2007-030 RES-Aut. the City Manger to propose a cash settlement to prepay the Pat Mayse Reservoir Purchase contract for water rightsRESOLUTION N0. 2007-030
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS,
AUTHORIZING THE CITY MANAGER TO PROPOSE A CASH SETTLEMENT
TO PREPAY THE PAT MAYSE RESERVOIR PURCHASE CONTRACT FOR
WATER RIGHTS; MAKING OTHER FINDINGS AND PROVISIONS RELATED
TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Paris has entered into several water contracts with the U.S. Corps of
Engineers for water rights at the Pat Mayse Reservoir, Lamar County, Texas; and,
WHEREAS, pursuant to these water contracts the City of Paris owes the U. S. Corps of Engineers
the following amounts as of March 31, 2007:
1. Principal payoff on space one $ 208,515.69 (paid current)
2. Principal payoff on space two $ 370,399.16 (paid current)
3. Principal payoff on spaces three, four, & five $1,925,722.00
4. Accrued interest on above $1,925,722 principal $ 2,864,691.22; and,
WHEREAS, the amount of accrued interest on the outstanding principal of $1,925,722.00 calculated
at 3.137% compounded annually since 6-15-78 is $2,864,691.22, but using the same rate with simple interest
for the same time period would only be $1,739,301.20; and,
WHEREAS, it would be in the best interest of the City of Paris and its citizens to authorize the City
Manager to make a cash settlement proposal to the U. S. Corps of Engineers in the form of the letter attached
hereto and incorporated herein as Exhibit "A" to reduce the interest charges paid by the City under these
water contracts;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That the terms and conditions of the proposal letter attached hereto as Exhibit "A" is in
the best interest of the City of Paris and the its citizens and is in all things approved, and the City Manager
of the City of Paris is hereby authorized to execute said proposal on behalf of the City of Paris.
Section 3. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 26th day of February, 2007.
~~ ..
Richard Manning, Mayor .
ATTEST:
anice Ellis, City Clerk
APPROVED AS TO FORM:
Kent McIlyar, C rney
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February 27, 2007
The Honorable Kay Bailey Hutchison
284 Russell Senate Office Building
Washington, DC 20510
Reference: Prepayment of water purchase contract on Pat Mayse Reservoir
Dear Senator Hutchison:
The City of Paris, Texas would respectfully request consideration of the following
proposal to conclude the purchase of all water contracts between the U. S. Corps of
Engineers and the City of Paris, Texas.
City of Paris, Texas
Summary of Proposed Financing to U.S. Corps of Engineers
To Prepay the Pat Mayse Reservoir
Purchase Contract for Water Rights
Whereas the City of Paris owes the U.S. Corps of Engineers ("the Corps") as of March
31, 2007 the following amounts:
1. Principal payoff on space one
2. Principal payoff on space two
3. Principal payoff on spaces three, four, & five
4. Accrued interest on above $1,925,722 principal
(3.137% compounded annually since 6-15-78);
$ 208,515.69 (paid current)
$ 370,399.16 (paid current)
$1,925,722.00
$2,864,691.22
Whereas the city contends that compounded interest vs. simple interest is not a
reasonable charge to the citizens of Paris;
Whereas the amount of accrued interest on the outstanding principal of $1,925,722.00
calculated using simple interest vs. compounded interest would be only $1,739,301.70 vs.
$2,864,691.22 (see attached schedule A);
Whereas the city may not be financially able to pay the amount due in the future under
the existing contract terms;
The City of Paris thereby~proposes a cash settlement on or about 6-1-07 of $3,635,819.24
based on the following amounts;
EXHIBIT.,
P.O. BOX 9037 PARIS, TEXAS 75461-9037 (903) 785-7511 FAX (903) 785-8519
1. Principal payoff on space one $ 208,515.69
2. Principal payoff on space two 370,399.16
3. Principal payoff on spaces three, four, & five 1,925,722.00
4. Accrued interest calculated as simple interest 1,739,301.70
Total (due 4-1-2007) $4,243,938.55
The future payments on $4,243,938.55 due 4-1-2017 plus simple interest at 3.137%
equals a combined total of $5,553,073.88.
The present value of $5,553,073.88, assuming the average value of money over the next
ten years at 5%, is equal to $3,635,819.24. (See Schedule B).
I would be pleased to discuss this item with whomever you designate at your
convenience.
Sincerely,
Ernest R. Clark
City Manager
EC/ga
Enclosures
cc: Jan Hotubee, US Army Corps of Engineers