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.

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.

Update 2-2-18:  The Development Corp decided to adjust sales tax revenue up to coincide what the city budgeted.  Sandbag removed!

Update 3-18-18:   Sales tax revenue is "over budget for revenue by $822,919 year to date."  That's from the city's higher number, not COSADC's lowball budget.  City Council will hear the report on March 20th.

Update 11-3-18:  Finance Director Tina Dierschke admitted sales tax came in much higher than budget for the closed fiscal year.  Staff never addressed the discrepancy between the city and the Development Corp's sales tax revenue projections. 

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. 

Water Board Gets Partially Consulted

San Angelo's Water Advisory Board heard a consultant's presentation on the Water Utility Master Plan (at a maximum cost of just under $315,000) before considering the hiring of another consultant for a Water Supply Engineering Feasibility Study (at a maximum cost of just under $575,000).  During the second presentation Water Chief Bill Riley showed a slide titled "Current Water Supplies."

The city's current surface water supplies are ample.

Lake Nasworthy - 8,069 acre feet
O.C. Fisher - 15,164 acre feet
O.H. Ivie - 120,056 acre feet
Twin Buttes - 22,070 acre feet
E.V. Spence - 72,508 acre feet
                      (source: Water Data for Texas)

Those sources currently hold 237,000 acre feet.  Mr. Riley's slide showing a mere 13,820 acre feet would be way off on any truth meter.  His slide would be better titled "Estimated Safe Yield" for water planning purposes.  The Water Advisory Board needs to plan for lots of non-rainy days.   It has a super conservative number to use going forward.

Board member Kendall Hirschfeld recalls our serious water predicament as a City Council member.  He understands the need for finding more water sources for our community, as does the state of Texas.

The 2017 Texas State Water Plan has the following projects listed for San Angelo:

Direct and/or indirect reuse for municipal use - $150,000,000  (year 2020)
Hickory Wellfield expansion in McCulloch County - $27,104,000  (year 2020)
West Texas Water Partnership - $39,175,200  (year 2030)
Desalination of other aquifer supplies in Tom Green County - $57,967,000 (year 2050)

Hirschfeld expressed his concerns about Water Board members being out of the information loop on critical development projects.  Our water board cannot hear updates on the West Texas Water Partnership and its possible $40 million price tag.  Updates on the Hickory Wellfied expansion are not allowed as the city may be suing Alsay and Carollo Engineering for their work on six additional Hickory wells which should have been completed in 2016.   It's hard for a board to do its work with incomplete information.

Planning not to run out of water is hard work and expensive.  It must also be irritating for citizens volunteering their time and expertise to be out of the loop on major projects, regardless of how good the reasons.

Twice in City Council Budget Meeting Staff Offered Mayor Old Numbers

For the second time in City Council's budget planning meeting Mayor Brenda Gunther asked for the current fund balance in a major fund and staff gave a year old budget projection.  The Water fund has over a $3.1 million fund balance as of 6-30-17.  There are at least two high margin months left in the fiscal year, July, August and September.

July's water sales came in at nearly $2.2 million, a virtual repeat of a highly profitable June which experienced a $1.5 million profit (on $2.1 million in water sales). 

Assistant Director Water Utilities Allison Strube shared how revenue is highly seasonal and revenue/profits occur mostly over our dry summer months.  This means City Council has to be patient to see if  the city will sell enough water at the end of the budget year to meet projections.  Strube said water revenue is on target to meet projections.

My longtime point has been that it makes no sense look at the Water fund balance in winter or spring to consider giving citizens water rebates  Any water rebate discussion should come after the money gusher and before staff can transfer overflowing water funds to other accounts. 

July is over and the accounting books have been closed.  The City's Water Fund balance could easily be over $4 million with two good months remaining. 

The Mayor asked for actual numbers.  City staff offered a budgeted fund balance number nearly a year old.  It happened first with the Solid Waste fund, then with the Water fund.  The city's not wanting to reveal current fund balances to Council or the public is beginning to look like a pattern.

Kelton Defers on Solid Waste Fund Balance

Operations Director Shane Kelton presented the need for the city to build its fund balance to fund an expanded or brand new landfill.  Shane got the obvious question from Mayor Brenda Gunther, "What's your fund balance now?"

Kelton's reply:  "I'd have too....  Do you have the Bluebook Tina?"

Discussion continued on various ways to expand the landfill while Finance Director Tina Dierschke flipped through paper.  Rather than give the current Solid Waste fund balance of nearly $2.5 million with three months left in the fiscal year, Dierschke gave the projected budget fund balance for year end of just over $2. 5 million.

Mayor Gunther clearly asked for the current solid waste fund balance.  The $2,463,745 could grow another $200,000 if the current spread of revenue over expenses continues as it has for the first nine months of the fiscal year.

I find it odd staff cannot answer a simple direct question, one that should be easily anticipated within the city's highly recognized budget process.

City Council to Consider Building Fund Balances

City Council will consider the 2017-2018 budget for major departments on Tuesday.  Both the Water and Solid Waste budget have excess money going to increase fund balance.  Yet, city staff failed to provide a current fund balance for either fund.  The City sold lots of water in June and continues to make big money off late charges.  It has nearly $3.2 million in the Water Enterprise fund balance as of the end of June.  As dry as July has been I expect that number will soon be much higher.

The Solid Waster fund has nearly $2.5 million as of the end of June.  These numbers should be part of a conversation as citizens pay the freight for the continued building of fund balance. 

City Council to Hear about Economic Development Funding on 8-8-17

Economic development was the major theme at City Council's strategic planning session on 7-27-17.  The City's Development Corporation conducts economic development for San Angelo.  It is funded by a voter approved, half cent sales tax.

Sales tax proceeds rose significantly during our oil boom 2014-2015 and fell afterwards.  City staff present regularly to Council and the Development Corporation on sales tax proceeds, as it is an important funding source for both entities. 

City Council will hear a budget presentation on  August 8th.  The presentation highlights major departments including the Development Corporation. 

The Development Corporation is primarily funded through the type B sales tax, 72% of which is earmarked for ballot projects and 28% of which is allocated for economic development initiatives. Staff proposed sales tax at a large decrease which subsequently decreased both the ballot and economic development expenses in order to balance.

A slide shows budgeted sales tax revenues for the current year of $9 million.  I couldn't find this number anywhere in city documents.

It's not in the proposed COSADC budget. Nor is it in the City's most recent monthly financial report, which indicates both an original and current budget.  Staff already revised sales tax proceeds down nearly $800,000 for the current fiscal year.

Staff will present the new $9 million number to City Council, which includes a former Development Corporation board member who approved last year's budget of $8.85 million.

The current fiscal year has two one-time gains, $1.1 million from the Hirschfeld-Martifer settlement and $1.6 million from asset sale gains.  These two items won't reoccur.  However, MedHab's economic development package with the city, originally estimated at $3.6 million, could expire in 2018.  Add back the city's planned support for OneEnergy's Mesquite Solar farm and more economic development funds could be freed up.

As of June 30 the Development Corporation had $14.5 million in cash and investments on its balance sheet.  These funds could cushion the projected sales tax decline from the current budget of $240,000.

Also, the last six months show signs that sales tax revenues could be stabilizing.  There might not be a shortfall at all.

Budgets tell stories about the present and the future.  I look forward to hearing the story of the $9 million and its precipitous fall of $1.15 million.  It might be a barn-burner..

Update 8-20-17:  The latest sales tax figures for COSADC show this revenue source is back on track.  Sales tax proceeds increased 13.5% from last July, putting the development corporation just over budget with two months left in the fiscal year. 

Update 8-22-17:   The $9 million sales tax projection came from April 2016.  City staff did not say why budget staff went so far back to fish out a number that has since been revised twice. 

Resignation Letter Submitted Six Days Before Cancelled ASAC Meeting

Citizens turned out for the June 15, 2017 Animal Shelter Advisory Committee meeting.  Their opportunity to be heard died due to lack of quorum.  The failure to achieve a quorum rested on the committee's former chair, who sat in the audience.

The Standard Times story on the non-meeting addressed Ms. Wilson's surprise resignation, which referenced her not having "enough hours in a day."  For those who are curious her second resignation letter from the ASAC is below.  Only Bradley Petty, ASAC member, got left off her e-mail. 

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Kendrick, Bryan
Subject: FW: Resignation from ASAC
From: Jenie Wilson
Sent: Friday, June 09, 2017 1:29 AM

To: Flores, James ; Salas, Robert ; 'Mo Soupiset' ; 'Faye Doepp' ; 'Sara Bennett' ; David Howard ; 'Dr Schulze'  

Subject: Resignation from ASAC 

Dear Mr. Dane, Mr. Salas, Mr. Flores and Animal Advisory Board Members, 

It is with much regret that I submit to you my letter of resignation of service to the Animal Services Advisory Committee. It has been an honor to serve with you and I know you will continue to strive to be a positive force of change for the welfare of the animals and good of our community. 

I visited with Mr. Flores at length earlier this evening, and he shared with me concerns that some of the advisory members expressed this evening regarding a statement I made to Standard Times Reporter, Ms. Rashda Kahn in reference to the injured dog that was euthanized on Saturday. I offer my sincerest apologies to anyone who took offense to my statement. Despite this unfortunate incident, I still have great respect for the Mr. Flores and the positive changes he has made for the San Angelo Animal Shelter. I understand that difficult decisions must be made every day and I do not envy the positions that he and his staff are put in daily. I will always acknowledge and praise the good work I have seen, however when I feel something is wrong or could or should have been handled differently, it would be wrong of me to stand silent. Silence has never brought forth positive change. 

As a representative of rescue, I will not always agree with the decisions made by people in the animal control industry and that is acceptable, as I am sure people who work in animal control do not always agree with the perspectives of rescues. But a mutual respect and desire to achieve a common goal can make a working relationship possible and successful. I hope that even though I disagree on occasion with San Angelo Animal Control, we can remain focused on our common goal to end the killing of adoptable pets. Mr. Flores has accomplished a great deal since he took over the shelter and I know there is more that needs to be done and more he wants to do. I wish Mr. Flores and the advisory board the very best in achieving these goals and I hope PAWS can continue to be a part of advancing adoptions though our partnership. 

For months you have heard me advocate for animals. You’ve heard me express a desire to help show the value that these lives have. I have said on many occasions that the only answer to our community’s complex issues with animal control is to put the responsibility back on the owners or guardians of these animals. That is a belief in which I stand firm. However, when humans fail these animals, I believe all of us have an ethical responsibility to protect them, aid them and shelter them, and I believe animal control should lead in that role. 

At this time, I do not think it is appropriate for me to continue serving in the capacity of chairwoman of the Animal Services Advisory Committee. I believe I can achieve more and be of greater assistance by focusing on my work with Concho Valley PAWS. 

I have enjoyed working with you and have had the privilege to learn from each of you. I am very grateful for the opportunity you have allowed me. 

Respectfully, 

Jenie Wilson
----------------------------------------------------------------------------------------------------------------------------

City staff said her first resignation letter was not available.  Yet the Standard Times wrote:

"First appointed to the committee on Feb. 18, 2009, and resigned Aug. 19, 2010, citing a conflict of interest." 

It was a conflict of interest for a newly hired rescue leader to serve on the Animal Service Board.  That conflict has only grown more egregious with the city paying the same rescue $60,000 a year for adoption management.

Minutes from the August 19, 2010 Animal Services Board meeting show Wilson resigning at the end of the meeting, just prior to adjournment.  Anyone wanting to make public comment got their opportunity that day.

The minutes refute City Clerk Bryan Kendrick's recent assertion that Wilson served out her allowable term the first go round.  He shared his belief at the City Council meeting where she was reinstated to the board.

The last official Animal Services Advisory Committee meeting had the former director outright lying to the board and public.  There's lots of air to clear since that May meeting.