Water Water Everywhere
Fuel was added to the fire last week when Mayor Teresa Isaac got the go-ahead for the Urban County Council to start negotiating with RWE for the purchase of Kentucky American Water Company. Smoke and water are the two biggest issues galvanizing locals to get involved in how they're governed.
As for the water company, RWE, a German utility conglomerate, owns KAWC and has said repeatedly that the company is not for sale. If the negotiations fall through, Isaac has said the city could go to court for condemnation proceedings and buy KAWC. Most agree that would be the hard way (not to mention expensive). That vote would happen by July 13. The community's response-pro and con-has been vehement. A sampling follows. (In this completely non-scientific sampling of readers, the Nays had it, by a significant margin.)
"Government takeover" is bad, but takeover by a foreign corporation is good?
Sounds like a lot of folks haven't had a billing dispute with a utilities monopoly yet. These are not always easy to win, even with help from state/federal regulatory agencies. So where do you go if your water is cut off by a monopoly in Germany? The US ambassador in Berlin? NATO? UN?
Or, what would the Germans do if they decided they weren't getting enough money out of us for OUR water? If they could find a buyer-anywhere in the world, with or without US diplomatic relations-they could sell it. Then what? Would the new owners' security guards around the lake be something like an occupying paramilitary force?
Drinking water is a natural resource and a public utility. Public administration is the rule, I suspect, not the exception. Give it up to the private sector, in a separate, sovereign nation, and we'll have colonialism, "we" being the aborigines.
I am for the LFUCG ownership of the water company especially after the ice storm when we experienced no electricity for many businesses and residences.
LFUCG needs to hire someone or a company to operate the business productively and with efficiency. We also need to keep the resources in Fayette County and not in another country. We need water at all times. And also, Jacobson Park and Lakeside Golf Course are big assets to Lexington. The stockholders need to be local and as I understand, some local shares have already been sold.
Please keep the ownership local.
Don't let the school board raise the taxes on our utilities and let them cut inside the school board. There are cuts that can been done. I worked in schools and the local school board. Too many administrators getting big salaries.
Local ownership of our water system is the most important issue to come before the public since the merger to create the Urban County. Over 95 percent of cities our size own their water system. While saying it was not for sale, the shareholders of American Water Works sold our system and others to RWE three months ago. The question before the Urban County Council is whether we should buy it back. Local ownership will bring many benefits, some financial and some practical. Instead of being five or six layers down the corporate charts from the decision-makers (and an ocean away), the board of a locally-owned water system would be right here in Lexington and reporting to the Urban County Council.
Foster Ockerman, Jr.
Martin, Ockerman & Brabant LLP
Board member for Bluegrass FLOW
It is difficult to see any advantage to international ownership of a local resource for which there is no substitute, without which we could not live, and whose supply is not only limited, but actually shrinking as demand for what is available increases with the growth of population.
Anything RWE can do for us we can do better for ourselves, at less cost, and with greater benefits to Lexington's citizenry.
I am all for the idea of free trade, but selling off our freedom of control over our water supply is carrying the idea beyond all logic. Especially where international rules will prohibit us-and by "us" I mean our city, our state, even our federal government-from ever having a say in what happens thereafter.
Let's, for goodness sake, hold on to this precious element. If we don't like the results we can always trade it away later. But if we trade it away now, international law will not permit us ever to get it back.
O. Leonard Press,
I am for local ownership of the water company because I would like local accountability. The profits might reduce taxes.
While not an arguing point, I thought the water company's ads insulted the Lexington citizens and their elected officials.
In this age of ever-increasing global uncertainty, I think it is essential that local communities have control over their water supplies. Revenues should be in line with community needs, not international stockholder needs, and the community needs can best be served by a local water board chosen by and responsible to the citizens of the community. It appears that approximately 95 percent of the communities across the USA think the same way because they operate their own water supplies. Why not us?
No civilization should ever allow control of such an essential utility as its water supply to slip from its grasp. Clean, dependable water makes life in a city possible. It is the worst foolishness to allow our water-supply issues to be decided by an absentee owner.
RWE will have paid a high price to acquire Kentucky-American's parent company. The company has a debt much greater than its assets, so it must maximize revenue. The first, most predictable, consequence of RWE ownership will be a big increase on water rates. Secondly, usual business logic will lead to selling off "surplus" property like Jacobson Park, Lakeside Golf Course, and the reservoirs for development. The same thinking has lead other companies in a cash crunch to plunder other assets, like pension funds, to finance the purchase. Then, the cash pressure leads to expansion of as many customers as possible without regard for fixing existing problems, such as additional storage and treatment capacity in the event of drought. Finally, layoffs and poorer service are likely outcomes of takeover by a company like RWE, in over its head financially.
A for-profit company necessarily costs the water customers much more than a municipal-owned company. The overhead of stockholders dividends and other profits and taxes is borne by the ratepayer. It is simple extraction of money from Lexington to Germany. Local ownership keeps the money in the local community, where it can be used for improvements in water supply system.
It makes sense (pun intended) for Lexington to own its water company, as many other large cities do. Those who let ownership slip away will regret it.
55, Registered nurse
Kentucky-American and its predecessors have provided Lexington citizens with private water service for 117 years. I have never had anything but reliable, high-quality water and excellent customer service. The city of Lexington has yet to show me that they can balance their budget and I shudder to think what kind of economic hardship that purchasing the water company will carry with it.
24, UK Graduate Student
Mayor Isaac and the Urban County Council are embarking on a dangerous journey towards fiscal disaster. At any cost, they are willing to takeover a perfectly viable, successful private company, justifying such actions on inaccurate rhetoric and xenophobia. The simple fact is, Kentucky-American has supplied Lexington with safe, affordable water for over 100 years. While it is a tempting desire to own the water company, one must not approach the issue as a greedy, irresponsible child, but rather in a responsible, logical manner. Lexington has $359 million worth of unfunded projects (ranging from sanitary sewers, storm sewers, and parks and recreation). Lexington also has hundreds of millions of dollars worth of outstanding bonds. Assuming Lexington resorts to bonds in order to complete its dictatorial takeover, the City of Lexington will possess nearly $1 BILLION in debt and unfunded projects. The profits from Kentucky-American will not be enough to pay off these debts within a reasonable time frame (under 100 years!). Therefore, water rates will go up (something many in FLOW claim is a reason for condemnation) or taxes will be raised elsewhere. There are some in the current administration that have failed, in the past, to grasp the ramifications of debt. The City of Lexington cannot afford to declare bankruptcy at the expense of owning Kentucky-American Water. We cannot always have what we want. With Lexington's current fiscal condition, ownership of Kentucky-American is simply not an option.
Nicholas Volk, 20
Our local government should not spend time and money (it does not have) investigating the purchase or purchasing the water company.
The government needs to protect its people-not engage in the sale of anything competing with a product or service a business could provide. In my opinion, any government revenue outside the tax base should be used to cover costs. Example: the fees we pay for items such as driver's licenses should only cover the cost of the materials required to produce the license. If the tax base does not provide enough money for the government, then we should raise taxes after getting rid of excess employees and cutting benefits.
The city's actions have wasted dollars that could have been used for other services directly affecting our population. The money could have been used to offset taxes for small companies in an effort to help them keep revenue for expansion. It could've been used to hire contractors to repair our roads-driving downtown over a period of a few years requires a good car suspension.
If RWE performs poorly, then the PSC has a duty (along with our government) to stop any bad practices. LFUCG could impose regular health, safety, and pricing audits to ensure RWE performs well and impose penalties if it does not. A contract between RWE and LFUCG could take care of the majority of the worries present in people's minds about "foreign ownership."
In the end, government should not compete with business.
I'm against a takeover, buyout, condemnation, or whatever you want to call it.
Harry Sparks, 57
Now we have the PSC to oversee the utilities. What will we have when the government takes over? They will set their own rates when they find out that they can't run the water company. It takes certain job skills, which Mayor Isaac doesn't have.
If the government can take your business by categorizing it as "Condemned," which one will they take next? I have heard NO good reasons so far from Mayor Isaac of why the government should own it.
Keep the government out of private business. It's the free enterprise way!
Bill Gruber, 56
We need to fully consider the impact of the City of Lexington taking over the water company. It is now a well-operated company, providing inexpensive water and its only shortcoming is the lack of adequate treatment capacity to meet some drought condition peak demands. This would be easily corrected by the construction of a new water treatment plant on the Kentucky River pool below High Bridge.
The best-operated systems in the Commonwealth are mostly operated by private companies or by utility commissions directed and managed by business men who are appointed for long terms and are free of political influence. Some of these systems are Richmond, Corbin, Morehead, Frankfort, Lebanon, Somerset, and Louisville.
The main difference you will find is those operated free of political influence are that they will be financially stable, usually have the money on hand to make new improvements, have more reliable systems, and better quality water. The others are often drained of profits for other city functions and are usually not as well maintained.
A second difference you will find is that privately-operated systems such as KAWC are under the close scrutiny of the Public Service Commission (PSC).
Donald Fugette, Age 67
Retired Sanitary/Electrical Engineer
I am against a takeover of the Kentucky American Water Works by the LFUCG, unless the new owners RWE show that they cannot be good stewards of the water company. The length of time and cost of litigation is so lengthy that a few years of control by RWE will indicate good or bad.
One only has to look at the existing problems of storm water runoff, sewer treatment, the recent ice storm, and the problems it imposed on our community.
The Wednesday before the ice storm, the LFUCG Tree Board held a meeting to discuss the problems with our right-of-way street trees and the crisis of what will happen if a severe storm were to happen. A few days later it did happen. Not one councilperson attended the meeting. For about the last 10 years the LFUCG Tree Board has indicated to Council that we have a serious problem with dead trees (about 900 in the ROW)-no one listens. The old landfill on Old Frankfort Pike is another example of letting infrastructure go. It "closed" over 25 years ago, but does not have state official closure because the government did not want to spend the money to close it as mandated by regulations. It is being done today, but at a cost many times greater that what it would have cost 25 years ago.
The council also listened to the NOPE Group that is the same as the FLOW Group about the proposed pipeline to Louisville. Our community needs more water-the cheapest solution was the pipeline to Louisville. It is interesting to note that many of the leaders of the FLOW group do not even live in Fayette County. The FLOW group likes to cite the various boards that Lexington has-airport, Civic Center, Lextran Bus Service etc. These boards are not exactly state of the art in efficiency and all three have serious money problems.
It is very nice to think that the Louisville Water Company gives back to the City of Louisville some 13 million a year. What that actually means is that the water company charges 13 million a year too much as a city-owned water company.
LFUCG can't take care of the business at hand, like traffic, budget, etc. Why does it want to stick its nose into something like running a water facility? What makes OUR government qualified to do this? Can OUR government afford it? NO, they will pass this bill on to Its Tax Payers. Bottom Line! Take it to the POLLS and see who really wants this takeover. NOT the majority of Lexington. Only the majority of our Leaders with a Politically Driven Agenda. DO YOU WANT YOUR DRINKING WATER TO BE IN THE HANDS OF THE LFUCG? I DON'T!
Daniel L. Eberhardt, Jr., 38
I have always felt that local government was meant to provide the basic needs to support a community. They are not there to make money or lose money in business ventures. I am against the takeover of the water company!
Donna Cox, 33
My four points against this nonsensical takeover. 1. In the first place, the entire concept lacks legitimacy. There is absolutely no reason for this takeover to occur. The price and quality of water is fine. What other possible reason could there be for condemning a perfectly good company?
2. Lexington has no money to fund the takeover. I have personally emailed the mayor, and she has been busy ignoring anyone against her agenda. She has flagrantly ignored the desires of the people that voted her into office, and seems intent upon a path of fiscal irresponsibility.
3. I find the fact that the public is being allowed no say to be highly suspicious. I strongly believe that federal oversight and an investigation into the holdings of all political and corporate entities that are for the takeover. I want to know who will profit, because it certainly won't be the people.
4. It is almost guaranteed that taxes will have to be raised to pay for this. Already, $100,000 was spent just to find a sock puppet to tell the Council what they wanted to hear. They went through four commissioned investigators before they achieved this end.
Make no mistake, this is a hostile takeover, and with the good people of Lexington being the eventual victims. If this takeover is successfully perpetrated, then all public companies should fear their future. I look forward to the next mayoral campaign. I do not care who is running against Teresa Isaac; I will not only vote for him/her, I will volunteer for the campaign. I want this woman out of office, and out of Lexington.
Tom Staton, 33
For goodness sakes, this debate has worn me out! Let me say at the beginning that I am for the water company to be run by the water company.
Please let me share a couple other things I am for as it relates to this issue:
I am for our local government learning how to better manage the resources and obligations they currently have!
I am for our local government leaders to start looking for the tremendous economic opportunities our great city can begin tapping into by being a member of the "Golden Triangle!"
I am for my tax money to be spent extremely wisely and with great stewardship.
I am for a much BIGGER vision from our leaders.
With that said, the constant complaining I hear about budget shortfalls and the need for painful cuts does not give me great confidence in this city's leadership taking on the fiscal and administrative responsibilities of a major utility. Therefore please count me as one casting his vote for NO government takeover.
I see much greater fiscal, social, and economic opportunities that our leaders could (and should) be focusing their time, talent, and resources on. Unfortunately, the Fayette-Urban Co. Government owning the water company is not one of those opportunities.
Let's please begin to look at the "Big Picture" folks!
CEO WorkplaceBuzz, LLC
The city cannot now handle the debris from the ice storm in February; they cannot maintain the sanitary sewer system; they would have to hire someone to run the water company because no one has the expertise to run it and the water company employees probably make considerably more money than city employees. We do not need more people in the city retirement system. The only people to benefit from this action is the lawyers.
Mike Sullivan, 57
I am strongly opposed to the government takeover of KAWC for the following reasons:
1) Governments have repeatedly proven themselves to be inefficient at managing businesses. There are no reasons to believe that LFUCG will be immune from these inefficiencies.
2) A large company like RWE can spread research and engineering costs across a large number of people. This leads to better service at a lower cost.
3) The legal fees involved in a forced takeover will be very costly. These large costs, however, will be eclipsed by the acquisition, restructuring and operational expenses of the company. What is the return on this expense and investment?
4) KAWC is not broken. It is working fine. Why "fix" it? There is no reason to expect it to become broken. KAWC is still subject to KPSC regulation-it is held accountable for its actions.
5) I have not seen or heard any factual arguments for the takeover. All of the reasons seem to be "what if" statements as opposed to hard evidence.
6) Stopping the takeover process now does not preclude this action in the future if deemed necessary-i.e., if concrete and logical reasons become evident.
Mike Partington, 29
Why should we change away from what has worked fine throughout Fayette County history? It was never expensive, the service has always been goodwhy change? The privately-owned water company will respond more quickly to customers than a government bureaucracy can.
We don't have government running Kentucky Utilities, Columbia Gas, the telephone company, or our bank! Sowhy should government be running a water company in the U.S.A.?!
A government takeover just wouldn't be the American way! Furthermore, I'm suspicious as to why the Coalition for No Government Takeover is not being allowed to speak much, and that we are being treated with bias! Couldn't we take this suspicion to some higher court somewhere? Think about it! Kentucky American Water Company is not even for sale!
My question is how can Lexington afford to buy a water company when they can't make our streets drivable? They say they can't hire more people to be placed on the police force, but they can build twin court houses. The question is can a person get there without falling into a pothole?
My next question is, why do we need so many parks downtown? Well I hope we never have to go back to horses and buggies. There will be a lot of lame horses. I have never been one to speak out about anything, but fix what needs to be fixed first and then if there is money for improvement then fine, if it is something that would help. Lexington needs to find good homes for abused children, the elderly, and for the homeless that are down on their luck. I know my thoughts don't mean much , but at least I have spoken my peace.
Verna Stokley, 52
The cost of the takeover will be huge. The ability of the Council to solve problems is suspect. The past history of the city's performance on items such as sanitary sewers, police pay, Lextran, storm water disposal, and the city streets and traffic flow all indicate to me how the water company will be run. I OPPOSE THE TAKEOVER.
Donald E. Rossoll, 64
On the wisdom of government-owned utilities:Mr. Ray Gifford is the immediate past Chairman of the Colorado Public Utilities Commission in Denver, Colorado, a position he held from January of 1999 to January, 2003. As such, Mr. Gifford was the Chief utility regulator for the State of Colorado and Chairman of a three-person commission that regulated telecommunications, electric, gas, water, and transportation companies for the state of Colorado. When asked about the condemnation of the Kentucky American Water Company in Lexington, Kentucky, Mr. Gifford gave me permission to quote his answer:
"City ownership of utilities is almost categorically a bad idea. Even bad, old monopoly regulation of private companies is preferable because there is at least something approximating a consumer-beneficial incentive structure (though not a great one). Municipal ownership, meanwhile, is unaccountable and can hide its inefficiency in a larger budget to become even less accountable. Plus, once it is entrenched, it cannot be undone. To the contrary, muni-utilities become very politically powerful."
Since the highly-credentialed Mr. Gifford has already "been there, done that" for the state of Colorado, why don't we here in Lexington realize just how very good we already have it? Our extremely well-run water company deserves to continue to offer the great services to this community it always has. Our local government has other core competencies upon which it should focus and let Kentucky-American continue to do what it does best.
President, THIEL Audio
I am opposed to the take over of the water company. [As a private company] the water company makes many donations to different organizations. If the LFUCG buys the company these will disappear. No one will have control on the rates if the LFUCG buys the company. The rates will have to go sky high. The LFUCG cannot run what they have now. This also means that your sewer rates will go sky high.
Ken Breunig, 65
I offer several reasons for my opposition. First, although proponents have not adequately articulated their justification for this action, they have put forth several "reasons" that government management of the water company is a good idea.
Emotional reasons have been provided including an insistence that monopolized commodities should not be controlled by foreign corporations because they are foreign and may sell "our" water to people outside our service area or decide to increase rates. Of course, proponents fail to explain that the current water company can do very little without approval from the Public Utilities Commission in Frankfort, while a city owned water company will be able to do what it pleases without state oversight. One could also ask where was the outcry when a foreign company bought Kentucky Utilities, another monopolized commodity that is vital to our existence? Where is the initiative to condem the electricy company and take it over as well?
Profit currently earned by the water company should remain in local government. Here, I believe, is the real reason for takeover interest. Proponents see a quick influx of cash, from water company profits, while spreading out the cost of the takeover over 20 to 30 years in the future. This type of financial leverage is a dangerous strategy designed to bail out failed budgetary processes because spenders will use the current profits to pay for current shortfalls and increases in programs.
If we don't control the water company, they may sell Jacobson Park to some developer for quick cash. As proponents fail to emphasize, the agreement between the city and Kentucky-American Water Company give LFUCG first rights of refusal concerning the purchase of the park if Kentucky-American decides to sell the property.
Second, this administration has shown that it cannot itself capable of making correct decisions in matters outside the course of "normal" public service areas. There are only a few new voices to be heard on the Council. Consider the Rupp Arena project initiated without adequate funds in hand for completion. Now, a water company takeover. How can we expect that this administration, trained under the old, will be any more adept at such decisions?
Third, we are facing a budget crisis that leaves little room for costly financial mistakes. The funds already spent on just evaluating the feasibility of this action could have been used to alleviate some of our current budget shortfalls. The millions more that will be required to pursue condemnation, whether successful or not, will require further cuts or additional tax increases, neither of which I support.
Fourth, the water company has provided outstanding service to the community for many years. Quality of service cannot be used as a reason for takeover.
Kentucky-American has made it abundantly clear the company is not for sale. Yet our government has already spent about $200,000 of public money to pursue this purchase.
Kentucky-American is a privately owned company that has operated in Lexington for many years, providing quality water to customers at a reasonable price. If the company is not for sale and negotiations do not produce an agreement to sell, the process of attempting to purchase the company should stop.
As a resident and taxpayer it's not in my best interest for local government to pursue a forced purchase of Kentucky-American through condemnation. If pursued further, all that will happen is my water costs and taxes will go up, with no actual benefit accruing to me as a resident and water customer.
Our elected officials would do well to address appropriate functions of government that benefit residents and immediately drop this pursuit of water company ownership.
Todd Strecker, 63
Retired Business Consultant
Mayor Isaac has said, "it's the difference between paying rent or paying a mortgage. It's much smarter to own."
I know the difference between mortgage and rent, and there's NO analogy here. In neither case (private or government ownership of the water company) am I building up equity in anything. Again, it is a service I pay for. I am best off paying my money to those who will be most responsible and efficient with my money.
I have no more control when the company is owned by the city of Lexington than by RWE. In fact, I'm quite sure I have less control with the city. The city does not have a management structure that allows it to conduct business well. It has neither a good track record nor a system which keeps it accountable to its customers. Further, with lack of PSC oversight, we are left vulnerable to the city's whims and incompetencies.
Your arguments continue to show a profound misunderstanding of basic economic and business principles and a blind disregard for the clear lack of competence the city has to undertake such a venture. I am more deeply disturbed than ever.
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