Tuesday, November 9, 2010

I'll Speak Slowly - Let's Pay For The Parking Meters Ourselves

Deputy Mayor Mike Huber continues to bring forward ONLY information that he thinks helps his cause of privatizing a City monopoly and public asset to a politically connected firm, ACS, for 50 years.

Let me speak slowly - or type slowly in this case - The City of Indianapolis has $8 million on hand, which it can use to buy technology-enhanced meters. THE CITY DOES NOT HAVE TO BOND $25 MILLION to pay for $8 million in new meters.

Huber refuses to show the income stream to the City, if we pay up front and keep the asset under public domain. Instead, he does a bait and switch, only referring to bonding - and for $25 million, to boot. In his latest presentation (see slide 13), he even omits the $25 million bond revenue as cash flow to the City under a bonding scenario. Curiously enough, boost that curve up by the omitted $25 million and it becomes highly competitive with the revised proposed deal with ACS, and outshines the original deal. Also, please note the difference in cash flow in slide 13 (amounting to less than $400 million in 50 years) and the 'increased income' shown in slide 5 (topping $600 million in 50 years). These guys refuse to stick to just one story, they are so eager to slant whatever information they think will sell this deal to the public.

But, that is not the point.

If we do the fiscally responsible thing, which seems to run counter to anything the Ballard Administration fancies, and pay $8 million for our own upgrade, the City would keep an asset that the next generation would find useful to have.

I asked for the spreadsheet used to generate the curves on slide 13 - but have received no reply, much less the spreadsheets. So, I analysed the predicted cash flow for the current proposal as follows:
I noted the year in which the curve crossed a $50 million line.
I divided the increase in cash flow between these years by the number of intervening years, to get the average cash flow per year.
I estimated that the average cash flow below $2.1 m was 30% of the $7 m threshold, and any amount over that $2.1 m represented 60% of the total revenue above the $7 m threshold.
I subtracted $10 million for the initial upgrade and an upgrade every 10 years.

Here is the comparison you get if you pay as you go:

Cumulative Cash Flow ($ Millions)
YearProposed 50 Year LeasePay Up-Front

The years with an asterisk (*), denote years where an additional $10 million upgrade of the system was calculated.

If the City took a pay as you go approach, we would see a net improvement in revenue over the proposed ACS deal by year 11, even with having paid for two system upgrades in that time.

By year 48, the City would see a net cumulative cash flow of $655 million, $305 million MORE than if we pursue this ACS deal. That is 87% HIGHER revenue.

If the slide 5 prediction of over $600 million in revenue to the City under the ACS deal were more accurate than the slide 13 prediction, then the City might actually generate $1.125 Billion, even after subtracting $50 million for periodic upgrades. That's a whopping $525 million more.

We don't need to craft a deal that makes ACS rich. We should keep this monopoly asset and pay the modest upgrade costs and let the cash flow to the owners of the rights of way and the meter system - the public.


Gary R. Welsh said...

You make too much sense, Pat. You have to remember we're dealing with a Republican-controlled council bought and paid for by Barnes & Thornburg and its clients. Vaughn (R-Barnes & Thornburg) and Rivera (R-I Wanna A MBE Contractor) shamelessly pitched the deal again at tonight's council meeting despite their glaring conflicts of interest. Huber could not refute your analysis because he knows it is indisputable the city would be many dollars ahead to keep control and upgrade the system ourselves. People simply don't appreciate how much this administration and the Republican councilors have been corrupted by the greed of Barnes & Thornburg and its clients. We truly have lost control of our city until these bastards are removed from office.

Paul K. Ogden said...

Mike Huber is nothing more than a snake oil salesman, the sort of joker who would come town in the Old West to sell the latest elixir claimed to cure everything. I don't know where Ballard finds these bozos. Huber has no interest in doing what's good for the City or the good people of Indianapolis. His goal is to make money for ACS on behalf of Loftus and Vaughn.

Citizen Kane said...

"Deputy Mayor Mike Huber continues to bring forward ONLY information that he thinks helps his cause of privatizing a City monopoly and public asset to a politically connected firm, ACS, for 50 years."

In other words, he is lying thief.

Had Enough Indy? said...

Gary, it seems that alternate reality is the name of the game. Just SAY you made significant changes - poof, the mediocre changes become significant. Just SAY you made the changes that the public asked for - poof, you are so kind to listen to the little people. Just SAY that anyone opposed is just starting next year's campaign for Council early - poof - oops - that one didn't fly, did it.

Its clearly Vaughn who is playing for next year. Last night he toss ethics out the window and got one step closer to bringing home the pork to the BRVA.

Had Enough Indy? said...

I'm waiting for the announcement that Huber scored a private sector job with Morgan Stanley - leading the meter privatization team. I don't get the sense he is only in it for others, even if those others are Loftus and Vaughn.

Had Enough Indy? said...

Citizen - you bring up two excellent philosophical questions. When exactly does giving incomplete, slanted information cross over and become outright lying? And, when does the vote of elected officials to raid every public coffer become actual theft?

J.Benson said...

My answer to one of those philosophical questions is that it becomes lying when you are thinking of your profit or your well-being. Omitting information isn't harmful until it's an attempt to deceive. Then it's a lie.

Anonymous said...

The Republican city county councilors are just a bunch of sheep that vote how they are told.

This parking proposal simply should not have come out of committee.

They don't view themselves as a separate and equal branch of government intended to be a check & balance, just a mindless puppet for others.

The backroom deals needed to push this will ultimately end many careers and possibly put some folks in jail. Just watch and see.