Lehigh Valley

Allentown residents call for public vote on future of city's water and sewer systems

Allentown residents upset a possibility of privatization

ALLENTOWN, Pa. - Calls for Allentown voters to decide the future of the city's water and sewer systems in the voting booth were heard by City Council Thursday night.

And consultants working for the city administration were blasted for offering a "filtered" presentation that included no estimates about what kind of rate increases residents will face if those systems are leased to a private water company.

Former city council member Michael Donovan maintained water rates immediately would rise 40 to 80 percent, based on his own analysis, but complained water rates were not part of the presentation about leasing the water and sewer systems. Donovan said that was very unfair.

Council held the special meeting so residents could ask questions about the financing behind the city administration's proposal to lease the water and sewer system to solve an impending pension crisis.

Donovan told council: "You can safely delay a decision for a year. I know that's tough. But perhaps you'll discover creative ways to release 118,000 people currently held hostage by a small group of former employees who laid claim to an excessive and unethical pension contract."

Consultants in suits, along with a couple of city officials, sat in the first two rows on one side of council's chambers, in seats marked "reserved." While people who stood in line to speak at the podium were asked to identify themselves, the consultants who responded to their questions did not.

One resident joked that he did not wear a suit to the meeting because he did not want people to think he was a member of the mayor's administrative team.

Jeannette Eichenwald, council's most vocal critic of plans to privatize the city utilities, told the audience those consultants are working for Mayor Ed Pawlowski, not council.

Council president Julio Guridy announced that on Oct. 3 council will consider a resolution to hire the Pennsylvania Economy League to do an independent study of options to solve the coming pension crisis. He promised council will call another public meeting to share results of that study.

"Could it be possible for council to allow the citizens of Allentown to vote on this in the 2013 election?" asked resident Dan Poresky.

People throughout the audience murmured: "Yes."

"We're not looking at that right now," said council president Julio Guridy.

"Will you look at it?" asked Poresky.

"I'll consider it," said Guridy.

"It would get you off the hot seat," said Poresky.

"I was elected to be in the hot seat," said Guridy.

Eichenwald was applauded when said she would be very interested in having a referendum on the privatization issue.

The meeting lasted four hours, including several mind-numbing stretches of what one resident referred to as "a lot of detail and gobbledygook."

Near the end of the meeting Donovan, who teaches business and economics at Cedar Crest College, said that even with his knowledge of finance, he had some problems interpreting parts of the presentation.

Scott Shearer, managing director of Public Financial Management, moderated the meeting.

Shearer spent more than an hour reviewing what he said were the seven most viable options, both legally and financially, for solving the pension crisis. He said the consultants attended several recent public meetings held by the mayor and city council on the matter and had analyzed several alternatives offered by residents.

In addition to privatization, other options he reviewed included raising real estate taxes or earned income taxes by an average of $308 per household, selling the systems to a new Allentown Authority or selling or leasing other city assets.

Shearer, along with his colleagues, council members and city officials, spent the rest of the meeting responding to questions or statements made by the audience.

More people than usual attended the meeting, but the room was not full.

Twenty-four people took their turns at the podium.

Guridy asked people to keep their questions and statements brief and to conduct themselves as they would in a courtroom.

Dr. Jonathan Bingham, the first resident who spoke after Shearer's presentation, sarcastically said every option offered would hit residents with some sort of tax increase, except the option of leasing water and sewer systems to a public or private operator. "There is no cost to us at all, is there?" he asked. People in the audience shouted back: "Yes there is."

Guridy scolded the audience: "You will listen and be quiet or you have to get out. A police officer is outside. You cannot be heckling, you can not be yelling, you cannot be answering. If you want to speak, you come up and talk. Otherwise you will be escorted out by the police officer. And I'm not going to say that again."

"The citizens of Allentown have paid PFM to do this analysis," said resident Rich Fegley. "I'm calling it out." He also said that analysis contains no data showing what impact leasing the water system will have on water rates. "The numbers aren't there. They are presenting us a filtered version, what they want us to see."

"This presentation was slanted very strongly toward making a case for privatization," said Poresky. He was just one of several residents who called on the city to have a referendum before making any decision on leasing the water and sewer systems.

City Clerk Michael Hanlon said 2,000 signatures would be required for residents to have council consider an ordinance for a referendum or a member of council could propose it. Council member Peter Schweyer said if council would approves a referendum, the mayor could veto it and five members of council would have to override that veto.

Shearer said the city faces annual deficits of more than $10 million a year. He said the city's general fund budget has declined from about $8.2 million in 2008 down to $1.7 million. He said that budget will be down to zero by the end of this year.He said the city's three main pension funds have an unfunded liability of about $158 million.

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