York City wastewater system buyer reaching out to municipal customers

The York City Council on Tuesday approved the final step necessary to sign off on a deal to sell the city's wastewater treatment system, triggering a $20 million advance payment from the buyer, Pennsylvania American Water Co.

City Council members voted 3-1 to transfer the responsibilities of owning the system from the sewer authority board, a process that City Council President Henry Nixon described as routine. The $235 million asset purchase agreement now only requires approval from the Pennsylvania Public Utility Commission to fully take effect.

“This is a new day for York, one filled with an unwavering optimism as our residents and businesses can finally breathe a sigh of relief for the first time in decades," Mayor Michael Helfrich said in a statement. 

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Council member Edquina Washington, the lone dissenting vote, did not respond to requests for comment. She has opposed the deal since it was first proposed.

Council member Judy Ritter-Dickson was absent from the meeting.

Helfrich has pitched the $235 million sale as the city's best bet to combat decades of skyrocketing pension and health care costs.

Facing a $14 million deficit, the city drafted its 2021 budget to be contingent upon the sale to avoid a 48% property tax hike and nearly two dozen job cuts.

But the deal isn't done yet. Pennsylvania American Water still has to submit a formal application to the PUC to acquire the system, said Laura Martin, a spokesperson for Pennsylvania American.

The PUC would then conduct a six-month review of the application before making a final decision.

“It's a very lengthy, comprehensive application process,” Martin said. “They don’t automatically accept it.”

Martin said the company anticipates submitting the application within 60 days.

Pennsylvania American Water also must notify all of the system's customers of the acquisition, which can take up to 45 days, Martin said.

In the meantime, though, the company can begin negotiations to set sewer rates for the six other municipalities that use the wastewater system.

A three-year moratorium on sewer rates that was included in the asset purchase agreement only applies to York City residents, which heightened concerns among other municipalities that the company would hike rates for the municipal users.

The York Area Regional Sewer Authority, which is composed of Manchester, West Manchester, Spring Garden and York townships and North York borough, raised those concerns.

West York also receives wastewater service from the city but is not a member of the regional group.

“Now that City Council has moved forward with the purchase, we feel it’s appropriate to protest the sale at the PUC,” said Kelly Kelch, the regional authority’s spokesperson, who also serves as the West Manchester Township manager.

Kelch confirmed that Pennsylvania American Water has reached out to the municipalities but that negotiations have not yet begun.

The authority is now speaking with an attorney to build its case against the deal, Kelch said. Any protests would be included in the PUC's six-month review process.

— Logan Hullinger can be reached at lhullinger@yorkdispatch.com or via Twitter at @LoganHullYD.