Norristown holds information session for proposal to sell

NORRISTOWN » The proposal to sell the Norristown Municipal Waste Authority to Aqua Pennsylvania, Inc. got its first meeting on Tuesday night, albeit a virtual one due to current stay-at-home orders in place from the state that has restricted public meetings.

This informational session with municipal leaders, representatives from Aqua and Public Financial Management (PFM) was the first to focus on the sale since the municipality received a reported bid price of $82 million in February for the aging municipal infrastructure system. Aqua was touted during the meeting as an “experienced” operator that is heavily regulated by the Pennsylvania Public Utilities Commission (PUC).

Selling of the NMWA falls in line with a recommendation issued in a grant-funded 2019 report for Norristown by the National Resource Network to eliminate the “structural long-term deficit” brought on by the authority if the municipality doesn’t do anything different as a government entity. Current sewer debt of the authority is estimated at over $20 million according to data presented at the meeting.

So far, a projected date by which the Municipal Council of Norristown will approve an ordinance accepting Aqua’s bid and selling the authority has yet to be made.

The possibility of selling the sewer authority started in Aug. 2017. One year later, requests for qualifications were sent out to determine market interest in the authority, yielding two responses including Aqua. An extensive review of agreements, tour of assets, and other due diligence proceedings occurred through Jan. 2020 when a request for bids was issued to the two pre-qualified firms that were interested in purchasing the system. Aqua posted a bid to the municipality in February for $82 million.

In addition to the proposed sale price, Aqua will invest another $10 million into the system’s infrastructure which will be reflected in an increase in rates using a “gradualism” model instead of a “rate shock” surge. The cost of the improvements would be spread over Aqua’s entire network of customers if the application Aqua files with PUC under Act 11 (to implement a Distribution System Improvement Charge) is approved.

Current municipal wastewater rates will be adopted by Aqua when the transaction occurs. Only the PUC can approve and determine customer rates and change only after public hearings and other proceedings as required by law.

American Water Works will continue to be the local water service provider.

Of the potential benefits to the municipality through the proceeds of the sale include alleviation of municipal debt, mandated offers of employment with Aqua for the waste authority’s 17 employees and to provide some financial stability and amenities to the taxpayers of Norristown.

The following possibilities from the proceeds of sale were created among municipal leaders including council:

Sewer rate stabilization fund; property tax stabilization fund; economic development initiatives; pay down debt; contribute to pension liabilities; public works operations/facility; park improvements; Recreation Center renovation/expansion; Municipal Hall renovations; Norristown Fire Department consolidation; and a scholarship fund for Norristown high school students.

“These are thoughts and ideas the council has been discussing as potential uses of the funds should they make the decision, ultimately, to sell the system,” said Norristown Municipal Administrator Crandall Jones. “(These) are all in line with that was the final report recommendations from the National Resource Network.”

“When Norristown began this exploration to determine the overall benefits, the kind

of benefits that would be realized by the residents of Norristown if the sale would happen… we feel that the funds that will come to the municipality will accomplish many, if not all of the goals, that we heard throughout the presentation tonight,” said Scott Shearer, managing director at PFM.

Shearer added that council is currently being asked to consider the selling of the NWMA only. What to do with the proceeds will develop through meetings with the community until the sale of the authority closes (this could be far out as 12 months after council approves the sale).

Video of Tuesday’s meeting has been posted on Norristown’s YouTube page at youtube.com/user/ NorristownTV.

Questions from the public about the potential sale can be sent to PIO@Norristown.org. The questions and respective answers will be posted onto the municipality’s website for public review at Norristown.org.