HomeMy WebLinkAboutRes2023-104 HEA Agreement Amendment 1 Sponsored by: Sorensen
CITY OF SEWARD,ALASKA
RESOLUTION 2023-104
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, 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
WHEREAS, 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; and
WHEREAS, Section 3 of Resolution 2023-039 stated the obligations of the parties under
the Asset Purchase Agreement were conditioned on voter approval as required by Article 13.4 of
the City of Seward Charter; and
WHEREAS, at a special election held May 3,2023 voter approval as required by Article
13.4 of the City of Seward Charter was not obtained; and
WHEREAS, 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; and
WHEREAS, 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; and
WHEREAS, the Asset Purchase Agreement Between the City of Seward and Homer
Electric Association("Asset Purchase Agreement")references the May 2,2023 Special Election;
and
WHEREAS, Section 11.02(a) of the Asset Purchase Agreement provides that any
provision of the Asset Purchase Agreement may be amended but only if such amendment is in
writing and signed; and
WHEREAS,the City Council desires to amend the Asset Purchase Agreement to replace
a reference to the May 2, 2023 special election with a reference to the October 3, 2023 election;
and
CITY OF SEWARD,ALASKA
RESOLUTION 2023-104
WHEREAS,the City Council desires to amend the Asset Purchase Agreement to replace
a reference to sixty percent voter approval with a reference to the number of votes required to
approve the Referendum proposition on sale of the electric utility; and
WHEREAS, the obligations of the City of Seward and Homer Electric Association set
forth in the Asset Purchase Agreement will continue to be expressly conditioned on an affirmative
vote by the number of the qualified electors voting on the proposition to approve the sale of
Seward's electric utility at the October 3, 2023 election;
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD,ALASKA that:
Section 1. The City Council finds it is in the public's interest to adopt Amendment No. 1
to the Asset Purchase Agreement with Homer Electric Association, Inc. as approved by
Resolution 2023-039.
Section 2. The attached Amendment No. 1 to Asset Purchase Agreement, is hereby
approved and the City Manager is hereby authorized to execute Amendment No. 1 to the Asset
Purchase Agreement in substantial form as attached hereto and to make such corrections to the
accompanying Exhibits and Schedules and execute related documents as may be necessary to
fulfill the intent of this resolution on behalf of the City of Seward and the intent of the parties to
the Asset Purchase Agreement.
Section 3.This resolution shall take effect immediately upon adoption,however,the
obligations of the parties under the Asset Purchase Agreement remain conditioned on voter
approval as required by Article 13.4 of the City of Seward Charter as now existing or as
amended at the October 3, 2023 election.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
11 th day of September, 2023.
THE CITY OF SEWARD, ALASKA
gtm-Me‘Ct,
Sue McClure, Mayor
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CITY OF SEWARD, ALASKA
RESOLUTION 2023-104
AYES: Osenga, DeMoss, Finch, Wells, Calhoon, McClure
NOES: None
ABSENT: Barnwell
ABSTAIN: None
VACANT: None
ATTEST:
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Kris Peck
City Clerk
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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 Homer 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. Amendment No. 1 does this 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 of voters required to approve. This accounts for the
possibility voters will approve the proposition amending Chapter 13.4 of the Charter but preserves 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: $ 0
This legislation(✓):
Creates revenue in the amount of: $ Funding will be received upon closure of the
transaction, subject to voter approval
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
Fund Balance Information
Affected Fund(✓):
General SMIC Electric Wastewater
Boat Harbor Parking F1 Water F1 Healthcare
Motor Pool Other
Note:amounts are unaudited
Fund Balance/Net position—unrestricted/unassigned $
This amendment has no fiscal
Finance Director Signature: impact
Attorney Review
x Yes Attorney Signature:
Not applicable Comments:
Administration Recommendation
Iq
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 Referendum on October 3,2023;
3. Article I
a. Section 1.01 Definitions is hereby amended by changing certain terms and definitions as
follows:
ii. "Referendum"means the referendum currently scheduled to be held on October 3,
2023 for the approval of the Transactions.
iii."Referendum Passage"means the affirmative vote of the number of votes required
to approve the Referendum.
In all other respects, the Agreement is to remain unchanged and in full force between the
undersigned parties.
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. 1 TO PURCHASE SALE AGREEMENT PAGE 1 OF 2
CITY OF SEWARD/HOMER ELECTRIC ASSOCIATION,INC.
01370630.DOCX
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Kris Peck
City Clerk
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op, O�P� �'p�'•, HOMER ELECTRIC ASSOCIATION, INC.
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SEAL By:
gTFOF A`PS�• Bradley P. Janorschke
`��''��,,,�,����•`•, General Manager
AMENDMENT NO. 1 TO PURCHASE SALE AGREEMENT PAGE 2 OF 2
CITY OF SEWARD/HOMER ELECTRIC ASSOCIATION,INC.
01370630.DOCX