(The following is an editorial submission from Towamencin resident Kofi Osei.)
Towamencin township has been considering selling our sewer system since September 2020. The township has provided a website that includes all the documentation related to this exploration and includes an FAQ, but I feel the information provided by the township does not adequately present the negatives of privatizing a municipal sewer system. Municipalities should never privatize their water or wastewater utilities. Privatization of these utilities is an expensive way to run the utility, it's an expensive way to run the township, and it is an anti-democratic way of doing both.
Expensive way to run the utility
For-profit utility rates are much higher than municipal rates. For 14 years, the Towamencin Municipal Authority (Formerly Upper Gwynedd Towamencin Municipal Authority) sewer rates were $375 a year. In 2022, TMA rates will be $450 a year. That is a big jump but represents a very modest 1.3% yearly increase. In comparison, Aqua PA, who has been acquiring a lot of the sewer systems in southeastern PA, has a sewer rate of $736 a year. In their recent rate filing, Aqua is requesting a 33% rate hike to $887 a year, nearly double the Towamencin 2022 rate. The Towamencin supervisors have been very clear in saying that the sewer is in good condition physically and financially. That doubling in rates does not represent a doubling in quality of service. This extra expense would put undue burden on residents especially those on fixed income like our seniors.
Expensive way to run the township
If it’s so much more expensive for residents to run the sewer this way, why would municipalities explore this? The township stands to get tens of millions of dollars for the sale of the system. That money isn’t free though, as these companies are entitled to a 10% rate of return and can include this acquisition cost in their rate cases. Limerick, who has a similar number of connections to their sewer system, sold their system to Aqua in 2017 for $75.1 million. The increased sewer rates will represent about a $2 million a year extra burden on Limerick residents. For that burden, Limerick township saved $1 million on the financing cost of their loans. Taxes aren’t fun, but if the trade is between a modest tax increase and an increase in sewer rates that dwarfs those tax increases, I will take the tax increase.
Towamencin has been very careful to only increase taxes as necessary. In the 2020 budget workshop, Towamencin Board of Supervisors Chairman Chuck Wilson defended the upcoming tax increase by saying “that’s the whole thing: we’re putting $600,000 more into the road program, and we raise taxes by $600,000.” That is a fantastic way of financing the township, and better yet, ratepayers wouldn’t be leaking money to corporate profit. Every dollar we pay in taxes or rates goes towards the maintenance of our township. Privatizing the sewer to prefund the township for decades would be a betrayal of the current tax philosophy.
Anti-Democratic way of doing both
Selling water utilities is bad for democracy. Here in Towamencin, we have hundreds of non-township ratepayers connected to our sewer system. Increasing their rates to fund our township is taxation without representation. Once Towamencin gets the money, these out-of-township ratepayers will not have any input into how it’s used. We have local, county, state and federal taxes. If we are saying we need assistance from other communities, we need to go through democratic channels at a higher level than the township. Even with one municipality isolated, having this huge pile of cash makes it hard to assess the performance of our local government.
Recently, Towamencin received grant money to build ball courts at Grist Mill Park. Residents have been asking for basketball courts for years. The Board of Supervisors’ position was that courts would be built as money became available. If tens of millions of dollars were in reserve, it would be hard to tell if the township was being sincere about not having money or they might skip the step of seeking grants which saves local tax dollars. That choice between raising taxes or waiting for grant funding is good for civil discourse. The sewer system itself is integral to township planning. The township would retain rights to determine new connections, but having a corporate middleman would add inefficiencies to the decision making process.
With their large staff, privatization companies like Aqua PA will try to present themselves as the efficient way of running water and wastewater utilities. Water and wastewater systems are legally enforced monopolies and in absence of a free market, there is no incentive to pass on any supposed efficiency to ratepayers. Local control is the fiscally responsible, democratic way of running these types of entities.
If you are compelled to keep local control of the Towamencin sewer system. You may make public comments at the Board of Supervisors meeting on the second and fourth Wednesday of every month at 7 p.m. at the township building located at 1090 Troxel Road. The supervisors also accept public comments emailed to [email protected] with a name and address by 4:30 p.m. on the day of the meetings. Be on the lookout for a letter from the township, as there will be a townhall to present information on the bids in the next few weeks.
Neighbors Opposing Privatization Efforts has stopped the sale of municipal sewer systems in Norristown and Conshohocken. You can read about the stories at https://www.stopthesewersale.com/. If you want to join the discussion about stopping Towamencin’s potential sale, you can join https://www.facebook.com/groups/tnope or email [email protected].
