The Times Herald (Norristown, PA)
$75M sale of Limerick sewer system completed
LIMERICK » The long-delayed sale of the Limerick Township sewer system to a private utility company for $75.1 million has finally been closed, township supervisors were informed this week.
The sale to Aqua Pennsylvania was approved by the Pennsylvania Utility Commission on July 13. The closing on the sale occurred on July 25, Assistant Township Manager/Treasurer Beth DiPrete said.
The system has two treatment plants, one on Possum Hollow Road and the other on King Road, as well as 18 pump stations and miles of underground pipe.
DiPrete said after deductions were made to the sale price to pay off a $3.7 million sewer bond incurred by the sewer authority, and other debts by the township, that the net gain for Limerick is $70,489,941.
Supervisors’ Chairwoman Elaine DeWan said the board decided to sell the sewer system because of the potential for increased operating costs, and the need to pay for a number of major capital projects driven by the burgeoning population.
“When I moved here in 2001, there were 9,000 people and now there are 19,000,” she said.
One of those capital projects can be seen at 646 Ridge Pike, where a new $10 million township and police building has risen where the former township building once stood. The township has been operating for months out of temporary quarters on South Limerick Road.
Plans call for the township to move back into the new offices on Aug. 15, when the township will be closed for business.
DiPrete said the township borrowed $6 million for that project because of the delay caused by the PUC in obtaining the money from the sewer system sale. “We initially thought it would close about December of last year,” she said.
Another $4 million was borrowed to pay for the new public works garage built behind the new township building.
DeWan said the township built a new Limerick Fire Station on Ridge Pike and intends to undertake a $2.5 million renovation of the Linfield Fire station. Both fire companies are in the process of merging into a single company, but both stations are still needed, she said.
She said the sale will also fund other major capital projects, such as improvements to the intersection of Royersford Road and Linfield-Trappe Road.
“To pay for all that would have required us to double the township’s taxes or more,” DeWan said.
The sale was made easier, said DiPrete, by a change in Pennsylvania law on how the value of such facilities are calculated.
The transaction falls under the recently enacted Act 12, which allows municipalities that own water and wastewater systems to sell their systems to regulated public utilities at fair market valuation.
“Aqua is thrilled to welcome our new Limerick customers and employees,” Aqua America Chairman and CEO Christopher Franklin, said in a prepared statement.
“This purchase was a collaborative effort that will allow us to bring benefits to the Limerick community by leveraging expertise in compliance, large-scale purchasing power and efficiencies in a larger, regional operation.”
Including Limerick, Aqua America has four fair market value asset purchase agreements in place, with Cheltenham, East Bradford and New Garden townships in Pennsylvania.
Also aided by Act 12, Exeter Township in Berks County sold its sewer treatment plant to Pennsylvania American Water Co. for $96 million earlier this year.
In the same prepared statement, Aqua Pennsylvania President Marc Lucca says his team will bring a sharp environmental focus to the service they provide for Limerick’s residents.
“It’s imperative we return treated wastewater back to our rivers and streams cleaner than when we first take it out,” Lucca said. “I welcome our new employees who’ve done a great job ensuring the Limerick system is compliant and well maintained, and look forward to serving our new customers.”
The sale of the Limerick system, which serves approximately 5,400 wastewater connections, comes with some historical baggage.
The township took over operation of the sewer system from the Limerick Sewer Authority in 2008 in what might be described as a hostile take-over and only after a protracted fight between the two.
Limerick Township Municipal Authority was created by the Limerick supervisors in 1966 and operated as an independent municipal authority.
In March, 2008, one month after the supervisors moved to dissolve the authority, the authority filed a court injunction to prevent the township from taking over the authority.
The township argued said such a power transfer would achieve cost savings for Limerick in the long run, while those representing the authority said pure politics were at play.
Much of the political accusations were aimed at former supervisors chairman David Kane, who was sentenced to four years in federal prison in 2012 after pleading guilty to filing a false income tax return, failure to file income tax returns, tax evasion and mail fraud.
Kane was a member of both the authority board and the board of supervisors and after he admitted publicly he wanted to install former supervisor Frank Kotch as sewer authority administrator, as well as install a member of Township Solicitor Joe McGrory’s law firm as the authority solicitor, he was accused of cronyism.
But ultimately, the issue was resolved in the township’s favor, after thousands of dollars in legal fees had been accumulated, and the transfer moved ahead in September of 2008.
Flash forward to 2016, when the Board of Supervisors unanimously approved the $75.1 million sale of the township sewer system to Aqua Pennsylvania Wastewater Inc.
The sale, which had been discussed previously, but not seriously, got more serious after the passage of Act 12 and the offers for the system started coming in much higher.
Aqua’s $75.1 million bid came in 43 percent higher than the other two offers, includes an additional $400,000 for future developments and requires that sewer rates not be raised for three years.