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Allentown mayor releases some conditions for water, sewer system lease

By Will Lewis, Reporter, WLewis@wfmz.com
Published On: Oct 17 2012 04:30:57 PM CDT
Updated On: Oct 17 2012 05:58:27 PM CDT

How does a 100 percent tax increase sound to you?

ALLENTOWN, Pa. -

How does a 100 percent tax increase sound to you? Probably not so good, but Allentown's mayor said that could become reality if his plan to lease the city's water and sewer system tanks.

Mayor Ed Pawlowski fleshed out some of the details of that plan on Wednesday.

"Let's say we get it to the $220 - $230 million range," said Pawlowski. "We may be able to pay off all our debt."

Pawlowski did not say that is the amount the city will get for leasing the water and sewer system. He did say it's the best option to get the city out of a crippling pension problem.

If the plan doesn't work, the mayor said taxes could go up 100 percent.

"That is unsustainable for the city of Allentown. That is a huge increase, which is going to hit senior citizens across the board," said Pawlowski.

"If we are responsible in our decision making process, need to thoroughly investigate, and discuss, and read this proposal," said Jeanette Eichenwald, a member of the Allentown City Council, which will introduce the lease concession for request for proposal, or RFP, at Wednesday night's meeting.

One worry is about a potential rate increases. The lease agreement stipulates there will be no rate increases for the first three years of the 50-year lease.

Then after that, the rates will be determined by the Consumer Price Index plus a percentage no greater than 2-1/2 percent.

That still doesn't sit well with at least one member of city council

"I know that many of these companies use service charges, insurance policies, maintenance cost, equipment cost, installation costs to increase, increase, increase the cost of water," said Eichenwald.

Pawlowski and his staff claim other fees will be paid by the company, and if there are infrastructure upgrades, the leasing company would have to get city council approval for an additional rate increase.

Once the proposal is released, the seven companies that have been qualified to bid will get their chance. Then we'll see how much companies think Allentown's water system is worth.