LOWER MAKEFIELD >> After a five hour meeting on August 14 that lasted into the early morning hours of August 15, the board of supervisors voted 3 to 1 to sell the township’s aging sewer system to Aqua Pennsylvania for $53 million.
The decision comes after nearly two years of investigation and exploration on whether the township should sell its sewer conveyance system, which services 11,800 customers in the township, and to exit the sewer business as expenses mount from the aging, unmaintained system.
Chairman Fred Weiss joined supervisors Suzanne Blundi and James McCartney in voting to sell the system. Supervisor John Lewis opposed the sale and Supervisor Dan Grenier abstained from the vote.
The supervisors have been discussing the potential sale for nearly two years, engaging PFM Financial Consultants last year to explore the possibility of the township exiting the wastewater business.
Three bidders expressed interest in purchasing the system, including the Pennsylvania American Water company which submitted the highest bid for the system at $56.1 million.
Aqua submitted the second highest bid of $53 million. And the Bucks County Water and Sewer Authority submitted the lowest bid at $35 million (flat rate) and $1 (at large rate) for the system.
Pennsylvania American Water and Aqua Pennsylvania are both regulated by the Pennsylvania Public Utility Commission. The Bucks County Water and Sewer Authority is regulated by the Pennsylvania Municipalities Authorities Act.
While indictative rates provided by the Bucks County Water and Sewer Authority do not assume any costs associated with capital related to the Morrisville Municipal Authority and would require add-on rates, bids by Pennsylvania American and Aqua assume Lower Makefield's $50 million share of a new treatment plant and are reflected in their cost and rates.
Prior to the vote, the supervisors heard individual presentations from Pennsylvania American and Aqua Pennsylvania.
Pennsylvania American, which already provides drinking water to the township and to neighboring Yardley Borough and parts of Falls Township promised a seamless transition,a one stop shop for customers, less disruption and excellent customer service.
“We believe our bid is superior,” said PA American President Mike Doran. “We’re already invested in the community. And your customers are our customers,” he told the supervisors.
Following closing, PA American would freeze rates for two years through 2023. The company would also assume a $50M commitment to capital obligations for the new Morrisville treatment plant. And it would make a $14.2M capital investment in the wastewater conveyance system.
Aqua said it would adopt the township’s wastewater rates, which would remain unchanged until Aqua’s first rate case following closing.
Monthly rates are projected to be $70.97 through 2024 before rising to $86 in 2025 and $96 in 2028.
“We want to be your wastewater provider,” said Aqua’s President Mark Luca. “We want to be your solution.”
After reviewing bids with the supervisors in July, PFM suggested that while Pennsylvania America's bid is $3.1 million higher, that incremental $3.1 million would not be enough to offset their higher rates."
Blundi, after reviewing the numbers, agreed pointing to a chart included in PFM’s report showing a more gradual increase in sewer rates over time for Aqua as compared to PA American or if the township retained control of the system.
“For years we had good sewer rates, but the truth is the reason we had good rates is that we hadn’t been maintaining the system," said Blundi. "So we had to raise rates. We have had to start doing the maintenance, construction and repair we haven’t been doing to bring ourselves in line with ever growing state and federal regulations on treatment.
“My vote to sell this system is not just based on the poor maintenance of the pipes and the impending processing fees that will be coming our way in excess of $40M, but also a big part of it is the overall structure of our current debt,” added Blundi. “It is my commitment tonight that after we pay down the sewer debt, we continue to reduce our township debt and that we secure a large portion of the sale to help stabilize rates. And that at the end of the day our township is in a much better fiscal position going forward.”
McCartney agreed with Blundi, adding, “This is a serious decision and not an easy one to make. I think (the sale) is in the best interest of the township both short term and long term if we can guarantee certain things. As tough as this decision is I stand by the motion. It would be nice to have John’s vote and some conformity," he said referring to Lewis.
But supervisor Lewis argued strongly against selling the system, warning the board, “Once it’s gone, it’s gone. This is a public asset. Once you sell it, you will never get it back.
“If you sell this to a private entity the only check on them is the PUC,” said Lewis. “I frankly don’t want to deal with another PUC-regulated entity where we have no power. I don’t want people coming to me in 10 years and saying we’re being gouged with sewer rates.
“I am profoundly disturbed by this motion,” he continued. “I believe this is singularly the worst public policy decision this board has made in the last 30 years. The last decision this bad was a decision to use eminent domain to acquire the golf course.
“This is a horrible decision - a wretched decision. I’m profoundly disappointed that the township would make this decision,” said Lewis. “I’m telling you that five or 10 years from now you will regret this decision.”
The township, which has until next year to designate the proceeds from the sale, will likely use the money to stabilize the township’s financial health, pay down its sewer and golf course debt and bolster its fund balance in order to restore the township's bond rating.
Blundi also asked that the supervisors at its next meeting discuss allocating a portion of the sale proceeds toward the establishment of a Customer Benefit Fund to help stabilize sewer rates over the next decade.
The next step for Aqua and the township will be to seek the approval of the Pennsylvania Public Utility Commission for the sale, a process that could take until next summer to complete. Once approval is granted, the township and Aqua could then proceed to settlement.