York City sewer system privatization: Regional users excluded from three-year rate hike pause
One of the selling points of the planned privatization of York City's wastewater treatment system was a pledge from the potential buyer not to raise rates for three years.
But that promise only applies to city residents — not to the municipal users who have criticized the sale and plan a protest to state regulators.
That distinction wasn't always clear, however.
Both York City Councilman Lou Rivera, who voted for the $235 million sale, and the chairperson of the York City Sewer Authority Board, who likely will be asked to sign off on the deal Wednesday, say they never knew the six townships and boroughs that contract for sewer service were excluded from the rate hike moratorium.
"It was never clearly stated until the board had the opportunity to ask (Pennsylvania-American) Water directly last Wednesday at our regularly scheduled meeting," Sewer Authority Board chairperson Phil Briddell said.
That same day, March 17, the recently formed York Area Regional Sewer Authority sent a letter to residents in the five municipalities it represents: Manchester, West Manchester, Spring Garden and York Township, as well as North York borough. (West York also receives wastewater service from the city but is not a member of the regional group.)
The letter summarized the group's opposition to the sale and warned the residents they weren't included in the rate hike moratorium.
The deal: “It’s completely unfair in our opinion,” said Kelly Kelch, West Manchester Township's manager and a spokesperson for the regional authority. “There’s only so many times we can say it.”
The regional sewer authority has criticized city officials for refusing to meet and negotiate over a purchase price for only the wastewater plant — as opposed to the entire system.
Selling the city's sewer system as a whole, though, is key to avoiding a hefty tax hike and job cuts this year, York City Mayor Michael Helfrich has said.
The fact that only city residents would qualify for the rate hike moratorium has been made public, though, city solicitor Jason Sabol said.
“City Council is concerned with what’s happening to city residents,” he said. “So maybe that’s why it hasn’t been a big issue."
Council member Lou Rivera said he was never aware that surrounding municipalities were not included in the moratorium. He voted in favor of the sale on March 2.
However, York City Council President Henry Nixon said he's always known that only city residents would be included in a rate freeze, given the fact that each municipality sets its own rates. But city attorneys have led those conversations, he added.
In response to Kelch's claim that it's unfair to exclude the municipal users from the moratorium, Nixon proposed an alternative argument:
“Let’s reverse that. The city has increased its sewer fees by 116% over the last 20 years. And we did that because we had to raise the money. The municipalities did not do the same. Was that fair to us?"
Helfrich and council members Edquina Washington; Sandie Walker and Judy Ritter-Dickson did not respond to requests for comments.
Although he won't say if he intends to sign off on the deal, Briddell, the chair of the city's sewer authority board, said he sees city officials' position.
“I guess that’s the benefit of owning the system,” he said. “York City originally built the system.”
Helfrich has said the sale is vital to plug the city's $14 million deficit that it had anticipated this fiscal year. He drafted the 2021 budget to be contingent upon the sale.
If the asset purchase agreement is approved, it would trigger an up-front payment of $15 million.
The city Sewer Authority Board must sign off on the deal, and that vote could occur during a 5:30 p.m. Wednesday virtual meeting. Anyone who wants to attend that meeting via Zoom can do so here: https://zoom.us/j/97800631175?pwd=MHpBSlUzU2toRUpFV1h2M0NUM3ppdz09
Pennsylvania-American Water spokesperson Laura Martin said that it was the company's impression, based on the city's requests for proposals, that only city residents would be impacted by the three-year moratorium.
That's because city residents are deemed as direct customers, while surrounding municipalities need to contract with the company if it were to take over the system.
“What we’re hoping to achieve is to listen to their concerns, listen to what their needs are for their community,” she said. “And we’re hoping to be able to negotiate an agreement that’s mutually beneficial.”
Even if the city's Sewer Authority Board approves the deal Wednesday, the state's Public Utility Commission would conduct a six-month review of the sale before final approval.
The York Area Regional Sewer Authority intends to file a formal complaint against the sale, which could prolong the process. It is required to wait until the York City Sewer Authority Board approves the sale before it can do so.
— Logan Hullinger can be reached at firstname.lastname@example.org or via Twitter at @LoganHullYD.