Monday, May 03, 2010
City Will Borrow And Spend $140 Million Regardless Of Whether Citizens Deal Is Approved
It's always been a part of the proposed sale of the water and sewer utilities to Citizens Energy that has seemed a little fuzzy. I'm talking about the $140 million the City expects to receive from Citizens in the form of payments in lieu of taxes (PILOT) to help finance streets and sidewalk improvements. Mayor Ballard's Chief of Staff, Chris Cotterill, tells the Star's Francesca Jarosz that the City will borrow at least that amount of money to pay for these public improvements regardless of whether the Citizens' sale is approved. That's no small amount of money. Keep in mind that some of those projects could be matched with federal funds. Regardless of whether the sale goes through, the funds to pay the debt service on the bonds is coming out of the utility's pocket. Let's avoid the inevitable tax increase that will come in the form of higher utility rates that Citizens will have to levy in order to finance the debt service on the additional funds Mayor Ballard has proposed the utility pay to the City to finance even more public infrastructure improvements and remove that $263 million payment from the City. It will save Indianapolis ratepayers at least 30% in higher utility rates. For once, let's think about what's good for average people and not city contractors and political contributors.
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7 comments:
Exactly right. Thank you, AI.
I am awaiting another document before posting on the hearing tonight on my blog. But, it is important to note that Prop 132, which would authorize the PILOT, authorize a bond sale to the tune of $189 million (not $140 million), authorize a bond anticipation note that presumes the IURC will agree to pass the cost of the PILOT payments on to the sewer utility rate payers, AND appropriate the proceeds of the bond anticipation note. I await a document that may or may not contain any means of dedicating the funds for the infrastructure improvements that the Mayor has been touting. The actual Ordinance contained in Prop 132 does not limit the things that the money can be spent on, except by reference to the Resolution of the Public Works Board. So, we'll see if there are any teeth there.
I have heard that the proceeds could be spent on downtown street improvements for the 2012 Superbowl, and the Prop 132 digest allows for expenditures on 'other public facilities' -- which I take to include sports venues and convention centers. I think these types of expenditures should be clearly banned outright.
I am also more than a little concerned about the risk of floating bond anticipation notes hoping the IURC rules in favor of rate hikes to cover the PILOT payments. If that gets flubbed, the taxpayers will have to come up with the repayment of those notes within 5 years.
Thanks for sharing, Pat. You've added another dimension to this issue. This PILOT needs to be explained once and for all in a clear and concise manner. I keep learning something new about it with the passing of each day.
Pat, So much for the promise from Ballard that no city money would be used for the Super Bowl. You knew they would sneak millions of spending for it through the back door.
Gary - they budgeted $600,000 to WiFi the mile square for the Superbowl. In addition, the emergency response folks are putting in unknown amounts of time, on taxpayer's funds, to plan for the event. I tried to get an approximation of the salary total going to this effort last budget time, but to no avail.
I would not be surprised to find other money going to the event that originated with the taxpayers.
You can see where Ballard's priorities lie. They sure as hell don't lie with dealing with the abandoned house problemm that is plaguing so many neighborhoods. I think we need an investigation of how much pay and benefits Mark Miles is receiving and other expenditures by his self-serving committee. I hear he wanted to book the entire Columbia Club for members of his committee and their friends and acquaintenances during the Super Bowl.
This deal is nothing but a scam. No money should change hands if these public services are transferred to Citizens. This is nothing more than the transfer of public uses to a public entity. Any money gained from this deal is nothing less than theft. This is shameful scheme to scam taxpayers and ratepayers and transfer wealth to the usual suspects from the general public again. When is this nonsense going to stop?
From Citizens website (please note the second paragraph particularly):
History of the Trust
Citizens Energy Group was founded in 1887 as Consumers Gas Trust at a time when the city began to use natural gas drawn from nearby gas production fields. City leaders such as Thomas Morris, Colonel Eli Lilly and Benjamin Harrison created a structure known as a Public Charitable Trust to protect the gas company assets from takeover by monopolies like Standard Oil and from political patronage.
Consumers Gas Trust became Citizens Gas in 1906 when the city purchased the majority of the company’s assets. It became Citizens Gas & Coke Utility in 1935 when the City purchased all of the company’s assets.
In 2008, the company was renamed Citizens Energy Group to reflect recent strategic changes in the company including closure of Indianapolis Coke. As long as it fulfills its mission, Citizens cannot be sold. The legal operating name for the Trust is The Board of Directors for Utilities of the Department of Public Utilities of the City of Indianapolis (“The Board”).
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