The lease agreement also gives city council the power to approve or deny proposed capital improvement projects, according to the mayor.
Pawlowski said 3.8 million of Pennsylvania’s 12.7 million water customers are served by private national or multi-national companies.
According to Food & Water Watch, Pennsylvania residents who have water systems under private control pay 57 percent more each year than those under municipal control – a difference of $121.80.
The average water/sewer bill in Allentown now is $487 a year.
WHAT HAPPPENS NEXT
Pawlowski hopes to receive bids before the end of this year and award a lease to the highest bidder by March. Allentown’s City Council must approve that lease contract. The mayor thinks the majority on City Council will do that because “they realize there are no other options.”
Seven potential bidders are interested in operating Allentown’s water and sewer systems. They are Aqua Pennsylvania, American Water, Access Capital, Lehigh County Authority, Macquarie, NDC Housing and United Water.
The next step will be for the city’s administration to gets bids from those water companies, by sending them Requests for Proposal – RFPs.
In a special meeting Wednesday night, City Council will consider whether it wants to support sending those RFPs.
The mayor doesn’t need council’s approval to send RFPs. But he explained: “If we want to get serious bids, we want the bidders to know council is behind us. We’re trying to show them there is political will to do this. I think we’ll get higher bids as a result of that.”
Instead of getting an annual payment for the lease, the city will get one big upfront payment.
The mayor said the initial estimated value of leasing the city’s water and sewer systems is $130 million to $200 million.
But Pawlowski predicted: “I think we’ll probably get in the $220 million to $230 million range.” If he can get that much, “we’ll be a debt-free city.”
After the RFPs are sent, representatives of the city will meet with prospective bidders, a process that will help determine exactly how much Allentown’s water and sewer systems are worth and if leasing them is the best way to restore the city’s financial health.
Moore said each of those companies will spend $500,000 to $1 million to investigate whether leasing Allentown’s systems is a good idea for them.
The mayor wants “a proven and experienced utility provider” selected through a “highly competitive and professional process.”
“We’re looking at the best qualified operator, the one that the best track record and the one that has financial capacity to pay and gives us the best price,” said Pawlowski. “This is a big system and it’s a well-run system. There are not a lot of capital costs. I think we’re going to get a pretty good price when we put it out for bid.”
City Council has hired the Pennsylvania Economy League to do an independent study of options to solve the coming pension crisis, including but not limited to leasing the water/sewer systems.
Despite council deciding to get that independent review, the mayor said council has been involved in the process “every step of the way.”
The economy league’s findings will be discussed during Wednesday’s City Council meeting, said City Clerk Michael Hanlon. Opponents of the lease have asked council to consider the economy league’s reports before approving RFPs.
Said lease opponent Dan Poresky: “For council to give the mayor the go-ahead prior to reviewing the Economy League report would be showing contempt for the public.”
In Allentown, an effort is underway to try to stop a lease from being signed by having a public referendum placed on the ballot in the May primary. The proposed question on that referendum is whether or not the city must come to voters before it can sell or lease any property or asset worth at least $10 million.