Thursday, December 07, 2017

Stripes Changing Under Proven Operator Renter


Stripes Convenience Stores provided an update on its plans for 207 potentially orphan sites, 45 of which are in the San Angelo area.  Their press release stated:

DALLAS , Dec. 5 , 2017  --  Sunoco LP  signed definitive agreements with a commission agent to operate the approximately 207 retail sites located in certain West Texas , Oklahoma and New Mexico markets, which were not included in the previously announced transaction with 7-Eleven, Inc. Conversion of these sites to the commission agent is expected to occur in the first quarter of 2018.
The press release referred to details in an investor presentation.


The slide above states:

WEST TEXAS: DEFINED VALUE - CREATING PATH

● A signed agreement with a proven operator for the 207 West Texas sites as a commission agent
          • The conversion of sites is expected to occur in Q1 2018
          • Commission agent is a proven profitable channel within our fuel distribution portfolio

● Key elements of commission agent model • Commission agent operates retail locations
          • Generates stable rental income through SUN’s continued ownership of real estate
          • Captures a material portion of fuel margin less a commission to the agent
          • Provides optionality for future asset sales
          • Commission agent operations are included in targeted 50% reduction in overhead

● Opportunity to capture upside of West Texas growth via commission agent terms

● Delivers on coverage (~1.1x) and leverage (~4.5 - 4.75x ) goals
         • Significant EBITDA retention, immediate accretion to distributable cash flow/distribution coverage
          • The commission agent model, developed early in the West Texas sales process, is high-value alternative to asset sale
          • Best option based upon the analysis of balancing EBITDA retention and after-tax cash proceeds
          • Combined with the 7-Eleven transaction, allows for debt reduction, redemption of preferred equity and repurchase of common units

In January 2016 Stripes operations were a key value driver for Sunoco LP.   West Texas Stripes, under their new name, will be operated by a renter who must give a good chunk of their gasoline profits to the landlord.  How might that impact service?

Will Alvin New end up as part of the "proven operator" team?  It remains to be seen.

Tuesday, December 05, 2017

Why San Angelo Citizens Did Not Get Water Rebate


The City of San Angelo's Water Fund continues to surprise.  First, it came in at $6.7 million.  That's $1 million higher than prior numbers released to the public.  The city took nine adjustments worth nearly $3.2 million to get the fund balance down to $3.6 million.  

City Council expressly approved only $1.2 million of these adjustments.  The remaining $2 million were characterized as "any typical year end audit adjustments" by the City's Finance Director.

I'm not sure how a Ford Ranch carryover is a typical year end adjustment as the city bought the ranch in November 2016.  That's after the start of the 2106-2017 fiscal year which ended 9-30-17.

City staff did not supply this information to Council and elected officials did not inquire when provided the opportunity.  Given the public's longstanding concern about water rates one might expect staff and council to be proactively transparent in the use of water funds.

Citizens can see the math.  The water fund increased $6.1 million in the last fiscal year, much of it due to our paying our water bills.  Most of that increase, $5.9 million, came in the last five months May, June, July, August and September.  

Another surprise is the city has additional accounting periods for the fiscal year ended 9-30-17.  This document shows a period 13 and period 14.  These year end close financial statements are not shared with City Council or the public.  How can elected officials or the public be aware of important information if it isn't shared?  They have to ask.

Friday, November 24, 2017

City Council Rejects Water Rebate: Rate Increase Vote Next?


San Angelo's City Council continued the decade long string of not offering water rebates to citizens, despite raising water rates at least five times since 2007.

The City enacted water rate increases in 2007, 2011, 2016 and 2017.  Another water increase is coming January 1, 2018.
2007 - Average increase of $13.22 per month
2011 - Average increase of $14.75 per month
2011-2016 - Additional fees of $5.42 per month added.
2016 - Average increase of $5.88 per month
2017 - Average icrease of $6.56 per month.
2018 -Average increase of $7.32 per month
Two more rate increases are planned for 2019 and 2020.  Combined they total $7.96 per month. 

By 2020 San Angelo's City Council will have increased citizen water bills by $61.11 to $79.08 per month.   That's a 340% rate hike over 14 years, an annual 24% increase.

Why no rebate?  One factor is the city shifts water money around before its time to consider a rebate.  Consider this historical fact from Fitch Ratings, the city's bond rating agency:

In 2011 the City conducted a "one-time transfer of $3.5 million into general fund reserves from the water utility." 
Consider what Finance Director Tina Dierschke told Council on 11-21-17:


"The estimated fund balance is our fund balance from September 30th in the Blue Book and we've also taken out the carryovers Council approved in the last meeting as well as any typical year end audit adjustments so that we have a better picture of where the water fund balance really stands."
The Blue Book showed nearly $5.8 in Water Enterprise fund balance as of 9-30-17.  Not once Councilperson asked how that number declined to roughly $3.6 million.  Those with a good memory would recall a $1.2 million carry forward for utility work for street projects.


That leaves $1 million explained away as a typical audit adjustment.  In addition, there was no discussion on the $4 million administrative line item or the $3.5 million in transfers from the water fund for the fiscal year ended 9-30-17. 

I wrote my City Council representative asking about the evaporation of $2.2 million in water funds.  I've heard nothing back.  That was also council's response when asked "any questions?" on this agenda item.  Silence.  Nothing. 

Saturday, November 18, 2017

Water Fund Dries Up: No Rebates Again for Citizens

-

A cold, dry wind blew $2.2 million from the City of San Angelo's main water fund.  It went from nearly $5.8 million as of September 30th to $3.6 million, according to city finance staff.

The Water Operations Fund estimated fund balance (after estimated year-end adjustments and carryovers) as of September 30, 2017, is $3,585,477 (unaudited).
The memo to City Council refers to a fund that does not exist in accounting documents.


What does exist is the Water Enterprise Fund.  As of 9-30-17 it showed:


The first question is what happened to the $2.2 million?  Staff should clearly explain any adjustments or carryovers to Council and the public.

The goal for the water operations fund is 75 days of expense budget, or $4,781,532.
The goal is to have 75 days cash to meet operating expenses, which came in at $18.8 million for 2016-2017.  The city's water enterprise budget was $4.5 million higher than it actually spent.

Council could consider a different analysis using the City's Bluebook numbers, one that would produce a small rebate for customers.


This is an accounting discussion that involves operational definitions, what numbers mean and how they are figured. City Council's tacking this item will be informative for citizens.

The water rebate comes after two other water related items, raising the deposit for an account by 186% to $100 for most new users and charging 18% interest on late bills.  These are items G and H on the regular agenda.  The water rebate is item L, the last item on the regular agenda.

Most citizens don't have time to show up to council to share their thoughts, especially for items at the end of the regular agenda.  Should any of these issues be important to you please contact your city council person.

Update 11-24-17:  Members of City Council asked no questions on this topic.  Their silence can be viewed here starting at 1:51:25..

Wednesday, November 08, 2017

Council Voted to Increase Water Deposit 186%


San Angelo City Council voted unanimously to raise the water deposit from $35 to $100 for the water meter used by 82% of its customers.  The increased deposit would only apply to new customers.  It would not impact existing users, according to city staff.

Citizens endured repeated large increases in water bills for the past decade, as rates increased multiple times and new fees were added.  Staff said the logic in charging larger deposits was to reduce deadbeat customers.  Yet, the city sends only 2.2% of its annual water revenue to collections each year.


Staff did not share that the city's water fund of $5.7 million is way over its $3.1 million budget.  Citizens funded $2.6 million or 84% more than the city planned.

Five years ago Council entertained a water rebate in its first meeting in November.  This Council nearly tripled the water deposit for most new customers.

The twisted part of the presentation involved using other aspects of the utility bill, sewer, trash and stormwater to push for the higher deposit.


Between the four operating funds the city has over $21.5 million in fund balance as of 9-30-17.  None of this was shared with City Council before it voted to raise the deposit significantly.  Fiscal year end numbers were available as they were shared with the Development Corporation on October 25th.

One has to dig to get the wider story from City Hall.  I'm not sure our current council likes to get their hands dirty.  Thanks to them new water customers will write much bigger deposit checks come January 1.

Sunday, November 05, 2017

Year End Financials Late to City Council


City of San Angelo Finance Director Tina Diershke presented year end financial statements to the Development Corporation on 10-25-17.  Staff will not have that information for City Council on Tuesday, even thought their meeting comes nearly two weeks after the Development Corporation.

Why might this be important?  Citizens expressed concerns about expensive water and trash bills to elected officials.  Several councilpersons seemed interest in current fund balances for those funds during at least one budget meeting.  City staff avoided direct questions and offered nearly year old budget projections vs. actual year to date figures.

November is the time City Council entertains a water bill rebate.  It won't be November 7th. 

Saturday, November 04, 2017

Citizen Water Rebate Not on Council Agenda for 11-7-17


Five years ago City Council discussed a customer water rebate during their first meeting in November (11-6-12).  That topic is not on the agenda for the November 7, 2017 Council meeting.  With one month left in the fiscal year the city held $4.6 million in the main Water fund.  That should be up significantly given September water revenue was nearly $2.6 million. 

Wednesday, November 01, 2017

Water Chief Riley to Retire


The City of San Angelo announced:

Water Utilities Director Bill Riley is retiring from the City of San Angelo, effective Dec. 8.  Riley joined the City in December 2014.
The City spent huge amounts on various consultants during Riley's term as Water Chief.

Prior to joining the City, Riley served as president and general partner of Water Resources Management, LLC, a consulting firm that assisted water utilities with developing strategies for a broad spectrum of operational, management, financial and resource challenges. From 1991-2000, he served as the water/wastewater utilities manager in College Station, where he began his career in 1983. From 2000-02, Riley managed the water and wastewater consulting practice of Reed, Stowe & Yanke, providing financial, management and operations guidance to public sector clients.
Executive Director of Public Works Ricky Dickson waived the licensed engineer requirement to hire Riley.  I can't recall the last time Dickson made a public presentation to the Water Board or City Council.  Might he do so on Riley's replacement?

Saturday, October 28, 2017

Development Corp Gets $6 million Bill from City


Finance Director Tina Diershke presented a bill of $2,380,000 to the Development Corporation board on Wednesday.  She explained, "When we did the bond refunding in 2012 for some reason it was not properly allocated to the Development Corporation." Nor was it budgeted for the Development Corporation's debt service.  Dierschke said the bill would be $1.4 million per year for the next three years.

The timing is ironic for two reasons.  First, the news comes as the city nears the end of the first month in its new fiscal year.  The second irony is the board approved a $578,000 annual agreement for city services.  The agreement states the city will:

Provide financial analysis and projections on available funds, sales tax trends, bonding capacity, and voter-approved project, as requested by COSADC Board.

Determine allocation of cost of services for COSADC budget as part of the indirect costs contract with consultant or other comparable means, . 

Assist COSADC staff in the preparation of the annual COSADC budget

Audit COSADC agreements, administrative files and financial records for compliance with relevant requirements and regulations. 
The Development Corporation board pays an annual fee for city management services.  Management owes this board a reason for the $6 million miss which lingered over five years of fiscal audits and city budgets.

Consider the language from the City's 2013-2014 budget:

General Debt Service Fund
This fund is used to repay the principal and interest on debt. For fiscal year 2014, $.08 of the property tax rate is designated for this fund. This year, approximately 54% of total revenue collected comes from both current and delinquent property tax collections and 46% reflects transfers from the Development Corporation to service the debt for type B sales tax community development capital projects. The remaining revenue is interest. Debt requirements change from year to year and activity in this fund will vary accordingly.
The city went through four more budget cycles with catching the error.  It had five external audits that also missed the error.

The City of San Angelo’s Finance Department has for the fourth straight year earned the Certificate of Achievement for Excellence in Financial Reporting for its 2016 comprehensive annual financial report.
The Development Corporation Board will take up a budget amendment to fix for the five year budget/audit error.  A number of board members were less than happy with the surprise development.

This is a quality of service issue as the error could have been caught during budget preparation or the annual audit. At least ten error catching opportunities were missed over the last five years.  The Development Corporation paid the city over $1.3 million for administrative support services for the last three of the five years.

In their last meeting the Development Corporation approved buying the city's illegal dump site for future economic development and endorsed a city services agreement that is 23% higher than two years ago.  For one meeting it looked as if the Development Corporation got dumped on by the city.

City leaders owe this board a clear and thorough investigation/analysis, not a strong suit for City Manager Daniel Valenzuela 

Monday, October 23, 2017

City Bill for Development Corp Balloons


The City of San Angelo Development Corporation will consider approving an agreement with the City of San Angelo for administrative services.  The proposed amount for FY 2018 is nearly $580,000.  That's up over $100,000 in two short years.

$578,088 - 2018
$513,677 - 2017
$471,273 - 2016
That's a 23% increase over the 2016 rate.  The Development Corporation board will undertake this item nearly one month into FY 2018.

The City of San Angelo operates under the speed of billing.   

Sunday, October 22, 2017

City Water Fund: Gushing at Year End


Citizens rained money into the City of San Angelo's water fund this summer.  Cash poured in such that the city hit its $3.1 million water fund target with three months to spare.  With one month to go the fund was over target by $1.5 million

The city's Water Enterprise fund had a $4.6 million fund balance as of 8-31-17.  This represented 75.3 days of cash on hand.  How much did fund balance grow with the city booking nearly $2.6 million in water revenue for the month of September?  September water revenues beat August's by over $575,000 so it could be a very green month for city coffers.

Water prices are slated for another annual increase in January.  The rebate discussion looms.  How much will the city transfer from water fund balance at the end of the 2016-17 fiscal year?  It's West Texas, where we're used to gushers and droughts.

Sunday, October 15, 2017

MedHab's StepRite: Ready to Heal?


StepRite, MedHab's long awaited signature rehabilitation product, finally has its own website.  Two critical hurdles for StepRite have been FDA approval and Medicare's agreeing to pay for the device.  MedHab founder Johnny Ross said the company achieved FDA approval in a March 2016 interview.

Less than a year remains on MedHab's $3.5 million economic development agreement with the City of San Angelo.  MedHab raised capital three times after inking the deal with the City.  Might the company be ready to ramp up StepRite?  That would be news. 

Monday, October 02, 2017

City Council: Selling Unauthorized Dump to Development Corporation


San Angelo's City Council will tackle the sale of 17.58 acres to the Development Corporation on 10-3-17.  This is the third time this topic has been on public agenda, twice for City Council and once for COSADC.  Not once has any city staffer or representative informed the public that the property formerly housed the city's incinerator and served as an unauthorized dump for household garbage for a decade after the incinerator was shut down.

The Development Corporation will conduct Phase 1 and 2 Environmental Site Assessments on the property.  For $1,500 more the engineering firm will provide a Remediation Cost Estimate.  That cost likely will dwarf the up to $100,000 in sales tax money Council and the Development Corporation approved to date.

This item may not be discussed as it is on the Consent Agenda.  The Consent Agenda has twelve items and the Regular Agenda only four.  That's one way to conduct business.

Update 10-3-17:  The item was pulled from consent by City Councilwoman Billie DeWitt.  Development Chief Roland Pena.  Mayor Brenda Gunther asked if there was reason to believe there might be environmental problems?  Pena said no but the studies are needed to confirm.  The history of the site was once again kept below ground.  The city posted the last environmental assessment of the property on its website.  Symbolically the document opens upside down.

Thursday, September 28, 2017

Five Years Ago City Closed STD Clinic


Five years ago the City of San Angelo closed its sexually transmitted disease clinic and severely restricted immunizations.  Mayor Alvin New and City Council carried through on their threat to shutter critical public health services so state and federal money could displace local funding.  It looked like strong arming at the time, which city staff later illuminated for council.

Medicare Section 1115 Grant funding enabled the STD clinic to reopen in August 2013.  During its closure the city experienced a rampant syphilis outbreak.  After reopening with Medicare funding the clinic treated 199 STD clients in two short months.  The full year before the clinic treated 160 STD clients.  Treating more patients in two months is an oddity given the city closed the clinic and had a baseline of no patients for its federal grant.

The reopened clinic saw patients three days a week by appointment only.  The clinic operated only 24 days in the last two months of that fiscal year.

The City budget stated there were 608 clients scheduled through the STD clinic during those two months.  That's over 25 patients per day.  The full year before the clinic scheduled 766 clients through the clinic.

In addition the STD clinic performed 795 STD/HIV prevention encounters.  That's 33 people per day after reopening.  The full year before the clinic conducted 722 STD prevention encounters.  It educated 73 more people in two months time than it did the entire year before.

There are more oddities in the STD clinic story line, both before and after its ten month closure.  That closure began five years ago at 5:00 pm, the last Friday of September.

Wednesday, September 27, 2017

City Blows Past Projected Water and Waste Fund Balances

The City of San Angelo is easily beating its projected fund balances for water and trash services.  Water Enterprise fund is $1.5 million higher than projected and trash is up nearly $200,000 relative to staff guidance in an August 8th strategic planning session.  The public knows water and trash funds from our monthly city consolidated services bill.

The city is soundly ahead with one month to go in the fiscal year.  Expect these numbers to rise baring any transfers to other funds.  Our hot, dry September should provide healthy water revenues.  For the last few months trash has been adding $100,000 a month to its growing fund balance.  There is one month left for each of these funds to grow.  How big will they get?

Monday, September 25, 2017

Sunken Garden Park vs. Railway Museum


San Angelo's Development Corporation will entertain supporting $700,000 in planned improvements for the Sculpture Garden at the Sunken Garden Park when the board meets on September 27th.

The Sculpture Garden has been a successful cultural addition to the city for 5 years. The park's visitation has very noticeably increased. Staff finds it to be a perfect use for the space based on its content and location.

For the last few years, we've realized the park needs significant improvements to make it more usable, attractive and fitting for the asset that it is.

The City's Capital Improvement Plan for 2013-2018 estimated Sunken Garden Park would need $275,000 in upgrades for.

Landscape refurbishment of Sunken Garden Park with enhancements to improve access and enjoyment of the new Sculpture Garden. Improvements to include a new irrigation system, new turf in targeted locations, improved accessibility with ramps and stairs, walkways to and around the sculptures and improved lighting.
That grew to $550,000 for the 2017-2022 CIP.  The project description is nearly identical in the city's latest CIP despite the cost doubling.

Landscape refurbishment of sunken garden park with enhancements to improve access and enjoyment of the new sculpture garden. Improvements to include a new irrigation system, improved accessibility with ramps and stairs, walkways to and around the sculptures and improved lighting.
The number is now up to $700,000. Oddly, that's roughly the amount of sales tax revenue that should come available from a combination of recent improvements in sales tax collections and strange budgeting.

The Development Corporation could find significant sums available rather quickly.  It could be used at the Sunken Garden Park or the Santa Fe Depot, home of the Railway Museum, which needs a new air conditioner and parking lot repair.  The City sent Railway Museum Board President David Wood packing but may happily fund Howard Taylor's outdoor sculpture project. 

Sunday, September 24, 2017

COSADC to Buy City's Unauthorized Dump


The City of San Angelo Development Corporation board will entertain the purchase of 17.58 acres of land in the midst of new hotel alley.  The area currently houses seven hotels.  The Development Corporation will consider buying the land from the city

The city put the land up for bid in May 2017 with proposals due in mid-July.  Bid documents show the city once had an incinerator on the site and used the land as a dump.

A 2002 Environmental report stated the land had been "transferred to Jack and Wanda Tubb in the early 1980 and subsequently transferred back to the city after discovery of wastes disposed at the site."


Cleanup estimates in 2002 ranged from $162,000 to $244,500 for remediation of a 2 foot layer over 1 acre.  It"s not clear how much household waste dumping the city conducted at the site in the decade after the incinerator closed.

The Development Corporation board and the public deserve to be informed of this property's history under city ownership.  The Development Corporation is a city sponsored entity, as its members are appointed by City Council. 

Apparently, there were no bids from the public solicitation for proposals for the old incinerator site.  Any sale from the city to the Development Corporation should be at arm's length with material disclosures. 

Update 10-2-17:  The Development Corporation board heard about potential environmental concerns.  They did not share the history of the property under city ownership during their approval of property purchase.  City Council will undertake the item on 10-3.  City Council's agenda packet makes no mention of the city's using the land as an unauthorized dump.

Wednesday, September 20, 2017

What City Does Not Audit or Correct


In mid-August Citizens learned from public meetings the City of San Angelo does not audit two areas of concern, safety training to reduce workplace injuries and the protocol for euthanizing sick or injured pets.

On 8-15-17 City Council asked Risk Manager Charles Hagan about strategies to reduce workplace injuries.  The topic arose in a Worker's Compensation presentation of an actuarial audit which was completed nearly a year ago (9-30-2016).  Hagan said department managers are responsible for weekly safety training.  When asked if anyone audits to see if such training occurred.  Hagan said he did not review those records.

The Animal Services Advisory Committee (ASAC) heard how the city conducts euthanasia of sick and injured pets.  A public outcry occurred after shelter staff euthanized Misty, a deaf Rat Terrier/Pit Bull mix.

Staff presented the euthanasia policy in ASAC's August 17th meeting.  When asked about the city's compliance with its stated euthanasia policy Neighborhood and Family Services Director Bob Salas said "Hmmmm, I don't know."  He said he would need to check on this and get back with the board.

Salas knew for months the public wanted answers on Misty.  Competent management would investigate Misty's death and conduct a wider audit on euthanasia compliance.  A seemingly basic management question stumped Bob Salas.

In addition the city does not correct the public record when staff present false and misleading information.  Former Animal Services Director James Flores did just that in May with his Community Cat survey.  Flores twisted the results to support his desired strategy for community cats.

Below is my interaction with City staff on the topic:

Question:  How does the City of San Angelo correct incorrect information, willfully or inadvertently shared and recorded for the public to view?

Official City Response:  This does not meet the requirements of a open public records request. Additionally, I am not aware of any records that would respond to this sort of request.

Followup Question:  So the city has no policy, practice or legal requirement ensuring the public gets correct and accurate information?  If no such things exist, please send me the City Manager and Public Information Officer job descriptions.
The city sent the requested job descriptions, nothing more.

The public information officer must know:
· Legal, ethical and professional rules of conduct for public sector employees.

The city manager:
• Supervises and provides advice and counsel to department directors regarding policy interpretation relevant to City programs and services, and confers with department directors in planning and carrying out special projects. 
Neither party admitted the falsehoods perpetrated by James Flores which reside in the city's public record.  However, the Animal Services Advisory Board learned of Flores' lies during their August 17, 2017 meeting.

The city's call for management excellence rings hollow in a number of arenas.  It makes one wonder how deep the hollowness goes.

Saturday, September 16, 2017

Railway Museum Closed for City Sponsored House Cleaning


San Angelo's Railway Museum is not open today, the day after the museum's lease with the City of San Angelo expired.  A sign on the entrance door stated the museum is closed for cleaning and suggested readers come back next Saturday.

This post appeared on the Railway Museum's facebook page on September 4th. 


The City sponsored housecleaning started September 5th when it rebuked Board President David Wood in full public view.  Wood resigned later that evening in a called Board meeting.  Volunteer Executive Director Shannon Carpenter resigned less than a week later.


Downtown San Angelo is promoting the Railway Museum for an event next weekend and for the upcoming Christmas Holidays.  Mayor Brenda Gunther also lends her time to Downtown San Angelo.

City Council will entertain lease renewal at their September 19th meeting but it's hard to believe the nonprofit museum can reconstitute itself in such a short period of time to be worthy of a twenty or fifty year lease.

Oddly the September 5th City Council minutes omit public comment from then President David Wood.

Motion:   Council Member Hiebert made a motion, seconded by Council Member Thompson , not to renew the lease related to 703 S. Chadbourne .
It does not mention that he spoke much less the points he made after introducing himself.


Wood We've been working closely with Daniel (Valenzuela - City Manager) and Cindy on getting all the figures and stuff together for them, that they asked for.  They told us there would not be a problem with renewing the lease.  So this is quite a surprise.  May I ask why?

Valenzuela:  Theresa (James - City Attorney), he's asking why we are not renewing the agreement.  So, he is asking for a response on that.

James:  That was issues that we were discussing in Executive Session and as attorney-client privilege requires I am not able to discuss it in an open meeting, nor will they discuss it as well.

Wood:  Y'all can't say why that just last week Daniel was saying everything is fine.

James:   I will say that in the meantime since you had the meeting with Daniel issues have came up that have degraded our belief that it would be prudent for the city to continue that lease.

Wood:  There's going to be a large campaign going on then, I guess through the media, that we will start today working on. If this release is not renewed let me assure you there will a large community outcry about it.  We've done everything we've been asked to do.  We had a problem with the lady that Daniel asked to come up and be the go-between between with the city and the Depot.  She just did not perform the duties as she said she was going to.  We've hired an Executive Director to take over that and we've been keeping Daniel and Cindy apprised of everything.  We've got everything ready to present to y'all.

We were told it wouldn't be done until next meeting.  We were told there was nothing on the agenda for this meeting.  So this is quite the surprise that this comes up like this.  We've got all the money shown and how where we're going to raise it as you asked for Mayor. We've got projections shown for.  We've been working with ASU even though they don't work with nonprofits normally.   ASU Small Business Development  made sure everything was up to snuff on everything in our business plan.  So this is quite the surprise that y'all decided to not renew this lease.  

Wood sat down and council voted.  The minutes recorded:

The motion carried unanimously seven (7) a yes to zero (0) nays.
Let the record show what a difference a day makes.

Update 9-19-17:  The City gave a decimated Museum board six months to get its act together after the city ran roughshod over the Museum's volunteer leaders 

Monday, September 11, 2017

City Engineer Speculated on Bell Street Project's High Bid


City Engineer Russell Pehl broke the bad news to City Council about bids for Bell Street reconstruction coming in way over his engineering consultant's estimates.  Pehl underwent repeated questioning as to why bids came in high for water and sewer work.


He said he could speculate why the bid came in much higher than estimated. Why would Pehl need to speculate when the contractor submitted bid pricing per city specifications?  The bid sheet broke out specific work for both water and sewer (wastewater).



This is not the first time city staff came across as clueless and uninformed before city council.  A professional engineer should be able to explain the difference between city engineering estimates and a construction bid, especially one that came in nearly a third over budget.  Homework, research, analysis and preparation beat speculation, especially in the engineering world. 

Update 11-5-17:  Pehl made the top 20 leaders under 40 years of age list. 

Railway Museum Runs Further Off Track



Volunteer Executive Director Shannon Carpenter resigned after a month with the Railway Museum.  She either could not pull together a fractious board or splintered it with her bombastic e-mails.  The volunteer board declined the opportunity to pay her $85,000 a year to serve as their paid executive director.

Still no word from former Board President David Wood who has to be considering where to take his giant sized railroad set and possibly a defamation lawsuit.  An understanding city management gave the new board President until Friday to submit a business plan worthy of a 50 year lease.  In six short days the City decimated San Angelo's Railway Museum. 

Sunday, September 10, 2017

Could David Wood Learn from Ken Landon?


The City of San Angelo's treatment of Railway Museum President and founder David Wood made me wonder what strategic moves remain for Wood and the Railway Museum.  Several years ago waterlily expert Ken Landon considered taking his considerable private collection of water lilies out of San Angelo.

Locals worked a deal to create a private organization for the lilies which the city actively supports. The proposed 2017-18 operating budget has over $100,000 for water lily garden operation.  Also, the city's website has numerous references to the waterlily garden.  One states:

One of the jewels of the Central neighborhood is the world-famous International Waterlily Collection, owned and operated through a contract by the City of San Angelo.
The City posted plans on its website for upgrading the Sunken Garden Park area:


The Waterlily website states the following about the legendary Ken Landon:
Ken has been growing, perfecting propagating techniques and hybridizing some of the most amazing waterlilies the world has seen.
He is the founder of the IWC (International Waterlily Collection) and the IWPR (International Waterlily Preservation Repository).
A nonprofit search on Guidestar failed to find a 990 for either of Ken's organizations.  A search of the Texas Comptroller site produced information on the second organization, the International Waterlily Preservation Repository.


The report showed its franchise tax involuntarily ended and someone in that organization would need to request the right to conduct business in the state of Texas.  How does this compare with the city's stance on the Railway Museum? 

The decision to let the lease lapse on Sept. 15 was based upon both those concerns and the museum’s failure to maintain its legal sufficiency.
Both David Wood and Ken Landon are passionate enthusiasts in their respective areas.  Both commit-ted significant personal time and resources to developing and sharing their specialties with area citizens.  I imagine both men would rather focus their time on their passion, not on the details of running an organization.

Ken got the city to support him, as I recall by threatening to leave.  People in the community helped expand his operation and are currently developing plans for a secure lily garden area.

Nonprofits cycle through functional and dysfunctional times. They deserve to deal with challenges privately and outside the public view.  That did not happen with the Railway Museum board, partly due to the pressure of eviction from city property.

David got the city's ire to the point it simply refused to do business with him.  Reports from San Angelo Live revealed significant conflict within the organization, at the board and paid leadership level.  Healing from such levels of conflict does not occur quickly.

The City of San Angelo debased museum leadership in a press release.  City Council members would not speak but the City Attorney hinted at problems with Mr. Wood at the September 5th City Council meeting.   In public comment Wood expressed surprise at the inconsistency of City Manager Daniel Valenzuela and promised a vigorous campaign.  That's all the public heard from him prior to his resignation as Railway Museum Board President.

David Wood no longer heads a nonproft but he retains his passion for everything railroad and his significant collection of historical items.   Surely a community in West Texas has a historical depot building he can help fill.

Ken Landon survived numerous dark days with little official city support for his waterlily passion.   Might David Wood recover from the city switching signals and ensuring a Railway Museum train wreck?

Update 9-23-17:  It's time for Lilyfest, the 12th annual event celebrating San Angelo's unique international water lily collection. 

Wednesday, September 06, 2017

City Goes After Railway Museum President David Wood

Anyone who has attended San Angelo's Railway Museum knows the critical role Board President David Wood has played in that operation.  His tours reveal his deep knowledge of San Angelo's rail history and the extent of his personal commitment to the operation as many exhibits are personally owned by Wood.

The railway museum is in the historic Santa Fe Depot and the nonprofit railway museum has operated there for over twenty years.  It's been an all volunteer operation.  The City no longer trusts the museum's number one volunteer who has challenged the city for not meeting its maintenance obligations under the lease.

Oddly, the city gave its auditorium to the San Angelo Performing Arts Council (SAPAC).  It provided $6.2 million in funding and another $1 million in historic tax credits.  The City gave SAPAC years to meet its fundraising goals before forking over millions in direct taxpayer subsidies.  Why the dramatic contrast in support?

City Council will need to explain why it fell over backwards for SAPAC while knocking the railway museum off the rails.  Both nonprofits enrich the community.  Both bring "heads to beds," tourists to town so they can rent hotels and buy meals.

Back in May San Angelo Live reported:
Wood and his board of directors are concerned that the city may be making a move to evict the 20-year-old museum of railroad history for a corporate suitor. 
City Council took the first step toward eviction with its action not to renew the lease.

What happens next with the old depot is up in the air. Rumors are that the City is interested in leasing or selling the old depot to a private company, such as Texas Pacifico, who runs a real railroad operation here. Spokeswoman for Texas Pacifico Liz Grindstaff said her company currently has a lease on their existing location and any speculation about leasing the depot is premature.

City Manager Daniel Valenzuela should recall the pain former Assistant City Manager Liz Grindstaff caused him with her role in the Furniture Fiasco, the unauthorized purchase of over $100,000 in Water Department furniture.  That debacle occurred in Valenzuela's first City Council meeting.

Grindstaff coordinated City Hall renovations, which originally excluded the city auditorium as it was in "good condition."   She left the city to join Texas Pacifico Railroad, which city staff recommended helping with a nearly $250,000 economic development incentive.  After City Councilman Winkie Wardlaw opposed the incentive Liz Grindstaff ran for his seat and won.

City Manager Daniel Valenzuela's investigation into the unauthorized furniture purchase hardly met the standard of competency.  It failed to answer the most basic questions and is unsigned and undated.  Yet yesterday Valenzuela had his attorney ignore the city's log like failures while pointing out the stick in David Wood's eye.

Time will reveal the city's true intentions. The Railway Museum Board must try to read the tea leaves.  If the city is intent on making money from real estate tossing David Wood off the board would make no difference.  It would be sad if the city's opaque approach splintered an all volunteer group with a noble mission.

It's incumbent on City Council to make their intentions clear.   The public can infer the city wants David Wood gone.  The question is do they want the whole operation out as well?

The Railway Museum does not have the city's PR resources which have already been unleashed in surprise attack fashion.  It does have over twenty years of goodwill in the community it can mobilize.  Will David beat Goliath?

Update 9-6-17:  A splintered railway museum board gave city staff the fodder it needed to not renew the lease.  So far all the communication has been from the anti-David Wood camp.  Goliath drove David out.  He resigned last night from the museum board so the organization has a chance to renew the lease.  It has an uphill climb to convince City Council the organization has revamped. 

Update 9-19-17:  The City gave a decimated Museum board six months to get its act together after the city ran roughshod over the Museum's volunteer leaders

Tuesday, September 05, 2017

City Council Booted Railway Museum and Deliberated Budget Public Hearing Behind Closed Doors


San Angelo's City Council looked secretive and unwilling to share the most basic deliberations in today's meeting.  The Executive Session agenda had two items where Council took action but shared no information.  The first involved real property at 703 S. Chadbourne..

b. Section 551.072 Deliberations about Real Property regarding 703 S. Chadbourne 

c. Section 551.071(2) consultation with attorney regarding 703 S. Chadbourne 
Council returned to public session and voted not to renew the lease at 703 S. Chadbourne.  The City  never identified the current occupant in the agenda or council discussion.  That is not honesty or transparency.

Railway Museum Board President David Wood heard about the move and cancelled two doctor appointments to attend.  His testimony informed the public watching live, not City Council or staff.  Wood offered public comment expressing his dismay at the turn of events.  When asked why, i.e. what were council's deliberations, Wood was told that information was under attorney-client privilege.

City Council hid behind attorney client privilege only to have staff produce a slick, scripted press release on the matter.  The press release quoted the same City Attorney who told Mr. Wood the reasons were confidential.  She did not hesitate to share information on Council's decision via news release.

City Council is the accountable body and it should not hide behind attorney-client privilege.  It should not delegate its responsibility to inform the public to a press release.  City Council held deliberations and took a vote in a public meeting.  They need to state the reasons for their action, which cancelled the Railway Museum's lease ten days before it is due to expire.


Oddly, staff moved the mandatory public hearing on the 2017-2018 budget to executive session from the public agenda.  The following item was moved after a nearly two minute silence. 

e.  Discussion and consideration of matters related to the fiscal year 2017‐2018 operating budget including:

1. First public hearing and introduction of an ordinance of the City of San Angelo approving and adopting the budget for the fiscal year beginning October 1, 2017, and ending September 30, 2018. This budget will raise more total property taxes than last year’s budget by $1,540,425 (4.29%), and of that amount, $635,425 is tax revenue to be raised from new property added to the tax roll this year.

2. Conduct a separate record vote to ratify the property tax revenue increase reflected in the budget and place the adoption of this tax rate on the agenda for the September 5, 2017 regular meeting of the City Council as an action item. (T. Dierschke)
It's hard to vote and put the item on the agenda for September 5th when it is September 5th.  The shift to executive session was likely a procedural move due to poor planning.   However, it would be interesting to hear deliberations from Council on an item intended for the public to hear and make comments.  Citizens did not get that opportunity.

Mayor Brenda Gunther and City Council looked off step on the budget item and mean spirited on the Railway Museum.  They serve the public and should not hide behind staff.  Deliberations, even procedural ones, should be shared. 

Saturday, September 02, 2017

Parts Budget Up $200,000, Contract Renewal Nears


San Angelo's City Council will take up a $200,000 increase in repair parts when they return from the Labor Day holiday.  This is significant as the City contracted out its parts department three years ago.  At the time it promised City Council a financial impact analysis.  That never came and when asked the city could not produce one.  It simply referred to vendor's pricing structure and a contract that had the City of Odessa as an example.

The parts department contract is up for renewal as it expires on 9-26-17.  Now would be the time for this City Council to hear the financial impact of contracting out the parts department for the last three years.   They learned of the arrangement August 8th in a Budget Workshop meeting.


This City Council has no members that approved the concept in May 2014.  There has been 100% turnover in elected leadership.  A financial impact presentation would ensure an informed renewal and that council remains complaint with purchasing ordinances.  It may not be required within the letter of the law, but ethically, the spirit requires it.

Update 9-5-17:  There were no deliberations on this item as it was on the consent agenda and no member of City Council pulled it for discussion.  In their August 15th meeting no member of City Council wanted to know why the cost for repair parts increased $200,000 for the current fiscal year.  That held for September 5th.  

Update 9-15-17:  City Council will not take up contract renewal for vehicle parts department operation in their 9-19 meeting.  The city produced no additional financial information.  I wrote my City Council representative with my concerns but am yet to receive a response.

Tuesday, August 29, 2017

No Financial Impact Exists on Parts Department Outsourcing


San Angelo's City Council approved contracting out its vehicle parts department in May 2014.  The consent agenda item had no presentation and was supported by a two page memo that said:

The financial impact will be finalized through the negotiation process.
That financial impact is nowhere to be found. When asked to produce the promised financial analysis city staff sent a copy of the signed contract.

The information requested is in "Section 7" of the contract, per the department
Section 7 is simply the pricing plan summary shown above. Assessing financial impact is Assistant City Manager/CFO Michael Dane's territory, not the Parts Department.  No credible financial officer would consider a vendor's pricing structure a financial impact analysis.  However, that is the city's position.


Oddly, Council's shadowy decision occurred in the midst of the city's rush to renew its trash contract with Republic Services. The Vehicle Maintenance Fleet Parts and Supply Management RFP was due April 9, 2014.  City staff opened trash bids the end of March only to learn Republic had over-billed commercial customers for over a decade.  That fact did not deter staff or council from their headlong rush to renew. 

With the public upset over the trash situation I'm sure city officials were relieved that no one raised the most basic questions regarding contracting out parts.

City Council remained out of the loop on the Parts Department until a recent strategic planning session.  As the contract is up for renewal now would be the time for city staff to show a three year financial impact analysis.  That the promised information does not exist should be concerning to city council and citizens wanting effective local governance.

Operations Director Shane Kelton is over both trash and vehicle maintenance.  City Manager Daniel Valenzuela signed both agreements.  Mr. Valenzuela is not known for his investigative abilities.   His investigative reports are light to the point they've been unsigned and undated.  These facts might explain why no financial impact exists in City Hall.

Saturday, August 26, 2017

Sales Tax Budget Varies Widely in Two Weeks


San Angelo's City Council heard two sales tax stories in recent budget sessions.  On August 22nd staff proposed a 3% sales tax increase over current budget for the city's general fund.  On August 8th staff proposed a large decrease in sales tax revenues for economic development.


So which is it, a projected 3% increase or a large decrease?  It cannot be both.  Sales tax revenue for the development corporation and general fund are directly correlated.

Using the general fund assumption of $17 million in sales tax revenue for the coming year the Development Corporation would have $8.5 million.  That's $650,000 more than budgeted.

There's a disconnect between 2017-18 sales tax projections in staff budget presentations.  City Council and the public deserve a consistent story from staff.

Update 9-23-17:  The COSADC Board background packet for 9-27-17 shows over $8 million in sales tax revenue with one month left in the fiscal year.  The development corporation will end the year with sales tax roughly equal to last year, i.e. no decline.  The city believes it will rise 3%.  So why the $800,000 sand bagging?  Is it to fund the Sunken Gardens park, also on the September agenda?  The Railway Museum might have serious regret for not shopping around for a new home.

Update 11-5-17:  Finance Director Tina Dierschke told the Development Corporation Board that sales tax revenues had been up the last four months in a row . 

Update 11-19-17:  Sales tax revenue is up nearly $300,000 or 11% from last year.  That's the story City Council will hear on 11-21-17. 

Tuesday, August 22, 2017

Murky Vehicle Maintenance Contract to Renew in September


Nearly three years after the City of San Angelo contracted out its vehicle parts department City Council heard information about the arrangement.

In May 2014 City Council approved negotiating with NAPA-Barron Services for vehicle parts and supply management.  The item had no discussion and passed in the consent agenda upon motion by Don Vardeman and seconded by Charlotte Farmer.

The background packet stated:

"The financial impact will be finalized through the negotiation process."
I requested this information after hearing Operations Director Shane Kelton describe the arrangement.  The city could not produce any documents showing the promised financial impact of this arrangement.  It did produce a contract which differed from details shared by Kelton.

"That management fee is set.... about $40,000."
The contract calls for NAPA Barron to be paid in two ways:

A search of the city's website produced amounts paid to NAPA for a six month period.  There appears to be two checks per month and over the half year period the city paid NAPA nearly $500,000.


Hopefully City Council will get the promised financial impact before the contract is renewed.  The initial three year period is up on September 26, 2017.