Township's sewer sale date extended to 760 days
By Richard Gaw
On Aug. 16, 2016, the New Garden Township Board of Supervisors gave final and unanimous approval to the sale of the township's sewer system to Aqua Pennsylvania Wastewater, Inc. for the price of $29.5 million. At its June meeting however, the board delivered the news that the sale date for the transaction, originally scheduled to be finalized in one year, has been delayed.
In a letter sent on June 5 by Aqua president Marc Lucca to township solicitor Vince Pompo, the township, its sewer authority and Aqua mutually agreed to extend the date of the sale of the township's sewer system from 365 days to 760 days.
The reasons for the continued delay in the sale are found in the need to interpret the provisions included in Pa. Act 12, signed into law on April 14, 2016, which establishes guidelines in the evaluation of acquired water and wastewater systems in the state, and establishes fair market values for the sale of these utilities.
Following the original agreement of sale with the township nearly two years ago, Aqua filed an application for the sale with the Public Utility Commission (PUC), in order to gain PUC approval for the amount of the sale. Subsequently, the Office of the Consumer Advocate – an independent agency that reviews applications of this kind – filed protests against the application and, as a result of the protests, the application was forwarded to an administrative judge, which then led to hearings on the application for sale.
The administrative law judge then rendered a recommended decision and, subsequently, the PUC approved Aqua's application and the final cost of the sewer sale. Soon after, the Office of the Consumer Advocate appealed the PUC's approval in Commonwealth Court, where an oral argument date to hear the appeal is scheduled for Sept. 12.
An official statement by Aqua, sent to the Chester County Press on June 25, reads: “After Aqua Pennsylvania's application to acquire the New Garden wastewater system was approved by the PUC, the decision was appealed to the Commonwealth Court by the Office of Consumer Advocate, where Aqua and the PUC have been working to ensure affirmation of the PUC's original approval. Aqua and New Garden have extended the agreement of sale as the appeals process continues.”
“We made an agreement and we're moving forward,” said board chairman Randy Geouque. “I think that Aqua wants to move this forth as quickly as possible. We're the first municipality [in Pennsylvania] to sell its water system, and so they are testing the bells and whistles of the act to make sure that it's going through the proper procedures. Five years from now, transactions of this kind will be able to be expedited more quickly because we have gone through that process.”
Once the sale eventually goes through, the township will reap the financial benefits of the transaction.
Aqua will contribute $20,000 toward the township's closing costs, assume responsibility for the system's permits and assets, and be responsible for the provision of wastewater service to customers. Aqua will also complete all modifications, improvements and requirements, in order to meet all regulatory agency requirements, and make all repairs to the sewer system's infrastructure, which would save the township from having to shell out an estimated $12 million over the next four years, as specified in the New Garden Sewer Authority's five-year plan.
Proceeds of the sale will be targeted toward paying off the debt on the sewer system, reserving funds to satisfy pre-existing obligations of the system; establishing capital funds for vehicle and equipment purchases; funding several capital improvement and maintenance needs, such as repairing roads and bridges; establishing a tax stabilization fund to offset future real estate tax increases; and providing funding for the township's park.
Proceeds from the sale are also expected to go into the construction of a new home for the newly-formed Southern Chester County Regional Police Department, a merged cooperative between the New Garden Township Police Department and the West Grove Borough Police Department.