Sunday, April 25, 2010

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 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.


Blog Admin said...

Pat, I can answer at least one of the questions. I attended the public forum a couple weeks ago in Pike Township.

Citizens, as a public trust (according to the CEO) can not legally sell the utilities they own. The CEO wasn't sure if leasing is legal, but stated clearly it isn't being considered. The only way the city could get it back is to legally prove that Citizens has broken the "trust." Basically, if they stop providing the service, or the service stops being needed.

For all I know, this could be wrong. Maybe public trusts CAN sell or lease their utilities. I'm sure Paul Ogden could offer some more in-depth perspective on this.

The simplest way for the city to stop the sale is the council to vote against it. All of the other city-commissions rubber stamped it.

You are right that the MOI (at least as far as I can tell) does not allocate the $269 million or so to any specific funds. I asked Maggie Lewis to look into this for me, and I'll try to follow up with her Monday. Ballard, at the public forum specifically ruled out Pacers, CIB, and ICVA from getting any of this money. I asked what economic development projects might get a slice of this money, and he mumbled something about NCAA projects and 2012 Superbowl, but nothing eligible or specific.

M Theory said...

Citizen's Gas customers need to get copies of their bills going back a few years and take a look at the SERVICE & DELIVERY charges being extorted from them.

There is no rhyme nor reason to these charges. When I asked Citizens what it is for, they state it's for "line maintenance" and "administration".

One month I was charged $155 just for service and delivery (not the natural gas), YET in the 12 years I've lived in my home, they have never once touched my gas lines.

The other day I spoke to a former Crystal Catering employee who told me that every single Friday night he had to go to Citizens' CEO Carey Lykins home to put on a lavish catered party for 200. This was a weekly event at his house.

My other utilities (electric, cable internet, and water) can all three be sent to my house for less than what Citizens is charging me for delivery alone.

Gas lines are just plumbing. They are dangerous, but so are electric lines.

Something doesn't smell right at Citizens. We don't need them taking over our water too.

I could INSURE my gas lines for a fraction of what they are charging for line maintenance.

If you don't pay these exhorbitant fees, they will cut off your gas, charge a $58 reconnect fee, and extract $150 deposit. They are holding people hostage to these fees which are unjustifiable.

Had Enough Indy? said...

IS - I get that answer about the status of a Public Trust - but...

Wasn't Blue Cross similarly positioned? Can't the whole company be bought? Can't they deliberately violate some aspect of the cannons of the Trust and thereby be deemed as not fulfilling their obligations and be terminated?

This unusual (to us mere mortals) company type and the rules that obligate it, and the crazy self-perpetuating board that runs it, do not bring comfort in the answer to the seemingly simple question "can Citizens sell the water company in the future?". The fact that they have existed for over 100 years doesn't really answer the question.

So, in keeping with the KISS principle, why doesn't the final agreement simply state "Citizens cannot sell the water company to any entity except the City of Indianapolis. Should Citizens change its status as a Public Charitable Trust, the water and sewer utility revert, free of charge, to the City of Indianapolis."

Surely there are unneeded clauses and repetition in all manner of legal documents. Being clear on the ownership matter should be doable.

As for Superbowl expenses and downtown streetscape improvements - no, no, no, and no. How much money have we spent on these things already, and to the neglect of the infrastructure residents must use every day? After being sold on the Superbowl as getting funding through donations - then seeing at budget time $600,000 going to Wi-Fi for the mile square for Superbowl AND seeing untold hours of police and public safety personel planning and training for the Superbowl at our expense, I must draw the line. Not that it matters where I personally draw the line. I just can't agree to any more money for sports and tourism.

Had Enough Indy? said...

HFFT - now I've got to pull all my old bills. You do raise a good point. I had merely thought the gas bills were through the roof the last couple of years due to natural gas prices. I'll be back with you on thisa after I can review what we have been charged and for what.

The point the City has been trying to make is that Citizens can lower the anticipated rate increases due to the CSO remediation because of lower billing costs and because of an increased paying customer base. It seems that the City estimates it is actually only getting bills to about 92% of real water and sewer users, when the industry norm is 99%. That amounts to real dollars lost. And, we all know about the poor billing practices of the water company that overcharge some people, and may undercharge others, because of the heavy use of estimated water usage instead of meter reading at regular intervals.

tomg said...

(1)The City-County Council and mayor must oversee the utilities, especially soas to safeguard water resources for Hamilton and Marion counties and control sales to outside interests. The mayor and CCC don't want to hear this.
(2)Some residents must select which utilities they can pay. If the bills are combined, how is this matter dealt with?

Marycatherine Barton said...

Thanks for this analysis, HEI. I am very much opposed to this flaky sale.