City’s default letter to I&M

A copy of the City’s letter to Indiana Michigan Power is available after the jump for download.

I’d like to point out a few things from the letter:

(1) Failure to Provide Emergency Services.  First, the City notified the Company and made demands that the Company install necessary facilities for purposes of maintaining emergency service to filtration plant and the sewage treatment plant as required under Article XI of the Lease.  The Company refused.  As a result, the City incurred $7,786,682 in costs to address and mitigate the Company’s default.  The City incurred $3,483,859 in costs, including engineering and construction support, to provide emergency back-up service to the Three Rivers Filtration plant.  And, the City incurred $4,302,823 in costs, including engineering and construction support, to provide emergency back-up service to the St. Joe Dam and Pumping Station.  These numbers omit any costs that were not attributable to the provision of emergency back-up service.  Likewise, the Company failed to install facilities necessary to provide for emergency service to the Water Pollution Control Plant.  The City intends to hold the Company responsible for that failure.

(2) Refusal To Coordinate With The City Concerning Use and Waste of Leased Property.  Second, the Company has refused the City’s numerous demands that the Company comply with Section 13.2 of the Lease.  Section 13.2 provides the City with the authority and responsibility to scrutinize and control the use of Leased Property, including but not limited to the waste of Leased Property.  By way of example only, the City placed the Company on notice in October, 2007, that the Company needed to consult with the City before retiring certain facilities in light of the upcoming expiration of the Lease and the City’s right to acquire the Leased Property and all Betterments, Enlargements and Extensions that would allow the City to operate an indepenedent and fuctioning system capable of serving customers served by the acquired facilities.  The Company ignored the City’s demands and unilaterally replaced the facilities.

(3) Refusal To Provide Essential Information And Data To The City.  Third, we understand from your earlier correspondence that the Company refuses to turn over the assets, facilities and information necessary to allow the City to operate a viable and independent system upon the expiration/termination of the Lease.  Instead, the Company has taken the position that it need not return any of the Betterments, Enlargements, and Extensions as required under Article XXV of the Lease and has refused to provide the City with basic and useful information necessary for the City to set-up the books and other necessary accounts as required under Section 27.5 of the Lease.

The letter continues asking for the following cures of the current defaults by the close of business on October 19, 2009:

1. provide the City with payment of $7,786,682 to reimburse the City for the costs the City incurred to mitigate the Company’s default under Article XI;
2. provide the City written assurance that the Company will install sufficient facilities to provide emergency service to the Water Pollution Control Plant;
3. provide a detailed explanation and rationale for the replacement of any facilities int he Lakeside-Northcrest Circuit as outlined in the City’s enclosed letter of October 17, 2007 to C. Lee Rodenbeck;
4. provide the City written assurance that the Company will turn over all of the Betterments, Enlargements, and Extensions;
5. provide the City written assurance that the Company immediately will cease any further modifications to the system inconsistent with the City’s election to take back a viable system at the expiration of the Lease; and
6. provide the basic and essential information previously requested by the City.

This provides a bit more information to the community and to me makes the City’s position on this issue a bit clearer.

Download the letter here.

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