Authority tables city payment hike
The city Water Authority on Thursday formally tabled a request made by the city in January for the authority to increase its annual payment for city “services” by $250,000.
Earlier this year, a couple of authority officials privately discussed how the authority could comply with the request – which the city’s Act 47 recovery plan directed it to make – but dropped those discussions in May when the city revealed it plans to explore the idea of auctioning the water and sewer systems operated by the authority for a long-term lease in exchange for a big upfront payment.
“Blindsided,” Chairman Maury Lawruk said Thursday.
The lease exploration continues, but authority member and former city mayor Bill Schirf argued at the meeting that failing to increase the annual payment could create serious budget problems for
Passed in late 2012, the recovery plan calls for the city to negotiate annual, cumulative $250,000 increases on a base of $2.9 million a year, with a previously negotiated annual 1 percent increase, through 2016, for a total cumulative increase of $1 million.
The city budgeted for the first two of those additional payments, but never asked for the additional money for 2013 – and only asked for the 2014 money after the authority had completed its 2014 budget, authority officials said Thursday.
Asked why the city didn’t ask for the extra money earlier, Interim City Manager Peter Marshall, who took the job in April, said he didn’t know – but said the question will become “moot” if the city follows through on the lease plans.
“If it doesn’t (follow through), it won’t be (moot),” Marshall said.
Getting no payment for last year or this year would represent a potential failure to obtain $500,000, Schirf said.
The city had an operational surplus of $400,000 last year, thanks partly to additional tax revenues authorized by the recovery plan.
But the city will lose some of that additional revenue this year because of a mandated recovery plan reduction of 0.05 percent in earned income tax, Schirf pointed out.
That translates to $558,000 less in Act 47-authorized earned income tax.
Not getting the $250,000 for 2013 didn’t create a problem, according to Finance Director Omar Strohm.
Not getting the 2014 money this year “could be an issue,” Strohm said.
It’s a “matter of degree how big an issue,” he said. “It probably wouldn’t be devastating.”
Strohm said he couldn’t say definitively why the city didn’t ask for the money earlier.
The plan names the solicitor and public works director as the “responsible” parties, but didn’t make it clear how they were to go
about it, according to Strohm.
Joe Weakland was city manager until August 2013, after which Strohm took over as interim manager, while keeping his regular positions as head of both the finance and personnel departments and assuming also for a time Weakland’s responsibility as overseer of the property maintenance code operation.
Working 3 jobs is “part of the answer,” he said.
“I think I needed to get direction on it, and I never did until January (2014),” Strohm said.
The direction came from City Council, he said.
Councilman Dave Butterbaugh said he doesn’t remember why the city
didn’t ask for the money earlier.
The Mirror didn’t get calls back from messages left for solicitor Larry Clapper and Public Works Director Dave Diedrich.
Authority solicitor Alan Krier suggested the city might want to think twice about amending the agreement to get more money, as the recovery plan suggested, because of Act 73, a 2012 law that prohibits municipalities from raiding authorities for funds.
The current agreement is “grandfathered,” because it predates Act 73, but an amendment might force a re-evaluation of the agreement, which lists many “services” the city provides the authority.
Those services mostly were listed to justify a $2.1 million increase in the annual payment in 2004, after the city threatened to privatize the authority.
It led some to suspect they might be an excuse to justify the additional payment, whose real purpose seemed to be to allow the authority to continue to operate the systems.
Krier plans to contact Clapper to discuss the matter.
Toward the end of Thursday’s meeting, authority officials indicated that they want to help the city, despite the resentment caused by the city’s proposal to lease the systems.
The authority wants to continue to operate the systems.
“We’re working on becoming part of the process,” Krier said.
But there are legal issues, probably more complex for the authority than for some outside party, he said.
Authority member Tom Martin has indicated he’d like the authority to short-circuit a general auction, providing the necessary money to the city directly.
But a city consultant has indicated an auction is necessary to determine the systems’ real market value, so the city can get the upfront equivalent of that value.
“I wish the city was not so intent on deciding this prematurely,” Martin said. “We need time to come up with a plan that is good for us and the citizens.”
“I don’t want to see it leased,” authority member Tony Ruggery said. “I don’t want to see a foreign company come in and make a profit.”
“We’re all city citizens,” Lawruk said.
Mirror Staff Writer William Kibler is at 949-7038.