This is the fourth blog on the efforts by some of the city council to buy the Illinois-American Water Company. Let me lay the facts out and you be the judge.
Sometime prior to year 2000, a group of wealthy Peoria area people formed a corporation called the Peoria Area Advancement Group. LLC, a limited liability corporation shortened to PAAG. The PAAG lent the City of Peoria a million dollars at 9% interest. The money was used by the city to study the possible buyout of Illinois American Water Company. If the price wasn’t low enough for the City of Peoria to buy the company without a great risk to the taxpayers, the City would not have to pay the loan back. The PAAG didn’t actually lend one million dollars to the city because 9% interest of $184,000.00 was deducted from the original one million. It then turned out that the $816,000.00 ($1,000,000.00 less $184,000.00 = $816,000.00 the actual amount the city could use) was not enough to complete the study so the City authorized the spending of an additional $170,545.00 of your money to continue the study.
An appraisal panel agreed to by the lenders, the water company and the city, has appraised the value of the water company at $222,000,000.00, a lot more money than the City Council ever thought the company was worth. Where does that leave the PAAG?
First lets look at the makeup these million dollar lenders:
Dale and Shirley Burklund – original investor in the Paradise Gambling Casino
Michael Cullinan – Cullinan Construction Company
Cullinan Companies, LLC – at that time wife of Michael Cullinan and perhaps the leading realtor in the area.
Underwood Furniture Galleries, Inc – owned, I believe, by Rita Kress of Kress Manufacturing in Brimfield.
D. A Hoerr and Sons, Inc. a very large user of water.
Ted Fleming, the name Fleming prominent in Peoria.
Thomas Lund, wealthy entrepreneur.
Otto Baum and Company – contractor
Wayne Oberlander – wealthy entrepreneur.
South Side Bank
Gerald D. and Helen Stephens Foundation (RLI Insurance)
Now in steps former East Peoria Mayor and now President of development for Cullinan Properties, Ltd. Or LLC (JS has given the firm two titles), with an article in the JS on 3/20/05, stating the price of $220 million is not to high and the whole community will benefit and in fact it may save the existing older neighbors.
Refer to my last blog Water Logged #3 as to the makeup of those who serve the City Council as advisors as to whether to proceed to buy or stop spending more money. You recall I said the “deck appeared to be loaded” with even Sandburg at one time supporting the buyout. As reported in the JS with then Mayor Maloof, then councilmember Dave Ransburg and then councilperson, Camille Gibson all supporting the buyout. David Koehler, a councilman at that time said he would be “flat against” the buyout if it amounted to nothing more than a hostile takeover. Councilman Steve Kouri said the city could spend up to $700,000.00 on the buyout before determining the actual buyout price. The figure spent is now well over $1,000,000.00 and probably no end in sight once the high priced lawyers get involved. The same JS article quoted then Councilman Dave Ransburg’s financial model as assuming a buyout of $60,000,000.00. Only $160,000,000.00, short and this man wants another term as mayor?? The article further states that water company officials warn the price could run as high as $163,000,000.00 to $213,000,000.00. Bingo.
Councilman Chuck Grayeb, the history teacher from #150, believes that we should worry about a “foreign” country owning our water works. (In the unlikely event we will go to war with France, I suggest the water company would quickly be nationalized). Note that no Caterpillar executive was listed as a member of PAAG. Maybe that’s because Caterpillar at last count did 50% of their total business with “foreign” countries. Also Caterpillar knows it is not uncommon for companies to make sizeable profits. All those on the PAAG committee have made sizeable profits either personally of thru their families.
The upcoming election is more important than the ordinary voters is aware Even though the water company buyout referendum will reject the buyout by a sizeable margin, I believe the power structure led by Mayor Ransburg and supported by some reelected council “wannabes” will push this buyout thru, Peoria taxpayers be damned. Pardon to Patrick Nichting and Jim Ardis who both opposed the attempted buyout from day one.
What is going on here should be fairly obvious. City ownership means a lot of profit for someone and it is not profit for the ordinary water user in Peoria. Plus the risk is immense.
Note also that an article in the JS dated 3/8/05 is entitled “Buyout May Require Rate Hike”, however, once the power structure makes up their mind, failure is not a concern because most of them can afford it. (Remember we accused the Japanese at the end of WW II of trying to “save face”)?
Just look at the riverfront failures that were projected to make a profit and at least six either closed up shop or are sticking the taxpayers with the losses. If the water company buyout goes thru the courts and the city winds up owning it, forget badly needed infrastructure in the City of Peoria. With all the taxpayer funded enhancements going on in the city now, buying the water company can only add to these costs.
In the best interests of the community, sometime in May this ill advised buyout should be laid to rest, hopefully by some new faces around the horseshoe.
Everyone is entitled to be wrong. Just stop abusing the privilege.