NOVEMBER VOTE SET: CITIZENS WILL DECIDE ON UTILITY PACT

Cape Girardeau voters will have the opportunity Nov. 5 to vote on new utility franchises with Union Electric and a proposal to purchase the city's water system from the utility company.

The Cape Girardeau City Council Monday approved the 20-year gas and electric franchise agreements, which City Attorney Warren Wells said include much more detailed and complete provisions than the old agreements that expired more than two years ago.

"They're about 15 pages each, compared to the old ones that were three to four pages," Wells said.

The city attorney said the previous franchises were "very sketchy" and "very broad."

"There were many, many areas the old franchises didn't address," he said.

"We attempted to address that concern and get some detail in these franchises. I think we have documents that are enforceable and reliable."

Some of the new provisions in the gas and electric franchises include:

30-month warranty on street repairs when utility work damages city streets.

2010 percent discount on the city's street light bill, which Wells said would save taxpayers $500,000 over the 20-year term of the franchises.

City's right of first purchase should the electric or gas systems be sold by UE.

Termination procedure should UE breach the terms of the franchise.

20Guaranteed continued service if the city purchases the system or starts its own system.

UE prohibited from selling its franchise rights without the city's permission.

20The city may compete with its own electric and gas business.

"This gives us a whole new package of opportunity and rights that we have not had before," Wells said.

Assistant City Manager Al Stoverink also discussed the proposed purchase of UE's water system for $8.5 million.

The Cape Girardeau water system is the only such system UE owns. Virgil Chirnside, superintendent of UE's Southeast Missouri district, told the council that although the system "isn't losing money," it hasn't been particularly profitable.

Stoverink said UE plans to sell the system regardless of whether the city buys it, but by purchasing the system itself the city can assure taxpayers the lowest possible cost.

He said most cities own and operate their own water systems. Also, the city can purchase the water system with tax-exempt financing, which would save 30 percent on debt service, Stoverink said.

"If the water system is sold to an investor-owned third party, they also would add 17 percent for allowable rate of return and federal and state income taxes," he said.

Stoverink said the $8.5 million purchase price for the system is equal to the minimum market value, which is significantly lower than typical industry standards for the price of such a system.

"We feel that we have an excellent bargain to present to the citizens of Cape Girardeau in that regard," he said.

Stoverink said purchase of the water system is the "missing link" in the city's overall city planning efforts, which include long-range, master street and sewer plans.

"The water system is the key to growth of the community," he said, "the same as trunk sewers and major streets."

Stoverink said the purchase of the system could be done with revenue bonds and wouldn't require a fee increase during the first year of operation.

Diane Howard, an attorney representing the Cape Girardeau School District, asked that if the city purchases the water system it pay the school district $128,800 annually in lieu of UE's annual tax payment to the district.

"Their only concern is protection of the funding base," Howard said of the school district. "It's a legitimate concern for them and all the residents of Cape Girardeau."

But Stoverink said that if the city made the annual payment there would have to be an immediate fee increase along with the purchase of the system.

The only improvements to the system that will be required can be deferred until 1993, when the Environmental Protection Agency likely will require modifications of the Cape Rock waste treatment plant, Stoverink said. Also, some two-inch water mains would have to be replaced in certain areas of the city.

The assistant city manager said the city likely would require a 3 percent fee increase each year to finance the water treatment plant improvements and start-up costs.