Wednesday, October 22, 2014

Frac Sand Loading: The Grindstaff Position

City Councilwoman Elizabeth Grindstaff spoke to her and Texas Pacifico's position on and interest in the proposed frac sand facility:

"For those that don't know I am an employee of Texas Pacifico Railroad (Vice President of Marketing), which is the railroad through the City of San Angelo that proceeds on down to Presidio  It is a property and track that is owned by the State of Texas and the company that I am employed by is the operator of that.  I have no ownership position in Texas Pacifico and am merely an employee.  In my position I work with a number of customers that are looking for transportation on the track, as Mr. Pfluger has in this.  In serving this area.  My company has no relationship with Mr. Pfluger other than the requirement to provide transportation services to and from his site.  There has been some talk of a partnership.  That has gone nowhere with our management. So, at this time we're, we have the obligation to Mr. Pfluger as we do to any other developer on the rail to provide transportation as we are part of the national transportation network."

A retired railroad employee asked Councilwoman Grindstaff how the train would handle the frac sand loads:

Retired Railroad Employee:  "This question is for the railroad.  I worked for the railroad for 43 years and all these times and everything they are quoting.  That ain't going to happen.  Are you going to take these cars to his spot?  Are you going to hotshot them out to the yard at his unloading facility or are going to stop the westbound train to do the switch?

Councilwoman Grindstaff:  "I'm not the operations department.  I can't speak to that."

Retired Railroad Employee:  "O.K.  If they take the westbound train.  How many cars?  150, 100 cars.  If they stop there, they're going to stop short of the switch.  They're going to block all of the cars crossing across Oakes and Chadbourne Street with their train to go in there and get those empties out and put the load in there.  So there's going to be lots of delay on this train track.

Councilwoman Grindstaff:   "Generally the empties are picked up on a separate route. You're right."

Retired Railroad Employee:  "O.K.  Are you going to bring his loads by itself or are you going to have to stop a 150 car train."

Councilwoman Grindstaff:  "I don't know.  I think you'll have to ask Mr. Pfluger what his operational plan is.  That would answer that I think more clearly for everyone."

Mr. Pfluger did not rise to answer this question. Neither the frac sand hauler or unloader answered this man's question. 

Retired Railroad Employee:  "Like I say if you stop that train there going to Barnhart you're going to have to block everything east of there.  Time they get their empties out of there and get their air tests run and everything like that.  I worked 43 years for the railroad.  Like I said I know how long it takes to do stuff like that and it ain't going to happen (as described by Mr. Pfluger)

I applaud local citizens with knowledge educating the public and City Council on issues.

Monday, October 20, 2014

Pfluger & Grindstaff Behind Frac Sand Facility

Local tycoon Lee Pfluger owns Southwest Orient Properties LLC, the company installing a frac sand offloading facility in downtown San Angelo.  City Councilwoman Elizabeth Grindstaff helps rail oriented businesses find property and get established in our area.  The WSJ had this to offer about frac sand offloading in Barnhart:

When the wind blows from the south, unloading the tiny pebbles used in fracking can create small sandstorms that reach the few houses nearby.

San Angelo has more than a few houses nearby.  I heard an employee of the town of Big Lake talk about frac sand this morning.  They said it was from one end of town to the other.  This happened after offloaders promised it would be safely handled and spread would be minimal.

Longtime local leaders are behind the location and operation of San Angelo's new frac sand plant.  Citizens should remember their names should San Angelo's experience mimic Big Lake's.

Sunday, October 19, 2014

City Council's Frightening Agenda

San Angelo City Council's agenda packet for their October 21 meeting is a scary 868 pages long.  I searched for it Friday and Saturday to no avail.  It appeared today in the form of two documents. 

There are other spooky items besides health insurance.  They include:

1)  Potential concerns over the proposed use of the subject property as a sand transloading facility has prompted the request to provide an informational briefing, clarifying the distinguishing allowed uses within the Light Manufacturing Zoning District versus those that are allowed within the Heavy Manufacturing Zoning District. Residents in the adjacent neighborhoods to the east and west of the subject property are fearful of a significant increase in heavy truck traffic, in additional to the likelihood of potentially harmful sand particles going airborne, threatening the health of both children and adults living in the area. 

Note:  City Councilwoman Elizabeth Grindstaff's role with Texas Pacifco is to help locate new rail oriented businesses in our community.  Her district will likely have some impact from offloaded sand.  When the north wind blows sand dust could fall in Santa Rita. 

Southwest Orient Properties, LLC is the sand offloading proprietor.  Local citizen and MedHab angel investor Lee Pfluger is the only officer and director of Southwest Orient.

2)  Refinancing Series 2007-A Certificates of Obligation for water capital projects. Refinancing will allow the negotiation of a lower interest rate and will create savings for the City.
There will be deal fees associated with recalling the current bonds and issuing new ones.  It will be interesting to hear more details about projected savings and the new term of the obligation.

3)  Staff recommends the City Council authorize staff to negotiate and execute a contract with with Fugro Roadware, Inc. for professional services per Request for Qualifications (RFQ) ES-01-14 Professional Services – Professional Services for Pavement Data Collection and Pavement Management.   Professional Services for Pavement Data Collection and Pavement Management will not exceed $185,000. The funding for this project has been budgeted in FY 2014 -2015.

The lack of staff engineers will cost the city in yet another way.  Look for more details on what's included.  Hopefully, a council representative will ask why the city has to contract out engineering functions it used to complete in house.

4)  Staff recommends purchase of SunGard software in support of City Council priority to “improve the development process,” realizing greater efficiencies due to the ability to perform electronic plan submissions and review, mobile building inspections, automated plan status notifications, and the like.  Financial impact:  $276,876 (one-time cost) plus $46,120 (recurring annual maintenance)
The development software will integrate with SunGard's engineering application.  It's not clear if the city is using other SunGard applications at this time.

5)  Staff requests consideration of authorizing the payment of West Texas Water Partnership invoices as they are received. Currently, all invoices are reviewed by the City Council prior to payment.  Staff recommends automating the process for payment of invoices related to charges for the West Texas Water Partnership.
This proposal comes from the transparency Gold level Finance Department.

There's more fun to be had at this meeting.  The City's Health Department will do something other than shrink as it looks for approval of

6)  A Resolution of the City of San Angelo, Texas City Council Authorizing the City Manager to Ratify the Application, Execute an Agreement and Accept the Department of State Health Services Supplemental FY2015 Health Promotions & Chronic Disease Prevention – Texas Health Communities Grant funds in the amount of $50,000.00.

This isn't the first time staff asked for approval of a grant it already submitted.  The city's contributions will be:

Health Administration will work as the liaison for the TXHC Self-Assessment and work with DSHS Program Staff to devise a plan of action based on the results of the Assessment. The Health Department has no prior history with this grant.

The Assessment is due November 15th and the Project Work Plan December 15th.  DSHS will not devise the plan of action, as stated by Health Services Manager Sandra Villareal.  The program specifies the contractor, the City of San Angelo, will complete both the Assessment and Work Plan. 

San Angelo has public health in the shallowest of ways compared to services offered two decades ago.  This grant will not stem the reduction tide under Villareal.

That's enough fright for one post. We'll see if the council meeting makes these issues more of less terrifying. 

City Council to Act on Health Insurance

Last month San Angelo City Councilwoman Charlotte Farmer talked about getting staff salaries up to 85 to 90% of the national averages.  Other council members offered a different comparison group, cities our size or in our region.  Wages are but one component of total compensation, which includes benefits.  One key benefit is on City Council's published agenda:  

29. Consideration of matters related to Request for Proposal HR-01-14: 

a.Discussion of proposals submitted for Request for Proposal HR-01-14 for benefits regarding health/Rx, clinic, dental, flexible spending accounts, employee assistance program (EAP), voluntary benefits and COBRA administration. 

b. Consideration of selecting Benefit Providers related to Request for Proposal HR-01-14, authorizing staff to negotiate contracts, and authorizing the City Manager to execute said contracts and related documents Presentation by Human Resources Director Lisa Marley) 
The city budget projected health insurance costs to soar, with the city picking up a portion of the increase.  How much will employee costs for health insurance rise?  How much will retiree health costs increase?  Several years ago the city hammered employee and early retiree dependents with massive health increases.  It caused nearly 200 people to drop city sponsored health insurance.  The irony was City Council had access to Early Retiree Reinsurance Program funding and chose not to use a penny.

Last year HR Director Lisa Marley changed faces on health insurance costs between budget and council proposal   In one month the projected number swung nearly $1 million.  (fiscal year)

The City's 2013 Comprehensive Annual Financial Report (CAFR) revealed the health insurance fund to be much lower than budgeted, $469,000 vs. the expected $1.23 million. (fiscal year).  The actual drop was even larger.. 

In July Marley flashed a slide showing a projected $2 million increase in health insurance costs (fiscal year).  Staff proposed Council fund $750,000, leaving $1.25 million for employees and retirees to shoulder. 

Former Police Chief Russell Smith has been the voice of retirees on this issue.  Their pay was a fraction of their peers in other cities, yet the selling point was city benefits.  These retirees got neither fair pay or the promised free lifetime healthcare. It must gall retirees to see staff get a 5% across the board increase while their retirement income remains fixed.

Both staff and early retirees will pay more for health insurance coverage.  The question is how much?  Another question is how many positions will no longer have health insurance benefits due to the city's contracting out numerous functions formerly performed by employees? 

Council's discussion should include a deep and honest discussion on health insurance.  That has not occurred in years.

Thursday, October 16, 2014

City Sits on Hands while Republic Refunds

The City of San Angelo contracted out its trash and landfill franchises to Trashaway-Republic Services for the last two decades.  Republic's overbilling of commercial customers came to light during the RFP evaluation process, which would determine the trash and landfill operator for the next ten years.  The City abdicated its oversight role, yet again, allowing Republic to audit bills and issue refunds.  At no time dig City leaders call for or conduct an internal investigation into how Republic promulgated these unauthorized fees.  Will Wilde, Ricky Dickson and Shane Kelton all "oversaw" Republic's contract with the city.

Since the city has been hands off Republic can say things like:

All the amounts to be refunded were charged in good faith.

Possibly in good faith that Republic's profits would be maximized, but they did not conform to contract or city ordinance.  The unnamed international accounting firm isn't on record with their findings.  No letter has been made available to the public as to the scope and methodology of their work.

The city failed to explore how this overcharge in excess of $6 million occurred.  No investigative body is exploring the long term bilking of commercial customers.  It's all packaged for public consumption for Halloween, which is symbolic given Republic tricked commercial customers for ten years.   

A class action lawsuit is all that remains between Republic and clear skies.  Republic's legal response to the lawsuit closed with prayer.  Or is it prey-er?

Wednesday, October 15, 2014

MedHab Ready to Announce Major Partnership

MedHab's big news will be revealed next week at a press conference.  City Council representatives and Development Corporation Board members have been invited to attend

Sunday, October 12, 2014

Water Rebate Consideration Time is Now

There is only one time during the year that it makes sense for San Angelo's City Council to consider rebating a portion of their water fees.  It is after the close of September's financials.  It is both the end of the fiscal year and the end of high water usage as summer's heat begins to abate.

Somehow the City's award winning financial department conned Council into examining rebates in April and November of each year.  The November account is paltry or empty.  Finance transfers fund excesses, often in the multi-million dollar range, as part of its year end close (done in October).  April is also too early as it's before the Water Department's big summer months.

Recall have far the water revenue budget was behind earlier this year?  A $2.4 million figure comes to mind.  The just approved City Budget for 2014-2014 shows a projected deficit of $606,608 in the Water Operating/Enterprise Fund for this year.  This is after the transfer out of $6.1 million to other accounts.

Budgets are projections, so the final tape on water revenues could be shared at the October 21st City Council meeting.  I hope it is.  The public deserves to know.  If not October, then the public will hear something in November.  The question is what?

Michael Dane: Well, each April and November we have an ordinance on the books that requires Staff to look at the fund balance in the water fund and to consider whether the rates, the revenue generated warrants, or has created the situation where we can provide a rebate to rate payers. We’re gonna do that in November anyway; we’ll be discussing results of operations, the net income, or the net loss; that’d be the perfect time to discuss this opportunity so, if this passes we’re interpreting this as a “Be ready to discuss this in November when you talk about the water fund balance.”

Watch for what staff brings to the meeting. I expect one month's performance for 2014-15 and their usual delta approach on how 2013-14 ended.  Hopefully, they'll bring more, show budget and actual performance while noting any water fund transfers made.

This may not be the year for rebates, but it's also not the year to raise fees dramatically to make up for a prematurely represented deficit.