The devil’s in the details (April 7, 2017)
According to the Daily Press (3/28/17) the Town of Apple Valley will ask voters to approve Measure F in June to facilitate their takeover of Liberty Utilities Water Company by issuing bonds in the amount of $150 million dollars, payable over 30 years at a rate of 12 percent.
These numbers are defined as “maximum” numbers, but once approved by the voters they are in fact the authorized amount and the town can complete the deal as stated in Measure F without additional voter approvals.
Town staff speculation they can get it done for less is meaningless. In asking for approval at these (Measure F) levels there is obviously some expectation that this takeover could be that expensive and certainly defining the price at $150 million will raise Liberty Utilities’ expectation as to the value of their operation and assets.
Now for the bad news. If the transaction goes as defined in Measure F, the total numbers will be a lot higher than the $150 million purchase price. $150 million financed at 12 percent for 30 years comes to a total acquisition cost of $690 million, of which $540 million is interest on the bond issue.
It is inconceivable to me that this deal represents a good value and could in any way reduce water prices, improve water quality or service. Additionally, I don’t believe the Town of Apple Valley has demonstrated it has the technical know how and expertise to operate the water system safely and cost effectively.
Once we issue the bonds and the money is spent, we are on the hook for it, for better or worse, there is no going back. I recommend a NO vote on Measure F.
Dean Schepis, Apple Valley
Source: Daily Press