Sunday, May 15, 2016

Staff Failed to Update Water Board on Current Water Supplies

San Angelo's Water Advisory Board recent agenda had a variety of topics but it lacked a most basic one, the amount of water currently available to meet anticipated water needs.  Citizen Scott McWilliams shared his assessment with the Water Board.  He projected the city has an anticipated 17 years of water between the current 30 months of surface water, expected rainfall (firm annual yield based on drought of record) and use of a fully developed Hickory Water field.

The Water Advisory Board narrowed their list of future water sources to five.  Three of those included Hickory Aquifer expansion, rehabilitation of the E.V. Spence Lake pipeline and using reclaimed water, known as direct potable reuse or toilet to tap. 

Former City Councilman and Water Advisory Board member Kendall Hirschfeld commented on Lake Spence pipeline rehab.

"My concern would be spending $20 - $30 million today and Spence continues to do what it has the last couple of years."

For the last couple years Lake Spence is up over 18 feet.  It holds 51,200 acre feet of water today, four times more than it did two years ago.

I don't fault Water Advisory Board members.  There's no evidence city staff updated members with area lake levels and storage volumes.

Currently, the City has 40,000 acre feet of banked Hickory water which must be used in the next nine years or it will be lost.  Water users paid increased base fees and tiered water use charges since 2011 to fund the Hickory project and its $120 million price tag. 

Water rates have and will increase dramatically to fund the city's next big water find to the tune of $136 million.  That happened to be the price of direct potable reuse. 

The State of Texas and U.S. Bureau of Reclamation have money available to fund projects/studies.  The State has low interest loans for approved water projects.  The Bureau of Reclamation, which owns Twin Buttes Reservoir, has grant funds for reclaimed water studies.  City staff applied for the federal grant and asked for the Water Advisory Board's endorsement for their $300,000 request. 

It will be interesting to see how our leaders go forward in the water arena.  Will Water Board members plan to use banked Hickory water in a measured way before it expires?  Will they explore staff assumptions on surface water that reduced over 50,000 physical acre feet of surface water to a projected 30,000 acre feet, the two year supply?  So far, they've been a relatively quiet group.  Pretty soon there might be much to talk about.  After all, it is water in West Texas.

Friday, May 06, 2016

Hirschfeld Energy Settles with City: Adds Rail Spur Incentive

The City of San Angelo sued Hirschfeld Energy for $2.7 million for failure to invest $40 million in the local plant and provide 225 jobs for ten years.  It settled for $1.4 million or 52 cents on the original public dollar

During the contentious negotiation Hirschfeld added more than 30 jobs in Abilene and said it planned to increase that in the future.  The City's settlement provides a reward for Hirschfeld adding 28 jobs locally to the 47 employees working in the steel bridge fabrication plant. 

Hirschfeld may increase its workforce to 75 employees during the five-year period. If it does so, the company will earn property tax rebates for that given year of 75 percent in years one through three and 50 percent in years four and five. The rebate will be lost for any year during which 75 employees are not maintained.

Hirschfeld's 2015 property taxes are estimated at $481,226 by the Tom Green County Appraisal District.   This is down from a 2013 property tax bill of $518,524. 

Seventy five percent of $481,226 is roughly $360,000.  Three years of that is nearly $1.1 million.  Add two more years at fifty percent, $240,000 times two, and Hirschfeld would have nearly $1.6 million.  That roughly a wash with the $1.4 million refund.

The settlement was aided by City Councilwoman Elizabeth Grindstaff, who helped the parties negotiate.  It seems she helped her employer Texas Pacifico Railroad in the process

The company will also make commercially reasonable efforts to build a railroad spur to its plant within 12 months, at an estimated cost of about $1 million. If Hirschfeld does not complete the rail spur within 24 months, it loses all rights to property tax rebates.
For Hirschfeld to get back its $1.4 million settlement money from the city it must build the railroad spur within two years. 

To sum up, 225 additional jobs for ten years became 27 jobs for five years.  That's 12% of the original commitment for half the time.  A $40 million plant investment became $1 million  That's 2.5% of the 2009-2010 promise.  And the deal is contingent upon Hirschfeld adding a railroad spur that will benefit the employer of the negotiator that helped the parties reach a settlement.  Interesting and just a bit unsettling.

It feels like practical politics, i.e what are you planning to do the next few years at Hirschfeld Energy and how can we rebate your money?  OK, you're planning to add jobs for the new Atlanta Braves stadium.  Add 27 of them here.  You're planning on building a railroad spur.  Good we'll make your rebate contingent upon what you've got in the works.  Stamp it, seal it. 

My gut may be off base on the negotiation process, but Hirschfeld's owner Insight Partners must be delighted about the settlement.  It removes a barrier to Insight monetizing, i.e. selling Hirschfeld.  I hope it's an IPO.  It'd be interesting to see how many millions in dividends Insight pulled from Hirschfeld while it held off repaying local taxpayers. 

Saturday, April 23, 2016

Standard Times Endures Readership Loss & New Owners

Journal Media Group's recent 10-K filing included statistics on readership for San Angelo's Standard Times:

1996 - 32,000 Daily paid,  39,000 Sunday 
2000 - 29,000 Daily paid,  35,000 Sunday 
2008 - 24,000 Daily paid,  28,000 Sunday 
2012 - 18,000 Daily paid,  22,000 Sunday 
2014 - 16,000 Daily paid,  18,000 Sunday
2015 - 14,000 Daily paid,  16,000 Sunday

Standard Times circulation dropped over 55% the last two decades.

It fell after the paper instituted a paywall to "restore revenue growth" in May 2013.  The company described the move:

As we implemented metered access to our digital content in 2012 and 2013, we significantly increased subscription prices to many of our subscribers. Going forward we expect to manage price increases in an effort to obtain the highest yield from our subscriber base. Many customers are price-sensitive, particularly when we have reduced content they consider valuable. In an effort to minimize customer churn and maximize profitability, we have and will continue to use analysis of customer price sensitivity to drive price increases on targeted subscribers and limit the price increases on other subscribers.

We have also implemented marketing strategies to gain new customers, primarily through digital channels with special offers designed to obtain subscribers, particularly digital customers. We have also run a number of in-paper advertisements encouraging subscribers to register their account on-line, which allows us to monetize their online activity with certain advertisers who target specific customers based on demographics, which drives higher advertising rates.
JMG's SEC filing reported the number of digital only subscribers for its 17 newspapers in 14 markets:

As of December 31, 2015, we had approximately 50,000 digital-only subscribers across all of our markets. 
JMG merged with Gannett on April 1st.  We'll see what Gannett reports next April on our local newspaper.  Until then I hope you are not the Standard Times customer having price increases driven upon them.  May you be the subscriber they pass over. 

Monday, April 18, 2016

Runoff Helps Area Reservoirs

Recent rains boosted area lake levels.  In the last week the following San Angelo water sources rose:

Lake Nasworthy - +422 acre feet 
(from 8,010 acre feet to 8,432 acre feet)

Twin Buttes North Pool - +1,088 acre feet
(from 15,410 acre feet to 16,498 acre feet)

O.C. Fisher - +240 acre feet
(from 18,054 acre feet to 18,294 acre feet)

O.H. Ivie - +2084 acre feet
(from 66,866 acre feet to 68,950 acre feet)
The graph below shows why Ivie took on so much water:

Area lake inflows total 3,834 acre feet.  E.V. Spence is up nearly 1,000 acre feet as well.  This blessing should be enough to break Drought Level 1 for at least a little while.

Update 4-20-16:  Lake Ivie now has 71,340 acre feet, a rise of nearly 4,500 acre feet.  Twin Buttes is up another 200 acre feet from the readings above.

Update 4-23-16:  Ivie has more than 75,000 acre feet, an increase of more than 8,000 acre feet since City Council voted for Drought I conservation measures.

Sunday, April 03, 2016

Council to Take Up Drought Level 1 Designation

The Water Advisory Board recommended San Angelo enter Drought Level 1 which results in outdoor watering restrictions and a 10% increase in water rates.  Staff spoke to aspects of their methodology for saying the city has less than a 24 month water supply.  They chose not to share their calculations. 

The City's annual water use is approximately 15,000 acre feet. City staff provided the following information on lake volumes to the Water Advisory Board:

Lake Ivie - 68,671 acre feet (of which San Angelo gets 15.8%) 
Twin Buttes Reservoir - 21,287 acre feet (15,291 in North Pool and 5,996 in South Pool)
 Water Data for Texas revealed current lake volumes for:
O.C. Fisher - 18,209 acre feet
Lake Nasworthy - 8,117 acre feet

Also, the city has the rights to 3,000 acre feet at Lake Spence (46,868 acre feet) but no functioning pipeline to get the water to San Angelo.

It's not clear how city staff reduced well over 50,000 acre feet of surface water supply down to 30,000 acre feet.  Staff projections include two summers of wicked evaporation but no rainfall.

While staff deeply discounted surface water supplies, Hickory's Aquifer's below ground water was hardly counted.  The city chose to include only the minimal amount currently being pumped per day to keep the well field operational.  That's roughly 1 million gallons of water per day or just over 3 acre feet.

A slow pumping Hickory pipeline delivers 1,120 acre feet per year or 7.5% of the city's annual water usage.  I understand the logic of not counting subsurface supplies, the reserve that will support us through a long term drought.

It seems fair that the minimum pumped from Hickory should be subtracted from our annual water needs for drought pricing purposes. Remember the significant price increases for the Hickory pipeline?  Council chose to include conservation incentives in setting up that charge structure and citizens responded. 

Marking up Hickory water another 10, 20 or 30 percent hardly seems fair.

It appears the city may enter drought level restrictions without citizens understanding the methodology for calculating how San Angelo has less than 24 month supply of water.  Council will consider a proposal that showed a 26 month supply on 3-28-16.

More needs to be said and revealed on this topic because it hits citizens square in the pocketbook.

Water usage fees - determined by two factors: how much water a customer uses and what drought level the city is under. The water rate structure is tiered; as a customer uses more water, he pays a higher rate. Those tiers compress more when San Angelo is in Drought Level 1, 2 or 3; the higher the drought level, the quicker the customer reaches the next tier.
That shouldn't happen arbitrarily or prematurely.

City Council dealt with a prior failure to follow ordinance resulting in Republic Services overcharging commercial customer via unauthorized, thus illegal, fuel surcharges.  Ironically, Republic's illegal fuel charges and the $6 million refund occurred under the watchful eye of Public Works, which is also over water.

Council should proceed thoughtfully and within their legal scope, which they have the right to change in full public view.

Sunday, March 27, 2016

Dr. Kwon's Excel ER Facility Won't Lower Healthcare Costs

Bulldozers broke ground at the corner of Sherwood Way and Southland Boulevard for Excel ER, a freestanding emergency room.  Excel ER operates 24 hours a day, 365 days a year in four Texas communities.

The Texas Legislature paved the way for freestanding emergency rooms with a bill passed in 2009, however government payors, Medicare and Medicaid, do not reimburse freestanding ER's for care provided.  Excel ER serves people with private health insurance and/or significant personal financial resources.

San Angelo patients will have a learning curve to navigate as they consider the appropriate place to have their crisis healthcare needs met.  Insured patients in San Angelo are used to seeing their primary care doctor or being referred to urgent care, if the wait to see their doctor is too long.  The ER decision, if not directed by their health plan, meant choosing between Shannon Medical Center and San Angelo Community Medical Center.  Area insured citizens will have other options.

In the words of President Christopher Kwon, M.D., Excel ER's value proposition is not lower costs, according to the Tyler Morning Telegraph.  

“Excel ER offers virtually the same rates as traditional hospital-based ERs,” Kwon said. “Urgent care centers do not treat the same level of emergencies as a hospital ER and freestanding ER’s, so their costs would naturally be different.” 
A local businessman said the Excel ER lot was purchased at a significant premium.  His words, "Never before has anyone paid so much for commercial real estate in San Angelo acre for acre."

Wheelhouse Development LLC is behind the commercial real estate side of Excel ER.  Wheelhouse is based in Lubbock and has a one person board, Brady Collier.  Maybe the Wheelhouse Development team knows something grizzled San Angelo businessmen don't.  Time will tell in regard to San Angelo commercial land values.

City of San Angelo Development Corporation documents show a $1.7 million price tag for the Excel ER project.  That price cannot include state of the art digital x-ray, CT scanner, ultrasound and medical laboratory equipment.  Total project costs are certainly a multiple of the $1.7 million amount listed.

Excel ER's value comes from a mixture of time and luxury.  Tyler Morning Telegraph reported:

“The main difference between our new facility and a hospital ER is that our patients are seen by a board-certified emergency doctor within minutes of coming through our doors, while it may take a much longer period of time for that same patient at a hospital ER,” Kwon said.
Kwon said Excel ER patients are seen by an ER doctor in five minutes or less in a television interview.  This compares to 17 minutes for SACMC and 23 minutes for Shannon's Emergency Department, a level 3 trauma center.

Midland Reporter Telegram highlighted:

While most patients spend little time in Excel ER’s lobby/waiting area, it has been designed with a four-star hotel ambience, so a patient’s family will feel more comfortable and at ease during what can be a stressful time.
Katy, Texas based Kwon is the sole board member for Excel ER. He's also listed as one of three board certified ER doctors for Excel's Weatherford site.  Excel partnered with ER physician groups, Leading Edge Medical Associates in East Texas and Code 3 Emergency Physicians in Weatherford.  Kwon also set up North Texas ER I LLC in Weatherford.

It's not clear who Kwon will partner with for emergency physician services in San Angelo.  I can't imagine anyone from Shannon or Community being involved, but I've been surprised before by actions taken by local folk.

Excel ER represents a myriad of corporate entities wanting to siphon patients with health insurance from area hospital emergency departments.  Taking the cream off the top will not decrease health care costs in our community.  It may make a few people, like Brady, Collier, Dr. Kwon and their partners, lots of money.  It's the new wheeling and dealing health care landscape.  In the end it will cost us all more.

Note:  While not the subject of this piece another freestanding ER by Neighbors Emergency Center is also underway.  Development Corporation documents show that project at $1.3 million 

Saturday, March 12, 2016

Ross Tells Radio Host MedHab is FDA Approved

MedHab CEO Johnny Ross spoke with the host Richard Diaz of National Running Network on BlogTalkRadio.  Ross said at the 25:40 mark:

Ross:  "From the clinical side of things in healthcare we are miles ahead of anybody else.  I believe we're pretty far ahead in this space as well sports performance."

Host:  "You have FDA approval on your products, right?

Ross:  "I do and we're probably going to start, they're Class 1 devices.  Right now we're negotiating with some major institutions to do some three or four month studies.....    The way we manufacture RPM2 it's identical to the way we manufacture our healthcare product....   When a person gets a pair of PRM2 inserts they meet FDA quality standards.  The difference between the two is the app and how we make it work through the smart device."
FDA approval is big news.  It's not on MedHab's website which remains under construction.  Garnering FDA approval was a critical hurddle for MedHab to start its promised production site in San Angelo.  San Angelo's City Council gave MedHab a $3.6 million economic development incentive package in January 2012 for up to 227 jobs.  The deal became official in August 2012.  The Standard Times reported:

"The San Angelo operation will serve five functions: final assembly of products, technical support, a patient call center, distribution and quality assurance," the release states.

San Angelo Mayor Alvin New, who is on the MedHab's board of directors, said the company, which can produce a maximum of 227 jobs covered by the tax incentives, could bring in money from out of town.

"It's a manufacturing facility, so it's the primary type of job we would like to have," New said. "It's not recirculating money."
Hopefully MedHab's exciting news will be forthcoming to Development Corporation board members and elected City Council officials.

Near the close of the programs the host asked Ross about his running and biking.  Ross said he has a road bike and added:

"I do a lot of riding out in West Texas where our facility is and the roads are kind of rough out there."
He also offered $100 off on RPM2 shoe inserts to the host's friends. It will be interesting to learn what's news and what's sales talk. There is a difference.

Note:  MedHab sponsors the National Running Network.