Public Watchdog.org

Evanston Water: Betting $60 Million On A Magic 8 Ball?

04.21.15

About a dozen years ago, consultant S.B. Friedman helped Park Ridge’s then-mayor, Ron Wietecha, and its then-city manager, Tim Schuenke, convince Park Ridge’s then-city council – which didn’t take much, considering how shamelessly a majority of aldermen were panting over the deal – that “investing” around $30 million in an Uptown TIF would bring a $20-30 million-plus profit by the time the TIF was scheduled to end 23 years later.

Unless you’ve been in a coma for the past several years, however, you know how totally wrong that projection turned out to be: that $20-30 million “profit” is now projected to be a $20+ million loss.

But Wietecha fled to Barrington shortly after getting the TIF passed, Schuenke fled to Wisconsin after the sweetheart development deal was cut with PRC, and not one alderman who rubber-stamped that boondoggle is still on the Council.  In fact, 11 of the 14 didn’t even stand for re-election after then-mayor Howard Frimark led the referendum drive that cut the council from 14 aldermen to 7.

So when we read in last week’s Park Ridge Herald-Advocate (“Park Ridge asked to make water supply decision by July,” 04.14.15) how another consultant – this one paid by Niles and Morton Grove rather than on the City’s meter like Friedman’s was – is claiming the City could save between $74 million and $111 million in water costs over the next 40 years if it spent around $47 million toward the construction of a new water main from the City of Evanston to Park Ridge, our initial reaction was: we’ve seen this movie before.

And it’s a horror film.

Make no mistake about it: our City currently is being gouged on the price of its water purchases from its sole-source supplier, the City of Chicago. And given Chicago’s decades-long self-destructive run toward bankruptcy, we can expect to be gouged even more as Emperor Rahm tries every trick in the book to avoid imposing necessary tax increases on all those mindless serfs (a/k/a Chicagoans) who elected and re-elected him, just like they mindlessly elected and re-elected Rahm’s evil dwarf predecessor whose name Rahm cannot speak.

Consider it the Chicago Way’s equivalent of the Mafia’s code of “omerta.”

So leaving our water supply at the mercy of the ethically-challenged parasites who run Chicago is a very big risk. But so is bonding $47 million when even the consultant trying to separate us from our money can’t come up with a better snake-oil pitch than one that needs 40 years for payback – especially when we’ve already seen just how foolish it is for politicians and bureaucrats to think they can predict a project’s ROI even 10 to 20 years into the future, much less 30 and 40 years out.

For proof, look no further than the Uptown TIF.  And just to show that inept prognosticating isn’t a recent phenomenon, Maine Twp. H.S. District 207 opened Maine North High School in 1970 to accommodate projected enrollment growth, then closed it for good a mere 11 years later when those projections didn’t materialize.

But being wrong, even spectacularly so, has never stopped irresponsible public officials from plowing ahead with bad decisions, especially when they know they’ll be out of office (if not out of town and/or out of state) and, therefore, conveniently non-accountable for those bad decisions by the time those turkeys come home to roost.

Niles and MG are simply looking for deep pockets to share the cost of this major project. And E-Town is just looking for additional revenue sources for itself. None of those three communities cares whether the money they’re looking for comes from Park Ridge, Park Forest, or Park City, Utah.

If the City were to bond the $47 million water line cost (assuming that number is accurate – don’t bet your lunch money on it) at an interest rate of 3% over 20 years – which is the customary term of muni bonds such as these – interest on those bonds would jack that $47 million price up by over $16 million if payments were made annually, or by over $15.8 million if payments were made semi-annually.

That cuts into the $74 million minimum projected savings by around $63 million. Except that the debt service calculation is basically a mathematical lock, while the savings calculation includes a bucket of variables that likely can’t be known with any certainty for a decade, or two, or three.

The H-A article quotes City Mgr. Shawn Hamilton as saying: “We want to make sure the numbers being used in their projections are good numbers and that the assumptions are correct.”

Now there’s a pile of heifer dust that would rival the Augean Stables.  Except Hamilton is no Hercules.

If Hamilton and City Staff actually believe they have a snowball’s chance in hell of coming anywhere close to predicting the cost of water – whether purchased from Chicago or E-Town – for the next 20-30-40 years, they must be smoking the souvenirs of their last trip to Colorado.

For this deal to make any sense at all, the first order of business is to determine whether Evanston is willing to lock in a water rate schedule for enough of those 20-30-40 years that the ROI from water cost savings becomes as close to mathematically certain as the $60+ million cost of building that infrastructure.  Because trading one avaricious water vendor (Chicago) for another (Evanston) without some ironclad guarantees on pricing is just plain foolish.

And one thing we’ve learned from watching Park Ridge government and politics for the past 24 years is that there are rarely any real consequences for bureaucratic foolishness. So when it comes to anything in the nature of long-term predictions or projections, a Magic 8 Ball is about as reliable as any local bureaucrat.

Fortunately, unlike the bobble-headed aldermen back in 2000-2007 who danced to whatever tune Schuenke and the consultants played, the current Council is willing to question and push back against Staff and consultant pronouncements – as you can see with Alds. Dan Knight’s (5th) and Marc Mazzuca’s (6th) interrogations of the Niles/Morton Grove consultant at the Council’s 04.13.15 Committee of the Whole meeting – with the consultant’s presentation starting at 1:11:10 of the meeting video; and Knight ‘s and Mazzuca’s interrogations running from 2:01:10 to 2:22:15.

THAT’s the way elected officials (D-64 and D-207 board members take note!) are supposed to look out for the taxpayers they represent.

Especially when they’re thinking about betting $60+ million of the taxpayers’ money.

To read or post comments, click on title.

11 comments so far

Sixty million dollars just for the privilege of buying water from Evanston? Has anybody done the numbers to see whether that sixty million would cover the anticipated increase in water costs from Chicago?

Alds. Knight and Mazzuca did a fine job of grilling the consultant, who sounded like he was tap dancing for all he was worth. I share 6:29’s concerns about sinking that much money into a water delivery system that will put us at the mercy of another community, even if it is one more trustworthy (at least as of today) than Chicago.

By putting such an artificial deadline of July on this it sounds like there is pressure to avoid the scrutiny this project would deserve. There are several critical assumptions that would go into this type of project such as those you have described above and others you have not. Locking up a long term deal with Evanston on the cost of the water would be one thing but you also have to factor in repair and maintenance of the line to PR and getting a long term deal on splitting that expense with Niles and MP. On the other side the repair and maintenance we currently pay for our line to Chicago should be factored in with an appropriate inflation rate. The consultant could certainly make the deal more attractive if they used recent price increases in Chicago water to project out into the future.

Ultimately the council should set up a task force to study the assumptions the consultant has made using the talent and skills of our community. This would give them informed (and I would hope) unbiased judgement in making a decision that is in the best interests of the community, specifically our wallets.

EDITOR’S NOTE: Should the City also factor in the possibility/likelihood of Chicago filing for a Detroit-style bankruptcy in the next few years?

A Chicago bankruptcy may benefit Park Ridge residents. If Chicago got their house in order they may stop looking at water as a source of revenue.

EDITOR’S NOTE: Given how FUBAR-ed Chicago is, and how broke Illinois is, only BK offers any chance that Chicago might ever get its house in order.

When did Hamilton and City Staff go to Colorado? Did I pay for it? Were they studying water delivery?

EDITOR’S NOTE: Calm down, Ace – that was a little bit of satire. And no, you didn’t pay for either the travel or the satire.

Would it be cheaper to build a pipeline from Mayfield Estates to Park Ridge?

EDITOR’S NOTE: Maybe, but then you’d need a water treatment plant – but the whole magilla would only be good two or three times a year.

I heard the Village of Bedford Park offers a huge water supply.

EDITOR’S NOTE: Which we understand it buys from Chicago. So your point is…?

I hate to break it to your climate-change-denying readers, but “looking at water as a source of revenue” is going to ramp up, not down, in the future. And as you are always happy to champion, them that has, gets.

EDITOR’S NOTE: “Climate change” isn’t something we expressly deal with here, so we don’t tend to get many/any comments denying it. We also don’t “champion, them that has, gets” – and we challenge you to identify a post where we have articulate that principle.

It would be hard to find a post where you don’t articulate that principle in one way or another. Nobody would ever say you’re at a loss for words of all kinds. The fact that you see human beings as no more or less than “taxpayers” or “freeloaders” and that you believe any needs of theirs besides spending less on government are unworthy of public interest is one way you keep articulating it. Transparency and integrity are hard virtues to maintain, aren’t they?

EDITOR’S NOTE: No, we see human beings as multi-dimensional creatures. “Taxpayers” and “freeloaders” are only two of those dimensions. So are “altruistic” and “selfish.”

We also are suspicious of “needs” because that term is so often mis-used by the “freeloaders” and the “selfish” to describe mere “wants.”

And we’d have no problem spending MORE on government if the community as a whole received MORE VALUE for that greater expenditure. But it never seems to.

And, no, “transparency and integrity” are EASY to maintain if a public official respects ALL the residents enough to tell them the truth, the whole truth, and nothing but the truth; and if that same official respects himself/herself enough to do the right thing rather than the easy thing or the popular thing. Sadly, we haven’t had any of those at D-64 for at least the past two decades.

Hence, we have to write posts like this one to point that out.

You are safe in your faux-friendly claim that you’d spend more on government “if the community as a whole received more value for that greater expenditure.” How convenient for your that “it never seems to.” You object to paying police and firefighters because not doing so hasn’t resulted in more crime (you actually said this during the cop shop rebuild fantasy) and presumably you feel the same because there aren’t more fires. Besides, only a few people need the cops or firefighters at any point in time, so it fails your “community as a whole” test. And public works is only needed by some of the people some of the time, so that’s out, thank goodness. As for schools, libraries and anything else that benefits specific populations (kids, those who read, etc.), well, those also fail the “community as a whole” test. So there you have it. Nice!

EDITOR’S NOTE: Public employees should get raises for basically the same reasons private employees get them: more work performed, or better results from that work.

For the other side of of the performance-based raise coin, we’ve given D-64’s teachers and administrators raises every year for the past 10 years, if not longer, even as the achievement rankings based on objectively measurable test scores stayed stagnant or declined.

“….. even as the achievement rankings based on objectively measurable test scores stayed stagnant or declined”.

Speaking of test scores…….http://www.huffingtonpost.com/2015/05/04/john-oliver-standardized-testing_n_7202430.html?utm_hp_ref=media&ir=Media

It’s a little long but worth a view. He says it better than I ever could and as a bonus, he is freakin’ hysterical!!

By the way, take a look at some of the ISAT documents. The company he references toward the end (Pearson) is all over it.

EDITOR’S NOTE: Interestingly enough, the “educators” never complained – before all this standardized testing – while the performance of American students began to decline vis-à-vis that of other developed nations.

Maybe that decline was why both the Republican Bush administration (with “No Child Left Behind”) AND the Democrat Obama administration (with “Race to the Top”) decided that standardized testing is one way of attempting to ensure some kind of uniformity in measuring student achievement and “educator” accountability – as well as the delivery of educational value for all the money “invested” in public education.

And so long as the SAT, ACT, MCAT, LSAT, etc. figure prominently in college and grad school admissions, that probably makes some sense.



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