York City officials say opposition to wastewater sale won't thwart budget plans
A $14 million hole would not be blown in York City's 2021 budget even if a group opposed to the city's sale of its wastewater treatment system asks a state agency to scuttle the privatization, city officials said.
York City Council is slated to vote Tuesday on whether to approve the $235 asset purchase agreement with Pennsylvania American Water.
Council President Henry Nixon said he is confident members will approve the agreement, which would then require the approval of the city's Sewer Authority Board. The city's 2021 budget was built on the assumption that the sale goes through, and the initial payment from Pennsylvania American covers York City's budgetary shortfalls.
The approval of both the city council and sewer authority would trigger a $15 million initial payment from buyer Pennsylvania American Water — a stipulation in the contract that more than plugs the $14 million budget deficit officials had initially anticipated.
"The city administration is hopeful it can all be wrapped up in the month of March," said Mayor Michael Helfrich.
The third and final step in the process of finalizing the sale would be a six-month review by the Pennsylvania Public Utility Commission, which Helfrich anticipates being completed by the end of the year.
But it's unclear whether the Public Utility Commission will rubber-stamp the sale by then, and an anticipated protest from a coalition of local governments opposed to the sale could prolong the PUC review.
The York Area Regional Sewer Authority, consisting of Manchester, West Manchester, Spring Garden and York townships and North York borough, alleges "there are not sufficient public benefits to selling the system."
The authority has for months lobbied York City to sell its treatment plant — but not the entire system — to the authority.
Authority officials have said maintaining local control would prevent rate hikes, despite the fact that the contract in question mandates a three-year moratorium on rate increases and any changes would be subject to PUC approval.
"We're meeting with an attorney right now to enter our appearance in with the PUC once the sale is awarded," said authority spokesperson Kelly Kelch. "We're basically looking to protect the rights of our rate payers."
However, neither city officials nor representatives from the authority could detail how significantly a protest would impact the timeline of when the Public Utility Commission would rule on the sale.
And PUC spokesperson Nils Hagen-Frederiksen said the commission is unable to comment because parties have not yet submitted any filings regarding the sale.
As a result, York City Solicitor Jason Sabol said, it is possible the opposition and lengthy review period could push the deal's finalization into 2022.
"The big concern would be if something happened where the PUC ended up rejecting the deal or something like that," Sabol said. "Then the city would have to pay that $15 million back. But we don't think that'll happen."
The sale of the wastewater treatment plant has become a defining moment for Helfrich's first term in office, where he has overseen a city that for decades has struggled with skyrocketing pension and health care costs.
Initially, in a draft budget late last year that he called "horrible," Helfrich proposed raising property taxes by 48% and cutting 27 jobs, including police officer positions.
However, in a separate $116.8 million budget contingent upon the sale of the wastewater treatment system, officials were able to keep taxes at their current rates and salvage 21 of the 27 jobs on the chopping block.
City Council approved the $116.8 budget on Dec. 30.
— Logan Hullinger can be reached at firstname.lastname@example.org or via Twitter at @LoganHullYD.