Loading...
1998-07-02 SPECIAL TOWN BOARD MEETING JULY 2,1998 3 :00 p.m. MTG.#32 TOWN BOARD MEMBERS PRESENT SUPERVISOR FRED CHAMPAGNE COUNCILMAN RICHARD MERRILL COUNCILMAN THEODORE TURNER COUNCILMAN DOUGLAS IRISH COUNCILMAN PLINEY TUCKER SUPERVISOR CHAMPAGNE-Called the meeting to order. Introduced Bob Hafner. ATTORNEY BOB HAFNER-You had asked us to come back because you wanted to talk about the Town of Moreau the proposed Water Agreement. The Town of Moreau has sent us back a revised agreement and we very, I very briefly went through it before and you wanted more time to think about the issues and go over it, I presume. So, why don't we start from the beginning and go their changes and see what the Board's opinions are so that I can respond to Martin Overdue the Attorney from the Town of Moreau. The Town of Moreau had taken the agreement that we had on our word processing system took a disk with it on it and made many changes and set it back. Overall this is closer to where we had asked them to come back then prior versions, But there are some big issues out, why don't we go through. First, the first main change is on page three on the bottom where they have added as you will recall we based our price and their purchasing one fifteenth of the plants effectively an interest in the plant equal to one fifteenth based on department of health's what they are expected to rate the plant at. And we had always used fifteen million and said if it comes up to be fourteen million nine hundred and seventy eight thousand so on or if it came out fifteen million you know, thirty two thousand so odd that it did not make, we were just going to use fifteen million and one fifteenth. What they have added is some language saying that when that comes out they want to use the exact number they want to be able to come in and negotiate if it is their favor but not give us the right to negotiate if it is not in their favor. I think that we just leave it tell them that this is the best of our knowledge it is fifteen million you are buying one fifteenth and that is where we are going to leave it so we are not fighting over nickels and dimes. That is what the board agreed. SUPERVISOR CHAMPAGNE-I think that is what we all agreed on that, that is ok. ATTORNEY HAFNER-The next substantial change is on page 5 which deals with again, to refresh them because I can see someone from the paper is here and they may not have all the same background that I bored you with many times. Part of the fifteen million gallon plant assumes that we will replace two low left pump motors. They have not been added yet because the plants is not going to need them until we cross using eleven and a half million gallons per day. But that a two hundred thousand dollar cost that has not be calculated in the purchase price that Moreau has gotten. What we have said is that Moreau was buying two twenty thirds of the increase that we just had and that they should pay two twenty thirds of the cost of these two low lift pump motors that are necessary to get us up to that fifteen million gallons per day. COUNCILMAN TUCKER-Where did the two twenty thirds come from? ATTORNEY HAFNER-When we start, when we have the plant before the expansion its capacity was three and a half million gallons per day, after the expansion it is fifteen million gallons per day so that is eleven and a half million gallons per day of an expansion. One eleven and a half is a lot harder than a half than two twenty thirds which is the same amount. So, that is where the two twenty thirds came out. What they have asked, they want to pay only one fifteenth of that two hundred thousand dollar cost and that is just is not how we calculated the price. SUPERVISOR CHAMPAGNE-It is a difference of a buck and a half. ATTORNEY HAFNER-We estimated the price without any markup without any risk that the town residents paid without any of the carrying costs that we have had and just let them buy in at what are actual costs were without any of those other factors and that is what this two twenty thirds is based on. I thought that town board had said to stick with the two twenty thirds. COUNCILMAN TURNER-You are right. ATTORNEY HAFNER-The next change is just at the bottom of the page they reference a wrong section it should be 8e. not 8B. I am going to skip some of the things that are not important from I think a legal or factual point of view, that is just wording, obviously we do not thinks hurts. The next go to page 7 this deals with the river crossing. Now remember one of our big issues was who is going to pay the cost of the river crossing that is we paid that cost, that would be an improper gift if we were not repaid for it. And they have revised the contract to have them pay for the river crossing and what they have wanted to clarify was that if they pay for the river crossing that we have to pay to make the improvements on them, in out own system to get it to the river crossing as the board probably will recall the town board had talked about it thought that making those improvements was good for the town for its own purposes to have future development in the area and how would some hydraulics SUPERVISOR CHAMPAGNE-That decision was made, I do not think we want to mess with doing decisions that we have previously agreed to. ATTORNEY HAFNER-But, this is the first time that this has been written in the contract, so that is why it is important to have UNKNOWN-The Big Bay and Big Boom road end ATTORNEY HAFNER-Yes. And there are reasons that as you said it was hashed out before but they put this in the contract but we will pay that cost for out own thing and they will pay for the river crossing. UNKNOWN-So, that is ok. ATTORNEY HAFNER-Sounds fine. UNKNOWN-the way it is written is ok, is that what you are saying? ATTORNEY HAFNER-On page 7 A As the long as the Town has not changed its mind on making the improvements on our side. (no) COUNCILMAN IRISH-Wait, it says they have the right to review and make recommendations on each others engineering specifications? COUNCILMAN TUCKER-How come? ATTORNEY HAFNER-It only recommendations, well what we are more concerned about is to have some input on their system and the water crossing. I mean... COUNCILMAN TURNER-That was in the other one. COUNCILMAN TUCKER-Yea, but they are paying for it. UNKNOWN-No but the two engeering... ATTORNEY HAFNER-The engineers and again Ralph I the way I understood is for when we connect that there is going to be some engineering some hydraulics some facts that we need to make sure are correct and they need to make sure and we need to make sure and this is just the way, neither has the right to order the other, but it is the way that they can work together. COUNCILMAN TUCKER-let him explain ...we got to make sure. WATER SUPT. RALPH VANDUSEN-All I want to make sure is that they are going to have an engineer do their work we are going to have an engineer do our work and they, this allows each of the engineering firms to make a recommendation to give the other firm information that they have specific to theirs to make sure the two are compatible it does not mandate anything. COUNCILMAN TUCKER-All we are responsible for is to get the water to the gate in the pipe line that goes in under the river, is that correct? WATER SUPT. VANDUSEN-That is correct. ATTORNEY HAFNER-Yes. COUNCILMAN MERRILL-they took out the word approved... ATTORNEY HAFNER-Because we told them that we would not give them that and again that is a sign that they have, we are starting I think maybe come together a little bit better. Moreau was going to seek the permits and we are going to help and provide them with whatever services we need to help with that process. CONTROLLER HENRY HESS-... in that paragraph, it says Moreau shall seek any needed permit for the river crossing etc. the next paragraph says Queensbury shall likewise obtain and likewise should refer to seek, we should be seeking. ATTORNEY HAFNER -Well actually I have and again I have just looked at that as a legal thing since we no longer have the responsibility to deal with the river crossing that we only have the obligation to help and that should be deleted that whole sentence. We no longer have responsibility, delete is what that says. COUNCILMAN TUCKER-Half the crossing in the Town of Queensbury. ATTORNEY HAFNER-Yes. COUNCILMAN TUCKER-They cannot issue a permit to the town of Moreau to come into the town of Queensbury and do their work and it is the army engineers that have got to issue the permit. SUPERVISOR CHAMPAGNE-DEC may get involved with this to. ATTORNEY HAFNER-They can issue it both of us, this is an intermunicipal agreement and they can take that responsibility and we have agreed to do what ever we need to, to work with them. COUNCILMAN TUCKER-a permit for work on our side of the river, right? WATER SUPT. V ANDUSEN- The potential currently exists that a portion in the Town of Queensbury we may have to playa role in. ATTORNEY HAFNER-And we will, that sentence just before that, Queensbury agrees to provide such documentation take such action as the governmental agencies involved may require. That is the language that I gotten in the past. We have to work together on the river crossing. SUPERVISOR CHAMPAGNE-I think the original thinking was that they are in a much better position since it is going to be their water with the GE issue up front it just seems that they go in and make the application with a little more strength than Queensbury. Then we can back it up and do whatever we have got to do to transfer that permit into the Town of Queensbury. But the lead agency, what we are saying, should be the Town of Moreau in order to proceed. ATTORNEY HAFNER-And they agree since they are going to pay for it that they should, that makes perfect sense. They in the next paragraph, paragrach C on the bottom of seven and top of eight they say that they own the river crossing which is good and they are going to maintain it which is what we have been wanting from the beginning, so that's seems like an improvement. On a bottom of page eight they wanted to make it clear that Town of Queensbury will not assess or level taxes against the river crossing. Which it is not inside our water district and .. COUNCILMAN TUCKER-What are the legal ramifications? ATTORNEY HAFNER-As long as we do not extend our water district to include where the River Crossing is it is not a problem, we just any time that we have a district we should make sure that it does not go from the border of the river into middle of the river which would be an uncommon thing I would think. SUPERVISOR CHAMPAGNE-That makes me think of Coles Woods. ATTORNEY HAFNER-Yes. Exactly, that is exactly why that is here. Is what I read between the lines. ... On the top of page nine, guarantee flow, again, in the past they have asked us to guarantee flow in specific terms we have always said that based on our engineer statements that we guarantee the full capacity of a million and a half gallons per day, at a hydraulic gradeant of five hundred thirty seven feet usgs. Now, that was based on what our engineer, O'Brien and Gere, stated, they want us to just guarantee it and they want us to increase that from a million and a half to two million. Which my recollection was that we couldn't even based on what our engineer said it was a million and a half at that number. If you went up to a million six it was a different ... and it was a sliding scale because Ralph can probably provide more background. WATER SUPT. VANDUSEN-The reality was that with the piping that has been discussed the model indicates that they can flow up to a million and a half a day. As soon as you go over that then a second line going all the way back to Corinth Road has to be installed to be able to accomplish that. So, based on the information that we currently have, if you make it one five zero, zero, zero, zero, one know that you will add to our capital cost. I think we should stay at the one five which is what we based it on. COUNCILMAN TUCKER-How much are they buying? WATER SUPT. VANDUSEN-Well, million with a million, COUNCILMAN TUCKER-That is all they are buying is a million. COUNCILMAN IRISH-What happens if they want to go to three million gallons we got to upgrade the pipe line ... WATER SUPT. V ANDUSEN-Ifthey want to go anything over one point five million the pipe line has to be increased, from the Corinth Road all the way out. As soon as they go above I do not know within the way of twoish, then they need a second river crossing and they are aware of that. Two million, the pipe that they are talking putting in will handle two million, once you go much above that then they will need a second pipe line. COUNCILMAN IRISH-What is the difference in cost for us if we to upgrade our side to handle two million just in case they.. WATER SUPT. VANDUSEN-At this point I do not know. What I would recommend COUNCILMAN IRISH-It does not make a lot of sense for us to do this now and then in five years they wind up wanting two million gallons a day and we have to.. WATER SUPT. VANDUSEN-On step one, step one was to just tie them in from Big Boom Road that will handle up to the close to a million gallons a day that they have currently purchased. I think before we decide to take step two which is link them together we ought to take a look at the cost and advantages and disadvantages of going in either direction of looping that together or what we are going to do. I think it is a mistake to make a committment now. I think we should stay at the eleven point five we are in the process of doing the hydraulic model of our system we are going to take a look at that it is a new engineering firm, have them take a look at those numbers. I do not think they are going hold up much different but maybe they will and maybe that will be able to change that slightly. I also think that under the old contract we were saying we were guaranteeing that pressure and that flow on the Moreau side of the River. I think we are in a different case now that Moreau is going to design the pipe that is going underneith the river they are going to own and maintain that totally out of our control I am not sure we can guarantee flows through that pipe. That would be absurb lets say that decide to put an eight inch pipe across the river there is no way that pipe is going to handle that flow. COUNCILMAN TUCKER-The only point that we should guarantee anything is our side of the river. WATER SUPT. V ANDUSEN-I think so. I think it is very reasonable for our engineers to provide the data that was used to calculate the flows to their engineers let them determine if they think that is valid or not. That is very easily done by the engineering firms. I think that is reasonable compromise, knowing the solution. Here is the data, let your engineers guarantee if they want to. COUNCILMAN TUCKER-Up front they are buying a million gallons. ATTORNEY HAFNER-Correct. COUNCILMAN TUCKER-Now, in my mind if they come along and want another million and we have problems getting to the million to them that should be their problem not ours....it does not say that we got to guarantee WATER SUPT. VANDUSEN-It says we have to guarantee up to one point five. UNKNOWN-We have got to have piping guarantee at one point five.. COUNCILMAN TUCKER-Big Boom Road will do that now. WATER SUPT. VANDUSEN-Tied with Big Bay.... COUNCILMAN MERRILL-Ralph it references at the pipe line at the Moreau side. ATTORNEY HAFNER-What he just said is that we should change that and I made that note. COUNCILMAN MERRILL-I think it should say the Queensbury side. ATTORNEY HAFNER-Again, we are basing on what our engineers had said a year ago. WATER SUPT. VANDUSEN-The engineers have said based on the sixteen inch pipe and based on a whole lot of things. . Moreau side, all I am saying is the equasion has changed we no longer have anything to do with that pipe line, so it is tough for us to guarantee what is going to happen through somebody elses pIpe. COUNCILMAN MERRILL-so, Queensbury, Queensbury side. ATTORNEY HAFNER-Right. Next. Substantive part on yes. COUNCILMAN IRISH-This part about the by-pass in B, it says if the by-pass is used. I thought all billing was going to be billed from our meter anyway. UNKNOWN-Unless there is a discrepance a problem.... ATTORNEY HAFNER-That as a long bitter discussion. The next real point...page twelve Al they are buying a million gallons of capacity this contract has them paying for half of that capacity upfront and the other half over a period of twenty years. This, the reason why I am stopping here is again is, this a board decision whether to accept that. What they are doing for the total million based on our cost we are charging them a million sixty thousand dollars. So, if they pay for half of it up front it is five hundred and thirty thousand dollars up front. COUNCILMAN IRISH-The deal is for a million dollars right? ATTORNEY HAFNER-A million sixty. COUNCILMAN IRISH-that is a flat rate fee? ATTORNEY HAFNER-That is the flat cost that supposedly is two twenty thirds of our total capital cost. COUNCILMAN IRISH-What about Henry, is there any interest built into that twenty year payment? CONTROLLER HESS-Well this doesn't talk about, somewhere it does talk about the payment on the next. Page. ATTORNEY HAFNER-You are taking about two different things. CONTROLLER HESS-We are talking about how they are going to pay the principal. ATTORNEY HAFNER-There are two things, there is a million gallons of capacity that they are paying the capital cost associated for the way that, that was calculated was based on the total cost of our expansion and multiply that by two twenty thirds. That number is one million sixty thousand dollars for a million gallons of capacity. They are proposing to pay half of that up front, five hundred and thirty thousand dollars for five hundred thousand gallons. That is the first thing the Town Board I think was amemible to that pay half up front. COUNCILMAN TUCKER-I do not know the reason why? Why can't they pay it all, they are getting five million from GE to do this. Why can't they pay it all. UNKNOWN-If they pay it all they will not have sufficient capital left to complete the piping they want within their town without borrowing. They do not want to borrow money. ATTORNEY HAFNER-That is what we have been told. COUNCILMAN TUCKER-What do they want to do within their town. UNKNOWN-Serve as many people as they can. COUNCILMAN TURNER-then want to get as much mileage out of that five million as they can get. SUPERVISOR CHAMPAGNE-Pliney in order for us to stay in the game, early on, .. COUNCILMAN TUCKER-What game do you want to say in Fred. SUPERVISOR CHAMPAGNE-I want to be able to provide water to other municipalities in order for the Town of Queensbury user to enjoy the benefit of a use cost of water. That is really in my goal here is one, and that one goal is to reduce the cost of water to the Queensbury user. That is the only goal that I have. In order to do that we are in competition, ok, COUNCILMAN TUCKER-With who? SUPERVISOR CHAMPAGNE-Well, we could be in competition with the Saratoga Water Authority, back then, COUNCILMAN TUCKER-They went and talked to them and they are coming back and talking to us what does that tell you. SUPERVISOR CHAMPAGNE-I am not going to argue with you Pliney if it is your way then have it that way, I think there is enough Board Members here who feel that... COUNCILMAN TUCKER-I am going to speak my mind whether it is off the wall or not, Fred. SUEPRVISOR CHAMPAGNE-I have to problem with that. The issue here is do we benefit the Queensbury user based on putting a program in place buying a half a million... COUNCILMAN IRISH-I do not have any problem loaning them the money as long as we are getting some interest on it you know we are getting on our investments. ATTORNEY HAFNER-From a legal point of view it does not make a legal difference as long as the interest rate is a fair rate. Whether we do it this way or if we require them to pay it all up front, that is a business decision for the Board. I mean the key things are, are you willing to accept it, is the interest rate fair, was the price calculated correctly? And those are all the things that we have been given are true and if so it is a business decision whether you want to accept that or not. Shall we go on? I want to point out an important sentence at the bottom of the page, Queensbury shall not deliver any water to Moreau until such sum is paid in full. Until we get that five hundred and thirty thousand dollars we have no obligation to provide any water. COUNCILMAN IRISH-We are not going to do any construction until we some money from Moreau either. WATER SUPT. VANDUSEN-This does not say that but I know that was our intent. COUNCILMAN IRISH-You might want to put something in there about that, I am not willing to spend any money if they are not, you know, we could spend a hundred thousand dollars and do whatever we have got to do and then they decide to buy water somewhere else and we are stuck with a pipe line going to the nver. ATTORNEY HAFNER-Ok. COUNCILMAN MERRILL-You scratched out the amount of the sum why is that, it just says sum, wouldn't you clarify that within the five hundred and thirty? ATTORNEY HAFNER-They crossed it out, I do not know why they put the five thirty in there after, they crossed out because before that sum was the five hundred and thirty plus half of the river crossing, which is why we used the aggregate amount totaling eight hundred and forty five thousand five, or forty thousand five hundred dollars. COUNCILMAN IRISH-but shouldn't we leave the five thirty in there? ATTORNEY HAFNER-Sure. COUNCILMAN MERRILL-Such sum is five thirty, then there would not be any question. ATTORNEY HAFNER-It is the only sum in the paragraph, but that is perfectly fine. The next section, page thirteen you may recall we had four issues here, basically lets find out first if the Board agrees with the concept and then we can work on the legal wording. The concept is that the other five hundred thousand gallons of capacity that they are buying they are going to pay five hundred and thirty thousand dollars over a twenty year period using a four and a quarter percent interest rate. The reason why they thought that was a fair rate, I think because that is the rate that we are borrowing from EFC? CONTROLLER HESS-The four and quarter is a rate that we plugged in at the time we thought was going to be a reduction in rate from five and quarter that we were paying on the old bonds, close to what we expected to pay EFC. ATTORNEY HAFNER-Based on what we expected our rate to be. So, is that ok with the Board to let them finance the other five hundred and thirty thousand dollars over twenty years? COUNCILMAN TUCKER-How much could be get for the five hundred and thirty if we had it in the bank, Henry? CONTROLLER HESS-I will give you two numbers, if they were to pay cash I would make one of two recommendations. I say we convert them to CD's, a five point nine two which is a rate that is available to us today or five point nine three or you could liquidate the old bond issue which was a million three hundred thousand dollars that you are paying seven point nine on. So, it is somewhere between seven point nine and five point nine three is the market value of the money. ATTORNEY HAFNER-We were not engaged for bond counsel in this so I have not done the research. I expect that is we got paid the five hundred and thirty thousand dollars up front that we would be required to pay down the bonds and usually that is called arbitrage if you pay a lessor amount on tax free bonds then what you go and collect. That is usually improper and one of those certificates that you are going to be signing Fred when we re-finance says you will not do that. But I have not researched it to see... (tape turned) CONTROLLER HESS-To go back to the four and a quarter percent I will tell you that since that number was plugged in the average coupon rate on the bonds is about four point seven. That is subject to subsidize we have a subsidize on that and how you want to factor the subsidize in, but the average coupon over the sixteen years of the issue is four point seven percent. COUNCILMAN IRISH-Did we offer them the same interest rate on that money that we are loaning them as we borrowed it? CONTROLLER HESS-That was an assumption, it was five and a quarter and if we ever re-financed that at a lower rate we will share the lower rate with them. I do not recall all the specifics on it. COUNCILMAN IRISH-The other interest that you talked about was if we paid for half the river crossing and they paid us back they were going to pay a higher interest rate on those funds? CONTROLLER HESS-They are refunded at five and a quarter... COUNCILMAN IRISH-I knew that there were two different interest rates. CONTROLLER HESS-Because that's is what we said we could put it into a checking account at five and a quarter. COUNCILMAN IRISH-I do not know is we want to get locked in at a fixed percentage it we do not know exactly what the percentage rate is that we refinanced at. CONTROLLER HESS-Actually we do know that, we know now what the rate is going... COUNCILMAN IRISH-Four point seven. CONTROLLER HESS-Four point seven and if you factor in, if you want to share the subsidy and we could debate the merits of that or why you want to do that but it would be down around three point seven five or three, in that range. SUPERVISOR CHAMPAGNE-Lets make sure that we all understand you know what that is all about. The way Henry is talking about is four point seven however I do not know whether it is a split or a third whatever that comes back as but the subsidize that we get a the result of the Federal and State subsidy against those EFC loans it reduces it another at least one percent, can I say that? CONTROLLER HESS-It reduces it a third but then you have to add back some expenses. SUPERVISOR CHAMPAGNE-So, it is down there to around three point seven, so that is what we are borrowing the money for. COUNCILMAN TUCKER-We leave this up at four and a quarter we should be all right? You agree with that? SUPERVISOR CHAMPAGNE-I agree with that. COUNCILMAN TUCKER-Well you know something so do I. ATTORNEY HAFNER-If that is agreeable to the Board. SUPERVISOR CHAMPAGNE-To me that is more than agreeable. ATTORNEY HAFNER-We can go and work, Martin and I with language to make this be better from a legal point of view. This language is loose again., Town of Queensbury, it implies that we might not get our full payment in the first and twentieth year which would mean that we would not get fully paid which is something that we cannot do because again we cannot make gifts to another town. So, and I talked to Martin Offerdue since last week and he said that wasn't the intention that he would be glad to tighten up the language. Now, Henry raised an issue of whether we should require semi-annual payments because our bond payments are semi annual and I really to me that is a business decision. COUNCILMAN IRISH-I think that we probably ought to. That is my opinion, if we have got to put the money out somebody has got to, they should be willing to .. CONTROLLER HESS-If they are paying you less frequently you are also getting less of an interest rate. SUPERVISOR CHAMPAGNE-Yes, you are right. WATER SUPT. VANDUSEN-They are going to pay by March 1st. when would our two payments be due? CONTROLLER HESS-You have one in April and one in October. WATER SUPT. VANDUSEN-So, they are going to give us the full years payment on March 1st SUPERVISOR CHAMPAGNE-Up front. WATER SUPT. VANDUSEN-and we are going to have interest on it for six months. CONTROLLER HESS-Dose it say upfront? WATER SUPT. VANDUSEN-They are going to make annual payments on or before March 1st of each year. CONTROLLER HESS-Except that the first payment will be pro-rated. I do not think that we should read, my concern here is, I am not sure that we should re-invent an established amoritization for... I think that the language needs to be cleaned up as to how this loan is amoritized to be traditional with the way we would borrow it from a bank or borrow it through bonds. That would require some annual payments and it would require cleaning up language for the first and last payment because this clearly does not comply. I am just saying lets not re- invent that language just take the language . .industry and do it. ATTORNEY HAFNER-That is easy to do. I just want to make sure that we agree, to clarify that the interest acrues until payment again to deal with any you know if they make a late payment the interest is going and the payment goes to interest first and then principal. This is common terms that you put in a note. But semi annual is a yes? Is that what the board says? (Board agreed) ATTORNEY HAFNER-Next section on page 14 deals with river crossing, now effectively they wish to borrow half of the cost of the river crossing and as I mentioned to the Board and I have talked to Martin, after I, we discussed it last week using borrowing is, would require them to go through the local finance law and all the things that we do every time we go to borrow. And that seemed to me to create a big, create a lot more hassles for them and for us. Under the applicable law here we can enter in, we can work with them in paying that half of the river crossing and then paying us back without it being a borrowing. They still would have the same requirements as to payments but it would avoid having to go through the local finance law and require an opinion of counsel from them that they properly complied with everything. What I also mentioned to them was Henry's comments, that the person that we worked with to refinance our water bonds said that he thought he could get a better deal for them and that would get us out of the middle. Let them pay less of an interest rate maybe get some type of subsidize from EFC and have us not in the finance business. I talked with Martin and I am going to recommend that you might talk with Rick. CONTROLLER HESS-He will be up here in a couple of weeks. ATTORNEY HAFNER-Have him talk with Martin, direct so that we can get out of the loop and if they can finance it that would be the best result for everybody, less interest for them and you know less that we have to worry about being paid back. UNKNOWN-If he beat the four and quarter on this then he could also beat the four and a quarter on ... COUNCILMAN IRISH-We have not agreed to four and a quarter on this though. CONTROLLER HESS-Four and a quarter is a proposal from Moreau and we have not agreed to that. ATTORNEY HAFNER-We had agreed with, I thought five and a quarter with language that they, there is a right for them to seek more efficient financing and we want it at current rate which is the five and a quarter and we wanted a five year balloon. Give them five years to go and find their own financing for that, which is a change from past things but again we are not in the banking business. COUNCILMAN MERRILL-But to be stated just that way it gets the project underway but allows them to .. COUNCILMAN IRISH-What are we going to do with the.. ATTORNEY HAFNER-Well, I thought that we had we were going to revise the language so it was cleaner so that it would not be a borrowing but a sharing of expenses with them paying us five and a quarter, balloon after five years with language in there that they have the right to seek more efficient financing and that may disappear before the contract is signed because they may do that. CONTROLLER HESS-That leaves one loop hole, one problem for them that they might object to and I could understand it and that is what happens if they cannot get more efficient financing or at the end of five years they just cannot finance this elsewhere and cannot pay us off. Could we leave it in there that we would continue to carry it but lets index it some way so that the rate moves with the market. ATTORNEY HAFNER-That is fine you have to give me what you want it indexed to and define that. CONTROLLER HESS-We will do it with a Wall Street Journal Index and we will find the appropriate one. SUPERVISOR CHAMPAGNE-Let me throw a ringer in there, if we take the half million five hundred and thirty thousand dollars ..to pay for the water plant, buying a piece of the rock rather than applying that five hundred thirty thousand dollars for the plant, because we know that financing is at four and a quarter or three seven five or whatever it is and it is going to be that way for twenty years that is a guarantee fixed bond issue. Instead of taking the half a million dollars and applying it to that lets say we take the half a million dollars and that is going to be cash up front for the river crossing. Now, the river crossing is paid for they are not going to finance that, but we are going to take that money that is coming in for the buying of the plant and we are going to finance that plant for twenty years with the four million dollars. COUNCILMAN IRISH-We are loosing that investment income if you do it that way. CONTROLLER HESS-What that does that does not lower our over all costs, the interest and the principal costs are the same and if you are not lowering costs but you are lowering theirs that means you are just transferring it to Queensbury. Over all cost to remain the same, you lower theirs it transfers into Queensbury and that is my objection to that. SUPERVISOR CHAMP AGNE- The only thing, I am not sure I am following you there, but one thing you are doing you are not collecting that interest at five and a quarter on that river crossing, is really what you are not getting. CONTROLLER HESS-But the value of that money has not gone down the value of that money is not the same. So, if we are not collecting it they are saving it so the burden becomes that of Queensbury and that's the point I am make. You can do that, but it just means you are subsidizing that project to a .. tune that is all. I think we should be trying to put this thing together to increase the income to Queensbury not minimize it. We are negotiating with one another, how do we save them money, why don't we negotiate with one another how do we benefit Queensbury. SUPERVISOR CHAMPAGNE-I guess I see it as an opportunity here to again, to deliver water to Moreau at no real heavy cost to the user. ... we are not loosing, well. CONTROLLER HESS-It cost them less, it cost us more. ATTORNEY HAFNER-Really what you are saying is that instead of them having to pay half up front which was, as I just said a few minutes ago is a business decision that you five will have to make. You want to let them pay zero up front. SUPERVISOR CHAMPAGNE-To buy into the plant. ATTORNEY HAFNER-To buy into the plant and that is a business decision whether you know, ..anyone buying a house has to put some money down, I mean, for something like this I mean, we are requiring the Village of Hudson Falls to pay all of it up front. COUNCILMAN MERRILL-By buying into the plant, am I right, you immediately reduce the ad valomm tax right? UNKNOWN-One way or the other yes. COUNCIMLAN MERRILL-So, the taxpayers would see an immediate reduction, if we did not do that we would not have that immediate ... SUPERVISOR CHAMPAGNE-Ok. I just threw it on the table as another option, that is all. ATTORNEY HAFNER-So, on the river crossing thing what I said, still says. (Yes) COUNCILMAN TUCKER-And you are going to try and get them in the interium to get the money themselves, right? ATTORNEY HAFNER-We are going to ask but the thing is if they don't, are we willing to float that for them? COUNCILMAN IRISH-Didn't we discuss the other day about Queensbury maybe finding that financing if either Moreau or Queensbury could find that funding mechanism. CONTROLLER HESS-I think what Rick was talking about is they mayor may not be equipped to put that together if we could actually take the lead in this system and help them through that process, or they could, we could share that responsibility for getting that done, if really what we are saying. COUNCILMAN IRISH-They would pay the administrative cost. COUNCILMAN TUCKER-Is this a route that we have gone before?