Feedback: In Defense Of The Public Lighting Authority

August 28, 2013, 10:07 AM

By Maureen Stapleton

Darrell Dawsey’s recent Deadline Detroit column, How Many Consultants Does It Take To Turn On A Street Light?, reflects a fundamental lack of understanding of the Public Lighting Authority of Detroit (PLA).

Detroit’s street lighting system, and indeed all of the assets of the public lighting department, has been in increasingly serious disrepair for some time, with minimal infrastructure investment having been made for at least the last 20 years.  Approximately half of the lights in the system are not working for reasons that include copper theft, bulb outages, vandalism, obsolete technology, lack of repair staff and a lack of funds to pay for repairs.   No reasonable person could argue that drastic change in street lighting isn’t badly needed.

"The investment required to 'get the lights on' necessarily means incurring new debt," says Maureen Stapleton, chair of the Public Lighting Authority.

The challenge before us was to find a way for a financially challenged city to find the funds needed to repair a badly deteriorated system and to get those repairs and upgrades underway.

The answer to this challenge was the creation of an independent authority completely separate from city government and with its own independent revenue stream.

That was made possible when the Michigan Legislature passed and Gov. Snyder signed legislation last December to allow public lighting authorities to be created in Michigan cities. The Detroit City Council then voted 6-3 on Feb. 6, 2013 to create the Public Lighting Authority of Detroit.

The PLA is governed by a five-member board made up of Detroit residents who are appointed by the mayor and city council.

Bond-Financed Upgrades

Our mission is to develop and implement a plan to improve street lighting (lights, poles, bulbs) in the city and to provide a vehicle to secure the funds necessary to make the badly needed improvements to Detroit’s street lighting system. The entire city should be done within three to four years.   

We are authorized under law to issue up to $160 million in bonds to modernize a system that everyone knows has fallen into serious disrepair.  Those bonds will be paid off through an annual allocation of $12.5 million from the city’s Utility Users Tax, originally levied to pay for public safety activities. That source was chosen because the marketability of the bonds required a secured revenue stream and we all recognize that public lighting is clearly an important part of insuring public safety. The three-bill package passed into law requires the city to pay back the money borrowed from the Utility User Fee to ensure that our Police Department remains whole.

We are now developing a plan to relight the City of Detroit and will be announcing the first phases in the coming weeks.

Let me briefly cover a few of the more serious misstatements in the column in question. 

The writer claims that our mission “seems to be to hand over lucrative energy customers to DTE and suck down funds once earmarked for cops,” and that “the sweetest part of this deal is that the Lighting Authority will buy power from DTE and it will, in turn, sell that power back to the City of Detroit.”

First, no one is handing anything to DTE. The fact is that DTE has been the city’s sole source of electricity ever since the city-owned Mistersky Power Plant was shut down more than three years ago because it had fallen into serious disrepair. They are already providing all the electricity used by the Public Lighting Department.  The city of Detroit will pay that electricity bill, not the Public Lighting Authority. 

Second, the Public Lighting Authority was established for the sole purpose of making the required investment in the mostly above-ground  street lighting system. The transition of the “lucrative energy customers” from PLD to DTE has nothing to do with the PLA.

Finally, as far as “sucking down” the Utility Users Tax funds from cops and using them for the street lighting upgrades, as I noted earlier, public lighting is an important part of protecting public safety.  It is a clearly appropriate use of the Utility Users Tax which has always been earmarked for public safety.  The police budget is being kept intact through the earmarking of a portion of the city income tax

Shortfall Scenario Is 'Preposterous'

Dawsey asks, “So what happens if that user tax falls short? Who could have to cover those bonds then?”

In the past year the Utility Users Tax yielded roughly $40 million for the city. The PLA, as noted earlier, only is earmarked $12.5 million per year -- a little more than 30 percent of the tax. For utility tax revenues to fall below $12.5 million, the city would have to lose roughly two-thirds of its current population.  If that were to happen, reduced revenues would be the least of the city’s problems.

Additionally, it is preposterous to believe that the most stable and steady source of revenue that the city of Detroit has would dry up overnight. In order to have that happen, all utility users would have to stop paying their bills all at the same time.

The writer then asserts, “It's beyond me why a broke city has to be anywhere in the vicinity of this debt, and why this authority can't be on the hook, fully and solely, for bonds it could issue.”

In fact, the authority is on the hook “fully and solely” for the bonds. That was the reason for the creation of an independent authority with an independent source of funds in the first place. The city is in bankruptcy.  If has no “full faith and credit” to put behind any bonds. The debt is necessary because the city has no funds available out of its existing budget to make the needed improvements. That’s why the system has fallen into such serious disrepair in the first place.

The writer is also upset that the PLA’s new executive director is not an engineer, saying “a touch of engineering expertise surely couldn’t hurt.”

Project-Financiing Expertise Needed

In fact, the problem the city’s lighting system faces is not an engineering problem -- it is a financing problem. The engineering for public lighting is simple and straightforward.  Lights, after all, have been around for well more than a century. The need is for someone who understands funding and the financial markets. 

The problem has not been with engineering, it’s with finances in a city that has not had the funds needed to keep the public lighting system up to par.   Odis Jones, with his extensive experience in arranging funding for large public projects, is eminently qualified for his new assignment and we are lucky to have him.

Finally, I have to respond to the writer’s assertion that “we want someone who knows something about getting the lights on quickly, efficiently and without adding to the city's debt load.”

As noted, had the city incrementally invested in routine maintenance and upkeep of the system over the last two decades, the lights could be kept on “without adding to the city’s debt load.” Instead, the city’s strategy over those two decades was one of deferred maintenance, and the current state of the system reflects the wisdom is that strategy.  The lack of investment then, requires massive investment now.  Unless Mr. Dawsey knows the location of a pot of gold somewhere in the city, the investment required to “get the lights on” necessarily means incurring new debt.

The problems Detroit is facing did not pop up overnight and they will not be solved overnight.  But through such innovative approaches as the creation of an independent public lighting authority, we will get the job done.

Maureen Stapleton is the chair of Detroit's new Public Lighting Authority and a former state representative who introduced, and was instrumental in passing, the bill creating the five-person authority.

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