Tuesday, May 11, 2010

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.


Blog Admin said...


I have heard two drastically different answers on how exactly everything is going to happen, as far as the Council goes.

From At-Large Councilor Angel Rivera, I was told that Prop 132 is just permission to take out bonds, and that the Mayor wants to introduce another ordinance in a week or so that'll allocate that money to specific projects.

Chris Cotterill, the Mayor's chief of staff, last night at a Pike township forum on the utility sale, seemed very unsure about when, if at all, there would be a proposal introduced that would allocate money for projects.

While the ocuncil will have to vote on it again if it's changed, Cotterill seemed to imply that the IURC can't change specific parts of the deal, but rather either approve or or not approve it. So taking Cotterill at his word, it's highly unlikely the deal will be changed anyway (Though it is a nice safe guard).

While "public comment" was taken at the last meeting, I know many people left waiting to make their comments. I was one of them. In a full room, I find it hard to believe only three people actually wanted to speak. I'm sure some of the people who left with me would've wanted to as well.

Had Enough Indy? said...

IS - actually prop 132 does indeed appropriate the proceeds of the bond issue to projects outlined by the Public Works Board. They would not come back for an approval of each and every project.

The IURC would decide if the rates could be increased to cover the debt incurred by Citizens to buy the utilities. But, no, they could not change the terms of the deal specifically. Their decision could impact the ability to finalize the deal, though.

Blog Admin said...

I did read through Prop 132 quite quickly. Where does it allocate that?

I'll have to write to some reps to advocate for specific allocations for everything. AT THE VERY LEAST, there should be restrictions on the funding.

Had Enough Indy? said...

IS - here is the main part:

"SECTION 1. The City is hereby authorized to make a loan, for the purpose of providing funds to be
applied to the costs of the Project, together with costs and expenses incidental thereto, and including
costs and expenses in connection with the issuance of bonds on account thereof."

The "Project" is defined in a document approved by the Public Works Board and I listed that in an earlier entry:


Hope that helps.