Lots of debate over Allentown's proposed water sewer lease
Updated On: Apr 18 2013 04:54:15 AM CDT
Allentown City Council met for five-and-a-half hours Wednesday night as it enters the final stretch in preparing for next week's vote on the city’s proposed $220 million lease of the water and sewer system to Lehigh County Authority.
City Council is expected to vote on the controversial lease during a special meeting at 7:30 p.m. April 25, according to City Clerk Michael Hanlon. The meeting originally was scheduled for April 24, but Hanlon said it has been moved back one day.
But first, at 5:30 p.m. Monday, council will continue Wednesday’s committee-of-the-whole meeting, which focused solely on providing information about the water/sewer lease.
Lehigh County Authority is expected to make a lease presentation at Monday’s meeting. Council also will ask questions about the lease agreement. And it hopes to present a report from Pennsylvania Economy League, which it hired to review alternatives to a lease, including the idea of the city creating its own authority.
At Wednesday’s meeting, Mayor Ed Pawlowski predicted if Allentown’s $158-million pension crisis is not resolved by leasing the water/sewer operations, “in less than 24 months Allentown will be just another Pennsylvania city making very ugly headlines about bankruptcy and the lack of political will to address these obligations. We should not allow our city to become another Harrisburg or Scranton or, worse, Stockton, Calif.”
“If I wanted to take the politically expedient route, I would just do nothing,” said Pawlowski. “That is not the way to run a city. It is good government to address the issues and address them properly.”
Council actually structured a meeting within a meeting Wednesday. The committee-of- the-whole meeting about the lease started shortly after 5:30 p.m. and recessed shortly before 7 p.m., when a regular council meeting began.
Twenty-three people addressed council during that regular meeting’s courtesy of the floor segment, which lasted more than two hours. Eighteen of those people stood to speak about the lease. Unlike many previous meetings, at least seven of them expressed support for the LCA lease.
Among the supporters was city resident Alan Jennings, executive director of Community Action Committee of the Lehigh Valley. Jennings called the planned LCA lease brilliant, fair and said “it makes sense not just for city residents but the county as well.”
“It’s sad to watch us fight the way we are,” said Jennings. “I think we would have to all agree that the most important thing here is the solvency of this town. I think Mayor Pawlowski came up with a pretty good idea.”
Jennings said if people are unhappy with the way LCA will run the city’s water and sewer systems, they can go to LCA’s board meetings and hold the authority accountable.
Jennings described Dan Poresky, one of the city’s leading lease opponents, as “an old friend of mine who wants to do the right thing for this city.” He said a few months ago he told Poresky that he supported LCA being the successful bidder.
Speaking directly to Poresky, Jennings said: “I thought, Dan, that we agreed on that.”
Chuck Rizzo of Coopersburg, an LCA residential customer who has a business in Allentown, said LCA does a great job providing water service, without disruptions or tremendous cost increases. Rizzo commended Pawlowski “for his vision to tackle the tough jobs” and urged City Council to vote for the lease.
Lease summary just posted
Several opponents questioned why council is moving so quickly to vote, especially because a summary of the lease agreement was just posted on the city’s website Wednesday.
City resident David McGuire told council: “Please take your time. Time is not of the essence. It would seem to me that for a 50-year deal you can spend 50 more days carefully looking at things.”
Added Al Wirth of Bethlehem: “If you’re making a 50-year deal, there doesn’t seem to be a reason to try to do the whole thing in a week and a half. These numbers were just made public.”
“This whole argument that we have not spent [enough] time is absolutely ludicrous,” responded Pawlowski. “We have talked about this for over a year. We started this process last April. We had multiple meetings.”
Twice during the meeting, the mayor said City Council has entertained public comments about the lease process and provided timely answers to questions “at virtually every single meeting it has had since last fall.” He also claimed the lease process had been open and transparent, but some opponents bluntly disagreed.
Laughing at the audience?
City Council’s meeting room was crowded, but not every seat was filled. Seated in the front of the room at tables facing council, with their backs to the audience, were the mayor and city officials and consultants who helped him develop the lease deal.
They included city managing director Francis Dougherty, finance director Gary Strathearn, City Council lease consultant Dan Koplish, Atty. Marc Feller and Scott Shearer of PFM, the city’s financial consultant on the lease.
Resident Lou Hershman claimed some of the consultants seated with the mayor “are getting paid $300-$400 an hour and they’re up there laughing at everybody who comes up to speak. Is that what we pay them for, to laugh at the speakers?”
Pawlowski led the way in immediately responding to some questions and statements raised by the audience, although some who spoke criticized the mayor for being long-winded or indirect in his answers.
The mayor said he doesn’t think the Lehigh County commissioners could dissolve LCA, as their chairwoman Lisa Scheller mentioned as a possibility if LCA won the lease bid.
Pawlowski said even if the county commissioners could dissolve LCA, it would be ludicrous for them to do that because the county would have to take over LCA’s debt, which immediately would raise taxes for everyone in the county. He also said the city would collect $10 million, based on a letter of credit it has with LCA, if LCA would not go through with the lease deal.
LCA general manager Aurel Arndt was sitting in the audience at Wednesday’s meeting, along with members of LCA’s management team.
The mayor said the unsuccessful lease bidders were American Water and United Water.
He said Allentown’s water rates have increased 689 percent over the last 40 years. Shearer said, with the LCA lease, rates will increase 579 percent over the next 50 years.
Wednesday’s committee-of-the-whole meeting began about 5:38 p.m. with Pawlowski reviewing the city’s pension crisis and how the lease will resolve it. Then Shearer and Feller took turns reviewing the lease agreement, page by page.
The committee-of-the-whole meeting resumed shortly before 10 p.m., minutes after council’s regular meeting ended, with Shearer reviewing alternatives to doing the lease.
“Tempers are fraying”
In addition to LCA immediately paying the city $220 million for the 50-year lease, Allentown will receive annual payments of $500,000 – considerably less than the $4.5 million in annual royalties the city originally hoped to get in a lease agreement. The mayor explained that the city had to reduce the annual royalty to get more money up front.
Lease opponent Rich Fegley maintained the mayor previously said a lease would not happen without that $4.5 million annual royalty fee. Fegley accused Pawlowski of lying and being deceptive. He repeatedly asked council to question everything that is being presented about the lease.
Said the mayor: “To say we are being devious here is an exaggeration of the facts.”
Shortly after 11 p.m., council member Jeff Glazier interrupted the heated exchange between Fegley and the mayor by suggesting council wrap it up for the night. Said Glazier: “The hour is getting a little late here. I see our demeanor isn’t what it should be. Tempers are fraying. And quite honestly people are fading.
“This is for the good of the order because we’re at a point now where there’s no traction here and we’re going the wrong way,” said Glazier.
Council president Julio Guridy agreed and the meeting recessed at 11:12 p.m., after two more people spoke.
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