Seeking to block the sale of a sewage system, residents of a Montco town organize a new local government

A revolt by Montgomery County city residents who are unhappy with the privatization of their city’s sewage system moved into uncharted territory this month with the creation of a committee to rewrite the city government’s bylaws to block the sale of the city’s wastewater service.

The Towamencin Township Government Study Commission, which was created after 61 percent of voters approved it in November, wants to draft a bylaw to make it illegal for the city’s sewage system to be handed over to a private buyer. The hope is to get the proposal to voters in May. If approved, it would create an immediate impediment to the sale of utilities in the township of 18,000 that borders Lansdale.

The potential change to Towamencin’s local government constitution is perhaps the most dramatic step opponents in Philadelphia suburbs have taken to prevent the sale of utilities, which have surged since the passage of a 2016 state law, known as Act 12. The Act was designed to encourage the consolidation of public water and wastewater services under private ownership. It has sparked bidding wars for municipal services and also pushbacks from customers whose rates have risen sharply, in part to compensate buyers for high purchase prices.

» READ MORE: Florida company’s $115 million sewage bid shocks suburban Philadelphia city

It’s unclear whether the new legal strategy could derail the Towamencin Board of Supervisors’ 4-1 decision in May to sell the city’s sewage system to NextEra Water, a giant Florida energy and utilities company expanding into Pennsylvania. But the new charter, if approved, could at least stall the transaction in court for years and, if successful, could pave the way for other cities to stand in the way of privatization.

“If the charter change is approved and steps are taken to complete the sale, they will definitely be denounced,” said Kofi Osei, who was elected to the study commission and named its chairman. But if the city tries to cancel the agreement to sell the assets, NextEra Water could also sue the city for breach of contract.

“It’s obviously untested, but we think it has a good chance of standing up to a challenge,” said Lauren Gallagher, an attorney who advises the study committee. Gallagher is a partner at Rudolph Clarke LLC, a Philadelphia suburban law firm representing cities and municipal authorities.

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“A house rules charter is a big hammer to a single issue,” said Gerald E. Cross, a senior researcher for the Pennsylvania Economy League’s central division in Harrisburg, who has advised several municipalities and counties that have adopted the rules. house rules cards. “But if it’s a big deal, the voters are the ones who decide to wield that hammer.”

Organizers of the Towamencin effort say they launched the charter change campaign after elected city officials defied protests and voted to sell the system to Next Era Water, whose staggering $115.3 million bid was 25% more than the next highest bid. NextEra owns no other Pennsylvania utilities and appeared to be overpaying for the system to establish a foothold in the state.

Towamencin officials said the decision to sell the sewage system was a no-brainer. industry. Supervisor Richard Marino called the sale “a generational opportunity to reboot and restore our finances for the foreseeable future.”

But opponents saw the sale as a mechanism for city officials to write a blank check on the backs of wastewater customers, a tax hike disguised as a sewage rate increase that would benefit private investors.

“It seems like sort of what home rule is meant for,” Osei said. If successful, he hopes Towamencin’s home governance campaign will become a model for other cities opposed to the privatization of utilities, though he suggests enacting the measure proactively rather than waiting for elected officials to quietly stage a sale of utilities. public services.

Towamencin activists said they were inspired by a 2020 effort in Norristown, where the city council voted to sell its sewage system for $82 million to Bryn Mawr’s Aqua Pennsylvania, the largest private water operator in the suburb. of Philadelphia. A city opposition group has collected more than 2,000 signatures that would have forced a recall referendum on the runoff. Aqua left rather than face likely electoral defeat.

Norristown already had a house rules charter which allowed for referendum petitions. Residents of municipalities such as Towamencin, which operate under state government rules, do not have the same power to repeal the measures.

Norristown’s opposition group, Neighbors Opposing Privatization Efforts, or NOPE, helped organize a public awareness campaign in Conshohocken against a proposed sewer sale in 2021, prompting the city council to abruptly end the sale talks. NOPE also advised the residents of Towamencin.

» READ MORE: In Philadelphia suburbs, sewage systems are up for sale and citizens are pushing back, fearing rate hikes

Montgomery County’s lesson is that one of the most powerful tools for thwarting a sale is to organize political opposition before a governing body makes a formal decision to privatize. That was evident in Bucks County this year, where the Bucks County Water and Sewer Authority announced in July that it had agreed to negotiate exclusively with Aqua to sell its sprawling system for $1.1 billion. The Bucks County Commission reversed the deal just two months later after strong objections were voiced by local elected officials and the public.

But in several cities, residents took notice of sewer sales only after the transactions were approved by the Pennsylvania Public Utility Commission (PUC), which looks at whether a deal serves the public interest and determines how much of the sale price can recover the buyer. in the tariffs. The PUC has not rejected any Act 12 takeovers so far.

This year the PUC approved a statewide rate increase for Aqua Pennsylvania that has seen customer bills soar as much as 98% in five cities whose sewage systems Aqua has acquired in recent years. In New Garden Township, Chester County, the first council service acquired under Act 12, bills have risen 90% this year and several outraged residents have made formal complaints to the PUC.

Leaders of an opposition group of New Garden citizens called Keep Water Affordable, which only formed after the sale was completed, acknowledge there is now little they can do to turn it back.

“We’re at a tipping point here on what to do next,” said Bill Ferguson, a leader of the opposition New Garden group. Its leaders are focusing their energies more on trying to rally public support to block Aqua’s proposed $410 million takeover of the Chester Water Authority, which would impact New Garden and 32 other cities in Chester and County counties. Delaware. That sale was challenged in the Pennsylvania Supreme Court.

In another Chester County community, Willistown Township, opponents of the city’s $17.5 million sale to Aqua are pointing to a Commonwealth Court appeal filed in August by the Pennsylvania Office of Consumer Advocate, which challenged the approval of the sale by the PUC. The consumer advocate says the sale will not deliver “affirmative public benefits” and would instead hurt all Aqua customers with higher fares.

Opponents of the sale are lobbying Willistown supervisors to terminate the deal under a provision in the Aqua deal, which allows either party to cancel the contract if it isn’t consummated by early 2023. Molly Perrin, who was elected to the board of supervisors in 2021 after the sale was signed, she said she would vote to terminate the deal. The other two supervisors, who voted to sell, did not indicate a rethink. William R. Shoemaker, the chairman of the board, declined to comment through a spokesman.

In Towamencin, the Home Rules charter campaign has strained community ties.

Opponents of Towamencin’s charter campaign—they don’t actually call themselves supporters of selling the sewers—questioned the community commitment of their neighbors who organized the charter campaign. They focused their attention on Osei, whose parents are Ghanaian immigrants. He was born in Kansas and moved to Towamencin about three decades ago as a child. Osei is also a member of the Democratic Socialists of America, a leftist political party, as is David McMahon, who founded NOPE in Norristown.

“That scares me,” said Mary Becker, vice chair of the Montgomery County Republican committee, who led the unsuccessful effort to defeat the paper vote in November under the banner of TRUST, or Township Residents United Serving Towamencin. “I volunteer with many people who come from socialist countries and are terrified that our country is leaning towards socialism.”

Osei dismissed Becker’s comments. “The NOPE project is very impartial,” she said. Osei said he was the only democratic socialist on the list of seven candidates for the government’s study commission, which he said included two registered republicans. “Whatever the commission does should be communicated to voters,” he said.

Towamencin’s proposed charter change would be modeled on a 2018 measure approved by Baltimore voters that bans the privatization of its water and wastewater systems. Osei said the charter change committee intended to draft a home government charter that changed as little as possible in the township’s existing government, except for the ban on the transfer of utility assets to private owners, which Towamencin has yet to do to finalize the sale .

“This is a big process, and we’re looking to do it in three months,” he said. “We don’t want to make big changes that may not be what we want. I think we might lose some votes if the changes are too big.

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