Star Continues To Mislead Readers On Utilities Deal

An editorial in today's Star once again blatantly makes misrepresentations about the proposed transfer of the sewer and water utilities to Citizens Energy in an effort to discredit the people raising concerns about the deal as proposed, including this blogger. In an editorial entitled, "Rescue operation within reach," the editors use the excuse of recent heavy rainfalls as a rationale for supporting a backdoor tax increase on sewer and water users to fund a massive public works program for street and sidewalk improvements. The answer to fixing the City's aging sewer system and improve drainage is the Ballard plan according to the editorial.

To cut into the city's enormous backlog of infrastructure projects, the Ballard administration has pushed an unusual but sensible plan to sell the city's water and sewer works to Citizens Energy for $1.9 billion. The city would net about $425 million from the transaction, money that has been promised for streets, sidewalks, bridges and neighborhoods vexed by abandoned houses.

The Star characterizes the transaction as a sale when it is simply a transfer from one public entity to another. The utilities are currently owned by a municipal corporation. If the deal is approved, the utilities will be owned by Citizens Energy, a public benefit trust that is collectively owned by the citizens of Marion County. Further, the cash transfer to the City from Citizens is $263 million payable over two years, not $425 million as falsely suggested by the editors. The editorial then goes on to suggest that people opposing the deal have no alternatives:

The deal is by necessity complex, leaving plenty of room for legitimate questions and appropriate concern.

But what opponents of the deal have failed to do in any credible way is answer how they would pay to fix the city's longstanding infrastructure problems in lieu of transferring the assets to Citizens.

Without the money raised through the sale, city leaders have only two realistic options: Continue to fall further behind in maintaining and upgrading basic infrastructure, or raise taxes. All sides should agree that the first option is untenable given the growing list of need. Opponents of the deal, however, have failed to embrace the second option, refusing to identify which taxes they would raise and by how much.

Until they do, it's hard to have a serious discussion about the city's alternatives to the Citizens transaction.

The Star pretends that this blogger and others who have raised legitimate concerns about the deal are opposed to transferring ownership of the utilities to Citizens Energy, which seems better equipped to manage the utilities compared to the incompetent and costly management the City has offered in recent years. I have no problem with the transfer; I and many others do oppose requiring Citizens to pay $263 million, not the $425 million the editorial falsely states, to assume ownership of the utilities and assume $1.5 billion in debt owed on them. Citizens does not have the cash to pay the City so it will borrow that money by issuing 30-year bonds. The principal and interest payable on those bonds will be passed on to ratepayers in the form of higher rates. Sewer and water rates are already expected to climb 300% and 100%, respectively, in the coming years in order to meet infrastructure needs and comply with a federal consent decree on the CSO.

Ballard wants to use the $263 million cash paid over the first two years by Citizens, along with a new bond issue of at least $140 million, to fund a massive public works plan he dubs "Rebuild Indy", an entirely different proposal than the original plan of simply transferring ownership to another entity better able to manage the utilities. Although water and sewer rate users will pay for those improvements through higher rates, none of those improvements are related to the maintenance of the water and sewer utilities. Most of the money will be spent paving streets and building sidewalks. Many of those projects have a life span of only 8 to 10 years, but we will be paying for those improvements with borrowed funds for at least 30 years.

The editors act as if the City isn't doing enough to address its infrastructure problems. Yet a story by Francesca Jarosz in today's paper discussing the problem with sewage handling in the city tells a different story. Jarosz writes:

Projects to stop the sewage overflows and eliminate septic tanks -- with a combined price tag of about $2.5 billion that's expected to come mostly from rate increases -- will take more than a decade.


Over the next 15 years, the city will spend $1.7 billion to build about 25 miles of limestone tunnels and double its treatment capacity to reduce the number of sewage overflows into bodies of water from about 60 times per year to a maximum of four.

About a third of the projects have been completed, said Steve Nielsen, deputy director and chief engineer for the city's Department of Public Works.

As major portions are completed in 2017 and 2021, problems will be reduced but not entirely fixed until the end of 2025, when the work must be completed to meet an Environmental Protection Agency mandate.

"With each and every project we get going, there's going to be some incremental betterment," Nielsen said. "By 2025, that's when you really see a difference."

Do you get that? We're spending billions on these infrastructure improvements already without another backdoor tax increase to fund pet street and sidewalk projects the mayor wants to tackle before next year's election. Even without the deal, Ballard says he plans to borrow the $140 million for these projects. If there is a need for more transportation funding, where's the mayor's proposal to raise taxes on motor fuel, or to impose a wheel tax, which are related to the transportation use? You don't see them because that's a tax increase waiting to happen after the next election when he will push for a new regional tax to fund transportation-related projects in the Indianapolis metropolitan area. The highway contractors who have contributed large sums of money to Ballard's re-election campaign couldn't be happier. Mayor Ballard can pretend he's giving you something for nothing, and the Star is backing him up on this false expectation one hundred percent. Again, just another reason so many people are ending their subscriptions to the Star. The newspaper simply can no longer be trusted to provide fair and balanced coverage to its readers.