False Hopes, False Solutions

Posted: March 23, 2010 by NewAlbanist in Uncategorized

Tuesday evening, the powers that be (elected and appointed) put on a show where they pretended to solve a critical sewer funding problem. Although no decisions were made, much pandering took place. Of course, Steve Price put on the greatest display of ignorance, but that’s to be expected any time the council gathers in front of the press or the public.

The Pander Bear extended her reach throughout the Third Floor Assembly Room, with no speaker uninfected by the dream of deferring judgment day.

Let’s recap: In late January, we were told that to keep the sewer utility from diving into the darkest abyss of bankruptcy, we all would have to swallow a 70 percent rate increase.

Cynics chose to look at this state/federal conundrum as being a manufactured crisis. Dan Coffey automatically declared that a 70 percent request/recommendation really meant that a 35% increase was needed, relying on the fact that Armageddon had not occurred each time in the past that he joined the venal council contingent that refused to listen to professionals and cut every request in half.

It is that cynicism that brought all of us ratepayers to this dire moment.

At the end of February, we were told that the State Revolving Loan Fund (SRF), having examined our situation, was willing to extend financing to us, including a refinancing of past indebtedness, and allow us to immediately begin a costly mitigation program. All they asked was that the sewer utility enact a rate increase of 36 percent now, and an additional rate increase of 19 percent in 2012.

Coffey, of course, seized on this near equivalency to say “Ah, Ha. Told you the request for 70 percent was just a ploy to obtain 35 percent!”

The sewer utility has expenses for operations and maintenance. Agreed?

The sewer utility has debt service it must pay for past capital expenditures. Agreed?

Finally, the sewer utility is under a state/federal (IDEM/EPA) mandate under the Clean Water Act to undertake an ambitious but necessary mitigation of sanitary sewer overflows. That is, we must keep our separated stormwater and wastewater from commingling and ejecting sewage into our streets, yards, and streams. Agreed?

I had challenged anyone to tell me which of those three imperatives we could refuse to pay for. Tuesday night, “they” pretended to do so.

Begrudgingly, I will set aside (temporarily) my crusade to stop the subsidy from taxpayers to various entities to report the words from Tuesday night. You should know that the council is done for the week. There will be no more work sessions. Everything is settled. There will likely be one more meeting/work session before the next regular council meeting. At that meeting, council will be informed whether the false solutions offered Tuesday will be acceptable to our creditors.

Here’s the report:

An impressive, competent advisor from Crowe Horwath, Jennifer(?) somebody, laid out the possibles. The city council could reject the SRF deal in its entirety, incurring no new debt, but relinquishing the debt relief and refinancing, and reduce the 70 percent rate increase by 12 points (to 58 percent) by a) dedicating $350,000 from EDIT and b) dedicating $350,000 from Riverboat funds.

Having consulted extensively with the mayor and with some council members, “Jennifer” outlined how the city might reduce its commitment to spending $3.5 million each year for capital expenditures for extensions and replacements. How much? $2.4 million a year. That’s right. We’re supposed to tell the environmental regulators that we’re going to back off on our mitigation plan by 69 percent.

That’ll fly, right?

So, we’re down to a 58 percent rate hike. How else can we reduce the rate hike?

Well, if we cut our operating expenses by $1.6 million (out of $6.2 million we spend now), we can drive that sucka down to a 12 percent rate hike. Golly, that must be doable, right. We must be overspending/wasting at LEAST 25 percent.

Let’s ignore CM Zurschmiede’s testimony that there is very little float in the op expenses. Let’s just assume that we can wave a magic wand and save 25 percent on operations and maintenance – this without even renegotiating our contract with EMC.

To be honest, though, this plan was clearly just an informational plan.

Where the silliness began and the Sino-Ursine presence was felt most strongly was when “Jennifer” offered up the other plan concocted as the sun went down on Tuesday.

Plan B, as my notes record, is more “realistic*.” Here we raid taxpayer funds to subsidize rates, again by $700K additional above the current $850K now being dumped into sewer subsidies. But we accept the SRF relief and reduce our operational expenses by only 16 percent, or $1 million, 1/6th of current expenses.

Now, I can do that in my business. I can lay off 1/6th of my staff, cut my hours, and cut lots of other corners. But it is incredibly difficult for me to fathom how an essential public service like a sewer utility can do the same. Are we to just stop pumping the waste from 1/6th of the city? Or shut down the treatment plant 32 hours a week and let the crap flow into the Ohio?

Still, this plan was discussed with a straight face. This plan would reduce the rate increase to 18 percent today, with another hike in 2012 of 21 percent more.

This plan, which appears to be The Tribune’s default plan on the table, would cause the typical ratepayer’s rates to rise from about $30 a month to $35.70 this and next year, and then to $43.26 in 2012 and beyond. No one is willing to accept a CPI increase in the out years, so wipe that old 3 percent a year increase out of your minds. Everything’s going to be OK. Don’t worry. We’ll never, ever again see a recession or inflation. Wages and revenues will never again flux upward. We can sleep easy. The rest of the decade will be all peaches and cream.

The numbers on that plan? 18 percent now, 21 percent in 2012.

Surprise, surprise, surprise. That’s not nearly enough for 3rd District CM Steve Price. He proposes that we deplete ALL of our EDIT revenues and dedicate (for the next 20 years) $1.4 million (about half) of the tax revenue generated by working New Albany residents to further lower the sewer rates for Pillsbury, Dairy Queen, Walmart, and yes, Destinations Booksellers and the New Albanian Brewing Company, not to mention the non-EDIT payers who consume sewer services from outside the city’s boundaries, including those in distant Georgetown.

And that’s just page 1 of my 3 pages of notes.

For the record, here was the attendance list: CMs Zurschmiede, Benedetti, Price, Caesar, Coffey, and president Gonder, plus the council’s new attorney, Mr. Lorch. In addition, the mayor and the deputy mayor were there, as was the controller. The entire sewer board and its attorney were also present. I estimate there were five civilians present.

[Can you imagine a world where a newspaper reporter could write this report? Daniel, don’t you wish they would pay you to devote this much time, and give you this much space to report the texture and nuance of a public meeting? We’re grateful for your rapid report and for what will surely be a mostly accurate, but necessarily incomplete report in Wednesday’s editions of The Tribune. Don’t you wish you had the space to write it all? Still, distillation is a lost art. I’m sure you and your colleague Harold will give clear, objective reports.]

Mayor England and CM Price then engaged in a little stiletto-work, and I don’t mean high-heels. Both gave yeoman-like performances in disguising their contempt for each other. Price said “I was told that developers are getting favors.”

His Honor replied, “I was a developer. I can tell you there hasn’t been any development, so reports of favors are simply lies.”

The mayor went on to decry the blatherings of what he called “tea-baggers,” who in the mayor’s estimation provide not solutions, just vociferous rantings.

The sewer board then proffered 2 cost-saving measures.

1. Considering that the EMC crews had fully surveyed, by now, all of the city’s sewers using TV cameras, they proposed that the TV program be cut in half. That would free up funds to begin lining the old clay (and terra cotta?) pipes with new synthetics, thus hastening the day that infiltrations and SSOs would decline.

2. Bring all pipe-lining in-house, providing a nominal extra decrease in expenditures since the profit motive would be decreased and mitigation would be accelerated.

Then the mayor weighed in with his plan. We’ll treat it as a continuation.

3. Institute an aggressive jawboning to extract a clawback of payouts to EMC (principal operations contractor) and the consulting engineers.

4. Cut emergency repairs budget by $500K.

5. Cut the insurance expense by $100K.

6. Don’t expect Riverboat funds to be reliable…but commit $350K a year to sewers.

7. Don’t count on EDIT to be available…but commit $350K a year to sewers.

8. Don’t count on TIF to be available…but commit $350K a year to sewers.

The England Plan would, in Dr. Pangloss’s best of all possible worlds, result in an immediate rate increase of 18 percent, followed in 2012 by a 17 percent increase in rates.

9. Decrease operating expenses by 16 percent.

The above is implausible and I won’t insult the mayor by pretending to believe that he is serious about any of this. And with certainty, I’ll project that by next Monday some of us will know that the SRF won’t buy it.

We are in default and we’re doing nothing to cure it.

The sole moment of creative public leadership (and some credit must be given to 1st District CM Coffey for pushing for this) came in the tentative investigation of the possibility that a $1.3 million investment in the Mt. Tabor Lift Station area could be financed by TIF bonding, which would call for about $91,000 a year over 20 years) to mitigate the rate hike. No one knows if it is possible, but it is an arguably defensible solution to use tax increment financing (which anticipates property tax benefits from current infrastructure investment, to be paid back by increase tax revenues).

CM Caesar, of the 2nd District, erupted at this and other suggestions that borrowing money, and thus paying much more money over time, was lunatic. Yay, Bob.

The mayor told us that an independent analysis indicated that EMC, the prime contractor, might be earning as much as $875,000 in fees over expenses (profits). Sewer Board member Ed Wilkinson responded with his own analysis that he could find little more than $400K in even possible savings, conceding that $500K would be the upper limit.

The whole evening was an exercise in implausibility, buck-passing, blaming of previous administrations, vituperation from CM Price, and good old pandering most applicable to a “presser.” The PR value on Wednesday ought to be bankable.

Here’s my take on the visible consensus [though I have independent evidence that much of the evening’s performance was just for show…you’ll have to take my word.]

The consensus is to put city finances
Into voluntary servitude
To benefit ratepayers at
The expense of working taxpayers
To benefit businesses at
The expense of working taxpayers
To benefit fringe property owners at
The expense of working taxpayers
To benefit landlords at
The expense of working taxpayers
To benefit profligate users of water at
The expense of working taxpayers.

Thus cutting off opportunity
Flexibility
Equity.

Handcuffing all New Albanians in the future.

JUST THE WAY COFFEY, PRICE, GAHAN, and McLAUGHLIN want it.

In spite of it all, we true believers continue to pour our fortune into New Albany by investing and reinvesting. We don’t ask for favors. We don’t deplete green space. We don’t demand new infrastructure. We don’t begrudge paying taxes or service rates [the first act of patriotism]. We open our doors and provide service to our community. We pay our employees to keep the doors open to serve our patrons while we devote our time and intellectual energies to improving the lot of our fellow man, opposing policies that diminish our community, and risking our fortunes for causes we believe in.

I was there Tuesday because I don’t believe it’s legitimate to critique our government unless and until you get your “skin in the game,” until you devote the time to “be there” when our legislators legislate. I don’t blame anyone else for not being there. My attendance, geeky as it may be, is just my warrant to you that I’m NOT a tea-bagger, I’m not just a griper. I try to make myself at least as aware of the realities as the average council member [and 10 times as aware as 3D Price].

Finally, let me report this. Were NAMU to institute an access fee for sewers, the base charge would be $25 before usage charges would be applied. This is twice what I had previously estimated as a minimum charge for a zero-units user. With some faith, but little faith it will be accepted as sincere, I submit this as my good faith defense for not agreeing that a certain blog commenter and recently active participant in public affairs has been passionate, but intransigent in believing that anyone other than the commenter “gets it.”

I get it. I only hope your activism isn’t ephemeral and that your education didn’t end at the moment they quit handing out degrees. I don’t say this with any sense of superiority, but I do say it with experience. You can choose to knee-cap your [potential] allies, or you can enter the scrum with the understanding that we all should be able to have a [craft] beer afterward.

Still waiting for that apology from you. And from your drive-by apologist, too.

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