City CAFR to Inform on Huge Pension Liability & Changing Water Fund

The 2015 annual financial audit must project the city of San Angelo's unfunded pension liability.  Past comments by staff and auditors indicate this number will be significant.

The timing of the presentation will be interesting as City Council just made a decision to borrow $80 million over a nine year period to repair the city's crumbling streets.

Two weeks ago City staff proposed Council lock up another $136 million on treating sewage water to drinkable standards.  Council sent this item back to the Water Advisory Board for review and prioritization along with other potential projects that could deliver treatable water.

The 2015 CAFR will also be revealing water wise.  City staff and hired guns used a different definition for water revenues and expenses in the recent study that increased household water rates 55%.  Here's how Water Chief Bill Riley parsed it in a communication with Mayor Morrison:

In 2012 Water Utilities had total revenues of $28,853,141 (amount shown in CAFR); however, $1,500,000 of that was a transfer from COSADC dedicated to debt service along with an additional $4,707,020 which was established through embedded rates within the standard water rates which has been historically strictly designated for capital and transferred directly to the CIP Fund.   Because the projects associated with capital improvements do not start and end within a given fiscal year, the expenses and revenues associated with those capital funds were not shown and only revenues which were available for paying general water operating expenses were shown in the presentation.  The main intent of that graph was to focus on the growing deficit and declining fund balance.

Riley chose not to address the differences between the CAFR and the water rate study for 2013 and 2014.  It's nice to know city staff used different definitions of water revenue and expense when they want to raise our rates vs. meeting government public accounting standards.  That could have been said to the public in Mr. Riley's presentation, but it was not.

The CAFR is coming.  Will the city have any debt capacity by the time it arrives?  City employees should be aware and be prepared to have their voices heard.

Let's hope City Manager Daniel Valenzuela doesn't pull a Harold Dominguez and make them take vacation time to attend the Council meeting.

Half Cent Sales Tax Drop Continues for COSADC

San Angelo's half cent sales tax proceeds declined to the lowest level in three years in January 2016.  One has to go back to January 2013 to find a lower number than the $605,393 the Development Corporation collected last month.  Sales tax proceeds for the current fiscal year are down an average of 13.25%.  That's significant.  February will be a bellwether month with the rodeo in town.  Hopefully it put more life in our local economy.

San Angelo's Search for Water Narriowed by City Staff

City Council discussed the following agenda during their February 2nd meeting:

Consider approval to negotiate a contract with Alan Plummer Associates, Inc. and Enprotec / Hibbs & Todd, Inc. for the Direct Potable Reuse Project ‐ (Presentation by Water Utilities Director Bill Riley)

Less than two months ago Council approved a water rate increase that would produce capital needed to develop future water projects.  It seems Water Utilities Director Bill Riley, Executive Director Public Works Ricky Dickson and City Manager Daniel Valenzuela forgot Council's direction during the water rate discussion to not target $136 million in capital funding to any specific project.  Council voted in the rate increase on 12-15-15

Thus the three showed up determined to push reclaiming the city's sewer water and treating it to a condition that would allow it to be consumed.  The video is a fascinating watch and somewhat reminiscent of former Water Chief Will Wilde's "management of the former Water Advisory Board.  What choice does a board have when staff present only one option. 

Twists and turns in the discussion include Riley's speaking to the inoperable Lake Spence pipeline publicly for the first time, Ricky Dickson's forceful statement's that sewer reclamation is the only viable project, Water Advisory Board member Chuck Brown's testimony as to a number of other options, Former City Councilman and WAB member Kendall Hirschfeld's stating staff provided the board one option and former City Manager Stephen Brown advising staff to be thorough, honest and transparent.  The meeting even had family intrigue as Stephen Brown is Chuck's father.

Council directed staff to work with the Water Advisory Board to bring back prioritized options with both capital and operating costs.  The Board last met on 10-27-15.  We'll see if staff listened to Council this time.

Lake Spence Requires $20 -25 Million Rehab

Finally the public heard the truth about the unusable state of the Lake Spence pipeline.  Former Water Chief Will Wilde offered such information in 2009 to push the Water Board to develop the Hickory Aquifer.

Seven years later Wilde's eventual replacement said it would take $25 million to rehab the Spence pipeline and install an intake barge.  Upper Colorado River Authority head Chuck Brown put the price tag at $20 million.

Who's been responsible for maintaining the pipeline? 

Water Utilities Maintenance provides maintenance, preventative maintenance and construction to all water and wastewater treatment plants, water pump stations, water storage tanks, wastewater liftstations, more than 150 grinder pumps, the Sewer Farm pump station, Nasworthy Dam, Nasworthy irrigation canal, Twin Buttes Dam, and the Spence pipeline, water tanks and pump stations.

 It's the same folks who stated in their 2015 Consumer Confidence Report:

WHERE DOES OUR WATER COME FROM?

San Angelo currently has six surface water sources: Twin Buttes Reservoir, O.C. Fisher Lake, Lake Nasworthy, O.H. Ivie Reservoir, E.V. Spence Reservoir, and the South Concho River.

Spence has not been maintained to a usable level for quite some time.  It would be interesting to hear the history of its failure and a clear assessment/plan for restoration.  Ironically, that information exists in a 2012 study by Freese and Nichols for the Upper Colorado River Authority.

To determine the required raw water system improvements, FNI first examined the existing E.V. Spence Reservoir raw water supply infrastructure, which is owned by the City of San Angelo. The system was originally designed in 1968 for 20 MGD of flow from the E.V. Spence Reservoir to the City of San Angelo.

The existing E.V. Spence Reservoir raw water supply infrastructure, as seen on Figure 3.1, has been out of service since the early 1990s due to multiple failures on the 36” pipeline.

Current Water Chief Bill Riley called restoring the Spence pipeline a very long term project.  City leaders were united in pushing one project to the exclusion of all others.  I'll explore how the city went from raising our rates to total alignment between City Manager Daniel Valenzuela, Executive Public Works Director Ricky Dickson and Water Chief Bill Riley.  My guess is it will be a rapid ride. 

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.