? Plambeck Out At DMD ?

Rumors are circulating pretty hard in neighborhood circles that Maury Plambeck is out as Director of the Department of Metropolitan Development and that Adam Theis, a City contractor for planning, will be named to replace him.  Don't feel sad for Plambeck, though.  The rumor goes on that he will be named head of a new Local Initiatives Support Corporation (LISC) sub-group that will be funded with $100 million from the Rebuild Indy money (profit from the sale of the water and sewer utilities for those playing along at home).  LISC pays enormous salaries, so Plambeck should be fine.

Here's what I've been able to round up on the internet about the organizations involved.

Theis is currently President of Eden Collaborative, aka Eden Land and Design.  Their website lists a couple of local projects that they consulted on - two at Fort Benjamin Harrison, one for the superbowl legacy project at St. Clair Place, and one for 'transit oriented development' planning for the Metropolitan Planning Organization - part of DMD.  While the website seems to be saying they were a client of DMD for the St. Clair Place project, I could not locate the contract in the City's contract database.  I did, however, find two contracts between DMD and Eden Land and Design. 

Contract 7886 was for $29,040, signed in June, 2010, and expected to run between 6 months and one year.  Its purpose was to create a grant application for the Federal Sustainable Communities Planning Grant Program.

Contract 9009 was initially for $250,000, signed in May, 2011, and expected to run through December, 2012.  In May, 2012, this contract was extended to December, 2013, and had its contract limit increased to $450,000.  The purpose of this contract, in part, was to help determine a good location for an IndyGo transit hub and to aid in planning for transit station locations in various parts of Indy.

LISC is a national not for profit organization that, according to its IRS filings, has as its mission to "assist community residents throughout urban and rural areas of the United States to transform distressed neighborhoods into healthy and sustainable communities".  Their 2010 tax filing listed revenues of $101.7 million and expenses of $110.9 million.  They had an increase in assets of $52.1 million for a total of $443.5 million.  They provided grants to a number of Indianapolis organizations in 2010 - by my total $1.3 million.  While almost all recipients were CDCs, there were two exceptions.   The Children's Museum got $45,000 and, my favorite neighborhood organization (oh the irony) Indianapolis Downtown Inc got $43,875.

LISC lists several pages of key personnel who receive over $100,000 in compensation.  Those listed range from a stunning take home of $599,460 for Joseph Hagan, Senior Vice President, to only $443,442 for Michael Rubinger, President.  The lowest salary of the copious number of Vice Presidents was listed at $136,451 for Kenneth Patrick Maher.  I guess Maher needs to step it up.

Although they list Indiana as a State in which they lobby, there is no listing in the City's lobbyist database for LISC.

The City's budget figures show the Rebuild Indy fund with a June 30, 2012, cash balance of $188,732,284 and an expected December 31, 2012, fund balance of $88,006,647 - or $100 million spent in the last half of 2012.

Stay tuned.

Is The Sale Of City Assets The Real Reason For This Year's Budget Chrunch?

This is the fifth year that I have spearheaded the budget review effort of the Marion County Alliance of Neighborhood Associations.  Each year is different to some extent.  This year there are some real anomalies and, frankly, I'm still trying to wrap my head around them.  So, none of that in this post.

Mayor Ballard and his administration are focusing their comments, and hoping thereby to focus the public's attention, on decreased tax revenues and waving their hands about a $64 million shortfall in order to justify transferring $38.5 million from the consolidated downtown TIF to make ends meet.  I cannot actually locate the $4.2 million transfer from the CIB in the 2012 budget, so I am leaving that off for now.

The rhetoric is that property taxes are stable, but income taxes are off $85 million from their peak in 2010.  A closer look at the numbers provided in the 2012 budget book show a drop of $11 million in combined local tax revenues, an increase of $7 million in property tax revenues, and a drop of $15 million in income tax revenues between the 2011 and 2012 budget years.  Add it all up and you have a drop of $19 million.  Real money to be sure, but the City claims to have cut the budget by $20 million simply by requesting non-safety departments that rely on these very tax revenues to each cut their budgets by 6%.

Ordinarily I would also be commenting upon all of the other sources of revenue in this paragraph.  But, unfortunately this year's budget book does not supply a summary table of revenues.  I will have to slog through the details of the budget, which has been provided online, create my own spreadsheet and from that, my own summary table.  I have not had the time.  Representatives of the Office of Finance and Management insist that a summary table will be provided before the budget ordinance is passed.  Great.

Moving on.

The budget for the Department of Public Works is more than interesting this year.  That Department operated the profitable sewer utility that was the sweetheart part of the sale of the water and sewer utilities to Citizens Energy - a deal that closed this past week.  DPW's budget is also the one that serves as the collector of parking meter fees.  You will recall that the meters were sold via a 50 year lease with ACS and some local parking companies with enough political clout to get themselves included in this great giveaway of public assets.

Comparing the DPW budgets for 2011 and 2012 it is easy to see that expenses (p. 41 of the link) have dropped by $78.4 million (largely due to the off-loading of the sewer and water utilities), but a drop in revenues (p. 37 of the link) of $153.0 million.  Looking closer, there is a drop in contribution from the Indianapolis Foundation/Central Indiana Foundation from $8 million to $200 thousand. 

Under parking meters you can see a drop from $2.3 m in 2011 to $1.3 m in 2012.  This, of course, is part and parcel of the fee-sharing demanded by the parking meter contract.  None the less, it means less money for the City each year.  In 2012 it means $1 m less.  Still real money.

The rest appears to be mostly sewer utility related - so, roughly a drop of $144 m, give or take a couple of million.  There is a PILOT (payment in lieu of taxes) that was increased this year and continues to flow from the sewer utility.  That seems to be contained in its own fund which shows revenue for 2012 of $7.5 m.  There is also another roughly $3.5 m scattered among a number of funds from PILOT payments from Waterworks.  Good money, but not enough to cover the cash cow that the sewer utility was for the City and its taxpayers. 

All of this distills down to about a $50 million revenue shortfall due to the sale of the sewer and water utilities and a $1 million revenue shortfall due to the 50 year lease of the parking meters.

It is apparent that the sale of our assets, especially our profitable assets, is having a much larger impact on the 2012 budget than is any drop in tax revenues.  And while tax revenues will recover, loss of our assets will be a permanent loss to all future City/County budgets. 

It therefore becomes imperative that the cuts be considered permanent and structural changes be made for sustainable budgets going forward.  Sure, Mayor Ballard can transfer (aka 'rob') $38.5 million from the consolidated downtown TIF to make ends meet in 2012.  But, lets not pretend that that is a permanent solution to a permanent change in City finances.

Hallelujah ! They Are Paving My Street - Warning, This Post Takes A Turn

Not since 1987, has my one block street been repaved.  With one pothole connected to another, we have survived on pothole filler for at least 10 years.  We were to the point where the real choice was - repave, or let it revert to gravel and dirt.

This morning when I saw the parade of trucks staging, then inching down my street, I was envisioning writing an entry about the impact of massive road repair on Ballard's re-election campaign, and the low regard many D's and some of my R friends have for giving Ballard an edge.  But, I also began reflecting on a few things I heard on the campaign trail and this entry turned to a new focus.  At some point I will make mention of DPW's role in any chance Ballard has to gain a 2nd term.  Just not today.

For now, let me describe what I see happening.  This morning's activity has been to scrape the years of built up paving, some as recent as last week's pothole filling, off the top.  As I write, they have gone down each side once and are now scraping the middle.

My block is somewhere between a quarter to half a mile long.  No sidewalks.  No sewers.  No city water.  No streetlights.  So, I figure, we've sort of been a donor block with regard to City and County taxes for quite a number of years.  Until today.  So, a hardy thanks to all of you who live in the rest of Indianapolis.

The parade of vehicles begins with a dump truck, travelling at a leisurely walking speed.  Behind is a machine that is scraping the top layer off the road and, via an aerial conveyor belt, sending the old paving off to the dump truck.  Then comes a water truck.  Then a medium size plow, doing what I cannot tell.  Then, at varying distances and seemingly occupied by its own activities, is another plow, rigged with a large wire brush on its underbelly, cleaning the scraped roadbed of remaining debris.  There are also two extra dump trucks awaiting their turn in rotation.  And, there is a police car stopped at each end of the block - both T intersections with other streets that are far more busy than mine.

All well and good.

Except, I then began to recall the comments I heard in various locations across the City, that a) the road crews were not diverse, and b) they seemed to hail from other Cities, with Ohio origins mentioned most often.  So, I looked a little closer.  Each truck was manned by either one or two white men.  No women.  No men of color.   Around the corner was apparently the spot for the crew to park their cars.  I could only catch the county on the license plate of one of about 6 cars - it was county number 41, or Johnson County (Marion County is 49).  All did have Indiana plates, though.

The sign on one of the police cars was Pittsboro Police.  The other was ATS.  A Google search of ATS does bring up Advance Tactics Security, out of Indianapolis.

The sign on the scraper and the water truck, and on the reflective vest of one of the walking workmen, was Mamco, Jeffersonville, IN.  Jeffersonville is across the Ohio River from Louisville, KY.

I didn't spy any other signs of origin.

So, here you have at least one road crew that will prosper from the taxes and water rate hikes that Indianapolis residents pay.  Maybe some live in Indianapolis, which would be an excellent situation.  Still, Jeffesonville, Pittsboro, and Johnson County were three of the four locations I could discern from the vehicles.  I just think that there should be more concern from the Ballard administration to hire Marion County firms and Marion County residents with all of our money (and children's money and grandchildren's money).  The employees should also reflect our pool of workers.

Oh, and one (and only one) complaint about the crew.  Most everyone was occupied in their work, so no problems there.  I had run an errand and as I was beginning to unload my car, one of the road crew was very nice in asking if I needed to get out of my driveway, not realizing I had just returned.  But, minutes before...  As I turned onto my block from a busy street, about two car lengths in, and on the right hand side of the road, sat the Pittsboro Police car.  The sun was reflecting off his windshield and I just barely caught the glimpse of his hand held up to the window with the universal 'halt' signal.  I then had to back up onto the busy street to exit.  Come on.  There are better ways to control traffic at work sites.  They do entail getting out of the air conditioned comfort of your vehicle, but they weigh public safety just a bit higher. 

All in all, and for many reasons, I look forward to seeing the crew that lays down new asphalt.  It has, after all, been 24 years since this tired old street was gussied up.

IURC Takes Utility Sale To The Community For Comment

The Indiana Utility Regulatory Commission has taken up the issue of Indianapolis' sale of the water and sewer utilities to Citizens Energy. Still pending a final decision by the IURC, is the older request for a 35% rate hike, the outcome of which will decide whether Citizens Energy pulls the plug on the deal itself.

Jon Murray, IndyStar reporter with the City Hall beat, has been doing an exceptional job covering the hearings conducted by the IURC on the utility deal (see "IURC begins hearing on proposed sale of utilities", "Public hearing set on Indianapolis' utilities sale", "Can city sell the IURC on utility deal?", and the latest, "Fee to sell utilities is focus of submissions"). His series illuminates a vigorous debate by consumer advocates and City officials before the IURC. The idea that the IURC could trim back or deny the sale is even in the air as a slim possibility.

Murray reported yesterday:

The ratepayer group, represented by Indianapolis attorney John Price, disputes the city's decision to pay Veolia to end its 20-year contract early. It argues there was ample cause to cancel the contract without payment because of performance problems and other violations.

One possibility is highlighted in new testimony by Tom Plummer. The ratepayer group member and a longtime water utility operating supervisor repeats allegations that Veolia, formerly US Filter, falsified records to receive some incentive payments from the city.

"Several Indianapolis Water employees told me that they were asked by USFilter/Veolia personnel to alter records in order to make it appear that USFilter/Veolia had earned an incentive payment when in fact the unchanged records would not have supported the claim for the incentive payment," Plummer testified.

In 2005, federal authorities investigated similar allegations of falsified water records. No charges were filed.

The ratepayer group also objects to the utilities transfer based on deep cuts to nonunion employees' benefits -- despite city leaders' assurances at the time -- after the city bought the water utility in 2002. A lawsuit filed by employees about the same issue failed several years ago.

The IURC has announce a field hearing for next week, and the Office of Consumer Counselor, which represents the interests of ratepayers before the IURC, will take comments through their website and via fax. Again, from an earlier Murray report:

On Jan. 5, the IURC will have the public hearing at Crispus Attucks Medical Magnet High School, according to a news release today from the Indiana Office of Utility Consumer Counselor.

An information session will begin at 5:30 p.m., and the public comment portion of the hearing will start at 6 p.m. The school is at 1140 Dr. Martin Luther King Jr. St.

The consumer counselor's office also is accepting comments via its website, www.in.gov/oucc. Click "comment on a case." You can also send a fax to (317) 232-5923 or mail a comment to Indiana Office of Utility Consumer Counselor, PNC Center, 115 W. Washington St., Suite 1500 South, Indianapolis, IN 46204. Include the case number: 43936'

Big Day for Public Notices - IPS, Lawrence, Beech Grove, Pike & Utility Sale

Today's Indianapolis Star has lots of public notices for local school districts as well as a notice related to the sale of the Indianapolis water and sewer utilities.

The annual financial reports for IPS, Lawrence, and Beech Grove school districts are up. I cannot overstate the amount of useful information included in these reports. They include information on the number and salary range of administrators, non-certified staff salary ranges, teacher salaries plus extra-curricular compensation, a comparison of the budgeted expenses and how much was actually spent, tax rates for 2009 and 2010, a list of all vendors who were paid over $2500, a list of debt, budgeted vs. actual revenues, and school enrollment by grade level.

MSD Pike Township has its notice of tax levies for the upcoming budget process. With an estimated 2011 budget of $132,450,982, they expect a maximum property tax levy of $40,049,800, little changed from $40,050,402 this year. Also noticed are the 3-year capital projects fund plan and bus replacement plan. A public hearing on all will be held August 26, 2010 at 7:00 pm in the Board Room, ASC - no street address given. The Board is expected to vote on the budget at its September 16 meeting.

Lastly, there is also a public notice saying that the utility deal has been sent to the IURC for review. This is available on the IndyStar website here. It is noted that it is cause number 43936. No hearing date is disclosed. This notice is pasted below:

BEFORE THE INDIANA UTILITY REGULATORY COMMISSION CAUSE NO. 43936 JOINT PETITION OF THE BOARD OF DIRECTORS FOR UTILITIES OF THE DEPARTMENT OF PUBLIC UTILITIES OF THE CITY OF INDIANAPOLIS, D/B/A CITIZENS ENERGY GROUP, CWA AUTHORITY, INC., THE CITY OF INDIANAPOLIS AND ITS DEPARTMENT OF WATERWORKS AND ITS SANITARY DISTRICT FOR APPROVALS IN CONNECTION WITH THE PROPOSED TRANSFER OF CERTAIN WATER UTILITY ASSETS TO THE BOARD AND THE PROPOSED TRANSFER OF CERTAIN WASTEWATER UTILITY ASSETS TO THE AUTHORITY, INCLUDING: (A) APPROVAL OF INITIAL RATES AND RULES FOR WATER AND WASTEWATER SERVICE , AS WELL AS THE TERMS OF CERTAIN AGREEMENTS FOR WASTEWATER TREATMENT AND DISPOSAL SERVICE; (B) APPROVAL OF AN ENVIRONMENTAL COMPLIANCE PLAN UNDER IND. CODE 8-1-28 AND AN ADJUSTMENT MECHANISM FOR WASTEWATER RATES TO PROVIDE TIMELY RECOVERY OF COSTS NECESSARY TO COMPLY IN WHOLE OR IN PART WITH THE SAFE DRINKING WATER ACT AND/OR CLEAN WATER ACT; (C) APPROVAL OF PROPOSED ALLOCATIONS OF CORPORATE SUPPORT SERVICES COSTS AMONG AFFECTED UTILITIES; (D) APPROVAL OF AN OPERATING AGREEMENT BETWEEN CITIZENS ENERGY GROUP AND CWA AUTHORITY, INC.;(E) APPROVAL OF DEPRECIATION RATES AND OTHER ACCOUNTING MATTERS RELATED TO THE WATER AND WASTEWATER ASSETS; AND (F) ANY OTHER APPROVALS NEEDED IN CONNECTION THEREWITH
______________
LEGAL NOTICE
______________
PUBLIC NOTICE is hereby given that on August 11, 2010, the Board of Directors for Utilities (“Board”) of the Department of Public Utilities of the City of Indianapolis, along with CWA Authority, Inc. (the “Authority”), the City of Indianapolis, Indiana (the “City”), the Department of Waterworks (the “DOW”) of the City, acting by and through its Board of Waterworks and the Sanitary District of the City (the “Sanitary District”), acting by and through its Board of Public Works, (collectively the “Petitioners”) filed with the Indiana Utility Regulatory Commission (“Commission”) a verified petition requesting approvals relating to the proposed acquisition of certain water utility assets by the Board from the City and DOW and the proposed acquisition of certain wastewater utility assets by the Authority from the City and Sanitary District. Among other relief, the Board is seeking authority to adopt the schedules of rates and charges applicable to the provision of water utility service by the DOW in effect on the closing date. The Authority is seeking Commission approval of its use of the schedule of rates and charges applicable to the provision of wastewater utility service by the Sanitary District, as set forth in the City’s rate Ordinance. The Authority also is seeking Commission approval of an environmental compliance plan under Ind. Code 8-1-28 and authority to implement an adjustment mechanism for wastewater rates and charges to provide timely recovery of future environmental compliance plan expenditures necessary for the Authority to comply in whole or in part with the Safe Drinking Water Act and/or Clean Water Act, as well as other requisite relief. A copy of the Petitioners’ verified petition is on file with the Commission in Cause No. 43936 and details supporting the relief requested therein will be provided in the Petitioners’ testimony and exhibits to be filed with the Commission in Cause No. 43936. Board of Directors for Utilities of the Department of Public Utilities of the City of Indianapolis, d/b/a Citizens Energy Group and CWA Authority, Inc. By: Carey B. Lykins, President and Chief Executive Officer (S - 8/14/10 - 5694640) - 08/14

Council Meets Tonight -- Utility Deal Up

The City-County Council meets tonight, and the transfer of the water utility and the sale of the sewer utility are on deck. The agenda is posted here.

Among the proposals to be introduced that strike my eye is Proposals 215, authored by the Office of Finance & Management and sponsored by Councillor Hunter. This proposal would budget $9.9 million of County Option Income Tax to :

SECTION 2. A certified distribution in an amount not to exceed $9,900,000 is to be used for the following purposes:
(1) the provision and maintenance of modern, dependable, and efficient public safety communications systems within the district for the purpose of promoting the expeditious delivery of public services to the residents and taxpayers throughout the district in order to assure the public health, safety, morals and general welfare and
(2) the provision of computers for the efficient functioning of governmental offices for the benefit of the residents and taxpayers throughout the district.

This bears looking into further, to see just what is being purchased and what will lose COIT funding in the future.

The very last action item on tonight's agenda is the utilities deals, Proposal 197. This deal has the benefit, should all the promises actually be kept, of some major infrastructure remediation in Indianapolis. But, the deal itself has too many highly negative aspects to warrant the 'yes' vote of any Councillor.

Here is my short list of primary reasons to vote against the utility transfer and sale:

1) There is no dedication of funds to ensure that the money will actually be spent on infrastructure as promised. The Council itself stopped this from happening, preferring to leave spending decisions to future Councils. There has been no proposal, as far as I have seen, to even account for the spending of the proceeds. Can the prediction of funding for Superbowl expenses be too far off? More money for the ICVA, IDI, CIB, or IEDI? Maybe a boost in arts funding? How about cash for other pet projects that are in favor? Or a few bucks toward raises, new software packages, or contracts with PR firms? The only banned expenditure for the funds is to the benefit of sports teams, an amendment introduced by Councillor Lutz.

2) All of the cash will be the proceeds of bond sales. Meaning the sewer utility ratepayers will be paying not only the money to be used for infrastructure (again IF the promises are kept), but also at least that much again for interest and fees to Citibank and the like.

3) The ratepayers will pay on the bonds for 30 years, while the infrastructure repairs will last 10 to 15 years. Your children or grandchildren's pockets are being picked so that your street can be smooth and shiny for a short while. What will they do for street repairs? It seems to me that a key ingredient that is missing here is sustainability. When the money is gone, it is gone for good. The next generation will have higher bills and lower ability to pay for their own needs. This is NOT looking 50 years down the road and doing what is right. It is looking to the next election year and doing what is expedient.

4) Not to be overlooked is the impact of this deal on the local taxing units besides the City/County. By attempting to preserve the property tax-free status of the sewer utility, the City is blocking the other units (schools, library, health & hospitals, and townships) from receiving tens of millions of dollars in property taxes each year. The question I posed to City officials and blogged on in "The City Needs To Learn To Share", remains unanswered by those officials. Without that added information, I cannot begin to guess whether the other units are losing their share of $25 million annually, or losing their share of $125 million annually. In either case, it is substantial. One can only guess what the Legislature will do in future years to remedy this loophole in the Indiana Code, perhaps putting taxpayers on the hook in addition to the hook they definitely will be on as ratepayers.

5) There is no clawback ability in the case of mismanagement by Citizens Energy. Yes, first right of refusal is in place, should Citizens Energy attempt to sell the utilities in the future - which is very good. But, there is no ability to pull them back without the consent of Citizens, should the need arise.

6) Last but not least is something I haven't heard talked about. That is the fact that Citizens Energy is awaiting the decision of the Indiana Utility Regulatory Commission on the 35% water utility rate hike that is currently before them. Yes, the deal with the City stipulates that Citizens Energy cannot request a new rate hike for 2 years after the deal is completed; pushing further rate hikes beyond the next Mayoral race. But, the 35% increase is still alive and critical to Citizens Energy's calculations. Citizens Energy officials have been clear, they have a strike price in mind for how large an increase the IURC must allow this time, for the utilities deal to make financial sense to them. Should the rate increase be too small, Citizens Energy will not consummate the deal. Yet, the deal is in separate pieces. Maybe I missed it, which could well be given the length of the documents, but I don't see both utilities being tied together as one deal. If the IURC fails to meet Citizens Energy's strike price, could they buy the sewer utility only and decline to assume the nearly $1 billion in debt on the water utility transfer? The sewer utility is well run and has always been the cash cow in this deal. One can only guess and wonder - and wait - on this last point.

Well, that's my dirty half-dozen reasons why Proposal 197 should be voted down.

The Utilities Sale Is a Mixed Bag

Anything as complex as the sale of Indianapolis' water and sewer utilities will garner mixed reactions. Not exactly a shocking statement. So, here is my take on several aspects of the deal as it is pending before the Indianapolis-Marion County City-County Council in the form of Prop 197 (see here for supporting documents and here for background documents). By the way, the Utility Transfer Oversight Committee of the Council is scheduled to meet again on July 19 - presumably in the Public Assembly Room, where they will again take public comments. That meeting will begin at 5:30 pm.

The basic outline of the deal is that the City of Indianapolis is transferring the water utility it owns to Citizens Energy for no cash, just the assumption of existing debt, and, it is selling the sewer utility it owns to Citizens Energy for $262.6 million in cash and the assumption of existing debt. Clearly, the sewer utility is the cash cow in this situation.

There have been some key players in crafting the sale, notably Chris Cotterill, the Mayor's Chief of Staff, and Dave Sherman, head of DPW, who I find to be genuinely interested in listening to ideas that can make this deal better in pretty much any aspect, except the core idea of the sale itself and the use of the proceeds for primarily infrastructure improvements. I am pleased to find this sort of openness in government, and I wish there were more folks like them. Now, that doesn't mean I think others who are involved give a hoot what the public thinks or how to improve the deal. Certainly there are some who are only looking to prod the deal in any direction that will send money to companies and outfits with which they are associated. And also certainly, there are those who are only motivated by the resulting humongous slush fund for Republican candidates for Mayor and Council in 2011.

Among the tinkered edges improved by public input, is the inclusion in the sales documents, of a prohibition on Citizens Energy ever selling these two utilities to a for-profit company. Additionally, a strong part of the deal is the first right of refusal if Citizens ever sells the water and sewer utility to a not-for-profit company or entity. Access to properties that is now enjoyed by the public, such as to Geist Reservoir, is to be preserved as well - although perhaps not to the full extent some members of the public would prefer.

Strong arguments that I have heard put forth, that have failed to materialize in the final documents, are water quality standards beyond baseline standards set by the EPA, any oversight on water quality or quantity by local authorities, or any instances of gross negligence under which the City would be able to take back these utilities without the consent of Citizens Energy. One I feel especially fervently about, and which will not see the dark of ink, is a dedication of the money to infrastructure improvements - making legal and binding, all the promises that are being made to the public in order to 'sell the sale'.

Now lets talk about the forbotten topic - should the City sell these utilities? Much is made of the nearly $1 billion in debt owed by the City for the water utility. Many believe that this utility is not managed and operated nearly as well as it should be. This is used to promote a sale. Also used to promote a sale, is some desire to remove 'partisan political governance'. Personally, I don't find any of these issues compelling. The debt is huge - but the ratepayers will still be on the hook for repaying it, regardless of who owns title to the utility. The sales agreement calls for Citizens Energy to honor the existing operating contract with Veolia that are now obligations of the City - so again no change. And lastly, one person's 'partisan political governance' is another person's 'accountability'. You say potato, I say potato. We move the water and sewer utility from services contracted by the City of Indianapolis and its elected officials, to services contracted by Citizens Energy with its self-perpetuating Board accountable to nobody else - not even shareholders.

Nobody talks about mismanagement or onerous debt encumbered by the sewer utility. By all accounts, the City has done a pretty fair, and lately a darned good, job of owning and running the wastewater system. It is under a consent decree with the EPA to make about $2.5 billion worth of improvements to keep sewage from overflowing into our rivers and streams every time it rains (Combined Sewer Overflow remediation). This represents a reduction of $1 billion from an earlier arrangement with the EPA. Everyone I know attributes this reduction in projected cost to the stewardship of Dave Sherman as head of DPW.

It is this reduction in projected cost for CSO remediation that gets garbled up in all the numbers - and I think this garbling is deliberate and unfortunate. The City's PR team wants to sell the public on the idea that Citizens Energy can pay the City $262.6 million in cash for the sewer utility and still keep rates lower than they would have been prior to the $1 billion reduction in projected cost of remediating the CSO problem. I think it is more fulsome to say that the $1 billion in reduction in the projected cost of remediating the CSO problem is fantastic - thank you Dave Sherman. But, the fact that Citizens Energy will have to float a 30 year bond to raise the cash to pay the City, will cause sewer rates to go up in order to repay the principle and interest on the bonds.

This is where the folks who support a simple transfer have a very good point. But, the water company 'sale' pretty much IS a simple transfer of that utility from the City to Citizens Energy. And all the poor management and onerous debt sound like supportive arguments making a case for the transfer. It is the sewer utility sale that is not a transfer, and without any real compelling arguments for the sale - except there is cash to be pulled out of the sewers that will result in higher than absolutely necessary rates for sewer customers. Make no mistake about it, the value of the sewer utility is not in any hard equity built into that system, but is totally contingent upon the fact that Dave Sherman brought projected rates lower than they would have otherwise gone, and the illusion that we somehow can spend that difference like it was equity.

So, now we're on to the topic of cash being obtained from the sewer utility. Just last month the City-County Council approved an increased PILOT from the sewer utility, most of which would be used to secure a 30 year bond to bring roughly $140 million immediately to the City for infrastructure improvements. I attended the Council committee hearing on this matter and something that Councillor Brian Mahern said still rings in my ears. He called it 'monetizing the PILOT payments'. Only, its 'monetizing money'. What they did was to basically take out a loan for $140 million, to spend over the next 2-4 years, and repay more than twice that amount when interest and fees are calculated -- when they could get the same $140 million from the PILOT payments in less than 10 years and have over 20 years of gravy after that. This leads me directly to the conclusion that a major purpose of generating this money is to fund the re-election campaign of Greg Ballard and Republican members of the Council. Otherwise, why be so impatient? Remember, the sewer ratepayers will be paying for 30 years to make infrastructure improvements that will last 10-15 years (and some say even fewer years than that). Why be impatient for the money?

This is the same situation that sewer ratepayers will face when Citizens Energy floats a 30 year bond for the $262.6 million sales price. That $262.6 million may be spent by the City on infrastructure improvements that last 10 -15 years -- but the rates will be elevated for 30 years to repay that money plus interest and fees.

Ratepayers will pay back at least twice the principle of both bonds, and easily more, when interest and fees are considered. So, $800 million to be paid by ratepayers over 30 years for street repairs costing $400 million that will last half that time. This money also eats up any rate savings that Dave Sherman's CSO remediation plan affords the community. Its not savings if you spend it. It is just an expense column adjustment.

On top of all this, there is no guarantee the money will be spent on infrastructure improvements. It is my understanding that the Mayor's office was willing to look at how to dedicate the proceeds of the PILOT and the sewer utility sale, but the Council blocked it. That's not good, in my book. If a Councillor is knee deep in 'selling the sale', then they have an obligation to ink down the promises being made - to protect the community from a bait and switch deal.

This deal is awash in politics - even as anti-politics is said to be a motive for selling the water and sewer utilities. This deal is clearly bad financing (monetizing money) - even as it is being touted as 'clever' financing. And, this deal will leave the sewer ratepayer with around $800,000,000 to pay off, long after the streets that do get repaved are crumbling once again.

I like very much the fact that at least some in City government have been honestly listening to the public. I'm not sure if I could be in favor if the deal was a straight transfer of the water utility only - but quite possibly. But, floating 30 year bonds for $400 million, to be spent on promised infrastructure improvements that will last half that time and leave the ratepayer on the hook for $800 million, strikes me as a generational ponzi scheme that is fiscally irresponsible.

Fox 59 Faceoff on Water / Sewer Utility Sale Making Quite a Splash

The debate between Council President, Ryan Vaughn, and Council Minority Leader, Joanne Sanders, shown on Fox 59's Faceoff on July 6, is making quite a splash in the blogosphere.

Here is the short video version:



Here is a link to the longer video, which is 14 minutes long. This link will also get you to a written position for both debaters.

The blogs are strongly siding with Joanne Sanders as the winner of this debate.

In "Ryan Vaughn Must Be Insane", the Bart Lies ! blogger makes a number of excellent points. One stands out, and that is the idea that selling the water company does not make the enormous $900 million debt go away - it only transfers it to Citizen's Energy, where ratepayers will be on the hook through Citizens, instead of through the City.

Jon Easter over at Indy Democrat, said that "Sanders whooped up on Vaughn who appeared to be out-of-touch with the prevailing opinion on the street".

Paul Ogden posted "Ryan Vaughn's Rough Week; Vaughn Loses Debates, Called "Insane" and a "Liberal Big Spender" by Members of His Own Party", wherein he brings up a number of issues, including "Vaughn has no answer - none- to the point that the Mayor's plan involves taking out a 30 year loan to pay for improvements that won't last 10 years".

Indy Student reiterates that Vaughn has a "clear conflict of interest", being an Associate with Barnes & Thornburg.

The folks over at Indy's Political Stock Exchange called it a "pummeling" of Vaughn.

Abdul, at the Indiana Barrister, who supports the deal, didn't have any comment on the debate specifically. But, he did let Think Again pen a rebuttal that focused on Vaughn's debate points. That was followed by a rebuttal of Think Twice's piece by Vaughn. The comment thread on this particular post has a good deal of vitality to it. The comments are not about the Fox 59 Faceoff debate, but are debate points on the sale of the water company itself.

If you are still looking at the water / sewer utility deal issues, Fox 59 has indeed spurred some very good public discussion.

Two Council Committees Meet Tonight

The Indianapolis-Marion County City-County Council has two committees with meetings tonight, both scheduled for room 260 of the City-County Building.

First, at 5:30 pm, the Rules Committee has two items on its agenda - Prop 183 which would put the authority of the Board of Waterworks into the Board of Public Works (and which is likely a moot point since the BofW already supported the sale of the water company to Citizens Energy) -- and -- Prop 196, which is a Council resolution sponsored by Councillor Evans to limit contracts and attendance at conferences in Arizona until that state suspends or repeals its new immigration law.

Then at 6:00 pm, the newly formed Utility Transfer Oversight Committee will be meeting to discuss Prop 197, which authorizes the sale of the sewer and water utilities to Citizens Energy. The City and Council have posted a bunch of information regarding Prop 197:

Exhibit A (19 pages) -- roughly, creates a new Authority to oversee the sewer utility, which would be controlled by Citizens Energy upon the sale of that utility. Interestingly enough, and importantly enough, this document seeks to bar the future sale of the sewer utility to a for-profit entity. This is what the paragraph under "Purpose" says:

In addition to the purposes set forth above, this Agreement provides for (a) the provision of wastewater collection and treatment services through the formation of the Authority as a separate legal entity organized as a nonprofit corporation, (b) the transfer to the Authority of the System as specified in the Purchase Agreement, (c) the delegation and/or transfer to, and vesting in, the Authority of all powers that are necessary, useful or appropriate, except the taxing power and taxing authority of the City and the District, (i) for the acquisition, ownership and operation of the System and/or (ii) for the Authority to have jurisdiction over disposal of sewage, industrial wastes or other wastes and qualifying as a publicly owned pretreatment works within the meaning of the Clean Water Act, in each case, except the taxing power and taxing authority of the City and the District, and (d) the exercise by the Authority of the powers delegated and/or transferred to it herein on behalf of the City, the District and Citizens for the benefit of the inhabitants of the City and the customers of the System in a manner that (x) protects the City and its inhabitants against further sale or disposition of the System, and forever from private ownership, control or partisan political governance; and (y) is coordinated with other utility properties that may be held, owned and/or operated by the Citizens or its affiliates (including the Authority) and (z) is irrevocable.

Exhibit B (84 pages) entitled "Asset Purchase Agreement" -- roughly, is the sales agreement for the sewer utility. A quick perusal finds that the agreement would
-- prohibit the future sale of the sewer utility to a for-profit entity and as an additional safeguard, a grant of the right of first refusal for repurchase of this utility by the City-County (two thumbs up !!)
-- allow NO MORE THAN a 10.75% annual rate hike through 2013 - which through reference much later in the document appears to be the rate hike request now under review by the Indiana Utility Regulatory Commission
-- an agreement that Citizens Energy will not seek to have the sewer utility placed under the property tax system and thereby jeopardize the PILOT just passed by the Council that I discussed in "City-County Council Should Vote Down Prop 132" and which I will bring up again in another post
-- all for the assumption of debt and a cash payment of $262,600,000

Exhibit C (78 pages) also titled "Asset Purchase Agreement" -- roughly, is the sales agreement for the water utility
-- prohibit the future sale of "Geist Reservoir, Morse Reservoir, the Canal,the South Well Fields, and any other wells or current water sources to the extent such wells or water sources are critical to providing water to the trust beneficiaries" (excellent provision)
--prohibit the future sale of the sewer utility to a for-profit entity and as an additional safeguard, a grant of the right of first refusal for repurchase of this utility by the City-County (two more thumbs up !!)
-- a rate freeze for at least 2 years (until right AFTER the next Mayoral race - coincidence??)
-- the sale is contingent upon the results of the rate hike now before the IURC being "acceptable" (as I understand it from another meeting, it must be acceptable to Citizens Energy or they will not go through with the purchase) and the sale shall not be consummated prior to 6 months after the new rates take affect
-- all for the assumption of debt alone

Supporting document A (7 pages) -- titled "Articles of Incorporation of CWA Authority, Inc.", which is the authority created to assume the assets of the sewer utility and to be run by Citizens Energy

Supporting document B (119 pages) -- the Consent Decree for the remediation of the CSO problem, dated 9-20-06

Supporting document C (75 pages) -- sales disclosure for the sewer utility

Supporting document D (27 pages) -- amendment to the Consent Decree dated June 3, 2010

Supporting document E (1 page) -- a map of the excluded assets of the Belmont treatment plant

Supporting document F (68 pages) -- sales disclosure for the water utility

Supporting document G (31 pages) -- appears to be the 2010 Capital Improvement Plan for the water utility

Supporting document H (1 page) -- map titled "Current System Configuration" showing the location of various features of the water utility with Council Districts overlaid. The south wellfield seems to have been omitted on the map to these eyes.

Supporting document I (1 page) -- flow chart of Veolia's proposed water utility capital improvements, dated 10-17-2008

WHEW !!!!

The Utility Transfer committee members are: Republicans Ryan Vaughn, Marilyn Pfisterer, Bob Lutz, Barbara Malone, Angel Rivera, and Mikes Speedy, and Democrats Joanne Sanders, Paul Bateman, Maggie Lewis, Brian Mahern, and Angela Mansfield.

This committee is set to meet again on July 19 at 5:30 pm in room 260 of the City-County Building.

City-County Council to Meet Tonight

The Indianapolis-Marion County City-County Council meets tonight. There are a few items that I find particularly interesting on the agenda.

Being introduced tonight include Prop 189, Sponsored by Councillor Cardwell, which would appropriate redevelopment grant dollars to the Indiana Convention and Visitors Association. According to Maury Plambeck, Director of the Department of Metropolitan Development, it is a grant from White Foundation, which has insisted that the money flow through the City to the ICVA. But, the grant is said to have been secured by the ICVA. Prop 189 is being assigned to the Metropolitan Development Committee, which next meets on July 12, at 5:30 pm in room 260.

Prop 196, sponsored by Councillor Evans, the digest of which is as follows:

urges the State of Arizona to repeal SB 1070, that no other state enact similar law, that the U.S. Congress consinder [sic] and act expeditiously to enact comprehensive immigration reform, and that the City and County neither hold nor attend official meetings in the State of Arizona, nor enter into any new contract for goods or services with vendors situated in Arizona until the new Arizona immigration law is repealed

Prop 196 is being referred to the Rules committee which next meets on July 6, at 5:30 pm in room 260.

Prop 197 is the proposal to approve the sale of the water and sewer utilities. Unfortunately, the exhibits referred to in the proposal which are purported to contain the details of the sale, are blank in the online version. I will edit this post to include a link as soon as I have one to these all important details. Prop 197 is being assigned to the newly created 'Utility Transfer Oversight Committee'. Melissa Thompson, Clerk of the Council Office, tells me that the committee will meet on July 6, after the Rules committee meeting ends. The committee will also meet on July 19, beginning at 5:30 pm in room 260. Ms. Thompson further informs me that the committee members have not yet been assigned.

Of the Proposals set for a final vote tonight, only Prop 167 seems to have engendered any negative votes in committee. Minutes of the June 8 meeting of the Administration & Finance committee indicate that the point of contention was about the process of Council approval of leases, with Councillor Malone saying voting for the proposal is "just to vote on what has already been completed". Councillors Malone and Lewis both voted against the proposal, while Councillors Pfisterer, Cockrum, Day, and Sanders all voted for it.

City-County Council to Meet Monday, June 7

The Indianapolis-Marion County City-County Council meets this Monday evening. The agenda has a couple of interesting proposals.

Proposal 183 will be introduced and assigned to the Rules Committee, which has a 5 to 3 Republican to Democratic member composition. This Proposal was initiated by the Mayor's Office and is being sponsored by Councillors Lutz, Speedy, Hunter, Scales, Freeman, Rivera, McQuillen, Cardwell, Day and McHenry - Republicans all. If passed, Prop 183 would eliminate the Board of Waterworks and transfer their duties to the Public Works Board. Indy Star reporter, Francesca Jarosz, had a piece in today's paper about this issue. The online title is "GOP aims to hasten sale of utilities", but the subtitle pretty much says it all: "GOP wants to dismantle bipartisan water board". As Ms. Jarosz notes, the Democrats on the Board of Waterworks have been missing from the meetings, leaving the Republican members shy of a quorum. The Ds say they want an independent review of the proposed sale of the water utility to Citizens Energy. The Rs say the Ds are injecting politics with the delay. Since the Public Works Board already voted in favor of the sale, only approval by the City-County Council and the Indiana Utility Regulatory Commission would remain as hurdles to the Mayor's sale. The Rules committee next meets on June 15 at 5:30 pm in room 260 of the City-County Building.

Proposal 182 is the rezoning petition 2009-ZON-068, which allows the expansion of the Southside Landfill. This petition was approved by the Metropolitan Development Commission on April 7, 2010. A rezoning decision changes the law on a particular parcel. The MDC does not have that authority, so all rezoning decisions of the MDC move to the City-County Council, which does have the authority to make and change local laws. Usually a stack of rezoning decisions move to the CCC where they usually pass them all without any particular scrutiny. Once in a while one petition is removed from the stack and 'called down' by a Councillor with the request that the full Council conduct its own hearing in the matter. Technically any Councillor may call down any rezoning petition, but the Council practice has been that only the district Councillor where the property is located does so -- successfully. Monday night, one or another at-large Councillor may call down the rezoning for Southside Landfill. Joanne Sanders and Barbara Malone, both at-large Councillors, are rumored names. Bob Cockrum is the district Councillor. The real debate in this matter on Monday night will center on the autonomy of the district Councillors to make this sensitive call in their own districts. I believe it takes a simple majority of the Councillors to agree to 'call down' a petition. If approved, which will be no small task, the next Council meeting would serve as a public hearing on the zoning proposal. If it goes that far, it would take a 2/3 majority of Councillors to overturn the decision of the MDC.

For action Monday night, Proposal 149, which increases fees for the Department of Code Enforcement, will be considered by the full Council. It passed out of the Rules Committee with a 6-1 vote in favor.

The entire agenda is rather short, with only the discussion on calling down Prop 182, the rezoning petition, really looking like it could bring some energy with it. This agenda does, however, portend more energetic debate at the next meeting - June 28.

Rules Committee to Vote Tonight on Utilities Deal

The City-County Council Rules and Public Policy committee will be meeting tonight to vote on Prop 131 and Prop 132, which involve the proposes sale of the water and sewer utilities and floating an $189 million bond, respectively. The meeting is scheduled for 5:30 pm in room 260 of the City-County Building.

The Rules committee has amended Prop 131 to require that the final version of the actual sales deal come back before the Council for final approval. This is an excellent move and rightly values the Council as an independent arm of City government.

There are 4 fundamental issues regarding the sale of the water and sewer utilities to Citizen Energy, that I think are most important.

1) DEDICATION OF FUNDS: The proceeds from the sale (Prop 131) and the increased sewer utility PILOT (Prop 132) are not dedicated to street and sidewalk repair and installation. From what I hear, the Mayor's office is willing to look at inking down exactly how the money can be spent, but some on the Council want to leave it loose in case a future Council wants to spend it otherwise.

We heard verbal promises by the Republican Council and Democrat Mayor, Bart Peterson, on the first stormwater drainage fee that appears on property tax bills. The promise was that the funds would be used to finance new drainage projects, something the City had been unable to find the funds to do previously. Instead, the money went to pay off old debt for old projects and the money that had been budgeted for those debt payments went elsewhere in the City's budget. So, lots of verbal promises, but no written commitment on how the money could be spent.

We heard verbal promises by the Democrat Council and the Democrat Mayor, Bart Peterson, on the increase in County Option Income Tax, $5 million of which was promised to go to crime prevention grants. While some money has been so spent, the verbal promise was put to the side by the Republican Council that was voted into office in 2007. Now-President of the Council, Ryan Vaughn, and Councillor Ben Hunter, have been the most vocal about the fact that the old Council did not ink down the promise properly and that is why a) they voted against it originally, and b) why they did not feel bound by the promise.

Vaughn, Hunter, and others, are now in the position of voting for or against a proposal of a Republican Mayor, Greg Ballard, who has made verbal promises all over the County regarding how the proceeds from any sale would be (and would not be) spent. They have it within their power to commit to the promises being made. It is now their watch. The Council is up for election next year. The Council could again pass to Democrat control and out of the control of Vaughn, Hunter, and Ballard. If they mean what they say, they will commit to it in writing. This is as true of the spending of the proceeds of the bonds that would be backed by the increased sewer utility PILOT payments, as it is of the proceeds of any sale of the water and sewer utilities.

2) LOCAL PUBLIC INPUT: To move all oversight and public input to the state level for a local service is not wise. That is what they did with the oversight of the cable companies - and that has not worked out well at all for the customers. The Indiana Utility Regulatory Commission has shown itself to be best buds with the utilities they regulate. Marion County residents deserve a local say in a local public process, about local rate hikes and local expenditures. It is, after all, the public's water and sewer utility right now, and it is in their interest that they not be cut out of further issues that will arise. Mayor Ballard has said the one of the express reasons to sell the water and sewer utilities is because politicians don't have the stomach for raising rates. Well, that's not all bad. And, if you go in that direction, at least leave the regular citizens with a process where they can HOPE to influence the outcome of rate appeals that will pull more money from their pockets.

3) RAISING WATER/SEWER RATES INSTEAD OF TAXES: There is a fundamental question involved in all of this - should water/sewer customers pay for their water and sewer usage AND fund street and sidewalk improvements? There is no doubt that there is much need for infrastructure improvements in Indy. But, how to get the money to do it all quickly, is another matter. If the proceeds from the sale are not dedicated specifically to a very short list of possible types of expenditures - then why would anyone agree to increased water and sewer rates? If the funds were to be dedicated, in writing before any deal is finalized, then this question still remains on the table, in my view. I have to admit, I end up on both sides of this one, depending upon how I approach the question in my mind.

If I look first at the huge need for street, sidewalk, and bridge repair and then at the issue of passing the cost onto water and sewer utility customers, I can see a scenario where I could support it. First, the money would have to be dedicated or its off the table for me. Second, there needs to be local oversight of water/sewer utility in the area of protecting our water supply - both in quality and quantity. Not widely know, I think, is that the water company has been pumping water so rapidly from the Perry aquifer, that the underground flow of water into the aquifer has not been able to keep up. The water table has dropped 10 feet as a consequence. This is not trivial. Likewise, overpumping from reservoirs and inadequate water release into our rivers and streams can lead to damage to those biomes. Luckily, the City will retain the Eagle Creek reservoir, considering it a drainage control feature, and not primarily a drinking water supply. But, not all of the rivers and streams in the County can have their water levels increased or decreased by opening and closing the Eagle Creek dam. When I come at this question from this angle, I conclude 'maybe - if there are some other ingredients secured'.

If I look at the water/sewer rate payers first, then the need for infrastructure improvements, I land on the other side of the equation. These rates are going to go up -- way up. Just because the City projects the rate to go up less rapidly if Citizens runs these utilities, the rates are still going way up. There is something positive to be said about keeping the cost of living as low as possible. There are economic and social reasons to do so. This is not a trivial matter. The proponents of the sale are saying it is important to keep rates as low as possible - so sell the utilities. But, then they say - since there are savings, lets split the difference. When I come at this question from this angle, I conclude 'no' to utility rate payers paying for ANYTHING more than the water and sewer they use.

4) CLEAN, SAFE, DRINKING WATER IS OUR NUMBER ONE RESOURCE: This is the most fundamental point of all. Our area spends much of its resources trying to get rid of excess water - especially this time of year. But, that should not lessen the value of clean drinking water to us. I would recommend folks look over the April issue of National Geographic before coming to a conclusion on this point. "Water - Our Thirsty World" is the title. They go into the perspective in other parts of our Country and the world. Some of the titles of articles in this volume: "Water is Life", "The Burden of Thirst", "California's Pipe Dream", and "The Last Drop". I can't conclude that the City should give up its ownership of this resource. Run the utilities better, sure. Give up ownership of the water? No - I cannot go there.

Tonight the Rules committee will decide on whether to recommend the full Council pass the increased PILOT from the sewer utility and approve floating the bonds that would be repaid with that money, as well as approve the Mayor and Citizens continued resolution of the details of the sale with the proviso that the Council gets a say after seeing said deal. This very well may be the most important decision that this Council makes its entire term. Again, the meeting starts at 5:30 in room 260. Since public testimony was taken last week, there may not be any additional time for comments made available. Channel 16, as always, will carry it.

Council Rules Committee Takes Up Water/Sewer Utility Sale

City Hall beat reporter, Francesca Jarosz, has another good article in today's IndyStar about the progress of the City's sale of the water and sewer utilities to Citizens Energy.

Jarosz says that the issue will be taken up tonight by the Council's Rules and Public Policy Committee, Chaired by Bob Lutz. The meeting begins at 5:30 pm in Room 260 of the City-County Building.

Instead of voting to give the Mayor authority to finalize the sale of the utilities, they will evidently modify Prop 131 to give the Mayor authority to continue moving forward with the deal. The actual Proposal on the actual sale will wait until June when the details have been crafted into a legal document. This is an important move by the Council; keeping alive their role as partners in Government along with the Mayor. They are refusing to rubber stamp a deal the details of which they have not seen. Good for them.

Jarosz writes:

City leaders initially hoped the council would vote on the proposal May 17. They
agreed to move back the timetable after some council members raised concerns about having to vote before the city and Citizens reached a final agreement, which is expected in June.

"It's an overwhelming proposition," said Joanne Sanders, the council's Democratic minority leader, who sent a letter to city officials asking that they allow the council to review the final agreement. "We'll be the ones who will be held accountable, and we have to make sure we do our due diligence in assessing whether this is the best deal for the citizens of Indianapolis."

The Rules Committee will also take up Proposal 132, which calls for increasing the Payment in Lieu of Taxes (PILOT) paid to the City by the sewer utility, floating bonds to the tune of $189 million backed by those PILOT payments, and floating bond anticipation notes to the tune of $189 million to be repaid by the bond proceeds within 5 years.

I am concerned about how dedicated these funds will be and what will prohibit the funds from being spent on things other than infrastructure.

While the digest of the Proposal says:

authorizes the issuance and sale of revenue bonds to procure funds to be applied to the costs of the construction, renovation, rehabilitation and installation of improvements to the public ways, including roads, streets, alleys, trails, sidewalks and other public facilities, appropriating the proceeds derived from the sale of such bonds, modifying the amount of payments in lieu of taxes payable by the sanitary district

The ordinance itself only says:

SECTION 29. All PILOT received by the City shall be deposited in the consolidated county fund and used for any purpose that the consolidated county fund may be used.

Throughout the Ordinance, there are references to "the Project", but nowhere can I find "the Project" defined. If the funds are not legally limited in how they can be spent, then, any and all normal expenses of the consolidated county fund would qualify. The sale of the utilities is being sold to the public as a way to fix our worn streets, sidewalks, and bridges. The ordinance needs to be as specific and ink down this promise. I remind everyone how former Mayor Bart Peterson raised the County Option Income Tax and promised that $5 million of it would go to crime prevention grants. When the Council and Mayor's office changed to Republican hands, that promise went out the window.

Melissa Thompson, Clerk of the Council, did send me the Resolution referred to in Prop 132. The "Project" is defined in the Public Works Board Resolution 21-2010 as follows (this gets a bit long, but it is worth public review):

PROJECT DESCRIPTION

Accessible Infrastructure

The City of Indianapolis estimates that as many as 26,000 ADA ramps may be missing and need to be installed throughout the city. The estimated coat to install these missing ramps is $40 million dollars.

Alleys

Indianapolis has approximately 476 miles of alleys that provide access to adjacent residents, utilities, solid waste collection, as well as the general public. DPW staff estimates that as many as 50 percent of these alleys are below fair condition. The estimated cost to upgrade these alleys to fair condition is $65 million dollars. Our initial need is estimated to cost $39 million dollars. The alley segments in our inventory will be prioritized throughout the city by DPW staff working with the city county councilors.

Bike Lanes

The City of Indianapolis has developed a bicycle plan for the installation of over 230 miles of on-street bicycle lanes and share the road segments to be incorporated over the next 15 years. The estimated cost to construct these bike lanes is $94 million dollars.

Bridges

Of the 531 bridges that are currently under Marion County' jurisdiction, approximately 151 of them are currently need some sort of the rehabilitations and approximately 110 of them are currently recommended for replacement. The estimated cost to replace and rehabilitate these bridges is estimated at $291 million dollars. Our initial need is estimated to cost $63.5 million dollars.

Curb and Sidewalk Reconstruction

DPW estimates that the City of Indianapolis currently has 2,966 miles of sidewalk in our public transportation network. DPW's sidewalk inventory which is a part of our pavement management inventory (updated in 2000) estimates 447 miles of our sidewalk's existing condition is less than fair. The estimated cost to reconstruct this existing sidewalk is $186 million. Our initial need is estimated to cost $52 million dollars. The street segments in our inventory will be prioritized throughout the city by DPW staff working with the city county councilors.

Curb and Sidewalk Missing Segments

The City of Indianapolis has 3,193 miles of streets in our transportation network. DPW estimates that 824 miles of thoroughfares and 862 miles of residential streets in this inventory currently do not have sidewalks. DPW estimates that installing the 1,686 miles of missing sidewalk will cost $702 million dollars not including the cost of drainage and additional right of way. Our initial need is estimated to cost $38 million dollars. The street segments in our initial inventory will be prioritized throughout the city by DPW staff looking for segments without extensive drainage and existing right of way and working with the city county councilors

Intersection Improvements

DPW maintains a priority rating of intersection improvements that will improve traffic flow and/or improve vehicular safety. Currently 18 of these intersections have had a traffic signal warrants analysis prepared indicating that a new traffic signal is warranted and some of these have had ordinances approved by the City County Council to install a new traffic signal DPW currently estimates that the cost to construct these 18 intersections is $14 million dollars. The intersection improvements will be prioritized throughout the city by DPW staff looking for segments without extensive drainage and existing right of way and working with the city county councilors

Monument Circle

With the upcoming Super Bowl in February 2012 there is an immediate need to implement a short term repair of the Monument Circle and its spokes. DPW estimates that the cost to rehabilitate all of the driving and walking surfaces with this area at $2 million dollars.

Resurfacing

The City of Indianapolis maintains 7,302 lane miles of pavement. DPW's pavement inventory estimates that 1,058 lane miles of pavement's condition (thoroughfares, and residential streets) is less than fair and is in the need of resurfacing or more extensive repairs. The estimated cost to resurface the street segments identified to be in less than a fair condition is $238 million dollars. The street segments in our inventory will be prioritized throughout the city by DPW staff working with the city county councilors.

Traffic Signal Operations

Of the 1100 traffic signals that are under Marion County's jurisdiction approximately 750 of them are currently or have been connected to some type of coordinated system. DPW estimates that the cost to repair the traffic signal system network and perform the necessary data collection and analysis to optimize our traffic signal network at $5 million dollars.

I do not know if a tangential reference to the Public Works Board Resolution can result in limiting number of ways the bond and BAN proceeds can be spent and in effect dedicate those funds. The dollar costs listed in the Resolution add up to $585.5 million. So, even if the Resolution legally does limit the ways that the money can be spent, there still is a lot of wiggle room for spending $189 million in money (less the expense related to floating the BANs and bonds) on $585.5 million in needs.

Hopefully, the Council committee will cinch down the legal issues of dedicating these funds tonight. But, the risk that the City's taxpayers could have to pay back $189 million plus interest on bond anticipation notes, should the IURC deny the rate increase, makes me very nervous.

City-County Council to Take Up Water Company Sale

At Monday night's City-County Council meeting, two Proposals will be introduced related to the sale of the Water Company and the sewer utility to Citizens Energy. Both will be referred to the Rules Committee, which next meets on May 4th at 5:30 pm in Room 260 of the City-County Building.

The digest of Prop 131 reads as follows:

authorizes the transfer of the waterworks and the sewage works of the City of Indianapolis to Citizens Energy Group

The Memorandum of Understanding is incorporated into Prop 131. Also of interest are a few documents posted at www.indy.gov/utilities The list of links includes Q&A of Council questions, which has a lot of information in it.

The digest of Prop 132 reads:

authorizes the issuance and sale of revenue bonds to procure funds to be applied to the costs of the construction, renovation, rehabilitation and installation of improvements to the public ways, including roads, streets, alleys, trails, sidewalks and other public facilities, appropriating the proceeds derived from the sale of such bonds, modifying the amount of payments in lieu of taxes payable by the sanitary district

I suggest we get a lot of folks reading this one. It seems to be authorizing the issuance of not only $189 m in bonds, but $189 m in bond anticipation warrants, so that the City doesn't have to wait for the bonds to issue. I assume this is because Payments in Lieu of Taxes (PILOT) will secure the bonds and we can't be sure of the PILOT money until the IURC okays the sale of the water and sewer utilities. It also seems to be saying that $9 m in sewer utility PILOT money that currently goes to fund public safety will go to repay these bonds instead -- but somebody correct me if I have that wrong. This particular Proposal is a tougher slog to read through than usual. So, post here what you think it means.

Star reporter, Francesca Jarosz has a very good article in today's paper regarding the issues revolving around the proposed sale. For the life of me, I can't find it on the IndyStar website, so maybe its one of those paper edition only stories. I'll look at the Star site in another couple of days and see if it suddenly appears and post a link then. [edited on 4-27-10 to add link to IndyStar article: click here]

There are a couple of important issues that haven't been locked down, in my view, that really need to be. In no particular order:

1) For what will any proceeds from the sale be spent? The original intention was for streets and sidewalks. Now, I have heard included, streets, sidewalks, alleys, economic development, community gardens, downtown streetscapes for the 2012 superbowl, trails, 'other public facilities', and stormwater drainage. The longer the list, the less I am personally interested in supporting the sale.

2) How will the funds be dedicated so that they are spent on just those things promised? As an example of what can happen when funds are not properly dedicated, we have the annual discussion of why the community was promised $5 m in crime prevention grants for a portion of the income tax increases implemented by former Mayor Peterson and the Democratically held Council. After the Mayor's office and the Council switched control to the Republican party, they declined to spend that money as promised. What Councillors Vaughn and Hunter have been saying in response to questions is that the proposal was not written on the proper Council form and thus was never guaranteed to be spent as promised. Well, what assurance does the community have that these monies will be spent as promised? Without dedication of the funds, I will hesitate to support the sale.

3) How can the City stop the sale of the water company and sewer utility by Citizens Energy in the future? Alternatively - can the City take them back?

4) There needs to be a public process created for local input into water and sewer utility matters by the community. Citizens Energy may be open and interested in such input, but it is not mandatory. The IURC oversight provides little comfort in this arena, as they are viewed as too cozy with the utilities that they regulate.

5) This sale basically finances a 4 year blitz of projects with water and sewer rate increases - and then the money is all gone but the rate increases remain. In addition, the taxpayers of Indianapolis lose control of the most valuable of all natural resources, water. There must be assurances, perhaps in the form of clawback authority by the City, that the water cannot be sold outside of Marion County, no matter how high a price is offered by other municipalities or states in the future.

Those are my thoughts. There has already been much discussion, so make sure you look over exactly what the Council will be voting on - because if it isn't in writing, it does not count.