Putting Lipstick on the Georgetown Electric Fund Pig

The City is moving money around within City accounts to make the Electric Fund look better. But, it does not change the bottom line that the Fund has and continues to lose money. Check the 11/27/2019 edition of the Wilco Sun to see more analysis. According to the co-publisher of the Sun, the Electric Fund has lost $11.1M this year for cumulative losses of $38M since this debacle started.

Here is the chart being presented at the 11/27/2019 Council Workshop.

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Here is the City explanation of the adjustments.

2019 Electric Fund adjustments

There are several proposed amendments in the Electric Fund both on the revenue and expense accounts. The purchased power budget must be amended to $58,465,559 and the CRR Credits be amended to $-2,821,759. This is a result of increased costs for purchase power and transmission of purchased power. The following actions mitigate these increased costs. First, staff proposes to sell land owned by the Electric fund to the Fleet Fund. This site on FM1460 will be the future home of the Fleet Services Shop identified in the facilities study. The land sale totals $481,927. There is a corresponding amendment in the Fleet Fund.Next, staff proposes the Water Fund purchase the Electric Fund’s portion of the Westside Service Center as well as reimburse the debt service payments made for the facility in the past. The purchase of the building totals $356,895, while the previously paid debt service principal and interest totaled $470,000 and $305,234 respectively. The Water Fund will also assume the remaining liability on the facility, shown as $1,562,500 under non-operating transfers in.The third proposed amendment is to increase the transfer amount from the South Georgetown TIRZ Fund to the Electric Fund by an additional $85,405 for capital infrastructure investment from previous fiscal years. This is also under non-operating transfer in.Fourth, the amendment proposes selling a portion of the City's fiber network owned and operated by Electric to the IT Fund for $645K. A multi-year plan will be developed to sell the remainder to IT and allocate costs to all using departments. Other amendments include recognizing utility revenue ($1.2M), decreasing operating expenses ($440K), decreasing the Return on Investment transfer to the General Fund ($500K), recognizing not moving forward with the Bloomberg Grant ($100K), selling Renewable Energy Credits in the amount of $722K, selling scrap material for an additional $10K, increasing debt service expense by $500 to account for handling fees, and decreasing capital project expense by $160K.

Georgetown Giving Away Your Money Again!

It looks like the City is giving away your money to big corporations again. Check out this agenda item on tomorrows City Council agenda.

In addition to very favorable electric rates, the City is prepared to give away a portion of the City's sales taxes and property taxes. 

Its time to ask your council person how much this is estimated to cost. Don't take "it depends" for an answer! Make them give you a credible estimate.

City of Georgetown, Texas City Council Regular Meeting November 26, 2019

SUBJECT: Consideration and possible action to approve an economic development retention agreement with Citigroup Technology, Inc. -- David Morgan, City Manager

ITEM SUMMARY: Citigroup Technology, Inc. opened a 300,000-square-foot data center in Georgetown in 2008 and has since become one of the most significant energy consumers in the City. The previous economic development agreement with them expired last year, and a new agreement is necessary to retain the current operations and encourage capacity growth within the existing facility. Retention Incentive: The all-inclusive rate of $0.062675 per kWh will be applied for energy used at the property beginning November 1, 2019. Following a May 1, 2020 compliance certification, the rate will be reduced to $0.053170 per kWh, and will be reduced a final time to $0.033465 following a compliance certification on November 1, 2020. The requirements to qualify for these rates are to maintain a 12-month average of a minimum of (i) 92% load factor for electricity for the Property; (ii) 6,000 kW of demand usage of electricity for the Property; and (iii) and a minimum of 4,000,000 kWhs of usage of electricity for the Property calculated by City for the prior 12-month period prior to each May 1 and November 1 of each calendar year during the five-year eligibility period. If Citigroup falls out of compliance with any of the minimum qualifications for the retention or expansion incentive, all incentives would be forfeited for the following 6-month period and an all-inclusive rate of $0.076920 per kWh would be applied until the next compliance certification showing they have met the requirements.

FINANCIAL IMPACT: Total financial impact would depend on final usage by Citigroup.

SUBMITTED BY: David Morgan, City Manager

ATTACHMENTS: Description Agreement - Citi Retention Citi Presentation

Apple Property Has Zero Value??

The 125 acres that Apple ownes on Parmer Lane in Southwest Williamson County has zero value according to the Wilco Tax Appraiser. How can this be?

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Bus Service Cost in Georgetown!

Georgetown initiated a bus service that services 4 routes in FY 18. That was the first year of an implied 3 year commitment. Following is the budget.

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Notice that the Federal Transit Administration has provided a grant of $265,383. That is another public subsidy.

And here is the ridership and cost for FY 18.

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So the cost per ride is $36.00 and the City picks up $15.70 directly.

The City recently conducted a pilot program using Lyft to provide transportation on demand. They budgeted $25,000 for this program. Here are the results:

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There were approximately 4200 rides provided for 863 users at a total cost of $45,872. That works out to $10.76 per ride compared to $36.00 per ride for GoGeo. This total cost per ride is even less than the subsidy Georgetown provides for GoGeo.

It seems like a "no brainer" to curtail the GoGeo program and use ride sharing to subsidize those in the City who need transportation.

There is still a question of the City's liability for subsidized ride shares that is being addressed with the City's insurance company.

Stay tuned as there are other options for subsidizing transportation that the staff is investigating.

How is Georgetown's Employee Retirement Fund Doing?

The short answer is: "The trend is in the wrong direction". Here is the data from the most recent reporting period showing the net performance of the Texas Municipal Retirement Fund using 5 year rolling returns.

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The chart shows that the total net return over the last 5 years is 5.4% versus a benchmark or projected return of 6.75% annually.

In addition, the long term trend is down.

The TMRS board needs to lower their assumed rate of return to more closely match actual performance. Recall that the lower the assumed return, the more the fund is under-funded. To insure the fund is adequately funded will required greater contributions by the employees, the City, or both.

There is another risk that portfolio managers have not recognized, but is now becoming public. “They can no longer get their money out,” said the investor, a builder of global institutional portfolios.

“Allocators who made private equity investments in mainland China over the past 5-10yrs are now trapped,” he continued. “Not metaphorically trapped - they’re literally not permitted to move cash proceeds out of China as those investments are sold. The problem is widespread and the sums so large that we now have internal people focused on helping these allocators hedge the exchange rate risk.”

There is another risk with respect to China in that China is selling Chinese company stock into the US stock market where institutional investors, such as pension funds, purchase the stock. The Chinese use these funds to attack America economically.

There is budding recognition of this fact and at sometime in the future, the Federal Government may prohibit American investment in Chinese companies.

This would have a significant negative effect on the value of the TMRS fund value, for example.

It is unclear at this time what the percentage of TMRS's investments are in Chinese companies, but it is definitely greater than zero.

Is Renewable Energy a Failed Experiment?

Three decades, massive subsidies and yet intermittent wind power’s contribution to world energy needs remains little more than a rounding error.

Electricity that can’t be delivered as and when it’s needed has no commercial value; massive subsidies are the only ‘value’ that attracts investors to wind and solar. Cut the subsidies and wind and solar investment would evaporate, overnight.

As Gail Tverberg explains, chaotically delivered wind and solar have never worked in the past. So, there’s no reason to expect that they’ll ever work in future. In a sane and rational world, we’d call it a ‘failed experiment’, clean up the mess and move on.

The indirect costs of renewable energy are never included in the calculation of their costs. These costs are not insignificant and include the following:

(1) Transmission costs are much higher than those of other types of electricity, but they are not charged back to wind and solar in most studies.

(2) With increased long distance electricity transmission, there is a need for increased maintenance of transmission lines. If this is not performed adequately, fires are likely, especially in dry, windy areas.

(3) A huge investment in charging stations will be needed, if anyone other than the very wealthy are to use electric vehicles.

(4) Intermittency adds a very substantial layer of costs.

(5) The cost of recycling wind turbines, solar panels, and batteries needs to be reflected in cost estimates.

(6) Renewables don’t directly substitute for many of the devices/processes we have today. This could lead to a major step-down in how the economy operates and a much longer transition.

(7) It is likely that the transition to renewables will take 50 or more years. During this time, wind and solar will act more like add-ons to the fossil fuel system than they will act like substitutes for it. This also increases costs.

Do We Have Too Much Faith in Models? 

The idea of using renewables certainly sounds appealing, but the name is deceiving. Most renewables, except for wood and dung, aren’t very renewable. In fact, they depend on fossil fuels.

The whole issue of whether wind and solar are worthwhile needs to be carefully analyzed. The usual hallmark of an energy product that is of substantial benefit to the economy is that its production tends to be very profitable. With these high profits, governments can tax the owners heavily. Thus, the profits can be used to aid the rest of the economy. This is one of the physical manifestations of the “net energy” that the energy product provides.

If wind and solar were really providing substantial net energy, they would not need subsidies, not even the subsidy of going first. They would be casting off profits to benefit the rest of the economy. Perhaps renewables aren’t as beneficial as many people think they are. Perhaps researchers have put too much faith in distorted models.

City Expanding Functions

Did you know that the City aims to become a nationally recognized arts destination by 2030? That is what the City's Arts and Culture Coordinator recently told the Community Impact Newspaper.

Here are their published goals.

The 2020 budget allocates approximately $37,000 to this activity, but if these goals are accepted by Council, the budget will significantly increase as well as the staff as identified in goal #8.

Is this the proper role of a city government? It seems city government's core functions are public safety, maintain and build roads, maintain and operate parks and operate the library.

Other functions are self-assumed by Council and they just levy more taxes to pay for these additional activities.

It is time to let your council know that you do not support expansion of government into non-core functions.

Georgetown Receives More Notariety!

Another unflattering article entitled How 100% renewables backfired on a Texas town has been published.

The article captures the primary issues, but, then allows the Mayor to obfuscate the problem by claiming "in the long run, it will be good for the city ratepayers and for the environment".

In all, the city contracts for more electricity than its municipal utility needs to serve customers — and that's been a problem. Surplus power is sold into a market hampered by weak prices, often delivering financial losses instead of the returns Georgetown expected.

The Mayor continues to defend the decision to go 100% renewable as an economic decision. But, if that is true, why has the Mayor continually advocated in movies and on national television the environmental benefits. Al Gore anyone?


Check out this clip: https://www.youtube.com/watch?v=t-llelAbVWc
At last count the City has lost $33M and the losses continue.

Will those losses ever be paid back to the taxpayers and ratepayers of Georgetown? If you believe that, I think there is a bridge in New York for sale at a bargain price.

Councilman Triggs Townhall

Councilman Triggs held a townhall meeting for his Sun City constituents yesterday. Here are several observations gleaned at the event.

Wayne Dawson was his campaign manager. Triggs spent the least $ per vote of any candidate.

Triggs focused on keeping property tax rate constant.

Admitted property taxes increased 1.6% due to increased appraisals and new property.

He used the Washington Monument defence when talking about reducing the city budget. That is, they would have to cut public safety services first.

He does believe the electric company should not contribute $4.5M or any amount to the general fund. He said is a minority of 1 on this issue.

He would like the city to go to a calendar year budget as it would give more time between when appraised values are available, late July, and budget adopted by September 30.

He stated all actions should be viewed through the prism of; is it legal; is it prudent; and is it ethical.

He believes the electric company should be separate from other city functions both management wise and financial.

Believes the newly hired electric company manager is well qualified.

The council has received 2 credible bids with incentives to manage the buying and selling of electricity for the city.

The city has started separating electric assets from other utility assets as the first step in separating the electric company from the other utility operations.

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All the utility bonds, regardless of use, have the electric company responsible for guaranteeing the payments. This will take a long time to correct.

About 80% of electric company customers are city property tax payers. The other approximately 20% of city tax payers are serviced by PEC.

X-walk lights in Sun City generated lots of discussion at a cost of $39K each.

Majestic Oaks also generated lots of heat and discussion, but, Triggs believes there are no solutions that would not require extended litigation and that would likely fail.

He was not supportive of bike lanes that would intrude on or take vehicle traffic lanes.

He was not supportive of spending tax payer $ on electric charging stations. Looking at lease options.

Georgetown Airport Going Regional?

It has been reported in the Wilco Sun that the City is considering a name change for the airport by appointing a committee to consider such a change.

During the regular meeting, the council will consider appointing two council members, City Manager David Morgan and two assistant city managers to a committee that will consider a request to change the Georgetown Municipal Airport’s name to the Johnny Gantt Regional Airport and the Airport Terminal Building to the Buz Landry Terminal Building.

Does this action presage a change in the type, size and frequency of aircraft usage at the airport? 

Costco is Coming to Georgetown

It looks like there’s a Costco in the works for Georgetown. The location is the 34 acres at the northwest corner of Lake-way and IH-35, just south of the new Holt Caterpillar facility.

This was discussed at the last Planning and Zoning meeting.

“Costco upon approval will develop a member’s only retail warehouse with approximately ±157,931 SF along with an attached tire center and both a liquor sales pod and Optical Exam pod area. In addition, a free standing 24 fueling position fueling facility will be developed on the Project Site. The Costco warehouse and fuel facility would employ approximately 200 to 250 people both full and part time. Currently the proposed PUD site plan consists of the proposed Costco Warehouse parcel as well as seven (7) outlots, two detention areas and two new roadways.”

Another View on Development and Road Bonds

The Taylor Press published a story on the proposed Wilco road bonds. Here is additional material that was not published.

Dana Boehm Here is the rest of my Q&A - I knew he couldn't publish it all, but I wanted the media to know that we know the names who are profiting. Here is the rest of the Q&A that was too much to publish: Why are you standing up to this bond?

The Commissioners Court, Cities, Engineers, Consultants and the political alliances have their
own agenda and the citizens’ wants and best interests are in no way part of that agenda.
At every Williamson County open house and Citizen Bond Committee public input, the vast
majority of public input was AGAINST the projects. Aware, informed citizens are against the proposals and their associated destruction and debt.

From attending and speaking at every open house, committee meeting, requesting open records and reaching out to every level of engineers assigned to the corridor projects, I have been left without any consistent answers, often with no answers. We have been dismissed, disrespected, deceived and questions continually deflected at every single encounter by every single representative of the County and taxpayer-funded engineering firms.
If the bond does pass, what do you think will happen next?

The Houstonization of Williamson County, afterall, Houston is what Williamson County engineer Bob Daigh stated was Wilco’s model for their transportation plan (Daigh stated this on August 24, 2017 – the day Houston started evacuations from the flooding of Hurricane Harvey).

What has been built and honored by my family for 129 years, this bond package and the
Southeast corridor will destroy. The corridors are planned for every 5 miles running North and
South with connecting arterial roads every 1 mile, spanning North and South and East and West.

No farm or ranch land will remain, and any fragmented areas will be so flood prone it will be unsafe to house livestock.

How does the bond proposal effect you directly?
My brother and I are the 5 th generation of farmers and ranchers in the Boehm family, with my nephews being the 6 th generation to carry on this stewardship of this treasured Blackland.
Boehm Farms is one of the larger farming operations in Williamson County, with my brother
farming 4000 crop acres. It is a heavily invested, successful business – one that takes decades to
build. We have continuously been treated with disrespect, that unbeknownst to us, we have
surpassed our expiration date; we are taking up the space on the map they are looking at in
some engineering office that some developer covets.

What is the most significant reason you believe people should learn more about the bond
before voting?

The millions spent on the open houses and Citizen Bond Committee meetings were all a
formality to make the appearance they were taking into consideration the needs and wants of
citizens. They did not take into consideration anything the thousands of us said. The corridor
plans were set into motion in 1999 by people who are still very much invested in the realization
of their plans. This is insider trading on every level at the devastating cost of land owners, taxpayers; those on fixed incomes being taxed out of their homes.

How long have you lived in Williamson County?
Born, raised and resided in East Williamson County for all of my 43 years.
What part of Williamson County do you live in?
FM 3349 & FM 1660 (Norman’s Crossing), Taylor
What part of the bond proposal effects the area where you live?

Williamson County debt affects every resident, regardless of homeowner, large landowner, landlord, or renter. You will feel the impact of tax rate increases and increased appraisal values for years to come.

The Southeast Corridor/Loop will displace many lifelong family friends’ homes and businesses, active servicemen and veterans – only to make key access points for developers and corporations. We all lose what we have planned and sacrificed to build all for outsiders to gain.

Why do you believe the bond has been presented the way that it has?
To deceive the voters plain and simple. The promoters of these bonds have an agenda that in no way is looking out for residents.
If the bond does NOT pass, what do you think will happen next?

The corridor projects have been 2 decades in the making – decades before us loyal land owners were given even a glimpse of plans for our community and futures, despite our regular efforts for over 10 years and were told there were absolutely no plans for our area.

The Commissioners Court, City of Hutto and City of Taylor have made too many private and questionable agreements with developers and especially the McAlister Group. The Rail Station cannot be realized without insiders who have promised the Southeast Corridor and overpass will be constructed. I feel the McAlister Group will pull out of their agreement due to lack of infrastructure.

However, there are so many politically connected who purchased land within the last 20 years, who had insider information knowing where the corridors routes would be, that they will push for other means of funding. In 2018, Williamson County only applied for CAMPO funding for the Southeast Corridor, making it clearly their priority project. I feel they will reapply for CAMPO funding once CAMPO puts out another funding call.

And us citizens will not grow complacent – we will continue to fight for our land; for our neighbors and the rights of citizens on a fixed income to live without fear of being taxed out of their homes.

Confusion on State Proposition 4

It is late to clarify this proposition, but there is so much misinformation on this subject. Let me explain Prop 4 very simply.

The current Texas Constitution ALLOWS the legislature to pass a law instituting an income tax with a simple 50+% majority. The tax does NOT take effect until a majority of registered voters approve in a statewide referendum.

Prop 4 eliminates the current wording in Sec. 24 of Article VIII, above, and replaces it with the ballot wording. "The legislature may not impose a tax on the net income of individuals ....."

Passing prop 4 makes it a constitutional amendment.

For this constitutional amendment to be over turned requires 2/3 approval of both state chambers to place another new amendment on the ballot. That new amendment would likely require a simple majority to pass in order to repeal Prop 4 and add language allowing a income tax.

Thus, it is clear that the current constitution does not PROHIBIT a state income tax and if Prop 4 passes it will not PROHIBIT a state income tax. It will just require another constitutional amendment, which requires 2/3 approval by the legislature, to be placed on the ballot for voter’s approval/disapproval.

Bottom line - Prop 4 raises the bar from simple majority to 2/3 majority for the legislature before a proposed tax can be placed on the ballot.