Archive for the ‘MLGW’ Category

Buried Memphis Treasure, More Valuable Than Gold

Monday, July 23rd, 2018

July 23, 2018

Buried Memphis Treasure, More Valuable Than Gold

 

Recently Mr. Jerry Collins, the recently retired President of the Memphis Light Gas and Water Division gave a talk to a local group which I attended. The presentation was very interesting and full of important points. The most interesting and contraversal point was his statement that water under the tri-state aquifer is increasing rather than decreasing.

 

This statement caused some discussion and when I repeated it to my daughter she challenged me. So, I went back to the source of the statement, Mr. Collins, and he gave his reasoning for the assertion. The hydrostatic pressure of water in the aquifer is increasing not decreasing indicating more water, not less.

 

You must look at his resume to understand his qualifications to make this statement. He has a bachelor and master’s degree in civil engineering and has 30 years’ experience at the City of Memphis all related to water treatment and then 11 years as President of the MLGW.

 

Another critical point in his explanation is that regulations mandating things like more efficient flush toilets, washers and other appliances have had the effect of people using less water. The same can be said for electric and gas using appliances. Conservation by reasonable regulations can be important in preserving our natural resources.

 

Memphis, in my opinion, has a bright future if we understand what we have here. Our water resource is our most valuable treasure and Jerry Collins with his history of smart water decisions diminishing flooding during heavy rains, and water treatment has helped make Memphis a great place to live. Your thoughts and experiences would be appreciated.

 

Open The Purchasing Records

Tuesday, May 15th, 2018

Open The Purchasing Records

May 15, 2018

There was an interesting article in the CA entitled “Memphis has lost focus”. The article went on to quote the Chairman of the Memphis City Council, Berlin Boyd, saying “We can’t continue down this path and expect a different result”. Also Richard Smith of Federal Express and Chamber of Commerce chairman, demand that elected leaders gut or fix the city/county EDGE board. The EDGE board is well known for handing out tax freezes for various businesses. The Edge board also has rules for minority vendor participation for any EDGE granted pilot. The article stated that Mr. Smith urged the end of minority spending rules.

 

Concerning EDGE minority spending rules the article stated that Boyd said that the biggest beneficiary of the minority spending rules is white women. Assailed by critics, Boyd and Smith agreed to keep the spending rules in place.

 

I have railed against this minority spending requirement for several years. I am not against economically disadvantaged minorities getting a leg up. However what should be changed is the following.

 

The paperwork and legal qualification rules are very complicated and discourage otherwise qualified firms. There should be a common-sense method such as the better business bureau or other independent organization that gives a rating system based on customer satisfaction reports.

 

Most importantly the purchasing system should be open and transparent with the final bids and selection on line and open to all. If a minority firm is the low bidder, so be it. If it is not the low bidder and is selected, then the price differential should be no more than 3% to 5% and then the minority firm should be given a one to two year time to graduate to a no price differential status for future competitive bids.

 

The system now is not transparent and we do not know what minority spending rules are costing us and we do not know who are the beneficiaries.

 

 

 

 

Why Can’t The Public See Public Bids And Price differentials?

Tuesday, April 10th, 2018

April 10, 2018

 

Why Can’t The Public See Public Bids And Price differentials?

 

Bids for items purchased by public entities should be open and public information. Organizations such as the City of Memphis, Shelby County, MLGW and others paid for by local, state or federal tax money should have transparency on their bids.

However, this is not the case. Here are some local examples.

If you go to the City of Memphis website (www.memphistn.gov) and click on Business and then on RFPS and RFQS (request for proposals and request for quotations) and click on current solicitations you will see a table of upcoming quotations.

However In regards to the posting of Bid Awards online, the City currently does not post these online, but plans are in motion to soon place online links to reports detailing all bid awards for a given time frame plus the awarded vendor name, amount, description of the bid and Division name.  (attached are two examples of this report—one for 2017 and one for 2018 YTD).  However, there is no report available that includes the above information along with details on the losing bidders. Info on losing bidders would have to be obtained via the Open Records Request system on an individual bid basis or by reviewing the contract documents for each awarded contract.

If you look at the above two lists (one for 2017 and on for 2018, you will see the types of items purchased by the City of Memphis and the amounts spent. There are huge amounts of pubic money being spent.

The tax paying public is entitled to know how this money is being spent, who is getting this business, how much higher the other bidders quoted and if the lowest bidder was not awarded the contract, why not.

The rules and regulations for being able to bid on this public business are very complex and discouraging for private businesses to jump though all the hoops. I know several local business who add 10% plus whenever bidding on public buxiness due tothe paperwork.

I asked Shelby County for similar information on purchasing and their reply was as follows.

In response to your inquiry, the County does not publish the information on our website. There is no intentional exclusion of the public’s right to see the information but rather there has never been a demand for the information.  Another problem we have is that we do not have a sophisticated system to process purchasing and contracts information.  We are in the process of obtaining a modern system that will facilitate providing the information in question.

 

Occasionally we will have a request for the information you are citing but it is usually from an unsuccessful bidder or sometimes from a company interested in bidding on a certain service or commodity.  Is there anything in particular that you would like to see?

 

To date I have not gotten any response from the MLGW concerning the question of purchasing transparency.

Now here is the problem with all local public purchasing.

A local news report stated the following. “Shelby County commissioners approved a moratorium Monday, April 2, on all county contracts and budget amendments worth more than $50,000 through the end of August.

The 10-3 commission vote follows concerns some commissioners expressed last week in committee sessions about a multi-year contract worth $20 million for medical services to county corrections center inmates.

The contract is specifically exempted from the county’s ordinance setting percentage goals in awarding county government contracts to minority-owned businesses.”

Now I have no objection to seeing minority-owned businesses getting a leg up in establishing an efficient and competitive private business. If they need a price differential for several years in order to get up and running so be it. But the public should know what it is costing the taxpayers and it is obvious we do not know the extent of this public cost. Let us put it out there so we know what it is costing. What is your opinion?

What Pubic Retiree Healthcare Costs You As A Taxpayer

Tuesday, January 16th, 2018

What Pubic Retiree Healthcare Costs You As A Taxpayer

 

January 16, 2018

 

Years ago, I started investigating healthcare costs for active employees and retirees at the MLGW, the City of Memphis, Shelby County and the school system. At that point (before 2007) there was no requirement that the unfunded liability of medical and other costs for retirees be put on the financial statements of the various local governmental units. I started checking on the unfunded liability which was called OPEB. (Other Post Employment Benefits, mainly health care costs and life insurance).

I was shocked by the amount of unfunded liability. Look at the history of this huge unfunded liability over a certain time period.

OPEB History- unfunded liability

MLGW 2007            658 million

MLGW           2015              461 million   down 30% from 2007

 

City of Memphis 2008                  857 million

City of Memphis 2015                  730 million

City of Memphis 2017                  504 million  down 58% from 2008

 

Old Memphis School System 2008                   1.34 billion

Current Shelby County School System 2016  1.25 billion   down 9% from 2008

 

Shelby County Government 2007                     319 million

Shelby County Government 2016                     101 million   down 69% from 2007

It is obvious that this is still a large problem. But as usual, our Shelby County government recognized the problem early (in 2007 when notified by GASB) and acted. The City of Memphis was slow in acting but eventually addressed the problem. The Memphis school  system as usual has stuck its head in the sand and is hoping for a government bailout. The MLGW is well healed and is slowly addressing the problem.

The next question that occurred to me was “What is the cost to the taxpayers for the portion of annual health care premiums for retirees paid by taxpayers?” I asked for and received the following answers.

MLGW           2528 retirees’ cost/retiree paid by rate payers            $11,733/year

City of Memphis 1524 retirees’  cost/retiree paid by taxpayers            $6466/year

Shelby County   1941 retirees’   cost/retiree paid by taxpayers            $4658/year

 

It is obvious that the MLGW is different and that Shelby County Government is more efficient. In my next posting I will take up the cost to public employees (active and retired) for their annual health care premiums so that you can compare your cost to what public employees pay and look at the annual cost rise since the affordable care act came into our lives.

MLGW Rate Increases

Wednesday, December 13th, 2017

MLGW Rate Increases

 

MLGW has proposed rate increases in gas, electric and water rates over the next few years. MLGW management says that part of the need for increases are related to decreasing sales in product. Well I decided to review the latest annual report available (the year ending December 31st, 2016).

 

The City Charter designates the disposition of revenue from MLGW three divisions, light, gas and water. MLGW is not a profit-making organization but it is required to breakeven and pay it debts and keep a reserve to cover its debts and emergencies with a proper margin. It also pays to the City of Memphis a payment like a for profit business would pay.

 

I have looked at the statements of the three divisions for the year ended 12/31/16 and the electric division lost $12 million dollars after paying $40 million to the City of Memphis. The Gas Division lost $14 million after paying $17.5 million to the City of Memphis. The water division made $9.8 million after paying $4.4 million to the City of Memphis. It is not clear if this includes the 2 million payment for the FedEx arena.

 

It seems clear to me that the MLGW needs a price increase to keep its financial situation secure. It is a well-run organization with well trained employees and with advanced technical knowledge.

 

Now I want to point out that MLGW employees have a much richer health care benefits then the City of Memphis and Shelby County employees. I am gathering current information of these benefits and will be publishing information as soon as I obtain the data.

 

People are becoming energy savers and the combination of advanced energy saving appliances like light bulbs and AC/heating units and smart meters are saving energy and this is a good thing for the ecology. Again this is a well run organization with competitive rates and I hope that whomever replaces Jerry Collins will be as able as he has been.

This and That About The Bicentennial Gateway Project

Monday, November 27th, 2017

This and That About The Bicentennial Gateway Project

 

I recently published the details about this huge proposed project but there were several unanswered questions that needed answers.

 

Here are the points that needed clarification and I pursued and got the answers.

 

On the list for original amounts spent for the presentation of this project was $518,270.97 paid to Stephen Schreiner & Renee Barrett. It turns out that that this amount was for the purchase of two pieces of property close to Bass Pro at 369 and 371 North Main.

Another question concerned the funding for this project which showed Annual Revenues from Land Leases of $297,000 the first year and a total of $3.7 million through 2031. The answer from the City of Memphis was the underlying assumption from the RKG report that the City might lease City-owned land to private entities, the specific land under consideration would be Mud Island. This is only an assumption, as no deal or structure has been developed for a project at this location.

Another question concerned the Brooks Museum of Art and the amount of support that the City of Memphis gives to the Brooks yearly. The City responded that in the FY 2016 net expenditures from the City to the Brooks was $571,448.00. I have attached the latest 990 form detailing the finances of the Brooks Museum. It basically depends on contributions from the City of Memphis and outside donors.

 

The other big factor is the type of bonds that are proposed to finance this and other similar projects like the Fairgrounds project. I am told they will be revenue bonds which generally mean that the City of Memphis, Shelby County and other governmental organizations with tax powers will not be on the hook if the project does not pay for itself on sales tax and property tax increasing revenues. Here is typical revenue bond language.

THE SERIES XXXX BONDS AND THE INTEREST THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE CITY, THE STATE OF TENNESSEE (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF WITHOUT LIMITATION, THE CITY, SHELBY COUNTY, TENNESSEE (THE “COUNTY”) and so on and so on.

So what this means, if it is revenue bond financing, that the bond buyer is at risk and will take the haircut if the income projections do not meet the projections. Hopefully they will and if so fine. If not, the bond holders suffer. However the reputation of the City will also suffer as it now happening in Puerto Rico and the City of Chicago and the state of Illinois and the City of Detroit in the past.

 

This downtown project and the Fairgrounds proposal needs a lot more discussion and disclosure. What are the risks and what are the rewards?

 

 

 

 

 

 

The Targeted Generation

Tuesday, March 14th, 2017

We have all read about and many of us have experienced credit card and even bank irregularities. Hopefully we are aware of the scammers, hackers and fraudsters as we live in the electronic age of banking and credit devices.

I try to be vigilant but it is not easy to keep up with these electronic artists. I charge most items on a well respected credit card (capital one). They seem to be vigilant and their fraud detection software seems good. If some charge is large and outside of my normal shopping pattern they alert me immediately. I have had to change credit card numbers several times over the last few years and that gets to be a problem when you pay bills automatically against your credit card (e.g. donations, MLGW bill etc.).

Recently I have had problems with my credit card at Kroger. It is a chip card and they had to try it three or four times before it accepted the charge. I asked Capital One about the problem with Kroger and they said that some companies had not kept up with security software changes. Then all of a sudden while checking recent charges on my credit card account I found that my card had been put on hold. When I called, they told me that the address on my driver’s license did not match my current credit card address. (We recently sold our house and moved into a retirement community). They told me I had to send them a pdf file for the following items by secure email.

 

A) Both sides of my driver’s license. B) My social security card. C) Some bank document showing my new address. Then to top it off, the security person said:

“YOUR GENERATION IS BEING TARGETED BY SCAMMERS”.

It is no doubt true but it did make my blood boil.

I did send them the documents by secure email and then I had to wait 72 business hours to get the card reinstated. Is it worth the trouble?

Some of my friends have gone to all cash payments for shopping, meals, groceries etc. That has its’ own problems including physical security and now the government is looking hard at anyone who regularly gets large currency bills from the bank. Think drug dealers.

Am I the only one who is concerned about these scammers? My daughter and son in law work for the VA and, of course, the VA had a huge loss of personal information (social security numbers, birth dates etc) to hackers. They had their credit cards compromised and went thru a similar reset, luckily without financial loss.

I would love to hear your thoughts, scammer and hacker stories and solutions.

The Memphis Police Situation

Tuesday, February 28th, 2017

I read Mayor Strickland’s weekly update (https://mail.google.com/mail/u/0/#all/15a4e354e56b4a71) and it was a very thoughtful and informative article on the Memphis police staffing, recruitment and benefit situation. He blames the current shortage of uniformed officers on two things. One was the Memphis pension and OPEB (other post employment benefits, mainly retiree healthcare) unfunded liability. The unfunded liability was so massive that the State of Tennessee Comptroller threatened to take over the city unless it was addressed. This was in 2014. In order to meet this funding requirement retirement healthcare benefits had to be cut and more and more officers decided to retire or resign.

I have written in the past about this situation and it was the fault of past city of Memphis mayors and past city of Memphis City councils that ignored the 2007 GASB 45 regulation that required that pension and retiree health care expenses be recognized as they are earned rather than as they are paid. The Shelby County government did the right thing and the City of Memphis did not and hence the 2014 year of reckoning.

We all want and need good and effective policing as Memphis is earning a bad reputation for violent crime. I want Memphis to hire more qualified officers and apparently Mayor Strickland is moving in that direction. There is one more thing he can do which will help in the future and that is to stop the abuse evident in the City of Memphis pension board. This abuse is the number of LINE OF DUTY DISABILITY approved by this board. In the past I have compared the number of line of duty disability approvals from Memphis to the MLGW and Shelby County. The approval in Memphis is 10 times higher per active employees than Shelby County and the MLGW. Line of Duty disability approval gives the disabled employee a pension of 60% of his highest average salary tax free for life.

The City of Memphis in 2011 had 429 people on line of duty disability costing the City $11.8 million per year. In 2016 the figure is 510 people costing $14.7 million. Compare this with the MLGW employees. In 2008 they had 37 people in this status costing $523,000 per year. In 2015 they had 34 people in this status costing $485,000. Shelby County in 2015 had only 17 line of duty retirees. Compare that to 510 for the City of Memphis. Clearly there is a problem at the City of Memphis and it goes to the Memphis Pension Board and it’s makeup of members. The membership of this board and its rules need to be changed. The numbers of line of duty retirees at the City of Memphis when compared to the MLGW and the County clearly show a problem and the problem should be addressed. Qualified new officers should be paid whatever the market requires but obvious abuses of the system should be stopped.

The City of Memphis OPEB Solution?

Tuesday, January 3rd, 2017

 

January 3, 2017

 

OPEB is Other Post Employment Benefits. This means retiree medical expenses and life insurance.

Mayor Strickland has been wrestling with this problem for some time including his stint on the City Council before he became Mayor. He is trying to solve a tough unfunded liability problem that has been brought about by the City’s (and I mean past mayors and past city councils) refusal to face the problem since 2007. In 2007 the government accounting standards board warned the city and the county as follows.

“The Governmental Accounting Standards Board issued statement No. 45 (GASB 45) Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions; GASB 45 requires that other post employment benefits (OPEB) be accounted for similar to pensions in that the expense must be recognized as the benefits are earned rather than as they are paid.”

As of June 30, 2008 when Willie Herenton was Mayor and Jim Strickland was on the City Council, the unfunded OPEB liability was $857 million. The County OPEB unfunded liability as of June 30, 2007 when AC Wharton was county Mayor was $319 million.

Now fast forward to recent reports. The OPEB unfunded liability of the City of Memphis was $700 million as of June 30, 2016. The OPEB unfunded liability of Shelby County Government as of June 30, 2015 was $101 million.

WHAT IS THE CAUSE OF THE DIFFERENCE IN THE ABOVE NUMBERS?  The original cause of both the City and the County was that they allowed retirees under the age of 65 to stay on their subsidized health care plans of which the City and the County paid 70% of the premium. This was regardless of length of service or whether the retiree spouse had a private sector plan which could include the retiree or whether the spouse was on Medicare.

The county passed Item 32B on June 18, 2007 and was signed by Mayor Wharton which addressed and solved the problem. The City did nothing until the recent actions which has resulted in the reported conflict between the Mayor and retirees. Mayor Strickland has come up with his solution “Explaining the path to pre-65 health subsidies”.

The real blame for this huge problem of unfunded liability is the non-action of past City Councils and past City Mayors since the 2007 notice contrasted to the actions of past Shelby County governments. City Mayor Wharton should have known better and past City Councils should have had more courage and foresight.

In the future I will post City, County and MLGW health care costs and let you compare them to what you will be paying privately. I would appreciate your thoughts on these matters.

What Is The Cost Of Minority Purchasing Efforts?

Tuesday, November 1st, 2016

November 1, 2016

 

No Subject causes more heat input and less useful locomotion than minority purchasing policies by all public tax supported governments. Look at what we spend just at the City of Memphis. It is difficult to pull together the total cost of these efforts but the 2017 City of Memphis adopted budget shows $895,000 dollars under the title “EQUAL BUSINESS OPPORTUNITY AND DEVELOPMENT PROGRAM”.

Shelby County Commissioners voted to rehire consultants Mason Tillman Associates at a cost of $80,000 to help rewrite the county’s procurement procedures.

The 8-4 vote followed a debate on whether a consultant was needed, whether it could be done locally and whether the contract included litigation support.

Mason Tillman conducted the county’s $310,000 disparity study, which analyzed purchasing data from Jan. 1 2012 to Dec. 31, 2014. They found that contracts went overwhelmingly to non-minority males and that 55 percent of the contracts were awarded to firms outside of the county.

Commissioner Steve Basar, who along with Mark Billingsley, George Chism and David Reaves voted against the contract, said there was probably someone locally or even with county government who could follow the recommendations of the study to provide the same services.

The contract did not include litigation services, which Commissioner Heidi Shafer saw as a grave omission.

If the county is sued, she said, there’s no way of knowing how much Mason Tillman will charge to serve as an expert witness.

She abstained from the vote.

However, Commissioner Van Turner emphasized that the law requires that race-based purchasing policies be “narrowly tailored” and it will likely be challenged if not done properly.

The commission seated an ad hoc committee to rewrite the county’s purchasing policies, which include the creation of a minority/women business enterprise program.

 

A new study released found that disparity between city of Memphis contracts awarded to minority- and women-owned firms and white-owned firms increased since the previous study six years ago.

The study by Atlanta-based Griffin & Strong found the city’s disparity index increased in the period between 2010 and 2014 from the period between 2003 and 2008 in all categories except “other professional services.”

The index is calculated based on the difference between minority and women-owned business enterprise (MWBE) utilization and availability.

Griffin & Strong made several recommendations, including that the city increase the staff working to reduce the disparity, take control of the certification process, and plan for MWBE spending during the budgeting process.

Joann Massey, director of the Office of Business Diversity & Compliance, said she will incorporate some of the recommendations into a new Equal Business Opportunity ordinance that’s in the works.

Griffin & Strong was paid $331,620 to create the study, the city’s first since 2010.

 

My position on the participation of minorities and small business enterprises is from the standpoint of a taxpayer. I want each multi bidder contract to be awarded on the basis of lowest and best price. Lowest is not always the best way to go. I remember a contract at the MLGW on underground electrical distribution cables. I voted to award the contract to a firm whose cables had a much better record on cable failures than the low bidder. Lower maintenance cost for the higher quality cable was the right answer.

 

The problem now is transparency in the bidding process. The City and the County show the winners of competitive bids but they do not show the losing bids or the names of the bidders . Also non competitive bids (single source) do not have an explanation of why the awarded bidder is the only available source.

I want minority and small enterprise firms to prosper and learn how to compete in the real world market place earning both public money contracts and private enterprise business. However let us stop with the expensive studies and concentrate on simplifying the qualification process and open up the bidding information so the taxpayers can know who the successful bidders are, who bid but did not get the award and if a premium was paid for the successful bidder, an explanation. What are your thoughts on this process?