Texas Receieves a Finanial Grade of "D"!

THE FINANCIAL STATE OF TEXAS 

"A new analysis of the latest available audited financial reports found Texas has a Taxpayer BurdenTM of $12,100, earning it a “D” grade from Truth in Accounting. Texas’ overall financial condition worsened by 20 percent from the previous fiscal year mainly because a large part of the state’s revenue is related to the oil industry. Texas’ elected officials have made repeated financial decisions that have left the state with a debt burden of $98.7 billion. That burden equates to $12,100 for every state taxpayer. 

Texas’ financial problems stem mostly from unfunded retirement obligations that have accumulated over the years. Of the $264.4 billion in retirement benefits promised, the state has not funded $58.8 billion in pension and $71.4 billion in retiree health care benefits."

Gross Stupidity in California

The University of California system has announced its intention to completely divest from fossil fuels. 

Officials in charge of investments insist that their decision to move toward more “sustainable” and environmentally conscious investments is simply in the practical interest of beneficiaries, rather than a product of political opinion.

In an opinion piece in the Los Angeles Times, UC chief investment officer and treasurer Jagdeep Singh Bachher and chairman of the UC Board of Regents’ Investments Committee Richard Sherman reasoned that “hanging on to fossil fuel assets is a financial risk.”

“That’s why we will have made our $13.4-billion endowment “fossil-free” as of the end of this month, and why our $70-billion pension will soon be that way as well,” the officials explained in the September 17 op-ed.

Sherman and Bachher deny that their decision was “born of political pressure,” or that it is a result of “green movement idealism.” Instead, they insist that it is based on a “sustainable investing” approach. 

“Today, we are on track to beat our own five-year goal of investing at least $1 billion in climate change solutions and, by incorporating environmental, social and governance factors — ESG factors — into our investment decision-making, we’ve become better stewards of university funds,” the officials explained.

Sherman and Bachher boast that they drove UC to become the first U.S. public university to sign onto the U.N’s Principles for Responsible Investing, a commitment by institutional investors to act in the "long-term interests” of their beneficiaries by incorporating “environmental, social, and corporate governance (ESG) factors” into investment decisions.

The commitment consists of six principles to guide investment decisions including to “incorporate ESG issues into investment analysis” to “seek appropriate disclosure on ESG issues by the entities in which we invest,” and to “promote acceptance and implementation” of the listed principles.

The investors emphasize that they are not driven by political reasonings, but that they are led to the same decision that they might be if that were the case. Regardless of political motivations, they say that they sold $150 million in fossil fuel assets because they “posed a long-term risk.”

“While our rationale may not be the moral imperative that many activists embrace, our investment decision-making process leads us to the same result. We’re in the business of helping to ensure the financial viability of a great university whose stakeholders frequently come at an issue — even one as terrifyingly consequential as climate change — from different perspectives,” the pair wrote.

https://www.campusreform.org/?ID=13752

Sun City Tidbits

Approximately 1900 residential lots remain for building.

Total build out will be 10,041 and it is expected to be complete in 8 years.

Pulte is still looking for property to develop as part of Sun City.

New models and sales center will be built in North Pointe, next to Ronald Reagan, starting later this year.

New amenity center at North Pointe will not be started for 3 years.

The current sales center will be torn down and single family residences will be built. Sales center cannot be donated to CA because of existing agreement with City of Georgetown that only allows single family homes.

CR 245 from Williams Drive to Ronald Regan will be expanded to 4 lanes by Williamson County.

Williamson County will conduct a stoplight study at Sun City Blvd and Ronald Reagan.

Williamson County to design and construct a typical exit ramp for northbound traffic from SH 195 to Ronald Reagan.

What is the Status of Georgetown Employee's Pensions?

The City of Georgetown invests in The Texas Municipal Retirement System TMRS, to provide future benefits to employees after they retire. It is important to periodically check the investment returns of TMRS as a measure of the health of the retirement system.

The City reports the percent funded in their various financial documents, but, one needs to understand that the funded ratio that the City publishes is almost 1 year behind as the City is on Oct. 1 to Sept. 30 fiscal year and TMRS is on a calendar year basis.

A more current, but, still lagging measure is the overall investment return through the latest reporting period. In the following case the period ends June 30, 2019.

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It is observed that the return over the last 1 year is 5.36%, over the last 3 years is 7.89%, and over thee last 5 years is 5.40%. There is considerable volatility in the return depending on the period selected as well as the start date of the period selected.

Keep in mind that TMRS assumes a 6.75% return when they determine the unfunded liability that they report on an annual basis.

The funded ratio for calendar year 2017, was reported by Georgetown as of September 30, 2018 to be 87.81%.

All the pension gurus think that 87.8% is fantastic, but, the question should be, why not 100% funded?

As noted above, the return over the last 5 years is 5.4% and when a return of 6.75% is assumed when calculating the funded ratio, the 87.8% ratio is overstated by some unknown amount.

All the more reason for the TMRS fund should be funded at 100%.

The Progressives are Here in Georgetown

The people who want to control every aspect of your life, I call them Progressives, are here in Georgetown and have taken over the Planning Department. Check out the presentation to the City Council scheduled for later today. Here are a few excerpts.

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Notice the second box labeled "Land Use Policy". The proposed policy is to promote higher density! High density brings many more problems than it solves.

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Goal 1.B. shows the explicit objective of increasing density, including at infill locations.

Just think about what increased density will bring to Georgetown. More traffic in the dense areas; calls for public transportation to alleviate traffic; more crime, as experienced in high density cities; and calls for more "affordable housing", code words for taxpayer subsidized. The list goes on and on.

And here is a new objective or goal.

Since when is it city government responsibility to "recruit new employers"? That sounds like a Chamber of Commerce function.

This is clearly an expansion of City power and responsibility beyond its core functions!

If you don't like this high density future for your city, contact your city councilperson and tell them to reject these policies. Preserving the small town atmosphere of Georgetown is inconsistent with these Land Use policies.

Water, Water, Does Georgetown Have Water?

City Councilman Steve Fought has an excellent and informative analysis in his current newsletter to his constituents.

The current drought, or near-drought, conditions prompted various concerns about whether Georgetown has fallen behind on our infrastructure for Water and Wastewater.  These are legitimate concerns, and not ones which can be answered "once and for all" -- the whole "water" supply and production process really demands revisiting from time to time, and now is a good time.  

Potable Water  

Let's begin by distinguishing between our supply of raw (untreated) water and our ability to produce treated (potable) water for customer consumption.  A prior City Council directed the City Staff to use a 50-year time horizon to plan for potable water and to have enough raw water supply, and treatment capacity over time, to accommodate growth in that time-horizon.  The reason for the 50-year horizon is that it takes much longer to develop and secure water than it does for other resources which are needed to accommodate growth (such as electricity or roads).  

The City Staff prepared the following chart showing our supply of raw water versus projected demand (based on the forecast rate of growth).

 The Yellow Line depicts the demand for raw water based on current usage and forecast growth. The lower Green Line shows that same relationship, but with conservation.  In either case the data indicates the City has more than enough raw water to meet the demands of growth until around 2050 (and beyond, depending on the assumptions about conservation).  But after that the City will need additional raw water -- and that will be a priority task over the next few years.*  

In the meantime, the next question is: Does the City have enough treatment capacity to convert the raw water into potable water to meet demands?  

The simple answer is yes, for the time being -- but not over the long haul.  In order to meet the demands for potable water, the City needs to increase its treatment capacity.  The strategy to manage the gap between the demands for treated water, and the ability to treat the available raw water is: 

1.  Have enough water treatment capability to meet the average daily demand for potable water.2.  Use storage tanks to manage the daily variation in demand by producing potable water during periods of low demand, then releasing the water into the system as the demand increases throughout the day.3.  When the immediate demand for treated water exceeds the supply, restrict irrigation to reduce the demand.**4.  Before the average daily demand for potable water exceeds the current capacity, expand the current capability and/or build a new water treatment facility.  

To support this strategy, the City has developed a capital improvement plan which:  

1.  Expands the water storage capacity by adding above ground and ground level tanks (e.g., the new Sun City Elevated Water Storage Tank, and a similar one on DB Wood). 

2.  Expands the current Lake Treatment Facility (behind HEB on Williams Drive). 

3.  Sets in motion a process to build an entirely new Water Treatment Facility (The South Lake Plant), beginning in 2021, at a total cost of approximately $100 Million.  (The new facility will be located, as the name implies, on the South Side of Lake Georgetown.)  

This, in simple terms, is "just in time" potable water -- which conforms with the objective of staying ahead of "growth" but not so far ahead that we build unneeded infrastructure and incur an unwarranted tax burden.

Raw Water 

I see where Georgetown is selling a lot of excess water to the "Blanchard" Company -- some 10,000 acre feet.  What's the deal here -- did we buy more water than we needed and now we have to sell it at a loss, just like the electric company?  

In 2006 we "exchanged" House Bill (HB) 1437 water in the LCRA basin for 10,000 acre-ft of water from the Brazos River Authority (BRA).  Round Rock contracted for the HB 1437 that we released.  At the time, Round Rock had determined that HB 1437 water made more sense (due to proximity) than water in the Stillhouse/Belton system.  We also determined that BRA water made available through the Williamson County Regional Raw Water Line (WCRRWL), via the Stillhouse pipeline made more sense than moving water from the south (at its higher cost due to the inter-basin transfer provisions of HB 1437).  

The acquisition of water is guided by prior Council direction to maintain a 50 year water supply.  The long time-horizon is because water resources take substantially more time to develop than energy sources.  Current surface water supplies in Central Texas are fully contracted with the exception of 3,472 acre-ft of HB 1437 water that BRA is holding for us in anticipation of contract execution sometime in the near future.  Ground water supply through the aquifers that we overlay is fully utilized.  Other Ground water supplies are being evaluated, but will be much more costly than our current sources.  

The Blanchard contract allows another entity (the Blanchard Corporation) to use a portion of our contracted water (the portion that we do not use now, and will not fully use until the water system doubles in size) until we need it sometime after the end of the deal in 2029.  

The BRA system rate has changed almost every year since 2006 when the rate was $49.65 per acre-ft.  The current BRA system rate is $79.00 per acre-ft.  Per the terms of the Blanchard deal, Blanchard will pay us 125% of our cost ($98.75 per acre-ft in 2020.)  The price to Blanchard will continue to be 125% of our cost (set annually by BRA).   

It's important to note that the terms of our agreements for all of our surface water supplies are that we pay for the water regardless of whether or not we use it.   At the current point in time, we pay for what we use annually at this point of growth (44,000 connections) AND 23 years of future water supply (enough for approximately 96,000 connections).  Put more simply, the current 44,000 customers are paying for water resources needed for 96,000 customers. This "long" position is required to allow for growth given the nature of water resource contracting.  The Blanchard revenue offsets the current cost being borne by current customers to allow additional infrastructure or resource investment without putting pressure on current rates.

The only additional relevant information with respect to the Brazos River Authority water is that it is in Belton Lake and there is currently no way to get that water to Georgetown. Thus it makes sense to sell the water to Blanchard who can access it through the Brazos River.

There is an ongoing effort to get a pipeline between Belton Lake and Stillhouse Hollow Lake which will give Georgetown access to the Belton Lake in the future.

Georgetown Continues to Lose Money on Solar and Wind Contracts

In the Guide to Georgetown, a magazine published by The Wilco Sun, it was reported that the City continues to lose money. The loss is now up to $33M.

Georgetown exceeded its budget by $5.6 million as of June 2019, and it had to sell surplus renewable energy at prices below the purchase price. The amount brings the total over-budget figure to $33 million since 2016, the first year Georgetown began using renewable power. 

The city ended its contract with LCRA in 2012 and signed a 20-year contract with Spinning Spur 3 for wind energy in 2013 and a 25-year contract with Buckthorn Westex for solar energy in 2015.

Georgetown is reaping another benefit (sarcasm) on the electric debacle.

Rating agency Standard and Poor’s lowered Georgetown’s electric and water utility bond rating from AA to AA- May 28 as a result of the city’s problems with its renewable energy contracts. 

No problem says the City Manager! So what if the City has to pay higher interest rates on future bond sales, including roads and water bonds!