TOWN HALL: Utility oversight is a joke (poll)

Voters must amend their city charter

January 14, 2012 7:12 PM

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WAYNE LAUGESEN

FOR THE EDITORIAL BOARD

Still, there is work to be done.

Structural problems with local government became apparent again on Thursday, when Mayor Steve Bach announced his refusal to sign off on a $150 million line of credit for Colorado Springs Utilities. Bach insists the request was sprung on him without advance notice or discussion. The quasi-governmental enterprise must have the mayor’s signature in order to incur debt against the full faith and credit of city property owners and other taxpayers.

Here’s the awful part. While the community’s utility company needs the mayor’s permission to incur debt, the mayor has no other authority over the utility. So, the mayor has been asked to put the financial interests of his constituents at risk for the benefit of an agency he cannot control. It’s like a young couple asking old Uncle Harry to co-sign for a mortgage after telling him to stay out of their lives. Uncle Harry, having no meaningful relationship with the borrowers, has no means of managing the risk they pose. So thank you, Mayor Bach, for responsibly respecting the interests of those whom you were elected to serve. We need to figure out the utility’s immediate need for adequate credit, but we mustn’t do so without due diligence.

City documents explain that the line of credit would provide liquidity necessary to satisfy requirements of credit-rating agencies. In other words, the line of credit may not ever be used and has not been used in the past. But it still puts residents at risk, in the event it gets used, and it costs $140,000 in annual fees.

Colorado Springs Utilities is a reputable organization, with a great credit rating, mostly because of a strong and competent executive team led by CEO Jerry Forte. But executives can come and go at whim, and without a sensible structure of governance the utility could easily pose a financial risk to the residents it serves.

Today’s governance of Springs Utilities is laughable. The City Council on occasion pretends that it is no longer the council and has magically transformed into the board of directors of the utility. The pretense is supposed to ease any concern the little people may have about the obvious array of conflicts involved in the ridiculous arrangement. Example: The council cannot raise taxes, by state and city law, without asking taxpayers. It can, however, raise utility rates without asking. This creates constant temptations to charge ratepayers for all sorts of expenses politicians would like to create without the burden of asking voters. A legitimate, independent utilities board would be inclined to protect against political raids on customers of the enterprise. Additionally, members of the council have no special expertise regarding water and energy. In essence, we have a utility that is mostly governed by its own employees, with customers who are at risk of a third-party political body using it like an ATM.

To fix all of this, we need an amendment to the city charter on an upcoming ballot. It should require that Colorado Springs Utilities executives answer to the mayor. It should establish a governing board, separate from City Council, with members who are mostly industry experts chosen by the mayor and confirmed by the council.

Our community’s public utility is far too important to operate as a potentially rogue organization with a board that best defines the phrase “conflict of interest.” Voters, let’s fix this amateurish, structural fiasco. It’s your city; your utility.

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City voters made tremendous progress toward bringing order and accountability to city government when they overwhelmingly voted in November of 2010 to make the municipality’s chief executive an elected servant who answers to the public.
Still, there is work to be done.
Structural problems with local government became apparent again on Thursday, when Mayor Steve Bach announced his refusal to sign off on a $150 million line of credit for Colorado Springs Utilities. Bach insists the request was sprung on him without advance notice or discussion. The quasi-governmental enterprise must have the mayor’s signature in order to incur debt against the full faith and credit of city property owners and other taxpayers.
Here’s the awful part. While the community’s utility company needs the mayor’s permission to incur debt, the mayor has no other authority over the utility. So, the mayor has been asked to put the financial interests of his constituents at risk for the benefit of an agency he cannot control. It’s like a young couple asking old Uncle Harry to co-sign for a mortgage after telling him to stay out of their lives. Uncle Harry, having no meaningful relationship with the borrowers, has no means of managing the risk they pose. So thank you, Mayor Bach, for responsibly respecting the interests of those whom you were elected to serve. We need to figure out the utility’s immediate need for adequate credit, but we mustn’t do so without due diligence.
City documents explain that the line of credit would provide liquidity necessary to satisfy requirements of credit-rating agencies. In other words, the line of credit may not ever be used and has not been used in the past. But it still puts residents at risk, in the event it gets used, and it costs $140,000 in annual fees.
Colorado Springs Utilities is a reputable organization, with a great credit rating, mostly because of a strong and competent executive team led by CEO Jerry Forte. But executives can come and go at whim, and without a sensible structure of governance the utility could easily pose a financial risk to the residents it serves.
Today’s governance of Springs Utilities is laughable. The City Council on occasion pretends that it is no longer the council and has magically transformed into the board of directors of the utility. The pretense is supposed to ease any concern the little people may have about the obvious array of conflicts involved in the ridiculous arrangement. Example: The council cannot raise taxes, by state and city law, without asking taxpayers. It can, however, raise utility rates without asking. This creates constant temptations to charge ratepayers for all sorts of expenses politicians would like to create without the burden of asking voters. A legitimate, independent utilities board would be inclined to protect against political raids on customers of the enterprise. Additionally, members of the council have no special expertise regarding water and energy. In essence, we have a utility that is mostly governed by its own employees, with customers who are at risk of a third-party political body using it like an ATM.
To fix all of this, we need an amendment to the city charter on an upcoming ballot. It should require that Colorado Springs Utilities executives answer to the mayor. It should establish a governing board, separate from City Council, with members who are mostly industry experts chosen by the mayor and confirmed by the council.
Our community’s public utility is far too important to operate as a potentially rogue organization with a board that best defines the phrase “conflict of interest.” Voters, let’s fix this amateurish, structural fiasco. It’s your city; your utility. — Wayne Laugesen, editorial page editor, for the editorial board. Friend Wayne on Facebook; follow him on Twitter.

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