Joseph Krist

Publisher

PIPELINE PAUSE

“The development of Navigator CO2’s pipeline project has been challenging. Given the unpredictable nature of the regulatory and government processes involved, particularly in South Dakota and Iowa, the Company has decided to cancel its pipeline project.” And so, Navigator CO2 announced it is halting its plans for a 1,300-mile pipeline to take carbon dioxide from ethanol plants across five states to be sequestered in Illinois.

On Oct. 10, Navigator withdrew its application for a certificate of authority before the Illinois Commerce Commission, needed to allow the company to use eminent domain for the pipeline route within Illinois. Navigator had only 15% of the agreements with residents it would need to pursue the route without eminent domain. In late September, the company had officially paused its permit-seeking process in Iowa, following a permit denial in South Dakota.

Navigator first proposed to sequester carbon dioxide in Christian County, Illinois, even though Christian County passed a moratorium on such projects. Navigator’s latest application also had a spur leading to a sequestration site in Montgomery County, Illinois. 

According to DOE, Biden’s goal of a net-zero U.S. economy by 2050 will require capturing and storing 400 million to 1.8 billion million metric tons of CO2 annually through CCS and carbon removal technology such as direct air capture. DOE estimates 30,000 to 96,000 miles of pipeline could be needed to link capture sites with geologic storage. There’s only about 5,000 miles of CO2 pipeline in operation today in the United States.

One of the other major pipeline companies – Summit Carbon Solutions -has formally extended the in-service date for its unapproved carbon pipeline network from 2024 to 2026. It blamed regulatory delay. In North Dakota, the Public Service Commission has agreed to reconsider Summit’s permit request with an adjusted route. A hearing to consider whether to overrule two county ordinances that restrict pipeline placements is expected to be scheduled for no earlier than December. In South Dakota, Summit plans to adjust its route and reapply for a permit. In Iowa, Summit’s final evidentiary hearing is set to resume in November.

HONOLULU MASS TRANSIT

The Honolulu Authority for Rapid Transportation (HART) announced that the Federal Transit Administration (FTA) will begin the process to restart funding for Honolulu’s expanding rail system. The goal is to finalize a new grant agreement with the city by the end of this year. That would lead to an immediate grant of $125 million. More importantly, it would enable a process to release funds which had been earmarked for the Honolulu project.

The FTA has withheld $744 million in federal funds since 2014 as the city struggled to resolve cost overruns and a long series of construction delays. The original funding plan was established in a 2012 agreement. That plan called for the federal government to contribute $1.55 billion to help fund construction of a 20-mile elevated line originally expected to cost $5.1 billion. It was supposed to be open for business by 2020.

The city ultimately decided shorten the line by one mile and eliminate the construction of a large parking garage. It cancelled plans for two stations. Those changes to the rail project triggered a new environmental review process and required a new grant agreement with the federal government. Completion of the shortened rail line is now scheduled for spring of 2031. HART estimates the system will now cost $9.93 billion including finance charges.

It is expected that the FTA will release $125 million in federal funding once the new full funding grant agreement is finalized, and will provide an additional $250 million after HART awards a contract for construction of the rail line and stations in the city center.  The first 11 miles of the rail system opened on June 30, but ridership on the half-built system has been limited.

HEALTHCARE

Westchester County Health Care Corporation (WCHCC) operates the only tertiary and quaternary provider between New York City and Albany. WCHCC is also the majority corporate member (60%) of Bon Secours Charity Health System with hospitals in Rockland and Orange Counties, and the sole member of HealthAlliance with hospitals in Ulster and Delaware Counties. This creates a large service area with unfavorable demographics and economics.

Like many other systems, WCHCC experienced significant utilization impacts during the pandemic from which it has been slow to recover. Now those impacts have hit WCHCC’s ratings. Moody’s just lowered its rating on WCHCC debt as well as that of institutions which WCHCC guarantees to Ba1 from Baa3. Lower than expected operating performance and thin liquidity that will result in high operating and balance sheet leverage for several years was cited. Uneven state funding sources and equity contributions toward a planned capital project will further strain cash.  

CA HITS THE BRAKES ON AV

The California DMV today notified Cruise that the department is suspending Cruise’s autonomous vehicle deployment and driverless testing permits, effective immediately. The DMV has provided Cruise with the steps needed to apply to reinstate its suspended permits, which the DMV will not approve until the company has fulfilled the requirements to the department’s satisfaction. This decision does not impact the company’s permit for testing with a safety driver.

Based upon the performance of the vehicles, the Department determined the manufacturer’s vehicles are not safe for the public’s operation. It found that the manufacturer has misrepresented any information related to safety of the autonomous technology of its vehicles. The ongoing investigation centers on an incident we reported last week that killed a pedestrian. The federal government announced its own probe last week which is focused on two reports to the NHTSA and a further two incidents the regulator identified on “public websites.”

TECH HUBS

The creation of hydrogen hubs has grabbed attention as a potential source of carbon mitigation. The focus has been on developing the technology versus just economic development. This week, the Biden Administration announced a hub plan for “tech” development in fields like autonomous systems, quantum computing, biotechnology, precision medicine, clean energy advancement, semiconductor manufacturing.

The U.S. Department of Commerce’s Economic Development Administration (EDA), announced the designation of 31 Tech Hubs in regions across the country. The Tech Hubs program is “an economic development initiative designed to drive regional innovation and job creation by strengthening a region’s capacity to manufacture, commercialize, and deploy technology that will advance American competitiveness.” Each designated Tech Hub can now apply to receive between $40 million and $70 million each for implementation funding, totaling nearly $500 million.

Like many other job creation programs, it managed to achieve buy in by spreading out the projects across the country. These Tech Hubs are located across 32 states and Puerto Rico, and represent a cross-section of urban and rural regions. For Puerto Rico it could become a case of remember the future. The PRBio Tech Hub would center on biopharmaceutical and medical device manufacturing in Puerto Rico. The irony is that the project could take PR back to its Section 936 days when it was a significant pharmaceutical manufacturing center. Once the 936 tax benefits were fully phased out, the pharmaceutical industry on the island declined significantly.

Other hubs reflect some already established investments. The Intermountain-West Nuclear Energy Tech Hub centers around small modular reactors and microreactors in ID and WY. Those two states were already pursuing nuclear generation technologies.

SPORTS DEFAULT

The high yield market is watching another speculative sports related bond issue default. In May, the operators of a 320-acre destination sports facility in Mesa, AZ declared bankruptcy. Over the summer, the owners hoped to be able to sell the facility via competitive auction. Unfortunately, that never came to fruition and the pressure to sell the facility increased. The judge presiding over the Chapter 11 proceedings was pressuring the parties to get the project sold.

Now, Legacy Park will sell for $25.5 million with the buyer Burke Operating Partners to provide $19.5 million and $6 million to come from the landlord Pacific Proving LLC. A sale hearing to close the deal with the judge’s approval will be scheduled for Nov. 20 with the expectation to close by Nov. 30. Some $19.1 million will go to pay the mechanic lien claimants, who were roughly owed $30 million. 

That just leaves the little detail as to what happens to the holders of the approximately $283 million of bonds issued through the Arizona Industrial Development Authority. If this deal is approved, bondholders will get $2.2 million and 11% of equity in the buyer. It is another pelt on the wall of failed sports bond credits. And it even had literally dozens of pickleball courts. What could’ve gone wrong?

FREE TRANSIT

Free transit fares are just one of several progressive ideas being tested out when the opportunity arises. Given the impacts of the pandemic on transit ridership, these efforts are being undertaken to attract and reattract riders. The results of these efforts have varied with the programs in smaller cities being perceived more favorably. In the big cities, the testing of the concept has been more limited and the results have varied.

The Mayor of Boston is a big proponent of free fares on the T. This summer, the closure of a tunnel was accompanied by free fares on the T’s Blue Line. It was thought that a combination of free fares and the closure would provide a good test for the impact of fares. For proponents of the idea, recent results from the T experience over the summer was not especially encouraging.

The Sumner Tunnel connects Logan Airport to I-93 in Boston. It was closed on July 5 for rehabilitation. According to MBTA estimates, 40,000 cars travel through the Sumner Tunnel on a typical weekday. The MBTA estimates the riders of 3,900 cars, or nearly 10 percent of the total, shifted to public transit, while 5,500 cars just stopped coming in to Boston. The T estimates three-quarters of the cars just traveled a different route – 10,200 used the Ted Williams Tunnel, 10,400 used the Tobin Bridge, and 10,000 used other roads.

The tunnel reopened August 31. Weekday ridership dropped 3% on the Blue Line and 58% on ferries after the reopening. Fares were maintained on the Orange Line but increased service seemed to have attracted riders. Orange Line ridership weekdays was up 14% and commuter rail posted a 1% gain. We expect that such experiments will continue but we do not see fare free transit in the big cities taking hold in the near term.

LOUISIANA REJECTS A P3

The Louisiana legislature voted to reject a proposed private-public partnership that would have replaced the Calcasieu Interstate 10 Bridge. The $2.1 billion project would have relied on state and federal funding along with tolls. It was the proposed use of tolls that killed the plan. Now, the recently elected governor will have to come up with a plan to replace the bridge without tolls. The opposition to tolls is reflective of the current state of Louisiana politics.

The final vote on the plan fell mostly along party lines, with Republicans largely voting to reject the deal, and Democrats voting to approve it. The trucking industry was the main source of opposition. The plan called for tolls on vehicles across four categories: 25 cents for local cars, $2.50 for nonlocal cars, $2.55 for medium trucks and $12.50 for large trucks equipped with toll tags. Some $800 million in state and federal money for the project had been committed, with the other dollars set to come from toll collections.  

The truckers prefer that the project be funded with much more federal funding so as to allow the bridge to remain toll free. In 2017, a bill to raise the state’s fuel tax in part to fund the bridge failed. These deals have been an especially tough sell in the South. Bridge and prison P3s in Alabama fell to political winds as has this one.

RELIGIOUS CHARTER SCHOOLS

Oklahoma’s Attorney General sued to stop a state board from establishing and funding what would be the first publicly funded religious charter school after the board ignored his warning that it would violate both the state and U.S. constitutions. The Oklahoma Statewide Virtual Charter School Board was sued after three of the board’s members signed a contract for the St. Isidore of Seville Catholic Virtual Charter School, which is sponsored by the Archdiocese of Oklahoma City.

Oklahoma’s Constitution specifically prohibits the use of public money or property from being used, directly or indirectly, for the use or benefit of any church or system of religion. Nearly 60% of Oklahoma voters rejected a proposal in 2016 to remove that language from the Constitution. Nevertheless, the school “participates in the evangelizing mission of the Church and is the privileged environment in which Christian education is carried out.”

The AG’s lawsuit also suggests that the board’s vote could put at risk more than $1 billion in federal education dollars that Oklahoma receives that require the state to comply with federal laws that prohibit a publicly funded religious school.

MEDICAID WORK RULES

Georgia remains the only state permitted to impose work requirements on Medicaid recipients. Those sorts of regulations have been challenged and overturned in the courts. Georgia’s Pathways to Coverage was conceived as the replacement program. The Georgia Department of Community Health has projected up to 100,000 people could eventually benefit from Georgia Pathways to Coverage. 

That outlook is clouded by the fact that the new health plan for low-income adults has enrolled only 1,343 people through the end of September. As has been the case in other states where work rule efforts failed it is the reliance on individuals to use computers to document work. That assumes that recipients (among the nation’s poorest) have access to a computer to submit information. Many low-income people struggle to document the required 80 hours a month of work, volunteer activity, study or vocational rehabilitation.

During the pandemic, states were not allowed to reduce their Medicaid rolls. That time period ended earlier this year and many states began a process to force those who had qualified during the pandemic to resubmit qualification data. The state launched Pathways on July 1 coincident with its review of Medicaid eligibility following the end of the COVID-19 public health emergency. In addition to imposing a work requirement, Pathways limits coverage to able-bodied adults earning up to 100% of the poverty line — $14,580 for a single person or $30,000 for a family of four.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

AUSTIN’S COAL DILEMMA

On March 26, 2020, the Austin City Council approved an emissions-reduction plan that called for its city-owned utility to shut down its portion of the Fayette Power Project, a coal-fired power plant by the end of 2022. Since that decision, the Texas power market has endured a variety of stresses. The winter storm debacle was followed by a couple of summers of life on the edge as the state grid operator struggled to maintain adequate supplies in the face of record heat. The pressure on suppliers to maintain lower costs while supporting adequate supply was significant.

Those factors combine to support the current realities facing the City of Austin as it considers its energy plans. After the 2021 winter storm, the grid manager moved to encourage more “dispatchable” power – the kind most easily produced at natural gas and coal plants. The operator wanted more flexibility in its load management efforts. This year, ERCOT created financial incentives to encourage power generators to expand their ancillary services, a system in which power generators hold a portion of their total power generating capacity in reserve, ready to provide more to the grid when demand threatens to outpace supply.  The change also made the economics of a natural gas plant much more favorable. This was in line with the state’s politics which support natural gas.

Austin still has not closed the Fayette plant. Through the reserve system, coal plants can also get paid simply for keeping some of their capacity available if called upon. All generators have profited from higher overall prices, but because coal operators can choose when to ramp up production, they can catch the highest price peaks to maximize profits. On the summer’s warmest day, the generation from that plant generated some $11 million of operating profit. Those unanticipated “profits” are ostensibly used to reduce revenue requirements to be generated from retail ratepayers.

Austin Energy is now in the process of updating its resource, generation and climate plan for approval by the City Council in 2024. It will not be easy to stop using Fayette plant power given the fact that the facility is co-owned with another agency, The Lower Colorado River Authority. LCRA was created by the Legislature, and its board of directors are appointed by the governor. It recently reiterated its plans “to operate FPP as long as it continues to be a reliable, cost-effective source of power.” So, a move to divest itself of its share of the plant by Austin won’t shut the plant down and it may be more expensive to replace.

MICHIGAN HOSPITAL MERGER

Henry Ford Health announced Wednesday that it has signed an agreement to join with Ascension Michigan and Genesys to create a $10.5 billion health system based in Detroit with 13 acute-care hospitals, roughly 50,000 employees and more than 550 sites for regional health care. Henry Ford Health says it is a joint venture that includes no exchange of cash.  Henry Ford went out of its way to emphasize that the arrangement is “not a merger”.

The organization would remain headquartered in Detroit and carry Henry Ford Health’s name and branding. It would be governed by a board of directors with representatives from both Henry Ford Health and Ascension Michigan. At least for now, the Catholic identity of the Ascension Michigan facilities would continue. If the combination receives regulatory approval, there would still be five large-scale competitors in southeastern Michigan: Corewell Health, The Detroit Medical Center, Trinity Health, McLaren Health Care and the University of Michigan Health.

Ascension, which is based in St. Louis, reported an operating loss of $3 billion in fiscal year 2023, and is selling many of its holdings. The combination will be reviewed under new guidelines issued in July by the Justice Department and FTC which would prohibit mergers that increase concentration in highly concentrated markets or eliminate substantial competition between firms. Nine Ascension hospitals will be part of the transaction. Six Henry Ford facilities will participate.

NUCLEAR

The federal Inflation Reduction Act provides funding for the New ERA program. That program sets aside money specifically for U.S. generation and transmission cooperatives to help them decarbonize their electricity portfolios. The IRA provides some $9.7 billion to fund these efforts.

In Michigan, an electric cooperative is seeking to use the program to support investment in nuclear generation. Wolverine Power Supply Cooperative, based near Cadillac, has submitted an application to the USDA for the 9.7 billion grant and loan program. The coop hopes to obtain power from a reopened Palisades Nuclear plant. Wolverine announced a power purchase agreement with the Palisades owner, Holtec International, to buy electricity from the plant, if and when it reopens following a regulatory review. The program would provide funding for up to 25% of the coop’s costs to purchase the nuclear power.  

The Palisades plant stopped operating in May 2022. Holtec has recently submitted requests to the U.S. Nuclear Regulatory Commission to effectively halt the decommissioning process and resume operations under an operating license that expires in March 2031. According to the National Rural Electric Cooperative Association (NRECA), U.S. electric co-ops submitted requests for more than twice the amount of program funding available, representing $93 billion in new investments. Awards are expected to be announced in early 2024.

CONGESTION PRICING

One of the major objections to the imposition of congestion fees is the favorable treatment being given to vehicles operating through transportation network companies (TNC) like Uber and Lyft. It is clear that one of the major contributors to increased congestion in Manhattan is the presence of these vehicles. This has led to calls to restrict or lower the number of TNC vehicles in operation.

Given the opposition to the new fees, it would not seem to be the best time to throw some oil onto that fire. Nonetheless, that’s what Mayor Adams seems to be doing. It was announced this week that New York City’s Taxi and Limousine Commission will lift its cap on new licenses for for-hire vehicles starting this week, so long as they’re issued to fully electric cars. The change could allow companies including Uber, Lyft and the recent start-up Revel to deploy thousands more vehicles on city streets.

The excuse is that the policy will promote non-polluting vehicles. At the same time, the move will increase the number of vehicles which will cause more congestion. The policy allows drivers to rightfully note that the fee is a congestion fee not a pollution mitigation fee. It further buttressed arguments that the fee really is just a money grab rather than a well thought out transportation policy.

One leading transit analyst (a former NYC transportation commissioner) has found that people who drive personal cars into Manhattan’s central business district travel just one or two miles, while for-hire vehicles drive 20 to 40 miles every time they enter the MTA’s planned congestion zone. That makes a TNC vehicle ten times more of a congestion contributor than an individual’s vehicle.

City data shows the number of cars operated by e-hail companies grew from roughly 13,000 at the start of 2015 to more than 70,000 in 2018. Meanwhile, the number of yellow taxi medallions — which give cabbies the exclusive right to street hails in much of the city — remained capped at 13,500. The City imposed a cap on new for-hire vehicle licenses in 2018 but allowed new ones to be issued to wheelchair-accessible and electric vehicles. The TLC revoked the electric vehicle exemption in 2021. As of July, there were more than 77,000 for-hire vehicles working for e-hail companies operating in the city.

The new policy is a part of Mayor Adams’ hope to convert all taxis and for-hire vehicles in the city to electric or wheelchair-accessible vehicles by 2030. He’s hoping that by the end of 2024, 5% of the city’s for-hire vehicle trips will be in an electric or wheelchair-accessible vehicle.

AUTONOMOUS VEHICLES

The National Highway Traffic Safety Administration (NHTSA) is opening an investigation into whether General Motors’ self-driving unit Cruise is taking sufficient precautions with its autonomous robotaxis to safeguard pedestrians. It is looking into reports of incidents including Cruise autonomous vehicles “encroaching on pedestrians present in or entering roadways, including pedestrian crosswalks, in the proximity of the intended path of the vehicles.” In December, NHTSA opened a separate safety probe into the autonomous driving system in Cruise vehicles after reports of two injuries in rear-end crashes.

The announcement follows an incident in San Francisco two weeks ago in which a pedestrian was struck by a hit-and-run driver, thrown into an adjacent lane and hit a second time by a Cruise robotaxi, which was not able to stop in time. The self-driving vehicle came to a stop on top of the pedestrian, It comes as NHTSA continues an investigation in association with a February 2022 Cruise petition seeking permission to deploy up to 2,500 self-driving vehicles annually without human controls like steering wheels. 

HYDROGEN HUBS

Hydrogen hubs are a collection of linked assets designed to work together to develop the domestic production of hydrogen. Hydrogen is currently used to make fertilizer and in various industrial processes in the petrochemical industry. The hope is that hydrogen can be produced for use as a carbon-free fuel in industries like long-haul trucking, maritime cargo shipping, and airplane travel. It is at the center of Biden Administration efforts to achieve emissions goals which could offset the negative impacts of energy transformation.

To help achieve these goals, the Inflation Reduction Act provided funding for the support of start-up facilities across the country. Using different sources of fuel to produce hydrogen, plants will provide an opportunity to evaluate the different sources of energy used to produce hydrogen and determine the actual “greenness” each technology and/or fuel results in. This week, the Administration announced the funding for seven hydrogen “hubs” across the country. Their power sources will reflect their locations.

The Appalachian Hydrogen Hub encompasses parts of West Virginia, Southeast Ohio, and southwest Pennsylvania and will use the large quantities of natural gas in the region. The Gulf State Hydrogen Hub will be centered in Houston, Texas, and will cover most of the Gulf Coast and southeast Texas. Texas has large quantities of energy to use in producing hydrogen. The hydrogen hubs that use natural gas to produce hydrogen will use carbon capture technology.

The Mid-Atlantic Hydrogen Hub spans parts of Pennsylvania, Delaware and New Jersey. The Midwest Hydrogen Hub is in Illinois, northwestern Indiana and southwestern Michigan and will produce hydrogen from, among other sources, nuclear power. The California Hydrogen Hub spans from Southern California to Northern California and encompasses three ports: Los Angeles, Long Beach and Oakland. 

The Pacific Northwest Hydrogen Hub encompasses eastern Washington, northeastern Oregon and some parts of Montana and will produce hydrogen for making fertilizer. It will likely connect with the California Hydrogen Hub. The Heartland Hydrogen Hub is hosted in Minnesota and includes a significant presence in North Dakota and South Dakota, and takes advantage of the uses the very inexpensive and abundant wind resources to make clean hydrogen. 

SPRINGFIELD, ILLINOIS MUNICIPAL UTILITY

City, Water, Light, and Power (CWLP) is owned and operated by the city of Springfield, Illinois and provides drinking water and electricity to Springfield residents. In 2021, an incident occurred at one of the City’s generation plants releasing more than 700 tons of fly ash into the environment. Subsequent investigations were impacted by CWLP’s inability to provide adequate documentation to investigators.

This led the state attorney general to file a lawsuit alleging CWLP violated the Illinois Environmental Protection Act, Illinois Pollution Control Board regulations and its Clean Air Act Permit Program permit. The lawsuit sought to prohibit CWLP from future violations of state environmental laws and regulations, as well as civil penalties. The litigation has resulted in an interim order while the lawsuit is pending which requires CWLP to conduct a thorough analysis and report to the IEPA within 30 days of the order being entered by the court. Failure to comply could lead to criminal and/or civil penalties against CWLP.

WANNA BUY A RAILROAD?

The City of Charlotte, NC has been approached by the Norfolk and Southern Railroad to consider the purchase of a stretch of railroad track owned by the company. That section of track lies in a path for a proposed rail connection (the Red Line) through Mecklenburg County to the Charlotte city center. Initial plans called for a 25-mile commuter rail line with 10 stops between Gateway Station in Uptown Charlotte to Iredell County. The idea is to provide an alternative to driving on I-77.

The track, known as the O line, is used for freight operations currently. Norfolk and Southern would be expected to continue using the tracks. It is not clear whether the ultimate transaction would involve a change of ownership or a lease arrangement. The plan will get serious consideration as it would go a long way towards enabling the Red Line.

In Cincinnati, the Norfolk and Southern is a potential buyer of rail tracks from the City. The Cincinnati and Southern Railway is the only municipally-owned railway in the U.S. It has been leased by Norfolk Southern since 1881. In 2021, that lease was extended through 2051. The city wants to sell the railway to Norfolk Southern for around $1.6 billion. It would take the proceeds of a sale and place them in a trust fund. The interest generated from the corpus of the trust is estimated to generate some $50 million annually for infrastructure investment in the City.

The City earns approximately $25 million per annum under the current arrangement. The Trust is projected to generate twice that much. The level of annual payments from the Trust to the City are not guaranteed. The plan contemplates a required minimum payment of $25.6 million per year, regardless of the investment returns. This ensures that the city won’t receive any less than it generated from the railroad prior to the sale. 

The planned ballot proposal requires that “in the unlikely case that the trust balance dips below 75% of the balance from the previous year, then a moratorium on payments to the city is required until the balance of the trust recovers to the level of the previous year before that loss.” The city is estimating a 5.5% return on its investments.

TEXAS BROADBAND

The U.S. Census Bureau reports 93.9 percent of Texas households had a computer, but only 86.9 percent had a broadband internet subscription in 2017-2021. The rate is substantially lower in the more rural areas of the state. To address the shortfall in broadband access, Texas voters will have a chance on November 7 to approve a constitutional amendment, Proposition 8.

The amendment creates a broadband infrastructure fund of $1.5 billion to expand high-speed internet availability. The fund is designed to take advantage of federal funding available through the Broadband Equity, Access, and Deployment Program to stimulate internet expansion. Texas was promised $3.3 billion, the most of any state, and Texas’ Broadband Development Office predicted it would begin accepting grant applications in 2024.

Eligible applicants would include internet service providers, political subdivisions and public-private partnerships interested in developing broadband infrastructure. Supporters have cited the benefits of the Rural Electrification Administration in the 1930’s which benefitted many rural residents. It is a comparison we have made for years. Broadband is the electrification project of the 21^st century.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

DETROIT PROPERTY TAX EXPERIMENT

As a city with a significant amount of vacant land, Detroit has always faced difficulties in maintaining property tax revenues. Taxed according to traditional property tax valuation methods, the relationship between land and development could not have been clearer. As the City tries to continue its recovery, the abundance of underutilized land has driven moves to try to derive value from those lots commensurate with their location, size and development potential.

Under the current system, vacant land and blighted buildings are taxed at a much lower rate than land with single-family homes and other structures. The Mayor would see land and structure values taxed separately. Detroit would have the ability to increase the tax millage on land and reduce the tax millage on structures like homes and buildings. That means property taxes on land will go up while the taxes on structures like homes and buildings would go down. 

According to the Mayor, ninety-seven percent of Detroit homeowners would see a reduction in their property taxes while the remaining 3% would see no change at all. The median homeowner will save 27% on their tax bills. The average $50,000 home in Detroit will see a $450 tax cut, while a $100,000 home will see a tax cut of $900.

The goal has been to qualify an amendment question on the ballot in February, 2024. The Legislature needs to approve enabling legislation and it has been a slow-going process. If approved, the Land Value Tax Plan would be phased in over three years beginning in 2025.

MEDICAID

In August we noted concerns regarding the potential loss of Medicaid benefits by those whose removal had been halted by pandemic regulations. In the states where the opposition to expanding Medicaid under the Affordable Care Act has been the strongest, aggressive moves were made to remove thousands of patients out of the program. Florida was particularly proud of its efforts in this area. Advocates had cited the potential for these removals as a real source of concern.

The initial data indicates that those concerns were not assuaged. Just before Labor Day, federal officials notified states that there were problems with the eligibility certification process. The Centers for Medicare & Medicaid Services (CMS) worked with states on the return to regular eligibility operations following the end of the Medicaid continuous enrollment condition. In that time, it identified issues where states are out of compliance with renewal requirements.

This issue most commonly affects children in households with at least one adult enrolled in Medicaid. Medicaid and CHIP eligibility levels for children are generally higher than those for adults. While the Medicaid income eligibility limit for adults is 133% of the federal poverty level (FPL), the median Medicaid/CHIP eligibility level for children across states is 255 percent FPL. Children’s eligibility levels range from 170% of FPL to 400% of FPL with all but two states covering children at or above 200% FPL.

CMS also determined that due to incorrect systems programing or other operations, some states are requesting information or documentation for individuals for whom the state has completed a renewal and are terminating coverage for individuals if other members of the household do not provide requested verification.

CLIMATE DISCLOSURE

California Gov. Gavin Newsome signed off on the Climate Corporate Data Accountability Act, or SB-253, and the Climate-Related Financial Risk bill, or SB-261. SB-253 will require all public and private firms that operate in California — and whose annual revenues surpass $1 billion — to disclose both direct and indirect greenhouse gas emissions. If companies fail to adhere to the demands of the law, they will face fines of up to $500,000 a year.

SB-261, meanwhile, will require companies that generate more than $500 million in annual revenue to publish climate-related financial risk reports biennially, beginning in 2026. Failure to comply with SB-261 will result in administrative penalties of up to $50,000 in a reporting year.

Federal rules proposed by the U.S. Securities and Exchange Commission are not as stringent as the California rules. Those proposed rules would require publicly traded companies to disclose both direct and indirect emissions, while the California legislation includes private corporations as well. The laws do not impose any additional reporting requirements for municipal bond issuers. At least, not yet.

SCOTUS AND CLIMATE CHANGE

The U.S. Supreme Court agreed to hear an appeal from fossil fuel industry entities who are being sued by the State of Minnesota. Like so many cases filed by other jurisdictions, the suit charges that the defendants knowingly concealed evidence of the impact of their businesses on the environment. Like all of the other litigation, the case being made is that the issues at hand are federal rather than state issues.

In its last session, the Supreme Court declined to hear challenges to climate cases from Hawaii, Colorado, Rhode Island, Baltimore, Maryland, and San Mateo County, California, that were all seeking to have the cases moved to federal court. 

LABOR AND HEALTHCARE

Given its outsized role in the healthcare ecosystem serving the western U.S., the settlement of negotiations this week between Kaiser Permanent and its non-provider workforce are a sign of the challenges many systems face in the post-pandemic world. As we discussed last week, some 75,000 employees at Kaiser Permanente health facilities staged a three-day job action. The strike was designed to move negotiations on expired contracts.

The strategy seems to have paid off. As we go to press, Kaiser has announced an agreement with the striking workers. A proposed four-year contract would include significant wage increases. The contract would set a new minimum of $25 an hour in California for the healthcare workers. That creates a new tier of minimum wage, $5 an hour higher than the new raise approved for fast food workers. It is about $10 an hour above the state’s basic minimum. The agreement would raise the hourly rate to $23 in other states and would stagger a 21 percent increase in wages over four years in all locations. 

Along with general inflation, labor costs have been and likely will continue to be a pressure on finances. The fact that this contract covers a large multi-state employer reflects at least one sign that size and consolidation are not providing much relief from the current wave of cost pressures.

In the Midwest, it is the provider class which is moving towards organizing in the face of recent trends. Some 400 primary and urgent-care providers across more than 50 clinics operated by the Allina Health System in Minnesota and Wisconsin have voted to unionize. The group is estimated to be the largest group of unionized private-sector physicians in the United States. More than 150 nurse practitioners and physician assistants at the clinics were also eligible to vote and will be members of the a local of the Service Employees International Union.

The issues were not just compensation based. In many areas and systems, staffing levels are a huge bone of contention between providers and hospitals. Allina say that staffing was a concern before the pandemic and that staffing has never fully recovered to its prepandemic levels. Others point to relatively low pay for clinical assistants and lab personnel. These factors appear to have contributed to the staffing issues.

NUCLEAR LITIGATION SETTLEMENT

Georgia Power is moving closer to settling litigation over the cost overruns associated with the expansion of the Votgle nuclear plant. A 2018 agreement was arrived at when the parties were at odds over who would pay for the rising costs from building the new units. That agreement gave Oglethorpe Power and the new units’ other co-owners — MEAG Power and Dalton Utilities — a one-time chance to cap their liability for construction costs. The utility partners believed that once a certain cost level was breached, the agreement permitted them to effectively cap their ultimate liability.

Georgia Powert already settled similar claims with the Municipal Electric Authority of Georgia. MEAG owns a 22.7% share in the new Vogtle reactors. A lawsuit filed by Dalton Utilities, which holds a 1.6% stake in the units, is still pending. Georgia Power said that it could have to pay another $17 million to resolve that dispute.

Now, a settlement between Georgia Power and partner Oglethorpe Power has been announced. Oglethorpe Power claimed that costs had moved past the trigger point of $19.2 billion agreement established in the 2018, affording the co-op the opportunity to limit its exposure to the rising costs, in exchange for forfeiting a share of its ownership in the new units. Georgia Power argued costs hadn’t yet reached that level.

Georgia Power said it will pay Oglethorpe $308 million to cover its share of construction costs that were already incurred. Georgia Power will also pay an estimated $105 million for Oglethorpe’s portion of the costs needed to complete Vogtle’s expansion, and will cover 66% of any additional cost overruns. Oglethorpe will maintain its 30% ownership in the new Vogtle units and has agreed to dismiss its lawsuit. 

The settlement comes as Georgia Power disclosed last week that it is facing another technical setback with Vogtle’s second new reactor. The problem at Vogtle Unit 4 involves a faulty motor inside one of the reactor’s four coolant pumps, which keep temperatures at safe levels inside the reactor core. Georgia Power said the issue was discovered during start-up testing and that the entire pump will have to be replaced. That pushes the expected commercial operating date into 2024.

SAN ANTONIO ELECTRIC

The Electric Reliability Council of Texas (ERCOT) issued a notice on Oct. 2 requesting as much as 3,000 megawatts of additional capacity — enough to power 600,000 homes during periods of peak demand — for the coming months. As part of that request, ERCOT cited several shuttered coal-fired plants which could be restarted to address the need. One of those plants is owned by the San Antonio electric utility, the J.T. Neely plant. Deely represented 40% of the 2,100 megawatts of capacity that would be eligible for a special contract this winter if it could come back online, ERCOT said in its notice. 

San Antonio will not be reopening the plant. The utility cited the short amount of time before the onset of winter relative to the time frame for getting the plant back in operation. The plant has been closed for five years. Supplies that are eligible for special contracts under ERCOT’s request include plants that have been or are about to be mothballed, new gas plant projects that may be accelerated and programs that pay big power users to curtail their usage during emergency conditions. 

GUARANTEED ADMISSION

The increasing pressure faced by colleges in an environment of declining demand is generating a variety of different approaches to the problem. As the demographic trends depressing college demand continue, the competitive environment for attracting students is driving a variety of different responses. The latest is guaranteed admissions.

Virginia Commonwealth University in Richmond, Virginia, recently announced a guaranteed admission program for first-year freshman applicants who have a GPA of 3.5 or higher and are in the top 10% of their high school graduating class. Last spring, the State University of New York notified some 125,000 graduating high school students that they had been automatically accepted. Undergraduate enrollment in the U.S. peaked at about 18 million students over a decade ago. Today, there are more than 2.5 million fewer students enrolled.

Cost continues to be a huge factor. Tuition and fees plus room and board for a four-year private college averaged $53,430 in the 2022-23 school year. At four-year, in-state public colleges, it was $23,250. When you put that together with the declining view of the worth of a college education held by many for whom cost is a huge issue, the pressure on enrollments should not be a surprise.  

CHICAGO – HOPE VS. REALITY

Chicago Mayor Brandon Johnson unveiled his proposed budget for the city of Chicago for the fiscal year beginning January 1. The much-anticipated plan followed significant campaign promises from the Mayor. Many of his plans included higher taxes to fund increased spending on social services-related needs. Those plans were made before it became clear that the projected budget gap for 2024 was some $580 million. Total spending is set at $16.6 billion.

The new promises and revenue requirements have driven some tried and true tactics to balance the budget. The Mayor declared a tax increment financing surplus of about $434 million, Chicago’s highest in 15 years. By closing five TIF accounts and siphoning $100 million from the La Salle Street TIF, he’s generating roughly $100 million for the General Fund and more than twice that amount for Chicago Public Schools. The city again will refinance city bonds, generating $89.2 million and carrying over $50 million from last year’s unspent balance.

The signs of a cash-strapped city remain as the Mayor relies on some old school special moves to present a “balanced” budget. They include $41.5 million in unspecified “personnel savings”. There was no detail as to whether the savings will come from closing out vacant positions or the elimination of other jobs. At present, it is estimated that there are 1,700 police vacancies. At the same time, Johnson’s plan includes 311 new positions and an overall city workforce of 36,729, the highest in years. 

The Johnson administration is relying on “improved revenue projections” to generate $186.8 million and stronger “revenue enforcement collections” to add $35 million. The plan however, does not include any of the local tax increases — on jet fuel, hotel rooms and business employment — which the Mayor promised during the campaign. It also maintains property tax rates and eliminates the automatic escalator that increases property taxes to match the rate of inflation.

The budget does seek to address some well-established concerns. $303 million is allocated for a pension prepayment and $53 million for lead pipe replacement which has been a significant ongoing issue. There’s a “slight increase” in the police budget, to $1.74 billion, from the corporate fund. But some vacant police positions will not be filled. Nevertheless, spending on police will exceed 10% of the total budget.

WIRES VERSUS PIPES

There has been so much attention paid to the efforts of carbon pipeline builders to obtain approvals for their proposed projects that it has taken attention away from efforts to develop other energy infrastructure. One such sector is that of new electric transmission projects. One of the largest new projects is the Grain Belt Express. It is designed to move wind generated power from Kansas to Illinois through Missouri. It had received approvals from regulators in Kansas and Illinois but it was a harder process in Missouri.

The project would have traversed the whole state of Missouri but would have provided only a minor share of the power from the line within Missouri. Local Missouri utilities made an effective case that given the physical impact of the line on the state, that it made more sense to provide a more substantial share of the power travelling through the line to their customers. Now, the Missouri Public Service Commission has approved a revised plan for the line and the distribution of its power.

Previously, state utility regulators approved a line that would have brought only 500 megawatts of energy to the state. Now, five times as much electricity will be delivered to the state some 2,500 megawatts as compared to earlier plans. The project sponsor – Invenergy – must either sign voluntary deals with landowners or use its power of eminent domain to build on the property of landowners.

The fight against the use of eminent domain failed last year in the Legislature. Instead, the legislature compromised and legislated that in the event of future large transmission lines, greater compensation for landowners be provided. The laws also set a seven-year time limit for companies to build transmission lines after obtaining their easements.

As this goes to press, Invenergy said it had acquired 95% of the easements it needs in Kansas and Missouri.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

COOL PAVEMENT

Cool Pavement is a process which coats street surfaces in an effort to reduce road temperatures. Beyond the impact on the road itself, the hope was that the effect would impact so-called urban heat islands. With environmental and social concerns intersecting, there has been a real press on municipal officials to address “environmental equity” issues. Cool Pavement is the latest iteration of the phenomenon.

The city of Phoenix, AZ began testing Cool Pavement in certain neighborhoods to combat the effects of the urban heat island.  The city has been installing more than a hundred miles of the special coating.  Now, the project has been temporarily halted, the second time that this has been required. The products and materials the department and its contractors use to pave and maintain city streets are routinely tested to ensure they meet department specifications. As a result of that testing, the Cool Pavement application schedule was recently temporarily paused as the department and its contractors work to resolve a concern about the thickness and texture of the Cool Pavement product. 

It seems that the road may be a bit cooler but that benefit is apparently not moving much beyond the curb. ASU’s researchers found that just 6 feet from the pavement, the air temperature was only .3 degrees cooler during the day and only half a degree cooler in the evening. Some studies have questioned the technology noting that it reflects more sunlight back off the road and that this could make the immediate surrounding areas actually hotter – as much as 5 degrees hotter. 

While Cool Pavement is three times more expensive, early findings show it holds up to wear better and protects the infrastructure under the road. Whether that is enough to justify the increased cost remains to be seen.

LONE STAR FLOOD RISK

Hurricane Harvey led the Texas Legislature to enact laws requiring the Texas Water Development Board to develop Texas first statewide flood plan. An initial risk assessment was released in mid-summer.  It showed that some 6 million Texans, or about 20% of the population, live in an area susceptible to flooding. More than 2.4 million Texans live in areas that have a 1% chance of flooding each year, known as the 100-year floodplain, the analysis found. Another 3.5 million people live in areas with a 0.2% chance of flooding each year, known as the 500-year floodplain. One-fifth of the state’s land — roughly 56,000 square miles — now fall within the 100-year floodplain.

The analysis identified how many buildings, homes, people, hospitals, roads and agricultural areas are in a floodplain. The San Jacinto region, which includes Harris County and Galveston, has the most people living in a floodplain: almost 2.5 million people are in a 100- or 500-year floodplain. The Lower Rio Grande region, which spans much of Texas’ southern border and includes the Rio Grande Valley, is next with about 1 million people at risk.

This will cause some concern. Sixty-three of Texas’ 254 counties had no existing flood hazard information prior to the planning effort according to the Board. As for the risk on the Texas Gulf Coast, between 2000 and 2019, rising sea levels caused the Texas coastline to retreat about 4 feet per year on average, according to a 2021 University of Texas Bureau of Economic Geology report for the Texas General Land Office.

CONGESTION PRICING

The long process of determining the appropriate level of New York City’s pending congestion fees is under way. Already, the panel appointed to determine the fee has released some potential adjustments to the fee schedule in response to obvious sources of opposition. This week, the first list of proposed adjustments and exemptions has been put up for discussion.

Before determining the base fee, the panel established that there will be “substantial” discounts for entering the congestion zone during overnight hours. Taxis, black cars, and TNC vehicles will not be charged directly rather a fee of between $1 to $2.75 would be added to the fare. Drivers would be charged just once a day even if they drive all day within the zone or enter and exit it multiple times.

CARBON CAPTURE

Navigator CO2 wants to suspend its pipeline permit process in Iowa until utility regulators in Illinois approve the project. Navigator filed a motion with the Iowa Utilities Board on Friday to cancel a scheduling conference that was set for Oct. 9, withdraw its motion to establish a procedural schedule and to pause its permit proceedings. The company plans to file an update on its project with the board by the end of March. Illinois regulators are expected to make a final decision on the project by the end of February.

In another example of the federal effort to drive carbon capture, the Bureau of Land Management is seeking public comment on a proposal to permanently store carbon dioxide in underground rock formations on public land in Carter County, MT. The BLM issued a revised policies in June 2022 allowing for the geologic sequestration of carbon dioxide on public lands. The project would store carbon dioxide in more than 100,000 acres of subsurface pore space.  

ONE TIME VERSUS RECURRING

We take no happiness from the fact that some of our previously expressed fears about government finances are coming true. The majority of those fears were based on one of the fundamental sound tenets of public finance. That is that programs with long-term time horizons must be funded with dependable recurring revenue sources. That has been true regardless of the source of the non-recurring revenues – intergovernmental aid, one-time windfalls, bond refinancings. The risk of one- time revenues has always been clear.

The latest example is from NYC where the potential impacts of 15% across the board cuts are focusing attention on the city’s finances. It is clear that the proposal is a political ploy but nonetheless the potential effect of those cuts is already driving debate. The prime area of concern is the schools. Expanding 3-K was former Mayor Bill de Blasio’s signature achievement. Unfortunately, his administration did not secure long-term funding.

Funding for disabled child education has relied on stimulus funds. The City is required to pay tuition to a private school for a child who cannot be served by the Board of Education. Students with disabilities make up a fifth of all pupils. Now, both 3K and the disabled tuition requirement rely heavily on stimulus. The City Comptroller noticed in a recent report that before this fall, school budgets were not slashed for low enrollment. If the proposed cuts to budgets are actually imposed, some 45 schools where stimulus dollars make up a significant portion of their budgets could each lose more than $630,000, on average.   

PUBLIC FACILITIES AND PROPERTY

Texas property owners flooded by Hurricane Harvey and Tropical Storm Imelda sued the Lone Star State after their land flooded for days following the storms. One group of landowners has alleged that the flooding impacting their properties was the result of a state-led highway elevation and expansion project. Ironically, the roadway was meant to serve as an evacuation route during emergencies. The plaintiffs contend it also prevented floodwaters from receding into the Gulf of Mexico.

Richard Devillier v. Texas is meant to determine whether the negative impact on property as the result of a project constitutes a taking under the Constitution. Texas, meanwhile, has fought the property owners’ claims for compensation, saying it was immune from the lawsuit, and in the case of Harvey, the challenge came too long after the 2017 storm. A 5th U.S. Circuit Court of Appeals ruling that found property owners could only sue for damages if Congress passed a law allowing it.

The case would impact general governmental projects like roads but it would also address concerns around the impacts of private utility infrastructure development on adjacent private property. It is based on a theory that the impact on a property owner of one of these projects constitutes an “inverse takings” situation. Inverse condemnation challenges can include suits against utilities operating outside their easements, or those allegedly at fault for sparking wildfires.

Four years ago, the Court ruled in a 5-4 decision to undo long-standing precedent requiring that takings claims be raised first in state court before being raised in federal court. If a plaintiff was unsuccessful in the state courts, they were barred from bringing their suit to federal court. The plaintiff property owners had first brought their challenge under the takings clauses in the United States and Texas constitutions to state court. Texas successfully shifted the case to the U.S. District Court for the Southern District of Texas, where it was consolidated with other cases into a single lawsuit including 77 property owners.

The case could have implications for projects like transmission lines for utilities or carbon capture pipelines.

LABOR ACTIONS AND MUNICIPALS

The last 40 years have seen the power of unions decline. With fewer members strikes had become more infrequent and major industries in what were highly unionized environments located in what were effectively right to work states. The idea that significant labor actions could actually impact credit was significantly diminished.

That is changing in 2023. The West Coast port credits saw pressure as prolonged negotiations with port labor drove business away amid fears of long-term impacts. Workers at UPS threatened to strike and received significant compensation improvements as their strike deadline drew near. Workers at several higher education institutions also struck. Between the lack of actual strikes and quick resolutions to others, labor negotiations have not been as impactful as they might. That could be changing.

Throughout the year, different segments of the hospitality industry have faced contentious contract negotiations and strikes. A strike in L.A. became a real political issue when Taylor Swift came to town. In the latest example, hospitality workers in Las Vegas have voted overwhelmingly to authorize a strike against major resorts along the Strip.

Contracts for an estimated 40,000 housekeepers, bartenders, cooks and food servers at MGM Resorts International, Caesars Entertainment and Wynn Resorts expired on Sept. 15, after being extended from a June deadline. Other workers remain on extended contracts that can be terminated at any time. A total of 60,000 workers could be included.

The UAW strike continues to expand and continues to highlight the challenges of the transition to electric vehicles. As it drags on, local economic interests will be impacted. Taxes based on economic activity will decline. The strikes in the entertainment industry clearly impacted the economies in the cities where these activities are concentrated like NY and LA.

The next strike threat is credit specific. Kaiser Permanente provides care for 13 million people in eight states, including California, Colorado and Washington, and the District of Columbia. This week, some 75,000 Kaiser Permanente employees undertook a three-day job action to protest the lack of a new contract. The previous contract expired on Saturday. Union leaders say this could be the largest strike by health care workers in recent U.S. history.

The strike does not include doctors or nurses but most of the technical, clinical support, and maintenance staffs are participating. Patients could experience delays in getting appointments, or elective procedures that are not considered urgent could be postponed. Like many other hospital providers, Kaiser has had to face the reality of rising costs for supplies and equipment while also accommodating the fact that the pandemic drove many employees out of the business.

It was workers in the medical field that were impacted the most during the pandemic and the people striking at Kaiser were exactly the ones who could not work remotely, had to take public transit and by and large came from groups or circumstances that placed them at greater health risk. Unsurprisingly, while dealing with inflation themselves as well, they would like to get paid too.

WATER AND GEOPOLITICS

One of the features of the debate over water in the western U.S. is the impact of agriculture on water supplies. As supplies of water have declined attention focused on how land was used in terms of how water intensive certain crops were. It is not an accident that nut growers have significantly increased their marketing efforts. In order to maintain historic water allocations, many farmers switched crops in order to maximize their yield from a gallon of water.

One of the most water intensive crops is alfalfa. A surprising amount of irrigated land in places like the Imperial Valley in CA and areas of southern Arizona is devoted to alfalfa. It is a contentious point because the alfalfa supports meat production primarily in other states while drawing down local – often groundwater -sources. It has been difficult to persuade legislators to take actions which might hurt their agriculture supporters.

One formula to address the problem is unfolding in Arizona. It has taken the confluence of water conservation advocates, domestic agriculture interests and geopolitics to create a unique situation. The State of Arizona has announced that an Arizona farm owned by a Saudi Arabian company that grows alfalfa for export is set to lose its access to state land. The farm is allowed to pump unlimited amounts of groundwater, free of charge, to irrigate its crop. 

The alfalfa is shipped to Saudi Arabia for use in its domestic dairy industry. Arizona is moving to immediately terminate one lease held by the farm owner and will not renew three other leases that are set to expire in February. Ironically, Saudi Arabia banned growing alfalfa and other green fodder crops within its own borders in 2018 in a bid to relieve pressure on the kingdom’s water resources.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.