HomeMy WebLinkAbout02-83
RESOLUTION NO.
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A RESOLUTION of the City of Port Angeles
authorizing payment into escrow of the
City's bill for the City's current
obligations for Washington Public Power
Supply System Projects Nos. 4 and 5.
WHEREAS, the City of Port Angeles has received a bill
for six installments of $79,022.60, the first being due on
January 25, 1983, from the Washington Public Power Supply System,
based upon the City's 0.469 percentage ownership in the Supply
System's Nuclear Projects Nos. 4 and 5 and the termination budget
for those plants for the period of January through June, 1983;
and
WHEREAS, extensive litigation and controversy exists
over the validity and enforceability of the City's obligations to
pay these sums of money; and
WHEREAS, the City Council has considered the following
factors concerning the payment of these funds:
1. The Participants' Agreement between WPPSS and the City for
Projects 4 and 5 has been ruled valid by a Washington State
Superior Court, at least as to certain important aspects, which
ruling is the lawful interpretation of the agreement, until such
time as it may be reversed by a higher court;
2. The general rule of law is that a contract is presumed valid
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until it is determined otherwise, so that the remainder of the
contract, although presently not litigated, must be considered to
be valid;
3. Payment directly to the Supply System would probably result
in a loss of the money, since if WPPSS either paid the bondhold-
ers, or retained the money but went bankrupt, the City would be
unable to recover the monies; and
4. An escrow has been established by order of the King County
Superior Court, into which the City may make its payment for
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January and February, without penalty and without losing control
of the funds, should the City wish to withdraw the funds prior to
March 10, 1983; and
5. If the City fails to pay into escrow, or fails to pay
directly to wPPSS, interest penalties of 2% the first month and
1% for each month thereafter will be incurred by the CitYi
6. Payment into escrow will also avoid acceleration of the debt
against the City by WPPSS for reason of default, which accelera-
tion, under the terms of the agreement, may be able to be ordered
upon default of anyone participant as to anyone installment,
even though the bondholders may not have accelerated against
WPPSSi
7. The threat of acceleration of the City's entire debt, which
is over $10,000,000, is sufficiently significant, so that the
payment of the present installments, even though they may even-
tually be lost, is appropriate, in order to avoid an acceleration
of the entire debt;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF PORT ANGELES as follows:
Section 1. The City will make its January and February
payments into the escrow established by the King County Superior
Court, thereby avoiding all penalties, and avoiding, as much as
possible, the threat of acceleration of the debt.
Section 2. The City Staff is directed to seek, through
negotiations with the parties to the Chemical Bank litigation,
extension of the escrow device beyond the February payment, to
assure that the City may continue to make payments into escrow,
and still be able to assure that the money is not spent by WPPSS
prior to conclusion of the Chemical Bank litigation to determine
the validity of the contracts.
Section 3. This Resolution shall be reviewed by the
City Council at its meeting of March 1, 1983.
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PASSED by the City Council of the City of Port Angeles
February, 1983.
at a regular meeting of said Council held on the 1st day of
ATTEST:
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Marian C. Parrish, City Clerk
APPROVED AS TO FORM:
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