Less than two days before Allentown's deadline, Lehigh County Authority's board of directors voted 6-1 Tuesday to submit a bid to lease the city's water and sewer systems.
That bid, for an undisclosed amount, must be delivered by 2 p.m. Thursday to the Harrisburg offices of PFM, the city's financial consultant for the controversial lease.
The LCA board’s vote came more than five hours after its meeting began. The board spent most of that time in a 4.5-hour closed-door executive session, primarily to review confidential legal and financial aspects of “the long and complex agreement,” including risks, with its financial and legal advisers.
LCA is one of six entities expected to submit bids to the city this week.
LCA general manager Aurel Arndt said he does not know exactly when the bids will be opened and a winning bidder selected. Asked about LCA’s chances to win the contract, Arndt said: “Time will tell. Clearly, it’s going to be a competitive process and all we’ve been looking for is the opportunity to participate in that process-- to put our credentials forward and make what we think is a workable proposal to the city.”
Allentown hopes to soon get $200 million or more out of the deal, money it will use to avert a looming pension crisis.
LCA is submitting a bid despite the fact that on March 13 Lehigh County commissioners voted 5-4 to refuse to extend LCA’s existence for 50 years so it could participate in bidding on the 50-year lease.
Initial expectations were that action by the commissioners would prevent LCA from bidding.
But LCA communications manager Liesel Adam said the city’s draft concession agreement includes recognition of LCA’s current lifespan, which expires in 2049.
“It basically states if LCA’s life is not extended by 2049, the lease terminates then instead of at the 50th year,” explained Adam. She said the city made that revision to the draft agreement last week, which was after the county commissioners’ vote to knock LCA out of the bidding.
“The city put in that early termination option to accommodate that shorter life,” confirmed Arndt.
While LCA’s current charter expires in 36 years, Asa Hughes, chairman of its board, said: “The city continues to express the desire for LCA to be involved in this bidding process.”
Hughes said: “There is an inherent comfort level with LCA pursuing this venture, due to our local, non-profit status.” Because of LCA’s strong service record and financial performance, he said, many businesses and residents are convinced “we can do a better job for Allentown.”
Hours before the vote, Lisa Scheller, chairwoman of the county commissioners, was one of five people to speak against LCA bidding. She said she was told if the county commissioners didn’t extend LCA’s charter, it could not and would not bid.
Later, stressing she could not speak for all nine commissioners, Scheller said she will consider a legal challenge against LCA if it submits a bid -- or even “dissolving” LCA. “It’s important to keep all options open,” she said.
“I’m very disappointed to hear that would be the consequence or the outcome here,” responded Arndt.
“It’s a very difficult issue and one our board really wrestled with up to the last minute today when they made a decision. Ultimately, the authority wants to be in a position where we have the ability to influence and control our destiny, assuming that we’re successful in the bid, and also to bring the good service record we have established to customers in the city of Allentown.”
During the first public portion of the board meeting, Adam read letters of support for LCA submitting a bid from Renew Lehigh Valley, the Lehigh Valley Partnership, the East Penn Chamber of Commerce and Upper Milford Township. Arndt said representatives of several western Lehigh County municipalities now served by his authority support LCA bidding.
When the board went into executive session Tuesday afternoon, Hughes warned he did not long how many hours it would take, but said it would vote on the lease “sometime this afternoon or this evening.”
The board reconvened in public to distribute a five-page draft resolution to submit a bid to the city and to adopt that resolution.
LCA board member Norma Cusick, the only board member who voted no, said: “I believe a much better proposal would have been a sale or merger of the two authorities to allow for regionalization and economies of scale.”
Two board members said they agonized over the issue before deciding to vote yes. Others indicated they had many questions and reservations, which were addressed – including in Tuesday’s executive session.
“It’s not been an easy decision for any of the board members,” said Hughes. “However, the situation exists that the city is going to put out a lease. Someone is going to bid on this.” He said the community will be ill-served if LCA, as a non-profit organization, does not participate in that bidding “and hopefully will be successful.”
“We have the capability of doing the best job at the best price for the residents of the county,” said board member Emrich Stellar. “I hope fervently that we are successful with our bid.”
“I believe we are the best entity to respond,” said board member Richard Bohner. “Because of our background, our no-profit philosophy and our continuing desire to provide service to the people of Lehigh County, I certainly cannot do otherwise than vote yes for this.”