Allentown Mayor Ed Pawlowski announced on April 5th that the Lehigh County Authority, a non-profit organization that already provides water and sewer service to more than 20,000 customers in the Lehigh Valley, was the highest bidder for the Concession Lease of the Allentown Water and Sewer Systems.
“We believe we have an agreement with very favorable terms for the City with operational standards that exceed those that are required by state and federal law,” said the Mayor. “Through this lease/concession the city will retain and continue to own and maintain the City’s Water Supply, our water reservoirs and wells. This was a highly competitive, transparent process and we produced a tightly written agreement – with many safeguards protecting the City – to wisely use these assets to save Allentown from a very serious and devastating financial crisis.”
During his State of the City address in January 2012, Mayor Pawlowski outlined the staggering unfunded police and fire pension fund and emphasized that if not addressed, the minimal payment for the city’s pensions will consume more than 30% of Allentown’s entire general fund by 2015 and lead to an unavoidable and absolutely unaffordable tax increase to pay these rising pension costs. The Mayor also stated that he believed the City could develop a plan whereby they could come close to fully funding our pension plans in a safe, prudent and financially sound way. Pawlowski proposed leasing the city’s water and sewer systems for 50 years in exchange for an anticipated $150 million to $200 million payment that would go toward those pensions.
On April 1st, the City opened the bidding process at consultant Professional Finance Management’s office in Harrisburg. The city received five bids from four bidders, with the Lehigh County Authority (LCA) submitting the highest bid. The bid must now be approved by City Council in the form of a resolution. Council is expected to vote on the resolution by the end of the month. Upon approval from council, the city will then proceed to move toward a successful closing.
During the last several months, Mayor Pawlowski made four presentations about the water lease at various locations across the City, and City Council has listened to public comment and answered questions about the water lease at virtually every meeting since last fall.
“I met with every organization that would meet with me,” said Pawlowski. “I answered on a daily basis every email and Facebook post sent to me, and worked with the best legal, financial and utility professionals that were brought on board to help the city to better understand and make the most from this option. Detailed and extensive information has been made available on the city’s website since the beginning of this process. We have engaged the public in every step of this process from the very beginning to keep them well-informed. I’m looking forward to our new relationship and working with LCA in the anticipated transition process,” he concluded.