Who Would You Trust on the Tenaska Power Plant Deal, Tony Martinez or Fitch Bond Ratings?

Mayor Tony Martinez

Who would you trust?  On one hand we have Tony Martinez, the mayor of Brownsville, who 18 months ago spent $2,300,000 of taxpayer dollars on a building worth perhaps $500,000, La Casa del Nylon.  The building sits idle, decaying, with one of its large plate glass windows broken for the last several months, allowing the elements inside.  A homeless couple, with all of their worldly belongings in plastic trash bags, camps nightly under the collapsing awning on the building's Adams Street side.

Do you feel the mayor has demonstrated the business 

La Casa del Nylon, decaying,
 unused, except by the homeless

acumen to make deals for the City of Brownsville, involving hundreds of millions of dollars, without the guidance of experts?  Consider, that Mayor Martinez, with a docile, inexperienced city commission in tow, has purchased 11 other downtown buildings, all empty, except the Mother of Perpetual Hope adult care facility, purchased for $195,101, now used by the city to store bicycles.  That makes a total of $3,500,000 spent on speculative real estate by the mayor with only bike storage to show for it.  Children, not yet in school, will be paying for these foolish, unbusinesslike purchases, as the City Commission has committed taxpayers to a 20 year Certificate of Obligation.

Now, the mayor has committed the ratepayers of Brownsville, people who pay utility bills, to have their utility rates increased enough to pay for one fourth of an 800 MW gas fueled, electric generating plant for $327,000,000, to be located on 270 acres adjacent to FM 511, the so-designated industrial corridor, an area the vultures leading United Brownsville, including Martinez, are putting themselves in position to control. 

Fitch Bond Ratings, an international credit rating agency based out of New York City and London, disagrees with Martinez. According the the company's website, "the company's ratings are used as a guide to investors as to which investments are most likely going to yield a return. It is based on factors such as how small an economic shift would be necessary to affect the standing of the bond, and how much, and what kind of debt is held by the company."  

Fitch is familiar with Brownsville's Public Utility Board, and, in the past has given them a bond rating of A+, but warns that, if the City of Brownsville goes through with this imprudent deal, P.U.B.'s bond rating will fall to "negative."

What concerns Fitch is that the publicly owned utility, already indebted by $200,000,000, cannot afford to add $327,000,000 more debt.  This is not an out-of-control city mayor talking, but a well-respected firm in the business of giving financial asssessments to companies and governmental entities for decades.

P.U.B. Utility bills will be much
higher if Tony isn't stopped

Fitch also fears that Brownsville's utility payers cannot afford the severely increased utility rates Mayor Martinez's agreement will impose, and will suffer from "rate fatigue," a fancy way of saying Brownsville citizens won't be able to pay the high utility bills the mayor wants to use to pay for the power plant.

Another problem:  Fitch states that Brownsville's future power needs will not rise to 800 MW, but, perhaps as much as 459 MW. Fitch put it this way:  It “recognizes BPUB’s proactive strategy to ensure an adequate power supply to meet projected (electricity) load growth,” though the power plant project would boost total available power resources to “well in excess of projected total requirements,” or 459 megawatts.  In other words, Tenaska is overbuilding.  Remember, Tenaska, a huge company with billions of dollars of assets, is in the business of selling power plants.  It is not their fault if a customer buys something they don't need.  Their job is to sell.  

The State of Illinois recently rebuffed Tenaska's five year efforts to build the Taylorville Energy Center.  Tenaska tried to sell Illinois on the idea that their energy needs were underserved, but citizens disagreed. 

Mayor Martinez and the City Commission cut an extremely bad deal for the ratepayers of Brownsville as Fitch Bond Ratings has made plain.  It was a deal made by amateurs.(Just as the University of Texas system did not need nearly a billion dollars of taxpayer subsidies, they weren't going to look a gift horse in the mouth.)  

Tenaska, a large company with $3.8 BILLION in assets, recently paid $368 million in cash for the Rolling Hills Power Generation Facility in Wilkesville, Ohio.  In another acquisition, the Imperial Valley, CA Solar Plant, Tenaska received funding from nine banks, including the Bank of Tokyo-Mitsubishi, UFJ, Ltd.  But Mayor Tony and the young city commissioners tell Tenaska, in affect:  "That's ok. Our dumb citizens, ratepayers will pay.  They always have."

After all, Brownsville, Texas is the "poorest city in the United States" for a reason.  The Tenaska deal, amateurishly "negotiated" by an inept mayor and city commission will continue that legacy.