20100119 Regular City Council Meeting - MinutesMINUTES OF THE SPECIAL CITY COUNCIL MEETING OF
THE CITY OF VERNON HELD TUESDAY, JANUARY 19,
2010, AT 9:00 A.M. IN THE COUNCIL CHAMBERS
OF THE CITY HALL LOCATED AT 4305 SANTA FE
AVENUE, VERNON, CALIFORNIA
MEMBERS PRESENT: Gonzales, McCormick, Davis, Maisano, Newmire
MEMBERS ABSENT: None
The meeting was called to order by Mayor Gonzales.
The Chief Deputy City Attorney announced that there
were no changes to the agenda.
The Chief Deputy City Attorney announced that this was
time for public comments.
Mayor Gonzales asked if there was anyone in the
audience who wished to address the City Council.
There was no one in the audience who wished to address
the City Council at this time.
Request for authority to terminate the CitiGroup and
Morgan Stanley Interest Rate Swaps, was presented.
City Administrator Donal O'Callaghan reported on the
financial impact that the CitiGroup and Morgan Stanley Interest
Rate Swaps represent to the City of Vernon under the current
financial market; the carry costs that the City is enduring due
to the fluctuating financial market; and his desire to terminate
the Interest Rate Swaps, with the guidance of the City's
financial advisors, at the time that it would be most
appropriate and cost effective for the City, which could be in a
few days or weeks.
He also advised that the termination of the Interest Rate Swaps
was necessary in order to reduce the City's financial liability
and to maintain its current AA Credit Rating, which would be
indispensable in the future as the City moves forward with the
development of other projects.
Mr. O'Callaghan asked that Mr. Eric Fresch, one of the City's
financial advisors, comment on this matter.
Mr. Eric Fresch explained that the Interest Rate Swaps
were meant to work under a normal market. He also expressed his
agreement with the City Administrator to terminate the Interest
Rate Swaps under the current financial market to free the City
from said liability and concentrate resources on other projects.
Mr. Fresch reported that the only reason the City of Vernon
should keep the Interest Rate Swaps would be if the City
believed that the interest rates were about to go up, which he
and other financial advisors do not foresee happening in the
near future.
Special City Council Meeting Agenda
January 19, 2010
Mr. Fresch further reported on the City of Los Angeles
Department of Water & Power and its attempt to rebuild its
utility system by placing various large projects aside.
matter.
The Mayor asked if there were any questions on this
There were no more questions.
It was moved by McCormick, seconded by Newmire, that
authority be granted to the City Administrator to terminate the
CitiGroup and Morgan Stanley Interest Rate Swaps, with the
guidance of the City's financial advisors, at the time he deems
most appropriate. Motion carried. 5-0
The City Administrator thanked the City Council for
their support and also reported that he is working with Orrick
and Bond Logistics on the commodity swaps and that a City
resolution on that matter would come forth for their
consideration at an upcoming meeting.
Update of the Purchase and Sale Agreement of the Red
Rock Wind Project, was provided.
The City Administrator reported that he had been
negotiating with two parties regarding the price of the
sale/purchase of 1/3 of the land in Tehachapi, which is
approximately 12 acres of the total purchased land by the City.
He advised that he anticipates that the selection of the bidder
and recommendation to the City Council to sell the land would
come forth the week of January 25th and on the transaction would
be closing in early February.
Mayor Gonzales asked if the City of Los Angeles would
try to go after the recent land acquisition of the City of
Vernon in Tehachapi.
The City Administrator responded that the City of Los
Angeles is concentrating on its own challenges just like the
City of Vernon is concentrating on the development of its own
renewable energy.
Mayor Gonzales advised that San Diego has raised the
cost on solar panels.
The City Administrator advised that all renewable
energy is very expensive. He also advised that the City is
working diligently to comply with the State mandates on
renewable energy at a cost effective margin for the City.
Councilman Newmire asked how come the City does not
apply for a smaller power plant similar to the size of the one
the City already has.
The City Administrator responded that the intent of
having a large power plant was to assist the region with energy
but due to the large opposition on that project that the City
would look into the possibility of the construction of a power
plant based on a projected load increase of the City rather than
to serve the region.
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Special City Council Meeting Agenda
January 19, 2010
Mayor Gonzales asked if there were any questions.
There were no questions.
There being no further business to come before the
City Council at this time, it was moved by McCormick, seconded
by Davis, that the meeting be adjourned, the time being 9:41
a.m. Motion carried. 5-0
ATTEST:
Manuela Giron, Lity Clerk
Hilario Gonzales, Mayor
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