Sedona Arizona
Sedona AZ (April 12, 2010) – In an open letter to the Sedona Times newspaper and its online SedonaEye.com news and views, Sedona resident Jean Jenks writes:
Dear Mayor Adams, Vice Mayor Hamilton and City Councilors:
Please be advised that I oppose increasing sewer rates one penny because:
1. CDM AND THE CITY ARE INACCURATELY CLAIMING THE WASTE WATER RATE STUDY IS A FINANCIAL PLAN.
The Waste Water Rate Study fails to state what the extra funds redirected from the WW Fund to the General Fund over the next five years will be used for; it fails to provide for balancing the budget; and it fails to address the bond debt overload. Perhaps worst of all during these perilous economic times, it fails to offer a “no new rates or fees” option among its financial alternatives to a community of predominantly retirees. As we know, very many retirees on fixed incomes, jobless residents, low wage earners who live in Sedona, and the infirm are having trouble putting food on the table and paying for gas. City Hall must pay the piper for the financial mess it has created over the past several years, not raid struggling citizens’ wallets.
2. THE CITY’S DEBT OVERLOAD REMAINS UNADDRESSED.
At $38.37M Sedona ranks 5th in the State for City debt. With reserves of $3K per capita and debt of $6K per capita (interest not included), the City is being eaten alive by bond debt. Furthermore, municipalities with high debt ratios are in danger of becoming insolvent. Instead of dealing with the “bond debt bomb,” City Hall wants to try to dig itself out of the massive indebtedness hole it has dug for itself by gouging innocent sewer customers. First and foremost, the City must pay down its enormous WW debt much faster than $6 million per year and get the indebtedness red ink under control. The unencumbered WW Fund reserve of $17 million should be used for this purpose. In addition, immediate downsizing (via staff reductions of at least 25%), salary decreases for higher echelon staff, and massive spending cuts are in order.
3. THE CITY OF SEDONA IS BROKE AND WANTS TO AVOID TAKING ITS LUMPS.
As we know, the immediate problem at City Hall is the upcoming 2011 operating fund budget. Due to continuing declines in revenue, General Fund bleeding in FY 2010-11 will result from a predictable deficit of from $1 to $2 million. And why is this mess being dumped on the backs of financially-strapped sewer customers? Because the purpose of the sewer rate increases is to bail out the General Fund and make it possible for the City to continue overspending and to continue running a big-city government operation in a small town. Meanwhile, longer-term financial problems will be going by the wayside.
By the way, Sedona’s residential sewer fee ($32.54/mo. per ERU), is already the highest in the area. Cottonwood’s is $16.75/mo., Flagstaff’s is $21.00/mo. and Camp Verde’s is $31.50/mo. And, as for Bullhead City, the 50% of residents in areas not under the ADEQ consent decree there pay $31.00/mo. A 10% annual residential sewer rate increase for Sedona is outrageous and 15% is insane. City Hall should be ashamed to take scare money from ordinary citizens it refuses to represent.
4. CITY HALL HAS ESTABLISHED A PRECEDENT WITH RESPECT TO SALES TAX REVENUE ALLOCATIONS TO THE WW FUND.
Old-timers were told sales and bed taxes would pay the bills, and an enterprise fund for the wastewater system was not set up by City law. In 1999 the Sedona City Council formulated a financial plan. Instead of instituting property assessments to help pay for the modifications required by the courts, the Council moved to subsidize the WW system through sales tax revenue allocations. Is it legal to make the sewer system into an enterprise fund at this late date? After over 20 years of putting 46% of sales tax revenues into the WW fund annually, hasn’t a binding precedent been set for future years?
I found CDM’s Table 12, “Rate Study,” an informative document. It shows that residences in areas in Bullhead City under an ADEQ Consent Decree are in Sewer Improvement Districts that pay from $63.92 to $104.75 per month instead of the $31.00/mo. the rest of Bullhead City residences [about 50%] are charged. The City of Sedona never charged the polluting businesses along Oak Creek that resulted in an ADEQ Consent Decree here for “Conveyance & Treatment” as is being done monthly in Bullhead City. Instead, the City ran up an enormous debt and got into the reprehensible habit of refinancing it. Now, the City can no longer refinance its debt so wants to launder its self-created problems and sock it financially to ordinary residential customers with absolutely no responsibility for the ADEQ decree or the City’s enormous bond debt.
5. THERE ARE CALCULATION ERRORS IN THE OFFICIAL CITY OF SEDONA, ARIZONA NOTICE OF PUBLIC HEARING on APRIL 13, 2010 and CDM’S WASTE WATER RATE STUDY THAT REQUIRE ISSUANCE OF A “CORRECTION TO STUDY” DOCUMENT.
Some interesting facts can be gleaned from page (56) of the CITY OF SEDONA, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 and CDM’S APPENDIX 1, “Existing Debt Service.” A review of these two documents reveals that over the first eight years of the 15-year life of the Second Series 2004 Bonds, $2,050,000 in principal payment obligations are to be deducted with respect to the City Hall Purchase [Original Issue = $4,555,000; June 30, 2010 Balance = $ 3,525,000; Outstanding Balance, 2011-12 = $2,505,000] and NOTHING, NADA, ZERO, ZILCH with respect to the WW system-related projects [Original Issue = $13,860,000; June 30, 2009 Balance = $13,860,000; Outstanding Balance, 2011-12 = $13,860,000]. This has happened, if I understand it correctly, as a result of former City Manager, Eric Levitt’s, restructuring of the city’s debt service requirements in an attempt to even out the annual debt payments over 23 years (ending in 2027).
Structuring the Series 2004-2 Bonds so as to maximize the Wastewater Fund interest due/owing and minimize the General Fund interest due/owing overcharges sewer customers and is wrongful. It results in amounts/rates that are too high in the following: CDM’s Figure 1, “FY 2009-10 Sewer Utility Sources and Uses of Funds;” CDM’s Appendix 1, “Existing Debt Service;” and the City of Sedona’s rate structure in its undated “Notice of Public Hearing, Notice of Intention to Increase Wastewater Rates or Rate Components, Fees or Service Charges.” All Grand Total Debt Service figures in Appendix 1 are too high as well. The following re-calculations, which I hereby request, are in order: (1) the P & I for both the City Hall Purchase and the Wastewater System for each and every year during the life of the 2004-2 Series Bonds, (2) all debt service requirements in CDM’s Appendix 1, and (3) the rate structure in the City’s undated “Notice of Public Hearing, etc.”
ALSO, please refer to the Series 1998 Excise Tax Revenue Bond detail (Page 186 of the current Annual Budget). This page shows the principal for these bonds restarts in 2019-20, not in 2021 as stated in CDM’s Appendix 1, “Existing Debt Service.” Thus, $1,400,000 million in principal should replace the $0 listed for the FY 2019-20 principal in Appendix 1. In addition, for FY 2019-20 the Series 2005 Bonds’ P & I are out of sync with the detail on Page 190 of the current Annual Budget. The current Annual Budget reveals the Series 2005 Bonds will be retired during 2018/19. So, Appendix 1’s P & I of $4,080,000 and $204,000, respectively, and its total debt of $4,204,000 for FY 2019-20 should all be $0. With the Series 1998 and 2005 changes mentioned, the Grand Total Debt Service requirement for FY 2019-20 should decrease from $4,722,663 to $1,604,000. In addition, the sewer rates in the years leading up to FY 2019-20 need to be reduced so sewer rate overcharging will not result in FY 2019-20 and the following years.
6. IT IS NOT THE RESPONSIBILITY OF THE RESIDENTS AND BUSINESSES OF SEDONA TO PAY FOR CITY HALL’S FISCAL INCOMPETENCE, AND WE ARE NOT OBTUSE AND DO NOT BUY INTO YOUR ENTERPRISE FUND HOCUS POCUS. CITY HALL MUST REVERSE THE GROWTH OF CITY GOVERNMENT AND DEAL WITH THE DECADES OF POOR DECISIONS IN AN HONEST, TRANSPARENT AND ADEQUATE MANNER. KINDLY DO NOT CORRECT THE CITY’S FINANCIAL MISTAKES ON MY BACK!
Sincerely,
Jean Jenks
250 Hillside Avenue
Sedona, AZ 86336
For the best in Arizona news and views, read www.SedonaEye.com daily!
namaste i checked out this after reading jean jenks letter to city & sad that what’s here in 2010 is now real.
LISTEN TO HER NOW & SAVE SEDONA
Love Jean Jenks! Thanks @keith for bringing this up.