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Lehigh County Commissioners may kill LCA's shot at bidding on Allentown water/sewer lease

By Randy Kraft, WFMZ.com Reporter, RKraft@wfmz.com
Published On: Feb 27 2013 06:00:00 PM CST
Updated On: Feb 28 2013 06:46:40 AM CST

Will there be another player in the effort to lease Allentown's water and sewer utilities?

ALLENTOWN, Pa. -

On March 13, Lehigh County Authority will find out if Lehigh County commissioners will allow it to bid on Allentown’s controversial water and sewer lease.

Waiting until March 13 will be cutting it close, because LCA must submit a bid to Allentown by March 21.

The problem is the proposed lease is for 50 years and LCA’s charter will expire in 36 years. It needs the county commissioners to extend that charter so it can bid on the lease.

A proposed ordinance to extend the local water and sewer authority’s charter from 2049, when it expires, to 2063 was on the agenda of the commissioners’ Wednesday night meeting, but deferred after more than 90 minutes of debate.

After the meeting Lisa Scheller, chairwoman of the nine commissioners, said: “Without taking the vote, one could never say what ultimately would have happened. But the passage of it was definitely in question.”

During the meeting, Scheller announced she would have been one of those no votes. Commissioners Michael Schware and Scott Ott also said they would have voted against extending LCA’s charter Wednesday night.

Schware and Ott want to change LCA’s charter so county commissioners, not LCA’s own board of directors, make the ultimate decision about bidding.

“I want to be able to weigh in as an elected representative of the people on important financial decisions,” said Schware.

But commissioners Dan McCarthy and Percy Dougherty said county commissioners cannot change LCA’s charter in just two weeks, unless several special meetings are scheduled, advertised and held.

Commissioner Vic Mazziotti warned county commissioners have the “nuclear” option of disbanding LCA if it seems about to make a massive mistake. “If that were our only choice I would consider it,” said Mazziotti. “I don’t want to see us be part of a bad transaction.”

The recommendation to defer action on the charter extension came from LCA general manager Aurel Arndt, who addressed the commissioners after 11 other people spoke about LCA. He hopes two more weeks will give all parties time “to see if there is any mutually agreeable way of moving forward. We will pledge to work with the board in whatever way we can over the next two weeks.”

The vote to defer action on extending LCA’s existence until 2063 was 8-1. Only McCarthy voted no.

“Putting this off for another two weeks almost suggests that we put it off indefinitely,” said McCarthy. He said LCA should at least be given the opportunity to negotiate with the city. Not extending the life of LCA, he added, will mean the end of LCA’s involvement and the city’s water and sewer systems may be leased to a national or international company.

Dougherty said commissioners already have some control over LCA, but will have no control if a private corporation wins the bid to lease the city’s water and sewer systems. He also said water and sewer customers will pay higher rates if a private company leases the systems, but “LCA will be more reasonable.”

Arndt said LCA is a non-profit organization that will charge lower rates than a private water company that must make a profit. “I’m not suggesting that profit is evil,” he said, but added in the private sector the incentive is to maximize profits.

“This could be the most important decision that this board of commissioners makes for the next 50 years,” said Scheller. “It can’t be one that’s made quickly or taken lightly.”

The charter extension ordinance was introduced at the Feb. 13 commissioners meeting and LCA was the subject of a 3.5-hour special commissioners meeting on Feb. 20.

The big question is whether LCA will find a way to satisfactorily address questions and concerns of enough commissioners to get five votes to win the 50-year charter extension on March 13.

“Whether LCA ultimately gets the lease is not the question here,” said Arndt. “The authority has a lot of offer and should be given an opportunity to participate in the bidding process.”

Dougherty warned if commissioners propose substantive changes to the current charter extension proposal on March 13, they will not be able to vote at that meeting, which means LCA would miss the March 21 deadline to bid.

Schware said commissioners now have minimal and insufficient oversight of LCA -- appointing its board members and extending its charter.

But McCarthy does not want the county commissioners to micro-manage LCA. He said authorities such as LCA, LANTA and the Lehigh-Northampton Airport Authority were established so those organizations would not be politicized.

“We need less government involved in these things, not more,” said McCarthy.

“The last thing I want to do is try to micro-manage the LCA,” said Mazziotti. “But I don’t think this is in the range of micro-management, when you’re talking about a massive expansion and a transaction that has the potential of being very bad.”

Schware said leasing the city’s water and sewer systems would more than double the size of LCA’s customer base and possibly quadruple its debt. Said Scheller: “This is a decision about – conceivably -- half a billion dollars that’s going to come from the ratepayers over the next 50 years.”

“The taxpayers and residents of Lehigh County deserve to know exactly what we’re getting into, how it’s going to affect their rates,” said Schware.

The East Penn Chamber of Commerce passed a motion recommending a charter extension be granted to LCA so it can continue to participate in the Allentown water/sewer lease process, said Kevin Baker, president of that chamber. He told commissioners East Penn businesses and communities deserve to a bid “in the non-profit model” to be presented by LCA.

Allentown’s final request for proposals was supposed to be sent to LCA and five other potential bidders on Monday, according to city officials, but it still had not been posted on the city’s website by Wednesday night’s commissioners meeting.
“We don’t even know what’s in that yet,” said Arndt. To be ready to submit a bid, he indicated LCA must continue working on the assumption it will get approval from commissioners.

Ott expressed skepticism about why the city’s final request for proposals still had not been released. He said it’s almost comical how little information commissioners are getting about such a big decision.

Schware agreed and said everyone is operating on an artificial time frame established by Allentown and its mayor. “They need to change that,” he said. “They need us more than we need them. They’re the ones that need the money for their pension system.”

He said the city’s multi million dollar pension problem, which is what Allentown hopes to solve by leasing the sewer water and sewer systems for around $200 million, was created by “rushing” and he doesn’t want that mistake to be made again.