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Q&A: Peoria City Manager Urich says water buyout option ‘was never designed’ for a successful bid

Peoria City Manager Patrick Urich
Joe Deacon
Peoria City Manager Patrick Urich

Peoria is spending $100,000 on an outside consulting firm to study the viability of the city buying out the water company.

Under terms of an 1899 sale, Peoria's option to buy back its water service comes up every five years. City manager Patrick Urich says the steps involved with a possible purchase include a lengthy appraisal process that could prove to be expensive.

In his latest monthly conversation with WCBU reporter Joe Deacon, Urich discusses the water utility buyout process.

This transcript has been edited for clarity and brevity.

The city is spending almost $100,000 for an outside firm to study the viability of buying out the water company and operating the service itself. What do you anticipate this report will show, and how realistic of an idea do you think it is from a cost-effectiveness standpoint?

Patrick Urich: Well, I think that this is money well spent for the City Council. We have seven members of the city council that have never gone through this process before. Every five years this comes up, the need for (considering the buyout option), and when they have elections … they've just never been through this purchase before. So what we wanted to do was to have a firm come in and really look at some of the operational and engineering and financial considerations ahead of the council making that decision because once they cast their vote in October – the end of October is the deadline of when they have to let the water company know – if they say they want to pursue that process, it's likely a 2½–3-year process that's going to cost a significant amount of money in experts and appraisers, and runs the risk that if the city decides after going through that lengthy evaluation process that they don't want to buy the water company, then they have to pay the water company back for their expenses. So in this, we wanted to bring on a firm that could look at some of these issues and help the council to make informed decisions ahead of time, because the first decision that they have to make is do they want to embark on this journey.

It sounds like it would be a very long journey if they do take that path.

Urich: If they do, just based on the rules that were built into the franchise agreement that's now 140 years old, what we would have to do is, we would first negotiate with the water company. As you could imagine, (we’d) sit down at the table and say, “Here's what we'll pay you for the water system,” and they'll say, “Well, here's what it's worth.”

If we can't get to agreement then, then we hire an appraiser, they will hire an appraiser, (and) those two appraisers will hire a third appraiser. That becomes the panel that will set the value for the water company, and then you hire expert witnesses to come in and testify. All that costs money, and all of that will take a very long period of time in order to get that information up and then finally have the valuation hearing.

After that point, the water company panel or the panel of appraisers that sets the value of the water company, they will say, “this is what we think it's worth.” Now we then have the option as the city to take six months to look into the books – and this is the only time we get to look at the books of the water company, is after the price has been set. Then we look at it and say, “do we want to buy it for that price?”

Then if the answer is no, we've got to pay the water company back all of their expenses in addition to all the sunk costs that we'll have of doing that. So those are some of the challenges with it. It was never designed, I think, for the city to successfully purchase the water company back, just the way that it was structured in that franchise agreement – and that's the only thing in that franchise agreement that's still left, that a judge has said is still valid. So we get to do this every five years.

Union employees of the Peoria Public Library still don't have a new contract, and have been working under an expired agreement since the start of the year. Pay remains the primary issue and contract mediation sessions were unable to bridge the gap. Union members have brought up their concerns to the (city) council at public comments. What can the city do to facilitate getting a new contract worked out?

Urich: The city council, through the mayor and then with the advice and consent of the city council, appoints the (library) board of trustees. Once appointed, all policy related decisions – except for ultimately adopting and approving a budget, which the council does as part of our budget process but it's really perfunctory – (are) really handled by the library board of trustees. They hire an executive director; that executive director (Randall Yelverton) works for them.

In a lot of ways, they are a set separate unit of government, so there isn't much that the city council can do. The council certainly has the power of convening, and can certainly meet with the board of trustees to talk through those issues. But this is a matter that needs to be dealt with between the employer, who's the library board of trustees, and their employees, represented by AFSCME.

You say that the city sets the budget for the library though, right?

Urich: We approve the property tax levy, and then in a perfunctory way approve the budget that they have set as the library board.

So is there any way that the city can maybe have influence or discuss with the board and try and facilitate this?

Urich: If the library were its own separate district, if it were its own unit of government, it would be limited to a 15-cent property tax rate; currently, their rate is over 30 cents. Coupled with that, they also have a debt service levy where they're paying for the bonds that were issued back in 2008. So as we look at that, the city is contributing from a financial perspective and allowing the library to spend more dollars than if they were on their own. So I think that the city has shown its willingness to support the library system. This is an employment matter, it's a collective bargaining matter between the library and AFSCME, and I'm fully confident that it will get resolved.

You're fully confident it will get resolved, (but) are you optimistic it can be resolved soon?

Urich: AFSCME has options that they still haven't explored, and the library district will certainly probably look at what they can do. But I fully believe that both parties will get this resolved.

Some city council members have suggested taking an “outside the box” approach to handling juvenile crime and large overnight gatherings in the city. It's been suggested that the city could somehow hold parents accountable for the actions of their children, or possibly the bars could close earlier. What can the city realistically do to address this unrest?

Urich: Well, the police chief (Eric Echevarria) has been working to dedicate some additional resources on weekend evenings. He has worked with his team and with our police department, and the men and women of the police department, to assemble a team that's going to be dedicated to working downtown on weekend evenings. We're hopeful; we deployed that this past weekend and it was – overall, the evening went off relatively well. I think that we're going to continue to try and dedicate as many resources as we can (to) try and address some of the criminal activity quicker that we're seeing that's happening downtown, and unruly behavior that's happening downtown, to hopefully address that and be more proactive with that since we have more resources dedicated on Friday and Saturday nights.

Then I think that we're going to continue to explore what options we have available on the juvenile side. I think that there's some significant concern that's raised – not only by our policymakers on the city council, but our residents – about the fact that we're seeing that juveniles with lengthy criminal records are being released back into the street instead of being held at the juvenile detention center. I know that our police chief has been in conversations with the state's attorney (Jodi Hoos) about talking to the – this is where you have two different unit levels of government, the city and the county, and a third, which is the judicial system. So there's really the relationship between all. The JDC is operated and run by the court system, so as we have those conversations, those are issues that need to be addressed with the courts. Hopefully, they'll see that we've got some significant concerns about some of the records that some of these kids have on the street. We'll see a noticeable decline in auto thefts or other crime when those kids are locked up than when they're not. So it’s something that we want to continue to see addressed.

Over the past few days, residents have had to decide whether or not to opt into the electric aggregation program. Can you explain for us what decisions were made as far as the electric aggregation choice and what this will mean?

Urich: So last spring, as we were preparing to execute another (aggregation) contract, the electricity market really exploded and the cost of supply for electricity exploded – and it's been very volatile ever since. So one of the things that we tried to do in our buying group – which includes Peoria, Peoria County, Tazewell County, there's Peoria Heights, West Peoria; we have a number of communities that are part of this in your listening area that are members – was to try and address some of that volatility.

Looking at what some of the Energy Department's publications had said about where long term energy rates are, we decided to buy long. So we decided to buy over a three-year period to try and lock in our rates. Our rate is 9.84 cents (per kilowatt hour), plus a little capacity pass-through (1.06 cents) – which, that comes up every year (where) they have this auction for how much electricity capacity. So our rate is a little bit over 10 cents right now, right in that area there, that will be that way for this year. We feel that that's going to be the best (way) to provide stability in the buying group for that period of time.

Because of the volatility, Ameren only published rates that are good through the summer, and then they're going to have to restate their rates again in October and then likely again in May. In addition, every month there is a line on your bill for what's called the “purchased electricity adjustment,” which Ameren can adjust it up or down – and mostly, at least over the last eight months, it's been up. It adds to your cost of electricity supply, as they "true-up" their costs of buying all the energy that they have. So we think long term, we just wanted to provide some stability and that's the reason why we made that decision.

What takeaways did you get from the strategic planning kickoff events held a few weeks ago? What do you think are the most important areas for the city to focus its efforts over the next five years?

Urich: We had six areas that we wanted people to focus on, and we asked for three different lenses that we wanted people to think through. So, we were talking about the importance of downtown, the importance of workforce development, the importance of economic development, the importance of neighborhood investment, financial solvency. We wanted to focus on all those areas, and then we wanted people to think about it with three additional lenses, and that was: thinking about it through the lens of public safety, the lens of the arts and how the arts can help to achieve goals in those different areas, and then lastly, within the area of diversity, equity and inclusion.

I thought the input from the community was fantastic. We had two great days of discussions; I bounced around to all the different groups that were talking about that and I'm really excited about the input that they're going to provide. Our team is working now to assemble what's called a “gap analysis,” looking at where we may have gaps, as well as an environmental scan, looking in the region of about what we see as some of the areas where we have strengths and weaknesses. Then we're going to put that back together, and then in July – July 20-21 – we're going to have additional community visioning sessions that will be set up.

We have a new website dedicated just to the strategic plan, which is www.peoria2023.org, and if you go out to (the website), you can see when the events are listed. You can also see the different areas of focus that we're trying to talk about, and you can provide additional input on the site. So if you weren't able to participate, you can do that. We're still going full speed ahead towards having a plan done and completed by the time we kick off budget (discussions) in October. So we're really excited about the initial kickoff; I think it really sets a great stage for where we want to go forward.

What efforts or ideas are being considered for the riverfront, and specifically toward attracting a new riverboat or something to replace the Spirit of Peoria?

Urich: We are finalizing some design plans that we had been working with Terra Engineering, and had several community sessions with the public talking about what elements we want from bridge to bridge (Murray Baker and Bob Michel bridges) down on the riverfront. We'll be seeing the release of that riverfront plan here very soon, where we'll be releasing that to the public. Then hopefully Council will adopt it and that'll be our template for what we want to go forward with.

In addition, this week, you'll see the riverboat RFP (request for proposal) is finally out on the street. Our economic development team has been working to identify how we might be able to solicit for other river-based activities along the riverfront, using the dock and the space that we have along the riverfront. So that'll be going out, and we're happy to get that out in the street and see what kind of impact we would have. That's likely not going to happen this year; by the time we get the RFP back and talk to different vendors, we'd probably be looking at 2024 for something to come forward with.

What are the key items coming before the horseshoe at the next city council meeting?

Urich: You're going to see a lot of appointments. This is the time of year where the mayor (Rita Ali) works to make all the appointments to our boards and commissions. She has been diligent; she had a whiteboard in her office that was full of names of people that she was working to get reappointed or appointed. So, they’ll be coming to the city council and that's going to be the lion's share of that.

We've got a couple of liquor license approvals on the agenda, and some zoning matters and a couple of annexations that we're asking the council to approve. But for the most part, it's really going to be focused on a lot of those appointments. Then, as we gear up, looking forward to seeing here – as we are now in the summer – just a busy year of all of the zoning and public works activities that will be coming over the next couple months.

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Contact Joe at jdeacon@ilstu.edu.