Note from Publisher Bill Bowman: I am yielding my space this week to Fayetteville resident, PWC ratepayer, and former District 8 Fayetteville City Councilman Ted Mohn. He is known for his laid-back common-sense management style, keen insights into complex city issues, and his razor-sharp analysis of what constitutes fiscal responsibility and good municipal business practices. Below he raises 13 pertinent questions about the proposal made to our city by Bernhard Capital to manage our Hometown Utility. These questions need to be answered before any further consideration is given to this proposal.
Fayetteville PWC is correct to request being released from the non-disclosure agreement with Bernhard Capital LLC. Citizens of Fayetteville and FAYPWC ratepayers deserve answers on this proposal. Fayetteville City Council should join our FAYPWC in being released from the NDA. Our Hometown Utility belongs to us and we deserve answers in a reasonably timely manner.
In June 2019, I attended a meeting at City Hall along with Mayor Mitch Colvin, Councilmember Tisha Waddell, FAYPWC Commissioner Darsweil Rogers, select Fayetteville senior staff and members from Bernhard Capital. Bernhard provided us a handout with background company information and the basic concept of how such an agreement might work. No specific financials were ever discussed. Everyone agreed much due diligence was needed for any further discussion for an initial financial proposal of this magnitude. June 2019 was the last time I heard of Bernhard’s idea until I noticed a closed joint-meeting between City Council, our FAYPWC Commission, Bernhard members and select city and FAYPWC senior staff. That meeting occurred on December 1, 2020, at Fayetteville State University. I thought it was odd at first but then I realized the extra space was most likely needed because of COVID-19 and social distancing requirements.
Fayetteville taxpayers and FAYPWC ratepayers outside city limits deserve details of the Bernhard proposal. Below are some of my simple questions:
1. How much actual cash will the city be provided upfront from Bernhard?
2. Is Bernhard going to pay-off all current city debt in addition to the upfront cash?
3. Who will set the FAYPWC customer electric, water and sewer rates?
4. Who will negotiate with Duke Energy for long-term bulk electric rate purchases in the future?
5. Will Bernhard pay actual property taxes versus how FAYPWC now pays Fayetteville money from their electric fund as payments in leu of taxes (PIT) as specified in the City/FAYPWC charter?
6. Will the potential new annual property tax payments from Bernhard be greater each year than the PIT money currently paid by FAYPWC to the city per the charter?
7. Will Bernhard actually build a satellite headquarters in Fayetteville and bring 200+ jobs like they told Lafayette, Louisiana, they were considering back in 2018 and never did?
8. Bernhard says they make their investment back by being more efficient in running business. During their due diligence what aspects of running FAYPWC will they make more efficient to save money which would go back to their investors?
9. Fayetteville PWC is a not-for-profit utility. Will the NC General Assembly have to update the charter to allow FAYPWC profits to be turned over to Bernhard and their investors?
10. Fayetteville PWC currently takes what could be considered profit and turns around and uses that money for infrastructure upgrades, extensions and improvements. Will Bernhard take that money to repay their investors or will they continue to invest in infrastructure upgrades and replacements?
11. Will Bernhard want some type of revenue sharing agreement where they automatically get “x%” of the initial annual revenue from the electric, water and wastewater fund regardless of projected/planned infrastructure needed upgrades identified by the FAYPWC?
12. Who will have regulatory oversight of Bernhard’s management of our FAYPWC’s electric, water and wastewater departments and funds?
13. How many years does this proposal last and what happens at the end of this proposal to the city, FAYPWC ratepayers and Bernhard investors?
Many questions still need to be answered and I’ve only scratched the surface. If Bernhard has done their due diligence to make this a win-win for the city of Fayetteville, FAYPWC ratepayers and their investors, I’d like to see their amortization tables on who is held harmless, who makes out and who gets the short end of the stick. I need to see these projections from Bernhard broken down by each utility fund to better understand what is being proposed and projected. I also want to see projections from our FAYPWC senior staff and whomever the city of Fayetteville might have hired to review all of this.
Residents and FAYPWC ratepayers deserve transparency on this proposal and we need it before our City Council and FAYPWC Commissioners take public votes on the Bernhard proposal.