Thursday, April 05, 2012

Town Meeting Tonight on Utility Rate Proposals - Updated

Lengthy presentations to precede citizen input.

By Dan Schroeder

Citizens who care about their ever-increasing Ogden City utility bills should be sure to attend tonight’s long-awaited “town meeting” in the city council chambers on the third floor of the Municipal Building. The meeting begins at 6:00 p.m.

Just don’t expect to have any in-depth dialogue with your elected officials. You won’t get to speak longer than three minutes, and you’ll have to sit through some lengthy presentations first.

According to the published agenda, the meeting will begin with the presentation (presumably by the city’s consultants) of various “scenarios” for the timing and funding of roughly $50 million in new infrastructure projects. Unfortunately, according to city council staff, these scenarios will not be available for viewing before the meeting.

Then city staff will present their answers to a long list of “frequently asked questions” that they’ve compiled over the last several weeks. They’ve promised to post this document on the city council’s web site by noon today, but as of this writing, the FAQ document is still a secret.

The city council discussed the FAQ document at its public work session Tuesday night, while refusing to provide a copy to myself or to the Standard-Examiner reporter who attended. Listening to that discussion was a bizarre experience, as staff insisted that council members read the document in silence and comment only on the changes they would like to see. Still, based on what I heard, it’s clear that this document is intended to explain to the public why their ideas, questions, and concerns are invalid; the bureaucrats know best.

In some cases, I actually agree. For instance, some citizens seem to feel that the city should somehow provide them with unlimited irrigation water for a nominal flat fee of only $150 per year. That’s just not going to happen, for excellent reasons. It’s a simple fact that those who already have access to unmetered secondary water can keep a large lawn green more cheaply than those who don’t. Life isn’t always fair. (The best the city can do is provide a modest discount during the summer to those who must irrigate with culinary water.)

I’m also convinced that most of the proposed capital projects really are necessary, although there are a couple of exceptions and I also think some of the projects could be delayed a few years without harm.

I’m even convinced that a modest water rate increase is probably necessary, to pay for all the needed infrastructure upgrades over the short and long term.

Where I part company with the consultants and the bureaucrats is over the need for additional bonded debt. The consultants love bonds, because they get to charge additional fees for serving as the “financial advisor” in the bond issuing process. And the bureaucrats love bonds, because they can then build lots of big projects immediately, forcing rate payers to pay for them over the next 30 years.

The problem with bonds is that we all end up paying substantially more in the long run after we’ve paid all the accumulated interest. To keep utility rates as low as possible over the long run, we should be paying for our capital projects with cash rather than debt. I’ve run some numbers and I’m convinced that this is mostly possible, but it’s not clear that the consultants are making an honest effort to formulate such a scenario.

In any case, the suspense is certainly building as we await the unveiling of the scenarios at 6 p.m. tonight. Then, after the presentations and the public comments, the agenda says that “direction will need to be given by the council.” In other words, the staff are telling the council to assimilate the scenarios and the public comments on the fly, then immediately make their decision. We’ll see soon enough what the council actually does.

Update 4/5/12 12:57 p.m.: Via Dan Schroeder: "Here's the "FAQ" and Fact Sheet...," which is now revealed a few five hours short of tonight's "Town Hall Meeting." Actually folks, it now appears that there are not one, but two of these suddenly unveiled and formerly "secret" documents:
So what about it WCF readers? Are the Ogden City Council and the Mike Caldwell administration coming up a day late and a dollar short in re this issue? Has Mayor Mike Caldwell, or the City Council, for that matter, been even slightly transparent about the multi-million dollar issues which are coming up at tonight's "Town Hall Meeting"?

You be the judges, taxpaying Ogden lumpencitizens.

Update 4/5/12 6:06 p.m.: Dan Schroeder is now live blogging from the Ogden City Council Chambers. Click the comments link below to follow his real-time posts.

Update 4/6/12 8:oo a.m.: Here's Mitch Shaw's Standard-Examiner post-meeting writeup:


Ogdenite said...

Why wasn't the FAQ included in the meeting packet that is supposed to be available to the public?  Are they working their way back to government in the dark?

OneWhoKnows2 said...

That is standard procedure for the Council from the past administration.  The Mayor would sell his puppets by lip service and the Council would give their blessing.  Hopefully, that crap will stop in Ogden soon ???

Crjennings said...

I must be a simpleton. Even if my water rates double over the next how many years, I'm still getting a bargain. I must admit that I have "Pineview" irrigation water, so I realize how lucky I am. Believe me. I have a big yard.

I lived, once, hauling water (not having it come out of tap) and took my garbage to a local open-pit dump where I had to ditch my garbage before the bears took it from me. I say "thank you" every time I turn on the tap or take my garbage AND RECYCLING out to my on-site containers.My only objection to the entire proposal is that we may be providing water for development further upslope on our beautiful mountainsides. I COMPLETELY object to facilitating the unreasonable act of allowing development any higher than we already have. To me, the Weber County Wasatch slope should be a protected public park and the sooner it becomes one, the better we ALL will live.If you don't agree with me, take a look at what is happening in North Ogden, as they are allowing the plaque (think teeth)/plague (think disease) of development creeping (think creepy) up Ben Lomond. Someone may love living up there, but as far as I'm concerned the destruction of the land/view is like a festering wound to me.So, the previous administration didn't administer funds the way we wanted and, possibly, the new one won't either. We deal with what we have left. Investing in water is one of the issues we have to deal with. As a community, our utility bills and taxes are one of the most civilized ways I know of doing this.
Specifically, what should we BE doing instead?

rudizink said...

You're definitely NOT a simpleton, Caril; but Dan's also right:  These necessary water system upgrades should be handled
systematically, and in the order of their fail-safe priorities.  Not
only that, but I strongly agree with Dan that these projects ought to be
financed in cash, from sources like the BDO cash cow.  Ogden City's
already nearly maxed out in its bonding capability; and in an era where
we're suddenly hearing  about municipal bankruptcies around the nation,
this is no time, I think, for the beleguered taxpayers of Ogden City to
get themselves into further hock.

Observer said...

Exactly right, Rudi.  Mayor Caldwell has shown exactly 0% leadership on his issue.  Loved the html page showing Caldwell with his head in a bag, I do confess.

Dan S. said...

I'm now coming to you live from the city council chambers. Chair Garner has just read a statement asking everyone to be civil and refrain from clapping, booing, etc. There's a new handout from the consultants outlining some of the main points of their rate proposal options, but a lot of the details are lacking.

Council staff Symes says that after the public comment, they will indeed be asking the council to "give direction".

Now consultant Cody Deeter steps forward.

rudizink said...

 Dan: How's tonight's public turnout?  Can you provide a rough numbers estimate? Thanks.

Dan S. said...

Deeter begins with an anecdote from a few years ago about how bonding isn't such a bad thing.

Deeter presents four options on scheduling the major short-term capital projects. But all four projects include bonding. The differences are in the resulting user rates.

When asked, he says they did try a scenario without bonding, but it's so horrible that they're not presenting it tonight. It's clear that they didn't try very hard.

Dan S. said...

I can't see all the seats from where I'm sitting, but I'd guess there are about 25 to 30 citizens present, plus all the usual bureaucrats.

Dan S. said...

Next topic from Deeter: Base rate and its rationale. 

Looks like his formula would imply that residential users are paying more than their share and commercial/industrial users less, based on what they actually use on average. But it's already that way to an even larger extent.

He's not saying (at least not yet) what the base rates would actually be--only how the base rates would depend on connection size.

Dan S. said...

He's proposing five separate rate tiers, which is just as complicated as the current tiered system.

The tier system for outdoor use assumes much larger lots than the Ogden average.

He's proposing no tiered structure for commercial users. The per-gallon rate would be the same for all.

Dan S. said...

Now Deeter comes to the question of what fraction of revenue should be captured by base rate vs. per-gallon "tiers". He offers options of 40%, 35%, or 30% from the base. All these would be better (in my opinion) than the current system where it's about 50%. However, if I understand him correctly, he's proposing to increase the total revenue from residential users (and presumably decrease the total from commercial users).

Dan S. said...

Hyer again wrestles with the rationale for having a rate system that encourages conservation.

Deeter, Wicks, and Stephens are in favor of encouraging water conservation.

Laura Lewis (Deeter's boss) steps forward and reminds everyone that there are significant costs to providing enough water for people to irrigate, and someone has to pay these costs.

That concludes the consultants' presentation (after less than an hour!).

Dan S. said...

Now Public Services director Jay Lowder steps forward to explain the FAQs.

Scratch that. He's simply reading the whole document aloud, word for word. Zzzzzz.

Dan S. said...

At least Lowder is getting through the document pretty quickly, without digressions.

The FAQ document is especially dull because it was written by a committee.

Comptroller John Arrington steps forward to answer the last two questions. The first of these concerns the "fiscal charge" tax that the utilities pay to the general fund. He reviews what he said about this Tuesday night. He also reviews the fees that other city departments charge directly to the utilities; this is in addition to the fiscal charges.

New factoid from Arrington: 97% of water fund's operating revenue is from "sale of water", i.e., monthly bills, including the base rate. So the percentage that comes from hookup fees and other incidentals is pretty much negligible.

Wicks: Can you explain why water department operating expenses have gone up by $3 million in the last few years?

Arrington responds in part, discussing the fiscal charges (which account for a little over a third of this increase), but doesn't address the full $3 million.

Dan S. said...

This concludes the administration's presentation. Next is a short break and then comments from the public.

rudizink said...

 Quick question, Dan.  Is Mayor Caldwell present at tonight's meeting?

Dan S. said...

Nope. CAO Mark Johnson is here, sitting low and quiet in his chair.

Dan S. said...

I won't try to summarize all the public comments. We're currently on the fifth speaker (I was second). He's saying that if water rates get higher, people will stop watering their lawns and then get fined for not keeping their lawns green.

Former candidates Steve Thompson and John Thompson are among the next few speakers.

I think there were 11 speakers in total from among the public.

Now they'll proceed with further discussion. Bill Cook suggests that Mr. Deeter and administrative staff come back up to the podium to answer some of the questions that have come up.

Dan S. said...

Arrington claims that it's not practical to try to set aside money over the long term because a future city council could decide to spend it on something else. [In my view this is a non-issue. The largest project on the table is less than $12 million and the city has already successfully saved up that much money in the sewer fund.]

Deeter now steps back up to the podium and asks the council for "direction" on narrowing down the 4 options for scheduling the projects and the 3 options for dividing bills between base rate and per-gallon rates.

Hyer asks if we can't add an option that would avoid bonding. Deeter claims that in that case, rates would have to spike to $90 per residence per month for at least a year. Wicks asks if they assumed current operating expense levels and Deeter says yes.

Deeter further explains that his model chooses the amount of bonding in order to minimize the average water rate in 2022.  [But the bonds are for 30 years! More bonding will result in higher rates over that next 20 years.]  His model also assumes [unlike the version he presented several weeks ago] that rates will never be raised more than 5% in any given year.

Dan S. said...

Gochnour isn't ready to commit to one of the four options tonight, having just seen them for the first time. Wicks agrees. Stephens also wants a little more time. Garner asks Cook if that's ok, and Cook says the next chance for the council to discuss this will be at next Tuesday's work session. They can't put it off any later than that and still comply with the agreed-upon schedule to get the new ordinances in place.

Dan S. said...

Gochnour asks whether it's possible for the water fund to borrow from the sewer fund. Arrington steps up and responds that it is possible, within certain limits. There would still be interest involved, but no origination fees.

Hyer asks why five tiers. Deeter says they decided that in the steering committee and the break points seemed natural.

Gochnour asks why only one tier for commercial users. Deeter says it's because there's so much diversity among commercial users, it's hard to characterize how much use is reasonable for the tier cutoff.

Van Hooser asks about use-base sewer fees. Deeter says that's his lowest priority because the city can't implement it yet. Wicks disputes this and reminds him that the administration promised to look into what it would take.

Dan S. said...

And the town meeting has now drawn to a close at 9:05 p.m. Good night!

rudizink said...

Many thanks, Dan!

Fantastic reporting!

Bob Becker said...

Good news and bad news from tonight's meeting [with, yet again, another thanks to Dan S. for both his reporting and for his independent vetting of the numbers].   

Bad news first: We are still in the early days of the new Administration, but I'm sorry to say it's a tad disconcerting that it seems to be slipping into the Godfrey Administration practice of presenting proposals at the last minute, or nearly so, and then insisting that a decision be made lickety-split, right now, or the stars will fall from the heavens, anarchy will be loosed upon the land, and the Administration will hold its breath until it turns blue.  The Good News:I'll give the new Mayor credit for one improvement: the Council is being presented with several options, and being asked to choose from among them. This is a significant improvement over the previous Administration which often preferred to present one option [which of course is Hobsen's Choice: no option at all], which it insisted be adopted immediately.   Good to see that the Council, when it is unhappy about the time it's had to consider the options placed before it, some of which it has evidently only recently been made aware of, has, so far, refused to be buffaloed into making an instant decision under Administration urging. 

Dan S. said...

There was some interesting informal conversation among city staff and others after the formal meeting ended. The point was made that we don't want to charge commercial and industrial users too much, because they may move to a location where the cost of water is less. The city's largest water user is Fresenius, which is also one of the city's largest employers. There's a distinct possibility that the new rate structure may build in an intentional subsidy for commercial/industrial users, provided (of course) by residential users. Whether or not that's a good idea, I hope the process and the motivation will be transparent.

Dan S. said...

Here's Mitch Shaw's writeup in the Standard-Examiner:

Smaatguy said...

Where in the world is Caldwell during all this? Down at Iggy's watching the game?   Ridiculous that he wasn't present considering the impact to the community. 

Rob Garner said...


During last nights presentation the presenters kept refering to the steering committee. Do you know who was on that committee?

Dan S. said...

Great question, Rob. The steering committee consists of most or all of the following: Consultants Laura Lewis and Cody Deeter; city council staff Bill Cook, Janene Eller-Smith, and Glenn Symes; and administrative staff Mark Johnson (CAO), Jay Lowder (Public Services Director), Justin Anderson (City Engineer), and John Arrington (Comptroller). I'm not sure about Assistant City Attorney Mark Stratford, and I could be wrong about one or two of the others, but that's the general picture. Mark Johnson is running the show as far as I can tell. The steering committee has been meeting as often as twice a week, and that's obviously where the real decisions are being made; the council is then expected to ratify whatever the steering committee decides.

At one time they promised to put together a separate citizens' steering committee, but that idea has obviously been abandoned.

blackrulon said...

A more cycical point of vview is that they don't want to charge commercial and industrial users too much because they are paying off the people who make the largest campaign donations.

Rob Garner said...

It would appear that the steering committee has limited what we the residents and the city council are being shown. IMHO the city council should be asking for the minutes of those meeting to ensure that the best options are coming forward.

BTW, I thought your idea of paying for the projects as they go forward was a great idea.

In the section of the meeting on  FAO responded to by John Arrington he mentioned the percentages of the operating revenues that were generated by the diffent sources with by far and away the most (97%) coming from the fees collected from water users. My question is what is that total annual dollar amount. Would you happen to know?

Dan S. said...

I very much doubt that anyone has taken minutes at the steering committee meetings.

The basics of the utility system finances can be found in the annual budgets and financial reports, which you can download from the budget section of the city's web site. I've recently learned that you can also get transaction-level details from the state transparency web site ( The total water fund revenue from customers during FY 2011 was $13.8 million, and "metered water sales" made up 97% of that total. I think the rest is mostly from sales to Bona Vista. Hookup fees were a little under $50,000, and so on.

Danny said...

Take note people.  Debt is Death.

In 2005, Stockton, California, unveiled a gleaming new arena and
ballpark on its riverfront, part of a $145 million plan to draw people
downtown. The city, a shipping hub for wine and
almonds, is now negotiating with creditors to stave off bankruptcy.  The
10,000-seat arena, a glass-walled symbol of the city’s fight against a
soaring crime rate and downtown blight, was one piece of a redevelopment
boom that also saw the addition of a 5,000-seat minor league ballfield,
a 650-space parking garage, a 66-slip marina and the purchase of an
eight-story City Hall.  …Today the new City Hall stands empty because
the government can’t afford to move in. The parking garage may be seized
by creditors because the city defaulted on $32.8 million in bonds.

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