Delco council Dems: Is ‘fix’ in on DELCORA sale?
MEDIA >> After an hour discussion solely on the DELCORA situation, Delaware County Councilman Brian Zidek summed up his viewpoint: “This deal stinks.”
“Once again,” he said, “it sure looks like we have an offshoot of county government giving a no-bid contract to a long-term political donor to the Delaware County Republican Party for the benefit of Republican Party insiders. Our sewer system should not be partisan - and the people that are left to pay the bill for this are the ratepayers of Delaware County.”
In July, the Delaware County Regional Water Quality Control Authority entered into an exclusive due diligence period with Aqua Pennsylvania Wastewater to consider a merger or acquisition, due, in part, to costs it is facing in complying with federal mandates that have been in place for decades. That period ends Oct. 1.
Both Zidek and fellow Democratic county Councilman Kevin Madden called on DELCORA to hire an outside expert to evaluate what options are available for the authority to address the situation.
“I have been worried that we are putting the cart before the horse,” Madden said. “The first thing that’s quite often done is that you hire an advisor and you look at not just narrowly ‘It’s time to sell’ but ‘What are our options for addressing what the situation is?’”
He suggested that another form of financing may be more advantageous than a sale, particularly with interest rates as low as they are.
Zidek noted that DELCORA Controller John Pileggi stated that the rate the authority would pay is
2.935 compared to Aqua’s
4.43 percent.
“Their cost of capital is
50 percent higher than our cost of capital,” he added.
Zidek also went a step farther, saying DELCORA’s position is now compromised and county council should get its own analysis of the situation.
“I would submit that county council as the governing authority of this municipal authority should hire an independent consultant to evaluate our options,” he said. “DELCORA is conflicted and, thus, is not in a position to conduct this review.”
Madden persisted, “Will there be a report that is shared with the public before any transaction is contemplated with Aqua or anyone else that shows an analysis of the range of options that DELCORA has in front of them, outside of a sale? Is that something we’re going to see?”
“I’d say we’ll take it under advisement what you’re saying,” DELCORA executive director Robert J. Willert, a Ridley Township Republican, said. “We’ll look at it and see if we need to do that.”
Madden and Zidek also suggested that the process be made more competitive.
“The part I keep saying is, ‘Why not? Why not bid it out? What’s the harm?’” Zidek asked, after saying that Aqua has “very little experience in wastewater treatment.”
“I keep asking myself what are DELCORA and Aqua hiding,” the councilman said.
In addition, Zidek questioned DELCORA’s $1.2 billion price tag of costs facing the authority over the next 20 years.
“It seems to me that that’s materially different from that which DELCORA gave us before - off by hundreds and hundreds of millions of dollars,” he said. “At least $400 million of this has nothing to do with these regulations and would be the ordinary cost of running the wastewater treatment plant ... When you put it in that context, it’s a bit of scare mongering.”
Willert explained that whether it’s costs related to complying with the mandates or operational costs, those costs would still be passed onto the rate payers.
County Council Chairman John McBlain, a Republican, said what matters most is how this will all impact DELCORA rate payers.
“I personally don’t think a resident of Delaware County cares whether it’s Aqua, Barnum & Bailey or DELCORA that provides the service dependent on what the effect is,” he said. “(What matters is) are they effectively taking away the wastewater from the resident’s home, are they treating it and delivering clean water back into our environment and are they doing it at a price that is acceptable to me?”
DELCORA’s consultants
— Delaware County Councilman Brian Zidek
said the due diligence process was exploratory.
“The cart is not before the horse,” Tom Wyatt of Obermayer, Rebmann, Maxwell & Hippel said. “We’re trying to find out if a sale makes sense.”
In the last two weeks, Wyatt and his firm were hired, as well a AquaLaw of Richmond, Va., and financial analysts Pennsylvania Financial Management, by DELCORA to provide additional expertise in the process.
Madden said he was hopeful that in the next three weeks, before the next council meeting, he and the other council members could create a resolution to address changes they’d like to see DELCORA make in their process.
In his comments, Zidek held his position.
“This process is awful,” he said. “There needs to be an independent expert hired to analyze the wisdom of this issue ... It feels to me like the fix is in. This needs to stop and we need to start over.”