Unlike the Mayor, City-County Councilors, the usual suspects from the civic community and the editors of the Star and IBJ, Williams made exhaustive public records request to the City seeking more information on the deal before publicly endorsing any particular plan. Those documents reveal some extremely troubling issues that have not been discussed in the plethora of staged dog-and-pony shows put on by Mayor Ballard's administration. In particular, the proposed transfer of the utilities relies on a study prepared by Citigroup, which is being paid $6.75 million to conduct this transaction, makes some highly questionable assumptions. A press release from Williams' campaign details the following, obviously-flawed assumptions being made by the Ballard administration and Citizens Energy:
- An immediate and sustained 15% decrease in operating costs
- An immediate and sustained 5% decrease in capital costs
- A household growth rate from 2010 to 2020 double that of from 2000 to 2010
- Residential water use as a proportion of total use 20% higher than the City's estimates
"Citizens CEO Carey Lykins has suggested that any loss in work force would come through attrition, but an immediate 15% drop in operating costs cannot be achieved in such a manner. Lykins has suggested by combining the gas and water utilities capital costs can be lowered by increased bargaining power," Williams said. "However, because gas utilities require far fewer capital expenditures it is unclear how this modest increase in capital projects will create the substantial discount assumed," he continued.
One of the questions I wanted to pose to Citizens Energy during their recent meeting with area bloggers was what growth assumptions were assumed between now and 2025. Unfortunately, we ran out of time before I could pose that question. Williams got some answers and they are dubious to say the least. The City and Citizens base this deal on the assumption that the number of households will grow at double the rate over the next 10 years that the number grew over the past decade. It also assumes 20% higher residential use as a proportion of total water consumption than the City's current estimates.
While Indianapolis experienced some population growth during the past decade after years of declining population, the prospect for sustaining that level of growth, let alone double that growth rate, is simply wishful thinking. People continue to move into the fast-growing suburban counties that ring Marion County, and large industrial customers continue to go out of business at an alarming rate. The fewer people and businesses that consume water and produce sewage, the larger the customers' bills must increase to meet the costs of operating these utilities. Water rates are already projected to climb another 100% and sewer rates are expected to increase another 300% during the coming years. Commenting on the residential use assumptions, Williams said, "This is an important figure as residential water rate are substantially higher than commercial and industrial rates." "If residential usage rises relative to commercial and industrial, the income per unit for the water provided increases thus lowering the need for increased rates."
Williams returns to the earlier point he made that the Ballard administration is relying on revenues from 30-year bonds funded by revenues generated from the transfer of the utilities to fund improvements with a relatively short life span. Citizens will issue 30-year bonds to fund the $263 million it will pay the City to pay for these infrastructure improvements. The City will issue another $140 million in 30-year bonds. Essentially, it's the equivalent of taking out a 30-year loan to purchase a new car. No banker in his right mind would make such a loan, and only a fool of a customer would obligate himself to repay a 30-year loan on a car that he won't even be driving in 10 years.
I think the Indianapolis community owes a great deal of gratitude to Williams for bringing these issues to light. At the end of the day, however, I don't think it will make any difference. There are no people sitting at the table deciding these matters who have the common sense or the will to do what's in the public interest. Williams likely won't win the Democratic nomination for mayor. Democratic leaders have already decided they want Melina Kennedy, who stumbled badly on the experience issue in her run for prosecutor four years ago, despite their public misgivings about this proposed transfer of the utilities. She can't even say anything publicly about this proposal because her law firm helped put the deal together for the Ballard administration and is being paid by taxpayers as much as $540 an hour to do the work. It really is sad that we simply don't have any honest and intelligent elected officials in this city to save us from jumping off this bridge. The City may survive this deal, but it might look a whole lot more like Detroit in a few years than the shining city on the hill our current elected officials blindly envision.