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Lehigh County Authority officials explain sewer and water lease to customers

By Len Righi, WFMZ.com Reporter
Published On: Jun 27 2013 11:44:24 PM CDT
Updated On: Jun 28 2013 06:59:09 AM CDT
BREINIGSVILLE, Pa. -

Lehigh County Authority officials answered a small but steady trickle of questions from a tiny pool of customers Thursday night about the effects of the Allentown water and sewer lease.

Five members of the public were on hand at the Holiday Inn Conference Center in Breinigsville, Lehigh Co., for the 55-minute information session featuring authority general manager Aurel M. Arndt, customer care and communications manager Liesel Adam and public relations counselor David Saba.

Arndt spent 25 minutes presenting the nuts and bolts of the deal that will pay Allentown $220 million through a 30-year bond issue for a 50-year lease of its water and sewer systems.

He noted that the deal, which will be closed on July 31, places limits on rate hikes -- none during the first three years of the deal; about 5 percent from the fourth year through the 20th year, and about 4.5 percent for the remainder.

One of Arndt's more aggressive questioners, Norm True of Macungie, characterized the deal as "giving Allentown $220 million for nothing." He later declared, "Somebody hustled on this."

Without missing a beat, Arndt politely replied that the revenue the authority will be taking in over a half-century "is many times greater than $220 million."

He listed several benefits of the lease deal, including the ability to share equipment and personnel and to buy things more economically. Plus, Arndt said, "We are much better able to control our destiny here in western Lehigh County."

Arndt allowed that Allentown's water and sewer infrastructure is older than the authority's, which is in the western part of Lehigh, "where most of the development has happened in the last 50 years."

Terry Eckert of Orefield also had a series of pointed financial questions.

In answer to his inquiries, Arndt said that Allentown takes in revenues of $33 million annually from its water and sewer operations and has operating expenses of between $12 million and $13 million; that the LCA debt is "in the $40 million range," with assets of $230 million, and that Allentown's systems are "well maintained and operated," although capital investment in the systems has lagged in recent years.

Arndt also answered several questions about labor costs from Eckert.

The general manager said that union wages paid to workers by the authority and the city "matches up very, very closely," and that the authority's pension plan is "overfunded -- 103 percent," while Allentown's is "almost fully funded -- 95 percent."

Arndt added that Allentown's plan "is considered in pretty strong shape," which led Eckert to declare, "I don't believe it," although he did not say why.

Chuck Siuciak of Salisbury Township wanted to know if the authority would continue its annual water quality ratings, and Arndt said yes, noting that the Safe Drinking Water Act requires authorities to publish a Consumer Confidence Report each year.

Arndt said separate reports would be issued for the authority's system and Allentown's system.