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Posted on: June 7, 2021

BOS Statement Regarding The Sanitary Sewer System Sale

June 7, 2021

 A number of years ago, the Board of Supervisors began considering the sale of the Township-owned and operated sanitary sewer system. There were a number of reasons for this: 

 Operating a sewer system is increasingly complex and not a core competency of township government. 

  • With environmental regulations always evolving, the compliance requirements are changing constantly and the need for costly legal advice and support are escalating. Our concern is to have the system operate with the highest standards of environmental safety and compliance.
  • The overall operating costs for the system are rising faster with each year and many, if not most, of these costs are essentially beyond our effective control. The Township cannot run the system at a deficit and rate increases could be substantial on a year to year basis. The number of rate payers on the Willistown system is relatively small versus other local townships, which is why our system user rates are comparatively higher.

The Board therefore sought bids from over 100 companies. In the end, 2 companies chose to enter the process and one, Aqua America, made a bid. Aqua’s bid was $17.5 million for the entire system. This bid is nearly 5 times the value of the system on the Township’s books and after a number of public meetings and discussions, the Board of Supervisors accepted the bid at a public meeting on December 14, 2020. After retirement of sewer system debt and closing costs, the net to the Township will be approximately $16.2 million. The Board believes that the Aqua sale price is good return for the Township’s asset and that Aqua is a first-class utility operator who can be relied on to operate the system to the benefit of the sewer customers in Willistown. One of this Board’s highest goals is to ensure the best environmental stewardship possible for Willistown Township. Bryn Mawr based Aqua has a robust sustainability and environmental policy with detailed wastewater standards and performance metrics evidencing this commitment.

Through the entire process, all discussions were held in public meetings, which were advertised through direct mailings, social media, Township publications and message boards, all encouraging public participation and engagement. 

From the very start of the Board’s consideration of the sewer sale, it has been the intent of the Board to set aside some part of the sale proceeds to the benefit of the system rate payers. The thought was to create what is defined as a ‘restricted’ fund that would be established with a specific and well-defined purpose and which could not be used by a future Board of Supervisors for any other purpose. This fund was to have two purposes: first to stabilize rate increases in the years following any sale so that rate payers did not see sudden, substantial increases in any one year, and second to provide those sewer customers with grinder pumps with at least one replacement pump, when needed, at no cost to them. When the Board idea was discussed, a number of individuals objected, essentially seeing the Board’s plan as insufficient. In order to reconcile the divergent views of rate payers, at the same December 14, 2020 public meeting as Aqua’s bid was accepted, the Board of Supervisors formed a committee to review the various points of view and to make a recommendation to the Board. The committee consisted of five sewer rate payers and one non-sewer system user.

There were essentially two contending positions coming out of the committee’s meetings: 

The first position was that essentially all the $16.2 million net proceeds should be distributed as immediate, tax-free, cash payments to the system rate payers. All customers would receive $5,500, with grinder pump customers receiving an additional $2,500 for a total of $8,000. 

The second position, as expressed in the final recommendation of the committee, is that the proceeds should be set aside in three parts – the first as $5 million in a restricted fund to:  

  • Stabilize rate increases to no more than 3.6% in any year for 20 years following the sale so that rate payers did not see sudden, substantial increases in any one year
  • Cover the costs of grinder pump replacements
  • Resolve the issue of correctly measuring sewer usage by users on wells. 

An additional $5 million would be set aside to function essentially as a reserve in   the event that the rate and cost assumptions in the first part fall short – a ‘true up’ fund. 

The balance of approximately $6 million would go into the Township’s General Fund. 

All three of these parts could be spent only subject to the recommendations of a newly-established Sewer Advisory Board. This body would be composed of sewer system rate payers and would meet regularly to review the funds and make recommendations as needed to the Board of Supervisors.

On review, the Board supports the committee’s recommended plan. We seriously considered the cash payout plan, but Township Counsel indicates that a simple tax-free cash payout of nearly $16 million to current users would likely be unlawful on its face. The Board of Supervisors also sees the cash payout plan as unreasonable and inequitable as it offers no protection against future rate increases and grinder pump problems, nor resolves the metering of sewer usage by well households. The committee plan addresses all of the Board’s concerns and particularly ensuring rate stabilization for rate payers in the event of future increases for the next 20 years. This is our top priority: to protect our sewer rate payers now and into the future.

It has been suggested that no further public comment on this matter be received. The Board disagrees and will continue to receive public comment from Willistown residents on this or any other subject as always. The Board will be meeting on June 14 + 28, July 19, August 16, September 13 + 27, October 11 + 25, November 8 + 22, and December 13 + 27.

William R. Shoemaker, Chair
Robert T. Lange, Vice Chair

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