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Home My WebLink AboutRes2023-104 HEA Agreement Amendment 11 c. 1 SpilI150.1757 SOf7rbert CITY OF SEWARA•ALASKA RESOLVTION zo20-104 RESOLUTION of THE CITY COUNCIL OF 'ELLE .CITY OF WAREI, ALASKA, APPROVING *INIENOMENT NO. 1 TO THE ASSE PURCHASE AGREEMENT yarn HOMER ELECTRIC: - ASSOCIATION It.4C,. FOR THE SALE OF THE CITY OF SEVVARD ELECTRIC sv.TErd TO HEA $158;IECT TO VOTER :i4PPROVAL WHEREAS. on' March.:41, C_)023., the '...kward ay Council passed 'Resolution 202,5,-010 Approving un, Agsei Purchase. Agreement 13ctween the City of Seward MI* IIuner Electyr Assiiatiorl firth Sale of the City of Seward Electrical Systern. Siihject to VOter Approval and' WIIEREAS,;*Ttion 1,011esol Om 202.1039 slalvd thulibligatiOns of the purtic under the AsselPuBlia.Ne Ayreemeri.O.Vere etraditinued cin.Nnter appirTviti asraquired by A_riiclti I 4 yrf :the City of Seward Char-len and WHER.EAS, at EL:Tpecial eiecticraheIdIVIO 3,2023 %ruler ppproval as required by.Artick 11:4 of the ('it GI -Seward C iitcr WilS n1 ObtEilT1Cd: and WHEREAS4. onJcd 24. ZOfl the 'Srward City, Council passed Regolitarri 2023..-4811 placing. -Proposition Na. 2 a prOposed arnendineni to City 0( Seward Charter Chapter OA 'mIna:ale number oreleetors Ealutrod: to appr.ove the sale of a munioipal from...WI:0e- tilths to uOinfgeinajority hgfore.the votep'.al Ihe Oetorier 2, 2023 regular eketiwki anO WHEREAS. on July 34. 3:023 1:11c Seward: Ow .CoLtricii rpusised Resolution 1023.4g9 tliacingProprOtion No. 1 Sale of Sgward Rreetrie Utility 1,.c.fctFe- Um; yam ai'iliq Oct ;2, 202.3: 15ulut •und WHERFAS. the .4.580. Purchase Agreement :aetwegn thg C* oC Seward and Flower Electric Ammulirtfon,("Assct Purchipc.Agrcernenl") refLitinces the My 2, 2(23 puvI Ejection: and WOMFLAS, Sec-tion T..02(a) of Ow Msel Purchase- Agroenierir provides 'hut umy, prithriion TA' tiie, Asset. Purchase, Ato cernerit ritav he arnendal hut unlviISuth irnndrniti1fl Wnlingand sigried: and WHEW:AS111e City CkUntI desireto luncald the Assel Pt.trohime Agrverrient in riailari. h reel-eat:to the May 2. 2023 spallateredion with it refertne-e`to4le Oetober 3, 2023 tioction: and on of SEWARD, ALASKA RESOLUTION 2023-1.04 wftlEREAS. the !.:ity Qni ihe to amend tilt: Asset. -NC hirsz Agrerznynl mtitilce a referetneelo p'ertent voterliptinnv211 wifli x reettErce ki th nurnha of Britt 1:F-wired .to ii:ppovc:i.he Rete-renduz proportji intin F-Je oldieottLieelci.niie WHEREAS.:the ohligationN uf Seward and Ifirt0 1c1ii Assoeiaiion foram:the Asset Putaase Ageenient Contintitio exTims-siy ternditibhetT on an affirmative vote bv the 'lumber of the qualified, eieerm %cling ou the PrOPOSid011 LO%pptcwe the sole cif S6Aa-d's e1tnc utiiit ithe.00-1*.7 ZhTt. 9 NOW,TIIEREF .01E 17.RESOLVEDBYTHA-CIFTYC0UNP:1-.01? TITECITY OF;KEWARD, ALASKA, Oa: Section 1. rile City Cnuncil finds it.is'in tile public's intAnimal-nem No.1 ti, tlic At rualiese ARcernent with: flamer Elettrin Assmg.tiatign, ii c. as approved by Res‘Aution 2.023-039. Scetifin 2 Tilt athaOred An:retufti: 1 Mser_ 'pErrellusp 6grepalent ig herby .typtilvd1 and the City Nkrringee i 11eratiy.:1,1tithonzed to i..-edIte No: 1 to flu! Asset NITChaSe Agreement in- stilistannal tbnn Lt$, attached hexeto and to.make sitilt.careetibtm. to the nwanying Ntiti.it's and gcttpdtiks and exatelite,r-ehiled dbpunmit.5: as.may be ne-pe:ssoy w. two th. intedt orthiiirratitinn i*n bemillaf !,h.4:City ofeivd laid the iritcnt aril* ijaqiffss the Asset Putahase Agreement SectOil 3 Thik rem:06m droll 131We:fled iTyartediatehrapqr.ndoptia-t, hInvcriteroti.e obhgatiens of the twits tin -der .the Aski Ptuthatte Agreement renVain.,totiditioned voter upprrpr#1::a icqi.Ired by Article 114 of the City of gewsrd Chart ec; w: now existing: Qr ltnientidi al tlid adtratier3; PASSED AND APPROVED the Citfcgro6ii urthe City orsmart!Alaska. this: 1 I1hday.orSeptetnb. 2o23. THE CITY.% SEWAAI), ALASKA 1r Sue McClure., Mayor ui 1 1 Q CITY O1 SEW .kaU, RESOLUTION 2123-J04 A. ES: Qsenga. I)eMps4. WeErs, C44huort, NOES: It,at ABS'111T: anwcfl ABSTAIN. 1liune VACANT: Non ATTEST: WI:h City Clot (C7i1Y,SRA13, `�*f 1111Ri; s'"*.64:it*-1574"`"tivee# s -r -1111- S• 4. r r r -- 11 {INbr.' �. ti� City Council Agenda Statement Meeting Date: September 11, 2023 To: City Council From: Kat Sorensen, City Manager Brooks Chandler, City Attorney Subject: Resolution 2023-104: Approving Amendment No. 1 to the Asset Purchase Agreement with Homer Electric Association Inc_ for the Sale of the City of Seward Electric System to HEA Subject to. Voter Approval Background and justification: On March 28, 2023, the Seward City Council passed Resolution 2023-039 approving an Asset Purchase Agreement Between the City of Seward and homer Electric Association for the Sale of the City of Seward Electrical System, Subject to Voter Approval. The obligations of the City of Seward and Homer Electric Association set forth in the Asset Purchase Agreement ("APA") were expressly conditioned on an affirmative vote by three -fifths of the qualified electors voting on the proposition to approve the sale of Seward's electric utility at a special election held May 2, 2023. At that special election a referenda proposition approving the sale of the Seward Electrical System to Horner Electric Association received more than fifty-eight percent voter approval. Because Chapter 13.4 of the Charter required sixty per cent approval the proposition failed. Both Homer Electric Association and the City of Seward had the right to terminate the Asset Purchase Agreement after the special election results were certified but neither HEA nor the City of Seward terminated the APA. On July 24, 2023, the Seward City Council passed Resolution 2023-088 placing Proposition No. 2 a proposed amendment to City of'Seward Charter Chapter 13.4 reducing the number of electors required to approve the sale of a municipal utility from three -fifths to a simple majority before the voters at the October 2, 2023 regular election. Also on July 24, 2023, the Seward City Council passed Resolution 2023-089 placing Proposition No. 1 Sale of Seward Electric Utility before the voters at the October 2, 2023 regular election. The two Resolutions allow the voters to weigh in on whether to reduce the number of voters required to approve the sale of a municipal utility and once again to vote to either approve or not approve the sale of Seward Electric to HEA. All the commercial terms of the APA remain the same. To allow for the possibility of voter approval of one or both propositions it is necessary to reword two definitions of the APA. AmendmentNo. 1 doesthis by; 1) replacing the reference to the May 2, 2023 special election with a reference to the October 3, 2023 election, and 2) replacing a reference to sixty percent voter approval with a more general reference to the number ofvoters required to approve. This accounts for the possibility voters will approve the proposition amending Chapter 13.4 of the Charterbutpreserves flexibility that amending Chapter 13.4 will not be approved. The language of Amendment No. 1 has been negotiated and approved by the city attorney and legal counsel for HEA. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: Strategic Plan: 200 Other Certification of Funds Total amount of funds listed in this legislation: This Legislation (✓): Creates revenue in the: atnount of: Creates expenditure in amount of: Creates a savings in the amount of; Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted Not applicable $ $ o Funding will be received upon closure of the transaction, subject to voter approval Fund Balance Information Affected Fund (✓)` General Boat Harbor Motor Pool SMIC Parking Ocher Electric Water Fund Balanee/Net position unre:strictedfunassigned Wastewater Healthcare Note: amounts are unaudited This amendment has no fiscal Finance Director Signature:: impact Attorney Review x Yes Attorney Signature: Not applicable Comments: car„a„ Administration Recommendation Adopt resolution Other: 201 AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT That certain agreement for the purchase and sale of Seward Electric Utility dated April 18, 2023 ("Agreement"), by and between the City of Seward, an Alaska municipal corporation dba Seward Electric Utility ("Seller"), and Homer Electric Association, Inc., an Alaska utility consumer services cooperative ("Buyer and, together with "Seller" the "Parties") is hereby amended as follows: 2. Recitals. Recitals is hereby amended to add additional WHEREAS clauses to read as follows: WHEREAS, the Asset Purchase Agreement between the Parties did not meet the requirements for Referendum Passage when submitted to voters on May 2, 2023; and WHEREAS, the Parties wish to amend certain provisions of the Agreement as necessary to reflect the passage of time and resubmit the Agreement to voters for R:ef'ercndum on October 3, 2.023; 3. Article I a. Section 1.01 Definitions is herebyamended by changing:certain terms and definitions as fol lows: ii. '`Referendum" means the referendum currently scheduled to be held on October 3, 2023 for the approval of the Transactions. i i. "Referendum Passage" means the affirmative vote of the number ofvotes required to approve the Referendum. In alt other respects, the Agreement is to remain unchanged and in full force between the undersigned parries.. IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 effective September 11, 2023. CITY OF SEWARD By at Sorenson City Manager ATTEST: AMENDMENT NO. I TO PURCHASE SALE AGREEMENT CITY or Srw.' RD HOMER ELECTRIC ASSOCIATION, INC. 01370.63CLOOCX PAGE 1 OF 2 Kris Peck City Clerk I,- SEAL to 1 (Pi' E� 19 r_,p • *�{.G� Jape, I , OF Ai' `,I,lu nas'$s, HOMED ELECTRIC ASSOCIATION. INC. B Bradley P. Janarschke General Manager AMENDMENT NO. l TO PURCHASE SALE AGREEMENT Crry of SLR ARD HOMER ELECTRIC ASSOCIATION, INC. 01370630.DOCX P:AG . 2 OF 2