LOWER MAKEFIELD >> In a move to control sewer rates after the township’s sewer system is sold, the Board of Supervisors have agreed to move forward with the creation of a Sewer Customer Benefit Fund.
After voting to sell its sewer conveyance system to Aqua Pennsylvania earlier this month for $53 million, the supervisors reached a consensus this week to use part of the sale proceeds to help stabilize rates.
Under the deal to sell the system, rates would remain flat during the first four years of Aqua ownership. After that, rates would begin to rise. That’s when the fund would kick in, making future rate increases easier to handle by the ratepayers.
Supervisor Suzanne Blundi said when she voted to sell the system it was with the idea that the board would work to create the new fund.
“I would like to see a fund constructed to help control rates,” said Blundi. “We need to plan and to discuss it as much as possible so that ultimately we can come up with the best solution.”
The supervisors will have about year to work out the details, including the scope and scale of the proposed fund. That’s typically how long it takes for the Pennsylvania Public Utility Commission to approve such a sale and the township and buyer to complete settlement.
Joining Blundi in supporting the creation of the new fund were Chairman Dr. Fred Weiss and Supervisor James McCartney. Supervisor John Lewis voiced opposition to the idea and Supervisor Dan Grenier was absent for the discussion.
“Long term rate stabilization was one of the requirements of this whole exercise,” said Weiss. “Starting the process of developing some type of fund to keep rates stable over the long term is something we definitely should consider. And I’m sure our legal team and financial analysts can help us work something out within the next year.”
The fund, added McCartney, “is something we all considered as a board when we made the decision to sell the sewer system. So I think it’s something important that should be looked at and considered.”
Lewis, who voted against the sale, expressed “tremendous misgivings” with the idea. “We’re essentially paying back the acquirer with the money they gave us so they don’t gouge us on rates.
“I find it preposterous to create a customer benefit fund to pay back the company for the fees they are going to gouge us for in the first 10 years and hope that in years 20 through 50 everything is going to be okay,” he said.
Instead of putting money into a customer benefit fund that goes back to the company purchasing the system, Lewis suggested investing the money in an endowment that provides recurring investment streams to the township that can mitigate other expenses and lower the cost to township taxpayers in other ways.
“If people are paying less in property taxes that’s money they could use toward their sewer bills,” he argued.
When Lewis suggested in his comments that the board “doesn’t care about ratepayers long run” based on its decision to sell the sewer system, Blundi interrupted and took exception to his remarks.
“I do care about ratepayers,” said Blundi. “Stop saying that we don’t. Stop editorializing as you voice you’re very rightful opinion. I’m happy to discuss, hear and learn from you, but your soliloquy where you keep taking jabs diminishes the points you make and makes me want to scream.”
Weiss stepped in after Lewis and Blundi continued their verbal altercation and warned Lewis against editorializing while making his comment.
“Editorializing does not do any good for the fellow decision makers on the board,” said Weiss. “If you want to keep your views on the pros and cons of this topic, please do. If you are going to disparage the board, than don’t bother us.”
During public comment, long time board follower Zachary Rubin voiced support for Lewis and his comments.
“The Sewer Customer Benefit Fund will be funded by proceeds from the sale of our sewer system. Therefore money in this fund will basically be given back to Aqua,” he said.
“If you’re really concerned about rate stabilization, you should keep ownership of the sewer system where you have complete control of any rate increases in the future,” he said. “I’d like this board to reconsider awarding of this bid, reject all the bids and start the bidding process all over again.”
After listening to Rubin’s remarks, Weiss defended the decision to sell to Aqua and against retaining control of the sewer conveyance system.
“Under municipal control, this township failed miserably in maintaining our sewers, kept rates artificially low and in the last three years our rates have jumped 75 percent and over the next three years would jump up another 60 percent under our control.
“One of the reasons we decided to sell the system is because our rates will be stable over the next 10 years. The $50 million capitalization from the Morrisville Municipal Authority will be spread over thousands of customers. And rate projections show they will go up much lower than they would have been if we had not sold the system.”
Rubin noted that he’s not necessarily against selling the system, but he said the board might get better prices if they rebid.
Weiss said a valuation of the system by PFM put its worth at between $35 and $38 million. “So they were very surprised that we received such high bids as we got. And with the market changing thanks to COVID, we could get much less in the next couple of years if we started all over again.
“This has been a year and a half discussion with multiple public meetings and getting a very good price,” said Weiss. “And we will protect not only the taxpayers, but also the ratepayers for probably a generation.”