Comptroller's Remarks to Senate Delegation on BGE Conduit Deal
Friday Feb 17th, 2023
Bill Henry
Comptroller,
Baltimore City
204 City Hall - Baltimore Maryland 21202
(410) 396-5410
FOR IMMEDIATE RELEASE
Madam Chair and members of the City Senate Delegation,
Thank you for inviting me to discuss BGE’s Conduit proposal and the Scott Administration’s response to date. I appreciate that the Delegation agrees that the significance of this deal cannot be overstated and thus warrants time for rigorous public discourse.
I’d like to start by sharing the events that have occurred up until today with the goal of reaching a shared understanding going forward.
Back in 2015, in an effort to collect sufficient funds from the users of our conduit system, at DOT’s request, the Board of Estimates raised our conduit fee from about a dollar per linear foot, to $3.33 a linear foot, based on a report by a consultant DOT had hired to study the issue.
Several of the conduit users took us to court for more than tripling our fee with no warning or phase in and we settled out of court on a lower fee of about two dollars a foot. We also entered into an agreement with BGE in which – because of their accusations that we wanted to use the conduit fees for other purposes – we now have to demonstrate that all of the money we’re collecting is actually being spent on conduit upkeep and improvements, or return it to BGE.
That agreement expired in the middle of last year, but instead of simply renewing it, BGE repurposed negotiations towards another attempt to purchase the conduit. The Administration went so far as to try to hire a consultant last October to help broker the deal, but public outcry – centered on a charter amendment which was about to be voted on, which would specifically prevent such a deal – caused the Council President and I to delay the vote on the consultant to the point that there would not have been sufficient time to proceed with the sale before the charter amendment went into effect. And that’s where we left this issue, last fall.
(Curiously, neither the Mayor nor the City Solicitor at the time raised the issue that such a deferral could not be done unilaterally under our rules, as “the effect of the deferral would be to prevent any meaningful implementation of the item for its intended purpose, even if subsequently approved at a later meeting, the deferral must be approved by a majority vote.” Which is what they said earlier this week, when the Council President tried to unilaterally defer the actual conduit proposal. But I digress.)
On January 26th, a media outlet broke the story that the Mayor was in negotiations with BGE to stop paying annual conduit usage fees to the City, and instead, make capital improvements to the conduit themselves
On January 27th, I reached out to the Administration to ask for details about this proposal. This was the first time I had discussed this matter with anyone from the Administration. At that point, I was assured that it was just a proposal and that there was no agreement yet. I requested more information, specifically trying to ascertain if the capital funding that BGE was proposing to commit was sufficient to cover the actual needs of the conduit system.
On January 30th, I met with the City Solicitor and the Mayor’s Chief of Staff for two hours. I again requested more information about the actual needs of the conduit system. In its absence, I suggested that instead of accepting BGE’s proposal, the City simply pursue an escalating rate strategy, in which we phase the needed increase in at a modest rate, over whatever period of years would be sufficient to withstand legal action by the conduit users. In fact, I specifically reminded them that this is the strategy that DPW has been using with water rates for several years.
On February 8th, the Board of Estimates February 15 agenda was released, listing the amended settlement agreement (BGE’s conduit proposal) as an item for consideration.
On February 9th I shared the past assessments of the conduit’s capital needs from 2015 with the Mayor’s Chief of Staff, asking if DOT had updated numbers that showed BGE’s proposal to be sufficient for current needs. If not, I again suggested that the City decline BGE’s proposal and instead pursue an escalating rate strategy.
On February 14th, the City Council President’s office asked for a deferral to learn more information. This deferral request was preceded by the Board receiving three Opposition Statements for the BGE deal. Statements were received from:
- Baltimore Green Justice Workers Cooperative, Lynn Pinder
- Commercial Utilities, Ron Adolph
- Taxpayers and Conduit System Users - Ann Brooks (Crown Castle), Kevin Brown (Quantum Telecommunications, Inc.), Danett Kennedy (Lumen, including Broadwing Communications, LLC, Level 3 Communications, LLC, Level 3 Telecom of Maryland, LLC, TelCove Operations, LLC, and Wiltel Communications, LLC), Dawn Kirstatter (Comcast), Gillian Leytham, Esq. (Zayo Group LLC), Joanne M. Petersen, Esq. (FiberLight)
In response to the President’s deferral request, the Law Department responded with the following message:
The Council President’s requested deferral will require a majority vote of the Board of Estimates. For review, the BOE rules related to a deferral state in relevant part:
If the effect of the deferral would be to prevent any meaningful implementation of the item for its intended purpose, even if subsequently approved at a later meeting, the deferral must be approved by a majority vote.
BOE Rules 27.01.03.04(F).
The Council President’s requested deferral would delay the agreement between the City and BGE beyond the date of BGE’s required submission to the Maryland Public Service Commission. BGE has made clear that it will not enter into the agreement if it cannot be finalized prior to their submission to the PSC. There would therefore be no meaningful implementation of the agreement if this item is deferred to a later BOE meeting, and the Board must therefore approve the deferral by a majority vote.
The Board should vote on this proposed deferral at the outset of tomorrow’s meeting.
On February 15th, the President and I made the difficult decision to not go into the Board of Estimates chambers in order to prevent the five-person necessary quorum. The Clerk to the Board of Estimates read a statement to the Mayor, Public Works Director, City Solicitor, and the attendees present explaining our position.
The Board of Estimates Rules define a quorum as, “The five members of the Board or the members’ designees as specified in the Charter.” These rules were drafted by my office in concert with the Council President and City Solicitor. For what it’s worth, there were at least two reasons that the Mayor’s office agreed to them:
1) if the quorum of the BOE was only three members, that means every cabinet meeting of the Mayor’s would be an open meeting available to the public and the media because the Mayor would never be able to sit and talk with the DPW Director and City Solicitor on any matter that might go before the Board. Likewise, the Mayor could not bring the city Solicitor into a conversation with either the Council President or myself because the three of us would be a quorum.
2) In a legal opinion from former City Solicitor Shea, dated October 18, 2021, Solicitor Shea stated, “Nowhere does the Charter establish a quorum, reinforcing the notion that all decisions are to be made by a final five-person vote, without the risk of a non-winning majority or a tie."
I’ll note here that the Law Department’s own advice is in direct conflict with the actions of the Mayor, the acting City Solicitor, and the Director of Board of Estimates two days ago.
Due to the Board of Estimate’s inability to reach quorum without our presence on February 15th, the Board was not able to hold its scheduled meeting at 9am. During a later gathering of the Mayor, the City Solicitor, and the Director of the Department of Public Works, an unsuccessful attempt to vote on the conduit proposal was made to look as if the item had in fact been approved. No effort was made to call for a vote on the routine agenda, nor any other items on the non-routine agenda, nor were any protests or statements of opposition noted or public comment permitted - all of which would have happened at an actual meeting of the Board of Estimates, as required by the rules & regulations of the Board.
Yesterday, my office sent out a message informing the public all items on the February 15th Board of Estimates agenda will be addressed at the next regularly scheduled Board meeting, currently set for March 1, 2023. The full March 1st agenda will be distributed and posted publicly on the Comptroller’s website next Wednesday, February 22nd, by or before close of business.
The Mayor has claimed that this deal has been public since October. That is not true. This proposal has been public for less than three weeks. For the Mayor to state otherwise is conflating his Administration’s private discussions with BGE and October’s consultant proposal to assess the conduit.
I am not suggesting that the Mayor doesn’t have the best interests of the city at heart. What I am suggesting is that the Mayor can be sincere about having the City’s best interests at heart and still be wrong about what is actually best for the City. While great power may come with great responsibility, by no means does it assure infallibility.
I have repeatedly said I am open to this deal if I can be shown the numbers work. In the three weeks, since I found out about this, I haven’t been able to gain that. Maybe this is a good deal. Maybe it isn’t. I honestly don’t know for certain at this point and we shouldn’t be making decisions this important before we’re sure they’re right.
I implore the administration to take a step back and do their due diligence on this deal. I have yet to find one elected official in City Hall, other than the Mayor, who thinks that this a great idea AND that we should hurry up and do it right now. We should make sure that DOT finishes providing the due diligence that would be expected when making a decision of this magnitude. We should expect that the consultant being paid $50,000 to study this issue should complete their report. Baltimore City deserves our best efforts and rushing to make a trumped-up deadline isn’t giving us that. Baltimore deserves better.
Thank you.
Bill Henry
Baltimore City Comptroller