As York City eyes sale of wastewater system, six municipalities ask for control

The City of York's wastewater treatment plant.
Tuesday, August 25, 2020
John A. Pavoncello photo

York City is moving toward shedding, and potentially privatizing, its entire wastewater treatment system, but officials in neighboring municipalities say the city should give them the plant instead. 

City officials say ditching the plant is necessary to avoid tax increases, especially as York City's rocketing pension and health care costs stress its budget. Paired with a financial blow caused by the COVID-19 pandemic, the city unveiled a request for proposals seeking a potential buyer in July.

“We are in a place now, and even prior to me becoming mayor, where the city has been spending down its savings to pay our health care costs, which are growing at astronomical rates," said York City Mayor Michael Helfrich.  "Also, there was deferment of pension payments that have now come home to roost.” 

“The city is out of savings, and so we are looking at either monetization of some assets or potential major tax increases," he added. 

Selling the system could potentially lead to privatization. However, it's not guaranteed because the request for proposals does not require bidders to be private companies, said York City Solicitor Jason Sabol. For example, another municipality would be able to bid if it so chooses.

In addition, the request is simply an exploratory measure to see if selling the system would provide the city substantial financial relief, he said.

"At this point we haven't sold the plant because we don't know what it's worth," Sabol said. "We're seeing what people are willing to bid on it."

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Specific numbers detailing the financial standings of the wastewater treatment system were not immediately available, said Chaz Green, director of public works.

Green declined to comment further, but Helfrich said he understands the system hasn't been losing money.

The York Dispatch on Tuesday filed a Right-to-Know request seeking details about the system's financial condition.

Meanwhile, officials in six surrounding municipalities that also use the wastewater system are instead urging York City to transfer ownership of the wastewater treatment plant — not the entire system — to their communities to keep it locally owned.

Those municipalities would create a regional sewer authority — the York Area Regional Sewer Authority.

"This might be our only opportunity to maintain local control," said West Manchester Township Manager Kelly Kelch. "With local ownership there's a lot of advantages. We're hoping this transfer would have very little impact on our residents."

The municipalities would not respond to the RFP but rather simply request a transfer of assets.

The plant serves Spring Garden Township, North York, West York, West Manchester Township, Manchester Township and York Township.

The City of York's wastewater treatment plant.
Tuesday, August 25, 2020
John A. Pavoncello photo

Kelch said that local control would mean the municipalities can set rates. If the plant was sold to a private company, he said, the rates would be set by the state Public Utility Commission and would potentially be much higher.

City officials, however, have argued that the PUC doesn't like inflated rates and large increases are very rare.

Helfrich said that while he is open to proposals, the municipalities wouldn't get the city's plant for free. 

“There is room for other ideas,” Helfrich said. “The reason for which we are selling the plant is to monetize it. Any transfers to the municipalities would include a substantial financial payment.”

Talks of passing an ordinance authorizing West Manchester Township's involvement in the proposed York Area Regional Sewer Authority is slated for 4 p.m. Sept. 14. 

Spring Garden Township, North York, West York, Manchester Township and York Township also have meetings slated in September to consider their involvement.

Under the creation of the sewer authority, each of the six municipalities would appoint a board member to represent their municipality. York City would have a seat at the table too.

York City would need to first authorize those plans, Kelch said. 

But for now, York City aims to have bids in by the end of September or early October, officials have said.

Its hopes come as the city expects a $3 million increase in pension obligations this year, largely driven by police pensions — paired with at least $4.4 million in lost tax revenue during the COVID-19 pandemic.

In addition, Helfrich estimated the city is about $100 million in debt because of rising costs, while the cost to run the city increases by 3% to 7% annually.