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HomeMy WebLinkAboutMinutes 1995-03-29 SPECIALCOUNTY SANITATION DISTRICTS NOS.1,2,3,5,6,7,11,13 AND 14 OF ORANGE COUNTY,CALIFORNIA MINUTES SPECIAL JOINT BOARD MEETING MARCH 29,1995 ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY,CALIFORNIA 92708-7018 ROLL CALL A special meeting of the Boards of Directors of County Sanitation Districts Nos.1,2,3,5,6, 7,11,13 and 14 of Orange County,California,was held on March 29,1995,at 7:30 p.m..in the Districts’Administrative Offices.Following the Pledge of Allegiance and invocation the roll was called and the Secretary reported a quorum present for Districts Nos.1,2,3,5,6,7,11,13 and 14 as follows: DISTRICT NO.1: ACTIVE DIRECTORS ~Pat McGuigan,Chair — James M.Ferryman,Chair pro tern •,,~.Mark A.Murphy •,~,_Thomas R.Saltarelli ......L....Roger Stanton ALTERNATE DIRECTORS Ted R.Moreno Arthur Perry Joanne Coontz Jim Potts William G.Steiner DISTRICT NO.2:......a_...John Collins,Chair — Daniel 1.Welch,Chair pro tern •~_,Barry Denes ......L....Burnie Dunlap ~Norman 1.Eckenrode .....z......James H.Flora ._..~.._..Pat McGuigan ~Mark A.Murphy ._..~._.Julie Sa _..4.__Sheldon Singer _.~L_.Roger Stanton ~Bob Zemel George Scott John M.Gullixson Bob Bell Glenn Parker Carol Downey Steve Anderson Ted R.Moreno Joanne Coontz Chris Norby George L.Ziaket William G.Steiner Torn Daly DISTRICT NO.3:_~_Sal A.Sapien,Chair ~Burnie Dunlap,Chair pro tern •~_Cecilia Age ...,.i.....George Brown ,_~_John Collins ..~.L.....James H.Flora .._&_Don R.Griffin ~Victor Leipzig —Wally Linn ~Pat McGuigan ......L....Margie L.Rice ...~Julie Sa .~._&....Sheldon Singer ~_i._..Roger Stanton ._&_..Charles Sylvia .__a...~.Bob Zemel —Harry M.Dotson —Glenn Parker —Walter Bowman — Frank Laszlo —George Scott —Steve Anderson —Patsy Marshall —Ralph Bauer ....~A.__Eva G.Miner — Ted R.Moreno Grace Epperson —Chris Norby George L.Zlaket —William G.Steiner —Robert Wahistrorn —Tom Daly DISTRICT NO.5:Jan Debay,Chair William G.Steiner,Chair pro tern John C.Cox,Jr. — John C.Cox,Jr. —Roger Stanton —Jan Debay DISTRICT NO.6: — James M.Ferryman,Chair ..~...Jan Debay,Chair pro tern _._L__William G.Steiner •~_~_Arthur Perry —John C.Cox,Jr. —Roger Stanton DISTRICT NO.7:Barry Hammond,Chair Thomas A.Saltarelli,Chair pro tern Jan Debay James M.Ferryman Pat McGuigan Mark A.Murphy William 6.Steiner —Mike Ward —Jim Potts —John C.Cox,Jr. ._L_Arthur Perry —Ted R.Moreno —Joanne Coontz —Roger Stanton DISTRICT NO.11:Victor Leipzig,Chair Shirley DettlofI.Chair pro tern Roger Stanton —Ralph Bauer —Ralph Bauer William G.Steiner DISTRICT NO.13:John M.Gullixson,Chair Glenn Parker,Chair pro tern Mark A.Murphy Williarn 6.Steiner Bob Zemel —Daniel T.Welch Burnie Dunlap —Joanne Coontz —Roger Stanton —Tom Daly DISTRICT NO.14: ~1~ Thomas A.Saltarelli,Chair Barry Hammond.Chair pro tern Mark A.Murphy William G.Steiner Peer A.Swan — Jim Potts — Mike Ward —Joanne Coontz Roger Stanton —Darryl Miller -2- DISTRICT 2 Arw%nintrvient of Chair oro tern 03/29/95 Don Mcintyre,General Manager,Blake Anderson, Assistant General Manager,Penny Kyle,Board Secretary,Gary Hasenstab,Irwin Haydock,Ed Hodges,John Linder,Mike Moore,Bob Ooten, Gary Streed,Ed Torres Thomas L.Woodruff,General Counsel,Richard Ardoin,Lucinda Dennis,Patti Gorczyca,Gary Hunt, Freddie Reiss,Jon Schotz,Phil Stone,George Ziaket In the absence of Chair John Collins and Chair pro tern Daniel 1.Welch,Director Bumie Dunlap was appointed Chair pro tern of District No.2. The Assistant General Manager advised the Directors that a presentation would be made on the proposed settlement agreement with the County regarding the Commingled Investment Pool,which was placed in their meeting folders that evening.The presentation would consist of:Freddie Reiss of Price Waterhouse;Richard Ardoin of Brorison,Bronson &McKinnon’s commercial and security litigation department;Gary Hunt,Executive Vice President of The Irvine Company;and Jon Schotz of Saybrook Capital. Mr.Reiss indicated that a lot of time,effort and energy had gone into bringing the settlement agreement to its final form,which was distributed to all pool participants that day.He stated that the agreement was the best arrangement that could be made at this time to resolve the pool participants’interests,as well as to avoid any further problems of further Chapter 9 bankruptcies that might occur.The most important part of the agreement is Option A or Option B.The OCIP committee does support the agreement and encourages participants to choose either Option A or Option B. He further stated that those participants who choose Option A will get immediate cash (76.26~), recovery notes and senior-secured claims,which adds up to 100%of the original December 6th investment balance.Those who choose Option B would receive cash (76.26 ).They would then have to file a claim for the balance.Option B reserves your rights to do what you wish,but you don’t have a claim other than the cash,It was further reported that the County will object to any claim filed above the cash if Option B is chosen,and you will have to litigate to prove that you have a claim greater than the amount of cash remaining. Mr.Reiss also reported that some of the income in 1994 was skimmed into a reserve for economic uncertainty.That amount will be paid to all pool participants choosing Option A and B in the same way it would have been distributed had it not been set aside.In addition,interest earned from July 1St through December 6th will be paid to all pool participants based on their average daily balance in that fund. If Options A or B are not chosen,then no funds would be received from the pool until a court awards whatever you are to receive,which is total uncertainty. STAFF MEMBERS PRESENT: OTHERS PRESENT: H ALL DISTRICTS Status report re County’s Commingled Investment Pool -3- 03/29/95 If the Districts choose Option A,it will provide an additional amount of $305.7 million in cash, recovery notes of $20.6 million and $45.8 million in settlement secured claims.This is in addition to the $48.9 million that has already been withdrawn under the emergency withdrawal procedure, bringing an approximate total of $354 million in cash that would be distributed to the Districts. Option B will provide $305.7 million in cash plus $48.9 million withdrawn and nothing else;just the right to a claim.The Orange County bankruptcy ultimately will have a plan of adjustment which will deal with claims that exist against the County and how they get paid.Litigating at this point is only to get a claim allowed;it doesn’t state how it gets paid nor what seniority or rights exist with that claim. Jon Schotz was then introduced and stated that the recovery notes under Option A would be good as gold by June 5th,which was essential to the OCIP committee,particularly for the schools who need to receive $.90 on the dollar to avoid further Chapter 9 bankruptcies.Also,the litigation proceeds would now flow directly from the settlement secured claims to the repayment claims.Another concern of the committee was to make sure pool participants would not be made a target of any litigation of the County.The County agreed,which was not in the original Term VI Sheet.In addition,the repayment claim was made much stronger.Most of what comes before the repayment plan are claims and notes payable to our pool.If everyone chose Option A,there would be $236 million of recovery notes which would be given to the pool’s participants. Mr.Reiss then commented that one of the last key issues dealt with during the last couple of weeks was how to make sure participants knew what they were getting when they signed the agreement to be a settling pool participant.He,himself,found the first draft of the settlement agreement almost unintelligible because of extremely complex formulas.The County’s attorneys agreed and reduced everything down to hard copy exhibits,which were attached to the agreement placed in the Directors’meeting folders as Exhibits 1,2 and 3.These exhibits took every formula and shows what it would mean to a pool participant in how much cash would be received,how much in recovery notes and settlement secured claims and how much interest should be received for the reallocated interest of last year,as well as how much interest was earned up to December 6th,etc.Having the exhibits done this way clearly defines the formulas to negate any disputes arising from differing interpretations of the formulas.Mr.Reiss then led the Directors through the Exhibits commenting on the columns and line items affecting the Districts. In response to questions by Directors concerning the County and preferential payments, Mr.Reiss responded that the settlement agreement has releases contained within it that releases everyone.In the spirit of cooperation and to avoid litigation and delays,it was decided that there would be no effort looking for preferences.He also pointed out that when there is a plan that will ultimately pay 100 cents,preference is meaningless.In the typical bankruptcy preferences are generally for those who are receiving something less than 100 cents on the dollar. Richard Ardoin was then introduced who went over the litigation aspects of the settlement agreement.He speculated what the County’s litigation strategy would be.He also commented on the strengths of both options contained in the settlement agreement. -4- ~—.—.•———.———————..——~,————...—.——.—— 03/29/95 Option A would grant participants certainty,which is knowing exactly what you are going to receive.There would also be fixed participation in third party recoveries,fixed payment and security structure.Option A will also allow you to review and advise County attorneys as to pooled claims.In addition,you will have an interest in shared claims.There will also be a portion of safety as there is an approved payment structure on allowed claims. Option B allows more control than under Option A.There is unlimited authority to pursue any party on any claim.You would have power to control all strategic and tactical decisions.This option would also retain independent settlement authority.Option B participants will also have to be creative as they won’t have a structure in which to work.They will also have the ability to set County and third parties against one another,as well as the flexibility to intervene and disrupt County actions.In addition there is potential to sue and attempt to recover individually from the County or third parties in excess of your principal loss.There is also possible priority on some part of the recovery. Gary Hunt,Executive Vice President of The Irvine Company,was then introduced and discussed the events immediately following the December 6th bankruptcy and the role the Orange County Business Council played in developing the proposed settlement agreement. The Assistant General Manager then gave a brief report on the financial picture of the Districts for the next 12 months,assuming no additional cash from the pool and no loans are made during the next fiscal year.The Districts would be in the red by the end of July. He then advised the Directors that a decision of whether to accept Option A or Option B would have to be made prior to April 17th.The options chosen would have to be signed off by the individual Districts and mailed to Price Waterhouse,who will be counting the ballots so that the information can be passed on to the County’s attorney and Patrick Shea of the Pool Committee. Once Judge Ryan enters his final decree,there would be 11 days after that for the Districts to change their minds,depending upon what the final settlement agreement looks like after any changes that Judge Ryan may implement.He further reported that if the Districts chose Option A and if the recovery notes were not made good as gold by June 5th,as required in the settlement agreement,the Districts would have three days to switch to Option B.Mr.Anderson also stated that Merrill Lynch and others are currently challenging the pool and it is unclear that if they were successful in doing so,how the Districts would gain access to any of their cash on the short term. Also,on August 1st certificates of participation in the amount of $17.7 million will be coming due for debt service. The Joint Chair then stated that the Districts could vote that evening or call a special meeting on April 12th,and that the Districts would be voting separately.General Counsel also explained that the Districts were comprised of nine,totally separate entities.Any number of Districts could opt for Option A or B.Those that elect Option B would be on their own,however,as far as costs to engage counsel and other professional staff. Following questions posed by Directors,it was then requested that further discussion be carried into closed session. 0 -5- 03/29/95 REVISED ALL DISTRICTS General Counsel reported to the Directors the need General Counsel’s Comments Prior to for a closed session as authorized by Government Closed Session Code Section 54956.9 to discuss and consider the item that is specified as Item 9(b)on the published Agenda.No other items would be discussed or acted upon. ALL DISTRICTS Convene in closed session pursuant to Government Code Section 54956.9 The Boards convened in closed session at 9:34 p.m.pursuant to Government Code Section 54956.9.Confidential Minutes of the Closed Session held by the Board(s)of Directors have been prepared in accordance with California Government Code Section 54957.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings.No action was taken re Agenda Item 9(b). ALL DISTRICTS Reconvene in reaular session At 10:30 p.m.the Boards reconvened in regular session. ALL DISTRICTS Moved,seconded and duly carried: Approving Amendment No.3 to the Aareement for Removal and Disposal/Reuse That Amendment No.3 to the Agreement for of Districts’Residual Solids with Pima Gro Removal and Disposal/Reuse of Districts’Residual Systems.Inc Solids with Pima Gro Systems,Inc.,providing for a five-year extension of the term of the agreement effective April 1,1995 through March 31,2000,with option for two one-year extensions,subject to annual reviews and CPI increase limits,establishing the cost at $28.00 per wet ton,providing for inclusion of provisions in the agreement to implement a cost recovery or revenue option,and to allow the Districts or Pima Gro to seek contract adjustments in the face of extraordinary price increases or decreases and authorizing staff to negotiate said price to reflect alternative use sites or technologies,be,and is hereby,approved;and, FURTHER MOVED:That the General Manager be,and is hereby,authorized to execute said Amendment in form approved by the General Counsel. ALL DISTRICTS Approving Resolution No.95-30.Amending Rules of Procedure for the Conduct of Business R~snIutinns Nns R7-Sl R~-~R 91-35 93-1 55 and 94-109.as reaealed ______________________________________ That the Boards of Directors hereby adopt ______________________________________ Resolution No.95-30,Amending Rules of -- Procedure for the Conduct of Business Resolutions Nos.87-51,89-56,91-35,93-155 and 94-109,as repealed,establishing Rules of Procedure for the Conduct of Business of the Districts.Said resolution,by reference hereto,is hereby made a part of these minutes. Moved,seconded and duly carried: Moved,seconded and duly carried: -6- 03/29/95 ALL DISTRICTS Director George Brown,Chair of the Finance, Aøprovinq Request of Garden Grove Administration and Human Resources Committee, Sanitary District for a short-term loan to reported that Garden Grove Sanitary District has a prevent their loan default debt service payment coming due in the amount of $5.4 million and does not have the funds to meet this obligation.Director Swan had brought this problem to the Committee’s attention and suggested that the Districts could extend a short-term loan to prevent this default.The loan would be subject to an agreement that the Districts have first priority for repayment out of the funds the Garden Grove Sanitary District receives from the settlement agreement with the County,as well as a commitment letter from Bank of America or an alternative financial institute for the amount over the settlement fund proceeds.He further stated that the loan would be a six- month loan that would probably be repaid in 60-90 days. It was then moved,seconded and duly carried: That a short-term loan to the Garden Grove Sanitary District to prevent their loan default,be,and is hereby,approved in concept. Director John Gullixson requested that his opposition to the motion be made a matter of record DISTRICT I Moved,seconded and duly carried: Adioumment That this meeting of the Board of Directors of County Sanitation District No.I be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m.(~jD DISTRICT 2 Moved,seconded and duly earned: Adioumment That this meeting of the Board of Directors of County Sanitation District No.2 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 3 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.3 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 5 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.5 be adjourned to Tuesday,April 11,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 6 Moved,seconded and duly earned: Adioumment That this meeting of the Board of Directors of County Sanitation District No.6 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. -7- 03/29/95 DISTRICT 7 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.7 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 11 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.11 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 13 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.13 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. DISTRICT 14 Moved,seconded and duly carried: Adjournment That this meeting of the Board of Directors of County Sanitation District No.14 be adjourned to Wednesday,April 12,1995 at 7:30 p.m.The Chair then declared the meeting so adjourned at 10:35 p.m. Secretary of tt~~d~a~4 of birectors of County SanMtiot(f~istricts Nos.1,2,3,5,6,7,11,13 and 14 -8- I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.1 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. ~ Chairman Board of Directors of County Sanitation District No.1 of Orange County,California Secretary,B~fd of,q~recTors of County Sanit’~lon ~trict No.I of Orange County,California F2C-0329.Dl I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.2 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. Chair an ~ of Di’~’edtors of County Sanitation District No.2 of Orange County,California County Sani of Orange County, No.2 ilifornia F2C-0329.D2 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.3 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. Board of Direc ors of County Sanitation District No.3 of Orange County,California Secretary,Bc~r~J ~f rectors of County SanitMi€n trict No.3 of Orange County,California F2C-0329.D3 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.5 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. (C~(airman /7 “-B’oard of Directoi~4 of County Sanitation District No.5 of Orange County,California Secretary,B a d of rectors of County Sanit on trict No.5 of Orange County,California F2C-0329.D5 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.6 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. (~airman (/ ~ard of Directors of tounty S’anitation District No.6 of Orange County,California Secretary,Bt4d o~irectors of County Sani!~ion ~‘strict No.6 of Orange County,California F2C-0329.D6 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.7 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. ChairmarT , Board of D~c?~rs of County Sanitation District No.7 of Orange County,California Secretary,Bo f rectors of County Sanita ion trict No.7 of Orange County,California F2C-0329.D7 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.11 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. Chairman V ,~/‘ Board of Directors of ~unty Sanitation District No.11 of Orange County,California Secretary,Bo~41 of~rectors of County Sanit~on l~/trict No.11 of Orange County,California F2C-0329.D1 1 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.13 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. Secretary,Boa,dJo(~ctors of County Sanitat~i D(~’rict No.13 of Orange County,California iirman Board of Directors of County Sanitation District No.13 of Orange County,California F2C-0329.D1 3 I certify that those portions of the minutes of the combined special meeting of the County Sanitation Districts of Orange County,California,on March 29,1995,reporting the actions of District No.14 are a true and correct report of the minutes of said District and that the additional matter reported showing the actions of the other Districts shall be regarded as surplusage. Chairman Board of Directors of County Sanitation District No.14 of Orange County,California / Secretary,r irectors of County San tio istrict No.14 of Orange County,California F2C-0329.D1 4 STATE OF CALIFORNIA) )SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2,I hereby certify that the Notice and Agenda for the Special Board Meeting of Districts Nos.1,2,3,5,6,7, 11,13 and 14 held on March 29,1995,was duly posted for public inspection in the main lobby of the Districts’offices on March 24,1995. IN WITNESS WHEREOF,I have hereunto set my hand this 29th day of March, 1995. Penny Kyle,~‘e4r”e$’rb of each of the Boards of Dire’~orcsfi County Sanitation Districts Nos.1,2,3,5,6,7,11,13 &14 of Orange County,California J:\WPDOC\BS~FORMS\95’F27E-O3.1