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Saturday, January 24, 2015

City Council Must Leave the PSB Alone

[This is an op-ed piece written by David Nemir who just recently left the Public Service Board. It was published in this morning's El Paso Times. Their title: "City Council must not leave El Paso PSB alone" was a huge mistake. Read David's op-ed piece and you will understand why City Council must leave the PSB alone and not try to take over its management and trusteeship of land nor must it attempt to reduce the EPWU to a department of the City of El Paso. Leave the PSB alone. If you forward any link to an elpasonaturally post, this is the one to forward.]

As an outgoing member of the Public Service Board, I have had a front row seat in observing water management in El Paso, both present and past.   This history guides El Paso’s water future.

In 1951, El Paso was out of water.   Drought, depleting wells and dwindling river allocations compelled El Paso leaders to seek bond approval to acquire needed assets and infrastructure.   When voters said no, El Paso leaders formed an independent Public Service Board and made it custodian of El Paso Water Utilities, the revenue from which could be pledged to servicing debt.   With the combination of an independent management and an independent revenue source, the PSB could raise bond money without voter approval, using bond proceeds to expand water and sewer systems. 

The model has worked well.   For much of the past 63 years, the PSB has used bond funding to leverage its asset base, addressing water needs proactively.   Indeed, strategic planning has been fundamental since the PSB’s inception.    Capital projects are planned and budgeted years in advance and are almost always completed within 5% of budget.   

The result is a water utility that is among the best in the country --- winner of awards and provider of some of the lowest cost water services in the state.   And as part of its planning, the Public Service Board has acquired significant land assets, paid for by ratepayers, that will play an important role in funding El Paso’s water future.

However, water ratepayers are falling victim to this success.   Since its inception in 1952, the PSB returns 10% of all water revenue annually back to the city as a franchise fee.    But recent City Councils have sought to modify that arrangement in order to generate new revenue for the City.  

In 2012 Council formed a blue ribbon commission to analyze the revenue share model and to benchmark it against franchise fee and payment in lieu of tax models used for water utilities in other cities throughout Texas and the U.S.   This resulted in a July 2013 report to Council that concluded that El Paso’s revenue share model is in line with other communities and is fair to both ratepayer and taxpayer.   

Unfortunately, City Council chose to ignore this report and in August of 2014, increased the revenue transfer to the City by a whopping 30%  by imposing an annual  “street rental fee” on El Paso Water Utilities, advocating that this be raised by new fees on non-residential ratepayers (eg: churches, schools and business).  

When City Council imposes a dollar of pass-through fees to the ratepayers, zero cents of that dollar go to meet water needs.  Regardless of whether a new fee is called a franchise fee, a street rental fee or an easement use fee, it is still a cost to the water ratepayer without an offsetting benefit in water services.   And it sets a dangerous precedent.   

Through 63 years of strategic planning the PSB has acquired an inventory of land and water infrastructure which it holds in trust for El Paso’s water future.   Through those same 63 years, City Councils have often had a shorter term, less strategic focus.  The PSB, its asset base and its operations should be left alone until Council can articulate a good reason for change.  City budget challenges are not a good reason.   

David Nemir

3 comments:

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  2. Was the mistake in the title a Freudian slip or are they deliberately trying to subvert the message?

    Brutus

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