Bazan responds to unusual broadside by Chron transportation columnist
The Houston Chronicle today ran an unusual broadside by transportation columnist Rad Sallee against a number of citizen activist/watchdog types who dare question METRO (and the ethically-challenged Frank Wilson), a task seemingly abdicated by the leadership of Sallee's newspaper years ago. Tom Bazan responded to Sallee's unusual broadside, and we're posting his comments below (since it seems unlikely the Chronicle plans to offer Bazan or other citizen activist/watchdog types named in the story any chance to respond in print).
To: Rad Sallee, et. al.,
There is the impression left by your column that I am or have been wrong in voicing my concerns and criticism of METRO and the electrified boondoggle legacy of Lee. P. Brown, named METRORail.
Stray Current:
FACT - The system was shoddily built, and not properly tested for stray current leakage prior to service start-up. It took three years, and a significant expenditure of taxpayer funds to identify and attempt to cure the sources of stray current leakage. The system still operates outside the design specifications. Stray current still exists, and no one knows the extent of cumulative damage to the infrastructure in the three years METRORail operated prior to the repairs and modifications, which has brought the stray current leakage down to where METRO claims is "manageable." No one at METRO can state the stray current leakage has been stopped, and that infrastructure will not be damaged in the future.
The industry forms Corrosion Committees, as METRO has, to manage the expense of future damage resulting from stray current. I am not convinced that there was NO cumulative damage, and that there is no danger of premature failure of city infrastructure and the 40+ year old substructures of the expressway bridges which span the METRORail.
I presented evidence of City-owned infrastructure damage, I contend from stray current corrosion, to the METRO board last month. From METRO's own stray current reports, there was a significant level of stray current detected in the vicinity of the Museum District platform situated on San Jacinto, just north of Hermann Drive. There was a premature failure of an 8-inch steel-reinforced concrete water line pipe, situated at San Jacinto and Herrman Drive, around February 26, 2006, which interrupted the METRORail operation. The city claims there was no record of any failure analysis of this pipeline. The intersection was rebuilt during the construction of METRORail, and infrastructure was being worked on in this vicinity around March of 2002. There was no contractor daily work report referencing that this pipeline was ever protected from stray current.
Regarding the recent speech made by Mr. Marcotte concerned FY2008, one might be curious if you asked Mr. Marcotte if the words "Stray Current" and METRO or, the corridor where METRORail operates, ever rolled off his lips during that presentation when the $2 million for corrosion control out of the CIP allocations was being discussed?
Is this the same Mr. Marcotte who was running the water system in Washington, D. C. back in 2004 when the EPA started enforcement action over unsafe levels of Lead in the drinking water? Didn't he claim he had no knowledge that the Lead levels were too high? This denial seemed reminiscent of the "I Know Nothing!" denial from the Sgt. Schultz character in the 1960's era TV Comedy series "Hogan's Heroes."
General Mobility Funds:
FACT: When I did sit down with the Mayor's staff, the first item mentioned was $44+ million which seemingly was not collected by the prior administration. Why did METRO refuse to disclose the information, seeking a TXOAG opinion so as to "stonewall" the information. According to the few documents "pried" from METRO, when compared with other agency documents, a huge discrepancy was observed. In my view $44 million is a huge amount.
The Mayor stated publicly that he had hired people to try and unravel METRO's financial statements and failed. There are still significant discrepancies that METRO will not explain in writing. Further, the City, also flush with sales tax revenue, does not seem to be anxious to invoice METRO for these funds. In April 2007, there was about $109 million unbilled, and that was reduced to $90+ million four months later. At that rate, METRO can sit on the GMP funds for years before distributing it, while METRO collects interest on the hoarded funds, and City taxpayers pay the project interest on the bonds.
Defeased Leases:
FACT: The actual data is detailed in the METRO annual financial statements, anyone who looks will likely be startled at the amount of payments, for decades! The facilities were already paid for, and METRO entered into these "finance" agreements so as to get a lump sum payment necessary to have enough cash to start building the METRORail boondoggle. Tax credits to investors still "short changes" federal taxpayers and are egregious!
The U.S. Congress BANNED the use of Defeased Leases by transit agencies in 2004.
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Excerpt from WSJ
Civic Duties
How Big Tax Shelter With Cities
Shortchanges Federal Treasury
Use of Sale, Leaseback Deals,
Worth Billions Each Year,
Is a Target of a New Bill
Chicago Sells Its 911 System
By JOHN D. MCKINNON
Staff Reporter of THE WALL STREET JOURNAL
October 7, 2004:
"The essence of the deals -- which the Internal Revenue Service dubs SILO, for "sale in, lease out" -- is a sale of depreciation rights. If a city builds, say, a subway system, it can't deduct the cost from its income taxes over future years, for a simple reason: Cities don't owe income taxes. So the city sells the subway to someone who does.
The buyers, typically financial firms, then can depreciate the subway -- that is, deduct a portion of its cost from their income each year for several years running. In a final step, the buyers, having no use for a subway, immediately lease it back to the city. The terms of the deals are structured to leave the city with a packet of cash. (The city often conveys the property to the investors in a long-term lease, which is treated for tax purposes as a sale.)"
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Might I suggest that each day that passes we learn that I was not wrong in my overall criticism of METRO, and I am confident the facts that emerge over time will support my contention that METRORail is an unsafe boondoggle.
-- Tom Bazan
Posted by Kevin Whited @ 11/05/07 10:27 PM | Print |
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