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HomeMy WebLinkAbout1943_06_VILLAGE OF EDINA_COUNTRY CLUB DIST SERVICE CO PROPOSALSI / ` Mar c3h 199 1945 Country Club District Service Company, 4611 •VTooddale Avenue Minneapolis, !1nnesota Attention: Ear. Oscar Gaarden, President Gentlemen: Notice is hereby given to you that. it is the desire of the Village of Edina to purchase that part of the water .supply• system and plant, now -used ,and us'efu,l, owned by your company. In accordance with the provisions of the franchise, and the resolution of the said, Village, you are hereby-given thirty (30) days' notice thereof. •. , A certified copy. of the resolution direct- ing said notice i,,�`r enclosed herewith., • .. ., Vic`, , Yours, very truly, ek Clerk of the Village of RESOLUTION WHEREAS, it is desirable to purchase. that part of the water supply system and plant now used and. useful, owned by the Country Club District Service Company, IT IS RESOLVED, by the Council of.the Village, of Edina,.that-the clerk be, and he hereby is, directed to give to the.Country.,Club District Service Company thirty (30) days' written notice of the desire of,the Village to purchase that part of the water 'supply system and plant,'now used and useful, owned by and belonging to tree Country Club District_ Service Company. . a RESOLUTION WHEREAS, it is desirable to purchase that. part of the water supply system and plant now used and useful, owned by the Country Club District Service Company, IT IS RESOLVED, by the Council of the Village of Edina,-.that the clerk be, and he hereby is, directed to give to the Country Club District SIervice Company thirty (30) days' written notice of the desire of the-Village-to purchase that part of the water supply system and plant, now used and. useful, owned by and belonging to the Country Club District Service Company. S :.4k SOLUTION "WMPEAS it is desirable to purchase that part of the grater ,supply system and plant now used and useful, owned by the, Country Club Diat Clot Service COinPWIY; IT IS RESOLVED, by the Council of the V llage. of Edina., that the clerk be, and lie hereby is,, directed. 'to . ,give to the Country Club District Service Company thirty (30) days' written notice of .the desire of the Vlllage to purchase that part of the water supply system and plant, now used and usoful, owned by and 'belonging to the Country Club District; Service Company. STINCHFIELD, MACKALL,CROUNSE & MOORE FREDERICK H. STINCHFIELD HENRY C.MACKALL ROBERT M. CROUNSE PERRY R. MOORE ELEVEN HUNDRED THOMAS P. HELMEY FIRST NATIONAL -SOO LINE BUILDING LESLIE L.ANDERSON DONALD A. HOLMES M. DANA NI CHOLSON JOHN M. PALMER MINNEAPOLIS - 2 FLOYD E. NELSON _ EDWIN P. CHAPMAN March 16 1 9 4 5 Mr. Bower Hawthorne Star Journal Minneapolis, Minnesota Dear Bower: Vide attach several copies of the resolution and form of letter to Oscar. If you find these satisfactory, you might write Oscar on the village letterhead along the lines proposed and enclose a certified copy of the resolution, following your customary practice as to the certificate.. Yours very truly, STINCHFIELD, MACKALL, CROUNSE & M OORE By 1 { i a i s STINCHFIELD, MACKALL,CROUNSE & MOORE FREDERICK H. STINCHFIELD HENRY C.MACKALL ROBERT M. CROUNSE PERRY R. MOORE ELEVEN HUNDRED THOMAS P. HELMEY FIRST NATIONAL -SOO LINE BUILDING LESLIE L.ANDERSON DONALD A. HOLMES M. DANA NI CHOLSON JOHN M. PALMER MINNEAPOLIS - 2 FLOYD E. NELSON _ EDWIN P. CHAPMAN March 16 1 9 4 5 Mr. Bower Hawthorne Star Journal Minneapolis, Minnesota Dear Bower: Vide attach several copies of the resolution and form of letter to Oscar. If you find these satisfactory, you might write Oscar on the village letterhead along the lines proposed and enclose a certified copy of the resolution, following your customary practice as to the certificate.. Yours very truly, STINCHFIELD, MACKALL, CROUNSE & M OORE By 1 JCtTVTTRY CLUB DISTRICT SERVICE CO. PROPOSALS TO L� THE VILLAGE OF EDINA c, June, 1943 I ;fir. Earl C. Sharpe, President, Edina Village Council, 4612 Edgebrook Place City Dear Mr. Sharpe: As requested by the Council there is attached hereto two prop- ositions covering future operation of our water and sewer utilities in Edina. These are (1) continuance of operation by the Country Club District Service Co. and (2) sale of all utility physical assets in Edina to the Village. In this connection it might be mentioned here that several apparent misunderstendinge should be cleared up. Our water rate, except 29 consumers in the Hidden Valley district, is below that of other villages adjacent to Minnea,polis and below that charged by Minneapolis to consumers outside of the city limits. In the Hidden Valley district we purchase water from the City of Minne- apolis at awholesale rate higher than our regular retail water rate. Our minimum charge is considerably less than sny of the municipal water systems in the Twin City area. In fact our water Pate is one of the lowest in the State of Minnesota. In recent years we have repaired water meters free of charge ;here the universal custom is to charge consumers for this service. Our net income on the basis proposed for operation, including L- ydrart rental, will be considerably below the allowance of 60 by the Federal Power Commission for electric and gas utilities Without hydrant rental the return has been in the neighborhood of 1-% on the portion of the k*ater system allocated by the court to tre Country Club District Service Co. No preferred or common stock dividen <lls have been paid' since fin,-l_ inFi P.cnuisition of all the stock by the nresent owner.' Operation by the Village would have a tremendous advantage from the standpoint that no taxes would hr ve to be paid and also from the standnoint that the Village would have .no investment in new distribution lines. With the Vi11Age personnel setup as it now exists, with Village Engineer, an of:L'ice clerk and street and sewer maintenance crews, the additional labor item.would be small. A separate sheet attached hereto shows an estimate of the revenue available for bond payments. These vary from $12,000 to 20,000 per yeas, irith the present 900 consumers. It varies from I1b,g00 to X35,000 per year with probable future growth. At the price of $140,000 the proceeds from operation should pay off the bonds in relatively few years. i e At: A e K r� ct: ;.tg:d Inc amo,�:�,�t rem - Pining For tY�e r-_•F = e .t j after 11 obli'-:Q tlsns and 1 iouV.atirrr tQ.xes are a id., W: li e a: In frca it is not suf'f'iolent for the "sweat snd blo:o: `' expenfe6 ire vi: t:i,-; tili` ;r c:r its feet d ►,:i•in7 �f t .�� ,w,•ez• �;rc �o �:Eg a price which wou3d ps.y him a rebE40-, - able the punch se i!A -Iat not appear attractive from the stu ,Fi ;f t' --: Vji., ge., The owner reco{�rizes the complexity of the p: esent opera.tiono of this utility and is willing to make what he rega.rde t�6 a. Lereroas concession in order to help work out a w,j1iita.��n, - The olrie :7 is porfeotly , filling '�o curry on the �,perrtions of ': {_d property but is convinced for the sa :e of the Water users in tht V ;.11. eD as Tv.F.11 as the Villa -^;e It6elf,, that a definite ec'mcret -e a .an, Ing ehoizl6. be -.ncernir,g every Dhp.se of the. operation the oh rges rnO caste v`herever they apply. Ti-.�:r±kin you for yo -,-,-v aecision 1n the matter, beC to reti�Pln Xotn7s very truly, President As requested by the Edina Village Council there are submitted herewith''two propositions in connection with'its water and sewer utility properties in the Village of Edina. The two propositions are outlined below Proposition No. 1 - Continuance of Operation by present owner. Proposition No. 2 - Sale of Utility Properties to the Village by present owner. - Complying with the above requests the Company proposes the following: Prcposit_ion No. 1 - Continuance of Operation The Company will continue - operation of the water utility for domestic service at the present rate.of 1701¢ gross and 15.39x, net per 100 cubic feet per q =.garter, subject to adjustments as provided for in the franchise. The Company proposes also to con- tinue its policy of repairing water meters without charge for the time being but reserves the right to make charges on a cost basis at any time it deems.this course advisable. (In this connection it might -be mentioned here that rates in other neighboring villages are higher and they all make charges for meter repairs on a basis similar to that of the City of Minne- apolis. The Company now has minimum rates considerably below that of Minneapolis and neighboring villages.) The Company further proposes to continue to furnish fire protection hydrant service for a. period of five years at the foilow in r.,, rates: For'9 new hydrants Installed by the Village south of 54th 3t. $3.75 per hydrant per quarter year For 35 hydrants in Country Club District $4.50 per hydrant per quarter ye�,:r For 62 hydrants installed by Company $10.00 per hydrant per quarter ye_.r Hydrant rental at above rates to be made retroactive to Jan-Liary 1, 1943-* It is further proposed that the Company lease to the Village its portion of the sanitary e.nd,storm sewer systems on the basis . of seven per cent (7n) per annum on the estirioted original cost thereof to cover depreciation and return on the investment, the amount to be payable quarterly. On computations w-de by the Corgi- - pany this will amount to $422.15 per quarter year. This charge to begin Jan. 1, 19439 In the determination of Ureter rates the basis of calculation shall be st the rPte of six and one half per cent (63$) on the or1f: • ina.l cost of utility property after allowances for cost of operatic and depreciation. If original cost is not fully available an es- timate thereof shall be made on a, basis P.11owed by the Federal FoT:9er Commission. In connection with Proposition No, 1 it is understood that the Village Council shall use its influence and shall cooperate i-,ith thr, Comi)Rny in the securing of desiraole sites for the location of f *_turf° wells end pump houses deemed necessary to maintain proper weer supply end pressure for both domestic consumption and Fire protector; It will be noted that the proposed rate for the hydrant rentE! is a little more for the old ype hydrants in the Country Club ,2i s._ trict than for the new type installed on the more recent exteneionc This is explained by the fact that valve seats frenuently sticX so tightly that nei,,, leather seats cannot be replaced without digging up the hydrant and chipping out the bronze seat with a cold c�nisel. T._'= cost of servicing the old hydrants is therefore somewhet more that for the nearer type of hydrants. Proposition No. 2 - Sale of Utility Prape.r.ties to the Village The Country Club District Service Company proposes to sell all its physical assets in the Edina water and sewer systems, together with any claims it may have for past adjustments and for services, for the cash sum of tr140,000.00. The property is to be delivered free of all encumbrances. In the offered prices the company has allowed the Village credit for contributions in aid of construction. If the com- pany is obligated, through court action or otherwise, to return any of these contributions it requests, as a part of the pur- chase contract, that the Village assume payment of such reim- bursements in addition to the price offered above. It is be- lieved by the company that the only requests for -reimbursement would come from 42 contributors in South Harriet Park. 41 of these were billed 050 for contribution in aid of construction. One paid 1100 because of extra cost for extension of water main In frozen ground, extension being made at his request. One con- sumer, Mr. Karl. Houschild, of 5200 Oaklawn Ave., brought suit against the company for return of a t5O payment in aid of con- struction. The District Court has,not yet handed down its de- cision though hearing was held many months ago. 'It is believed by the company that all the homeowners or the contracters con- structing the homes had full understanding regarding the charge for aid of construction before any connection was made to the water main. It is believed, therefore, that reimbursements, if any, would be small. A schedule of actual and estimated original costs, together with certain services not yet paid for by the Village, is attached hereto.. This will show the method of arriving at sale price as it effects property cost and value of services. VALUE OF PROPERTY AND SERVICES TO BE DELIVERED TO VILLAGE UNDER PROPOSITION NO. 2 (SALE) Item Original Cost I F. '• Construction Before Oct. 1Q+ Tank and'50th St. Water Lines 2 389.35 30% of Brown and Fairway Water Lines ,1 c 30% of Brown Storm and Sanitary Sewers 50th St. Sanitary Sewer Line 2 Eng-ineering and-Refinancing Services Total 0 630843.92 Complete revamping of eater system to put it on an earnings basis, including plans for new wells, rote investigations; replacing personnel, nets layouts, etc. (See e"langtion under Item No.6 on follow- ing page) Construction Since Oct. 1„ 191p; 10,000.00 Pump House, Land Fnr', Enuiprlent Distribution Lines 11,951+ 00 oo Office Equip. Tools', Supplies, Meters Seger Deity. Additions 57,270 2,2 0 09 { and Tools 0;.r-0 ,., Adjustments Considered Fair Total 71,_9,55.7o ,�. Franchise Expenditfures (Est.) Y H Brent Rental Oct. 1 1 5 to 6/3o/43 7,000.00 ; Operating only -Storm Sewer`10/1/35 � tole /,l/41 Council Request of 4/16/37- Donation to I7'�96 °3O 1,750.004', Ecklund with Int. Operating Sanitary Sewer Djping 1 41 9 1,�!OO.QO -'' b 2,000,0 Total _30,11 6. o i. < Grr•nd Totsl "175,945 -919 Offered Sale Price ;r140,0oo. c© \r ' r Note - See following p�.ges for Full explPration of each item, Note - Original Cost shown Pbode Original Cost portion -- ranted to Vil, by Court �,9;��. �_ 7r�-�4.1 Total acouired by Vil, s--ith Prop. Dio. 2 ~ .r274, 7 5o 39 5/P4/43 r EXPLANA:'IONS OF ITEMS UNDER PROPOSITION FOR SALE Items 1 to 5 Inclusive _ Old Construction The values given in these items represents the original cost - according to the Graber report for the physical assets of the portion of the system belonging to the Country Club District Service Company and constructed before October 1, 1935• Item No, 6 Prior to Oct. 1, 1935, the system was losing money and lacked proper records. Considerable planning had to be done to revamp the system and put it on an earning basis and to install proper records, Well locations and bids had to be planned. Plans for serving future loads had to be made, buildings had to be erected, pressure improved; valve layouts, tank and pump house, piping layouts and financing had to be planned, These projects had to be installed i•rhile existing consumers were supplied with water. The many details to be worded out over a period of three years are conservatively valued at $10,000.00 but has never been paid for or charged into the capital account. Items 7 to 11 Inclusive - New Construction These figures represent the new construction work since Oct,, 1, 19;2 It is believed that *'rye 4'{71,955.76 represented by these items is considerably less than the sverage cost as a great deal of effort was put forth to get the lowest cost for first -class material and workmanship. Judging by the cost of similar work done by the Village it %ould have cost 30% to 40% more if every effort had not been made to ?peep costs down. Item No. 12 - Franchise Expenditure This item represents the estimated cost for legal services,' office expense, etc. in prepering the franchise and its extension, prorated for the 10 years the franchise has to run. Such cost lags Slot been included in any of the property appraisals. In er.se of purchase it is only fair that this item should be included, Item No, 13 - Hydrant Rental Oct. 1, 1935 to June 30, 1g43 This represents the value of $19.00 per hydrant -year for the z5 hydrants owned by the Village in the old portion of the system, they being much more difficult to service and repair than the new hydrants., The 9 new Village -owned hydrants are figured at $15.00 per hydrant-yeal and those owned by the Company at x'40.00 per hydrant -year. The earn- ings represented by this hydrant rental added to the net profit fror; domestic service would be considerably less than a fair return on the property investment owned by the Company and even less than a fair 1 return on the actual investment by the present owner. It is therefore only fair that this item should be included in a sale as the Village has prin nothing for this.service and residents are saving about four tines the cost of this service each year in insurance rates. When domestic rates were determined in 1936 full a.11ouTnce for collection of hydrant rentals was uepen ed on. Item No. 14 Operating Storm Sewer Oct. 1, 1935 to Dee. 1942 During this 7 -year period the Company operated the storm sewer system, after being told by the Council that it should do so, no ?gay was received. The c4arge of 220.00 per year is low for the service and in all fairness should be included in a sale. Item No. 15 - Council Request for Donation On April 16, 1537, the Company paid J. Frank Ecklund of 8 Bri ?ye Lone, Edina., the sum of *1,000.00 at � the request of the Villege Coun- cil. This was in settlement of e law .suit between Mr. Ecklund. an? tie Village in which the Company was not involved in any way. The sum r.-re paid in fear of reprisal as the Company was to ask for a 5 -yeas exten- sion of its franchise soon thereafter. The sum rith interest amootz to about It is only fair that the.Company should be relz- bursed for this sum. The sewer sump at Arden Ave. Pnd.Bridge Streets which was relieved by the White Oaks sewer, was not the property of the Company tho operated by the Company at Village request. Item No. 16 - Operating Sanitary Sewer During 1941. As of January 1, 1941 the Village and the Comneny signed a contract In which the Company agreed to discontinue serving the sanitary sever system in the Country Club District and to discontinue billings to residents for this service. Thie was to prevent a conflict with bilic the Village was senc'ing out in connection with Metropolitan Sewage District charges, The Village failed to live up to come to the Company to service did not perform the service until the service was about $2,000.00. this service. to the contract and calls continued. the sewer mains. The Village creme about December 1941. The value of The Company should be reimbursed for LU M 5/22/43 ,DINA ?,CATER SYSTEM Es;,i-; rQ;? Revenue Under Village Operrtinn With 900 consumers With 1200 consumers With 1500 customers (Present) (Future) (Future) e�year v,year Dry year Wet year Xvyepr Dr y;year et year Av.year Dry year Gross Operatin Revenue $19,500 22,000 1?g,000 �2�,700 �:�9,3�Op �37��Jp. :` 1,000 ��7,000 ��7,ObQ Operating Costs Electric Power. Pump M&Ane & Supplies Maint , of Line e Water Purchased Office Supplies do Exp, Extra Labor Miceellaneous Taxes Total Operating Cost Bal. Available for Financing 2 400 3 2 700 3 100 3 000 3 400 .z 3 800 4 3 rGC ` 3 qoo w 4 500 2r� %'75 35050 �7 >5p 400 450 550 1 orzo 1 100 zoo 1 -�o0 1 450 1 x•50 1 750 1 850 1 900 300 Soo 350 550 475 550 400 650 450 700 575 700 500 goo 590 goo 1 Soo 1 600 1 800 1 Roo 1 60o. 600 1 goo 2 000 2 900 2 00 goo 500 50(0 50/0 00 600 Boa goo ® 0 0 0 0 '�0 0 0 0 .6 o0 7 075 7 975 7 900 8 575 9 375 9 750 10 680 11 750 ��12 000 g1�i ° L5 w ^o 125 X16 SOO �2U 750 P28 025 *21 r- 320 X35 250.