In the summer of 2012, Mayor Ed Pawlowski proposed leasing the city’s water and sewer system for 50 years possibly to a private entity. Less than a year later, in April 2013, the Lehigh County Authority — a public, nonprofit entity overseen by an appointed board — won the deal for the system, outbidding United Water and American Water.
Although this outcome is not perfect, Allentown residents have been saved from rate gouging and other poor practices of the private water companies who bid on their system. It also highlights how private companies just cannot compete financially with nonprofit public entities. Because the Lehigh County Authority had access to low cost public borrowing and because it did not have to make a profit, the authority was able to bid substantially more than the private companies while offering a better benefit package to the water workers. The authority will keep the water workers’ pensions, which would have been lost with privatization.
- Lehigh County Authority wins bid for Allentown water, sewer system (Food & Water Watch statement, April 2, 2013)
Throughout the process, Food & Water Watch, along with an assortment of local allies, sought to shed truthful light on the ill-conceived privatization plan by filing information requests, producing independent cost analyses and publicly challenging the administration’s mistruths.
- Lehigh Valley Residents: Sign the Petition to Stand Against Privatization of Our Water in Allentown and the rest of Lehigh Valley (expired)
- Get involved at www.SaveAllentownWater.com
A Costly and Risky Proposal
In 2012, confronted with fiscal difficulties related to steep pension costs for the police and fire departments, Allentown Mayor Ed Pawlowski proposed the long-term lease of the city’s water and sewer systems. This is a shortsighted idea that would end up costing Allentown families for generations.
Pawlowski claimed that because the 50-year lease would generate much-needed funds without a tax increase, “… the burden of the debt is not paid for by the residents of Allentown.” This was simply untrue. Although taxes themselves may not increase as a result of the deal, families would indeed pay more to cover the cost of the lease, through steep increases in their water bills. The plan was what you might call “a tax through the tap.”
Pawlowski’s administration consistently sought to mislead the public about the true public cost of the plan through incomplete, inaccurate and just plain false analyses.
- Allentown’s Water Gambit: An Irresponsible and Risky Lease (fact sheet; September 2012)
- Activists, Community Leaders Denounce Flawed Fiscal Analysis of Water Privatization Plan (press release; September 27, 2012)
- Food & Water Watch’s Rebuttal to Consultant’s One-Sided Analysis (analysis; September 27, 2012)
- Why Leasing Allentown’s Water and Sewer System Would Be a Financial “Worst Practice” (blog; October 11, 2012)
- Selling Out Your Children: An Analysis of the Draft Water Concession Agreement (analysis; October 25, 2012)
An Analysis of Allentown’s Revised Water and Sewer Concession Deal (analysis; March 1, 2013)
The Public Has a Right to Know
Complicating matters for Allentown residents, the Pawlowski administration was extremely secretive about every step of the process. It hampered Food & Water Watch’s efforts to undercover more information about the companies that were interested in Allentown’s water and sewer systems, refusing to disclose the responses to the request for qualifications for the water and sewer concession until after the lease was awarded to the Lehigh County Authority.
Before the contract was signed, the mayor’s administration provided the public with very little information about the companies that sought to take over the water and sewer systems. It refused to reveal the full identities of each bidding team. Many of the private sector teams included a company that would have operated the systems and an investment company or consortium that would have financed the deal. The financier would have been the one making the big decisions and could have hired and fired the operator.
For example, we later learned that United Water, a bidder, partnered with private equity firm KKR, as it did in Bayonne, N.J. And Access Capital Advisers partnered with Severn Trent Services.
The public had a right to know what entities seek to control their essential water and sewer services, and why those entities believed they were qualified to run the systems. If the mayor’s administration supported the possible privatization, why didn’t it tout the companies’ purported qualifications? It really made one wonder what the mayor was trying to hide.
- Food & Water Watch Files FOIA Request Seeking Bidders on Water Privatization RFQ (press release; August 22, 2012)
- Allentown’s initial response to the RTK request (letter; August 29, 2012)
- Allentown’s response denying the RTK request in its entirety (letter; September 28, 2012)
- Food & Water Watch’s Appeal of Allentown’s Denial of the Organization’s Right-to-Know Request (memorandum; October 18, 2012)
- Allentown’s response to FWW’s Appeal (letter; November 2, 2012)
- Muddy Waters in Allentown (blog; November 2, 2012)
- FWW’s response to Allentown (letter; November 8, 2012)
- United Water’s request to participate in support of Allentown (letter; November 9, 2012)
- FWW’s response to United Water (letter; November 13, 2012)
- United Water’s submission (memorandum; November 30, 2012)
- State’s final determination (December 13, 2012)
- Allentown’s denial of FWW’s follow-up RTK request submitted after the city issued its request for bids (letter; March 7, 2013)
- FWW’s appeal of Allentown’s denial (memorandum; March 19, 2013)
- Allentown’s response to our appeal (letter; March 27, 2013)
- United Water’s request to intervene (letter; April 12, 2013)
- United Water’s submission (memorandum; April 15, 2013)
- State’s final determination (April 18, 2013)
- State Orders Allentown to Reveal Details of Secretive Water Leasing Plan; Consumer Group Calls on City Council to Delay Vote Until All Facts are Made Public (press release; April 24, 2013)
- State’s final determination upon reconsideration (October 15, 2013)
Let the People Vote
Allentown elected officials, community leaders and advocates sought to ensure that the people get a say on the mayor’s plan. In Fall 2012, they formed a petitioners committee to collect signatures to on a proposed charter amendment that would require voter approval before any major lease or sale of public assets. Despite opposition from the mayor, they collected more than 4,000 signatures — twice as many as needed to put the proposed amendment before voters at the next election.
In January 2013, the city council refused to adopt the ordinance, sending it to the May 2013 ballot, but because of technical differences between the city’s petition process and state law, the county clerk was unable to put the question on the ballot.
- Elected Officials, Advocates Call for Referendum on Water Plan as New Analysis Shows Huge Costs of Privatization (press release; October 15, 2012)
- Mayor Pawlowski’s Personal Interference with Petition Drive Demonstrates Disdain for Democracy and Fear of the Public Will (statement; November 6, 2012)
- Lehigh County Solicitor’s explanation of petition requirements and rejection of the referendum question (memo; February 19, 2013)
- Despite Legal Questions over Petition Submission, Allentown Residents Have Made Their Opinion on Water Privatization Clear (statement; February 26, 2013)
- Candidates for City Council Speak Out Against Water Lease (press release; April 6, 2013)
- Trends in Water Privatization: The Post-Recession Economy and the Fight for Public Water in the United States (report; November 2010)
- Private Equity, Public Inequity: The Public Cost of Private Equity Takeovers of U.S. Water Infrastructure (report; August 2012)
- Borrowing Trouble: Water Privatization Is a False Solution for Municipal Budget Shortfalls (report, April 2013)