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1981/03/1981-446 City Hall~ Anaheim, California - COUNCIL MINUTES - March 19, 1981~ 7:00 P.M. The City Council of the City of Anaheim met in adjourned regular session for the purpose of a joint meeting with the Public Utilities Board (PUB). PRESENT: ABSENT: P RES ENT: ABSENT: PRESENT: COUNCIL MEMBERS: Overholt, Kaywood, Bay, Roth and Seymour COUNCIL MEMBERS: None PUBLIC UTILITIES BOARD: Haynie, Townsend, White, Keesee, Kiefer, Stanton PUBLIC UTILITIES BOARD: Anderson CITY MANAGER: William O. Talley CITY ATTORNEY: William P. Hopkins CITY CLERK: Linda D. Roberts PUBLIC UTILITIES GENERAL MANAGER: Gordon Hoyt Mayor Seymour called the Council to order at 7:00 P.M. for the purpose of conducting a joint meeting with the Public Utilities Board. Public Utilities Board Chairman Ken Keesee called the Board to order, all Board Members present with the exception of Wynn Anderson. 175: PROPOSED ACQUISITION OF 1.5% INTEREST IN SAN ONOFRE NUCLEAR GENERATING STATION (SONGS) UNITS II AND III FROM SOUTHERN CALIFORNIA EDISON (SCE) AND SPECIAL MUNICIPAL ELECTION JUNE 2~ 1981 TO SEEK APPROVAL TO ISSUE $80 MILLION OF ELECTRIC REVENUE BONDS: Public Utilities General Manager Gordon Hoyt, also Secretary of the PUB, stated they should discuss first the subject acquisition as outlined in his report of March 19, 1981, recommending that the City acquire from Southern California Edison an additional 1.5% interest in the San Onofre Nuclear Generating Station, Units II and III, and to schedule a Special Municipal Election- June 2, 1981 to seek approval to issue $80 million of Electric Revenue bonds. In that regard, he was recommending that the PUB recommend that the City Council: 1. Approve the acquisition from Southern California Edison Company of an additional 1.5% interest in San Onofre Nuclear Generating Station, Units 2 and 3. 2. Schedule a Special Municipal Election June 2, 198.1 to seek approval from the voters to issue Electric Revenue bonds in the approximate amount of $80 million to finance the recommended acquisition. 3. Schedule an additional ballot measure at the June 2,~1981 election to remove the 8% interest limitations on the remaining unissued Electric Revenue bonds which were authorized by the voters in March, 1975. 4. Perhaps schedule other measures on the June 2, 1981 ballot following discussion with the City Council at the joint Public Utilities Board/City Council meeting March 19, 1981. Mr. Hoyt then named the following people who were present today: Mr. Edward Long, Mudge, Rose, Guthrie and Alexander, Bond Counsel; Mr. James Lowry of James J. Lowry & Associates, financial advisors; Mr. Winston H.. Peterson, R. W. Beck & Associates, engineering consultants; Mr. Alan Watts, Rourke and Woodruff, special counsel to the City; Mr. Robert Dietch, Vice President, Southern California Edison; Mr. James Pignatelli, Treasurer's Department, Southern California Edison; Mr. Gene Ray, legal counsel, Southern California Edison; Mr. Dave Sparks, Resale Accounts Manager, Southern California Edison; Mr. Burbank, Southern California Edison; and Mr. Gleitz, attorney, Southern California Edison. 81-447 City Hall~ Anaheim~ California - COUNCIL MINUTES - March 19~ 1981, 7:00 P.M. Mr. Hoyt continued that relative to Item No. 4 above, he was going to recommend that they put a ballot measure on the ballot which would authorize the issuance of short-term securities that could be reissued. The matter would further be discussed by their financial consultant and bond counsel, but they had assured him that language could be structured that would protect the community from any City Council issuing any debt, short-term or long-term, without it first being approved by the voters. Mr. Hoyt then referred to Item No. 3 (Page 2 of the March 19, 1981 report)-- "Anaheim will pay to Edison 1.5% of the costs which Edison has incurred so far ~n constructing the plant, together with the approximate costs for common facil- ities shared with Unit 1, and including an allowance for funds used during con- struction (~apitalized interest). With minor exceptions the costs will be determined as they were for the 1.66% interest already purchased. Anaheim will pay to Edison, from time to time, an appropriate share of the continuing construction and operation costs." Southern California Edison representatives told him about two hours ago that was not entirely their understanding, that the cost had not yet been determined and there needed to be some negotiation. There were going to be some tax consequences to Edison that needed to be dealt with and there was perhaps a value to the plant that was i-n excess of the investment which Edison had already made. That was not something he understood in their meeting the other day. Their challenge, if the Board and Council were in agreement at the end of the meeting today, would be to write the various legal resolutions that were necessary, the ballot measures, and secure approval of the various people involved as to the specific language and to structure aa agreement with SCE which they could accept. They would have that done by approximately noon on Monday, March 23, 1981 so that the material would be ready for the Council meeting Tuesday, March 24, 1981. The other caveat was relative to Item 7, Page 3 of the March 19, 1981 report-- "Subject to evaluation by Edison of the actual interest costs incurred by Anaheim, costs to redeem Anaheim's securities, and costs incurred by Anaheim in issuing securities, it appears that Edison would return advances made by Anaheim with'sufficient interest to paY Anaheim's costs of interest, issued and redemption of the securities, if the sale is not approved." Since at this point they were still not certain as to how the deal might be structured, Edison was not anxious to make any flat guarantee as to what could be done but, in the general realm, it looked doable, subject to the final numbers. Mr. Hoyt stated that today he would like Mr. Robert Dietch of SCE to describe the project and the licensing process and proceedings. He also recommended to the Board and Council that they employ Mudge Rose Guthrie and Alexander and Rourke & Woodruff and bond counsel. He had received a prelimimary proposal that they could discuss, and also that James J. Lowry & Associates be appointed their financial consultants of the project. He had a proposal from Mr. Lowry. He would also recommend that they execute a work order under the agreement which was already in existence with R. W. Beck to provide for Beck performing the engineering feasibility work in connection with any securities issue they would engage im. He would not ask for approval of any of those today, but would do so on Tuesday, March 24, 1981 if they proceeded with the project. He had looked at the cost of the issuance and it appeared they were going to be somewhere between $330,000, $340,000 or $370,000. He then introduced Mr. Dietch. 81-448 City Hall,. Anaheim~ California - COUNCIL MINUTES - March 19, 1981, 7:00 P.M. Mr. Robert Dietch, Vice President, Southern California Edison, first narrated a brief slide presentation. One slide showed the San Onofre Unit 2 schedule, construction, start up and power ascension. They were currently 98% complete in construction of that unit. They were into the starter process which was approximately 50% complete. At the current time, they were also completing the hot functional test which he explained° Another slide showed the Unit 3 schedule which basically followed Unit 2 by 13 months and that was a primary aspect to keep in mind. Unit 3 was 74% complete in construction and they were at the beginning of the starter program. The final slide showed the licensing milestone schedule. (~nit 2 schedule--Unit 3 schedule and Licensing Milestone S~hedule data sheets were submitted to the Council along with fact sheets--San Onofre Nuclear Gene=ating Station--made a part of the record). A two-step licensing process was involved and they were entering into the operating license stage, as opposed to the Permit Construction Stage which had already been accomplished. They had been docketed for an operating license since 1977 and the reviews were basically complete to the first milestone, a safety evaluation report issued by the Nuclear Regulatory Commission (NRC) that was completed in February. As of last Thursday, they had completed all of the ACRS "advisory .committee on reactor safeguards" committee meetings. They had the letter inhouse which was add=essed go NRC Commissioner stating that the plant was ready to proceed to the last phase of licensing, that it~was safe and the independent board of scholarly reviewers had deemed it such by their review, as well as the NRC staff. The key items to be decided in this period were that the NRC had to now issue the supplemental safety evaluation report concerning any open issues which had been opened between SCE and NRC and anything that had gone forward from the ACRS meetings. Also, one of the remaining hurdles to be taken on during this time period was the running of the emergency planning exercise which they were currently scheduled to conduct on April 14, 1981. He then explained what was involved in that exercise. He continued that they expected to go into hearings by mid-June, but in order to get a date for hearings, they had to have a final prehearing conference before the licensing board. They had requested that conference be held April 7, 1981. Currently there were two contentions remaining--(1) seismicity and design for that seismicity and, (2) emergency planning and the capability to evacuate according to Federal regulations. They expected the hearings to take four to six weeks and, after that, a period of time for the licensing board to make their decision. They would then have to wait for Appeals Boards to make a decision and then wait for the Commission to take the matter under advisement and subsequently make their decision. Prior to TMI (Three-Mile Island) this was not required. They asked that the Immediate Effectiveness Rules be rein- stated so that when the licensing board made their decision, they could load fuel. If they could do that, another 90 days would be reduced from the NRC schedule for such plans. Another point of contention was the fact that their schedule for loading fuel was mid-October 1R81 which was in conflict with the NRC schedule. The appro- priations subcommittee had them getting their license in April of 1982 based on their schedule. Their schedule ($CE's) was dependent on getting the im- mediate effectiveness rule reinstated. Their schedule was optimistic and aggressive, but they believed it achievable and thus were'saying October of 1981. 81-449 City, .Hall, Anaheim~ California - COUNCIL MINUTES -March 19~ 1981, 7:00 P.M. Councilman Bay asked if the contentions on San Onofre were out of the ordinary as compared to Palo Verde. Was Palo Verde getting the same type of delays and reactions as San Onofre. Mr. Dietch answered that Palo Verde was not nearly as complete as San Onofre and they had just recently gone into their contentions. It would be difficult to compare the two projects at this time on a contention basis. Mr. Hoyt then asked Mr. Wynn Peterson to discuss the economic benefits to Anaheim from the additional participation in San Onofre and if there were a~y particular differences from the last time. Mr. Winston Peterson, R. W. Beck & Associates, stated as they had discussed and studied the participation by Anaheim in the project before when they a acquired a 1.6% interest, they projected the savings to the City at that point in time at the issuance of the last bonds to be in the order of $48 million in the first ten years of operation, as opposed to continuing the purchase of all requirements from SCE. In the purchase of an additional 1.5%, the analysis would be almost parallel to what they did before depending on some things that had yet to be determined, such as the total purchase cost and the terms and conditions of the purchase. However, nothing had basically changed but the overall economics or construction of the project which seemed to be a very good project. Previously they had taken into account additional contingencies which allowed for a ten-month delay in receipt of an operating license. The six- month delay which had occurred had taken a portion of that contingency with four months of contingency remaining. With that contingency, they still showed a significant savings. It was their belief that acquisition of a 1.5% interest would show additional significant savings to the City with the caveats of what kind of a sales agreement could actually be put together. He stated they believed it looked like the same deal the City had before--outstanding! Mayor Seymour asked if he was saying, that the basic economic assumptions they made for the previous 1.6% interest would still hold for the subject proposal. Mr. Peterson answered the fundamental assumptions in some cases had changed but the interest and financing costs on both sides of the equation for both Anaheim and Edison had gone up in the same ratio. That was. the only basic element that had changed in the entire procedure of evaluation. If both went up concurrently, the relative merits were still constant. Councilwoman Kaywood asked in the event there was a delay, would that affect Edisonls cost the same as Anaheim. Mr. Peterson answered it would affect them in the same direction and in approx- imately the same relation. It would drive the total cost of the project up and the City's total cost would be the same for the same reasons. Councilwoman Kaywood asked for clarification that in the event Anaheim were not to be involved in the project, if Edison's cost increased, would the cost of the power Anaheim would have to purchase rise accordingly. Mr. Peterson answered he was certain the increased costs would be reflected in the rates. Anaheim's cost for the purchase of power from SCE which they would be purchasing, despite their participation in the project or not, would reflect increased costs due to delay. 81-450 Cit~ Hall,. Anaheim~ California - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. Public Utilities Board Member Carl Kiefer asked if the ad valorem tax situation would he higher on this element of the project. Mr. Peterson answered that ad valorem taxes were a very small increment of the overall cost. They may be somewhat higher, but not dramatically so. Mr. Hoyt then called upon Mr. James Lowry, James J. Lowry & Associates, to explain how they would go about the options that were open to them for finan- cing the project, along with his recommendations as to the kinds of financing f.lexibility they needed to make the arrangement go. The only problem was that they would potentially be paying money to SCE prior to their having received all of the approvals to transfer the ownership interest to Anaheim. They were optimistc and Mr. Watts had spoken with representatives of the NRC in the legal department as late as that morning. They suggested a procedure by which they could file an affidavit when sending the application for trans- ferring the ownership interest indicating ~hat they had just gone through an anti-trust hearing so that they did not need another anti-trust hearing nor did they want one. The indication was that they (NRC) would endorse that purchase and pass it on to the Attorney General and if the Attorney General did not hold an anti-trust review, they could save six months off the schedule. The outside chance did exist that they did not have the approvals and thus would have to structure any financing, if that unlikely case occurred, so that Edison would return the money to them and they would have some way of retiring the notes or debt they acquired to enable them to get the money in the first place. If they did a one-year borrowing and at the end of that year they were three months away from it, they would need some place to be able to go in order to carry themselves for the next three or four months. Mr. Lowry would describe that. He had also made a particular effort of indicating to both Mr. Lowry and Mr. Long, proposed bond counsel, that the Council was very much concerned that the community be protected against issuance of any debt not approved by the elec- torate. They assured him that they could write that language. Mr. James Lowry, President James J. Lowry & Associates, stated, assuming that SCE and Anaheim were going to come to an agreement upon terms whereby they were going to enter into a contract to Purchase a portion of the San Onofre facility, the next concern was how they were going to pay. In the past, the City floated long bonds for a portion of the project. Once again, they could proceed the same way. The problem was that Edison wanted the money before NRC approval and Anaheim could not get ownership until they received that approval. Therefore, they had to structure a mechanism whereby they could enter into an agreement with Edison and achieve their purpose in getting their money before NRC approval and yet Anaheim would be in a position where if the approval.was not received, they would not jeopardize the credit of the Utilities system or if NRC did approve, they were not in the position of paying a superfluous interest rate. The structure of the transaction should be such that the cost would be minimized. If they were to go out and sell long-term bonds without knowing if they were going to get NRC approval and had to make some kind of a provision to retire the debt, it was a "heads, the investor wins; tails, the investor wins" situation and conversely, Anaheim would be the loser, especially if they did not have NRC approval. Conservatively speaking, borrowing costs would be about 50 basis points higher on the cost of the project because the ultimate investor would not know what he had, whether a 30-year bond or a i0-year bond. 81-451 City Hall, Anahe'.zm, California - COUNCIL MINUTES - March 19, 1981, 7:00 P.M. There were some problems with California law. If there was a call provision on bonds, they had to be retired at the first refunding date and the investor would be looking at a 10-year bond for certain. Going into a period from high interest rates to low interest rates, in all likelihood they would want to set up the transaction so that there would be no call provision and if they were to refund the bonds, they would be refunded through a purchase of government securities which would be escrowed to defease and discharge the outstanding obligations. The problem with so doing would be that the refunding issue might not take place until a year or two after selling the original bonds and in a period where interest rates had declined significantly, thus incurring m real differential. For example, it would be like buying 7% governments to discharge a 10% municipal commitment. Ever since they started to review Anaheim's utility situation, they had recom- mended that Mr. Hoyt approach the City Council and request the ability to sell short-term obligations. He agreed that should be a product of what the voters approved with respect to long term bonding authorization and the short-term indebtedness ought to be tied into the long-term authorization. The short-term authorization as they saw it gave the "tails, you win; heads, they lose" type of situation with respect to the~financing of the project. They would structure some type of indebtedness which would allow them to fund the instrument with long-term bonds upon NRC approval or, if there was a hang-up where they would be in a position to roll the debt once again so that Anaheim would not face the possibility of technical default on its obligations. In any event, they should allow the Utilities system to enter into short-term transactions, since it would greatly enhance their flexibility. Another thing they would not have and which they should have was the ability to refund. It appeared impossible for somebody to engage in a refund trans- action where they could make a significant amount of money where even the issuer, the City itself, could make a significant amount of money at the expense of the Treasury Department. He felt they ought to look at a refunding in terms of the following: It was possible that they could move into a period of much lower interest rates. The 8% bonds the City sold not too long ago, running new numbers of a refunding scheme, they might want to do so because they could sell 6% bonds. For example, if the savings to the City was $2 million, it would be unfortunate if Anaheim would not have the wherewithall to be able to take advantage of a change in the interest rate structure due to a more conservative fiscal or monetary policy. There were refundings used many times for more technical reasons, the most notable with indentures to defease the outstanding obligations. When talking in terms of a refunding, in general, they were not talking about selling more bonds than those out- standing. With refunding they would sell fewer bonds than they were going to discharge. It was because the IRS Code would allow them to purchase governments at a rate of interest which was equal to the refunding issues so that the transaction was not really interest rate-sensitive. Because the Treasury bonds were generally outstanding at a much higher rate of interest than a municipal bond, they needed to purchase fewer Treasuries to discharge the outstanding obligation and, therefore, sell fewer number bonds. They had to look at a refunding the same way as short-term financing, just to enhance the financing flexibility of the Utilities system. 81-452 City Hail, Anaheim~ California - COUNCIL MINUTES - March 19~ 1981, 7:00 P.M. When purchasing something or selling bonds, the only way they could make a true computation of the cost of capital was through a present value analysis of the retiring of principal and the payment of interest through time. This was the true interest cost and very much of an exact science. By putting them- selves in a position where they were compelled to sell, for example, 8% coupon bonds even though the bonds could be sold down in price, they were putting them- selves at a disadvantage once again with respect to future financing flexibility. He would hate to think they would have to sell another $80 million worth of Anaheim Electric Revenue Bonds with a retention provision of 95 on the term bonds and say that would not penalize them in the present market--it would. ~hether they sold 8% bonds at a dollar price of 90 or 80 or 9.5 or 10's of par, they were going to be taking the approach which gave them the lowest cost of capital and the lowest cost of capital would always be derived through what the market found most acceptable and which would also allow financing flexibility. In concluding, Mr. Lowry stated they were of the opinion that the recommendations Mr. Hoyt was making would not only achieve the purchase of an additional share in San Onofre at the lowest possible interest costs, but also it would enhance the financial flexibility of the Utilities system which had to enhance its ability to reduce ±ts overall cost of capital in the long run. Mr. Hoyt then asked Mr. Lowry to address the problem in America today relative to long-term debt and how the institutions were looking at 15 to 20 years as being long term and one of the reasons they might need refunding if they wanted to structure a debt over the useful life of any project. If they could only sell bonds of 20-year maturities, they might put a balloon payment in at the end of 20 years, the idea being to refinance that. For example, if a 30-year life was involved, they would sell 15-year bonds with a balloon payment and then refinance that payment over the next 15 years to spread the cost over all of the people who would benefit from the project. Mr. Lowry then gave an extensive dissertation of the aforementioned subject as requested by Mr. Hoyt at the conclusion of which, Councilman Bay asked, when talking about going to a 30-year life project and in 15 years a balloon pay- ment., refund, refinance and then go to the other 15 years, the political problem was how to tell the voters the total cost of the project under that condition. Mr. Lowry stated that the attornies might be able to work out language where, if they were to take advantage of refunding flexibility because they were going to sell a 15-year balloon, the original voters' authorization would be tied in some way to the comt of the p=oject. The problem now was that relative to the authorization, people thought they were tying it to the cost of the project and~ to a large degree they were. What they were also saying was, we are mot going to allow you to sell more debt than what we have already authorized. In truth, if they authorized $80 milliom worth of bonds for 30 years and sold $80 million worth of bonds for one year 30 times, in a true analytical sense they would not have sold any more bondsl What they were really doing, they were going to be paying a rate of interest for $80 mfllion over some period of time. There should be a way in which they could have maximum financing flexibility and also tie the cost of the project into a bond or note flotation, so that there would be flexibility in terms of the instrument they wanted to sell and how often they could sell that instrument, but by the same token, the instruments would be tied to the specific cost of the project at what they envisioned at that time. The language was going to be very complicated. 81-453 City Hall~ Anaheim~..California - COUNCIL MINUTES - March 19~ 1981, 7:00 P.M. Mayor Seymour stated in the entire financial spectrum, they began to talk short- term financing with a balloon payment coming due, rather than what they had become accustomed to over the years, long-term, fully amortized financing. There was no certainty they would be able to refund that or if they were able to refund it, perhaps it would be at 1,000 basis points higher than the last one. He asked if that would not distort a major portion of the benefits for which they began the process in the first place. Mr. Lowry stated he could not disagree there were a couple of things that were for certain. Relative to the way municipalities conducted their financial ~ffairs, they were on the threshold of a change and it was going to be with them for 20 or 30 years. Therefore, they were going to have to be able to respond to the forces that were changing in the marketplace. If they had the right to refund a 20-year bond issue, for example, between the sixth and 20th year, it was reasonable to assume, especially if they were in a period where there were unforeseen events which caused interest rates to react, as business- men they could say, some ~ime within the year six and 20, they were 90 to 95% certain they were going to be able to reduce the borrowing costs of the project. Even if they decided they did not want to do that and laid out all of the alternatives, they were in a position now where they could not do that because they did not have the flexibility. They did not make the decisions, the City Council did--they just provided the options. If there was no decline in interest rates which they did foresee, they could come up with numbers, even if they were wrong by 75% or 50%, where they were still going to come out ahead of the game. There was going to be some chance involved, but it was a chance they had to take because the numbers were so overwhelming one way vs another. Councilwoman Kaywood .asked if there was a minimum time for holding the bonds, for instance, two years or five years, before looking at refunding. Mr. Lowry answered they could be refunded almost anytime and they could do so repeatedly, but in the State of California the bonds had to be returned at the first refunding date. Councilwoman Kaywood asked if there would be a problem in the ballot language by stating the.refunding would be to the best advantage of the people without getting into the specifics of the matter because it was such a complicated issue. Mr. Lowry did not think there would be a problem to state that the Utilities system and the City were going to enhance their financing flexibility and by so doing it was reasonable to assume they should be able to have lower costs rather than higher costs. Mayor Seymour stated he did not agree with the last portion of Mr. Lowry's statement. He stated "reasonable to assume" would lead one to believe that it was not possible to go broke. If they were going to reasonably assume that it would always be profitable because the Council or financial advisor made the decision when to refund and when not to refund or not conforming to a financial pattern that needed to be conformed with when running a public cor- poration vs a private corporation. He did not think they could tell their voters they were always going to make the right decision, they were not. 81-454 .City Hall, Anaheim, California - COUNCIL MINUTES -March 19, 1981, 7:00 P.M. Mr. Lowry stated if they were to leave the refunding question aside and asked themselves--do we want to have the right to refund an issue if interest rates decreased significantly--do we want to have the ability to be able to create a short-term instrument of indebtedness for the San Onofre project so that they would not be penalized. He felt that was what they were talking about in the refunding issue more so than whether they should be selling 20-year bonds vs 30-year bonds. They did not have that option, but they could be in a period of time where 30-year bonds were selling at 20% and 20-year bonds were selling at 10%. Mayor Seymour stated that a conflict was involved and he understood where Mr. Lowry's expertise was coming from. If he were advising the gentlemen from Southern California Edison, he (.Seymour) was certain that was very sound advice. They were running a private corporation, but running a public cornora- tion was different. There were only two reasons he had been able to under- stand for the citizens of Anaheim to own their own utilities--interest on cost of borrowing was less and they did not face the same tax structure. Other than those two factors, there was no reason for them to be in the utility business. Mr. Lowry was saying, because of the rapidity of change in the financial market, they needed a new tool. He supposed that they did, but since they were a public corporation, he was not so sure that the voters wanted to entrust that tool in a public corporation environment. Mr. Lowry explained if the municipal bond market was a taxable ma=ket, he would not have the concerns that he had, but it was a tax-exempt market. To be a participant in the market, you had to pay taxes. The municipal bond market was discontinuous at times. For example, it was entirely possible that Edison could be sitting in a market environment where it was discontinuous and they were saying, we want to sell you a project, R. W. Beck was saying the City was going to save $I00 million in the first five years if they bought a portion of the project--but they could not finance it because they were locked into a 30-year amortization schedule, since that was the life of the project. The only thing they were saying, there was a possibility they might find them- selves in a position not to be able to take advantage of purchasing even having done a cost benefit analysis. Councilwoman Kaywood again expressed her concern that the issue was a very complicated one to have to explain. However, it needed to go on the ballot and there had to be a way to explain it. She also felt that people were wise enough to vote someone in or out of office who was not acting in the best interest of the City. If a Council made a mistake in judgment on a particular issue, that was no reason to hang them. She did not see how they could make a deliberately bad decision. She felt that without having the flexibility necessary, it was a total disservice to the people and it rendered the Council unable to make any decision. Mayor Seymour asked if they went out for anticipation notes on the specific matter being discussed, would there be some type of written commitment as to what price they would be able to refund those at. Mr. Lowry answered "no". They would be selling the notes and there were many reasons for so doing. Here they were talking about selling notes because they were going to fund it with a long-term bond. That was only a possibility. They were not saying, sell notes because the markets were going to be better 81-455 City. Hall~ Anaheim~ California - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. a year hence. They were saying, sell notes because they were not sure whether they were going to be able to buy the project, but yet Edison needed their money. If they sold long-term bonds now, and they did not know whether they were going to be able to buy the project, that was far more im- prudent to go out and sell the notes now and say they were going to take a chance in the future. Ail other things being equal, by selling the bonds now without NRC approval, they were going to incur a 50 basis point penalty in interest rate. Not only would they incur that kind of penalty, but also some very fundamental problems with respect to financing flexibility with the securities as to when and how they were going to discharge the obligations. %hey were saying, why sell $40 million worth of 30-year bonds if they did not even know they had to. Mr. Hoyt explained if they sold some short-term financing, it would say that the whole thing would be due in a year or one and one-half years and they would carry it at some specific interest rate or some specific calculation, two-thirds of prime or 8½% notes, so that the cost of the notes would be specifically measurable at the time they were issued. The next question then would be, if they rolled them, would they know what they were going to be able to roll them at which would be dependent upon the market at the time. If they took them out with long-term bonds, that too would be dependent upon what the market was at the time so they would know for sure what the price of the notes were. When the time was up, say a year, they would owe whoever they borrowed the money from $45 million with the agreed upon interest. How they took them out was where the uncertainty arose--where the market was at the time and the instrument they took them out with would determine that cost. Mr. Lowry stated they were not talking about selling notes to play the market, but selling notes or carrying out the transaction in that way because it was prudent financial practice for Anaheim and would enhance the way they were serviced in the market with respect to borrowers. They were also not talking about interest rates but how they could provide funds without embarrassing Anaheim. For instance, if they really believed they were going to get NRC approval in 12 months, they would sell 15 months to give three months of leeway just in case. If subsequently they found out they were not going to get NRC approval for 20 months after the notes were outstanding and they still wanted to buy the project but the notes would come due in 15 months--what would they do. They were saying that they would roll the notes for another six or nine months. The Mayor asked how many times they could roll the notes. Mr. Lowry answered that they should have the ability to roll the notes an unlimited amount of times. The money markets having tax exempt notes had a very stable yield curve to it, the shorter in time, the lower the rate of interest. It also responded to maturity dates upon which he elaborated. In finality, they were saying, give us the flexibility so that the Utilities system could participate in a prudent financial plan. Mayor Seymour, speaking to Mr. Hoyt, stated he would personally like to see a comparison of anticipation notes to rolled and then into some type of long term as compared to traditionally what they had been used to, assuming the defeasance cost thereto. 81-456 ' City Hall~ Anaheim~ California - COUNCIL MINUTES - March 19, 1981~ 7:00 P.M. Mr. Hoyt asked for clarification that he meant a cost comparison of the various ways of doing it; the Mayor confirmed that was correct. Councilman Bay stated that what he was hearing was, they were trying to manage and run a utility with a funding system that was almost a dinosaur in the mar- ket. Not to give those flexibility tools to management or a decision of the Council to use it within those time periods where they could move rapidly was costing them a lot of money, and it would cost them a lot more in the future. Mr. Hoyt stated that could be the case although he did not know that was the c%se right now; Councilman Bay stated every bit of logic pointed to the fact that it would. Mr. Lowry noted that on the last deal, if they did not have the 9.62 average retention price or 95 and they wanted to refund, that was a $5 million cost that they would have incurred because they had an 8% coupon on it, and the Council was not empowered to change it. Councilman Overholt stated his understanding of the concern expressed primarily by the Mayor on authorization to get into refunding issues was that that "tool" could be used by some Council in the future to rewrite the deal and release cash flow for purposes other than originally intended, to service the debt. He asked the Mayor if that was not his concern. The Mayor answered, it had been done in the past. That was only a part. The other part was that if the voters were willing to have the Council granted the power to do as they wished, that was one thing. If they were going to go to the voters with some fixed numbers of cost of borrowing, return on elec- tricity generated, as compared to buying wholesale, and in essence saying this was a $48 million bonanza for Anaheim over the next ten years, if they had refunding capability, they could not legitimately make that statement. Nobody could predict what interest rates were going to be in ten years. Councilman Overholt then asked why they would ever get into a refunding program unless they were doing so to reduce the cost of borrowing money. Mayor Seymour stated, as he understood it, they might not have a choice but to refund, since there was a balloon payment coming due. Councilman Overholt stated the problem there was that they had a form of financing that had a balloon, but if not and if amortized over a 30-year period and they used refunding to cut down their investment costs, he questioned what was wrong with that. Mayor Seymour stated that he would totally support that if, in fact, the bottom line was--the only time they could refund or refinance an issue, and the question was on the ballot last time, it was clearly spelled out--a lower interest rate, no extended maturity, and only for the outstanding principal and no other reason. 81-457 City Hall~ An. aheim~ California - COUNCIL MINUTES - .March 19~ 1981~ 7:00 P.M. Councilman Roth left the Council Chamber. (5:10 P.M.) Public Utilities Board Member Carl Kiefer stated one of his concerns relative to the economics of putting the rate savings back into the rate payers pocket, was that they had seen on the initial purchase of San Onofre some sliding to the right and most had been generated by new and tighter regulations, delays, etc. He wondered whether R. W. Beck had the same degree of confidence in the projected Edison schedule relative to when they were going to generate and get the lower priced power and thus, savings back to the taxpayer. Did they feel that schedule was reasonable. Mr. Peterson stated the Utilities had expressed the last time a concern about the schedule and did plug in a contingency of 10 months. He felt that Mr. Dietch's presentation today indicated that there was still some disagreement on schedules at the NRC and thus there was some potential for additional delays on the project simply due to the licensing process. On the other hand, three new regulator changes had been proposed in the regulatory guides for the NRC operations all of which would dramatically enhance the scheduling of the l±censimg process. Whether those could come into effect and have any real benefits to SCE or San Onofre he did not know. They still felt fairly confident that somewhere at least within the NRC schedule for licensing of the project by April of 1982. It was reasonable to expect that it would certainly happen before then. If delayed all the way to April of 1982, the costs of that type of delay were not enormous at all, and they had provided for a significant portion of those already. The cost benefits of San Onofre would still overwhelm any cost they might see for that term of the delay. Mr. Alan Watts, Special Coumsel, then elaborated upon why it seemed reasonable to expect that the licensing process, if not improved, would at least not be delayed further as relayed to him by a staff member in NRC. Public Utilities Board Member Richard Haynie asked, if that be~the case, why Edison would want to sell. Mr. Jim Pignatelli, Treasurer's Department, Southern California Edison, explained that basically they had a very heavy construction and financing schedule this year. In the interest of helping them meet that financing schedule, they felt this was an opportunity they would extend to Anaheim. It was a way of them raising some mecessary capital. Mayor Seymour stated what he was hearing from Mr. Hoyt when he introduced his recommendations, as well as his reports, seemed to him that what they discussed last Friday in the Liaison meeting may have changed somewhat or perhaps he did not understand clearly at the meeting. He was under the distinct impression that, im essence, the terms of purchase would be the same as they were with the 1.6% intezest. Now what he heard from Mr. Hoyt was that perhaps there would be some tax consequences on the SCE side, etc. Mr. Pignatelli stated they must go back to the 1.66% interest and the background of that in relationship to what was transpiring at this time. The agreement at that point in time was for them to sell at book cost what they actually had invested at that period. After that transaction was made, they were aware of certain difficulties in the basic book cost that would cause them to actually 81-458 City Hall~ An. ahe. im~ California - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. lose money on the transaction. There were certain expenses that were capi- talized on the books, but expensed currently in the tax return and those bene- fits flowed through to their rate payers. By selling at book cost, they in- curred a tax exposure and had to pay a tax liability to the IRS equal to the tax benefit previously passed to the rate payer in the form of lower rates° They considered that an additional cost of the transaction and they wanted to negotiate that in the present transaction. On Friday, they never came to an agreement on cost but were talking concept. They were looking for a deal that was mutually beneficial. They needed to meet and felt they could hammer out an agreeable resolution on cost before the Council meeting on next Tuesday. Mr. Pignatelli also felt it incumbent to clarify one thing. They had been using NRC approval a little loosely. It was really NRC approval for the City to enter into the ownership of San Onofre but had nothimg to do with the lic- ensing. From some of the conversations that counsel had with Washington, it seemed that the approval could be forthcoming within the year. Their hope and needs were for the transaction to be funded this year. It might prove to be a good point if matters moved expeditiously° Public Utilities Board Member Joe White asked if they could get a figure on the maximum amount the project would cost them, what SCE was going to sell it for. Mayor Seymour stated that Mr. Hoyt was talking in the vicinity of $80 million; Mr. Hoyt stated that was in terms of structuring a bond issue and they could probably do it for somewhat less than that. He would hope that it would not exceed $80 million. It was difficult to answer because they had to discuss the matter with SCE. Mr. Pignatelli stated $80 million was imflated even to them because they were talking about a capital cost contribution or payment. Mr. Hoyt stated the next thing they proposed to do, the Council had asked that they prepare some material that would indicate what their load looked like, what percentage of their load would be served by the resources they had going now, what their thoughts would be and what his plans would be for the future acquisition of load. Basically, they would be full of base load by the time they put the present deal together, with the possible exception that if the Palo Verde project came together, it was such low cost energy, they were going to work hard at that.' In terms of additional base load energy, they were simply not looking for more. They were already participating in some projects which he named which were base load projects. They were going to try to get the best leverage out of whatever projects they did study, but they were not looking for an additional base load. ~ They were asked specifically for that information and it had been provided under report of March 16, 1981--subject: An Informa- tion Presentation On Generation Projects Under Study (on file in the City Clerk's office.) Mayor Seymour stated he appreciated the imformation but did not see the impact of that question having anything to do with the SCE deal. He preferred that they concentrate on that. Councilman Bay stated he did as well but they also had a time constraint if they wanted to consider placing something else on the ballot they were talking about, a June ballot with a deadline of next Tuesday, March 24, 1981. With reference of Item No. 3 in the March 19, 1981 report possibly going on the same 81-459 Ci..ty Hal. l, .Anahe'.zm, California- COUNCIL MINUTES -March 19, 1981, 7:00 P.M. ballot, he could not see spending the money for that special ballot and not using it to the best advantage. Number 3 talked about the 8% limitation on the remaining unissued revenue bonds. He asked the dollar amount of those bonds that could be changed and used. Mr. Hoyt answered, $47.5 million which was the remainder of the $150 million authorization that was authorized but unsold. If they brought their own capital to the table on the Palo Verde project, it would roughly be around $30 million. Councilman Bay stated, therefore, that Item No. 3 became important on the ballot fr°m a potential that if they could remove the 8% limitation on the same ballot and possibly open those funds up to be used for Palo Verde if they wanted to, it would be critical in getting it on the ballot by June 2 or losing that also. Mr. Hoyt agreed that they needed to do it for whatever opportunity may appear and Palo Verde was a good one. It was likely that they could negotiate or try to negotiate their way into it. Councilwoman Kaywood stated she saw the problem of having one question per ballot each time. It was true that they could devote more time, education and energy to one ballot measure but where they were all related and all, if not critical, were important and if not voted on at this point, would become criti- cal at a following election. They no longer had April of even year elections to work with. By having changed to a June election, June of 1982, for example, they would have elections for the Governor, Supervisors, Senate and three seats on the Council. As had happened in the past years when she looked to combine a municipal election with another question, the majority of the Council, and mainly those who would be running on the ballot, did not want to confuse an election of candidates with an issue. At the time the Charter was written, certain things were different than they were today. In order to maintain a flexible way of controlling and benefitting the Utilities and the City, these questions needed to be asked and had to be revised in the Charter. She did not see anything wrong with doing that and would prefer to see it happen. She saw a deadline on almost all of the questions and many millions of dollars being wasted if it could not be done. If they could get the wording down properly and be satisfied it was a clear question on the ballot, she would like to see it done together this June. A November, 1981 election was very "iffy" at this point. If they combined with the School District, there was not a lot of savings involved. To spend $100,000 for a Special Election and then again SDO0,O00 for another, she would find that hard to justify to the voters. Mr. Hoyt then stated that as a result of their discussions today, he would like to add at least one additional recommendation--that being that they schedule a ballot measure which would provide for short-term financing and that they be instructed to go back and draft that language so that they were protecting the community in the ways described. From what they heard today, it was necessary to complete the deal. Mayor Seymour stated he felt it would be appropriate for the Public Utilities Board and Council to express themselves as to how they felt at this juncture about what was being proposed so that the gentlemen present today could be busy between now and next Tuesday. 81-460 City Hal. l~ Anaheim, California - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. MOTION: Mr. Dale Stanton thereupon moved that the Public Utilities Board adopt the recommendations in the report of March 19, 1981 from the Public Utilities General Manager. Before any action was taken, Mr. Stanton explained that he was at a seminar this past weekend on energy where Mr. Dietch spoke and made a statement that he did not make today. His opposition was a Mr. Hachett from the NRC. Mr. Dietch was talking about San Onofre Unit 1 running since 1968, or 12 years at 75% efficiency and in 1978 operated at 85% efficiency. In doing that, it generated electricity at 1.7¢ per kilowatt hour. In that same time frame, ~il and gas was 4¢. It looked to him that the proposition, if the finances could be worked out, was close to home, the transmission was short, and it would be a very good deal. Mr. Hoyt asked if the motion included the recommendation with regard to the short-term financing. Mr. Stanton answered "yes", he would include that. Mr. Haynie then asked, if the questions went on the ballot as separate measures and the public said they wanted to buy into the project, but did not want to go to a different way of financing, what were they going to do. He was wondering if it would not be smarter to have the questions as one package. He did not know how they could put the question on the ballot taking the chance of it being defeated by not being allowed to change the 8% interest limitations. Mayor Seymour stated that had been his position from the inception. He felt this was such an important issue to the citizens of Anaheim that at least at this juncture, he was reluctant to mix anything around it. He would prefer a "rifleshot", rather than a shot gun approach to the ballot. They were talking about a potential savings of over a ten-year period of $48 million--S100,000 for the cost of an election was "peanuts" compared to those savings and his concern would be confusion. He reiterated the issue was so important he would be hopeful at least at this point to see the issue as narrow as possible on the ballot. Councilman Bay stated it would not be necessarily probable that they could leave out Item No. 4 in the report if they were going to go with No. 1. The way they were looking at it, they would almost have to have some short-term securities in with that. He questioned if they might not combine Item No. 1 and 4 into one issue because they went together. Number 3, however, was talking about the other points and although related, it could be a separate issue. They could go with two ballot questions--Number 1 and 4 combined and then put 3 on as a second issue that would give the opportunity to have the flexibility to go after Palo Verde or some other opportunity that would come along in the meantime. Mayor Seymour suggested to the Board, what they needed was maximum flexibility from them because of the close time frame. On the other hand, if they were willing to recommend maximum flexibility which would be all of Mr. Hoyt's recommendations, now would be the appropriate time for them to share their personal concerns relative to that flexibility. 81-461 City Hall, Anahe'.~m~ Califo.rnia - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. Mr. Kiefer meconded the motion made by Mr. Stanton. Mr. Joe White stated he thought the $47.5 million remaining from the bond sale of $150 million in 1975 for generation projects was going to be a part of the present proposed $80 million bond issue. Under those terms, he would have no objection. He wanted to see the $47.5 million included in that $80 million. Mr. Hoyt explained at present on any kind of long-term basis they would have great difficulty in selling that $47.5 million. He tried to convey some of the information he received from Salomon Brothers the managing underwriter on their l~st sale, relative to that aspect (.see Page 3 of March 19, 1981 report): "I have recently discumsed the marketability of our existing authorized but unsold Electric Revenue Bonds which have an 8% coupon limit. Salomon Brothers have informed me that in today's market, we might be able to sell twenty-year bonds at a 17.5% discount, and twenty-five year bonds at a 20% dimcount to produce respective yields to investors of about 10% of the twenty-year bonds and 10.20% on the twenty-five year bonds. A 20% discount would reduce the usable amount to $38 million." After a brief discussion between Mr. Hoyt and Mr. White on the foregoing point, Councilwoman Kaywood asked for clarification relative to Mr. Stanton's motion. She wanted to know if it included all of the issues on the ballot. Mr. Stanton answered that it included recommended Items 1, 2 and 3 in the March 19, 1981 report from the Public Utilities General Manager and Item No. 4 to be the ballot measure which would provide for short-term financing as articulated by Mr. Hoyt. Public Utilities Board Member Jim Townsend stated he agreed with Mr. White relative to changing the percentage on the bonds. He also believed when it came to major questions like bond issues, the public was more concerned about whether or not to approve the overall project, rather than getting into the nuts and bolts of the management of those issues. He therefore agreed with Mr. HaYnie that they would confuse the issue by placing a number of issues together. He felt the public wanted to be involved in the question of ex- penditure of public funds but in going to the polls and voting for the project, they were relying on the expertise of the management as he did being a Board Member. He did not pretend that he was ever going to become expert enough to judge the day-by-day operation of the Utility to where he could supersede those whose job it was to run the Utilities. He felt they would be inviting problems by doing more than placing on the ballot the bottom line of what they would be asking the public to approve. By the same token, he would vote against the motion as p=oposed but might vote for it if it were rephrased and if it included Mr. White's suggestion to bring in and utilize the remaining 1975 bonds under refinancing. Councilwoman Kaywood asked him, even if the mmount were reduced by approximately $12 million as they were told previously would be the case; Mr. White answered it would not be so if they removed the 8%. Mr. Hoyt stated that was true. However, writing ballot language that would say, in the event that they did not get the 8% coupon changed, they would need different kinds of money than if they did get it changed, would make a very difficult question to pose to the voters. 81-462 City Hall~ A. naheim~ California - COUNCIL MINUTES -March 19, 1981, 7:00 P.M. Mr. Townsend asked if they had to present the change in the bond interest rate to the voters; Mr. Hoyt answered "yes". Mr. Townsend continued, in that case, their argument to the public, in his opinion, should somehow include it. Other- wise they would have an ismue that was going to sit there forever. Mayor Seymour stated he felt he understood where Mr. White and Townsend were coming from. They both felt that this was probably a good opportunity but would like to be assured that the money was gone after the deal was put together. He believed they had that assurance without going to the issue on the $47.5 million until interest rates fell to the point where they could t~hen be issued. However, as long as they were in the financial market they were in today, there was no way they could sell them. He reiterated, if they wanted to keep the present issue a narrow "rifleshot", they should try to get it done ±n one question rather than two. On the other hand, he did not think they could guarantee that the $47.5 million could not come alive when rates dropped down to 8 percent. At least they would have the assurance that it could not be touched in today's market. Further discussion took place on the latter statement by the Mayor during which Mr. Hoyt elaborated upon the information that Salomon Brothers relayed to him as articulated earlier in the meeting for purposes of clarification. Councilman Bay stated he heard the feeling expressed to wipe out the $47.5 million and try to make it part of the $80 million for the subject project. He did not agree with that. He felt in going to the voters on the San Onofre opportunity, that they go to them with that only as one ballot issue. He felt it had to include some words relative to short-term financing unless the Council was going to assume that the short-term securities were going to be approved by the Council since the matters were advisory and not necessarily required under the Charter, but required under a policy voted by the Council. The San Onofre pro- ject under Item 1 with the short-term securities added to it was one issue. The second issue was to change the interest limitation on the $47.5 million so that they would have a pool voted on by the public not designated to a specific project, but there and available to take advantage of opportunities that occurred on a short flow time basis such as Palo Verde. Mr. Hoyt stated one correction needed to be made. The things they were talking about now were not advisory, but all required a vote. The advisory measure that they presented on March 10, 1981 (see minutes that date) was an advisory measure as to whether the Council should enter into a contractual arrangement to pur- chase Palo Verde. He reiterated the present issues all required a vote of the electorate. Mr. Townsend stated there was no question in his mind of all the projects they were entering into or contemplating, San Onofre was probably the best bargain they had today. As Mr. Stanton pointed out earlier, based on the cost of generation as opposed to oil, gas and coal, it spoke for itself. He was not opposed to taking advantage of the situation that had been presented. By the same token, they had a great deal of money sitting in a bond issue that had already been approved that they were not going to be able to spend. He under- stood that it was money that was earmarked for San Onofre and not for Palo Verde or any of the other projects that would be coming before the Council at various t~mes if they materialized. 81-463 Ci[y Hall, Anaheim, California - COUNCIL MINUTES - March 19~ 1981~ 7:00 P.M. Mr. Hoyt stated it was not earmarked for anything. Mayor Seymour interjected and stated that there were very diverse viewpoints on the Board and he suspected even on the Council relative to the question of generation and how they would get there. It seemed to him, however, that they were totally unified in wanting to take advantage of the proposed opportunity before them. He suggested that they not get bogged down in their diverse interests and risk losing the opportunity before them. Councilwoman Kaywood wanted to clarify one thing Mr. Townsend said and she w~nted staff to correct her if she was wrong--that the $47.5 million was earmarked for San Onofre. The $150 million was for generation projects and not specifics; Mr. Townsend stated he agreed. Mr. Stanton then stated that he had a motion on the floor to accept the March 19, 1981 report which in substance covered the four points. However it appeared to him to approve acquisition of the additional 1.5% interest had to go along with the $80 million bond issue, point No. 2. He felt that was one vote because it was not possible to have one without the other. When it came to the 8% interest limitations, including the short-term financing, it appeared to him that perhaps those Were two separate issues and should be grouped together. His motion was to agree in substance, but not to mandate how it was to be executed on the ballot. Councilman Overholt asked if they did not make a recommendation on short-term financing which he understood was absolutely necessary to carry out the deal, were they to be making a recommendation without the Public Utilities Board's recommendation. Mr. Stanton clarified his motion covered all four items, the fourth being the short-term financing, but not how they were going to be presented on the ballot. A vote was then taken on the foregoing motion by Public Utilities Board Member Stanton. Board Members White and Townsend voted "no"; Board Member Anderson was absent. MOTION CARRIED. Councilman Overholt questioned if it was perfectly clear as to the position of the two dissenting votes. It was his understanding that both Mr. Townsend and White were in favor of the San Onofre transaction, but that their negative vote was based upon the fact that they felt the bonds presently approved to be used to finance part of that transaction. He asked if that was a fair statement, that their negative vote was not to be misinterpreted as a vote against the San Onofre purchase. Both Mr. White and Townsend were in agreement with Councilman Overholt's inter- pretation of their votes. Mayor Seymour indicated that no action was necessary from the Council unless they wanted to express themselves to provide further and more specific direction to staff than they already bad. A brief discussion the followed between Councilwoman Kaywood and Mr. Townsend. Mr. Townsend left the Council Chamber. (6:02 P.M.) 81-464 City H. all~ Anaheim~ California - COUNCIL MINUTES - March 19~ 1981, 7:00 P.M. Mr. Stanton asked for clarification as to what Councilwoman Kaywood said should be taken under consideration. Councilwoman Kaywood stated that the refunding issue would have to be voted on because the Charter could not be changed without it. It was an issue that could mean millions of dollars in savings to the rate payers. If they did not put it on this ballot, she asked when they would like to see another election for that It would be necessary to put it on a ballot at sometime if they ~ were interested in changing it. Did they want to see another special election on that question. Mr. Stanton asked if they needed to ask that in this election or was it going to add confusion to the voters. Councilwoman Kaywood stated that relative to the last $84 million bond issue that was passed (_$84 million City of Anaheim Electric Revenue Bonds, Issue of 1980) there was a possibility within three-years of refunding to same money. It must go on the ballot or it would not be possible to do any refunding under the~City's present Charter. Councilman Bay questioned whether this was the right ballot or not. They had to consider the risk of something like refunding being placed on the ballot when they were trying to take advantage of the San Onofre buy while at the same time changing interest limits on the other bond issue and trying to get short-term securities into the action. He was not saying "no", but it was some- thing that should be considered. At this point, however, he was curious after the Board just having passed the foregoing motion, what Mr. Hoyt would be bringing to them on Tuesday. Mr. Hoyt answered that they were going to try to put together some ballot measures, a combination of them combining the approval to issue $80 million or whatever the figure might be of long-term Electric Revenue Bonds. They would combine that question with a Charter amendment to provide short-term financing in a single issue which would make it complex. He asked bond counsel if that was going to be a problem and he indicated it was going to be complicated, but they could probably draft a measure. They would do it both ways. Mayor Seymour stated he felt what the Board recommended was a "full menu", but on the other hand, he thought he heard some reservations expressed on the part of the Board, the reason they recommended a "full menu" was to provide maximum flexibility in knowing what might change between now and next Tuesday. (.The Board nodded their consensus of the Mayor's understanding). He asked the Board, however, if they shared~the concern for not confusing the electorate in risking potential loss of the deal with Southern California Edison. Mr. Stanton answered that he did not want anything on the ballot that would risk their losing San Onofre. Mayor Seymour stated so that there would be no confusion, in his opinion, they made a deal in concept last Friday. What he heard today from Mr. Pignatelli of Southern California Edison and what they talked about Friday were two different things. He would expect that when the issue was firmed up by Tuesday, that SCE would be presenting through the Utilities to the Council the same deal they talked about Friday, including the "keeping Anaheim whole" concept. 81-465 City Hall.~ .Anaheim~ California - COUNCIL MINUTES - March .iR.., 1981, 7:00 P.M. Mr. Hoyt stated they had that direction and would do their best to carry that out. ADJOURNMENT - CITY COUNCIL: Councilman Bay moved to adourn. Councilwoman Kaywood seconded the motion. MOTION CARRIED. (6:10 P.M.) The Public Utilities Board then continued with their regular meeting agenda. LINDA D. ROBERTS, CITY CLERK