Oct 18, 2012

Pawlowski's Water Sham

Yesterday, Mayor Pawlowski gave a press conference in which he said that water rate increases would be capped to inflation, plus a moderate factor. Other pass alongs, which would increase fees, are any capital projects which exceed $2 million dollars. Practically any on going work will exceed $2 million dollars. The current project to replace water meters, which are only ten years old, cost $8,612,681.00. The current project to reline the water main under Union Terrace, and up Reading Road, cost almost half a million dollars a block. Currently, such system maintenance is financed by a state agency through loans amortized over 20 years. Under Pawlowski's five thousand page plan, homeowners will be paying up front as a private company deals with our aging water infrastructure.
UPDATE:Currently, Allentown utilizes all it's departments on a water main leak; Engineering, water, and street. A private company will bill the taxpayers for every private contractor involved in the same repair, and have an incentive to make every job contribute to the threshold necessary to pass the cost along to rate payers. For a City creative enough to form the NIZ to Transform Allentown, they should be able to meet the pension obligation without selling an asset operated by the city since before 1900.

18 comments:

Anonymous said...

I don't think any of these private water companies want to be A) constrained by the rate increase requirements nor B) the ridiculous requirement to keep all of the staff and their CBAs.

Together that says "makes no money".

michael molovinsky said...

@8:56, a simple survey of other communities which took their water private will confirm your conclusion. the contract will be written to appease the public, allow justification for city council, but be full of loopholes designed to satisfy the buyer. for instance, as i wrote, $2 million is chicken feed for any water project. currently, allentown utilizes all it's departments on a repair job; engineering, water, street, and park, if necessary. a private company will bill the taxpayers for every private contractor involved in the same repair, and have an incentive to make every job exceed the $2 million threshold.

Anonymous said...

5,000 pages?

Cool.

Obamacare was only two thousand eight hundred or so ...

... and EVERYBODY knows the bigger the Government, the better!

PROGRAMMED TO POM-POM FOR PAWLOWSKI

doug_b said...

It's obvious that if a private company can do the job, and make a profit, why can't Allentown do the same job, and pocket the 'profit'?

The reason is it can't be done. And all you residents will wind up paying a lot more - but it won't be a 'tax' it will be a 'fee'.

I bet if they do it, and get a wind fall of cash up front - they'll spend it all, and go deeper into debt.

Anonymous said...

This whole deal is dead wrong for every tax payer. I find it hard to understand how the people of Allentown could let this happen.

Andrew Kleiner said...

If you or your readers are interested in finding out more about the dangers of water privatization, from a more environmental perspective, check out Blue Gold. It's a solid documentary about this very prescient topic.
(http://en.wikipedia.org/wiki/Blue_Gold:_World_Water_Wars)It's on Netflix Watch Instantly.

This project is bad on all fronts for the City.

Anonymous said...

To my dear friends in Allentown,
Your mayor has said you will not see drastic increases in your water bill in the first years after the system is turned over to a for-profit-corporation.
Beleive him.
Those increases will not begin until such time as he, your mayor, has left Allentown and achieved his next political objective. Lt. Governor most likely.
Look for a skyrocketing of cost in your water bill and a decline in service to coincide with your current mayors departure.
Beleive me.
I am in a position to know.
Best wishes to you Allentown ,

A friend.

Anonymous said...

This shameful gambit will mark the end of more than a few political careers and the start of others.
One of the opponents of what is now commonly referred to as the Great Allentown Water Boondoggle will ride this right into the position regardless of the outcome of the GAWB.
Mark my words.

Anonymous said...

HOORAY FOR CITY COUNCIL!
Finally, some independent action.

Anonymous said...

POLICE• FIRE• WATER

I can't think of three more fundamental services in the public domain.

This issue transcends normal party bounds.
There is something in selling our water and sewer system for everyone to dislike.

michael molovinsky said...

@2:04, it's simply a political move by pawlowski, and supported by guridy, who approved the pension contract as a councilman. how ironic to have seen J.B. Reilly endorse it, when he is benefiting by the "creative" NIZ. where's the creativity for the taxpayers?

Anonymous said...

No question the value of the system will be reduced by the union contract protections and any pricing restraints.

The question will be to what extent these items reduce the value?

Less than $150 million is a no go?

Anonymous said...

@10:20am

WELCOME BACK KLEINER!

We missed you! The best news I heard all week.

monkey momma said...

If you don't support privatizing water, do you then support large property tax increases? I seem to recall reading 30% increases on prop taxes are in order if the water works is not sold.

I gotta say, I'm kinda leaning towards limiting property taxes. This town already has a big problem with devalued real estate - significantly higher taxes is not going to help the problem.

I own property in a different area that does have a private water supplier (AQUA), and the rate is not high. I do not agree that water prices will be as high as many predict. In any event, my own selfish financial motivations cause me to support privatizing water in Allentown if it truly does prevent huge property tax increases. Not a popular view here, I know, but one that property owners should consider when deciding their own stance on the matter.

No matter what, Allentown's financial future is certainly screwed, regardless of the water deal. I absolutely agree w/ Doug_b that our city leaders will spend any windfall right away and be even deeper in debt. I don't trust the bastards.

michael molovinsky said...

momma, this pension debt bubble in 2015 is nothing new or unexpected. although pawlowski wouldn't consider act 47 for political reasons, he springs these schemes one at a time. we have the transformational NIZ, the endorsement of the trash to energy plant, which doesn't reduce either the sewage costs or the trash costs to taxpayers, but makes money for a private company; now the water lease. in other words, we have over $300 million in projects, but need to sell our water? perhaps where you live development outpaced capacity to provide water and sewage, making investment by a private company an attractive idea. here in allentown, we have excess capacity, which we are able to sell to suburban areas. we could be meeting the pension obligation with revenue anticipation bonds and other vehicles. pawlowski is selling our primary asset because he can, not because we need to.

LVCI said...

"this pension debt bubble in 2015 is nothing new or unexpected"
I agree and why wasn't something done before the shit hit the fan?

Here something to think about. Take a look at Allentown's 2012 Budget

On Page #1- Over that last 6 years real estate taxes were flat. The mayor could have made small increases each year so it wouldn't be a sticker shock 35% increase in 1 year. Some of the additional revenue could have been set aside just as you say with "anticipation bonds".

Now look on Page #2-- In prior years "sewer capacity sales" revenue was applied to the city's general fund. In 2007 it was $2.433 Million, In 2008 it was $1.09 million and $2.3 million in 2009. Why after that was $0 generated in 2010, 2011 and 2012? That could have been another couple of million. What deals were struck? Why couldn't we have raised and set aside another $3 or $4 million in additional "anticipation bonds"? Why couldn't we still do that rather then leasing it?

What about the Casino fees we never had before 2009? In 2012 we budgeted for $4.09 million. Why not take some of this unexpected windfall and apply it too towards the anticipated pension crises?

Instead of combining incremental cost savings while at the same time setting aside funds in anticipation we failed to increase sewer capacity sales rates. Or make small annual increases real estate taxes or set aside even a portion of the casino windfalls. On top of that we've set aside 110 acres (the NIZ) that will generate $0. That's million$ more out of the revenue stream. One could have managed the NIZ better if it were done in depressed areas where far less income would have taken out of the mix rather then the present NIZ location.

Which brings me to another point somewhat off topic. We are told 1,000's of new workers and sports fans will be spending their money downtown after the completion. This will have a spill over effect and generate additional tax revenue. That's only true if the workers and fans spend outside of the NIZ zone. Since there will be shops and several new restaurants built within the zone, it becomes problematic. Workers or attendees will have no need to leave the safety of the zone which provides food, hotels or shops for them. Will they actually wander around town if all their needs are already met on the NIZ campus?

Anonymous said...

I hate to bust the kings bubble, but he has been caught with his hand in the cookie jar of allentowns revenue to often. It is time for counsil to step up and demand explination of the nut shell trick with allentowns fiscal revenues. Than with no written evidence in the ten day time limit IMPEACHMENT is the dicipline for non-disclosure of financial affairs!!!

Anonymous said...

Why has an alternative to the revenue problem not been proposed? Because it's more than above the table money that is needed here. These water companies fund political campaigns for politicians with aspirations. Do the water deal, and everyone who votes for it will have a war chest to run for the next office they desire. If you are a local politician, that proposition is music to your ears.

If you are a local citizen, you must oppose this privatization of this important public asset with every fiber of your being.