Why Bicycle Paths on Williams Drive to Sun City?

City staff recently presented interim results of the Williams Drive corridor study to the City Council. The presentation raises several questions that were not asked at the workshop.

Here is the cross-section of the proposed changes between Lakeway Blvd and Jim Hogg Road.

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The first thing to notice is that the right-or-way will exceed 100 ft wide to accommodate roads, green spaces and bike ways. This will clearly be of concern to existing property owners. It is also planned to limit the driveways into/out of businesses from Williams Drive.

The second item to notice is that there is a bike way paralleling the road. This segment of proposed improvements is about four miles in length. There has been no cost-benefit analysis or data that indicates that there will be sufficient bicycle traffic to justify the cost. So, why is it included?

If one asks what is the principle impediment to increasing bicycle traffic, the answer comes back - hills! The terrain drops almost 150 ft. in elevation between Jim Hogg and Lakeway. That is great when you are going down Williams toward I35, but, not so great on the return trip. Particularly if you are over 55 years old!

It should also be noted that Sun City does not allow bicycles on the sidewalks, only in traffic lanes. Here is the rule:

"All wheeled vehicles, including but not limited to golf carts, bicycles, skateboards and motorized vehicles, are prohibited on all sidewalks, walking paths and nature trails." 

Because of the hills and the prohibition against riding on sidewalks, few of the 15,000+ residents of Sun City will likely use the bike path on Williams Drive. Likely only a few dozen competitive riders will use the paths.

Finally, even though staff did a yeoman's effort on outreach for this study, less than 150 people provided input, according to the city. Should a very small percentage of residents drive the expenditure of taxpayer funds on bike paths for the benefit of very few?

Most Georgetown citizens prefer to travel by automobile. They don't like to ride when it hot, cold, windy or raining. This leaves few days out of the year that would see any meaningful use of bike paths along the outer reaches of Williams Drive.

Let your city council and city staff know that you want Williams Drive optimized for vehicular traffic.

Hedge and Private Equity Funds Conflicts of Interest

"In 2010, a firm called Swift River Investments LLC put money into a software company developed by private-equity giant Blackstone Group LP. Five years later, a company Blackstone co-owned acquired the software firm, at a price that gave Swift River a fat profit.

Blackstone’s back-and-forth involving Swift River wouldn’t be notable but for one thing: Swift River invests personal wealth for Blackstone’s president and chief operating officer, Hamilton “Tony” James. A brother of his runs it.

Wall Street billionaires, their fortunes built by investing other people’s money, increasingly are putting some of their own in sideline investment ventures, while continuing to operate their hedge funds or private-equity funds for clients." (WSJ)

Read the entire article as there are other firms and employees/managers that are named.

This is not a new problem as nakedcapitalism.com identified this issue more than four years ago.

This is a potential issue for Georgetown and the Texas Municipal Retirement System as they use Blackstone as one of their investment managers. It is unknown at this point how many other investment managers have conflicts of interest between the fund managers and client investments. This whole area is very opaque and needs a large dose of sunshine!

Dannenbaum Engineering Firm Raided by FBI in Laredo

The Dannenbaum Engineering firm, who's offices in Laredo have been raided by the FBI,(patch.com) was recently awarded a design engineering contract by Williamson County for county road improvements.

"The Austin American-Statesman noted that Williamson County recently contracted with Dannenbaum Engineering to design improvements for County Road 110 South. The project involved an upgrade of two existing two-lane roadway from Texas 79 to Limmer Loop stretching 2.2 miles of roadway to a three-lane roadway, making up half of an ultimate six-lane facility, the publication reported."

Georgetown Citizens Drowning in Government Debt

A quick look at the bond debt that the citizens of Georgetown are obligated to pay is very revealing. These are the debt incurred by Georgetown school district, the city of Georgetown and Williamson county. Keep in mind that this is not the total indebtedness as it does not include special tax districts. It also does not include the unfunded liabilities associated with the pensions for teachers, city employees and county employees. Those unfunded liabilities can be quite large depending on the assumed rate of investment return. The data sources are indicated.

GISD Financial Report published in January on their website.

Debt P+I =$533,523,964,  Population calculated from their data = 66,398,  debt per capita = $8035

Georgetown CAFR for population and Texas Bond Review Board for debt.

Debt P+I =$317,868,654, Population 59,391,  debt per capita = $5352

Williamson County, Texas Bond Review Board for debt and Census Bureau for population.

Debt P+I = $1,320,901,660,  Population 528,718,  debt per capita = $2,498

Total for Georgetown, Wilco and GISD, debt per capita = $15,885

Wilco Sun Drinks the Green Energy Koolaid

The Wilco Sun has a feature piece in today's paper touting the benefits of renewable energy for Georgetown without mentioning all the drawbacks and issues.

All the benefits are assertions. No data is provided to prove the assertions.

1. Prices will not increase for electricity over the next 18 years.

2. What happens when the wind doesn't blow and the sun doesn't shine? Answer; The gas powered plants will come online to provide electricity. How will that affect electricity prices? Answer; Don't know! But you know it will increase the cost!

No mention of the fact that the terms of the solar and wind contracts are kept secret from the taxpayers. The city hides behind a state law that applies to private energy generators to keep relevant information secret, with the approval of the Texas Attorney General. Therefore, the assertions about constant rates over time are unprovable!

The article fails to mention that the city lost over $6 million last summer due to hedging the price of electricity.

It also fails to mention that Georgetown is NOT 100% green energy. This is because the electricity input to the Texas grid is 10% renewable and 90% fossil fuel generated. Since electrons are indistinguishable from each other when put on the grid, Georgetown takes at most 10% renewable energy generated electricity from the grid with the remaining 90% generated from fossil fuels.

Of course there is no mention of the massive wealth transfer that occurs because of the government subsidies for renewable energy. All the American taxpayers and non-renewable energy rate payers pay for the subsidies so that Georgetown can have long-term stable prices. 

There are other subsidies like property tax credits afforded the solar and wind generators that reduce the taxes owed to the counties and schools where the solar and wind farms are located. So, the city is implicitly saying that subsidies are "good" as long as we, the citizens of Georgetown, do not have to pay them.

Does the City of Georgetown Know What They are Doing?

The following item is on the City Consent agenda for the next council meeting on April 25: 

Consideration and possible action to approve Task Order with RVi of Austin, TX, for professional services related to San Gabriel Park Phase II improvements and Hike and Bike Trail Extension in the amount of $502,265.00 

Remember that items on the consent agenda are to be approved without public comment. It would seem that this particular item deserves some public discussion.

The San Gabriel Park Phase II is budgeted to cost $3.8 Million Dollars including this item.

The first issue that jumps out is this is a proposed task order contract. Task order contracts are used when the scope and timing of the work cannot be predefined. In this case it seems like both the scope and schedule can be defined in advance and a firm, fixed price contract is warranted. Task order contracts are open-ended with no cost or schedule limits, except the contract duration.

The second issue that arises when looking at the task order is that this 1/2 Million Dollar contract is for project management services, where the project is the design of the park improvements. Five people are to be hired at rates ranging from $70 per hour to $250 per hour to hire subcontractors to do the actual design work.

This seems like a task for city staff to accomplish themselves, unless they do not have the necessary skills. It would certainly be far cheaper for the city staff, i.e. a project manager and procurement specialist, to hire and oversee subcontractors than to hire a high price project management firm.

Here is what passes as a schedule:

Timeline

July 31, 2017            Schematic Design Documents  

October 31, 2017       Design Development Documents

February 28, 2018     Construction Documents

And by-the-way, "No public meetings or presentations to Parks Board, City Council or the Adaptive Management Working Group by Consultant are included."

What a deal, here is $500K, come back when the money is gone and hopefully something useful will be provided to the city!

The proposed tasks do not include schedules, milestones, performance requirements or other common project management tools.

For more information, visit the following city website.

Solar Subsidies in Austin

The Wall Street Journal has an excellent article describing how solar energy is subsidized by all the rate payers and taxpayers for the benefit of those fortunate enough to be able to afford to purchase "green energy", either individually or through their electric utility. Here is the article by Robert Bryce.

"Now that tax day has passed, I must thank you, my fellow federal taxpayers. You all are the wind beneath my solar panels.

Pardon me for mixing energy metaphors, but it’s only appropriate that I express appreciation for the generous subsidy you provided for the 28-panel, four-array, 8,540-watt photovoltaic system I installed on my metal roof last year. Thanks to the investment tax credit, I slashed my 2016 federal tax bill by $7,758.

Before going further, let me be clear: I’m opposed to all energy subsidies—unless, of course, I’m the one collecting them. And thanks to the incentives for rooftop solar, I’ve snared three subsidies.

In addition to the federal subsidy, Austin Energy (our city-owned utility) paid $6,593 of the cost of my system. Thus, after subtracting local and federal subsidies, the net cost of my 8.54-kilowatt system was $18,100, or about $2.12 per watt of installed capacity. I’m also getting an ongoing subsidy that pays me far more for the electricity I produce than what other generators get in the Texas wholesale market.

My panels are producing about 12 megawatt-hours of electricity per year. In 2016, according to the Electric Reliability Council of Texas, the average wholesale price of electricity was $24.62 per megawatt-hour. But Austin Energy pays me $106 for each megawatt-hour my system produces. Therefore, I’m getting more than four times as much for my solar electricity as other generators in Texas. I get that price regardless of whether the grid needs the juice from my panels or not.

In the 12 months since I installed the system, half of my monthly electric bills are showing up with a negative balance. I figure my solar panels will pay back their cost in 14 years and that the return on my investment is about 7%.

Recently, one of my neighbors also had panels installed. But fewer rooftop solar projects are being installed in low-income neighborhoods. That’s true in California, which leads the country in solar-energy capacity. According to a study done for the California Public Utility Commission, residents who have installed solar systems have household incomes 68% higher than the state average. Ashley Brown, executive director of the Harvard Electricity Policy Group, calls the proliferation of rooftop solar systems and the returns they provide to lucky people like me, “a wealth transfer from less affluent ratepayers to more affluent ones.” It is, Mr. Brown says, “Robin Hood in reverse.”

Do I feel bad about being a solar freeloader? Yes, a little. As Mr. Brown and others have noted, I’m now paying less to maintain the electric grid. That means that the local barista or school janitor—people who likely can’t afford solar panels—are paying incrementally more for the grid’s maintenance and operation. And the more that people like me install panels, the more those baristas and janitors have to pay.

But don’t trouble me with all that. I’m doing my part for the polar bears. Indeed, I’m a prime example of the “green” economy: I’m socializing the costs of my scheme and privatizing the profits. And I’m feeling virtuous while doing so.

It doesn’t get much better than that."

Even though this article focuses on solar panels installed on individuals homes, the same principles apply to publicly owned utility companies like Georgetown's electric utility. The residents of Georgetown are getting a great deal on the price of their wind and solar generated electricity because the generating plants are subsidized through tax credits, low interest government guaranteed loans, property tax relief and other subsidy mechanisms.

As the article author says, we in Georgetown are socializing the cost of the "green" electricity and reaping the savings at the expense of others in this country. So enjoy it while you can!

Public Pensions Huge Topic of Interest

The under funding and under performance of public pension funds is garnering more interest as they come closer to insolvency. Public pension funds in Dallas and Houston are lobbying the Texas legislature for authority to access more public funds as a way of solving their financial problems. The Texas Tribune has an excellent analysis of the financial issues and the politics behind trying to use public funds to cover their dollar shortfalls.

Calpers, the huge California public pension fund is front page news on the WSJ today as they struggle with under funding and under performance.

"Calpers, which typically acts as a bellwether for smaller funds, already has made other decisions to eliminate all hedge-fund holdings and sever ties with roughly two-thirds of the private-equity firms that handle its money. It oversees retirement assets for 1.8 million active or retired police officers, firefighters and other public employees."

The under performance is associated with the high fees charged by Private Equity funds and Hedge funds to manage and invest the pension money.

It is observed that Private Equity returns over the last 20 years are reduced by over 5% annually due to excessive fees.

As the article indicates, Calpers has been reducing it's exposure to Hedge funds and is looking for ways to dramatically reduce Private Equity fees.

So, while Calpers is reducing exposure to Private Equity and Hedge funds, Texas Municipal Retirement System (TMRS), has been increasing their exposure. They both cannot be right and be working in the best interest of the taxpayers and pensioners!

TMRS has allocated 10.95% of it's funds to Absolute Return (Hedge funds) and they earned 2.97% gross return. Subtract the fees and the return is even less.

Private Equity, which is being ramped up by TMRS, earned 1.68% last year with only a .45% allocation of funds. 

These returns are far short of the assumed investment return of 6.75% that TMRS uses to calculated the unfunded liability.

Build Up of Unused Road and Park Bonds

Out of $46M in road bonds authorized in 2008, only $4.45M, or less than 10% have been used as of the end of FY 16. The same is true for the parks and recreation bonds issued in 2008.

Only $10M of the $105M in road bonds authorized in 2015 have been used.

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Of the total of $186.5M in bonds authorized by voters, only $17.45M have been used. That is less than 10% of the authorized bonds.

This raises many questions. Have circumstances drastically changed since the bonds were authorized? Is there sufficient staff to plan and implement the projects that the bonds are to pay for? 

There may be other valid reasons, but, the city does not seem to communicate to the taxpayers the reasons for the buildup of unused bonds.

Is it time for a presentation to the public of revised schedules for the planned projects?

Apartment Building Boom

The city has issued or is in the process of issuing permits for 1900 new apartments. This is eye-watering as it represents between 5% and 10% of housing in Georgetown. Get ready for more traffic congestion, especially around Walmart as over 500 units are planned on Wolf Ranch Parkway behind Walmart and Home Depot.

More than 500 units are also planned along Williams Drive.

Here is a map of the planned apartments.

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Police Staffing Request

As the FY 18 budget cycle begins, city departments are requesting staffing increases. One of the first is the police department. Here is the history of department staffing over the last five years.

Fiscal Year                            2016               2015                 2014              2013               2012

Police Services

      Administration                4                      4                       4                   4                      5

      Support Svcs. - - - - -

      Field Operations            102.5              101.5                98                 98                    99

      Animal Svcs.                   10.5                10.5                  10.5               9.25                8.5

      Municipal Court             6.5                   7                       7                    6                      7

The Chief is requesting the following;

Traffic/motor vehicle officers                       2

School resource Sergeant                          1

Community engagement                             1

Animal services (Admin)                             1

This will add four officers to Field Operations for a total of 106.5 and one position to Animal Services for a total of 11.5 authorized equivalent positions.

It is interesting to note that Georgetown police have five officers assigned to schools and hence the need for a supervising Sergeant. The chief plans on adding one more school resource Sergeant in FY 2019. Inquiring minds would like to know if the school district shares the cost of these officers?

More information is available on the city website.Georgetown Workshop Agenda for April 11

Woo Hoo - Council Slush Fund Up To $1,919,824

The excess funds for FY-17 have been reviewed by the General Government and Finance Board and recommendations for spending are being forwarded to the City Council for approval to spend.

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The good news is that it looks like Lone Star Rail is finally dead and the City is not going to continue funding it.

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The recommendation to commit $650,000 to the Economic Uncertainty Reserve seems to be a place to stash some extra funds that can be spent later without public scrutiny. Keep in mind it is not an "unfunded liability", it is just a reserve to hedge against future economic uncertainty. The Council established the fund last year and funded it with $500,000. There are multiple reserve funds embedded within the city finances and one wonders if another is needed.

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It is curious that the other options include EMS Start Up Costs and Street Maintenance. EMS was supported to be fully self supporting and would pay back the start up costs. Street maintenance is an on-going expense and should be included in the regular street maintenance budget, absent some unforeseen catastrophic event. It also worth noting that the radios, ambulance replacement (TRV) and police vehicle replacements are identified for acquisition in FY-18. The chart below indicates bonds are going to be issued in FY-17 for these items. What is going on?

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The question remains, why not fund the first four items on the above bond chart for $1,530,000 from the available cash? You would have sufficient funds remaining to meet the $250,000 needed for current obligations with some pocket change left over. This avoids saddling the City with more debt and saves the costs to issue the bonds.

Contact your city council representative with your own ideas. The spending of this money will be discussed tomorrow, April 11, at the council workshop at 3pm.

Georgetown 2016 Pension Performance

Performance of the Texas Municipal Retirement System (TMRS) was revealed at the end of last month by RVK. RVK (formerly R.V. Kuhns & Associates, Inc.) one of the largest fully independent and employee-owned investment consulting firms in the US, provides world-class investment advice to institutional investors. The following charts are from their presentation to the TMRS Board.

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The stock market, as represented by the S&P 500, returned 11.96% over the last year and 14.66% and 6.95% over the last five years and ten years respectively. Most of this improvement ocurred after the presidential election.

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This chart shows that TMRS earned 7.04% in 2016 while the S&P earned 11.96%. TMRS earned 6.45% and 5.98% over the last five and ten years respectively. TMRS significantly underperformed the S&P 500 over the various time periods while investing in higher risk elements like Private Equity and Absolute Return.

It would seem the assumed 6.75% rate of return is still too aggressive and should be scaled down to meet actual performance over recent years. It could be increased later if performance warrants such a move.

Georgetown ISD Property Taxes

The previous post on Georgetown ISD factoids used a chart from GISD that left the erroneous impression that school taxes have not been increasing over time. Of course any property owner within the district knows that is not true.

As a proxy for the typical homeowners property tax annual increase, the district provides the assessed/appraised value in their annual financial reports. Here is a chart showing the annual growth in assessed value within the district to which they apply the tax rate.

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Thus it is observed that the assessed value has been increasing over the last nine years at a compound rate of 7.37%. Over that same time period the tax rate has also increased so it is safe to say that the taxes that property owners in GISD pay have grown at a rate greater than 7.37% annually.

Remember from the previous post that the number of students increased by only 527 out of approximately 10,000 over the last 5 years. That equates to a 0.99% compound annual increase.

In line with other local government entities, GISD is taking money from property tax payers at a rate greater than population growth plus inflation. What is the justification for that?

Council & Mayor Salaries Going to the Moon!

The City Council is planning on voting to raise their salaries at the next council meeting on April 11, 2017. Here is some history:

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Five years ago Council members were paid $400/Month and the Mayor was paid $550/Month. The Council appointed a compensation committee late last year and they are recommending that Council members be paid $1400/Month and that the Mayor be paid $1800/Month.

It is left as an exercise for the reader to determine if they believe the proposed compensation amounts are warranted.

Attend the April 11, 2017 City Council meeting at 6pm in City Hall to voice your opinion!

Civil Asset Forfeiture Not Just a Texas Problem

The Texas legislature is trying to fix the problem of local law enforcement officials taking people's property without an arrest or even a charge, let alone conviction of a crime. It is estimated that $45M per year is taken by law enforcement from Texans. The proposed legislation allows law enforcement to take and keep property only after a conviction.

It turns out the IRS also takes peoples money from their bank accounts without ever proving in a court of law that the taxpayer has broken the law. The IRS Inspector General  has found that the IRS used civil forfeiture to seize millions of dollars from innocent business owners.

"The report covers IRS cash seizures against businesses and individuals suspected of deliberately trying to avoid federal reporting requirements for large bank deposits.

To combat criminal activity, individuals and businesses are required to report all bank deposits greater than $10,000 to federal authorities. Intentionally splitting up large sums of cash into sub-$10,000 amounts to avoid that reporting requirement is known as “structuring” and is illegal under the federal Bank Secrecy Act.

The IG took a random sample of 278 IRS forfeiture actions in cases where structuring was the primary basis for seizure. The report found that in 91 percent of those cases, the individuals and business had obtained their money legally.

“Most people impacted by the program did not appear to be criminal enterprises engaged in other alleged illegal activity,” according to a news release from the IG. “Rather, they were legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others.”

More troubling, the report found that the pattern of seizures — targeting businesses that had obtained their money legally — was deliberate."

It is clearly time to reign in our government, both local and Federal, to protect the property rights of American citizens!

Georgetown ISD Factoids

The Georgetown school district imposes the largest tax bite on citizens of any government entity operating in Georgetown. Here are some interesting facts.

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Even though the Georgetown population has been growing at a compound annual rate of 3.87% over the last five years, school enrollment has only increased by 527 students. Does this mean that most of the people moving into Georgetown do not have children? Hello Sun City!

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Fortunately, property taxes, although quite high, have  not been increasing much over the last five years.

GISD owes a significant amount of debt. P+I= $533,523,964 as of 6/30/16. Another surprising fact is that some of the debt consists of Capital Appreciation Bonds which were issued sometime in the past. Capital Appreciation Bonds require no annual payments over the term. The principal and interest are due in one lump sum at maturity.

GISD currently participates in the Teachers Retirement System (TRS) which is a defined benefit system. Under the TRS defined benefit plan, the unfunded liability is $62,908,381, of which GISD is liable for $20,750,875 at an assumed investment/discount rate of 8%. The state of Texas, read the taxpayers, are liable for the remaining unfunded liability. At a 7% investment/discount rate, the unfunded liability for GISD balloons to $32,230,684.

Wilco Debt and Budget Out of Control

Williamson County is not doing any better for its citizens than Georgetown with respect to constraining budget and debt growth. Lets examine the top line financial numbers for Williamson County.

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It is observed that the budget is growing at a compound rate of 5.85% over the last 5 years. The steep upturn of 13.3% from 2015 to 2016 is particularly worrisome as that is not sustainable.

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The debt is over $1.3 Billion dollars and is also accelerating. If this trend is not arrested soon, the county may well be in financial trouble.

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The population is growing at a healthy rate of 4.21%, which is higher that most counties in the United States, yet budget and debt are growing far faster.

The last piece of not so good news comes from the 2016 Comprehensive Annual Financial Report that the unfunded pension liability for Williamson County is $110,158,224. This is at an assumed investment return rate of 8.1%. Has anyone seen rates like that recently? At an assumed investment rate of 7.1% the unfunded liability for the county balloons to $177,825,454.

Georgetown Water Factoids

The city council was presented a water Integrated Resource Plan at the March 28, 2017 workshop. The plan estimates water supply and demand over the next 35 years and assesses the needs to meet projected population growth. Here is the "money" chart!

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Raw water supply is estimated to be adequate until 2045 to 2050.

Treated water production capacity is 40 Million Gallons per Day and current peak demand is 36 Million Gallons. The current treatment plant capacity is expected to be fully used by 2022. There is the capability to purchase 6 Million Gallons per Day from Round Rock at a significantly higher cost, but, that would only be a short term solution.

The Lower Colorado River Authority(LCRA), which supplies the bulk of Georgetown's raw water is expected to raise water prices 5% annually going forward.

Either the existing water treatment plant capacity will have to be increased or a new plant will have to be constructed by 2022 to meet the projected needs. In any event, expect your water bills to continually increase in the future as the city grows.