Sewer Rate Hike Will Not Include Upper Pottsgrove

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Bernie Grundusky, senior director for business development for Pennsylvania American Water, outlined in yellow, informs last night's township meeting that the company's rate hike request will not include Upper Pottsgrove.

The rate hike that Pennsylvania American Water is seeking from the Public Utility Commission will not apply to Upper Pottsgrove sewer customers, a company official said Monday night.

Late last month, the commissioners voted 4-1 to sell the sewer collection system to Pennsylvania American Water for $13.7 million.

Bernie Grundusky, senior director for business development for Pennsylvania American Water, made the announcement that the rate hike won't apply to Upper Pottsgrove during an online commissioners meeting at the invitation of Chairman Trace Slinkerd.

Grundusky said because Pennsylvania American is a publicly traded company, it would have been against the rules to mention that the company was filing for a rate increase prior to the official announcement.

Further, he said any rate increase granted by the PUC will only apply to those who were customers when the company applied. And because it may be a year before the PUC approves the sale of the township's sewer system "you're not our customers yet."

Upper Pottsgrove's rate "is in no way impacted by this request. Upper Pottsgrove is not a part of" the rate hike request Grundusky said. 

Township rates will still drop by 9 percent in 2021 when compared to projected rates had the township still owned the system. That's what was presented during the four public information meetings  conducted online using the Zoom cyber-meeting platform prior to the sale.

Several of the commissioners complained about reaction on some Facebook pages when news of the rate hike request broke.

"I knew it didn't include us," said Commissioner Renee Spaide.

"I know it stirred up a lot of feeling," said Commissioner Cathy Paretti. "I didn't know about it until I read about it in the paper Friday. I called Trace and he had already looked into it and confirmed it did not include us."

"I'd like to offer some advice," Paretti continued. "You can't rely on Facebook for getting your news. If you want to be informed, you have to come to the meetings, if you have questions email one of us or the township manager."

Spaide said she felt the negative comments on Facebook were "just a handful of people," adding that she was threatened on one of the posts.

"I love this community and would never do anything to hurt this community," said Spaide before asking Commissioner Martin Schreiber, who operates his own Upper Pottsgrove Facebook page and who voted against selling the system, to outline his reasons for opposing the sale.

"I don't think it was the right time," Schreiber replied. Noting that a 143-unit over-50 housing project is currently in the works and will be hooked into the sewer system. "So maybe we could have gotten more for the system later on."

Slinkerd suggested to Schreiber that if he is going to run a Facebook page "it's incumbent on a public official to police it, particularly when profanity is used."

Resident Al Leach, who is also vice president of the Pottsgrove School Board and was among those commenting on Facebook pages, said "I completely agree about using Facebook to get your news, but we can't make a meeting, sometimes its the only news we can get."

He suggested that the township's website is "difficult to navigate" and suggested the commissioners making it "more user friendly."

Slinkerd asked Leach about the school district's website and Leach replied that the school board had recently undertaken an effort to upgrade it, as well as allow advertising there to cover the cost. He also said the school district has plans to update the "mobile site," so it is easier to read on your smart phone.

Two residents, Bill Hewitt and Nicole Matz, said they like the Zoom meeting platform and hope that the township will continue to use it ever after coronavirus restrictions end.

Resident Doug Kern agreed and added that he thought the commissioner discussion prior to the vote to sell the sewer system last month was "extremely informative. I would have preferred to hear from the commissioners prior to the information meetings."

Tax Deadline to Move

In other news, the commissioners agreed that it might help those suffering financial difficulties from the pandemic to move the deadline for property tax payments.

A formal vote will occur at the 18 meeting, but the commissioners all agreed to move the deadline forward by one month, meaning no penalty will be levied against any taxpayer who pays by June 30.

The current deadline is May 31. 

Township Manager Michelle Reddick said the township has already collected 90 percent of its property taxes and that the discount period for paying early, when most people pay, ended at the end of March.

Paving Mervine Street

Reddick also reported that she has confirmed with the borough of Pottstown that they plan to pave their half of Mervine Street next year. The street forms part of the border between Pottstown and Upper Pottsgrove.

As a result, Reddick said the township plans to hold off on plans to pave its half and do it jointly next year with the borough.  

"But we need to let residents of that street know they need to repair their curbs and sidewalks, and the commissioners will have to decide how much time we give them," she said.

Upper Pottsgrove Votes 4-1 to Sell Sewer System

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Those participating in last night's Upper Pottsgrove Commissioners meeting listen to Commissioner Martin Schreiber, outlined in the yellow rectangle, discuss his objections to the sale of the sewer system.

Surprising no one, the Upper Pottsgrove Township Commissioners vote 4-1 Monday night to sell the township's sewer collection system for $13.75 million to Pennsylvania American Water.

Commissioners Martin Schreiber cast the sole vote against the sale.

As The Mercury reported April 8, the presentation provided at four online informational sessions earlier in the month forecast that sewer rates would drop by about 9.6 percent under Pennsylvania American Water ownership.

However, the decrease — from the current $71.87 per month to $65 per month — would be short-lived, according to Bernie Grundusky, senior director for business development for the water company.

A chart he shared as part of the online meetings showed rates would return to the current rate in three or four years after the sale, and then increase annually by an average of 4.5 to 5.2 percent.

By comparison, the township's sewer rates, which have increased in a more haphazard fashion, average out to between 4.6 to 6 percent a year, according to the presentation.

Now that the sale has been approved, the average homeowner will save  $1,260 between the time rates were dropped to when they return to their current level, according to the presentation.

The deal must still be approved by the Pennsylvania Public Utility Commission, a process which could take longer than a year to be finalized.

As a result of the vote, PFM Financial Advisors LLC will be paid more than $250,000.

As noted by Commissioners Chairman Trace Slinkerd, who, prior to the vote, praised the consultants for taking a risk, noting that if the commissioners voted against the sale, PFM would have been paid only its $7,500 fee for preliminary work.

Scott Shearer, managing director of PFM, insisted during Monday's meeting that the firm "did not make a recommendation. We're not trying to sell this system."

During the four public information sessions the township staged online, not one negative aspect of the sale identified. Township Manager Michelle Reddick said the presentations were put together by PFM and the staff.

(You can see that presentation by clicking here.)

During those meetings, Slinkerd restricted all interaction to questions from residents, which were mostly answered by the consultants or township staff. He said public comments would be accepted at the April 20 meeting.

When that happened last night, the online meeting was attended by more than 50 people.

Eight residents spoke. All but one asked the commissioners to vote against the sale or, even more frequently, delay the vote until next month or later.

Pennsylvania American Water's bid does not expire until June 30.

Don Read, a former member of the Pottstown Borough Authority and a current member of the township's sewer committee, spoke in favor of the sale and said, as he did at the April 16 meeting, that the best reason to sell the system is the risk inherent in running it.

He said the potential capital costs of problems with sewer lines and pump stations, as well as capital costs imposed by the Pottstown Borough Authority, which runs the plant that receives and treats Upper Pottsgrove's sewage, is too big a financial risk for a four-person staff.

"The price is on the high side of what we projected," he said of the winning bid. The other bidder was Aqua America. "What's another month going to do? It's frustrating to watch people come in at the last hour and ask for a delay."

He was referring, presumably, to other speakers who said they were unaware of the potential sale of the system until they received a township letter in the mail, a letter which arrived after the first two public information sessions had already occurred. 

"I am imploring you all to take an opportunity to table the vote until the May 20th meeting," said Turnberry Farms resident Stephanie Rowe.

"This is beneficial in several ways, the first being it allows all residents to be able to digest and question this decision that seems to be on a fast track for a reason that has not been satisfied by any of the presentations that you allowed to happen with little or no response from the board -- almost every question was deferred to either PFM or PA American Water," Rowe said.

Darryle Tillman, seen in scrubs framed in yellow, objected
to the manner in which the township has proceeded with the sale.

Darryle Tillman, who appeared in scrubs while caring "for 104 patients, one third to one half of
which have COVID-19," also urged a delay.

"This plan has its good points and its bad points, but it is ridiculous to do this in a Zoom meeting in the middle of a pandemic," he said in reference to the on-line platform used for the meeting.

Al Leach, who is also the vice president of the Pottsgrove School Board, also urged a pause.

"I'm sure you've all done your due diligence, but a lot of residents are just finding out about this and would like to see if they can get more involved," Leach said.

"There are a lot of questions that need to get answered, like how the board intends to spend the proceeds, and the open space question," he said.

Although the presentation has identified the proceeds as paying down the sewer system debt; making the pension system whole and paying off general fund and road fund debt, two other proposed uses have raised questions.

One is paying off debt undertaken by the open space fund, which is paid off with a voter-approved earned income tax; and infrastructure improvements to the police station and township offices in the firehouse.

No specific plan for those improvements has been presented as part of the sewer system sale proposal, said resident Doug Kern.

"We have no access to the paperwork, no ability to examine this ourselves," said Kern, who said he did not find out about the proposal until two of the public information sessions had already passed.

"All I have is a bunch of slides, which changed after almost every meeting, and a lot of 'take-my-word-for-it-answers. It sounds like you have a 90-day window to make a decision," said Kern, urging a delay or a no vote.

Dustin Schreiber said his research indicates American Water, the parent company of the high bidder, "is owned by a German conglomerate called RFWAG. I'd prefer we support an American company if we sell, and  I'm not convinced we should sell."

Hanover Drive resident Keith Plumadore said he sees the sale as a short-term fix for the township's finances. "It's an temporary reprieve from amateur fiscal management. The township did a good job with the (request for proposals) but I see no evidence the township will execute and bring better fiscal governance with the proceeds."

"When I moved here in 2000, the commissioners and the people all worked together," said Leach. "I implore you to at least consider the idea of tabling this motion, It would be so easy to delay this vote so we can get all our ducks in a row and demonstrate transparency we always used to have in this community."

Slinkerd closed public comment and then called on Schreiber to outline the objections he has been posting on his Facebook page and the Turnberry Farms Facebook page.

However, as Schreiber spoke, Slinkerd repeatedly interrupted him, talked over him and told him his points were not relevant to the subject at hand.

"The sewer customers paid for the sewer, if they were stock holders, they should be getting a bonus check, they're getting the short-end of the stick," said Schreiber. 

"What about people who pay school taxes but don't have any children in the system," Slinkerd interjected. "Should they not be taxed?"

"Everyone has a chance to send to send students to school," Schreiber replied. "What about open space, Martin?" Slinkerd interrupted again. "That's paid with earned income tax, but seniors don't pay that. Should we put signs up telling them they can't use the open space?" Slinkerd asked.

"We taxed ourselves for that," Schreiber started to reply and Slinkerd pressed on. "We don't separate our residents into septic or sewer residents. Are you saying that's the way we should go?"

As Schreiber tried to raise further points, Slinkerd continued to interrupt him. "That's what you've been doing, going down this rabbit hole trying to dislodge what we're talking about," Slinkerd said.

"You keep trying to throw things at the wall at the 11th hour to see what sticks to make it seem like you did research," he continued. "You've had a year to think about this stuff."

"Are you going to let me finish?" Schreiber finally asked. "I never stopped you," Slinkerd replied, finally allowing Schreiber to speak uninterrupted.

The areas of Upper Pottsgrove shown in green are
part of the sewer collection system.

The other commissioners, Dave Waldt, Cathy Paretti and Renee Spaide were permitted to speak uninterrupted, except when Schrieber thought Paretti was finished with her point.

He apologized for interrupting her and urged her to go on.

The other commissioners joined in disputing Schreiber's points.

Spaide, who has served on the board for many years with Schreiber, read from a prepared statement that noted, in part, "all the commissioners have been involved."

She said she agrees with Read that running the sewer system is a risk. "We have a road crew, not a sewer crew and Pennsylvania American Water does this for a living," said Spaide.

Waldt said he and Paretti "ran on concern about the township's finances. People were very unhappy." He disputed Schreiber's characterization that he was left out of discussions. "We've spent hours on the budget and I never see you. You never participate," said Waldt.

"Dave and I started to get to get acquainted with this while we were running," said Paretti. "We don't have any business running a sewer business. If we keep it, our taxes would rise and the rates would be higher than if we didn't own it."

She added, "I don't wait to be invited into things, I ask for the information I need."

When Schreiber tried to point out he had asked Reddick for information and it took two days to get an answer, the other commissioners leapt to her defense. "Michelle has a lot on her plate," said Paretti.

"Michelle has done an outstanding job," said Slinkerd.

Paretti pointed out that while people last night were complaining about having the meeting over Zoom, it had more participants than most in-person township meetings. 

"It's great to see so many people participate. This is not as many as we get at regular meetings. I've had people tell me they like this better," said Paretti. "You're never going to make everyone happy." 

But even in a pandemic, "the one thing that can't stop is your government," Paretti said.

After the vote, Slinkerd said next steps would be discussed at a future meeting.

U. Pottsgrove Sewer Sale Hinges on Monday Vote

The green-shaded area indicates the Upper Pottsgrove parcels served by the township's sewer collection system.

After more than a year of discussion, and four online question and answer sessions, the drive to sell the township's sewer collection system comes down to a single vote Monday night.

Although the sale, if approved Monday by the commissioners, must still be approved by the Public Utility Commission, the township's final say on the matter will be Monday's vote.

On March 20, Pennsylvania American Water, which provides services to 19 percent of Pennsylvania's population, submitted the highest bid for the purchase of the system — $13,750,000.

Ben Kapenstein, who works for PFM Financial Advisors LLC, said bid is "on the high end" of what the township was anticipating being offered. The other company to offer a bid was Aqua PA.

Informational Meetings

Prior to Monday's pending voting, the commissioners staged four online question and answer sessions on April 6, April 8, April 14 and April 16. Participation ranged from 40 to as many as 70 people at each one.

Each session included an hour-long presentation on how the township got to this point, and the benefits of the sale of the system which serves about 1,600 households. By way of comparison, Pennsylvania American has 74,000 wastewater customers among the various systems it owns.

The company most recently purchased the Exeter Township wastewater system for $93.5 million and is in the process of purchasing Royersford Borough's system.



As The Mercury reported April 8, the presentation forecasts that sewer rates would drop by about 9.6 percent if the township commissioners vote to sell the system to Pennsylvania American Water.

However, the decrease — from the current $71.87 per month to $65 per month — would be short-lived, according to Bernie Grundusky, senior director for business development for the water company.

A chart he shared as part of the online meeting showed rates would return to the current rate in three

This slide from the presentation shows the difference in sewer rates.

or four years after the sale, and then increase annually by an average of 4.5 to 5.2 percent.

By comparison, the township's sewer rates, which have increased in a more haphazard fashion, average out to between 4.6 to 6 percent a year, according to the presentation.

If the sale goes through, the average homeowner would have saved $1,260 between the time rates were dropped to when they return to their current level, according to the presentation.

In addition to the lowered rates, the benefits touted in the presentation included:

• The retirement of all township debt, including unfunded pension obligations;
• A transfer of the inherent risk of running the system to a third, expert, party;
• The ability to spend up to $4 million on infrastructure projects like a new or upgraded police station without borrowing;
• The elimination of the $5,447 "tap-in fee," currently charged by the township for new connections to the system.

Why the Rush?

Many of the residents who participated had questions — ranging from how the sale would affect their property and proposed sewer expansion projects and what some perceived as a "rush" to vote on the matter.

"Why does the vote need to happen on April 20?" resident Stephanie Rowe asked during the final meeting Thursday.

"We're in the middle of a pandemic. We're doing meetings on line and we're all dealing with a new normal," she said.

"I think we can do this," Commissioners Chairman Trace Slinkerd replied. "We've done enough due diligence. We need to get this moving through the PUC process," he said in reference to the sale still needing to be approved by the Pennsylvania Public Utility Commission process.

"I live on a cul de sac and there are six families there, three of them have first responders who could not be at this meeting and the other three had no idea this was happening," Rowe said.

"We still have nine to 12 months of more exploration until everything is closed," said Commissioner Cathy Paretti in apparent reference to the PUC approval timeline.

"We'll still be looking at information," Paretti said. "It's not like the vote Monday is the end of it."

But it is the end of it as far as decisions by the commissioners are concerned argued Commissioner Martin Schreiber, who has repeatedly expressed frustration at the idea of holding the public meetings online and what he has described as his difficulty getting answers.

He said after two queries, he still had not been told when the bids expire and it will be too late for the township to act. "We have 22 staff people, I don't understand why I can't get answers," he fumed.

The answer was then supplied by Township Solicitor Charles D. Garner Jr., who said the Pennsylvania American bid expires on June 30.

Who Pays? Who Benefits?

Other pointed questions revolved around the fact that not all residents have paid into the system system, but all residents will benefit.

According to the presentation, Upper Pottsgrove has about $8.4 million in debt, but only $4.7 million is sewer debt, which would be paid out of the proceeds of the sale of the system.

The remaining debt is $2.1 million in the open space fund; about $208,000 in the general fund and $241,000 in the road fund.

Elwood Taylor, highlighted at the top right, had

a long list of questions during the online meeting.

About 65 percent of the township's parcels are served by the system so the sale of the asset sewer customers have paid to build and maintain will benefit those who have never paid into the system, argued former commissioner Elwood Taylor.

"Much of this would make sense if the $8 million in debt where all general fund debt, but you're putting the burden of paying off township-wide debt on sewer users," Taylor said.

He also pointed out that using the proceeds from the sewer sale to pay off the debt in the township open space fund will not result in savings to the general fund.

The open space fund debt is paid through an additional earned income tax approved by voters in 2006. The money raised by that tax can only be spent to purchase new open space, or maintain the township's current open space, Garner confirmed.

Taylor also argued that when residents have an issue with their sewer bill, or how the system is run, they can take those complaints to their elected officials and even work toward throwing them out of office if they don't like the results.

After selling to Pennsylvania American, Upper Pottsgrove customers would have the same standing as the other 74,000 customers in the state and, if they don't get satisfaction from the company in a dispute, would only be able to take it to the Public Utility Commission, Taylor said.

Avoiding Risk

Others supported the sale.

Don Read, who served on the Pottstown Borough Authority and is currently on the township's sewer committee, said "it looks like it makes sense to sell it."

Read said he sees the primary benefit of the sale as "mitigating risk."

A screenshot from the April 16 informational meeting.

He explained that in addition to capital costs Upper Pottsgrove's collection system may incur, it is also responsible for its portion of capital projects at the wastewater treatment plant on Industrial Highway in Pottstown, which receives and treats Upper Pottsgrove's waste.

That plant is operated by the Pottstown Borough Authority and the township has no say in what gets done at that plant, or how much it costs, said Read.

Last year the authority completed a $5 million sludge dryer replacement project which Upper Pottsgrove, and the other surrounding townships who send sewage to the plant, helped to fund under the terms of the agreement with the borough authority.

"The borough authority can throw anything at us they want," said Read.

In fact, that agreement is something Pennsylvania America will have to resolve if the commissioners vote Monday to sell them the system. The authority can agree to transfer the existing agreement to the new owners, or require a new one, according to Township Manager Michelle Reddick.

But Marc Feller, an attorney with the firm Philadelphia law firm of Dilworth Paxson — hired by the township as special counsel to the sewer sale — pointed out that "the Pottstown plant needs the waste as much as the township needs a place to dispose of it."

Conflict of Interest?

In addition to the law firm, Upper Pottsgrove hired PFM Financial Advisors LLC, also known as Public Finance Management, to assess the feasibility of selling the system. It is the same firm that handled the sale of the Royersford sewer system to Pennsylvania American Water for $13 million.

According to an answer Reddick posted on the township website, PFM will be paid a fee of $7,500 for the "limited scope valuation" it undertook to explore the question of whether selling the system would be beneficial.

A second agreement for the work it has done since then, which Slinkerd previously described as being $50,000 plus 1.5 percent of sale price, indicates that PFM will be paid the major portion of their fee only if the commissioners agree to the sale.

As a result, PFM will receive about $250,750 if the township agrees to sell, and only $7,500 if the commissioners vote against the sale, which raises the question of whether PFM is motivated to convince the commissioners to sell in considering the information it presents to them.

In her posted response, Reddick did address the part of the question which read "Any conflict of interest concerns the taxpayers should be aware of?"

No downsides to selling the system were identified in any part of the presentation, which was prepared by PFM and which became more detailed over the course of the four online meetings as questions from residents provoked fine tuning.

A Mercury email to Reddick asking if any negatives to selling the system had been identified in the year-long exploration of the issues, had elicited no reply as of Friday evening.

Thursday night, Slinkerd, who restricted public involvement in the four meetings to questions from residents, thus prohibiting a Mercury reporter from being be called upon to ask questions, said the commissioners will entertain opinions and comments on the proposed sale during Monday's meeting.

Those comments will be limited to three minutes.

"Commissioners will then debate this and hash it all out," said Slinkerd.

To date, Schreiber, who has been on the board for several years, has been the only commissioner to ask questions publicly about the proposed sale.

Two other commissioners, Paretti and Dave Waldt took office four months ago, although they were in regular attendance at commissioner meetings prior to that.

Renee Spaide is the fifth township commissioner who has a vote Monday.

Upper Pottsgrove Adds More Info on Sewer Sale

The green areas on this official map show the areas of Upper Pottsgrove Township which have sewer service.

Upper Pottsgrove Township Commissioners voted last week to advertise an ordinance allowing the sale of its sewer system to Pennsylvania American Water for $13,750,000.

Commissioner Martin Schreiber cast the only vote against advertising the ordinance.

The vote came Wednesday night after the second of a series of four on-line public meetings to provide information and answer questions about the proposed sale. The next two meetings are Tuesday, April 14 and Thursday, April 16.

(Click here for details on how to attend the next online meeting.)

The vote to advertise the ordinance will make it possible for the commissioners to vote April 20 on whether or not to sell the system.

The April 6 meeting occurred at the same time as the Pottstown Borough Council meeting, so I only caught the tail end of the Upper Pottsgrove meeting.

I am not sure how much new information was provided, but one piece identified by attendees as missing during the first meeting was provided in the second.

Newly provided was what the history of the township's rate hikes over the past few decades looks like.

The chart shows that Upper Pottsgrove's sewer rates have not moved steadily. From 1978 to about 1988, there was little change. Then there was a doubling of the rate in about 1992 and another decade of no change.

In 2007, they jumped another 71 percent when the state forced the township to take over and replacing the failing pump station in the Regal Oaks subdivision.

The township calculated, as the chart shows, that the average rate since 1978 is about 6 percent and the annual growth rate works out to 4.64 percent.

Information about the forecast rate increase under Pennsylvania American was also made more specific.

Those projections show rates would drop initially by about 9.6 percent under the current proposal, and then begin to climb again about two years after the purchase is completed.

It also shows the projected rate increase are comparable to the township's history of rate increases.

The township also provided two new slides in its presentation to show:

A) How the sale would benefit homeowners and save them money;

B) How the sale of the system would lower township expenses;

Another piece of the puzzle was added by John Bealer, a former commissioner who is now chairman of the township's sewer committee.

He said the system needs about $5 million in expansion to meet the township's master plan for the system, known as the 537 plan. The properties added to the system will generate $731,500 in revenue, he said.

The remaining cost would "have a great impact on rates going forward," said Bealer.

If Pennsylvania American does buy the system, those same costs would incurred, but they would instead be spread among the company's 700,000 customers and not just shouldered by Upper Pottsgrove users of the system.

On Saturday, Scheiber posted his views on the Facebook page he runs: "Commissioner Schreiber's Upper Pottsgrove News."

There, he criticized the informational letter issued by the township and questioned the wisdom of selling the system.

In part, he wrote:

By now most residents have gotten a letter about selling the sewer. This letter pictures the rosiest picture possible. Does the township have debt? Yes, it does, but only $4.7m is sewer debt. This debt is paid for by sewer customers only.

The idea to sell the sewer could sound great, and it does have its pluses. When new EPA/DEP regulations come into place it is no longer the township's problem. When a pump station goes down it is not the township's problem. Upgrades that need to be made, again, are not the township's problem.

But, why would sewer customers need to pay off all of the township’s debt? Why would sewer customers be the only ones paying for new or improvements to the township buildings?

He added:

Selling the sewer, after closing costs, would see about $13m. $4.7M or $5M would pay off the sewer debt. This leaves $8M to pay off the open space that would be paid off too (remember the township voted to tax themselves via Earned Income Tax at 0.25%). This $2M+ would then make members of the community that have no earned income that have sewer pay for this open space.

This is what the online meetings look like on your computer.

$200,000+ is owed in the state fund, the money to pay this comes from liquid fuel money from the state from when you gas up. Yes, we can use that money for other items if this is paid, off but do we need to? The general fund has very little debt, maybe around $30,000 a year for a few more years.

When I was seated on the board, the township was in debt for about $12.5M. 6 years later that number has gone way down and the number keeps going down. PFM, the group that is managing the sale, stated they believe that the sewer rates would stay steady if the township keeps the sewer. They also stated that it would cost households about $190 a year in tax increase to borrow $4m for 20 years for new or repairs to the buildings. 

Scheiber concluded:

There are plans approved for about 140 age restricted homes in our community. This same company would like a total of about 400 homes. If these homes are built the system could sell for another $2M. Should we wait?

If you look up the company that is the highest bidder on the Better Business Bureau they have a D- rating. If you are not happy with your sewer now, you can come to a township meeting and talk it out with the township. You can also vote out the individuals who don't seem to hear your concerns. Who are you going to talk to if it is sold?

To sell the sewer now without having true public meetings would be wrong, it could be perceived as lack of transparency would not be in the best interest of our township.

Upper Pottsgrove Sewer Rates Would Fall Then Rise if System is Sold to Pennsylvania American Water

A screenshot of  Upper Pottsgrove's online informational meeting on April 6 regarding the potential sale of the township's sewer system.

Upper Pottsgrove sewer rates would drop by about 9.6 percent if the township sells the system to Pennsylvania American Water, a spokesman for the company said Monday night during the first of four scheduled informational meetings on the subject.

However, the decrease -- from the current $71.87 per quarter to $65 per month -- would be short-lived, according to Bernie Grundusky, senior director for business development for the company.

A chart he shared as part of the online meeting showed rates would return to the current rate in three or four years and then increase annually by an average of 3 to 4 percent.

"Although you might see two or three percent," he said.

Resident Don Clancy said a deal that lowers rates initially and then "raises rates 4 to 5 percent indefinitely is a bad deal."

He said the best way to make an informed decision is to compare the increases Pennsylvania American projects to those the township might have to impose. "So we would need to have a look at future costs by the township and we haven't seen that presented tonight," observed Clancy.

"It seems like you're pursuing a short-term fix and creating long-term problems," said resident Al Leach, who is also a member of the Pottsgrove School Board.

After Leach asked how Pennsylvania American's rate projections compare to the township's history of rate hikes, a variety of answers rose in a flurry.

Commissioner Renee Spaide said "in 2007, rates rose 72 percent in one year. I'll just put that out there."

Chris Pelka, the township's sewer engineer, interjected that hike was due to the failure of the Regal Oaks pump station, part of a small private system that failed and which the state required the township to take over.

"That was forced on the township and was an unforeseen circumstance," Pelka said.

Commissioners Chairman Trace Slinkerd then rattled through a list of rates dating back to 2008 too rapidly for me to repeat here with any hope of accuracy.

Former commissioner Elwood Taylor, who has raised several questions in the past about his perception that the township is pushing hard to sell the system, offered that "the rates have been relatively stable for the last 10 years."

"If we sell the system or not, it will cost us more money," Spaide said. "We will have to borrow money to do these projects."

The projects to which she refers are those included in something called the 537 plan, so named after PA Act 537, the law under which sewer system capital projects are outlined.

In February, commissioners approved a bid from Doli Construction for another phase of the Regal Oaks sewer system project. The bid of $537,440 was within the budget for the project, which benefits from a $200,000 state grant to cover part of the cost.

The project will connect 26 homes on Rose Valley Road and Holly Berry Court, as well as seven homes on Gilbertsville Road.

However, according to the presentation made last night, future sewer projects in the 537 plan would be undertaken by Pennsylvania American Water, if the township sells them the system.

Phase 2B of the Regal Oaks expansion; as well as sewer service to Horsehoe and Bruce drives; as well as Continental and Old Orchard drives, would all be undertaken by the company if the system is sold.

Further, unlike when the township constructs new sewer lines, property owners would be spared the $5,447 tap-in fee if the company undertakes the project.

Grundusky explained that the company works under a different system than the township and existing homes and businesses are not charged a fee to connect to the system.

Further, the company will even contribute $15,000 toward the cost of extending the system in the street beyond the area outlined in the 537 plan if requested by a homeowner who wants to connect.

Grundusky said a $4,000 "capacity fee" is charged to new homes and businesses built after the company buys the system, he said.

Slinkerd said Pennsylvania American's bid of $13,750,000 was about $332,000 higher than what the township had hoped to receive.

Ben Kapenstein, who works for PFM, the township's consultant in this matter, said Aqua PA was the other company to bid and because the two bids received on March 16 came in "within 10 percent of each other, we proceeded to a phase called 'best and final offer,' in which we contacted both bidders and informed them they could submit higher bids of they wish."

The final bids were reviewed during a March 25 executive session, he said.

In a physical letter sent out to residents Monday, the same day as the first meeting, and posted on the township Facebook page (but not the website), the township laid out its reasoning for considering the sale.

The primary reasons listed include township debt of $8.4 million; and unfunded pension liability of $1.7 million; and a need for between $3.5 million and $4.5 million in repairs and upgrades to the township highway and police department building on Heather Place, and the township offices beneath the firehouse on Farmington Avenue.

However, questioning by residents revealed that of that $8.4 million debt, only about $4,728,507 of that debt is held by the sewer system.

The $8.4 million total also includes about $2.1 million in debt in the open space fund, which could be paid back with proceeds from the annual earned income tax dedicated to open space, and another $2 million in general fund debt.

Taylor called the slide outlining the township's debt, without revealing that only half is attributable to the sewer system itself, "misleading." He asked "how do the commissioners justify using money from the sale of the sewer system to pay down general fund debt?"

Not all of the township is hooked into the sewer system, and Taylor and several of the 47 people who participating in the online meeting asked why those who have never paid into the sewer system should benefit from the sale of an asset only those on the system have paid to improve and maintain.

When Limerick Township sold its sewer system to Aqua PA for $75 million in 2018, township officials used the proceeds to pay off township debts not related to the sewer system and invest $55 million into its capital for future needs, like new firehouses in Limerick and Linfield.

At the time, Limerick Township Manager Dan Kerr said the number of people in the township not on the sewer system was small. Limerick, Kerr said, has about 6,500 parcels and about 5,800 sewer accounts, meaning the system served a little over 89 percent of the parcels in the township.

The areas in green of the township's official sewer map show the parcels that are served by the system.

Upper Pottsgrove's sewer map shows more than 2,300 parcels in Upper Pottsgrove and Grundusky said the sewer system serves about 1,500 of them, meaning the system serves about 65 percent of the township's parcels.

Put another way, about 35 percent of Upper Pottsgrove's parcels will benefit from the sale of a system they have never used and never paid for.

But Marc Feller, an attorney for PFM, offered another perspective. He said paying down the general debt will lessen pressure to raise taxes, which benefits those hooked into the sewer system equally with those who are not.

PFM, which stands for Public Finance Management,  has also handled the sale of Royersford's sewer system to Pennsylvania American.

Under its agreement with the township, PFM waived its $7,500 fee to assess the system and begin sounding out bidders. Instead, it will be paid $50,000, plus 1.5 percent of the sale price, but only if the system is ultimately sold, as I reported last May.

That means as the bid now stands, PFM stands to collect $256,000 if Upper Pottsgrove sells the system to Pennsylvania American Water. It will be paid nothing if the commissioners decide against selling.

I'll leave it to you to decide if you think that is the best way to guarantee unbiased financial advice.

Feller further emphasized a point made in the township's letter, that professional management of the system is a benefit. "I live in a township in Bucks County with a municipally owned system and the rates recently went up 37 percent," he said.

"Many townships have not kept up with their obligations and rates have been kept artificially low over the years," he said.

But resident Robert Rowe said his research has shown that many municipalities that privatized their water and sewer systems have taken them back under municipal control after costs went up by 20 percent.

Monday's cyber meeting was not the first. Similar online meetings, which Feller said satisfy the state's Open Meetings law, are scheduled for April 8, 14 and 16. Slinkerd said the township will increase its capacity from 100 to 200 for the next meeting.

Instructions for how to join that meeting, either online or by phone, are included in the letter sent to all residents and are posted on the township's website.

Upper Pottsgrove Ponders Selling its Sewer System

Photos by Evan Brandt

Upper Pottsgrove Commissioners Chairman Trace Slinkerd outlines some of the financial challenges facing the township in the coming years.

Despite the fact that it does not own a sewage treatment plant, Upper Pottsgrove Township has been approached by two private companies about selling its sewer system, it was revealed during a work session Monday night.

The revelation was a while in coming, as Commissioners Chairman Trace Slinkerd began the discussion by talking about the financial challenges the township faces and he made no mention that he was trying to outline how selling the sewer system might alleviate some of those challenges.

But Commissioner Elwood Taylor pressed to make it clear to the small audience at last night's meeting.

After the meeting, Sewer Committee Chairman and former commissioner John Bealer said the township was approached by Aqua PA and Pennsylvania American Water about selling the system.

Ever since the passage of  Act 12 in 2016, private utility companies like Aqua and PA American Water have been on a buying spree.

The act changes the way the systems are valued and allows municipalities to charge much more to sell the system than they previously did. This makes overtures from private companies much more attractive because the sale prices are much higher.

Just last summer, Limerick Township sold its system for more than $75 million to Aqua PA, in a move that allowed the township to eliminate debt and fund several capital projects, but may also mean a rate hike for Limerick customers of as much as 84 percent.

To be fair, Limerick's annual average sewer rate of about $384 will be frozen for three years under the law. And Upper Pottsgrove's annual bill is about $860, one of the highest in the area.

That may be because the system has about 1,600 "equivalent dwelling units," which is how sewer charges are calculated, that together have to should the nearly $9 million in debt it cost to expand the system to homes with failing septic fields and failing systems, like the Regal Oaks subdivision off Gilbertsville Road.

Bearler said about 35 percent of the quarterly sewer bill goes to debt service on the system extension.

If the system is purchased, the debt would still be owed by the township, he said, so that would likely be the first place the money from the sale would be spent.

Bealer said because rates are often frozen for three years under the tenants of the law, as was the case in Limerick, the system might be attractive to private buyers because of the profit margin of higher rates to pay off a debt that no longer exists.

He said he would only support the sale if it could lower rates for customers, which both Krazalkovich and Slinkerd suggested could happen.

However, Upper Pottsgrove does not own a sewage treatment system, unlike Limerick.

Instead, Upper Pottstown, along with Lower Pottsgrove and West Pottsgrove townships, send their sewage to the Pottstown Wastewater Treatment Plant, owned and operated by the Pottstown Borough Authority.

There is no price determined yet and the township commissioners met in closed door executive session at the end of the meeting to discuss the matter. Comments by Slinkerd suggest that the municipal financial firm of PFM may be who he has in mind to determine that price.

But even without a price, Slinkerd and Vice Chairman France Krazalkovich were ready to start discussing how that money could be spent, including retiring the sewer debt, as well as funding improvements to the township's buildings.

However Taylor warned that once the system is gone, customers would no longer have the ability to complain about or dispute their bills with their local government, and would instead have to contend with a large corporation.

"Our people will not have a say," said Taylor, noting that local politicians are easier to replace than big corporations.

Krazalkovich, pointed out that local government tried to control trash collection in town and that did not work. But people saved money after the townwide contract expired and was abandoned because people had a choice of which hauler to chose. There was competition.

That will not be the case with a sewer system, said Taylor. "This is a monopoly interested in making money. The local government is not interested in making money," he said.

Slinkerd said that Fortune 500 companies like Aqua and PA American Water are better equipped to manage sewer systems than small townships. "Profit is not evil," he said.

PAL Carnival Coming?

Seth Lawrence talks about how the proposed carnival would be 

arranged on the PAL site in Upper Pottsgrove.

Before the Upper Pottsgrove Commissioners started talking shit (whoops), they heard from Seth
Lawrence about the Pottstown Police Athletic Leagues efforts to stage a carnival and fireworks at its fields off Chestnut Grove Road.

The carnival is planned for five days at the end of May and beginning of June, said Lawrence.

The group is hoping 4,000 to 5,000 people will visit over the five-day span, said Lawrence, who noted that the site currently has 1,000 parking spaces.

Concerns were raised about the impact of the event on neighbors of the site; safety; and the fact that currently, the township zoning code does not allow such events there.

Lawrence said the event would be similar to the fair the Norco Fire Company stages each year in July, and that the fireworks planned would last for 25 to 30 minutes.

More discussions are needed before the matter is decided, but the group is on a tight time-line and we might see some votes at the board's next meeting on April 15.

And with that, here are the Tweets from the meeting:

Shall We Sell the Sewers?

Lower Pottsgrove Pondering 7.4% Tax Hike for 2018

Lower Pottsgrove Township Commissioners Thursday night approved a tentative $6.4 million 2018 budget that would raise taxes by 7.4 percent if adopted next month without change.

The tentative budget's $6,3267,371 in spending represents a 2.4 percent increase in spending over the 2017 amount of $6,175,765.

But the tax increase can be attributed to one single item, the commissioners' desire to create a capital reserve fund, a saving account for major projects, said Township Manager Ed Wagner.

The .25 millage increase is dedicated entirely to that fund, he said.

According to Montgomery County's list of all millage rates, Lower Pottsgrove's is currently 3.368 mills. So a .25 millage increase for the capital reserve tax brings the total to 3.618 mills, or an increase of 7.42 percent.

Wagner said  there has been no major project in the past year that has brought this need to the front of the commissioners' table. "We're just trying to be prudent and plan ahead," he said.

For the average property owner, whose assessment is $125,000, it means an increase of $31.25 on the 2018 property tax bill.

The commissioners voted unanimously to advertise the budget and make it available to the public for a minimum of 30 days. Final adoption does not take place until December.

The blue area is currently Pennsylvania American Water's

franchise area. The tan area shows the proposed expansion

In other matters, the commissioners also approved a letter of support for the expansion of Pennsylvania American Water's franchise area into the township to provide water for the massive Sanatoga Green project of more than 500 housing units, a medical facility and, possibly, a hotel.

When pressure tests were done, it became evident that the Pottstown Borough Authority system could not provide enough water pressure to- run sprinkler systems and meet other water needs.

The commissioners did not have the final word. That rests with the Pennsylvania Utilities Commission, a process which could take some time, said Sanatoga Green developer Ted Draushcak