits that this was done according to law of a chartered city and did not depend dor its validity upon an interpretation of state constitution and the. statutory law under which Azusa operates. He next referes to case involving the Town of Sausalito, 168 Cal 587. This case was decided in October of 1914 and involved the purchase contract for an amount of water and did not involve either an.established market value or an expert appraised value. This case also states that a city does not act in a legislative capacity in administering a public utility and also states that a contrast can be voided for "inequity in the terms of the agreement. 176 177 CITY HALL, AZUSA, CALIFORNIA THURSDAY, DECEMBER 29, 1960 7:30 P.M. Lastly Mr. Williams argues that we have had competent technical advice. 1 admit we do have the engineering appraisal of James M. Montgomery in which he finds that the value per share of the entire Agricultural Water Company, including its physical facilities and its water rights, is 146 per share as of July 10, 1957. The difference we are now being asked to pay with no further technical advice on the subject amounts to $56 per share or $166,000 in excess of the appraised value. Mr.WiIliams implies in his letter that it is within the discretion of the City Councll to pay this $166,000 excess money in order to acquire not the entire water company but only the shares held by the Azusa - Foothill Citrus Company. 1 would remind you that we would have to buy another 1,286 shares of outstanding stock before we would own anything in the nature of physical facilities or water rights. All we acquire by buying stock is the controlling interest in a non-profit AGRICULTURAL WATER company and the company would still exist as an operating concern with a large monori#y stock ownership. Now Mr. Williams implies that we know all about this deal. This is not true. We do not have one opinion or bit of written advice over the signature of Mr. Edward Taylor, Special Water Counsel for the City of Azusa. We do not have a more recent appraisal of the'value of this water company than July 10, 1957. In order to get some of the information which I believe we need to have a discussion in this matter, I would like to ask some questions and to request some written information, First, I would like to ask of what the physical properties of the water company consist. Namely, how many wells, resevoirs, feet of pipe of various sizes, the age of the pipe, etc. 'n this connection I jould like to have a written report of the City Engineer concerning the physical-contlition.of the pipe, wells, pumps, motors, and other operating Vquipment. Second, i would like to have a copy of the fl nancial reports of the Azusa Agricultural Water Company for the past five years. Third, I would like to have a statement of the acre feet of water produced and sold and the acre feet of water diverted and/or produced and turned over to the Spreading Corporation for disposal, Fourth, I would like to know the details of all water sales contracts which the Azusa Agricultural Company has with the Monrovia Nursery Company or others who may use its services, since certainly if we buy this -stock we will inherit these contracts and have to live up to them. Fifth, I would like to have a complete analysis of the corporate structure of the water company, a list of its employees and their salaries, and a description of their retirement pension, severence, or other benefits which the City of Azusa, as a majority stockholder, would have to honor in the future. In this connection 1 might point out to you that we a: a not buying the company. The Company is not being dissolved, and we cannot, therefore, intergrrte the operation of this company into our water department. Sixth, with reference to the proposed agreement which has been submitted to us to accept or reject, paragraph 4 (f) requires the escrow agent to close the escrow and pay the $600,000 price at 8 a.m. following the date of a protest hearing with respect to the annexation of Foothill Shopping Center. In view of the fact that a protest hearing is not necessarily the final act, 1 believe the escrow, if held, should not be closed until the day following the official filing of the completed annexation with the Secretary of State and his acknowledgement thereof. . 178 179 CITY HALL AZUSA, CALIFORNIA THURSDAY, DECEMBER 29, 1960 7:30 P.M. Seven, paragraph 4 (g) completely binds the city to do one of two things: (a) permit the private utilities to continue to serve the shopping center with water and electricity; or (b) the City may provide such services if the Citrus Company believes the services to be equal or better and at a comparable cost to that furnished by the private utilities. This is a completely unreasonabic limitation upon the soverpignity of the City of Azusa, and I believe it should be entirely eliminated if for no other reason than the action of this City Council in accepting this paragraph would completely bind the hands of all future city councils for all time to cone, and subject the City to the veto of the Citrus Company. Now in conclusion, I must remind the Council that we have already instructed Mr. Williams to initiate proceedings leading to a revenue bond issue to provide the money for the purchase of this stock. It is complained by the Chamber of Commerce that this would take j -i undue period of time. The water company has been in existance for about 70 years. It appears to me now that we are being forced into a RUSH act without having the information 1 have mentioned above that we should have. This rush may be occasioned at this particular time because the water company is no longer solvent; or it may be because of the pressure of the general lav suit instituted by the City of Long Beach which will soon come to trial; or it may be that the Citrus Company wishes to cash in its Blue Chips at the highest price it could ever expect to secure for them. I do not know if these or other reasons are impelling this rush act we are now getting. 1 do not know that it is good business to take a a long hard look at all of the facts before this City Council spends $600,000 of the taxpayers money without knowing whether they are buying water stock, water rights, or a bigger share of the Long Beach law suit. I believe the taxpayers should have the right to vote on this issue. Respectfully submitted, /s/ Martha M. Johnson W Before any further discussion regarding Azusa Agricultural Water Company was undertaken, the resignation of the City Engineer was considered. It was moved by Councilman Teasley, seconded by Councilman Paul that the resignation be accepted. The resignation was accepted upon the unanimous vote of the Council. The Attorney's opinion regarding the Mayor's signature on the notice of meeting was that the signature was not required. Councilman McLees stated that after thinking over the action of the City Council at their meeting of December 19, 1960, instructing the City Attorney to take the necessary steps to put before the people as a revenue bond issue the natter of acquiring the Azusa Agricultural Water Company stock, that he would move that the City Council reconsider this action. Councilman Johnson explained that this would not be proper for Councilman McLees, therefore Councilman Paul moved, Councilman Teasley seconded that the City Council reconsider the action taken at the December 19th meeting instructing the City Attorney to make the necessary arrangements to put this before the public as a revenue bond issue. Councilman Johnson voted "No", the other councilmen voted "Yes". At the suggestion of the City Attorney, it was agreed that the Council dispense with the regular order of business so that further discussion over the table may continue. Mr. McNeil and Mr. McKellar appeared on behalf of the Azusa Foothill Citrus Company for the owners of the majority shares of the Azusa Agricultural Water Company Stock. Mr. McNeil asked the members of the Council if the City did have the $600,000 to commit the purchase of this water stock. After being assured by the City Council that there was $600,000 to commit and being asked if there wcs a possibility of making something in the realm of a partial or half and half payment, Mr. McNeil agreed that if the City seriously desired to make this purchase that some arrangement could be worked out for any variation of a payment plan. 180 181 CITY HALL AZUSA, CALIFORNIA THURSDAY, DECEMBER 29, 1960 7:30 P.M. Mayor Ortuno asked Mr. McNeil if there was any reason why all of the holdings of the Azusa Foothill Citrus Company could not be'annexed to the City. Mr. McNelI felt that there was at this time no advantage to the Citrus Company to annex all of the holdings. Further discussion of variations of partial payments details were then discussed. Councilman Johnson noted that if there were any changes the agreement would have to be revised Councilman Paul asked again why all of the holdings of Azusa Foothill Citrus Company could not be annexed to the City . Mr. Mc Nell felt that if this was the basis of the discussion at the table that the Azusa Foothill Citrus Company was definitely not interested in annexing all of their holdings at this time. Mr. Paul asked if the Council and Mr. McNeil would be agreeable to further discussion of annexing all the Azusa Foothill Citrus Company holdings at some future date, and separately from the matter now ,uniier_'crmsideration. Mr. McNeil agreed. Mr. Edward Taylor, special counsel for the City on the purchase of 2965 shares of Azusa Agricultural Water Company stock, spoke and agreed that the 3,000 acre foot of water that would be available should definitely be made available to the City, the excess water over and above the needs of the shareholders could accrue to the City and certainly would be in the best benefits of the City to have this water available, and seriously suggested that this acquisition be made. Mr. McKellar asked Mr. Taylor if it was not true that all possible information from Azusa Agricultural Water Company was made known to him before he, Mr. Taylor, made any recommendations as to the purchase of this stock. Mr. Taylor agreed that al I possible information was made known to him. Mr. McKellar then went on to explain in some detail the basis that the Foothill Citrus Company used in arriving at what they felt was a fair price for a fair value. -Mr. McKellar stated that the Azusa Agricultural Water Company was not, to date, a part of the pending Long Beach water suit. Mr. Taylor felt that a new report from the Montgomery company would certinaly bear out the $600,000 value for the water stock of the Azusa Agricultural Water Company. The Mayor asked the City Council if they would consider making the acquisition and payment of the" money in one lump sum. Councilman Teasley spoke in favor of making the acquisition and paying for it all in one lump sum. It was agreed that the represernatives of the Azusa Agricultural Water Company return to the next regular meeting of the City Council and at that time Council could take official action as to its desires In the acquisition of the 2965 shares of Azusa Agricultural Water Company stock. Moved by Councilman Teasley, seconded by Councilman Paul and unanimously carried that the meeting be adjourned. Meeting adjourned at 8:35 P.M. I uty City Clerk 182