Ballots will soon be hitting the mailboxes of Anchorage voters for the municipal election, which includes various propositions. Proposition 10 asks voters to approve negotiations with Chugach Electric for the sale of our electric utility, Municipal Light & Power. I am voting no on Proposition 10 and urge other voters to do the same.
In 1975, the city of Anchorage and the Greater Anchorage Area Borough merged into the Municipality of Anchorage. Subsequently, the Municipal Charter was written and enacted as the guiding document for the governance of the new entity. Section 16.02 of the charter defines how the sale of any municipal utility should be conducted. It reads: "the municipality may sell, lease, or otherwise dispose of a municipal utility only pursuant to an ordinance or initiative proposition approved by three-fifths (60 percent) of the qualified voters voting on the question. If the disposal of the utility is by ordinance, the municipality may dispose of a municipal utility only to the highest responsive bid received by the municipality from a responsible bidder to a competitive procurement. The assembly shall provide for such competitive bidding by ordinance, and shall provide a description of the factors that will be considered in evaluation of the bids, including the relative weight of price and other evaluation factors."
Unfortunately, neither of the charter requirements for selling ML&P has been followed in the proposed sale to Chugach. There was no Assembly ordinance authorizing a sale and triggering a competitive bid and the requirement for a 60 percent vote has been disingenuously altered in the proposition. The opening sentence of Proposition 10 reads: If approved by a majority of qualified voters voting on the question, this proposition would amend the Anchorage Municipal Charter and authorize (but not require) the Municipality to sell … the assets and business of ML&P to Chugach Electric.
Nowhere in the proposition does it state that the normal requirement for selling a utility is 60 percent and that this charter requirement is being ignored for this proposed sale. I seriously doubt if 99 percent of the voters know the 60 percent charter requirement and if that requirement is to be bypassed, it should be done in the most transparent way possible.
Municipal Manager Bill Falsey has given varying and somewhat bizarre explanations for not following the charter. First he said that the 60 percent requirement was written to keep the former borough residents from voting to dispose of municipal utilities after unification. Later he said that the 60 percent standard in the charter is primarily for voting on minority rights issues. Both explanations are wrong. The 60 percent requirement for selling a utility was put in place so that an extremely valuable municipal asset was not easily disposed of. The last utility sale, the Anchorage Telephone Utility was successfully sold with the higher standard. If this sale is such a good deal, why are we not following the existing charter language?
Chugach proposes to continue to pay the annual property tax currently paid to the municipality by ML&P and adds that amount to the total sales price. Since the muni is already receiving these funds and would receive them if the sale was to a for-profit company rather than a co-op like Chugach, this provision does not add any value not already received by the municipality. Chugach CEO Lee Thibbert agreed with that assessment at a recent meeting coordinated by Commonwealth North.
Additionally, the sales proposal retires ML&P debt and replaces it with new debt to be incurred by Chugach. However, the current ratepayers will be paying the debt regardless of who owns the utility. Like the property tax issue, paying off the ML&P debt does not add monetary value to the municipality or give relief to ratepayers. Voters have been told that this is a ''billion dollar sale'' but they should be aware that the actual cash to be paid to the municipality is significantly less. Over $300 million of the sales price is to be paid over a 20- to 30-year period, not cash up front.
This deal was negotiated behind closed doors with minimal public involvement and without the advice and consent of the ML&P Advisory Commission, who learned of the deal the day before it was delivered to the Assembly. Judy Brady, one of Anchorage's finest civic leaders, resigned as chair of the commission over how this backroom deal was handled.
Combining utilities and striving to create efficiencies is a laudable goal. However, this goal should not be achieved at the expense of a truly open and transparent process. I would advise the Assembly to go back to the drawing board, pass an ordinance approving the sale, and begin a true competitive bid process. This way, if a sale is to occur, Anchorage residents will receive the maximum value for our utility, which could be many millions more than currently being offered.
Dan Sullivan was Anchorage mayor between 2009 and 2015.
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