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Sell Municipal Utility
City of Hercules
Majority Approval Required
Pass: 2987 / 76.69% Yes votes ...... 908 / 23.31% No votes
Index of all Measures
|Results as of Jun 22 3:50pm, 100.0% of Precincts Reporting (13/13)|
|Information shown below: Impartial Analysis | Arguments | Full Text|
Shall the City Council of the City of Hercules be authorized to sell the Hercules Municipal Utility with the net proceeds designated for repayment of the Utility's debt and other contractual obligations, and any remaining proceeds allocated to the City's general fund?
Daniel P. Doporto
Jarvis, Fay, Doporto & Gibson, LLP
For the City Attorney of the City of Hercules
|Arguments For Measure N||Arguments Against Measure N|
|The Hercules Municipal Utility was created in January 2001. It currently serves in an area generally bounded by San Pablo Bay, San Pablo Avenue, Hercules Avenue and Linus Pauling Drive. At the time the HMU was established, the forecast was that the HMU service area would serve over 1800 new homes, with expansion of service to the North Shore Business Park. This did not occur. Today it serves just over 800 customers. The projected growth in the service area did not materialize due to a number of factors, including a downturn in the economy, and the profitability of the HMU has been hampered by a lack of a sound business plan and best management practices. HMU has never made a profit, and its operations have been and continue to be subsidized by the City, with current annual losses of over $330,000 projected for 2012 and over $730,000 forecasted for 2013. Due to the likelihood of continued losses for the immediate future, the drain on core City services, and the need to get the City back on sound financial footing, the City proposes to entertain the sale of the Utility. Should sale offers prove to be less than sufficient to meets its current debt and obligations, the City will retain the right to reject all offers and pursue other means of disposition.
Dan Romero, Mayor
John Delgado, Vice Mayor
Myrna de Vera, Council Member
William Wilkins, Council Member
|Full Text of Measure N|
|AN ORDINANCE OF THE PEOPLE OF HERCULES CONCERNING THE SALE OF THE HERCULES MUNICIPAL UTILITY
WHEREAS, the Hercules Municipal Utility ('HMU") was established by the City of Hercules ("City") as an enterprise fund within the City's structure on January 9, 2001, with initial operation of the Utility beginning in March, 2003, and
WHEREAS, the purpose of creating the HMU was to establish the City as a provider of safe and reliable electric services to retail end-use customers located within certain parts of the City and the Water Pollution Control Plant jointly owned by the City and the City of Pinole and to generate revenue for the City, and
WHEREAS, HMU accepts electric power from the California grid via interconnect to Pacific Gas and Electric facilities owns and operates a 12,000 Volt distribution system consisting of conduits, vaults, cables, switches and transformers, and
WHEREAS, HMU serves in an area generally bounded by San Pablo Bay, San Pablo Avenue, Hercules Avenue and Linus Pauling Drive, in virtually all the Redevelopment Areas of the City, and currently serves over 800 residential and commercial customers, and
WHEREAS, at the time the HMU was established, the forecast was that the HMU service area would serve over 1800 new homes, with expansion of service to the Business Park, and
WHEREAS, the projected growth in the service area did not materialize due to a number of factors including a downturn in the economy, and
WHEREAS, the profitability of the HMU has been hampered by a lack of a sound business plan and best management practices, and
WHEREAS, HMU has never made a profit, and its operations have been and continue to be subsidized by the City, with current annual losses of over $330,000 projected for 2012 and over $730,000 forecasted for 2013, due to debt service and bond obligations, and
WHEREAS, due to the likelihood of continued losses for the immediate future, and the difficulties involved in the day-to-day running of a utility, the City proposes to entertain the possible sale, lease or other disposition of the Utility, and
WHEREAS, Article 2, Chapter 1, Division 5 of the California Public Utilities Code ("Code") authorizes California municipal corporations to sell and dispose of any public utility they own; and
WHEREAS, the Public Utilities Code requires the City Council to order the proposition of selling the HMU to be submitted to the qualified voters of Hercules at a special election called by ordinance and held for that purpose; and
WHEREAS, the Public Utilities Code specifies that the votes of two-thirds of all voters voting at the election are necessary to authorize the sale of the HMU; and
WHEREAS, on January 24, 2012, the City Council adopted Resolution No. 12-012 on a 5-0 affirmative vote determining that the public interest and necessity demand that the HMU be sold in the manner specified by the Public Utilities Code and directing City staff to prepare this Ordinance calling for a special election, the Ordinance to be considered at a public hearing scheduled for February 14, 2012, and,
WHEREAS, due to a software error, the Agenda Notice for the February 14, 2012 Regular Council Meeting was not posted on the City's website 72 hours in advance of the meeting; and
WHEREAS, in order to meet the time specified in the California Elections Code for a June 5, 2012 election, the Council must now have a first reading of the Ordinance at a special Council meeting; and
WHEREAS, on February 16, 2012, Ordinance No. 466 was introduced and on first reading was approved by a 5-0 affirmative vote of the Council to submit the proposition of whether to sell the HMU to the qualified voters of the City, and
WHEREAS, on February 28, 2012, the City Council approved final passage of Ordinance No. 466 by a 5-0 affirmative vote to submit the proposition of whether to sell the HMU to the qualified voters of the City, and
WHEREAS, at the June 5, 2012, Special Election to authorize the sale of the Hercules Municipal Utility, the voters approved the Measure by an affirmative vote of greater than a two thirds margin to grant the City the authority to sell the Utility.
Now, Therefore, the People of the City of Hercules do hereby ordain as follows:
Section 1. That the City Council shall have the power and authority to sell and dispose of the Hercules Municipal Utility, established by the City as an enterprise fund in January 2001, pursuant to Article 2, Chapter 1, Division 5 of the California Public Utilities Code.
Section 2. That the net proceeds from any such sale of the Hercules Municipal Utility shall be for repayment of the Utility's debt and other contractual obligations, with any remaining proceeds allocated to the City's general fund
Section 3. Election to Approve Ordinance; Effective Date. The provisions of this Ordinance shall be effective ten (10) days after the City Council certifies the results of the June 5, 2012 Special Election.
Section 4. Severability, If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, the provisions of this Ordinance are severable. The People of the City of Hercules hereby declare that it would have passed each section, sentence, clause or phrase hereof irrespective of the fact that any one or more sections, sentences clauses or phrases be held unconstitutional, invalid or unenforceable.
Section 5. Publication. The City Clerk shall cause this Ordinance to be published or posted in accordance with applicable law.