Towamencin Township Administration. Photo by James Short.
Town could allow more payments as rates increase.
As the township’s long-running sewer sale debate shows no sign of ending soon, Towamencin residents could soon have more options to pay the sewer bills they’ve discussed for years.
Township officials heard updates in late April on two requests from residents, whether bills can be paid in smaller increments than annually, and billed by usage rather than a flat fee.
“The (finance) committee asked the finance director to investigate the idea of quarterly billing for sewer fees. Finance staff believes that could be done without much issue,” said supervisor Kristin Warner.
Sewer bills have been the township’s hottest topic since late 2020, when the supervisors directed staff to start looking into selling Towamencin’s municipal sewer system to a private owner.
Throughout 2021 into ’22, pro-sale supervisors argued that the sale proceeds could pay down debt, lower taxes, and generate revenue for other projects, while removing the costs of mandated work expected to be needed at the sewer plant, while residents opposed to the sale warned of possible steep rate hikes under a private owner.
Since a first vote to sell in May 2022, residents have mobilized to pass a “home rule charter” with provisions they claim make the sale illegal, while the pro-sale supervisors have voted to transfer the sale agreement to a new buyer after the first pulled out, while arguing that sale agreement is legally binding and could be costly to terminate.
During the debate, the supervisors approved sewer rate hikes bringing that annual cost from $375 from 2008 through 2021, up to $450 starting in 2022, then up to $590 for 2024, and approved a real estate tax increase in 2022 for 2023.
Sale opponents have argued the private owner could take rates as high as over $1,200 annually, with those dollars going from Towamencin ratepayers to corporate profits, bonuses, and work on other municipal systems owned by that company, and have asked the township to look into allowing bills to be spread out over multiple payments, and questioned how the sale and private rate hikes would impact those in communities that are currently unmetered, such as condo complexes, and those with septic systems instead of public sewer connections.
During the April 24 meeting, Warner said the finance committee had hit on those topics in April, with staff saying that more bill payment options could be possible, but may require changes behind-the-scenes.
“The finance director noted that our programming that we use is a little difficult for, doing that kind of more complex (payments), and is suggesting that we upgrade the township’s online (bill payment) platform,” she said.
“The committee recommends the board of supervisors direct the township solicitor to prepare an ordinance amending chapter 127 of township code, to update the township’s residential and nonresidential sewer billing frequency to quarterly. And there’s a hope that, down the road, we can give the option of monthly as well,” Warner said.
Changing calculations
Changing the way those sewer fees are calculated was also discussed by the finance committee and staff in April.
“The committee believes the current flat-rate fee is high enough to warrant a transition to consumption-based (sewer) billing in the near future. The committee believes a successful transition to quarterly billing is required first,” she said.
Finance staff will work on automating current consumption billing methods for commercial customers “to learn from the process,” Warner told the board, and prepare for a larger shift in the future.
“The staff will also need direction on how to handle the billing for individual housing units that don’t currently have meters,” she said, along with those that use water wells instead of connections from the North Penn Water Authority.
“So the committee does not recommend transitioning to this kind of fee base until at least 2026, to give staff the chance to figure this all out,” she said.
Sewer rates for customers outside of Towamencin were also discussed: the committee asked for specifics on what rate is charged to those outside Towamencin’s borders, but still connected to the township’s sewer plant.
About 320 customers outside the township are billed on the residential cycle in March, and are currently subject to the township’s Pennsylvania Utility Commission approvals, and thus would require a formal rate case before PUC to increase from the $450 rate.
Township Manager David Kraynik asked if the board wanted to direct the solicitor to prepare and advertise an ordinance increasing the billing frequency to quarterly, and the board voted to do so.
Looking long term
Long-term financial planning and capital needs were also discussed by that committee, and the finance director has updated calculations of the township’s outstanding debt, and what may be needed to complete planned projects and match outstanding grant requests over the next 10 years.
“The finance director suggested that average borrowings of $2.5 million every other year would be feasible, while limiting annual governmental debt payments to not more than 10 percent of governmental revenue,” Warner said, down from the current level of 15 percent.
Each year, an overhead calculation is performed to determine how much the sewer fund must reimburse the general fund for “sewer-related costs borne by the general fund, such as employee payroll,” Warner said. A new expense-based calculation method “will lead to a more accurate, but lower, overhead reimbursement than the current revenue-based method, resulting in a net reduction in sewer fund expenses and general fund revenues.”
Directly charging employee wages and salaries to the sewer fund starting with the 2025 budget could also reduce overhead transfers, and could lead to more accurate figures for long-term planning.
“The net impact of a new sewer overhead calculation, and new debt to incur for capital projects, will likely result in the need for two or three property tax increases in the next five to six years,” she said.
“The finance director suggested a three percent tax increase, every other year, and feels that would meet the long-range plan. However, strong earned income tax performance, or larger than average assessed value growth, could reduce this need,” Warner said.
Changes to the township’s homestead exemption, which sets an amount that qualifying property owners can deduct from their assessed value while calculating their tax bill, could help offset those increases, but changing that exemption is only allowed during years with no tax increase, and the board could see a possible timeline for doing so at an upcoming meeting.
“It’s all going to be presented as part of the long-range plan, that will be reviewed in front of the entire board this summer,” Warner said.
Supervisor Kofi Osei, leader of the home rule charter effort and efforts to stop the sale, pointed out that the recommended three percent tax hikes every other year were “significantly less” than tax or rate increases recommended in the analysis provided by outside firm PFM ahead of the 2022 sale vote, and called into question other figures from that study.
“So I guess the question is: did we vote to sell the sewer system without this information?” he said.
Board Chairman Chuck Wilson answered that “things constantly change over time,” including financial conditions, and the township has paid down debt and secured grants since that initial analysis, while the overhead calculation “was based on a formula that the township has used, probably for 30 years.”
“We knew that might be high, and so we had it recomputed using other methods, that maybe yielded better results,” Wilson said.
After other board business, Osei attempted once again to make a motion to direct staff to terminate the sewer sale, and that motion failed by the same vote as all prior attempts, with Osei and fellow Democrat Joyce Snyder voting for that motion, and the three Republicans on the board voting against.
Towamencin’s supervisors next meet at 7 p.m. on May 8 at the township administration building, 1090 Troxel Road. For more information visit www.Towamencin.org.
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