City of Wichita - Chapter 4 Page 51
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Cover of Water History book

Water Utilities
City Hall, 8th Floor
455 N. Main
Wichita, KS 67202


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three percent bonds over a 30-year period, and partial refinancing after 20 years, the annual service charges were estimated at $255,000. Combined with the water supply plant debt service for 1942 of $93,145, and operating costs for the plant of $45,000, the total amount needed annually would be about $393,125. By continuing the 15 percent surcharge, the city could, according to the firm's analysis, purchase the plant at $5,000,000 and have about $50,000 above the necessary annual expenses for additions and improvements in the system.

The city manager emphasized the need for speedy action by the commission. If the city was going to buy the Water Company it would have to serve notice at least six months prior to the termination of the franchise on October 21, 1942. In addition, if condemnation proceedings would be used, action would have to be started in the courts to determine the value. Either method would require a bond election to authorize the necessary funds.

The commission was not willing to accept the company's offer. Three questions deserved consideration before a decision could be made. First, some limitation had to be allowed on the amount of taxes used in determining the rate of return for the company. Its rate of return should have been comparable to tax-exempt securities, since utility returns were also exempt. Second, various items should have been limited since company expenses were deducted before earnings were determined and the amount beyond the entitled return would go to the city. Third, the cost of the water which the city supplied should have been fixed, and not used to guarantee a rate of return for the Water Company.

Portrait of O.F. Sullivan
O.F. Sullivan, mayor
1942-1943.

Portrait of E.C. Moriarty
E.C. Moriarty, mayor
1943-1944.

After debating the options for several weeks, the commission decided to put the purchase of the company to a vote, not an uncommon event in the history of the city. On April 11, 1942, the commissioners voted 3 to 2 to place an ordinance on first reading providing for the purchase of the water distribution system, as provided for in the franchise. The ordinance passed the next week on April 13 by the same margin. Mayor Dotson and Commissioners Sullivan and Beuttel voted yes, with the mayor saying that although he favored the condemnation alternative better than the franchise, he wanted to bring it before the public. Commissioners Coleman and E.C. Moriarty voted against the proposal, arguing that with the current high prices and heavy emergency demands for bond issues, the purchase price would be too high.

The ordinance had created much publicity. Over 75 citizens were on hand for the first vote and a significant number were also present to hear the results at the regular Monday night meeting.

Some commissioners questioned the working of the ordinance, fearing that the city would be compelled to purchase the company regardless of the vote in the bond election. City Attorney Hiebsch tried to allay those fears when he stated that the city would not have to purchase the company should the electorate reject the bond.

Hiebsch also recommended that condemnation proceedings be followed for purchasing the plant rather than relying on the specifications of a 20-year old document. Under the condemnation procedure, a three-member board would appraise the value of the property, with one member chosen by the city, one by the company, and one named by a court judge. Through the proceedings, a thorough investigation would determine the system's values rather than rely on the old data. That decision would have to wait, at least until the plan was approved by the citizens.

The election was included in the regular primary election on August 4, 1942. Had the special election been held on a different date it would have cost $9,000 compared to just $800 extra to add it to the planned election. The change also provided more time to publicize the information and to study the issues. In preparation for the vote, some 119,800 special ballots were ordered by the city with the question on whether to issue general improvement bonds in the amount of $6,127,000 in order to purchase the Wichita Water Company.

The League of Women Voters teamed up with a group of Wichitans calling themselves the "Citizen Water Ownership Committee" to push for passage of the bonds. Large ads were placed urging people to register to vote as well as to vote yes on the ballot. Ads included such statements as "The Question is...Who Will Get The Profit From the Water Plant--Wichita or New York? The Wichita Water Company is a profit-making corporation. Since Wichitans pay the bills, we are entitled to the profit...That is just business sense." The ads answered a series of relevant questions about cost to the citizens in an effort to inform and persuade the public. One ad ended with the proclamation, "Remember: the Water Company does not want to sell! They have a good deal and they know it. What is good for the New York holding corporation is better for Wichita.... Buy now! Water revenue will more than pay for water bonds." (Eagle, 8/3/42). The citizens were still not prepared to go that far however, especially after just paying for a new source of supply. Consequently, the bonds to finance the purchase of the company failed by a substantial margin, 7,586 to 4,401.

With the vote for the bonds defeated, and the franchise expiration rapidly approaching, the City Commission had little choice in opening negotiations for a new franchise. In a three-hour session at City Hall the commission agreed on August 14, 1942, to make a preliminary offer to the Water Company as an opening move in the negotiations for a new franchise. The informal meeting involved extensive debate on the issue and the commission reviewed various proposals made by the Water Company to determine a preliminary base for negotiations. At the August 24 meeting, the City Commissioners decided on the proposal they would make to the Water Company. Corbin emphasized in his dissertation how the city had little choice but to act, as it was left "again in a position of weakness, and with no choice but to negotiate a new franchise." (Corbin, 1972).

Photo of women seated at tables
Modern office equipment eased the record-keeping task for Maurita Stearns, Greta Dietrick, Minnie Anderson, and Miss Crumm.

The offer was made to the Water Company, which responded with its own options. A four-hour conference between city officials and the company, represented by four New York executives, was held on September 11 to discuss the suggestions. At the conclusion of the meeting, attorneys for both sides were instructed to work together in preparing a new franchise based on the discussion. A specific franchise proposal would be drawn up and each party would review it, with thorough public discourse allowed.

By September 25, the draft proposal had been prepared. Mayor O.F. Sullivan presided, and all commissioners were present at the meeting to hear the public's response. Many took advantage of the opportunity and a variety of viewpoints were brought to the public hearing. While the specifications of the new franchise were discussed in detail, no substantial action was taken. The Eagle predicted that the franchise would be placed on first reading the following Monday, although three readings were required to pass the compromise.

As it turned out, not too surprisingly, the newspaper was a little too optimistic about the decision, as a few more points remained to be ironed out. But following another conference on October 16, which lasted two hours, the Eagle reported conclusively that the city and company had "settled their differences and reached complete agreement on the new water franchise."

The compromise agreement established a 20-year franchise with a stop-gap clause by which it would automatically terminate at the end of

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Chapter 4
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