Aqua PA proposed purchasing the municipal authority’s assets for $100 million.
The Northampton supervisors halted exploration of a private company’s offer to purchase the township’s water and sewer assets, the board chairman confirmed Thursday. The decision to cease consideration of Aqua PA’s unsolicited offer to buy the Northampton Water Authority for $100 million was made during an executive session before the March 28 public meeting.
“We had a discussion about it before the meeting, and the consensus I got was that the board wanted to focus on other things,” Chairman Barry Moore said in a phone interview Thursday afternoon. “Honestly, I looked at the proposal, and I don’t think it is in the best interest of the township and rate-payers to sell to a third party.”
Moore’s top concern about the sale of Northampton’s municipal authority would be an inevitable rate increase in the future. A $100 million purchase would require financing by the buyer, which would then have to raise rates to pay back the loan, Moore said. When he brought the matter up near the end of the March 28 public meeting, supervisors Eileen Silver and Frank O’Donnell did not outright reject the offer. Instead, they said the township’s current activity does not leave room to consider such a proposal.
“We are involved in so many projects at the moment, that maybe we ought to just put it on a back-burner,” Silver said at the March meeting. “Hopefully, when we calm down a little bit and if we wish to, we can look at it. We’re not throwing it away, just holding off on it.”
Aqua PA President Marc Lucca said in an interview this week he did not consider the board’s decision an outright rejection, and that he will continue building awareness of the benefits the community could receive from selling the properties. The injection of potentially $100 million in revenue (minus $15 to $17 million to pay off the authority’s outstanding debt) and Aqua PA’s management of the utilities would ease a lot of minds, Lucca said.
“We would transfer the risk of maintaining the system,” Lucca said. “Our aging infrastructure is affecting our bridges, roads and our pipes. The American Society of Civil Engineers gave the United States a grade of D for water and D+ for wastewater infrastructure. Aqua has embarked on an aggressive program that began in the early 1990s and has replaced 2,000 miles of our pipes. Last year, we replaced 130 miles in Pennsylvania.”
Aqua PA’s offer came in response to a 2016 request by the Northampton supervisors asking the company to turn a portion of its land at the Churchville Reservoir into open space and grant access for recreational use, including hiking and bicycling. The company returned with a formal, non-binding proposal that included dedicating the reservoir land in perpetuity, along with the following:
- Approximately $100 million for the water and sewer assets;
- employment for all municipal authority employees;
- current water and sewer rates would remain unchanged until 2022; and,
- future rate adjustments would require approval by the PA Public Utility Commission.
The procedure for rate changes is an open and public process that would include meetings in the community, Lucca said. Customers would have the opportunity to participate in the process and comment on the potential changes, he said.
Aqua PA’s proposal is significant enough that it deserves more consideration, said Northampton supervisor Larry Weinstein Thursday afternoon. He advocates continued investigation before the township makes a final rejection or acceptance of the offer.
“My personal opinion is we have an obligation to investigate and see whether the idea makes sense,” Weinstein said. “It may or may not, but until we do an investigation, we don’t know that.”
The additional $80 million revenue could give the township an opportunity to set up a stabilization fund, which would be used to offset a future rate increase, Weinstein said. There would be enough left over to invest in more road and infrastructure improvement projects without adding to the township’s debt, he said.
“We have a lot of homework to do,” Weinstein said. “We haven’t learned enough to dismiss the idea outright.”
