Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 23, 1993 TAG: 9309290295
SECTION: EDITORIAL PAGE: A6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
The question has become: Do the potential benefits from proceeding down this takeover path outweigh the potential harm from continued turmoil?
The answer ought to be clear enough, even through the flames and smoke enveloping City Hall. After all, the potential benefits from a takeover are neither large nor assured, and the harm in proceeding already is evident.
By voting to petition the state for a valuation of Roanoke Gas' assets in the city, council members insist they're merely leaving the acquisition option open. They suggest an arrangement benefiting both the city and gas company may be achievable.
Council members also are telling themselves that, by keeping alive the takeover clause in the franchise pact, they retain leverage in negotiations with the gas firm - regarding the amount of future franchise fees, for instance.
Yet the city's mishandling of the gas talks, coupled with the collateral damage to all sorts of working relationships beyond the battlefield, really leave only one option: Call a truce, now.
More than a year ago, Roanoke Gas contacted municipal officials to set up talks for renewing the 20-year franchise which expires this month. Yet, not until July 23 of this year did the city reveal to gas executives a consultant's report recommending acquisition, and ask that the existing contract be extended so that this option could be studied.
City officials are smarting because Roanoke Gas launched its p.r. blitzkrieg after asking for a delay of public disclosure until it had time to inform employees. But what's being discussed is, in effect, a hostile takeover, sprung on the gas company at the 11th hour. Torched-earth resistance was predictable.
City officials are disappointed, too, that the heat of combat has obscured and overwhelmed the merits of the issue over which the struggle began. But this also is predictable when war breaks out. And in war, the merits of the issue are often exaggerated in the first place.
Roanoke officials were entirely right to at least look at the acquisition clause in the franchise agreement. Ownership of gas pipes and fittings seems advantageous on paper, because the city wouldn't have to pay state or federal taxes as the gas firm must.
Acquiring the business would start a new revenue stream flowing to the city, from gas bills, which the consultant says might swell the treasury by $2 million yearly. An appealing idea.
Yet full of holes, beginning with apparent underestimations of the cost of takeover and overestimations of the gains. There are reasons for a worldwide trend toward privatization of certain government services. There are also limits to the creativity with which Roanoke politicians can hope to raise funds without resorting to the out-in-the-open old-fashioned method, called taxation.
Looking after its own revenues, the city has given short shrift to the regional implications of it proposal to remove the core from the gas company's valleywide distribution network. The consultant barely considered the fact, for instance, that a municipal utility would need access to gas facilities outside the city. (Cooperation, anyone?)
City officials seemed surprised by the public reaction. They shouldn't be. Roanoke Gas is a reliable utility, a good corporate citizen - and it organized its troops effectively.
It is unfortunate that the gas negotiations have become so politically charged and divisive. Not only has the brawl brought scorn on City Hall, from both inside and outside city limits. City officials themselves have been divided and demoralized.
As casualties mount, the question of who started the war pales in significance. Relations between council and residents, city and county, the business community and City Hall, are strained. Is it worth straining them further?
If the potential benefits in pursuing a takeover were greater, or the potential harm smaller, keeping the option open might be reasonable. But a vote today to activate the acquisition clause would offer better prospects for armies of lawyers and consultants than for city and valley residents.
by CNB