Monday, June 12, 2023

Councilman Thomas Concerned about Turnover

City Councilman Harry Thomas expressed concern at the last Council meeting over the continued loss of key leaders in the Water Department.  He attributed turnover to pay scales but often people say "you can't pay me enough to work here."  That requires clarifying issues and coming up with strategies to deal with shared concerns.

Fortunately the Council is in the middle of its annual strategic planning process and would only need to take a slight detour to add "staff retention in priority areas" as a key objective.

Having watched this same Council ignore a deteriorating Animal Services during last year's planning process I am not sure Councilman Thomas will get wider support for his concern.  

Animal Services blew up as the budget neared approval from a roach infestation amidst horrific hoarding conditions.  The City Manager imposed a game plan for future operations.  Two months later Council allowed the shelter to shutter intake transferring loose animal responsibilities to citizens.  For many poor service turned into no service.  

The City has numerous buildings used to house thousands of animals multiple times a year.  City leaders want the Department of Defense to grant them millions of dollars to improve the City Coliseum and surrounding buildings.

City Council approved borrowing nearly $2 million in short term money, the vast majority for Animal Shelter renovations.  Oddly, the funds will have been paid back before the city begins spending significant amounts updating the building. 

Ad hoc nonstrategic interventions require the simple silence of City Council.  Councilman Thomas has spoken out.  How many will join him?

Thursday, June 08, 2023

Benedetti Buyback Deal Hits Third Amendment

The City of San Angelo physically returned its Benedetti Phoenix asphalt recycler in October 2019 and has been waiting for payment since.  The City financed the $1.2 million equipment purchase with the intent of street maintenance crews refinishing deteriorated city streets.  

The plan did not materialize and few streets were redone with the equipment.  In 2021 Council approved spending $1.4 million to refinish Rio Concho, four years after a Benedetti refinish.

The initial buyback agreement was created December 2018.  City Council approved the buyback in January 2019.  Beneditti had until October 30, 2020 to refund the city $800,000 or begin paying 10% interest on the outstanding balance.  

The COVID pandemic disrupted the country in March 2020.  The city understandably wanted the $800,000 and executed a series of amendments postponing payment. 

Amendment 1 ..."the parties executed an amendment to extend the payment date until April 30, 2021"

Amendment 2  ...."provide for a payment date of August 31, 2021"

In April 2022 the city and Benedetti appeared close to resolving the issue.  The company thought they had a buyer for the city's returned equipment.  That did not materialize.

City Council approved the latest amendment at its June 6, 2023 meeting.

Amendment 3 

• The total amount to be collected by the CITY from BENEDETTI as the repurchase price of the EQUIPMENT is equal to $800,000 plus $17,500 in costs of issuance for defeasance of the bonds for a total of $817,500; and 

• A quarterly payment in accordance with the Payment Schedule included in this amendment

City Council approved the plan to refund the financing in accord with the payment schedule. 

Finance Director Tina Diershke noted in an e-mail chain:

....we would like to defease the amount necessary from the 2016 Streets CO to recycle the amount due from Benedetti , Inc. and make that amount available for immediate use for street reconstruction and improvements.

Public Works has been working on the buy-back agreement for several years and has finally come to terms with the vendor.

I believe Council already authorized Daniel to negotiate and execute the agreement several years ago, and this would be an amendment to the original agreement.
It would be the third amendment to the original agreement, all agreed upon terms with the vendor.

Director of Operations Patrick Frerich stated in an e-mail:

We’d also like to budget the entire revenue upfront.

Finance Director Diershke replied:

I was thinking we would need the signed agreement in place prior to the budget amendment as a basis for budgeting the revenues and expenditures.
A Benedetti budget amendment may be on City Council's docket in the near future.

The City of San Angelo's Benedetti Phoenix has been a story of unfilled promise after promise.  I can see why staff want to present as little as possible and move on.

Tuesday, June 06, 2023

Council Approved CAFR Not Available to Public

City of San Angelo staff chose not to include the 2022 Comprehensive Annual Financial Report in the May 4th City Council background packet.  So far, they've chosen not to make it available to the public on the city website.  

City Council is undertaking its annual Strategic Planning process.  Years ago they set a goal of growing the city's various fund balances.  Council missed the opportunity of updating the public on those balances during the accountant's CAFR presentation one month ago.

It remains to be seen if those balances will be shared with the public in a Council strategic planning session.  Those figures are not available from FY ended 2022.

Staff wants fewer public information requests but consistently takes a minimalist approach to sharing information publicly.  In 2018 staff removed public access to the city's monthly financial statements.  Council agendas and background packets were unsearchable for a significant period.  A recent software update corrected this problem.

If staff don't want to fulfill PIRs then they should post more information on the city's website.  And City Council should encourage that in their strategic planning sessions.

Update 6-12-23:  The 2022 CAFR is now available to the public on the city's website.

Thursday, June 01, 2023

City Paying $130,000 for Water Leadership Drought

City Council will consider hiring Enprotec/Hibbs and Todd to support San Angelo's depleted water department leadership.  The background packet states:

With the Water Utility Director and now Assistant Director position being vacant, assistance is needed to help navigate many of the routine reports and monitoring activities of the Utility. This change order will be for temporary assistance in managing the regulatory paperwork and reports of the Utility until a new Water Utility Director and Assistant Director are hired.

Consider approving Change Order No 1. to ES-06-19 EHT between Enprotec/Hibbs & Todd, Inc. and the City of San Angelo for Water Utilities Department Assistance up to the amount of $130,000

Patrick Frerich, Director of Operations, Water Utilities

Hiring key leaders for strategic priority areas may need to get in the City's strategic plan given the number of vacancies in top positions.  It took over two years to fill the City Engineer position.

There is a real cost to leadership turnover, in this case up to $130,000.  It is budgeted for this fiscal year and the next.  That's either fiscally conservative or sadly practical.

Update 6-6-23:  Councilman Harry Thomas pulled this item from the consent agenda and expressed his concern that the city is losing another key staff person.  Executive Director Public Works Shane Kelton avoided -the loss of yet another leader in the Water Department in his comments to council. 

Update 6-8-23:  Water Utilities Assistant Director Andy Vecellio submitted his resignation on May 12th and June 2nd was his last day with the City of San Angelo.

Benedetti Buyback Hits City Council Again

San Angelo's City Council will revisit a decision it made over four years ago.  Council decided in January 2019 to exercise the buyback agreement in its contract with Benedetti.  

The June 6, 2023 background packet states:

The City is negotiating an agreement with Benedetti, Inc. in order to execute the buyback provision of the original agreement. The repurchase price will result in $800,000 in proceeds to the City plus an additional $17,500 for expected issue costs associated with this redemption of the 2016 Streets CO. Since the agreement with Benedetti is a multi-year agreement, the City must redeem $800,000 of the original CO to avoid potential Federal tax violations associated with a tax-exempt bond which could potentially affect the City's future ability to issue debt. Essentially, the City will be paying off, or calling, a portion of the bonds at an earlier date than originally planned. The City has this funding available in the Debt Service Fund’s fund balance so that it may be placed into escrow for payments at the relevant call dates. The amount placed into escrow will also include approx. $45,366 to cover the costs of interest associated with the bonds at the date of defeasance.

This defeasance will allow the proceeds from the repurchase to be deposited and budgeted, as received, into the Street Infrastructure Fund.

The City will receive $800,000 in proceeds over a period of four years plus an additional $17,500 to cover issue costs. Beyond the costs of issuance, which are being recovered, there is no additional cost to the City that wasn't previously obligated.

City Council approved the purchase of the Benedetti machine to resurface San Angelo's beleaguered roads in December 2016.  Councilman Tom Thompson asked for an update on the machine in March 2018.  City staff provided a memo in response.  Ten months later the city was asking for its money back.

So it took two years for the City to decide the equipment wasn't working and twice that to garner a refund?  

Update 6-6-23:   City Council approved the item as presented.