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Dan Poresky takes on City Council at Allentown water lease forum

By Randy Kraft, WFMZ.com Reporter, RKraft@wfmz.com
Published On: Feb 20 2013 06:04:34 AM CST

Allentown water sewer lease debate

ALLENTOWN, Pa. -

Opponents of leasing Allentown’s water and sewer systems intend to campaign against any member of City Council who won’t agree to delay voting to approve that 50-year lease until after the May 21 primary election.

City Council expects to vote on a final agreement for a lease before the end of April, about one month before that primary.

“Five sitting council members are running for election in the May primary,” said Dan Poresky, a leading lease opponent. “Let them know that if they don’t let the public vote on this in November, we’re going to vote them out of office in May.

“It takes only a few votes to swing a primary election in Allentown and we plan to campaign against any candidate that won’t agree to let the public vote on this. Tell council members they should not vote on the lease.”

Poresky made his threat to unseat council members during a two-hour public forum on the lease early Tuesday evening in the Lehigh County Government Center in Allentown. He made it clear opponents are looking for commitments from members of council that they will delay voting until after the primary.

After the program, Poresky said opponents will campaign for any member of council who agrees to defer action on that lease.

In addition to voting for City Council candidates on May 21, Allentown residents will decide whether City Council should adopt an ordinance requiring that any sale, lease or transfer of city-owned property valued at $10 million or more would have to be approved by voters in a referendum. November is the soonest such a referendum could be held.

Poresky is counting on that ordinance being approved by voters in May.

“Tell council members they should not vote on a lease,” Poresky told the audience. “They should let the decision go to referendum.”

Most members of City Council were among the estimated 75 people in the audience at the forum, which was sponsored by the League of Women Voters of Lehigh County. Only one of council’s seven members, Jeanette Eichenwald, openly opposes the lease. She is not up for re-election this year.

Poresky charged that members of City Council have “made it very clear they don’t care what the people think and they don’t fear the perils of privatization, even though dozens of citizens spoke at council meetings offering alternatives and decrying privatization.”

Poresky was part of a committee that collected more than 4,500 signatures from city residents who wanted the lease on the May primary ballot so voters, not council, would decide the issue. But by a 6-1 vote, council “soundly rejected our request to have this put on the May ballot. Our referendum will still go to the voters but not until November, too late to prevent them from approving a lease. We’re not giving up, this is too important.”

Poresky, who was introduced as being from Citizens for Allentown Water, was one of seven panelists sharing their views on the lease at the forum.

On Poresky’s right sat Gary Strathearn, the city’s finance director, who usually serves as Mayor Ed Pawlowski’s point man on the lease at City Council meetings. On Poresky’s left sat Scott Shearer, managing director of Public Financial Management, the city’s lead financial consultant on the lease.

Also on the dais were Mary Grant, a researcher with Food and Water Watch, a non-profit consumer advocacy organization; Jim Kennedy, the former mayor of Rahway, N.J.; Dan Koplish, retired Allentown water resources manager; and Al Wurth, a political science professor at Lehigh University.

While proponents and opponents disagreed whether the word “privatization” was proper to describe the planned lease, the forum was not a debate. Many aspects discussed have been argued for months at City Council meetings.

Both Grant and Wurth supported Poresky’s opinion that city voters should decide if the lease goes forward.

Strathearn said the six bidders for the lease “have long histories, long track records and they are coming in to do the right thing.” But Poresky said no information can be found about two of the companies -- NDC Housing and Allentown Forward –“and they could be the winning bidders. We don’t know what their reputation is. We don’t even know who they are, what kind of track record they have.”

Shearer encouraged residents to read the proposed final concession agreement and operating standards documents, which the city intends to post on its Web site on Feb. 25.

But Wurth said: “I don’t recommend you read the document,” indicating only a lawyer could understand it. He said the contract is incredibly complicated – “it’s lawyer-ese.” He also said it includes information “that the concessionaire is not necessarily the operator. If you win the concession, you could sub the whole operation to somebody else.”

Earlier, a number of people in the audience murmured “what?” in surprise when Koplish indicated the city has the right to replace the water/sewer system operator but not the concessionaire.

Each panelist was given give five minutes to make an opening statement. Most of the program was spent answering questions submitted in writing by the audience. Panelists had up to two minutes to respond to each question – with the option to pass.

“We will not get to every single question,” warned MaryAnne Rood, president of the county League of Women Voters, at the beginning of the program. “But we’ll try to cover as many areas and interests as possible.” More than 50 questions were submitted. At the end of the program, Rood said 10 were asked.

“Allentown is facing the most serious problem of its 251-year-history,” said Strathearn, who was representing the mayor. “If the city were to go into default, dire consequences would rip far beyond the city’s borders. We’re not going to allow that happen. Failure is not an option.”

Strathearn said the city “is burdened with a $200-million-and-growing unfunded liability in its pension plan.” He said the city has to pay that debt, and those payments soon will consume at least one-third of the city’s entire general fund budget. “This is unsustainable and unacceptable.”

After much research with “some of the best and brightest legal, financial, economic, governmental, pension and water professionals in the country,” the finance director said the city decided the most viable option was to lease its water and sewer operations. It hopes to get $200 million or more from a lease.

Strathearn explained the city intends to “negotiate an up-front payment close to or equal” the amount needed to significantly reduce that unfunded liability. “We’re on the cusp of snatching victory from the jaws of defeat.”

While opponents argue the city’s water and sewer systems have nothing to do with the pension crisis, Strathearn said leasing them is a funding mechanism to solve the problem.

“If you don’t do this, you still have to deal with your pension issue, which could be devastating to the city,” warned Kennedy. “You don’t have to go far in Pennsylvania to see larger cities that are bankrupt and having major problems, such as your capital city.”

Grant said city water users will pay for the lease through higher water bills, which she called “being taxed through the tap.” She said any water company will have to pay interest on its loan to get the lease, in addition to paying for eventual capital improvements and making a profit.

“The typical household bill will increase 1,200 percent” over the 50-year deal, she warned.

“Our rates have gone up almost 700 percent over the past 50 years,” said Strathearn. “Will rates go up? They will. (But) there are parameters in the agreement to control those.”

“The rates are going to go up dramatically,” said Poresky.

Shearer said the rates will be going up even if the water and sewer systems are not leased. And Kennedy said it is not in a company’s best interest to come in and gouge a community. “They’re trying to continue to grow their business in terms of providing water services. Our rates did not skyrocket. That hasn’t occurred.”

Koplish, now a consultant to City Council on the lease, outlined how whatever company is awarded the lease will be required by the city to maintain high standards for water and sewage treatment. He said: “Allentown’s water quality is significantly cleaner (and) of higher quality than is required.” He said the same applies to sewage effluent: “It’s cleaner than the Lehigh River.”

Koplish said an office in City Hall will deal with the concessionaire on a daily basis, including handling consumer issues. He added there will be quarterly meetings and an annual report by the city regarding how the concessionaire is doing.

Shearer said PFM continues to look at the option of setting up an authority, as an alternative to a lease.