The Elephant in the Room…or, How Could Something So Simple Be Overlooked??

The City of Glendale is planning a major overhaul of its electrical generating plant. The plan is referred to as the “Repowering of the Grayson Power Plant”. The proposal started off about 4 years ago with an estimated cost of $250 million…then a couple of years later the plan was upgraded and the cost went to $340 million. Today, the re-powering is planned to cost $500 million…funded through a 30 year bond.

The City is pushing unusually hard to get this plan approved. The General Manager of the Utility, Steve Zurn, has spoken at various meetings and passionately advocates for passage of the plan. In addition, some Council Members and the City Manager are also advocating to have the plan approved.

But, something doesn’t seem right?? On its face, the plan appears to be wrong: overpowering the plant, unreasonably expensive, having a projected obsolescence before the bond is paid off, and environmentally unsound. With all these negatives, why is the City pushing so hard to approve it??

Lots of questions are unanswered (some defy common sense):

Why is the plan so expensive?

Why is the plan for using natural gas, when natural gas is polluting and becoming obsolete?

Why has the City spent tens of thousands of dollars on mailed fliers and website write ups to convince the citizens that this is good for them?

How/Why did the plan go from $340 million to $500 million in two years??

The majority of the Citizens don’t seem to want the repowering, why go ahead with it?

I kept asking myself, “Who is benefiting from this?”

Last week the answer to all this came to me like a bolt of lightening!! The single answer to my questions was like the proverbial elephant in the room that no one has noticed, or wants to acknowledge!

It’s NOT about the Power Plant, electricity, or the environment…it’s all about the Bond Money – The $500 million!! The City may need it to survive!!

I believe the City Management couldn’t care less about the power plant, it’s the money they want!!

Here is why! (A little history.)

Several years ago, in order to balance the City budget, City Management began transferring about $20 million a year from the Utility to the City’s General Fund. The City Council Members even voted a large increase in the Electric Fees (about a 32% increase compounded over 5 years) to ensure the Utility had the money to transfer. Money going into the General Fund is usually from taxes…but, the Council didn’t want to try something unpopular and raise taxes to fund expensive staff salaries and pet projects, so they just began to use the Utility money instead. It was easier to raise the Utility Fees by a simple vote of the five members of Council, than to get taxes raised by a ballot measure requiring a 2/3’s vote of the Citizens to pass!!

Unfortunately for the City, using the Utility money as they did was/is a violation of State Law and the City’s own Charter. Four years ago, a volunteer/non-profit Citizens group, the Glendale Coalition for Better Government, Inc. filed a law suit challenging the money transfers and requesting that the money be returned to the Utility. Last year, the Coalition won that lawsuit for a return of almost $60 million, but the City has appealed that decision. If the City loses that appeal and the Coalition wins, by the time the court’s decision comes out, the actual award with accumulated interest could be well in excess of $100 million dollars.

So, as I see it, the unjustified $500 million bond is going to be used as an “insurance policy” so that if the City loses the appeal, City Management will be able to use a portion of that bond money to offset the $100+ million loss from the Court judgment. As you can imagine, $100 million loss to the City budget would put the City into a seriously poor financial position and shine a very bright light on City financial mismanagement.

And here’s something that most people may not have thought about:

Question: How come the Grayson Power Plant suddenly needs a $500 million “repowering”?

Answer: Because City Management has used the Utility’s money to fund general government and sucked the Utility dry, leaving no surplus, no money for deferred maintenance, and allowing the Power Plant to fall into a state of disrepair. City Management and their puppets will argue that the Plant needs repowering because “it’s old and worn out”…they don’t mention that each year millions of dollars were/are being drained out and the Plant was starved for maintenance and upgrades.

You may ask:

Question: If that $500 million bond is for the Power Plant, how can City Management use it to help the City’s General Fund. (By the way, no one I have asked can tell me why the Bond cost increased $160 million…is it just coincidence that this might be about the City’s loss in the lawsuit?)

Answer: That Bond money can easily get to the General Fund by “creative accounting”.

The City Management was able to illegally use Utility money for years and no one questioned it until the Coalition sued the City…surly the City can hide and use some of that Bond money for things for which it wasn’t intended just like the original utility fees.

There is a saying, “If something doesn’t seem right, it probably isn’t.”

It’s the Bond Money, no one in City Management really cares about the Power Plant.