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Home My WebLink About98-87 RESOLUTIONRESOLUTION NO. 98-87 A RESOLUTION AUTHORIZING AND RATIFYING A COUNTERCLAIM BY THE CITY OF FAYETTEVILLE, .ARKANSAS AND THE NORTHWEST ARKANSAS RESOURCE RECOVERY. AUTHORITY AGAINST GORDON L. CUMMINGS IN WASHINGTON COUNTY CHANCERY COURT CASE NO. E 87-1228. BE IT RESOLVED BY'THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE; ARKANSAS: ' 1 The Board of Directors hereby authorizes and ratifies the filing of a counterclaim by the City of Fayetteville, Arkansas and Northwest Arkansas Resource Recovery Authority against Gordon L. Cummings in Washington County Chancery Court Case No. E 87-1228 on October 22, 1987. A copy of the Counterclaim authorized and ratified hereby is attached hereto marked Exhibit "A" and made a part hereof. PASSED AND APPROVED this 17th day of November }, .J4. .- , , I :,s, ,i 5 , -. • cdi,rn•' /.i- ,...• • APPROVED By: 1987. 0 :;, - o � Pd C:11. IN THE CH•MO COURT AYWA: • GORDON L. CUmm iNG$ >", \�V p\ -E' VS. C\ NO. E 87-1228 CITY OF FAYETTEVILLE, ARKANSAS, CITY OF WEST FORK, ARKANSAS, WASHINGTON COUNTY, ARKANSAS, NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY, UNION NATIONAL BANK OF LITTLE ROCK, ARK., and FINANCIAL GUARANTY INSURANCE COMPANY COUNTERCLAIM PLAINTIFF DEFENDANTS Come Defendants City of Fayetteville, Arkansas and Northwest Arkansas Resource Recovery Authority and for their Counterclaim against Plaintiff Gordon L. Cummings state: 1. The City of Fayetteville, Arkansas is a municipal corporation duly organized under the laws of the State of Arkan-, sas, is a city of the first class located in Washington County, Arkansas, and has the city manager form of government. 2. The Northwest Arkansas Resource Recovery Authority (the "Authority") is a corporation organized under the Joint County and Municipal Solid Waste Disposal Act, Act 699 of 1979, as amended ("Act 699"), Ark. Stats. Ann. §582-2731 et seq. (1985 Supp.). Its members are the City Washington County. 3. In December, 1985, the Authority issued.$22,405,000 in revenue bonds (the "Bonds") under Act 699 to finance construction of a 150 ton per day Solid Waste Disposal and Resource Recovery Facility (the "Facility"). The Facility will incinerate solid waste and generate electricity which will be used to operate Fayetteville's new Wastewater Treatment Plant. Any surplus electricity will be sold to Arkansas Electric Cooperative Corpora- tion. Fayetteville will supply over 90% of the solid waste to be incinerated at the Facility. 4. The Bonds contained a mandatory "put" under which all bonds would be remarketed in one year if certain conditions were met or redeemed if said conditions were not met. The conditions precedent for remarketing are set out in §616C of the Trust Indenture executed to secure the bonds and required, inter alia, of Fayetteville, the City of West Fork, and t c an executed construction contract, an executed contract with a qualified operator for the project, and evidence of back-up landfill availability. 5. On December 30, 1986, the Bonds were remarketed as serial bonds with a 27 year maturity schedule. The face of each bond contains the following statement: "This bond and the interest and premium, if any, thereon .are payable solely from and secured by the revenues, income, and moneys of the Authority pledged to the payment thereof by the Bond Indenture. . . This bond -shall not in any manner or to any extent be (i) an indebtedness of the State of Arkansas, the Authority, or of any municipality or political sub- division of the State of Arkansas, within any constitu- tional or statutory limitation (ii) a general obligation of the Authority nor a charge upon any revenues or assets of the Authority not specifically pledged thereto in the Bond Indenture, or (iii) a personal obligation of any official, officer, deputy or member of the Authority or any employee, agent or servant of the Authority." The Bond Indenture pledges to payment of the Bonds the following revenues: "tipping fees" which are charges made by the Authority to its members and to the general public for accepting and disposing of solid waste; revenues from the sale of electri- city; and, interest earned on invested bond reserve funds. 7. The Authority has executed a Waste Disposal Agreement with its members which contains the following provisions at 5901: "(c) The Cities' and the County's obligation topay tipping fees shall be payable solely out of income derived by the Cities and the County from charges for the disposal of garbage and trash (Sanitation Fund Revenues). The Cities and the County agree that said charges, together with other revenues and funds to be collected by the Authority during the current fiscal year and to be available to the Authority for such purposes shall, at all times during the term of this agreement, be maintained and collected at a level sufficient to enable the Cities and the County to pay the tipping fees established by this Agreement, which tipping fees shall, at all times, during the term of this Agreement be sufficient for the Authority to (1) pay, when due, all operating and maintenance expense of the Authority for the current fiscal year. . .(2) pay, when due, the principal, interest, trustee's fees, and paying agent's fees for bonds issued by the Authority to finance construction of the Facility, (3) pay, when due, any amounts necessary to replenish the reserve funds in accordance with the Indenture executed by the Authority. . . . (d) The City of Fayetteville unconditionally agrees and guarantees to charge, collect and pay from Sanitation Fund Revenues all obligations under (c) above." 74. • 8. Plaintiff's Complaint challenges the validity of §§401(c) and (d) of the aforesaid Waste Disposal Agreement. 9. §5401(c) and (d) of the Waste Disposal Agreement guaranty that the City of Fayetteville will pay "tipping fees" established by the Authority. "Tipping fees" are charges made by the Authority to its members and to the general public for accepting and disposing of solid waste. The Authority has pledged revenues from tipping fees to pay the principal and interest on the Authority's bonds. 10. The Authority's bonds have been insured by Defendant Financial Guaranty Insurance Company ("FGIC"). If the Authority defaults on the bonds, FGIC is obligated to pay, when due, the principal and interest on the bonds. As a condition for issuing bond insurance, FGIC required that §§401(c) and (d) be provisions in the Waste Disposal Agreement. 11. By challenging the validity of §§401(c) and (d) in the Waste Disposal Agreement, Plaintiff has, in effect, challenged the validity of the Authority's bonds. WHEREFORE', Defendants City of Fayetteville, Arkansas and Northwest Arkansas Resource. Recovery Authority pray for a judgment declaring the Authority's bonds to be valid, declaring §§401(c) and (d) of the Waste Disposal Agreement to be valid, for reason- able attorney's fees, for their costs herein, and for all other relief to which they may prove themselves entitled. CITY OF FAYETTEVILLE, ARKANSAS and NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY DEFENDANTS By: '7">h`' 01-enL times N. McCord ITY ATTORNEY 113 W Mountain Fayetteville, Arkansas 72701 (501) 575-8313 v CERTIFICATE OF SERVICE I, James N. McCord, on this OA a� day of October, 1987, hereby certify that I forwarded a copy of the above and foregoing Counterclaim to: Mr. Gordon L. Cummings, Attorney for Plaintiff, 34 East Center, Fayetteville, Arkansas 72701; Mr. George E. Butler, Attorney for Separate Defendant Washington County, Arkansas, 207 West Center Street, Fayetteville, Arkansas 72701; and .Messrs. .David F. Menz and Patrick J. Goss, Attorneys for Separate Defendants Union National Bank of Little Rock, Arkansas and Financial Guaranty Insurance Company, WRIGHT, LINDSEY & JENNINGS, 2200 Worthen Bank Building, Little Rock, Arkansas 72201. 7i. 7Ac1 N. McCord