Resolution passed by MABL board leaves far more questions than answers
You’ll have to forgive our skepticism, but it seems that the finance resolution approved by the Municipal Authority of the Borough of Lewistown Monday is not a very good deal for anyone — not even the Borough of Lewistown, which seems to have staked its future on the plan.
Sure, the borough will realize savings — not a direct payment, but savings — of upwards of $630,000 through bond refinancing. Over, what, 20 or 30 years? In a municipal budget, that’s chump change.
Of course, that assumes no other change in revenue for the borough based on the water deal, which is clearly not what Borough Council has in mind. It could be as simple as leasing the water authority back to itself, an easy move when you consider the MABL board of directors is stacked with borough employees who will likely at the very least feel pressure to do what they think council — the very people who can decide to end their employment with the borough — wants them to do.
Then the borough can collect the water bills for everyone on the system, regardless of whether they live in the borough. The borough could theoretically be on the hook for upkeep of the whole system, but when that question went noticeably unanswered at Monday’s board meeting, it sent a strong message that what’s good for the goose could very well cost the gander even more.
Or, the borough could, as many suspect, lease the authority to a private company (“Still not sold!,” we can hear the council exclaiming). That company, which would have to meet the borough’s terms, could then raise your water bill as high as it wants to, as long as the Public Utility Commission deems it “just and reasonable.”
Another way the borough could benefit from this — let’s call it “the best way” — is to sign back on to the Memorandum of Understanding that offers the borough a buyout of the current authority, based on the questionable assumption that the borough built it in the first place (historical documents tend to question that claim, but for the sake of expediency, we’ll throw council a bone).
Under that deal, the borough would have been paid more than 20 times the savings Monday’s refinancing resolution offers — roughly $13 million, with $1 million paid up front and then annual payments, starting at $300,000 the first year and increasing by 2% each year for three decades.
That, by the way, was not the original offer to Lewistown, which was a few million less. This was the borough’s request, which was met in the MOU.
If borough council can explain how $630,000 is more than $13 million, we’d love to hear it. If getting paid $13 million for doing little or nothing is a bad thing, we can’t see it.
If the borough can prove the refinancing — which could put the debt for the entire water authority on the backs of Lewistown taxpayers — is really a good deal, it would be nice to know. But actual interest rates were never discussed at Monday’s meeting. We don’t know how good or bad Lewistown or MABL’s credit ratings are — this refinance could mean paying more interest, not less (especially on the admittedly small PennVest loan).
The only way we can see this being mathematically advantageous to the borough is if it takes over the system and uses the taps as a means of flowing cash into Lewistown’s coffers — at your expense.