Tuesday, February 09, 2016

New Airline to San Angelo: Boutique Air?

San Angelo's Standard Times reported:

San Angelo city officials have reached a tentative agreement with a second airline to set up operations at the city's recently remodeled airport. The new airline could be operating by next year if efforts progress smoothly, officials say.

The agreement will be taken to City Council for consideration in March or early April, Luis Elguezabal, the airport's director said on Monday.

"We have spoken to an airline that is interested in serving San Angelo and would provide direct flights to Houston," Elguezabal said. "I can't release the name of the airline yet because it needs to go before City Council first and the company must also receive approval from the Federal Aviation Administration."
Last summer the Development Corporation provided an update which mentioned recruiting Boutique Airlines to provide flights to Houston.  The city has a federal grant with potential incentive money for a new airline.  Stay tuned for the name of the airline and the deal they need to provide service to our region.

Monday, January 18, 2016

City Multiplies Engineering Award: 200% Increase

San Angelo's City Council will hear a proposal to increase the maximum amount it plans to spend on street engineering by $2 million.  Council approved a $1 million indefinite quantity, indefinite delivery contract for engineering services in September 2015.  Staff proposed increasing that to $3 million. 

Monday, January 11, 2016

MedHab Gets Texas Higher Education Grants

Four years ago San Angelo's City Council voted for a $3.6 million economic development package for MedHab LLC.  The money would go toward creating up to 227 jobs.

The Standard Times reported on January 3, 2012:

According to a city memo, its first product will hit the market in Australia in June, "with a launch in the U.S. as soon as they receive final FDA (Food and Drug Administration) approval."
Four years later MedHab remains firmly in the research phase while it continues to raise capital.

Instead of 227 jobs in San Angelo Medhab has 15 company wide.  The company's main address is 1120 South Freeway, Fort Worth.  Data on the number of employees came from a Small Business Innovation Research spreadsheet dated 1-1-2016.  The SBIR website states:

The Small Business Innovation Research (SBIR) program is a highly competitive program that encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that has the potential for commercialization. Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. 
Four years ago San Angelo's City Council was sold a "nearly ready" to market product.  Nearly turned out to be a very long time.

Sunday, January 03, 2016

City to Outsource Delinquent Water Collections Yet Again

San Angelo's City Council will entertain yet another proposal to help the Water Department ladies with collections.  The background packet for Tuesday's meeting states:

The proposed amendment will modify City Ordinance to allow the utility to turn over delinquent accounts to a third party collection agency and place the burden of the collection fee (20% of unpaid balance) on the collection account instead of the Water Utilities department. The collection agency will also be reporting these owed monies to the credit reporting agencies (i.e. Equifax, etc.)

The City had a similar provider until 2010 when the business folded. The City absorbed all collection cost with the previous provider. Currently, all collections for the Municipal Statement are performed by the Customer Service and Municipal Court departments. There is currently over $2.3 million in collections.
Council approved two other items to help water billing, a customer portal for residents to view their water use (April 2013) and an automated phone payment system (October 2012).  I have not seen any feedback on the impact of these two prior actions by council.

Oddly, staff projected little impact from utilizing a collection agency again.

Financial Impact:
Over $2.3 million currently in collections as handled by Customer Service and Municipal Court.
Placing the collection fee (20% of unpaid balance) on the customer relieves the Water Utilities department of this financial burden.

Who entertains contracting out a service and not projecting results?  How much of the $2.3 million is in water utility bills?  How much did the prior vendor collect percentage-wise from deliquent water accounts?  At what age did the city turn over accounts to the collection agency?  Hopefully, more information will be forthcoming at the Council meeting on Tuesday.

Mayor Morrison historically opposed the $25 late fee charged to citizens as usurious given the average water bill for 3015 was just over $50.  That's nearly a 50% penalty.  I wonder how he'll find an additional 20% collection penalty paid by the citizen user.

A charge will be added to a customer’s account for each delinquent, closed account at the time the account is turned over by the Water Utilities Department to a third party engaged by the City for collection of such accounts in a sum equal to twenty percent (20%) of the total sum payable on the account.
If the account is eight months overdue it could have $200 in late fees.  The simple act of turning that account over to collections would result in an additional $40 penalty solely from late fee charges.  

It will be interesting to hear Council's and the Mayor's take on this item..

Update 1-6-16:  Council denied the 20% add on to the water bill for delinquent accounts but nodded for staff to bring back a contract for a collection agency on over $2.7 million in delinquent water bills.

Saturday, December 12, 2015

San Angelo's Economy: Expansion & Layoff

San Angelo's economic contraction occurred shortly after its rapid expansion.  Energy companies dominate the list of layoffs/closings after comprising a good chunk of corporate expansions during 2013-2014.

Half cent sales tax proceeds dropped 8% year over year for November.  Those are a few of the statistics in the Development Corporation's December board packet.

Tuesday, December 08, 2015

Funding San Angelo's Development Corporation

The City of San Angelo Development Corporation is funded by the half cent sales tax, which had been in decline for five of the last six months.  The first month of the new fiscal year found sales tax collections down over 14%.  COSADC expected sales tax revenues nearly $50,000 higher than occurred.

The oilfield bust came home in November when National Oilwell Varco announced it would leave San Angelo eliminating 120 jobs.  The price for a barrel of oil hits the lowest mark since February 2009.  Oil drilling rig counts continue dropping.

City Council recently asked COSADC Executive Director Roland Pena to explain the addition of a new staff member.  What will happen if sales tax revenues continue to fall far short of budget? 

Update 12-12-15:  November sales tax proceeds for COSADC came in (8.02)% below last year.  The estimated sales tax budget is short $137,077 and the budget called for a slight decline.  Sales tax collections are roughly $175,000 below a year ago.

Sunday, December 06, 2015

City Council Enacts Plan for 55% Water Rate Increase

City Council discussed a 55% water rate increase over a five year period, approving an initial 11.5% increase in rates for 2016.  Some Council members seemed unclear as to recent water bill increases, a 48% rise in 2011 to fund the Hickory pipeline and the later addition of stormwater and pumping fees.

Four years ago City Council was clear on their motivation.

Citing a desire to encourage conservation, council decided to generate 75 percent of the revenue needed to make payments by increasing water usage rates by $1.31 per 1,000 gallons and 25 percent of the revenue needed to make payments by increasing the base usage rate by 29 percent.
Citizens responded to council's directive cutting the average usage from 8,000 gallons per month to 4,000.  Assistant City Manager/CFO Michael Dane spoke to this possibility in 2011,

As residents cut back on water use, especially as water usage restrictions have tightened under the city's drought contingency plan, Dane said, sufficient revenue to pay for the debt service payment may not be generated, which would result in the city having to impose even higher rate increases.

"That's a wild card," Dane said of "how strong the water consumer reaction is" to cutbacks and drought.
If citizens cut back usage so dramatically why is the average water bill higher than projected in 2011? 
How did the 2011 water rate increase multiply beyond what staff projected?

How might Council's new promises look in five years?

It's hard to have confidence in a group that can't or won't explain why the last round of fee increases hit citizens harder in the pocketbook than promised.  This is our future.

What will bills and usage look like come 2020?  The "Dane prediction" happened once. Could it happen again?