KCBD Investigates: LP&L to pay its share of Citizens Tower debt

KCBD Investigates: LP&L to pay its share of Citizens Tower debt
LP&L will relocate to a basement catercorner from Citizens Tower (Source: Perkins & Will)
LP&L will relocate to a basement catercorner from Citizens Tower (Source: Perkins & Will)
A look at where LP&L is currently located in relation to Citizens Tower (Source: Google Maps)
A look at where LP&L is currently located in relation to Citizens Tower (Source: Google Maps)

LUBBOCK, TX (KCBD) - The KCBD Investigates team has learned more about how the City of Lubbock is going to pay for the nearly $64 million renovation to Citizens Tower.

City officials said they hope the building will be move-in ready by 2019.

The goal is to relocate several city offices, including Lubbock Power and Light, into the building.

Right now, LP&L sits on the corner of Broadway and Avenue M, in a building that is already paid for.

"There is ongoing maintenance expenses, but yeah, it's basically paid for," said LP&L President David McCalla.

We asked McCalla if it makes sense economically to move from a building that is already paid for into a building that will require hundreds of thousands of dollars in rent per year.

"The decision was made by the city council," McCalla said.

It is a decision McCalla defends.

"Having everybody in the same building will allow us to work closely with city management and provide efficiencies we cannot even envision right now," McCalla said.

We asked Councilman Steve Massengale the same question.

"I think there are benefits to getting all of the city departments under one roof," Massengale said.

A sentiment echoed by Lubbock Mayor Dan Pope, "I believe we need the city's services all together and certainly this will accomplish this."

Former Lubbock Mayor Glen Robertson said ratepayers should expect additional costs for this convenience.

"They are having to charge other departments money to be in Citizens Tower. That is a disingenuous way to say we are not going to raise your taxes. You are going to see increases associated with utilities so they can pay for the Taj Majal without raising property taxes," Robertson said.

While water, sewer, garbage and electrical rates will increase, Chief Financial Officer Blu Kostelich said this is not related to the debt service for Citizens Tower.

"That is correct, it's not because of Citizens Tower," Kostelich said.

Kostelich said the city will spend roughly $4 million a year for the next 20 years to pay off the bonds issued for Citizens Tower.

How much each department pays is determined by use.

"LP&L is going to be occupying just under 28 percent of that building, so 28 percent of that debt payment is going to be coming from LP&L," Kostelich said.

LP&L is still two years away from move-in, but ratepayers will start paying their share of the debt right away.

"Two million dollars is our share of the debt service. There's some offsets, the net impact is about $1.1 million. In future years, it will drop to a net of about half a million dollars a year," McCalla said.

In the past four years, LP&L has implemented base rate increases totaling just more than 24 percent for infrastructure projects.

"We've got the last of our rate increases in the current budget. After that, there are no rate increases envisioned," McCalla said.

McCalla said those increases are not attributable to Citizens Tower.

"We've looked at the cost associated with this. The net cost to our budget will be about a .50 a month cost to our customers next year and in future years, it will be less than a .25 per month. Over the last few years, we've worked really hard to find cost saving measures. Even if we stay in SBP, we will be able to reduce our power supply costs. The savings we are talking about dwarf the amounts of money we are talking about with Citizens Tower," McCalla said.

The majority of LP&L employees will relocate from the building on Broadway to a basement underneath a parking lot catercorner from Citizens Tower, while administration will be upstairs in the tower.

"There is going to be an atrium that will allow outside sunlight into that building, so it won't really feel like a basement," McCalla said.

McCalla said even if the city had not voted to move LP&L to Citizens Tower, it would have pushed for a new facility.

"It is in a state of decay," McCalla said.

According to LP&L, from October 2013 to July of 2017, more than $686,000 was spent on maintenance and repair to the current building.

That number does not include expenses for a flood event paid for by the City of Lubbock.

Matt Rose with LP&L said the parking lot and garage repair are two projects they placed on hold due to the prospective move to Citizen's Tower.

Potential expenses for additional elevator repairs and garage and parking lot repairs are estimated to cost more than one million dollars.

Again, while it is true that almost every fee or tax at the City of Lubbock is increasing, city officials said those are not attributable to Citizen's Tower.

One thing is for sure, for the next 20 years, taxpayers and ratepayers will have to come up with an extra $4 million a year.

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