As I took a deep dive into this sorted document I noticed a trend, water and sewer fees are being used for all kinds of projects, not just roads (I understand that when there is a total road replacement you have to do some pipe replacements). But many of these projects have NOTHING to do with the water and sewer.
No wonder they didn’t have to raise electric rates, they just use sewer money to upgrade that utility! Not sure what new office furniture at the electric plant has to do with flushing my toilet but I’m sure councilor Jensen has an explanation.
As I said during this public input (FF: 26:30) the city sets up all of these separate ‘weirdo’ funds to pay for projects thru the redistribution of these fees, and the proof is in the pudding. I counted over 20 projects that use water and sewer fees to fund them and have little to nothing to do with water and sewer.
Speaking of the water and sewer plant, over the next 5 years the city plans to spend over $329 MILLION on the combined water and sewer plant (I would assume these numbers don’t include interest and bond repayments).
Hey Paul, maybe Theresa was lying, it isn’t going to cost us $300 million, it’s $329 million! How dare she mislead the public like that 🙁 Maybe at the next council meeting Paul will publicly chastise Stehly for UNDERESTIMATING the costs!
There is good news and bad news concerning utility rates for Sioux Falls residents, multi-housing facilities and businesses.
The GOOD NEWS:
As The Dakota Scout reported on June 6 —
“Xcel Energy last year sought to impose increases of nearly 18 percent on its South Dakota customer’s revenue for the company. However, the PUC settlement, agreed to by Xcel, reduces that increase to about 6 percent. This settlement also freezes base electricity rates through 2025.”
Thanks to the Public Utilities Commission for taking time to listen to the customers and caring enough to keep rates reasonable to support an affordable quality of life. This is government doing its due diligence on behalf of its citizens.
The BAD NEWS:
On June 6, the Mayor’s Office presented to the Sioux Falls City Council a four-year plan to increase our sewer bills by 22 percent and our Water bills by 19 percent. This is in addition to the already massive increases we have been experiencing since 2018.
The justification for the 2018 rate increase was the need to fund the largest expenditure in our city history, the $260,000,000 (that’s $260 million) rebuild of our Waste Water Treatment Plant. This proposed cost projection never included the additional interest payments.
As one of your At-Large Council members in 2018, I listened as the City Council was told this new facility would be funded with the sewer fees to be paid by homeowners, businesses and apartment owners. Grave concerns were voiced at the time about the escalating sewer rates needed to pay off this massive project. This is a basic and necessary life sustaining government service everyone uses.
Our community has a healthy stream of revenue from the collected 2nd penny sales tax money, a funding source set up almost 40 years ago to be used for infrastructure like this.
In 2018, I attempted to get a resolution passed, freeing up some of the 2nd penny sales tax money to help pay for this costly project.
Every time you borrow money, a payoff or amortization schedule is created to help you budget. I requested this schedule for all of us, so we could all keep track of the cost and repayment of the Waste Treatment Project. The Public Works Department denied the City Council an accounting of this basic information.
Why is this important today? The city says it needs more massive rate increases, while still not answering the original questions: How much have we spent on the project since its conception? How much do we owe on this huge project? How many more rate increases will be needed to pay for the project? How much has the city spent in cost overruns?
Now as a private citizen, I expressed my concerns on June 6 to Mayor Paul TenHaken and the City Council that this is not the time to be raising fees or taxes. Water and sewer are basic survival needs for all. Many users are struggling with providing the basic necessities for their families, and many of us are upset about the outrageous tax burden we have to shoulder.
The City Council acts as our “Public Utilities Commission” of water and sewer rates in our community, and just like the South Dakota PUC, our City Council can vote to approve the rate increases, negotiate lower rates or vote down a rate increase altogether. This is the time to use your voice.
We need to demand more openness and transparency in these big ticket items that the good people of Sioux Falls are paying for. I am deeply grateful for the recent respectful conversations I have had with several council members over this issue. Their promises to dig into the details of these rate increases, the money that has been spent for design and implementation, and what will need to be spent on the Waste Water Treatment Plant is encouraging. I eagerly await their findings.
If you, like me, have concerns about these rate increases, I urge you to reach out to the mayor and City Council before they vote to increase your rates on June 20, 2023.
Theresa Stehly is a longtime Sioux Falls resident and former city councilor.
UPDATE: It took almost 2 weeks to massage the numbers and hand them over to the safety of the Stormland TV news room;
The city of Sioux Falls secured a $166 million state revolving loan for its $215 million wastewater sewer expansion project, and that loan was based on sewer rates that exist today, said Jourdyn Brown, a communications official for the city’s public works department.
If you read the article you will see that we will be paying about $34 million in interest which brings the total cost of the project to $249 million (according to what the city is saying today). So it is NOT $300 million, but it certainly isn’t $200 million. This part is also revealing;
St. Louis-based McCarthy is the construction manager for the project or contractor at risk and includes a guaranteed maximum price (GMP) with an amendment.
Contractors are responsible for any cost overruns beyond the maximum price unless there are changes to the project design or scope.
And this is how contractors on other city owned facilities have been able to go over the GMP, once the scope or design changes they can automatically tack on more. While I would be thrilled to death if we kept the project to $249 Million I have a feeling this is NOT the final number but I wouldn’t want anyone to think I was a liar.
We will get into the tit for tat in a minute, but first I was a little taken back when Paul said this about Stehly’s comments on the wastewater treatment plant;
“There are certain people that need to be responded to. When you stand up, especially as someone who has served in city government, and just spew inaccuracies and lies, I’m not just going to sit there and not respond to it,” he said. “So when you say our wastewater treatment plant has ballooned to $300 million — absolute lie. But when you say that, now you get people all riled up, that, ‘Whoa now we’re wasting money. What’s going on with TenHaken?’”
He is right about one thing, the city has been blowing money like crazy, that is nothing new, you know like $10 million for ‘landscaping and other stuff’ at the PRIVATE research facility. But to say Theresa was lying is a stretch. This is what Theresa said before Paul mocked her (item #51);
‘ . . . as I understand it could be closer to $300 million. I think there is cost overrides we don’t know about . . .’
First the obvious, Stehly hasn’t been in city government for several years and has no access to internal numbers so she made an assumption, an assumption any citizen would make based on the track record of the city and cost overruns.
So who is closer to the actual amount?
Remember a few years ago when the School District held a communist bloc school bond election? Leading up to the election the district was saying the bonds were $180 million. I pointed out to the District that the payoff amount would be $300 million and withholding that information from the public was a disservice to the taxpayers. Super Maher finally admitted that was the payoff amount.
According to reports when the water rec plant was first proposed in 2018 the estimated project cost was $159 million, by 2022 it ballooned to $205 million. Since then there has been numerous change orders to the project, in fact, in the past year the council even questioned one of the change orders that was around $400K and no one from public works bothered to show up to the meeting to answer questions.
While Paul may be right that the project cost may never hit $300 million it certainly won’t be $200 million. With inflation and material costs change orders will be common place and once we have to pay off those bonds we will be plenty north of $300 million. So while Stehly’s comments are not 100% accurate, they are not as far-fetched as we think.
But what bothers me more is that we have an administration that mocks people claiming they are ‘spreading lies’ but when we request the information we only hear crickets. I would love it if Lalley wrote a followup story of what the initial costs have been, the final price tag and the payoff amount. Let’s see who is LYING. If you are not going to be transparent and have an active policy of not responding to citizens at meetings you can’t get angry when former city councilors show up and question the process.
Paul believes in the tired old political stance that we need to keep information from the public because we don’t want them to ‘get riled up’.
As a local elected official says to me all the time, “If you are not going to tell me the truth I will just make up my own version of the story.” and while he is being sarcastic, he is correct, if you don’t tell the public what is going on they WILL make their own assumptions. If mis-information is being spread by the public, that is on you! The truth will always save you 🙂
Also, Paul’s mockery Tuesday night is something he has been doing for a long time. What is surprising is according to Robert’s Rules, the mayor can hand the gavel to the council chair and respond respectfully to anyone, instead he chooses to act like the kid who dropped his ice cream cone.
If Stehly is lying back it up with numbers not with crybaby rhetoric like this;
“Anybody who is listening should know that I’m frickin’ annoyed,” he said Wednesday. “This is not a circus, that shouldn’t be city government.
If you want the circus to end at the council meetings maybe stop acting like a clown?
“The Stehly days are done.”
. . . and in a few short years we all will be able to take a sigh of relief and say “The TenHaken days are done.”
UPDATE: It was confirmed to me from those in the chambers that it was Mayor TenHaken who was mocking Theresa, as we all suspected. I still think this clown show could be prevented at meetings if 1) we put public input at the beginning of the agenda and 2) rescind the council rule to interact with the public during input.
Theresa was reminiscing about her time on the council and the presentation of the new waste water treatment plant when she started to bring up her recollection of the process.
She said she requested an amortization schedule from Public Works Director, Mark Cotter, at the time for paying off the waste water bonds. During her input you could hear someone on the dais quietly mock her. When Theresa says that we may have cost overruns on the project, ‘someone’ on the dais mumbles into their microphone ‘Oh Yeah? Really?’ in a sarcastic voice. Stehly also talks about the public being left in the dark and this same passive aggressive voice whimpers from the dais ‘Hmmmm’ and later ‘Uh Huh.’
Like I said, you have a pretty good guess who was being a brat from the bench, but the individual doing this doesn’t really matter. The fact is the public is constantly told by the chairs of these council meetings that we need to practice ‘decorum’ at these meetings because gosh golly three cub scouts showed up while all the time they are personally acting like kids who got their ball stolen.
Someone needs to tell these folks it’s study hall time not recess time.
Sioux Falls water and sewer is funded thru enterprise funds (user fees). Those fees go towards maintenance, operation, general expansions and pipe replacements. They also go towards paying the salaries of the employees of this department (while all other city employees are paid thru the 1st penny operational fund).
While the concept of enterprise funds works well for normal operation, paying salaries and bond payments for major expansions out of this fund is what is draining the coffers and a cause for fee increases.
The 2nd Penny fund was created for road maintenance and soon got hi-jacked for all infrastructure projects. But that is what is it is for, major infrastructure like an expansion of our water and sewer plant.
This is really about allocation of tax money.
We say we need to pay down the bonds for this facility with user fees but we don’t use user fees to pay down the bonds for the Events Center, Pavilion, Zoo, Tennis Courts, Midco Aquatics and the list goes on.
It is ludicrous to have $80 million in a reserve fund for infrastructure projects while raising water rates to pay down bonds for a needed infrastructure project.
Why not re-finance the bonds thru the 2nd Penny fund and avoid a water rate increase? I wonder what Bloomberg thinks of that?