Brian Williams Focuses in on the Utility Sale

Brian Williams, a Democratic candidate for Mayor of Indianapolis, sent out a lengthy message via Facebook today. As Gary Welsh of Advance Indiana has pointed out, Brian Williams is the strongest voice against the water/sewage utility sale, and has often been the first out with information. And while Williams backs up his voice with facts and substance, the other Democratic candidates for Mayor are streets behind. José Evans was doing a lot of posturing and pandering when I saw him at a Pike Township forum earlier in this month. But the worst in the lot is Melina Kennedy.

Kennedy is listed as "Counsel" for the law firm Baker and Daniels. Baker and Daniels has charged an unspecified amount of hours at the rate of $540 an hour to represent the city in the utility sale. Because her employer is involved, Kennedy can not say ANYTHING good or bad about the utility deal.

Here is his message in full:

Nearly two months ago my campaign submitted a public records request for all contracts, invoices and documents related to the proposed sale of the Indianapolis water and sewer utility. While the City still has not honored the entirety of the request, recently released documents offer a more complete picture of Mayor Ballard's proposal. The released documents included a study by Citigroup which showed the projected revenue and expenditures for the water utility under Citizens' ownership. According to the study, proposed savings under Citizens' ownership are completely dependent on the following assumptions:

- An immediate and sustained 15% decrease in operating costs
- An immediate and sustained 5% decrease in capital costs
- A household growth rate from 2010 to 2020 double that of 2000 to 2010
- Residential water use as a proportion of total use 20% higher than the City's estimates

Citizens CEO Carey Lykins has suggested that any loss in workforce would come through attrition, but an immediate 15% drop in operating costs cannot be achieved in such a manner. Lykins has suggested by combining the gas and water utilities capital costs can be lowered by increased bargaining power. However, because gas utilities require far fewer capital expenditures it is unclear how this modest increase in capital projects will create the substantial discount assumed. No rationale is given for the assumption that Indianapolis will suddenly increase its rate of household growth. Nor is any rationale given for the assumption that residential water usage as a percentage of total usage will rise. This is an important figure as residential water rates are substantially higher than commercial and industrial rates. If residential usage rises relative to commercial and industrial, the income per unit for the water provided increases thus lowering the need for increased rates.

The released documents also explain how the proposed transaction is to be funded. According to Mayor Ballard, the City will receive approximately $425 million from this transaction. This amount includes a payment from Citizens to the City in the amount of $263 million, $140 million from PILOT bonds and the remainder from the liquidation of the water and sewer system's capital fund. According to the documents recently released by the City, Citizens' payment to the city is being funded with thirty-year bonds. The PILOT bonds also have a thirty year lifespan. While ratepayers in 2040 will still be paying for infrastructure improvements in 2011, they will not be able to enjoy them. The lifespan for the majority of the improvements funded by these bonds is only 8-10 years. In short, the recently released documents show a long-term increase in water rates being used to pay for infrastructure improvements with a medium-term life span.

Our infrastructure needs are real and manifold. Mayor Ballard is wise to address these needs; however, he needs to do so in a sustainable manner. Divesting ourselves of the water and sewer systems forever eliminates a funding source for infrastructure improvement. Instead of proceeding on this unsustainable path, Mayor Ballard should be honest with Indianapolis citizens about the need for infrastructure spending and act accordingly. Real leadership requires honesty and acting in the best interest of Indianapolis citizens. Mayor Ballard's proposal meets neither of those criteria.