Thursday, January 7, 2010

Water Company Revenues

The political rhetoric against Barletta's plan to takeover the water department of the Hazleton City Authority is so disingenuos it begs correction.

One of the possible suitors, among many, Pennsylvania American Water, is a publicly traded company. It is traded on the New York Stock Exchange with a symbol of AWK. A look at its 2008 annual report shows revenues which exceed $2 billion dollars. 7,000 employees serving 15 million people in 32 states and Ontario,Canada.

By comparison the Hazleton City Authority revenues are approximately $4-5 million.

Aqua Water Company is another business entity that has been mentioned in reports. Aqua Water trades on the NYSE with a symbol of WTR and annual revenues for 2008 of $627 million.

United Water is a third possible candidate. Under their facts and figures page annual revenues for 2007 were $800 million. They manage $2.5 billion in assets. HCA pegged their entire assets at $68 million. 2,600 employees serving over 7 million customers in 26 states. HCA Water Deparment- 40 employees in 1 state.

Hazleton City Councilman Jack Mundie stated the HCA is the best run authority in the state. While not being certain where the study was performed to back up that conclusion it is impossible to believe that companies acrruing over $3.5 billion in sales would perform any worse than an very small authority operation taking in $4-5 million.

Quelling the opponents on the water quality issue read this Consumer Confidence report from American Water at their Mount Laurel Treatment Facility.

Here is their history from 1886-1999.

The issue isn't whether it makes sense to sell the Hazleton City Authority's water department. The issue is Barletta. His opponents are so set to defeat him that any proposal would be fought and fought hard.

Chris Paige has attended two Hazleton City Council meetings. He talks about the property tax situation in Hazleton. While denying he is a Democratic operative where is his disgust with the $466 million in debt accrured by Luzerne County mismanagers? The law he cited does not apply to Hazleton and with a little research any first year law student would have reached that conclusion. Yet, Mocarsky over at the Times Leader couldn't wait to run with the story only to have the facts blow it right out of the water.

Under the Municipal Authorities Act of 1945 and a previous court case cited by SOP all it takes is a resolution of Hazleton City Council to order the Hazleton City Authority to divest itself of the water department and the plan can become a reality. However, keep in mind that this issue is still just a proposal with all options open.


Grace Cuozoo said...

It is not the job of the HCA to make a profit. Its job is to cover outstanding debt, consider any new debt, pay salaries, in other words to meet the requirements of its trusts. Making a profit is not its goal, or shouldn't be. At that point rates would increase more often and at higher percentages. Its job is spelled out in its ARTICLES OF INCORPORATION. One could argue the status of their non-profit well being if they start showing a great profit. As long as they continue to put funds held by them back into the water system why would anyone want to sell it. The city does not own it the ratepayers do! A sort of SHAREHOLDER SITUATION almost. The city has to look ay other avenues to bail itself ouy! Hey sell the AIRPORT it benefits so few.

McGruff said...

You couldn't be farther off the mark. Look at Lehigh Valley Hospital and Gesinger Medical Centers as an example of making great profit as a non-profit.

Are they putting funds back into the water system or are they hiding funds by buying lands that serve no purpose other than to hide revenue? Do you realize how many leases were given to hunting and fishing organizations where the ratepayers are paying for the use of the land by only a few and are excluded from using that land by lease. Leases are difficult to be broken.

Profits- Why don't you ask them where they go after the meeting and who foots the bill?? Ask about their Christmas gathering at the Library? Is that what their articles of incorporation provide for?

Here's what their articles of incorporation state: that, without limitation as to the exercise of all powers and authority contained in the said Acts of Assembly, shall include the acquisition, holding, operation and/or leasing either wholly or partially for public uses and for revenue producing purposes, certain lands in the City of Hazleton, County of Luzerne and State of Pennsylvania, together with improvements thereon, now owned by Duplan Silk Corporation; but the enumeration of this particular power shall not be deemed to be in limitation of the powers generally named in the Act of Assembly creating such a body corporate and conferring upon its authority to acquire, hold, improve, operate, own and lease other land and property.

McGruff said...

Many financially distressed cities are using the sale of their authorities to solve problems. So if you are so opposed to the sale you must be for a tremendous property tax hike. You will be paying thousands in city property taxes if another option is not found. Pension obligations alone can be troublesome.

There is absolutely no SHAREHOLDER situation. Grace, you are purchasing water. When you purchase at Giant do you become a shareholder? When you purchase at Walmart do you become a shareholder? In all of the water department writings ratepayers are referred to as CUSTOMERS, plain and simple.

And I submit the Board does not REPRESENT the customers they SERVICE the customers. They provide water service plain and simple. Even the bondholders are not shareholders. Their return is guaranteed with no risk. Shareholders take on risk and there is no risk being a CUSTOMER other than lousy water and/or lousy service.

McGruff said...

The City of Hazleton created the Authority and under the provisions of the Municipal Authorities Act of 1935 and as amended 1945 they have the right to take back the projects of the Authority. About that there is no question. Chris Paige was blowing smoke when he popped his load too soon about Lebanon. Hazleton is not home rule so no application of the law he cited.

I ask, what is your proposal to solve the financial situation of the City? Do you want to see those workers laid off become permanent? Do you want your streets to remain the same? Do you want exhorbitant tax increases? What is it you and Dee want?

You come off as anti-Barletta. IF that is the case so be it. But don't be so blind in your rage to oppose everything. Because in the end you will be the one paying and the Authority will be the one sitting pretty.

McGruff said...

Authorities are created to relieve the cities of certain types of obligations. They also provide for additional bonding capacity that a city with limited assets may otherwise not enjoy. There used to be the Hazleton Area School Authority. Where is that Authority today?? Gone...

One will argue that rates will go up. But no one is telling you that if a private firm takes over it will have to pay property taxes on lands now tax exempt. That reality can be a windfall for other municipalities that have no investment whatsoever in this Authority.

Private firms have labs, scientists, biologists, microbiologists, researchers. What does the HCA have?? 3 firms looking at the HCA have a combined revenue of $3.5 billion. Does that sound like companies who get rid of employees??

The employees of the HCA are invaluable. If a private firm took them over why would they want to terminate their employment to hire new people who have to learn the system??

You can't sell the airport. The FAA would want its money back. They already went through that exercise.

McGruff said...

Read the Times Leader story. Would you want your water rates to go up $10.00 per month or property taxes go up $100.00 per month...If the HCA is sold you will have no tax increase for a very long time. The money will be in a trust to fund future city budgets....

KobraKai said...

I want to add my "thumbs up" to your statements. I think all of your arguments are valid and fair. In particular, in your comments just above, you hit on something that I think is a very, very key aspect of this transaction that nobody seems to want to consider: The fact that, if a private utility buys the assets, they would become a large (perhaps the largest?) property tax payers in Hazelton. In other words, not only would the city get a large payment for water system up front (or perhaps over a short time depending on however the deal might be structured), but the city would also gain a very large and very permanent new revenue stream from the property taxes that would now be paid on ALL authority-owned land. That would be a pretty darn good deal compared to the $0.00 the land now earns for Hazelton.