Niles council divided on issue of paying to learn monetary value of city-owned electric utility

Published 9:29 am Wednesday, August 10, 2016

In a very rare occurrence, Niles Mayor Mike McCauslin had to vote twice during Monday’s meeting of the Niles City Council on an issue concerning the valuation of the city’s electric, water and sewer utilities.

As mayor, McCauslin only votes when there is a tie vote among the eight-member council. The mayor said he has voted three or four times during his tenure as mayor prior to Monday.

“This rarely happens,” he said.

The council was divided on whether or not to pay a company — Burns & McDonnel, of Kansas City, Missouri — an amount not to exceed $32,800 to determine the true value of the city’s electric utility. Council members agreed that the city should pay the same company $15,000 to perform a valuation of the water and sewer utilities because the valuations are needed in order to proceed toward the settlement of a lawsuit with Niles Township.

The electric utility is not part of the lawsuit — one reason why Councilman Tim Skalla made a motion to pull the valuation of the electric utility from agenda item, while leaving in the valuation of the water and sewer utilities.

Skalla also said paying for a company to put a value on the electric utility gives the public and employees of the electric utility the impression that the city is thinking about selling the utility.

Mayor Mike McCauslin said the city council could not vote to sell the electric utility because that would take a vote of the city residents. He also said he has been asking for a valuation of the city’s utilities divisions — including the electric division — to be performed for a number of years.

“We have a tremendous asset in wastewater, water and electric and we have absolutely no idea what their true value is,” he said, adding that knowing the value would be beneficial in determining more accurate depreciation schedules and valuations. “This has nothing to do with the sale of the electric division or the utilities. It is really information that the city council and our city leaders should have.”

Skalla said he does not remember ever hearing the mayor or anyone else ask to obtain the true value of the city’s utilities divisions until the city received what Skalla described as a “low ball offer” for the electric utility.

“I certainly would not be inclined to encourage that,” he said. “That’s the only time I’ve ever heard of that come up.”

Councilmember Gretchen Bertschy said she could not imagine putting a value on the utilities because they “are worth everything.” She also questioned what the council could do if the company returned a valuation the city did not agree with.

“What do we do then?” she asked.

Councilmember Dan VandenHeede said he could not vote to pay a company $32,000 to study the electric utility.

“As a ratepayer myself I can’t support that,” he said.

John DiCostanzo and Georgia Boggs both agreed with the mayor that knowing the value of the electric utility would be beneficial.

Robert Durm said while he thinks the information would be valuable, he could not support a study of the electric utility during a time when the city is struggling to balance its budget.

Bertschy, VandenHeede, Durm and Skalla voted in favor of paying for a study of the sewer and wastewater utilities, but not the electric utility. Boggs, David Mann, Bill Weimer and DiCostanzo voted against the motion.

The mayor then broke the tie by voting against the motion.

Mann then brought the motion up again — this time with a valuation for all three utilities. Predictably, Boggs, Mann, Weimer and DiCostanzo voted in favor of the motion, while Bertschy, VandenHeede, Durm and Skalla voted against it, leaving the mayor to break the tie.

McCauslin voted to support the motion, which passed 5 to 4.