Monetization is the process of converting assets into economic value. Looking for options to generate greater revenue, municipalities and public sector entities have begun to consider the transfer to private operators of a greater variety of public assets than in the past. There has also been the development recently of more creative and profitable public-private partnerships. Continue Reading Generating Value from Public Assets
A bill introduced by Representative Kate Harper (R-Montgomery) would impose a new public meeting requirement on municipalities considering selling or leasing their water or sewer systems. The bill was recently approved in the House unanimously, and has been referred to the Senate Consumer Protection and Professional Licensure Committee.
House Bill 477 would require municipalities to hold at least one public meeting prior to entering into an agreement to sell or lease a municipal-owned or operated water or sewer system. The bill would also apply to systems operated by municipal authorities, if the transaction contemplated the dissolution of the authority by the municipality. The meeting would have to be advertised at least twice, on successive weeks, not more than 60 nor fewer than 7 days before the date of the meeting. If the system served customers outside of the municipality considering the sale or lease, public notice would also have to be provided in the municipalities where those customers resided.
Additionally, the potential purchaser or lessee of the system would be required to attend the meeting – presumably to present its plans for the system and to answer questions.
In the event the Senate acts favorably on the proposal, and the Governor signs it, the new public meeting requirement would go into effect in 60 days. Municipalities considering selling or leasing their water or sewer systems should keep a close eye on the status of House Bill 477 to ensure they comply with its requirements in the event it become law.
McNees attorneys Tim Horstmann, Ade Bakare and Kathy Pape recently provided an update on municipal storm water management to the membership of the Pennsylvania State Association of Boroughs. Their presentation addressed recent changes in Pennsylvania laws governing municipal storm water management in boroughs, permissible user fee structures, and additional funding streams that are available to municipalities to pay for necessary projects.
Interested in learning more? A copy of the Power Point presentation is available online.
For Pennsylvania municipalities facing a rising tide of costs from implementing storm water management plans, the available funding options vary depending on where you are and what you are – but that could change as soon as later this year. The General Assembly has passed several laws that authorize certain municipalities and municipal authorities to impose “reasonable and uniform” fees to fund storm water management plans – and several additional bills are pending that, if passed, would extend these funding mechanisms to municipal entities across most of Pennsylvania. Continue Reading New Funding Mechanisms for Municipal Stormwater Management
On May 18, 2017, House Bill 1405 was introduced into the Pennsylvania General Assembly. The proposed legislation, which would restrict a municipality’s ability to utilize revenue generated by a municipal electric system, would significantly impact 35 municipalities in PA that purchase wholesale power on behalf of residents and distribute the power through municipal-owned electric distribution system. Continue Reading Electric Costs in Ellwood City Spur Proposed Legislation to Restrict Use of Electric Revenue to Fund Municipal Operations
Are municipal pension costs eating your budget alive? Are streets, bridges, water and wastewater systems crying out for capital investment? Are public safety costs pushing your budget to the brink? If so, now may be the time to explore unlocking the value of your municipal assets.
Over the past five years, the Pennsylvania General Assembly has enacted several laws that have changed the landscape of municipal water and wastewater assets. These changes make the sale of water or wastewater assets to a public utility more attractive. These changes may also result in an increased sale price if your municipality decides to sell. Continue Reading Broken Budget? The Fix May be a Sale of Assets
On May 17, 2017, the Pennsylvania Environmental Quality Board (“EQB”) greenlighted a proposal that would substantially increase fees for public water suppliers regulated by the Department of Environmental Protection (“PADEP”). In addition to seeking the fee hike, the proposal would amend other regulations under the Pennsylvania Safe Drinking Water Act (“SDWA”), with some changes being even more stringent than federal standards. The proposal now will be published in the Pennsylvania Bulletin followed by a public comment period of at least 30 days.
Stakeholders should carefully review the proposal and consider submitting comments, including all community water systems, noncommunity water systems, and bottled, vended, retail, and bulk water suppliers. Those affected may include municipalities with water supply systems and businesses that supply water to the public or their own employees.
McNees attorney Steve Matzura recently covered for the McNees Energy and Environmental User Blog the proposal by the Susquehanna River Basin Commission (SRBC) of a new rule that would expand the scope of its current authority over projects that withdraw and use water in Pennsylvania, Maryland, and New York. Per Steve’s analysis:
The proposal would amend application requirements and SRBC’s review standards for projects, as well as add an entire subpart to its regulations for registration and reporting of “grandfathered” projects (which previously were not regulated). Water users should expect additional regulation and scrutiny of all projects that involve withdrawals of surface water or groundwater and/or consumptive uses exceeding SRBC thresholds, whether they are new, existing, or (now) grandfathered projects.
Steve’s complete analysis of the new rule can be found here. In particular, the public comment period on SRBC’s proposal closes on January 30, 2017. We expect further developments on this issue of interest to municipalities thereafter.
A recent decision by the Pennsylvania Public Utility Commission (“PUC” or “Commission”) confirms that Pennsylvania public utilities with combined sewer systems (i.e., systems that collect both sewage and stormwater) may incorporate stormwater charges in their service charges. While some public utilities have already been incorporating stormwater collection charges in their sewage rates, not all utilities have carried forth this practice. As a result, this decision could increase sewage rates for some large commercial and industrial customers experiencing significant stormwater flows.
On March 30, 2016, the Pennsylvania American Water Company (“PAWC”) and the Sewer Authority of the City of Scranton (“SSA”) filed an Application with the PUC to permit PAWC to purchase the SSA’s combined sewer system. As indicated above, combined sewer systems collect sewage and stormwater, so the PUC’s disposition of this Application would clarify the ability of a Pennsylvania public utility to include stormwater charges in its wastewater service rates. Although Administrative Law Judges David A. Salapa and Steven K. Haas recommended that the PUC reject the proposed Application, the PUC approved it on October 19, 2016.
As a result of the PUC’s approval, statutory enabling legislation was required. Senate Bill No. 881 was revived and amended to make necessary changes to the Public Utility Code. Specifically, the Bill amends the Public Utility Code to change the reference of “sewer” to “wastewater,” and expanded the definition of wastewater to include certain “stormwater.” This bill passed both chambers [October 26 (Senate) and October 27 (House)] and was signed by Governor Wolf.
The Bill provides as follows:
Wastewater. Any used water and water-carried solids collected or conveyed by a sewer, including:
(1) Sewage, as defined in Section 2 of the act of January 24, 1966 (1965 P.L. 1535, No. 537), known as the Pennsylvania Sewage Facilities Act.
(2) Industrial waste originating from an establishment. For the purposes of this paragraph, the terms “industrial waste” and “establishment” shall be as defined in Section 1 of the Act of June 22, 1937 (P.L. 1987, No. 394), known as the Clean Streams Law.
(3) Infiltration or inflow into sewers.
(4) Other water containing solids or pollutants.
(5) Storm water which is or will become mixed with waters described under paragraph (1), (2), (3) or (4) within a combined sewer system.
The term does not include storm water collected in a Municipal Separate Storm Sewer, as that term is defined by 40 CFR 122.26(b)(8) (Relating to storm water discharges (applicable to state NPDES programs, see § 123.25)), that does not flow into a combined sewer system.
This legislation, now codified as PA Act 154, allows Pennsylvania utilities providing wastewater service to include, in certain cases (i.e., combined sewer systems), stormwater charges into rates. While some Pennsylvania municipal wastewater service providers (e.g., Philadelphia Water Department) have been including stormwater charges in wastewater rates for some time, it will be much more commonplace with PUC-regulated service providers with this new legislation.
McNees Energy and Environmental attorney Aly Hylander assisted in the writing of this article.
The deal is reportedly for $23 million. Per The Patriot News:
The sale will eliminate $16 million in debt the borough has. Pa. American Water also agreed to invest $2 million in wastewater and other improvements in New Cumberland over the next five years.
Leaving aside the question of whether the Borough violated Pennsylvania’s Sunshine Law when it voted to approve the sale, did the Borough leave money on the table by fast-tracking a sale to PAWC? At least one other interested party thinks so:
Tom Rafferty, of Aqua, said that Aqua would have surpassed the bid the council accepted from Pennsylvania American Water, if the council offered an extension for the bidding process.
It was reported that the bidding period set by the Borough was only one month. At least one other interested party, Capital Region Water, the municipal authority responsible for delivering water and wastewater service primarily in the City of Harrisburg, also expressed concern about the short time-frame for bidding.
While $23 million sounds great, $25 million (or $27 million, or $29 million, etc.) is better. Unfortunately for the residents of New Cumberland, after a fast-tracked bidding process that failed to give adequate time for true competition in the bids, they’ll never know just how much the Borough left on the table with PAWC.