Lehigh Valley

Allentown council member says city admin has spent $500K to promote water, sewer system lease

ALLENTOWN, Pa. - An Allentown City council member maintains the city's administration has spent a half million dollars to push leasing the water and sewer systems, a proposal that does not yet have public approval.

Jeannette Eichenwald, council's most vocal critic of Mayor Ed Pawlowski's plan to lease the systems, said the administration never has disputed that that $500,000 figure, adding: "Who knows what it is? Maybe it's $600,000."

Eichenwald and Council President Julio Guridy said the administration has spent $239,000 to develop its lease proposal. But that does not include hiring Public Financial Management –PFM-- to do a financial analysis of options to meet the pension crisis.

Eichenwald said PFM is the administration's lead consultant, but council does not know how much it is charging the city.

Publicly expressing her frustration at Wednesday night's council meeting, Eichenwald declared: "I could just scream."

During that meeting, she asked Francis Dougherty, the city's managing director: "Do we have the PFM bill to date?" Dougherty replied: "I don't know the answer to that, I will check."

On Sept. 27, PFM moderated a four-hour-long council meeting where it recommended leasing the water and sewer systems as the best of several options to resolve an impending pension crisis. Eichenwald said eight consultants attended that meeting. She guessed each was paid $200-500 an hour, plus meals and transportation. "I had a good view of them," she said. "Some of them were almost asleep and the meter was ticking."
"I want to express my profound disappointment with the PFM report and its obvious omissions," resident Dan Perosky told council. "Hundreds of thousands of dollars were spent on that and they came up with something that was so deficient in its explanation of what rate increases might be."
Resident Rich Fegley suggested council should direct the administration to require PFM to plug the holes in its Sept. 27 presentation, by projecting the impact leasing the water system would have on water rates in the city.
Guridy said: "I want to make sure we don't get our water rates doubled in five years like some other municipalities."
On Wednesday, five council members unanimously agreed to pay up to $15,000 to the Pennsylvania Economy League (PEL) to review options and issues regarding the city's impending $158 million pension crisis.
A few residents who oppose the administration's plan to privatize the water system commended council for hiring its own independent consultant. But those residents expressed concern because council is spending far less than the administration to study the issue. And they may have to lower their expectations about the thoroughness of that review.
"We are going to be deeply disappointed with what PEL does for us," predicted Eichenwald. She said it is a reputable, non-profit organization, but council has limited finances to pay for such a study. "We should all be screaming."
Guridy said the economy league's review should take only two or three weeks to complete. He said council plans to present its findings at a future meeting, days after that report is posted on the city's Web site.
Guridy said the economy league will review other options to solve the pension crisis rather than only PFM's recommendation to lease.
City Clerk Michael Hanlon explained the league's Central Pennsylvania division will first define the scope of financial problems faced by the city, then look at how different options might solve that problem.
Eichenwald said whatever report the economy league gives council will be helpful, but no one should expect it will find the best solution. After the meeting, she said the league "can't do what we want, they're not going to do what we want."
She elaborated: "I feel extremely confident PEL will complete the first part of their charge, which is to identify the problem."
But regarding finding solutions, she said: "They said they do not have the expertise to answer a lot of questions. They will deal only in facts and figures. They will look at numbers. But so many issues that will determine what we do in the best interest of the city are beyond the scope of mere numbers."
As for the $239,000 council knows the administration already spent, Guridy said it went to pay for consultants, "but I don't know who got what. We have no direct control of what the administration is spending."
Residents asked council not to take any action authorizing the city to seek bids to lease the water and sewer systems until after the league's report is considered.
Former council member Michael Donovan also asked council if opponents can be given more than the usual 3-5 minutes to make their own presentation to resolve the pension crisis at a future meeting, before council votes to authorize seeking bids.
Donovan got no immediate response, although Eichenwald later said: "As individual council people, we should pledge to the citizens of this community that we will take the time that is necessary to make this important decision -- not be rushed."
Resident Elijah LoPinto confronted council about why it was not considering his petition to pass a resolution for a public referendum on privatizing the water and sewer systems. He said that petition, signed by more than 50 registered voters of Allentown, was properly submitted Monday to be on council's agenda, but was not on the agenda.
LoPinto when said he attempted to deliver the petition to Hanlon, he was denied entry to Hanlon's office in City Hall. Hanlon said he already apologized to LoPinto about that.
Atty. John Marchetto, a city solicitor, maintained he got the petition, but its language contained nothing about placing it on council's agenda for discussion. "My suggestion would be if you want something on the agenda, that you state so in your petition," said Marchetto. LoPinto said no requirement in the city's charter specifies that must be done.
Guridy said the petition calling on council to consider a referendum resolution probably will go on the agenda of council's next meeting.

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