Wednesday, April 3, 2013

Beep, beep!



When I was growing up, one of my favorite Saturday morning cartoons was the Road Runner.  As one may recall, it involved Wyle E. Coyote who constantly chased a road runner, presumably to make a meal of it.  Coyote would prepare elaborate schemes to catch the bird, all of which came to the same inevitable conclusion:  he either burned to a crisp, became disassembled or, my personal favorite, ran off a cliff and for a moment was running in place in thin air before falling to the canyon floor.  After every disaster, the Road Runner appeared smiling and said: “Beep, beep!”

One must wonder if the current city administration has become our own Wyle E Coyote.

About 12 days ago, Bach announced that Mark Earle, the city airport director, had “resigned.”  What was particularly telling was Bach’s quote of Earle’s reason for leaving in the Gazette article: “ ‘Why don’t you hire someone more in line with your philosophy.’ ”  I have known Earle through the years and seen many of his presentations to City Council.  I can easily hear him saying this.  However, it was probably not said with respect for Bach’s leadership.  What is more frightening is the thought that Bach will be taking over the negotiations with the airlines.  What, if anything, does Bach know about running an airport?  If he is confused about why passenger traffic is declining at Colorado Springs Airport, perhaps he should log on to Travelocity or any other airfare booking website and check the price differential between a flight from Denver or Colorado Springs.  It is a bad sign when one’s administration cannot retain highly qualified and respected people.  Further, that the news was released late on a Friday afternoon indicates that the Bach administration was intentionally trying to bury the story.

The disasters keep coming for the Bach Administration.  Last evening I checked the city election results!  I cannot remember any election in which the Housing and Building Association (HBA) got shellacked like it did in this election.  Sure, perhaps there may be one corollary.  In 1991, following years of bickering on City Council, including one incident in which a council member dropped the “F” bomb on an open microphone, the citizens cleaned house.  Of the three incumbents running for re-election that year, only one won.  The major combatants were turned out in favor of new blood.  (For trivial buffs, that campaign also featured the first television commercial in a city election.)  This year, however, the outcome is much more sweeping.  Particularly telling are the losses suffered by Tim Leigh and Angela Dougan, Bach’s leading supporters on Council.  The HBA and Steve Schuck (Bach’s biggest supporter in 2011) were out in front in January with quick endorsements of their slate of candidates, including Leigh and Dougan.  Leigh and Dougan did not lose close elections; they were soundly beaten.  Given their close and very public ties to the Bach Administration, this can only be seen as an indirect rejection of such.

Now Bach goes forward with his best allies on Council beaten.  This is a warning sign for any of the newly elected Council members or the three remaining incumbents of the dangers of alignment with the mayor’s office.  It is also a sign of a weakened mayor. 

Beep, beep.

Sunday, March 24, 2013

Predictions



The election is coming up soon, so it is probably time for a review of the six district races and some predictions.

District 1:  A standard rule of thumb is that a controversial incumbent wants a lot of opponents to split the anti-incumbent vote.  I am not sure whether that will work in this district.  Tim Leigh has two main opponents: Don Knight and Joe Barrera.  Only Knight has any money, which makes gives him a one on one with Leigh.  At the candidate forums I attended I thought neither Leigh nor Knight connected very well with the audience.  I am guessing that Leigh will win on the basis of name recognition with Barrera getting just enough traction to split the anti-Leigh vote.

District 2:  This is a one up between the incumbent Angela Dougan and Joel Miller.  Dougan is one of two council members (Tim Leigh is the other) who usually votes the way the mayor wants.  She has a lot of money, over three times the amount Miller had in the last report.  At the campaign forums she also brags about being the most conservative council member.  She did not talk about any issues, much less any nuances of an issue, and alone of all the candidates at the forum, she did not use all of the time given to her for an introductory speech (everyone else ran long).  Unfortunately for Dugan, her reputation as a council member is poor and there is no one to split the anti Dougan vote.  I think Miller has just enough money to run a credible campaign and ekes out a win.

District 3:  This is the hardest to call.  There are three candidates, Keith King, Jim Bensberg and Brandy Williams, all with name recognition, money and a winning track record.  Of the three, King’s campaign fund is most puzzling; he has probably three to four times the funds necessary to run a good campaign.  Why?  Are donors trying to curry favor in the event of a victory?  Since I will not permit myself to straddle the fence, I will say Bensberg wins, but I would not be surprised with a King victory either.

District 4:  This race is also difficult to call.  Helen Collins and Deborah Hendrix have the money; Hendrix has over twice the funds Collins has, which alone makes her the favorite.  Dennis Moore has just enough money and endorsements to be in the race.  And Gary Flakes is infamous.  I did not think any of these candidates connected with the audience; all had trouble dragging people out of their iPads or smart phones.  Dennis Moore has been a Republican precinct walker for many years and has demonstrated the willingness to do the grunt work necessary to win a small district race.  I think Dennis Moore wins in an upset.

District 5:  This is essentially a one-on-one with Jill Gaebler running against Bernie Herpin.  Al Loma is also in the race and may play a spoiler role splitting the anti-incumbent vote, but he does not appear to have enough money.  If the vote comes down to name recognition, then Herpin will win.  If Gaebler has been successful in organizing small neighborhood meetings and meet-and-greets, she will win.  Indeed, Gaebler is the only candidate to really connect with the audience at any of the candidate forums I attended.  She had just enough energy to pull people out of their electronic devices, catch their eyes and hold them without being over the top.

District 6:  This is the race that strikes fear in the hearts of all.  This is also essentially a two- candidate field: Ed Bircham and David Moore.  David Moore has the endorsements, money and virtually all of the support of the power elites in Colorado Springs.  Bircham has name recognition and a very surprising sixth place finish two years ago.  Playing a hunch, I think Bircham finishes on top this time.

Issue 1:  This is the TOPS modification measure.  While I personally oppose this (please see my post from a few weeks ago), I expect it to pass.

Issue 2:  Pay for Council.  The role of council is in great flux right now.  If a separate utility board is created, council's work load will be much smaller and the time / salary requirement also smaller.  I just think this is the wrong time for this measure.  I expect it to fail.

Sunday, March 17, 2013

Sorting Through the QUE



Once each quarter, the University of Colorado Colorado Springs College of Business and Administration publishes a review of economic metrics in El Paso County Colorado.  (Available here)  Known as the Quarterly Updates and Estimates or QUE, it is a must read for anyone in public office or in business in Southern Colorado.   One can even subscribe to it free of charge and have it delivered each quarter to your email inbox.   Several items in the most recent publication merit comment.

The first one is the data set on housing starts in El Paso County.  Housing starts are up in El Paso County over the last year.  Good news.  However, the data set used by UCCS only details the last two years for a year-over-year comparison.  Curious, I visited the Pikes Peak Regional Building Department (PPRBD) for a longer term view.  The PPRBD data set goes back over a decade, and provides not only the total number of permits issued, but the total dollar value for those permits as well.  This enables a rough calculation of the average dollar value of the permit issued.  Using a crude inflation deflator, one can compare the average dollar value of a permit over time:

Year
Single Family Permits
Single Family Gross Value
Average Value per Permit
Average Value of Permit - Inflation Adjusted
2000
5,000
$608,339,213
$121,667.84
$164,036.79
2001
5,272
$635,301,017
$120,504.75
$157,973.49
2002
4,931
$594,876,052
$120,640.04
$155,689.36
2003
4,856
$625,138,761
$128,735.33
$162,434.60
2004
5,789
$803,787,146
$138,847.32
$170,649.16
2005
6,269
$904,596,195
$144,296.73
$171,535.05
2006
4,148
$696,796,063
$167,983.62
$193,452.80
2007
2,686
$478,817,710
$178,264.23
$199,606.90
2008
1,547
$301,121,873
$194,648.92
$209,894.25
2009
1,315
$416,491,672
$316,723.70
$342,749.62
2010
1,629
$505,995,855
$310,617.47
$330,716.95
2011
1,563
$528,358,733
$338,041.42
$348,902.25
2012
2,387
$836,160,686
$350,297.73
$354,221.90

From 2005 to 2009 the gross number of permits cratered, as El Paso County suffered along with the rest of the nation from the fallout of the interrelated housing and banking crises.  However, the average value of the permits issued skyrocketed both in absolute and inflation adjusted terms.  Indeed, in 2012 El Paso County had almost recovered all the way to the 2005 high in gross value of housing permits; but on only about 1/3 of the total permits.  Fewer permits mean fewer housing starts and, thus, fewer construction jobs, while the higher dollar value of those permits means that city and county sales tax revenue should be recovering quite nicely.  And it appears, based on the most recent City sales and use tax report, that they have.

The second interesting data set to be pulled from the QUE are the details on the unemployment rates.  At the end of 2007 there were about 290,000 jobs in El Paso County.  Today there are fewer than 270,000.  Factor in the growth in the population of about 60,000 to 70,000 people and we have a significantly worse employment situation than the official unemployment rate of 9.2 percent.

An improving real estate market is not solving the unemployment problem.



(I would like to acknowledge and thank my wife, Robin Purvis, for her willingness to edit my posts each week.  She has saved me countless times from my mistakes.)

Sunday, March 10, 2013

Storm Water




“Those who cannot remember the past are condemned to repeat it.”  -- George Santayana



So,  Colorado Springs Utilities should fund storm water capital and maintenance needs.  Really?

I am not sure where to begin on this one.  Does this mean that there should be a fifth utility, storm water, to go along with electric, gas, water and wastewater?  Or, maybe that storm water channels are so important to drainage crossings of water and wastewater lines that utilities should be responsible for the entire channel?  Or, perhaps simply that CSU should pay for storm water improvements, just because?

On the first suggestion of a fifth utility, well, we’ve been there, done that.  We had a fifth utility once not so long ago.  It was called street lights.  The public objected very strongly, and in 2003 the citizens elected a new City Council that promptly eliminated it.  It seems the citizens thought it was a general fund expense.  After that lesson, City Council tried storm water as an independent enterprise, this time operated by the general fund.  Again the voters rejected it, passing Doug Bruce’s Issue 300 in 2009 thus forcing the elimination of the storm water enterprise.  Surely, the current administration is not so ignorant of recent history that it does not know the likely citizen response to the idea of a fifth utility.

On the second option there is, obviously, a nexus between the condition of the drainage channel and the security of water and waste water crossings.  Everyone would accept utility’s taking steps to care for the channel within a reasonable distance of the crossing.  Much more than that and one is quickly in a quagmire.  How far upstream (or downstream) does the responsibility go: the city line? CSU service territory?  the Fountain Creek watershed?  the county line?  These are four different geographical areas with no logical connection between them and CSU’s primary services.  CSU has for some time contributed to storm water channel improvements within 100 yards +/- of a water or waste water line crossing.  The Utility Board even discussed increasing that distance, and walked away from it for the reasons discussed below.

Maybe CSU should pay for it, just because?  Except, unlike the Federal Reserve Board, CSU cannot simply print money.  CSU must raise it through the rate structure.  Adding tens (hundreds?) of millions of dollars in expenses will require raising rates for either water, waste water or both.  Water rates are already sky high to pay for the Southern Delivery System, now under construction.  Waste water rates are also high, having been raised over the last 15 years to pay for system-wide improvements to replace and repair ancient, decaying mains thereby reducing waste water spills.  Adding the costs without raising the revenues to pay for it is even more dangerous, impacting many different bond rating metrics.  Further, bond rating agencies are always on the lookout for publicly-owned utilities pulling this type of shenanigan: foisting general fund expenses off on the utility rate payer.  The rate payer pays for the storm water improvements, either directly through rates consciously increased to pay the added expenses, indirectly through lower bond ratings and higher borrowing costs, or, most likely,  both.  It is, in fact, a back door tax increase without any public discussion of either the cause of the problem or where the costs should fall.

It is the nature of everyone newly elected in public office to blame one’s predecessor for current circumstances.  A close corollary to this precept is the argument that one’s predecessor overlooked the obvious solution to the problem.  Unfortunately, in public office, this is almost never the case.  The newcomer to office simply (willingly) does not remember the past.