New Garden announces distribution of proceeds from sewer sale01/27/2021 10:53AM ● By Richard Gaw
By Richard L. Gaw
Even before the proceeds from the nearly $30 million sale of its sewage system were forwarded into New Garden Township’s account in late December, speculation ran rampant as to how the township would distribute portions of that big pay day, and to whom.
At their Jan. 19 online meeting, the Board of Supervisors sliced up a bit of those proceeds in the form of major contributions and necessary payments. At the time of the transaction’s closing on Dec. 21, 2020, the final agreement of sale came to $29,756,567.05, which was wired into the township’s account, and also stipulated that the $3.58 million remaining in the township’s Sewer Authority account would be placed in the township’s capital fund.
From that dollar amount, the township plans to funnel $21,774,761 back into the township’s investment portfolio, for possible use over the next decade to 20 years. The sum is expected to draw an annual one percent return in interest – about $210,000 a year.
The township will then allocate $2,307,871 toward expenditures, which will include $250,000 for St. Anthony in the Hills; $238,000 for the Toughkenamon Streetscape Improvement Plan; $35,000 for the continued clean-up of the Broad Run Creek; $210,000 for the development of the Scarlett Road Trail; and an additional $1,574,371 that will be directed toward depreciation expenses.
The township will also direct $5,417,369 of the sale toward paying off loans, including $4,577,368 to pay off the total costs for the construction of the facility now occupied by the Southern Chester County Regional Police Department. Additional reimbursements will include $665,000 for the cost of Phase II of the expansion of New Garden Township Park; and $175,000 for the township’s sewer revenue fund.
Board chairman Pat Little said that other potential expenditures in the future may include the improvement of the Newark Road-Baltimore Pike intersection; the Newark Road Main Street initiative; the development of the Reynolds Road Trail; the design and construction of the Sprout Trail; and the rehabilitation of the Egypt Run and Bancroft bridges.
The distribution figures proposed during the presentation were for budgeting purposes only, and the actual final amounts may change as the process continues.
Kennett Library to receive $100,000 annually for next five years
During their presentation, the board approved an annual $100,000 contribution to the Kennett Library and Resource Center for a period of the next five years. The payment will be rolled into the library’s campaign fund that is currently raising the costs needed to pay for the library’s new $15 million, 29,257-square-foot facility in Kennett Square, which is set to begin construction in March and be completed in December of 2022.
The five-year $500,000 total contribution from the township to the Kennett Library, while sizable, still falls short of a non-mandatory payment option that was proposed by the library to the municipalities the library serves in 2019.
Under the guidelines of the proposal, New Garden Township would make an annual contribution of $241,478 over a three-year period to the library’s capital campaign – totaling $724,433 – that would account for about 4.8 percent of the costs needed to construct the new facility.
The township, however, did contribute to the library beginning in 2017, when by a vote of 1,014 to 651, a referendum was passed by township residents in November of that year that created an annual dedicated tax of about $20 per household that generated an additional $80,000 in annual revenue to the library.
“I know it’s not the full amount that the library is requesting, but I think it’s a good place to start at least, and maybe in the future if we have more money, or if we get a windfall, maybe we can reexamine [the amount of the township’s distribution],” said supervisor David Unger.
Jim DeLuzio, the township’s representative on the library’s board of directors, thanked the supervisors for their contribution.
“Anything towards constructing our new Kennett Library and Resource Center will see every penny utilized for the benefit of our community,” he said.
The board also approved the allocation of up to $50,000, that will be used to pay for the upgrade of zoning and codes software that will be used by township administration.
Nearly five-year journey to distribution
Arriving at the distribution of proceeds from the sale of its wastewater system was a long time in waiting – nearly five years, in fact.
In August of 2016, the township’s Sewer Authority and Aqua Pennsylvania Wastewater, Inc. (now Essential Utilities, Inc.) entered into an agreement to purchase the township’s sewage system for $29.5 million. On June 29, 2017, the Pennsylvania Public Utility Commission (PUC) approved Aqua’s application.
Finalizing the agreement of sale, however, ran into a more than four-year buzzsaw of negotiations, legal snags, lawsuits and other delays that involved the township, the PUC, the Bureau of Investigation and Enforcement, the Commonwealth Court and the Pennsylvania Supreme Court.
The delay reached its peak in Oct. 2018, when the PUC's Office of Consumer Advocate sued the PUC in Commonwealth Court, claiming that the sale of the township sewer system would lead to a severe escalation of rates among Aqua customers not only in New Garden but across Pennsylvania.
Subsequently, the township sent a notice to all wastewater system rate payers in the township that signified that the long journey to finalize the sale was coming to a close. On Feb. 21, 2018 the notice stated, Aqua filed the proposed final settlement with the PUC for the completion of the sale, pending final approval from Hon. Administrative Law Judge Steven K. Haas and the PUC.
The last hurdle in the final approval of the sale was to allow for parties who were opposed to the transaction the opportunity to submit written comments to the PUC before April 8, 2020, which were to be reviewed by the PUC before the sale could become final.
Getting to the finish line of the agreement, however, has been well worth the wait, Little said.
“After we got through doing our budget for 2021 and going through this process, it’s fair to let the residents know that the township is in very good financial shape,” said Little, who gave credit to past and present supervisors, township managers and department heads. “I know we are in the top two or three percent of [municipalities] in the state, so [there are] a lot of accolades for that.”
To contact Staff Writer Richard L. Gaw, email [email protected].