Sale of Oxford Area Sewer Authority on hold for now
By Steven Hoffman
The sale of the Oxford Area Sewer Authority is on hold for now after the potential buyer formally entered discussions to merge with Aqua America, a privately owned water and wastewater utility company that serves more than 3 million people in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, Indiana, and Virginia.
The Oxford Area Sewer Authority was deep into negotiations to sell its assets, including the state-of-the-art wastewater treatment system, to DELCORA when the merger talks between that public municipal authority and Aqua America were announced more than two weeks ago. DELCORA, the Delaware County Regional Water Control Authority, owns, operates, and maintains wastewater systems in 42 municipalities in greater Philadelphia, mostly in Delaware County and Chester County, serving approximately 500,000 customers. The DELCORA board approved entering into a six-week, non-binding negotiation period with Aqua to discuss a potential merger.
Following that decision by the DELCORA board, the Oxford Area Sewer Authority Board voted to rescind its approval of the Asset Purchase agreement with DELCORA. The Oxford Area Sewer Authority initially pursued a sale to DELCORA because it is a public entity, not a private one like Aqua America.
By rescinding the agreement now, the Oxford Area Sewer Authority keeps its options open while DELCORA and Aqua America discuss the possible merger. The Oxford Area Sewer Authority is operated by four member municipalities—Oxford Borough, Lower Oxford Township, East Nottingham Township and West Nottingham Township, with each municipal assigning two people to serve on the sewer authority board.
According to David L. Busch, it’s business-as-usual for the Oxford Area Sewer Authority while the potential sale is on hold. Busch, the executive director of the Oxford Area Sewer Authority, was brought on board in early 2017 to help turn around the operations of an entity that was facing significant financial hurdles after taking out a $27 million loan from the United States Department of Agriculture (USDA) to modernize and expand the capacity of the wastewater treatment system.
While the expansion project got the Oxford area out from under a moratorium that largely paralyzed commercial and residential growth in the area for years, the Oxford Area Sewer Authority fell behind on the debt-service payments on the loan.
The Oxford Area Sewer Authority has made great progress with its finances in the last two and a half years since Busch and a group of new members joined the Oxford Area Sewer Authority board.
Busch explained that the operating budget is balanced and the Oxford Area Sewer Authority is paying all of the bills and the semi-annual debt-service payments to the USDA on time. The sewer authority is still behind about $1.2 million on the loan from payments that were missed in 2016, but efforts are underway for the sewer authority to sell some of the property that it owns to help pay down some of the debt.
Busch emphasized that customers of the Oxford Area Sewer Authority will not be impacted as a result of the sale to DELCORA being put on hold for the time being. There are no sewer rate increases planned at this time, although future increases in operating costs could necessitate increases in sewer rates. The Asset Purchase Agreement with DELCORA would have resulted in a three-year rate freeze for the customers of the Oxford Area Sewer Authority system, but increases to ratepayers could have come after that.
According to Busch, the Oxford Area Sewer Authority remains open to discussion with DELCORA concerning a possible sale of the system. The previous negotiations with DELCORA were undertaken, in part, because they are a public authority, not a private utility. According to Busch, the Oxford Area Sewer Authority board has stated previously that they are not interested in selling the system to a private firm.
The municipal ownership vs. private ownership of water and wastewater utilities is a major issue for municipalities as concerns grow about rising water and sewer rates in areas that are served by large water corporations that are accountable to their stockholders, and not the people they serve.