Tuesday, August 06, 2013

Ogden Council Set to Discuss $18 Million Utility Project Bonding at Tonight's Work Session - Updated

Ogden City Administration continues to push for bond financing of the "whole $18,921,773 enchilada" even on the eve of the 2013 Municipal Election

As a followup to our July 29 and July 31 WCF articles, wherein Dan Schroeder reported on the inexorable progress of the Ogden City Administration toward $18 million in new water and sewer infrastructure bonding, we'll provide a quick heads-up regarding tonight's Ogden City Council work session, where the council will "Discuss Various Options Proposed for Bonding," as more particularly set forth as the last item in tonight's Council Packet. Here's a screenshot of the series of water utility "options" which will be discussed tonight, with the Administration's preference prominently highlighted in yellow, presumably to keep our City Council on the legislative "straight and narrow," we suppose:


And here are the Administration's suggested parameters for the sewer bonding:


So amidst all the talk about financing some portion of our water and sewer utility improvement expenses from the $28 or so million we have sitting in the bank, drawing a measly 1% interest, the Administration continues to push for bonding the "whole $18,921,773 enchilada," at an interest rate which even our esteemed "financial advisor," Lewis, Young, Robertson, and Burningham, "estimates" could be as high as 6%.

Although these proposed bonding matters have indeed been set for additional public discussion for August 20, having observed the council's aggravating pattern of making their decisions at the "work session level," we do express our concern that a council majority will already have their minds made up even before Ogden lumpencitizens have enjoyed the "formal" opportunity to chime in on the issue.

There's no word whether Dan S. will be available for live blogging tonight; but we'll be keeping a close eye on the results of tonight's work session in any event, particularly in view of the ongoing 2013 election, wherein we have the strong sense that the financial prudence of these current bonding proposals could very well develop into an important campaign issue.

Update 8/6/13 5:59 p.m.:  Dan Schroeder is now live-blogging from tonight's Ogden City Council Work Session! Click "Comments" to read Dan's real-time posts.

Update 8/7/13 6:30 a.m.:  A public hearing on the bonds has been set by the City Council for August 20.

39 comments:

Dan S. said...

OK, I'm at the city council work session. There are several items on the agenda before we get to the utility bond discussion. All council members are present.


Right now John Gullo is giving a speech about the wonders of pickleball. Sounds like he's proposing a $100k upgrade to the pickleball facilities at Mt. Ogden Park and offering to pay half of that himself. Discussing potential RAMP grant proposals. Could involve Monroe Park as well. "We have an opportunity to be the Mecca for this sport." Potential for "$1 million coming into the Ogden area." Showing videos. The announcer in the video says central Florida is the pickleball capital of the world with over a hundred courts, so I guess Ogden has a ways to go to become Mecca. Gullo: There's three kinds of people: those who make things happening, those who watch things happen, and those who wonder what's happening. Which kind do you want to be?

Dan S. said...

Gullo is asking for a "deviation from the master plan", apparently for Mt. Ogden Park. Claims that tennis courts are under-used so we need less tennis and more pickleball. The plan in question is apparently the city's recreation master plan, which Iain Hueton has been working on for the city. May call for a new tennis court that can be converted for pickleball, with room to move in seating for spectators. Wants to bring in a national tournament, now in Arizona.

Dan S. said...

Next agenda item: Presentation via Skype from consultant who will do upcoming IT Department audit. Presenters are Adam Rujan and Dale Vanderford who are in Chicago. Their firm is called Plante & Moran. Rujan says they are independent of all vendors and therefore free of vendor bias.

Dan S. said...

Sounds like the IT Department audit will focus more on management policies than on technical details. Other than that, the presentation is pretty vague: "guide planning and investment decisions, optimize level of centralization, strengthen customer service," blah blah blah.

Dan S. said...

Ironically, they're having technical difficulties with the audio connection to the IT consultants in Chicago. Lots of audio drop-outs. They're trying a different phone number... doesn't seem to be helping much...

LibertyinUtah said...

Hmm. I'd like to see the city replace some of it's expensive to maintain sports areas with less expensive ones, but it sounds like Pickleball courts would be a lateral move. Now, turning off the sprinklers at Mt. Ogden and turning it into a nature park / Disc golf course like Riverdale's, that's something I can get behind.

Dan S. said...

They're giving up on the audio connection and signing off with the consultants in Chicago. Now council staff (Janene Eller-Smith) takes over the presentation. She says they (a committee of bureaucrats and a couple of council members) like these consultants because they have lots of experience with municipal government.

Dan S. said...

The cost of the IT audit will be just under $60,000. Staff will prepare a contract for final approval at an upcoming meeting.

Dan S. said...

Next agenda item: Airport art proposal.


We're now in the midst of a 30-day comment period. Council will be asked to transfer some of the "pooled" funds for art into this project.

Dan S. said...

I think the presenter just said that the art needs to relate to our "unpretentious and adrenalized Rocky Mountain home." This art will go in the new airport terminal addition. You can see the proposal in the council packet. More phrasing from the call for proposals: "dynamic representation of high-adventure amenities [she lists them]."

LibertyinUtah said...

Adrenalized Rocky Mountains? We should hire the people who do the art for Maverick gas stations ;)

Dan S. said...

The art is going to represent "Ogden's exciting and prosperous future" in addition to Ogden's past.


Councilmember Gochnour says she loves the design. Wants murals to be movable in case of future airport expansion.


Approval of funding for this art project will be on an upcoming council agenda.


Now on to the utility bonding discussion!

Bob Becker said...

Surely we can fold that into our planning horizon.....

Ogden Lover said...

Is the airport doing anything for Ogden or is it just a money pit? How about forgetting the art that few will see and lowering our water bills or taxes?

LibertyinUtah said...

On this point, do we have a lot of layovers in Ogden? Or, are the people who end up there already planning on being in Ogden? Are we preaching to the converted with these murals?

Dan S. said...

City finance manager Laurie Johnson is presenting, answering some questions that were submitted by council member Wicks. First, she has updated some of the slides to show preliminary data from FY 2013 for the sewer fund. Looks like the sewer fund came out somewhat ahead of projections, but not by much. Also there was an error (not huge) in version that was presented last week. In any case, it looks like the total cash in the sewer fund is about $13.3 million, not $17 million as the city treasurer told the council four weeks ago. The reason for the discrepancy isn't clear.

Dan S. said...

Johnson is now passing around some 11x17 sheets of paper to show how she produced the financial projection graphs that she showed last week. Looks like these aren't being provided in electronic form so I can't see them--the council members are all fumbling through the big sheets of paper. Apparently Cody Deeter of LYRB was involved in doing these projections. Johnson explains that the only thing that was changed from last year is the amount of cash currently on hand. Maybe the interest rates were also changed.

Dan S. said...

So it sounds like nobody has made any attempt to correct any inaccuracies in the revenue and expense projections that were made last year. Instead they just made a one-time adjustment to the current cash balance and left everything else alone. For the water fund, this means that they're probably being too pessimistic. For the storm drain portion of the sewer fund, their revenue estimates seem to be too high.

Dan S. said...

Staff: The upcoming sanitary sewer master plan will propose $28 million of projects over the next 40 years. [No problem!]

rudizink said...

Sodden query: How could these figures be $4 miliion off? Mindless bureaucracy in action, I guess.

rudizink said...

Idiots! These city bureaucrats can't even balance their own check-books, and they're seeking to borrow another $18-19 Mil? Unbelievable!

Dan S. said...

Several council members (Stephens, Hyer, Van Hooser) are now giving speeches on the general importance of maintaining our infrastructure and how important it is to keep the water running.


In response to a question from Stephens, Johnson alludes to "previous bond commitments" to keep a nonzero balance (she doesn't say how large) in the water fund. I question whether there is any significant such commitment.

Dan S. said...

Hyer states incorrectly that a 20-year bond would have a higher interest rate than a 30-year bond. He's got it backwards (for current conditions).

Dan S. said...

Wicks suggests bonding for only the filter plant, not the other projects, and making the bond for 20 years rather than 30, to save on interest. Doesn't sound like she has much support from the rest of the council.

Dan S. said...

The public hearing on the bonds will be on August 20. At that time there will be a vote to give direction to the pricing committee regarding the parameters of the bond.

Dan S. said...

Hmm. Now it sounds like the council is inclined NOT to go for the full 30-year term on the bond; they're now hesitating between 20 and 25 years.


Wicks repeats that she will not support a bond for more than just the treatment plant, or a bond for longer than 20 years.

Dan S. said...

There's still a great deal of confusion about what this debate is over. Some people think it's over whether to spend down some of our cash, while others think it's a debate over whether to carry out certain capital projects. I would contend that it's the former, not the latter--or should be.

Dan S. said...

The bonding discussion has concluded. There are a couple of minor business items but basically they seem to be wrapping up. So that'll probably be all for now!

rudizink said...

On behalf of all WCF readers, Dan, I'd like to convey my most sincere thanks and highest compliments for your tireless and informative reporting on this issue. Many thanks, once again!

smaatguy said...

Thanks for the update Dan! Amy is sticking to her guns!..and then some with the bond not going for anything other than the treatment plant!...you go Amy! She was the ONLY council member that replied to a email of mine...the others are apparently too busy not worrying themselves over where the $4million discrepancy is or came from.
Pathetic group of lazy politicians...except for 1.

smaatguy said...

I wonder how many of these clowns would finance their house if they had that much scratch in the bank....it's so ludicrous it's not even funny....meanwhile everyone is watching dancing with the stars or some BS like that....
UHHHHHGGGGG!

blackrulon said...

There is another kind of person. The one who doesn't mind spending other peoples tax money.

blackrulon said...

Not a problem. We were promised that lease revenue from BDO would help fund infrastructure improvements

Dan S. said...

The "1% for art" program is established by state law. For every capital improvement project, 1% of the funding is set aside for art. So the funding is there and can't be spent on other things. The only question is *where* the art will go. You make a good point about few people seeing it at the airport.

Dan S. said...

By "no problem", I mean that the cost of these projects, coming to well under $1 million per year, can be absorbed by the sewer fund without any bonding or rate increases in the near future. Of course, there's no way to predict revenue and other expenses 40 years in advance, so minor rate adjustments could still be needed at some point. But these capital improvements would not play a significant role in determining the rates.

Dan S. said...

After the meeting he assured me that he didn't intend to say that, and he knows that the longer-term bond would have the higher interest rate.

Dan S. said...

I've now had a chance to review these spreadsheet printouts. Indeed, the only significant update (to reflect new information) is a one-time change to the current cash balance. The income and expenses for all future years are still based on inaccurate projections made in spring 2012. Furthermore, in exploring the various possible bonding scenarios, Mr. Deeter has indeed assumed a constant 4.1% interest rate, as he did last year, regardless of the duration of the bond. As his boss Laura Lewis has explained to the council, interest rates have gone up since last year. The latest written estimate in the council packet is 4.7% for a 30-year bond and 4.12% for a 20-year bond. If these rates are correct, then Mr. Deeter's payment schedule is approximately correct for the 20-year-bond scenarios but he has significantly under-estimated the payments in the 30-year-bond scenarios.

smaatguy said...

Sound familiar Rudi????

http://market-ticker.org/akcs-www?post=223404

rudizink said...

Yep. A curious "pattern" is evident, ainnit?

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