Middletown Borough Council votes to lease out water-sewer systems

Middletown’s Borough Council and Authority voted yesterday to approve a plan to lease the Borough’s water and sewer systems.

 

Middletown’s Borough Council and Authority voted yesterday to approve a plan to lease the Borough’s water and sewer systems in a $43 million, 50-year deal.

It’s meant to bail the borough out financially—the borough currently has $10.8 million in unfunded pension liabilities and post-retirement benefits as well as $26 million of debt. The borough is currently in the Act 47 Early Intervention Program.

Council Member Ben Kapenstein chaired the committee that studied the feasibility of a lease. He recommended the deal, saying the alternative would be raising electric or tax rates, or making more cuts to the borough’s work force.

In a press release, Mayor James H. Curry III endorsed the decision and called the long-term lease agreement “the lesser of two evils.”

“Mayor Curry’s comment really, I think, reflects the sentiment of probably every council members who voted for it,” said Chris Courogan, the Borough of Middletown’s Director of Communications. “There was nobody on the council that wanted to do this.”

“But,” he said, “by doing this, we’re able to kind of solve a lot of the old problems that have plagued us for quite sometime. And instead having to put our energies into fighting our old problems, we now can focus on moving the borough forward and revitalization.”

Under the terms of the lease agreement, New Jersey-based United Water will pay the Borough $43 million for the 50-year lease. United Water would also pay an annual fee to cover the Borough’s lease administration expenses.

Middletown is not the first Pennsylvania municipality to lease out its infrastructure to pay off debt. Allentown made a 50-year lease agreement with the Lehigh County Authority to the tune of $220 million up front and $500,000 annually from 2016.

In central Pennsylvania, Altoona City Borough Council recently proposed a similar plan, but voted to put the process on hold in response to citizen opposition.