EDITOR:
The memo below was originally sent to Riss Lake homeowners through the HOA site. Alderman Brian Whitley then submitted it to the city clerk as public comment. At last Tuesday’s meeting, the board of aldermen voted 7-0 to increase sewer rates 3%, thus confirming my point at the end of the memo. This is the second increase in six months; rates were increased 6% in July 2021.
During the meeting, Alderman Bob Lock made a statement to the effect that I don’t want to be part of the solution. For the record, on three separate occasions last year, I offered my time, at no cost to the city, to teach them the basics of rate structure mechanics. The only sound coming from City Hall was crickets. Further, if Mr. Lock is the rate expert the mayor proclaims him to be, why hasn’t he taken charge of this matter?
For the likes of Mr. Lock, Mayor Johnston and anyone else who thinks I am the problem, they should go look in a mirror.
Response to Brian Whitley e-Neighbors Post from February 11, 2022
From: Gordon Cook
Mr. Whitley: “On Tuesday, February 15th at 7:00pm, the city will hear a proposal for a 3% sewer rate increase. The public is invited to comment on the rate increase (is it fine, should be 0%, should it match inflation at 7%+, should it be something else?).”
Alderman Whitley invites comment for various rate increase options, including:
1. 3%, as that is the lowest rate increase in recent years, and they think you won’t mind.
2. 0%, based on what, that 0% is not 3%?
3. 7%+, to match inflation, since they think you are dumb enough to believe that sewer costs are directly correlated to general inflation numbers concocted by the feds.
As I demonstrated last year in two separate presentations to the board of aldermen, the city sets sewer rates without taking into consideration long term capital costs (see below), but more importantly, the city is using the Sewer fund (i.e., sewer customers) as an ATM to pay General fund legal fees.
The October 14, 2021 Sewer report showed a projected 2021 Admin fee of $295,000 and $310,000 for 2022. The actual 2021 charge was $350,000. The projected 2022 cost is $350,000.
The city believes it takes over $500,000 ($450,000 via the Baker Tilly calculation plus staff costs directly charged to the Sewer fund) to manage a sewer system for less than 1,900 customers. Keep in mind that sewer plant operations are fully outsourced to a third party, meaning staff has little or no involvement.
The city hired Baker Tilly to provide a mathematical worksheet to derive the $450,000. The reality is that the Baker Tilly report and amount are rubbish.
At the July 6, 2021 board meeting, the city’s engineer claimed that it was too hard to estimate future costs. From the July 6, 2021 board minutes:
“City Engineer Jay Norco, North Hills Engineering, stated that staff forecast expenses 10 years into the future and there was guesswork involved in determining the life of each part of the sewer system, which made it hard to forecast in years five through 10. Upgrades with a big price tag would be required in the future for capital costs that would also increase the annual costs.”
As to forecasting future costs, consider a life insurance actuary whose job it is to estimate how many of the insurance company’s insureds are going to die over a time period in order that the company can set aside sufficient reserves to pay death benefits. Are estimates involved? Absolutely. Does that mean the actuary avoids doing his/her job? No.
How would Riss Lake homeowners respond to the HOA board if FSR said estimating future replacement costs for the assets in Riss Lake was too hard, and as a result, FSR recommended increasing dues 7% to match inflation? Or if the HOA board increased the FSR management fee during the year simply because they didn’t spend the money elsewhere?
In each instance when I appeared before the board of aldermen last year, the mayor sicced Alderman Bob Lock on me, stating that since Mr. Lock is a government auditor, he was qualified to speak on rate structure. It was the mayor’s attempt to bully and silence me. Mr. Lock in one board meeting stated that my input “.has little credibility, not worth the breath to discuss it.there are 50 things I could point out.” I challenged Mr. Lock to detail those 50 things. Neither he nor any other city official has responded to me in reference to his baseless assertions. Bullies rely on intimidation, not facts.
Desperate measures:
.In 2014 and again in 2021, the city considered selling the sewer system. The 2014 review was due to the Brush Creek and Brink Meyer Road NID debt (now Creekside) that was exploding in their faces, and they needed money. The city was staring at a bond default (technically, the city was insolvent).
.Selling the sewer to a private party would result in three additional rate components: finance costs over and above the current cost, return on invested capital (i.e., profit), and income taxes.
.Selling to a third party may cause rates to increase substantially depending on the buyer’s estimates of asset replacement costs and their operating costs.
The board thinks you’re stupid. They think you won’t notice another increase, even though sewer rates have increased 50% since Nan Johnston has been mayor. The board thinks you won’t notice that the reason sewer rates have increased since Ms. Johnston has been mayor is primarily due to the Admin charge to the Sewer fund (i.e., their ATM). Understand that if the city going is to pay for defense attorney fees and legal settlements, it has to extract additional money from someone, and that someone is sewer customers.
The city spent over $250,000 on legal fees to defend itself in the Jason Maki lawsuit. Mr. Maki is not an attorney, represented himself, and collected a $195,000 settlement. The city’s legal meters are still running as it now has four law firms on retainer, one being a criminal defense attorney.
For those who may not be aware:
.The city is under criminal investigation by the Platte County Sheriff’s Department.
.The mayor is under investigation by the Ethics Commission.
.City officials have refused to testify in-person to the Ethics Commission.
The excessive Admin fee is an unconstitutional tax and can otherwise be labeled theft. They only way things are going to change at City Hall is to change the guard at City Hall, and to cut loose those behind the scenes orchestrating the shenanigans over the last 20+ years.
Now back to Alderman Whitley’s proposal for the rate increase. The board of aldermen refuses to acknowledge that the city doesn’t understand how to set rates. Clueless would be a better descriptor.
None of the options Mr. Whitley presents are based on appropriate rate methodology. He asks for your input, but it’s all for show. He and the other aldermen will vote how they are told to vote. That’s how he and the others respond if they want to continue to be members of the club. If he votes against an increase, it too will be for show and as a result of knowing in advance how the others will vote.
–Gordon Cook
Parkville