More on SunEdison

SunEdison Inc. (NYSE: SUNE) showed an increase of 22% in short interest to 88.16 million shares. About 28.2% of the company’s float was short, and days to cover fell from four to two. In the latest two-week short interest reporting period, the share price tumbled by nearly 45%. The stock closed at $8.80 Tuesday night, down about 18% for the day, in a 52-week range of $8.78 to $33.45. The low was posted on Tuesday. Investors are concerned with the number of acquisitions the company has made, and the amount of debt SunEdison has piled up, now at more than $10 billion.

Cash flows

The company’s operating cash flows in 2Q15 came in at -$621 million in 2Q15 due to losses and adverse working capital changes.

The company spent $65 million on capex during the quarter. Higher investment in projects as well as cash paid for acquisitions drove the company’s investing cash flows, which came in at -$1.9 billion. During the quarter, the company, along with TerraForm (TERP), acquired Atlantic Power Transmission’s five operating wind projects with a total capacity of 521 megawatts for $347 million in cash. Plus, TerraForm Global (GLBL) acquired wind energy projects in China during the quarter.

The negative operating and investing cash flows were largely funded by higher debt.

SunEdison Focus of Derision on Twitter

Marc Lehman ‏@markflowchatter  1h1 hour ago

Tier 1 Energy desk now referring to $SUNE as SUNEnron and $SUNE.Q (as they joke around) SUNE is the ticker symbol for SunEdison.

WOW!!!! Look At SunEdison

SunEdison stock price has declined from $31.66 on June 20,2015 to $8.80 today!  One has to wonder if this company is going to survive. This is the company that Georgetown has signed a contract with to supply solar generated electricity.  They have been losing $242K to $305K per quarter for the last four quarters and their balance sheet is negative according to Yahoo Finance.

EMS Control Solidified

Georgetown is solidifying control over the EMS in Georgetown.  The city is executing an agreement with Williamson County to provide EMS to the county jail inmates 24/7.  Just another mechanism to push Williamson county EMS completely out of the city.

They are in the process of taking over EMS responsibility within the Extra-Territorial Jurisdiction (ETJ), which further pushes the county away from Georgetown.

Recall that recently, the city enacted an ordinance requiring licensing of all ambulances operating within the city.  Of course the city has a list of requirements the operators must meet as well as fees to be paid.

Citizens, beware of a government that wants to control all aspects of your life under the guise of public safety.  That is always the argument, give up some personal choice and liberty for increased safety.  As Ben Franklin said, "Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety".

FY 2016 Budget Information

The City Council will hold the first of two readings of the budget tonight at 6 pm, August 25, 2015.  Be there or watch the video if you want to know how they are spending your money!

The Council is scheduled to approve council member Ty Gipson as the city's representative to Lone Star Rail(LSR). We need a representative so that we know what LSR is planning with respect to asking Georgetown to commit to joining and funding LSR.

The city is poised to approve the following tax rates.

     $0.20716 for maintenance and operations
     $0.22684 for principal and interest on city debt
     $0.43400

This will extract $1,739,911 more dollars out of the city's property taxpayers in 2016 than in 2015.  That is an increase of 8.26%. $857,088 is levied on existing property owners and $882,823 is levied on property added to the tax rolls.

The County Appraiser has certified that the appraised value of property within the city is $5,838,074,672, before the freeze is applied for seniors, disabled, etc.

The average home taxable value for 2015 is $234,785 versus $213,554 for 2014.  This is an increase of $21,231. The average tax bill last year was $927. When the 2015 home value is multiplied by the tax rate, it yields an average property tax bill of $1019 for FY 2016, which is a 9.9% increase year over year.

Recall that the overall city budget increased 23.2% over last year, yet property tax revenues are expected to increase by 9.9%.  One might reasonably ask where the extra money is coming from that the city plans to spend in 2016.  The simple answer is that it coming from an increase in debt, and additional water and electric customers.

Truth in City Budgeting Needed

City officials continue to try to justify the out-of-control growth of the city budget by claiming our population growth requires greater capital investments to meet future service needs.  Yet, while the city's population has increased by 23 percent over the last four years, the budget has increased 60 percent.

Let us break that down into actual numbers:

    The Georgetown population in 2010 was 47,995. It was 59,102 in 2014. That is an increase of 11,107 people in four years which is a 23 percent increase. These are the latest U.S. Census Bureau numbers.

    The budget in 2012 was $178.3M.  It is proposed to be $284.7M in 2016.  This is a $106.4M increase--a 60 percent increase--in just four years.

So this growth clearly is NOT a one-year bump in the budget.  A significant unsustainable trend has been established.

Looking at the second level of the budget, it can be seen that $73,175,500 is in the budget for capital improvements.  Of that amount, $39,503,000 is new debt for 2016.  This new debt is a combination of voter approved General Obligation Bonds($24.7M), non-voter approved Certificates of Obligation($4.998M) and Utility Revenue Bonds($9.805M)  The taxpayer pays for General Obligation and Certificates of Obligation debt, and rate-payers pay the utility debt.  The property tax payer and the rate-payer are usually the same people, though not entirely.

To show this is a long-term problem, let us look at the City's debt:

     Examining the growth of the debt from 2005 to 2015, the latest figures available, the debt has grown from $72.7M to $185.9M.  That equates to almost a 10 percent annual growth rate in the debt over the past 10 years.

     Using the latest population numbers the city was home to 38,348 in 2005 and 59,102 in 2014.  The annual growth rate of the population over those years was 4.9 percent.

Thus, the argument that the city budget has to grow at a high rate to accommodate the population growth does not stand up to scrutiny. The principal element in the budget driving budget growth are the capital improvements--which are funded by debt. Debt has been growing twice as fast as population for the last 10 years! Simple math proves this divergence is unsustainable.

More Evidence of Anticipated Airport Growth

The Williamson County Sun(http://www.wilcosun.com/) has an in-depth article today by the new business editor, Matt Loeschman, describing the new fixed base operator(GTU Jet) at the Georgetown Airport.  They are fully committed to growing their business to take advantage of the population growth in and around Georgetown.  They report that "Every day, we are adding more amenities and services".

The business occupies six buildings, including multiple large hangars and 21 T-hangers that are fully occupied.  They are marketing their services and office space adjacent to two of the large hangers with the objective of growing the business.

Once the existing office and hangar space is filled, the company(GTU Jet) will be asking the city for authorization to construct more hangars, parking aprons and taxiways to accommodate more and larger aircraft.  The strengthening of the main runway will provide GTU Jet with the opportunity to attract jet airplanes in the 60,000 pound to 70,000 pound weight class.

The company thinks there are ample opportunities for growth at the airport and have said that "Georgetown is attractive to investors across the nation".  This means they believe that there will be funding available from investors across the country to expand the facilities and services at the airport.

It should be observed that the segment of business they are likely to focus on for growth, is the business jet or turboprop aircraft. The piston powered aircraft are smaller, use less fuel and other services and are used by local recreational fliers, and thus are less profitable for a fixed base operator.

People living near the airport can expect to see more and larger jet aircraft as GTU Jet expands their business.

Changing Times

More and more people are talking about the changes that are occurring in the transportation industry and especially in the personal transportation segment.  Ride sharing in the form of Uber, Lyft and others is spreading and exists currently in Austin.  It is a matter of time until we see them in Georgetown.  These companies ultimately reduce the demand for vehicle ownership.

Another emerging trend is the advent of the driverless vehicle.  It is predicted by many that these autonomous technologies will show up first in long-haul trucks. Several manufacturers are currently experimenting with driverless trucks as the technology matures.  All the auto manufacturers are developing driverless cars and several have been operated, all-be-it with a safety driver, on streets and highways across the country.

These autonomous vehicles are having a tremendous impact on large segments of the US economy.  It is predicted that they will be much safer as computers don't drink and drive or talk and text on a phone.  The reduction in vehicle crashes will negatively impact both insurance companies and auto repair and replacement parts companies. This of course will benefit the consumer.

Coupling the trend of driverless vehicles with ride sharing will likely result in fewer privately owned vehicles.  Driverless vehicles will become available on demand to transport people to the grocery store, medical appointments and entertainment venues.  Again, this benefits the consumer as they will not have to bear all the costs of owning a vehicle, which sets in their garage a large percentage of the time.

These trends are happening very quickly and we are likely to see them in Georgetown in the next few years as the regulatory and legal liability issues are worked out.

The bottom line for the City of Georgetown is that they need to recognize these trends and plan to accommodate them.  That means NO Lone Star Rail!  A fixed rail system is hugely expensive, inflexible and only serves 1-2% of the population.  There is not a single rail system in the United States that is self-supporting.  The driverless cars are likely to be here before the first revenue paying passenger is transported on the rail line.  The citizens of Georgetown's children and grandchildren will end up paying for a rail system over their lifetimes that does not meet their transportation needs.

More on City Budget

The Williamson County Sun has published a letter by your blogger in their e-edition that provides more information on the budget.  There is also an excellent citizen letter showing the negative effects of Obamacare on the taxpayers of the country.

http://www.etypeservices.com/SWF/LocalUser/Williamson1//Magazine94941/Full/index.aspx?II=94941#4/z

City Budget Misdirection

The City staff and Council use a variety of techniques to focus citizens attention on issues or comparisons that are at best irrelevant or at worst, misleading.  These are called "red herrings".

The most egregious example is the undue focus on tax rate, even though there are statutory requirements for public hearings, etc. The bottom line to the taxpayer is how much money is being extracted from their pockets.  The projected property tax bill for the "average home" is $1,019.  That is a 9.9% increase over the prior year tax bill. How many taxpayers have seen their income increase by 9.9% over the past year?  Likely not many. Let us see the trend over time in the "average home" tax bill.  Is it reasonable for the benefits received?  Each taxpayer can make their own determination.

Another way to focus on the taxpayer is to feature the increase in projected property tax revenue in aggregate over time with residential and commercial revenues separated.  These numbers have to be calculated in order to formulate the budget, so they should be readily available.

There is also undue interest focused on the tax rate for debt interest and principal reduction.  Most of the analysis tends to focus on voter approved debt, but, significant debt is incurred by the electric, water and storm water operations.  Citizens need to know explicitly the total city indebtedness and the multi-year trend of public indebtedness.  This allows people to see if debt is outpacing our ability to pay for it.  There is also an abundance of attention paid to individual capital projects without showing how the projects fit into the larger debt picture.  This causes people to focus on particular projects while ignoring the ever increasing total city debt.

Another "red herring" is the comparison of Georgetown's tax rate with other nearby cities.  This is like comparing your income with your neighbor's income.  It might be interesting, but, it is completely irrelevant to your own financial well-being.  Every city is unique with unique opportunities and problems and comparing with other nearby cities adds little or no value.

The City needs to show the citizens the long-term trends in key budget parameters and how the proposed budget compares with the past budgets over multiple years.  Year to year comparisons are necessary, but, insufficient to provide long-term guidance.  By ignoring/omitting longer term trends in key budget parameters, the citizen/taxpayer is not given the necessary context in which to assess current budget proposals.

City Budget Out of Control?

Georgetown's budget has grown from $131.8M in FY 2006 to $284.7M in FY 2016, an increase of $152.9M or 116%. In the last four years, 2012 - 2016, this trend has accelerated with the budget increasing from $178.3M to $284.7M, or $106.4M. This four year rate of annual increase is 12.4%. This means it will double in six years at this rate!

The Census Bureau recently released the latest population estimates for Georgetown. The population in 2010 was 47,995 and in 2014, their latest estimate is 59,102. This equates to a 5.3% annual growth rate. The Bureau of Labor Statistics data shows that annual inflation over this same time period has been 1.7%.

The City apparently does not have a policy or ordinance that limits the budget growth. The State of Texas has adopted a policy that the biennial budget growth is limited to population growth plus inflation. Applying that metric to Georgetown would limit the annual increase in the budget to 5.3% + 1.7% = 7.0%. Georgetown's budget growth is far above 7.0% and continued growth at levels above that is a recipe for financial disaster. Just look at cities like Detroit, MI; Chicago, IL; and Stockton, CA.

This trend of budget increases is much greater than population growth and has been going on for more than 10 years and needs to be reined in to be in line with the State of Texas metric. The City needs to limit budget growth, NOW!

Transparent Government is an Oxymoron

An open records request was submitted to the City of Georgetown on July 9, 2015 requesting a copy of the contract between the City and SunEdison for the purchase of solar generated electricity.  The City has tentatively denied that request saying that the contract contains "competitive information" that is allowed to remain secret under Texas law.  An appeal has been submitted to the Texas Attorney General who has final authority over open records requests.  A copy of the appeal follows and now we wait for the Attorney General's decision.

July 31, 2015

Office of the Attorney General

Attention:  Open Records Division

P.O. Box 12548

Austin, Tx  78711-2548

Re:  Open Records Request from City of Georgetown: G001402-070915

Dear Sir or Madam:

The following request to the City of Georgetown was made on July 9, 2015 by the undersigned:

Please provide a copy of the 25-year contract between Georgetown and SunEdison to purchase 150 megawatts of capacity produced by a 600,000 panel photo-voltaic array to be constructed in West Texas. This contract was announced to the public in March 2015.

The City has indicated they are denying my request based on Texas Government Code paragraph 552.133(a1) relating to competitive matters.

Since the requested contract is for a span of 25 years, it is not a competitive matter for the City as they will not be bidding the contract for 25 years.  I am sure SunEdison would argue that the information in the contract is competitive information as they seek to secure other contracts.  I firmly believe the needs of the public override the needs of  any private company to keep all of the contract hidden from the public.  Furthermore, the terms and conditions in Georgetown's contract are not necessarily the terms that SunEdison would include in another bid.  Their bid would include many factors that change over time and would be different from those included in Georgetown's contract.  Technology is advancing at a significant rate in all segments of electric power, including solar cell manufacturing, rectification and energy storage to name a few.  These developments would  make trade secrets in the contract irrelevant over time as new technology is adopted.

As a ratepayer and taxpayer of Georgetown, I believe I am entitled to know the following:

What is the price Georgetown will be paying SunEdison and how does it potentially impact my personal electric rates?.

What are the conditions that allow price increases to Georgetown?

What is the minimum and maximum delivery of electricity in megawatts specified in the contract?

What are the risks to the city for non-performance by SunEdison and what are the corrective actions?

What are the terms and conditions that govern the time when cloud cover prevents SunEdison from providing the required electricity.  The City estimates 2% of the time renewables will not provide the required electricity.  That is 175 hours or 7.3 days per year.

Does the contract allow the sale or assignment of  the contract with Georgetown to another entity and what are the risks associated with that?

What are the risks and consequences to Georgetown if the Federal Energy Credits are not renewed next year?

           

Georgetown has stated it will  have the ability to purchase electricity from ERCOT using green energy credits when the need arises at no additional cost to its customers.  Does the contract with SunEdison allow or require the transfer of energy credits to the City or does the City have to purchase them?

I am not seeking trade secrets with respect to construction of any power generators or any costs associated with power generation or any confidential financial information relating to the internal operation of SunEdison.

I am willing to accept a redacted copy of the contract with trade secrets and confidential financial information redacted and will resubmit my request so stating if necessary.

Transparency in government is the only way that citizens have to assure their government is operating ethically and legally.  The Electric Fund comprises almost 25% of Georgetown's annual budget.  Without knowledge of the terms and conditions of the SunEdison contract, a citizen has no way to independently assess the appropriateness of the City's budget.

Your commitment to open government will be greatly appreciated in responding affirmatively to my request.

Sincerely,

Tactics Used by the Feds to Attack Local Government

The Federal Government is using the Affirmatively Furthering Fair Housing (AFFH) regulation to take control of local government housing decisions. The model for the take-over is Westchester, NY. Westchester was sued for violation of provisions of the Fair Housing Act and as a consequence, specific requirements were imposed on Westchester County government to fund low income housing and to suppress local opposition to such developments.


The latest fight revolves around Chappaqua , NY, where the Clintons reside. The court appointed monitor has declared Westchester County in violation of the court approved agreement and is threatening fines of $60,000 per month and holding the county officials in contempt. The County can be forced to build low income housing in locations identified by the monitor. http://www.nationalreview.com/



Thus we see the pattern that is being established. Entice cities to apply for HUD grants that require intrusive data collection, combine that data with other data collected by other government organizations and declare that housing discrimination exists using the "disparate impact analysis" that was recently approved by the Supreme Court. Then court ordered solutions are imposed under the direction of a court appointed monitor, most likely a low income housing advocate. The local government is ordered to fund the low income housing by issuing bonds and to suppress any local opposition, under penalty of contempt, to designated projects. And, by-the-way, the local taxpayer has to pay for all this low income housing.


Welcome to Big Socialist Government and the loss of freedom and liberty!

Airport Capacity Increase

The proposal by Georgetown to resurface the main runway 18-36 to accommodate 60,000 pound single wheel aircraft is a doubling of the existing limit of 30,000 pound single wheel aircraft.  Although, the airport landing limits are specified for single wheel main landing gear aircraft, the weight limits for aircraft with dual wheels on each main gear strut are higher.  For example, a single wheel limit of 30,000 pounds is equivalent to a 40,000 pound limit for dual wheel aircraft.  Likewise, a 60,000 pound single wheel limit is approximately 80,000 pounds for dual wheel aircraft.

The following are examples of aircraft that meet the C-II airport designation:

Canadair Regional Jet CRJ 700

Wingspan 76 ft 3in

Tail Height 24 ft 10 in

Length 106 ft 8 in

Max Take Off Weight 72,260 lbs

Dassault Falcon 20

Wingspan 5.05 ft

Length 56.3 ft

Tail Height 17.4 ft

Max Take Off Weight 28,660 lbs

It is apparent that the Canadair Regional Jet is more that twice as large as the Dassault Falcon 20 and by increasing the runway strength, the larger airplane will be able to be accommodated.

This feels like the movie, Field of Dreams, "Build it and they will come."  To meet the City Council direction that the airport should be self-sustaining, the number of annual operations will have to increase as the City grows.  Doubling the weight of allowable aircraft able to use the airport provides the opportunity to increase the number of annual operations.