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Sunday, Nov. 23, 2014

PILOT: Council's view

Sunday, February 2, 2003

To the citizens of Sikeston:

If you have been confused about the PILOT issue, don't blame yourself. It is a detailed and complicated issue. Furthermore, many statements have been made that simply don't square with the facts. Before you vote, please read the following. The future of this community is at stake in more ways than you know.

Not a single member of your City Council came to office with the belief that a PILOT was necessary. Now, by a vote of 4 to 1, we have put this measure on the ballot and are asking you to approve it.

It's not a secret that there is a disagreement between the Council and the BMU. What may not be as well known is that the City Council has tried repeatedly to work this matter out with BMU in private. Only after considerable frustration have we placed the matter before the public for a vote.

A year ago last August, the City Council initiated the current discussion with BMU on a Payment In Lieu Of Taxes. In order to promote an orderly and responsible discussion, we compiled all the documents we relied on to conclude that a PILOT was both legal and reasonable from a business standpoint. These documents included three formal legal opinions holding that a PILOT would be legal.

We sent these documents to the BMU board and asked the board to review them. We asked the BMU to offer any reasons they might have to oppose a PILOT on either legal or prudent business grounds. We asked for a written response in six weeks. We never got one.

Instead, the BMU board suggested that they make annual, voluntary payments to the general of the fund of the city beginning with a first installment of $750,000. However, the BMU stated that this transfer would create a need to raise retail rates as much as 6 percent in the very near future. The Council declined this offer.

They were in favor of us putting a PILOT on just the Sikeston rate payers. The BMU is in the business of producing and selling power. They do a very good job of that; they are one of the lowest cost producers around. Seventy-five percent of the power is sold outside of the city limits. We feel that this well run business that sells power below competitor's prices has the ability to produce and distribute a profit to the citizens of Sikeston.

The Power Plant has been operating at full capacity for many years now. Their audited financial statement shows that they've accumulated $19 million in revenues over expenses since the plant opened. We believe the citizens of Sikeston should get more than low electric rates.

Our rates to these cities are cheap enough already. According to reports on file with the Federal Department of Energy (Form 412), most of these cities (four out of five) buy more power from us than they're required to. Obviously, they can't buy power cheaper anywhere else. Columbia pays other electric providers a rate 50 percent higher than they pay us for their incremental power purchases. In fact, they buy cheap power from us and sell it to others for a profit. Privately, former BMU officials write that Columbia has every right to resell our power to others. That's true. It is legal. But the point is still made. Our power is so cheap to these cities that they market it to others for a profit. They're not going anywhere. Columbia has a 7 percent retail PILOT of their own and uses that revenue to keep their other taxes low.

The PILOT is the smartest possible way for Sikeston residents to raise money to pay for municipal services. For every $1 raised from Sikeston residents, $4 would be raised from non-residents. From these wholesale customers, we would be claiming nothing more than a well-deserved profit for having taken the risk of building the plant and going into debt $250 million.

Our contracts with these cities run for the life of the plant. The public statements that these cities will leave us are simply not true. All these contracts contain the language, "This contract may not be terminated by either party hereto under any circumstances, including upon the default of the other party." These firm power customers aren't going anywhere.

The claim that retail rates will rise 10 to 14 percent is wrong. The elected City Council, not the appointed BMU board, sets the final retail electric rates in this city (Sikeston Ordinance 2.24.220). The BMU even says so on their Website. The council has already pledged that retail rates will not rise by more than 3 percent, and to do whatever is necessary to prevent any increase over that amount (including refunding payments back to BMU until the PILOT can be repealed, if all the legal opinions are wrong and there's a court judgment against passing it through to others).

We believe we need to move forward and continue to support our Public Safety officers, our Public Works programs, fund the cleanup of derelict properties and accelerate much needed improvements to our streets and parks.

We believe the PILOT will allow the City of Sikeston to move forward. We cannot afford to go backwards.

Sincerely,

Phil Boyer, mayor

Jerry Pullen, council member

Michael Harris, council member

Sue Rogers, council member