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.

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 Moves Closer to Sewer System Sale

Township commissioners took the next step forward Monday night toward selling the sewer system.

With a unanimous vote, the board voted to approve the deal with PFM, once known as Public Finance Management, for the assessment of the system and to identify potential bidders.

Under the agreement approved, PFM will be paid $50,000, plus $1.5 percent of the sale price, but only if the system is ultimately sold.

"This is just looking at and evaluating," said Commissioners Chairman Trace Slinkerd. "If we go through this process and pull out, we don't pay anything."

Commissioner Elwood Taylor said he remains doubtful, especially considering that if the preliminary figures PFM showed the township are right, ratepayers won't save that much money, if any, and will have a sewer service provider less accountable than one run by elected officials.

"I am of the philosophical position that if the private sector can do it better, it ought to," said Commissioners Vice Chairman France Krazalkovich.

He said Upper Pottsgrove sewer rates have doubled in last 13 years, and one potential buyer has not raised rates in nine years. But Taylor noted that Krazalkovich picked 13 years because of the big increase 13 years ago and that for the last 12 years, sewer rates have been steady.

Commissioner Renee Spaide said rates went up 71 percent in 2007 and that more work on the system is needed, so rates will have to go up.

Slinkerd reminded everyone that in addition to paying off the debt, the proceeds of the sale could be used to repair township buildings as well as provide a cushion in the township budget.

But resident Keith Kehl pointed out that those in the township who are not hooked into the sewer system have not paid into it and therefore should not benefit from it's sale.

In the meantime, repairs and expansion of the system continues with the 3-2 vote to advertise for bids for the second phase of the Regal Oaks sewer project, which will hook up 26 homes within the Regal Oaks development and six more on the west side of Gilbertsville Road. 

Commissioner Martin Schreiber and Krazalkovich both vote against the motion, with both questioning why more of the project is not using gravity as opposed to the grinder pumps it calls for in some homes.

Owners of those homes object to this aspect of the project as the pumps can break down and will need to be maintained and repaired.

The engineers for the project explained that running the line for gravity for all homes would involve many easements and increase the costs.

Taylor also noted that running the line down the street would require many homeowners to "reverse their plumbing," which had previously been oriented to go out the rear of their homes, thus saving them thousands.

Nevertheless, the project will involve tearing up portions of Rose Valley Road, which was just re-paved within the past three years.

Government at its finest folks.

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

Sewer System Sales and Sewer Projects

Upper Pottsgrove Votes 4-1 to Sell Sewer System

Image from Screenshot

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.

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?

Borough Authority Has Say Over Sewer Sale in Upper

The Pottstown Borough Authority may have decided Tuesday night it has no interest in being among the bidders for the sewer conveyance system Upper Pottsgrove Township is considering selling, but that doesn't mean they won't have a say in the matter.

During discussion at Tuesday's authority meeting, board members briefly considered the idea of being bidders for the Upper Pottsgrove system, but quickly dismissed it.

"The authority could certainly qualify to buy it, but I doubt you would be top bidder," said Josh Fox with the authority's engineering firm, Herbert Rowland and Grubic.

Because the township is looking to the sale of the system to pay down debt; make its pension system whole and possible use the funding for new township facilities, it would be looking for the top bidder.

The township has issued a "request for qualifications," which is the first step in determining what entities, both public and private, are qualified to bid for the system. The decision to sell the system has not been made and will depend on the price.

Upper Pottsgrove has hired a public financing specialist called PFM, which is working on a share of the sale price, to undertake the investigation and solicit and qualify the bids.

Beyond the unlikelihood of the authority not likely being the high bidder, "I don't think we could handle it," said board member Tom Carroll, referring to all the responsibilities the authority already has, running both the water and sewer treatment plants.

But unlike other municipal systems that have lately been getting bought up by private companies, due largely to a legal change in how system assets are evaluated, Upper Pottsgrove does not control the treatment plant where its sewage is treated.

That honor belongs to the Pottstown Borough Authority.

There is a "sewer services agreement" under which the authority agrees to accept and treat the township's outflow and the authority would have to approve the re-assignment of that agreement to a new owner, or the new owner could negotiate a new agreement with the authority, explained Authority Solicitor Vincent Pompo.

Additionally, moving that agreement from a government body to a for-profit company would also require approval by the Pennsylvania Public Utility Commission, said Pompo.

"This is going to be a sticky wickett," said authority member David Renn.

Finance Director Janice Lee also pointed out that currently, the borough does Upper Pottsgrove's billing for water and sewer. If the sewer system has a new owner, it would complicate the usual remedy for non-payment, shutting off the water.

"I see this as a major issue," said Lee, who suggested the new owners would have to take on the task of billing as well.

She also noted that Upper Pottsgrove "owes the authority $400,000" for a sewer upgrade called a "siphon," which has not yet been paid and could cut into their profits from selling the system.

None of those considerations were raised Monday night, when Upper Pottsgrove Commissioners Chairman Trace Slinkerd told the board that things were moving ahead smoothly with the investigation of selling the system.

He said the Upper Pottsgrove has set a target for September or October to review bids on the sewer system.

Stormy Discussion

In the wake of a severe thunderstorm and flash flood that caused more than $1 million just to property owned by the borough, Borough Authority member Tom Carroll again raised the question of charging a fee for managing stormwater.

Pottstown's stormwater system was overwhelmed by
Thursday's storm. Here, water shooting up out of the system,
not in, forced this manhole cover off its fitting
at the intersection of East and North Hanover streets.

Authority Manager Justin Keller said the Manatawny Creek watershed was hit with about six inches
of rain in a single hour.

And although the Schuylkill River rose 13.2 feet from the storm, the water and sewer treatment plants, which are both located along the river, don't start having problems until the river reaches 13.6 feet, said Utilities Director Brent Wagner.

During the July 11 storm, this collapse arch behind a home on 

Walnut Street swelled and overflowed with stormwater.

Nevertheless, said board member Tom Carroll said the borough should again look at the idea of charging a fee to manage stormwater. The more impervious surface a property has, the more stormwater it sends into the system, the higher the fee is the theory.

In 2015, the authority paid $56,000 for a "Stormwater Master Plan," that would inventory all the borough's stormwater intakes, arches, outlets and storm sewer pipes.

One model for funding these anti-pollution and stormwater control measures is to charge property owners by the amount of stormwater that leaves their property.

That is one reason why many municipalities have adopted new requirements for containing and infiltrating stormwater back into the ground before it hits the streets and streams.

Erosion from the storm had made the sinkhole even bigger,

as seen in this July 12 photo.

Pottstown’s ordinance was adopted last July .

The owners of large parking lots, which shunt vast sheets of water into storm sewers, may soon find they are being charged for having the borough authority manage and treat it that water where currently they pay no more than the universal property tax rate.

“I’m not anxious to be the first town in the area to start charging for stormwater,” Authority Board
Chairman Jeff Chomnuk said in 2015, worrying it could discourage commercial investment.

But there is another worry -- a lawsuit.

When West Chester Borough adopted just such an ordinance, West Chester University refused to pay, saying the stormwater fee was a tax and, as part of the state higher education system, it was tax exempt.

The storm also opened up a new sinkhole in an alley off Airy Street 

between Spruce and North Hanover streets.

And when West Chester sued, the college sought to have it thrown out of court on that basis. But that argument failed and on Monday, a court ruled the suit could go forward, Pompo told the authority members.

Currently, Pottstown is waiting to see how that lawsuit is resolved, said Authority Manager Justin Keller. "I don't want to spin my wheels and spend staff time putting something together that the court ultimately throws out," he said.

Carroll argued the time spent waiting for the lawsuit to be resolved could be spent preparing for the eventuality that the new fee could be imposed, but Keller said that work is already done.

Making Your Own Energy

Another interesting item to come out of last night's meeting is a plan to make the Pottstown sewer treatment plant a "net zero" facility in terms of energy.

Photo ruefully stolen from The Pottstown Post (Sorry Joe.)

In other words, the authority voted to spend $34,000 on a feasibility study to see if changes could be made to the operation of the sewer plant that would allow it to use no more electricity than it can produce on site.

The study will look at the cost/benefit of changing over the system operations from aerobic digesters
to anaerobic:

• This would reduce pollutants in the effluent the plant discharges into the Schuylkill River; 
• which could reduce electric costs by no longer requiring blowers; 
• provide more methane to allow the plant to produce its own electricity and further reduce costs; 
• and use exhaust from idling septic trucks to provide heat to the digester process to reduce costs even more.

Josh Fox, who is with the borough's engineering firm of Herbert Rowland and Grubic, said another advantage is it would make what is now undesirable at the plant, things like grease and oil, more desirable because of the amount of BTUs it contains.

"All the worst stuff has a higher energy value," he said.

It could even make use of food waste.

Consider the case of spoiled milk, he said. Most grocery stores have it hauled away to a landfill, but "spoiled milk has a high BTU value and is full of the stuff the bugs (which digest the waste at the plant) love to eat," he said.

"It's pretty exciting," said Fox. "There are a lot of potential benefits."

And on that appetizing note, here are the Tweets from the meeting:

Not So Fast Upper Pottsgrove