Water Company Buyout Mess

WATER LOGGED” was the title of one of my recent BLOGS. I stated that a group of individuals had lent the City of Peoria $1,000,000.00 to study the possible buyout of the local portion of the Illinois-American water company. Some of my information was incorrect at least at the present time. After hearing the dialogue at the last Council meeting, re-reading my files, talking to the City Attorney and a couple of Council members, I believe the following information to be basically correct:

Many people including some of the “power structure” in the community thought water costs were too high, service was not that good and too much profit was leaving the area. (Think Peoria Civic Center Broadway Productions.) “Bud” Grieves, who was Mayor at that time, most council people and other prominent people in the community believed that they had a legal right to buy Illinois-American (Here after known as IA.) So steps were taken to proceed. The time frame was approximately 1998 but discussions of the possibility of a buyout were started in earlier years.

ROAD BLOCKS immediately arose from many different sources. Some council members, Jim Ardis, Patrick Nichting & John Morris expressed their outright opposition to the idea, as did most of the public. Gary Sandburg believed there should be a referendum (Dave Ransburg, who was running for Mayor at that time, was quoted by the JS “He vaguely said he favored some kind of public input” to see how the taxpayers & users felt.) Realization set in when no one knew how much the IA was worth. Pretty hard to ask me whether I want to buy something before telling me what I’ll be paying for it & how I’ll profit from the purchase. It was then determined that the City would need to have an appraisal to determine what the IA was worth. While they debated how to continue a group the Journal Star called “wealthy investors” stepped in said they would form a company named Peoria Area Advancement Group LLC (Hereafter known as GAAP) and lend the City up to $1,000,000.00 at 9% a year interest. The GAAP said the City had to conduct an appraisal of the worth of IA and whether or not the City ever bought IA, the City would not have to pay any money back, not even the interest. Evidently the PAAG did not want the names of their investors made public (The JS called them “secretive business people”)& on 2/7/01, a blowup occurred in a public setting, in which Sandburg accused the then candidate for Mayor, Dave Ransburg, of being member of the PAAG. After heated denials & accusations, Sandra Birdsall of the Peoria Chamber of Commerce stated “I can tell you he not a member”. The members names were made public two days later. (See my previous post named “WATER LOGGED).”

Meanwhile, IA made it positively clear they did not want to sell, even filing a lawsuit against PAAG. Now, the six year term of the PAAG loan is up, the City has spent the money and the appraisal is not finished. The PAAG says it won’t lend the City any more money but they will lower the ongoing interest to 6.9%.

So now what? If the City stops the appraisal now, they have to pay the PAAG all the money the City borrowed plus $184,000.00 interest. You know the old saying “The Captain would rather go down with the ship, than to admit it is sinking”. On 8/17/04, the City Council voted 9-2 to borrow $500,000.00 from the capital fund reserves to continue the study. Mr. Nichting voted no, the position he has taken, and the right one, since the issue first came up, & Mr. Sandburg, because he didn’t like the City reserve fund where the new appraisal money is coming from.

Where does all this leave the taxpayers & other citizens? Forget the referendum, by the time the appraisal is completed, which Mayor Ransburg “says could take weeks or months”, by the time all the lawsuits are settled, none of those in power will know whether the City can even afford the price let alone know whether the City can make a profit.. Then as this “sinking ship” tries to right it, it will do so with more of our money, and the city will try to move into private enterprise while other cities across the country are doing the opposite.

When the PAAG established the fund for the City to use, they required a committee of five to be created to make recommendations to the Council. I believe they are called the Select Committee. The PAAG has two representatives, Rita Kress & Sandra Birdsall. Mayor Ransburg, John Morris & Gary Sandburg, represent the City. Aha!! Even the makeup of this committee is interesting!!

There is a saying “everyone has the right to be wrong, just don’t abuse the privilege. The “wrongs” are adding up fast in Peoria with more on the horizon. The “bills” are coming due and they will keep rising. Those that can afford more taxes and assessments don’t worry, but a lot of us do.

Talk with you soon!!