Thursday, March 31, 2005

Water Logged #5

Last night, I attended the LWV and Peoria Chamber of Commerce sponsored forum which allowed a dialogue with audience involvement of the proposed city buyout of the Illinois-American Water Company. The pro buy side was represented by PAAG representatives Sandra Birdsall and Terry Kohlbus. Illinois- American was represented by their president and two other officers of the company, all from the United States. Throughout the meeting questions tailored for city officials to answer were not asked because there was no one in the audience to answer these questions. The JS said today that Jim Ardis and Gary Sandburg were there, but evidently not during the question and answer period. Jim Ardis , Patrick Nichting and Bill Spears have spoken in opposition the buyout as have city council candidates Barbara Van Auken and Bob Manning. Gary Sandburg and John Morris probably can not state their positions as they are on a special committee to present their finding and recommendations to the full City Council.

Both sides ably presented their positions. There was actually no way to factually prove this proposed purchase might not turn into a large liability to the City of Peoria taxpayers or turn into a cash cow for the city, because figures presented by both sides were often in conflict.

A PAAG representative said it was simple as oil and gas, (probably forgetting they don’t mix), saying that across the sea, oil companies owned the oil and gas we buy from them and we don’t want “foreigners” from across the sea, to own our water. Actually, all the water in the United States is owned by the United States and can only be mined and sold by whoever buys the right to do so. Peoria’s water company, owned by a German firm, could have been bought by any interested company in the United States starting back in the late 18 hundreds. Ownerships of any entity changes hands many times in a lifetime. Water companies are no exception.


As I’ve said before, “foreign” ownership is welcomed by our governments. Seems to me a lot of financial benefits were given to a Japanese auto maker in Bloomington-Normal; a company Peoria was trying hard to land, offering this “foreign” company financial incentives if they would locate closer to Peoria. In short, our Economic Development people welcome anyone that wants to locate in the Peoria area and employ people. Probably 20 firms in Peoria have plants or distribution centers in “foreign” countries. And many “foreigners” own huge chunks of land in our country so “foreign” ownership is hardly new in the world.

The price of $220 million will probably grow to $240 million before the buyout is concluded. The City of Peoria has already spent over $2,000,000.00 on this project. It is time to move on to running the core business of cities’ and ownership of water companies should not be our cities’ core business. Many cities already own water companies and many wish they didn’t but can’t find a buyer who wouldn’t raise existing rates. Many cities are too small for private businesses to be interested as there would not be enough profit incentives. Many of these cities started out with public ownership, Peoria didn’t.

What is wrong with making a good profit? Caterpillar does and the PAAG group that lent the city a million dollars at 9% interest must have made good profits or how could they risk a million dollars? Were they counting on a city council that would give special treatment to their desires? I believe they actually thought they could save money on their water bills forgetting that few public ventures are handled more efficiently than the private sector.


Public entities in Peoria have a poor track record when it comes to making a profit and the most recent public entity to not meet their projections is the RiverPlex, which was projected to make to make $187,953 profit in 2004, instead has lost approximately $6,000.00 a day thru 12/31/04. And many public dollars and other taxpayer paid incentives were given to a new ballpark that has not yet met projections.

The PAAG and their supporters believe city ownership would solve many of the cities financial problems. Most people disagree as I believe the referendum will show.

One reason for the poor turnout last night is that 80% of the people do not want a change in water company ownership, and many also believe that if changes are not made on the city council in this election, their opinions won’t count anyway. So why show up?

If the city does buy out Illinois-American, the city would hire a private profit making company to run the water department. Would it be low bid or by special interest? How much would it cost? Who would handle the advertising and who would stand to benefit from the advertising contract? Too many unanswered questions. A business plan supposedly has been made up. How outdated or updated is it? Would the PAAG and the Mayor make it public for all taxpayers to see?

Are rates in Peoria too high? On 3/8/05, the JS quoted City Manager Randy Oliver as saying, if the city bought the water company, rates would probably go higher. Hmmmm.

Illinois-American pays approximately $300,000.00 in property taxes each year and donates another $100,000.00 to local projects. They are good citizens with us. Let’s keep them!!

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