Don Spatz: Why water talks haven’t started in Reading Wednesday March 26, 2014 12:01 AM By Don Spatz The city is seeking a new kind of lease for its water system - a lease with mostly upfront money so it can pay off debts to cut its budget needs. Two weeks ago, the Reading Area Water Authority that has leased the system for 20 years made that proposal, then was livid the city wont discuss it. On Monday, several union employees, a union leader and even new water authority member Ernie Schlegel demanded City Council talk to RAWA, but the city wont even talk to me about why it wont talk to the water board. I cant fathom a reason, its chairman, Ray Schuenemann, told his board. But I can fathom several reasons. Start with timing. The administration and City Council have been meeting to discuss what kinds of things they want in a new lease. They havent yet decided them, nor issued a request for proposals (RFP) listing them, so theyre not ready for talks with any potential bidders. Then theres appearance. What other potential bidder would pay to prepare an offer if it appears a rival already has the deal? But thats the emphatic message if the city and RAWA begin talks even before an RFP is issued. Then theres price. The authority offered $50 million up front, plus a nearly $9 million payment in 2015 that rises each year after that. Pretty good, but maybe someone else might offer more. Fourth, RAWAs offer requires it to raise rates by 33 percent to get the money. Allentown leased its water and sewer systems for $200 million up front, but that lease bans rate hikes for three years and caps any future hikes. Finally, theres city credibility with voters. The water authority is the least customer-service friendly of any city entity, as shown by its high penalties, its addition of new fees without warning and its repeated raising of rates to give the city an extra $5 million a year for its budget. Moreover, its conflicted. The executive director gets paid for two jobs - executive director and water plant manager. His firm has the contract to read water meters, a contract that began before he came aboard but has been extended year after year. RAWAs board includes Eron Lloyd, the mayors special assistant, who voted for the $5 million deal benefitting his employer, even as board solicitor Mike Setley ruled the vote was not a conflict of interest. I can hear voters griping at City Hall now: You let them of all people get first crack? What were you thinking? Contact Don Spatz: 610-371-5027 or dspatz@readingeagle.~ Well lets take a look at this... 1.The administration and City Council have been meeting to discuss what kinds of things they want in a new lease.~ Yes they have done so in what appears to be illegal Executive Sessions keeping you the public out. 2.They havent yet decided them, nor issued a request for proposals (RFP) listing them, so theyre not ready for talks with any potential bidders.~ Yes they have done so in what appears to be illegal Executive Sessions keeping you the public out and accomplishing nothing. 3.Then theres price. The authority offered $50 million up front, plus a nearly $9 million payment in 2015 that rises each year after that. Pretty good, but maybe someone else might offer more.~ No one said someone else couldnt make an offer. Two points , a.)The Water Authority has had a 20 yr relationship with the city and has corrected service issued and admittedly has other issue to address. b.)Also The Water Authority has about 90 million in bond debt which is doe have the capacity to pay. After all it has a great barrow rating. 4. Fourth, RAWAs offer requires it to raise rates by 33 percent to get the money.~ This article only reflects one offer. 5.Allentown leased its water and sewer systems for $200 million up front, but that lease bans rate hikes for three years and caps any future hikes.~ City Council should consider relief to the rate payer by reducing its $31.03 service charge which is a hidden tax. 6. Moreover, its conflicted. The executive director gets paid for two jobs - executive director and water plant manager. His firm has the contract to read water meters, a contract that began before he came aboard but has been extended year after year.~ This has been addressed with the proper panel and deemed not a conflict. 7. RAWAs board includes Eron Lloyd, the mayors special assistant, who voted for the $5 million deal benefitting his employer, even as board solicitor Mike Setley ruled the vote was not a conflict of interest.~ This again has been addressed and deemed not a conflict because there is no personal gain. 8. I can hear voters griping at City Hall now: You let them of all people get first crack? What were you thinking?~ Speaking for the voters now Don?, Nobody spoke in opposition Monday night...good try Don.
Posted on: Wed, 26 Mar 2014 15:44:26 +0000
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