The City is holding a series of town halls on the proposed 55-percent water rate increase, but that’s like shutting the barn door after the horse has bolted.
The City Commission should have held the town halls on the water project itself, to see if the public approved of the indebtedness it would have to pay for.
The City Commission approved the debt with no public hearing, without being given a presentation on the project by the engineering firm and without being given the City’s application for the $9.4-million loan and grant money from the U.S. Department of Agriculture, which comes with the condition that the City raise rates.
But the most important piece not presented to the City Commission and public was a cost analysis.
The water project is going to tear up City streets downtown. The City has sewer pipes that are just as old as the water pipes that are not going to be replaced at the same time. That means the streets will have to be torn up twice.
Maybe three times. The City also has a big drainage problem that street-replacement design may only partially solve during the water project.
What will it cost City residents to fix each infrastructure problem separately versus at the same time?
A few candidates running for City Commission and members of the public are also suggesting fiber-optic cable be installed at the same time water and sewer are repaired.
The City is set on spending $1 million on smart meters installed on customer buildings, which give off spikes of electro-magnetic radiation. Residents are so against the possible ill-health effects they have presented an initiative ordinance banning smart meters to the City Commission.
If the city put the $1 million into buried fiber-optic cable instead of smart meters, residents argue, it would create a smart-grid with leasable cable space, creating an income stream for the city.
The other problem with the upcoming town halls is the Rural Community Assistance Corporation rate study that is being used to rationalize the rate increase.
The RCAC is supplying a bridge loan of about $940,000 to the city over the next year before the USDA loan/grant of $9.4 million is disbursed. The RCAC is a not-for-profit hired by the USDA to train the rural government how to meet the debt and run the project to ensure the federal money is not wasted. Such a bridge loan is a condition of receiving the USDA loan. Therefore the RCAC is representing the USDA, not the City, yet the City is presenting the RCAC rate study to the people as a neutral study.
Karl Pennock, the RCAC representative, said during an interview, he got the City’s water-department financial figures from the City.
Pennock did not get his figures from an independent source, such as from the third-party firm the City hires to do its year-end audit. He also said, “I assume the transfers were legitimate,” not questioning where water funds went. His figures show that transfers out of the water fund put it in deficit five years out of the last six years.
The Sun compared Pennock’s figures with the City’s financial statements attending the audits and they don’t match.
Pennock’s rate study says the Water Department was in deficit $256,361 in fiscal-year 2017-18. The rate study shows $510,573 was transferred out. In contrast, the financial statement attending the audit says $2,718,799 was transferred out and $1,956,345 was transferred in, for a difference of negative $808,282 in the fund.
In fiscal-year 2016-17, Pennock’s rate study says the water fund was $160,014 in the black and $308,777 was transferred out of the water fund. The audit’s financial statement says $10,217,873 was transferred out and $11,790,507 was transferred in, for a difference of positive $2,070,934 in the fund.
This huge amount of money put in and out of the water fund demonstrates it is used as an inter-fund transfer weigh station.
Pennock’s rate study goes back three more years, but the City’s financial statements for those years do not break out the electric, water and wastewater funds from each other, pooling them into the Joint Utility Fund, with massive transfers going in and out to numerous funds.
Pennock also has figures for fiscal-year 2018-19, but the City turned in its financial statement and audit late to the State, and it is still not available to the public.
The point is, the City and RCAC are treating the water fund in isolation for examining its “losses” over the last six years, when the City does not run it or any of its utilities as separate entities, thus making it impossible to separate out real costs and profits from the Joint Utility Fund and other City-operation costs.
Since the people’s rate money was pooled, where it went needs to be presented to determine if the people have paid their fair share to maintain the utilities in concert.
If the City used the rate funds for non-utility purposes, the City’s management of the funds needs to be examined alongside a possible rate increase.
In any case, it is unfair to present a rate study that presumes the water department has been run as a separate entity, when it has not.