Board of Commissioners Meetings

69 CITY OF HENDERSON – RECORD BOOK Record of Minutes of Special Called Joint City/Utility Commission Meeting on June 2, 2021 A special called joint Board of Commissioners and City Utility Commission meeting of the City of Henderson, Kentucky, was held on Wednesday, June 2, 2021, at 2:00 p.m., prevailing time, with no primary location designated for this video teleconference meeting as the result of the state of emergency declared by the President of the United States and the Governor of Kentucky due to the global COVID-19 pandemic, and in accordance with recommended and mandated precautions related to COVID-19 per the Kentucky Attorney General Opinion 20-05, limited public attendance was permitted at this meeting due to the highly contagious nature of COVID-19. It is not feasible for the City to maintain order and abide by recommended and mandated precautions while providing a central physical location for public viewing. The meeting was conducted in accordance with KRS 61.826 and SB150. MAYOR AUSTIN called the meeting to order and asked the City Clerk to conduct Roll Call for the Board of Commissioners. There were present Mayor Steve Austin presiding: PRESENT: Commissioner Rodney Thomas Commissioner Austin P. Vowels Commissioner Robert N. Pruitt, Sr. Commissioner Bradley S. Staton ALSO PRESENT: Mr. William L. “Buzzy” Newman, Jr., City Manager Mrs. Dawn Kelsey, City Attorney Ms. Maree Collins, City Clerk Mrs. Donna Stinnett, Community Relations Manager/Public Information Officer Mr. Robert Gunter, Finance Director Mr. Dylan Ward, Project Manager Ms. Amanda Brannan, Administrative Secretary Mr. Cory Fischbeck, IT Applications Programming Manager (via Zoom) Mr. Bill Raleigh, IT Support Specialist Mr. David Wright, IT Network Administrator II Mr. Lin Shannon, City Utility Commission Chair Mr. Mark Weaver, City Utility Commission Member Mr. Russell Sights, City Utility Commission Member Mr. David Curlin, City Utility Commission Member (via Zoom Panelist) Ms. Jennifer Howell, City Utility Commission Member Ms. Tammy Konsler, City Utility Commission Clerk (via Zoom Panelist) Mr. Chris Heimgartner, HMPL General Manager Mr. Brad Bickett, HMPL Power Supply Director (via Zoom) Mr. Randall Redding, HMPL Attorney Mr. Michael Mace, PFM Financial Advisors, LLC Mr. Bob Berry, Big Rivers President & CEO Mr. Paul Smith, Big Rivers Chief Financial Officer Mr. Mike Pullen, Big Rivers Chief Operating Officer (via Zoom Panelist) Mr. Tyson Kamuf, Big Rivers General Counsel Ms. Jennifer Keach, Big Rivers Communications & Community Relations (via Zoom Panelist) Mr. Kevin Patton, the Gleaner (via Zoom) ________________________ UTILITY COMMISSION CHAIR SHANNON asked that Roll Call for the Utility Commission be conducted. ________________________ PRESENTATION: “Report on Big Rivers Electric Company’s Offer to Purchase Henderson Municipal Power & Light” MICHAEL MACE of PFM Financial Advisors, LLC (PFM) presented a detailed Report on Big Rivers Electric Company’s (BREC) Offer to Purchase Henderson Municipal Power and  70 CITY OF HENDERSON – RECORD BOOK Record of Minutes of Special Called Joint City/Utility Commission Meeting on June 2, 2021 Light (HMPL). PFM was retained to assist the City in evaluating the offer received from BREC for the purchase of the assets, business and rights to serve the current customers of HMPL. The analysis report was not modeled after any prior analysis by HMPL and is not intended to serve as an independent valuation of HMPL, nor does it opine on a fair market value for HMPL or a price at which the City should consider selling HMPL or potential buyers. The Report evaluates the BREC Offer: -Estimate impact on the City and on City Customers; -Quantitative (economic) and non-quantitative impacts; -Very long-term timeframe of analysis – 30+ years; -Calculating Net Present Value (NPV) in today’s dollars; -Outcomes very dependent on various assumptions. The BREC Offer includes: -BREC pays $90 million to the City; -BREC pays an annual franchise fee of $2.5 million; -BREC will maintain its transmission business in Henderson; -Rate freeze at current levels for five years; -Retain all current HMPL employees; -Allow Henderson to retain its properties on Water Street; -Ending litigation related to HMPL Station Two power plant; -Henderson retains HMPL debt and accrued benefits liability. Future rates regulated by Kentucky PSC-no rate projection beyond the rate freeze period. Primary impacts: -Receive $90 million purchase price, Less $24 million liabilities; - Receive fixed $2.5 million annual franchise fee; -Lose total initial “HMPL” value of $2.9 million in first year; -HMPL Value assumed to grow (-2.35%) over time. Over the next 30 years this Lost Value could grow to as much as $6 million. -Loss of control over an essential service and on its leadership; -Loss of control rate-making and policy decisions; -Lack of direct utility management accountability to the City; Reduced operational and economic synergies with the City; Potential unknown impacts; -Difficult to impossible to “undo” a sale once executed. Long- term rate projection should be an essential component of any sale consideration. Additional Considerations: -Challenge of long-range assumptions in a changing industry; -Request long-range rate projections/assumptions from potential buyers; -Unresolved HMPL/BREC litigation and liabilities; -HMPL pension and Other Postemployment Benefits (OPEB) liabilities may remain open; -Tax status and potential costs and reduced FEMA eligibility; -BREC credit condition/rating relative to HMPL (Report assumes similar long-term borrowing costs.) Summary: The results of PFM’s assumptions and projections indicate a sale of HMPL to BREC, under BREC’s proposed terms, would have a minor $1.5 million positive Net Present Value impact to the City, and a material $30.5 million negative Net Present Value impact on customers. It is clear these results are highly dependent upon certain important assumptions, and their impacts over a long period of time. Relatively small changes to assumptions can have material impacts on the Net Present Value results. PFM believes the current assumptions represent a reasonable middle-ground starting point and is willing to provide additional analysis and sensitivities for any variables of interest to the City, HMPL and their stakeholders. In addition, there would be several non-quantifiable impacts – many of which would not be known for decades. ________________________ MAYOR AUSTIN indicated that all questions and comments be directed in writing to Maree Collins, City Clerk, at mcollins@cityofhendersonky.org; and asked if any Commissioner would like to request to go into Executive Session for further discussion. COMMISSIONER PRUITT requested an Executive Session. EXECUTIVE SESSION: “Litigation and Real Property” MOTION by Commissioner Staton, seconded by Commissioner Thomas, that the Board of Commissioners go into Executive Session pursuant to the provisions KRS 61.810(1)(C) relating to pending litigation and KRS 61.810(1)(b) for the purpose of discussion of the sale of property located on Water Street. The vote was called. On roll call, the vote stood: Commissioner Thomas -- Aye: Commissioner Vowels --- Aye: Commissioner Pruitt ----- Aye: Commissioner Staton ---- Aye: Mayor Austin ------------- Aye:  71 CITY OF HENDERSON – RECORD BOOK Record of Minutes of Special Called Joint City/Utility Commission Meeting on June 2, 2021 UTILITY COMMISSION CHAIR SHANNON entertained a motion for the Utility Commission to adjourn into Executive Session. WHEREUPON, Mayor Austin declared the Boards adjourned into Executive Session. ________________________ MEETING RECONVENED: MOTION by Commissioner Staton, seconded by Commissioner Pruitt, the Board of Commissioners reconvened into regular session. The vote was called. On roll call, the vote stood: Commissioner Thomas -- Aye: Commissioner Vowels --- Aye: Commissioner Pruitt ----- Aye: Commissioner Staton ---- Aye: Mayor Austin ------------- Aye: WHEREUPON, Mayor Austin reconvened the Board into regular session. ________________________ UTILITY COMMISSION CHAIR SHANNON entertained a motion for the Utility Commission to reconvene into regular session. ________________________ MEETING ADJOURN: MOTION by Commissioner Staton, seconded by Commissioner Thomas, to adjourn the meeting. The vote was called. On roll call, the vote stood: Commissioner Thomas -- Aye: Commissioner Vowels --- Aye: Commissioner Pruitt ----- Aye: Commissioner Staton ---- Aye: Mayor Austin ------------- Aye: WITHOUT OBJECTION, Mayor Austin and Utility Commission Chair Shannon declared the Meeting adjourned at approximately 3:05 p.m. ___________________________ Steve Austin, Mayor ATTEST: May 10, 2022 ______________________ Maree Collins, CKMC City Clerk