What About the Ratepayers?

question-1262378__340The Key Largo Wastewater Treatment District (District) is fighting over the staffing plan.  Commissioner Andy Tobin has long expressed concerns over staffing issues and a lack of transparency.  Rather than seeing to it that these matters are addressed constructively, Commissioner Steve Gibbs has attempted to make this a personal issue – siding with staff and denigrating his colleague for simply asking questions.  That seems to be the way of things these days.

The latest argument is about Rob Bulkiewicz, who is set to be promoted and given a sizable pay increase according to press reports.  I’d rather not get into the details of this particular situation, but the latest blow-up provides an opportunity to discuss what’s really important:  the ratepayers.

Here, briefly, are my concerns.

The District is paying the salaries, but are they getting the qualifications?

Does merely asking the question constitute an “attack” on staff as some would have us believe?  I would say no.  In fact, I think board members have an obligation to ask.  But there does seem to be an attitude that asking questions is a no-no.  I’ve run into that myself.  I’m sure that if Tobin had received satisfactory answers, we wouldn’t even be having this discussion.

When Commissioner Tobin insists on a more rigorous and transparent approach to staffing decisions, he’s not trying to start a petty personal argument.  He’s trying to do his job as a board member.  If a person is hired or promoted into a position for which they don’t have the customary qualifications, the board ought to be asking questions.  That goes to the General Manager’s decision-making ability, and it’s the board’s job to manage the manager.

Like it says in the header:  if the District is paying the salaries, they ought to be getting the qualifications.  It’s up to the board to see that they do.  Reasonable people can certainly disagree on what qualifications are required to perform a given job and what salary might be justified.  There is plenty of guidance out there to come to some kind of consensus.

Two years and still no functioning asset management system.

When I resigned in 2014, the District was abandoning the Cityworks asset management system.  It’s a good system, but it was too sophisticated for the District’s relatively small operation.  The board had approved BS&A as its replacement and was in the process of implementing it at the time.  My understanding is that BS&A has now been abandoned as well, and there is nothing to take its place.

In fairness, asset management is something that many utilities struggle with, especially smaller ones.  However, the District isn’t all that small, and it’s system is new.  It would be ridiculous and wasteful for them delay and then have to play catch up.  The board has a $154 million investment to protect.  The ratepayers are still paying for it, and will be paying for years to come.

Early on, one could rightly blame staff for the lack of an asset management system.  But two years later, it’s clear that the board has failed to hold staff accountable for results.  There is no plan.  There are no milestones.  There is no discernible progress.  And three-fifths of the board seem perfectly fine with that.  At $400+ per commissioner per meeting, the ratepayers have the right to expect results.

No solid plan for financial relief.

This is inexcusable.  Just so you know, I’ve never met a ratepayer who opposed paying a lower sewer bill – except Sylvia Murphy.  As discussed here, the Key Largo area is facing an affordability issue when it comes to the wastewater system.

Current General Manager, Paul Christian, negotiated the swap agreement with the county in May of 2015.  The county actually made its first payment shortly thereafter.  The county is legally obligated to abide by the swap agreement.  That means that financial relief for Key Largo ratepayers should be on the horizon.  But a year later – nothing.  No plan, no timeline, no rate study.  A vague promise that something might happen in 2018.  It just seems like more spending initiatives keep coming up – new building, solar panels, and now salary increases.

Somehow the rhetoric has flipped from providing financial relief to the ratepayers to paying down debt.  Well, who’s paying down that debt?  If you said “the ratepayers”, you are correct.  Islamorada paid some of it, but the vast majority has been paid by Key Largo customers.  Comm. Gibbs, in particular, seems to have abandoned the idea of financial relief and is spinning debt reduction as the ultimate goal.  From the article at KeysNews.com:

Gibbs also expressed confidence in the abilities of Christian and his staff:

“We have paid down our debt to build the $160 million plant and collection system from $81 million in November 2012 to $49 million today primarily under his leadership. In about two years we expect to begin reducing rates for every homeowner and business in the District. This is what a team can do with leadership such as we have.”

Gibbs has made this extremely misleading claim before.  I debunked it here.  Most of the debt reduction was accomplished simply by making regular debt service payments as required by the terms of the loans – using ratepayer money.  This fiscal year, the District is making an additional $3.3 million debt payment.  Some of that will come from the county’s first payment on the swap agreement.  The rest presumably comes from operating revenues and/or reserves.

I understand that paying down debt is a necessary intermediate step, but Gibbs ought to be telling us what the plan is for financial relief.  I understand there’s a perceived stumbling block in 2018 because the gap between assessment revenue and debt service payments is about $2 million even with the county’s payment.  But if the plan is there, it sends a signal that the District is truly committed to providing financial relief.  Besides the District ought to take the intermediate step of doing a rate study to guide them in reducing rates.  The District needs to also plan for major repairs and replacements long-term.  That means they need to get that asset management system in place.

Bottom line:

The District board has a responsibility to the ratepayers.  Only two of the five even bother the ask questions and attempt to collect the information needed to make good decisions.  One has stated that the General Manager should be regarded as a “god”.  He’s appointed himself as the protector of staff, which is occasionally necessary, but it’s the ratepayers that he should really be looking out for.  The other two just bob along with the current.

Maybe the election will freshen things up.

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