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Mayor reveals highest bid to lease Allentown's water, sewer system

By Will Lewis, Reporter, WLewis@wfmz.com
Published On: Apr 02 2013 12:42:46 PM CDT
Updated On: Apr 03 2013 06:32:08 AM CDT

LCA is highest bidder for Allentown's water, sewer system

ALLENTOWN, Pa. -

Four companies all wanted the chance to lease Allentown's water and sewer system.

But in the end a company right in the Queen City's back yard made the winning bid.

Lehigh County Authority's bid of $220 million is $20 million more than what the city administration had hoped for.

Not everyone is happy with the decision.

Some feel rates in the city will go up and one Lehigh County Commissioner says the Lehigh County Authority will have to borrow a lot of money to make the deal work.

“I think it's good for our citizens," said Allentown Mayor Ed Pawlowski. "I think it's good for our taxpayers. Quite honestly I am very delighted that LCA got it because I think it's good for our region as well.”

Not everyone is echoing Pawlowski's praises.

On Monday night, Lehigh County Commissioner Scott Ott expressed his concerns on WFMZ-TV's Business Matters.

“LCA is this municipal authority that is able to issue tax free bonds," Ott said in the pre-taped showed that aired the night before the bid was announced. "It has a lower cost of borrowing and unfortunately it will have to borrow a pile of money in order to execute this kind of deal.”

“I suspect in 20 years we'll say who did this to us," added William Hoffman, a member of "Citizens for Allentown Water."  "When the rates have doubled, why are we paying these exorbitant rates and that will be long after this administration and City Council's gone unfortunately.”

Citizens are also worried about the rates going up but in a statement about the lease on its website LCA said that would not happen.

"City customers will ultimately benefit from stable rates over the life of the lease," the statement read.

The lease proposal prevents any increases in the first three years.

After that the rates will go up 2.5% plus the current rate of the consumer price index.

“The rates that they are going to be paying are actually less if you average out the rates over the last 49 years," said Pawlowski. "It's going to come out less than what we've been currently charging our customers. How does anybody think that is a bad scenario.”

City Council still has to approve the lease agreement.  Mayor Pawlowski believes a vote on the lease proposal will take place by the end of April.