Debate Sparks as Oil City Council Votes Seek Formal Bids for Wastewater System

| September 14, 2018

OIL CITY, Pa. – Oil City will seek formal bids for its wastewater treatment plant, but the sale of the plant is anything but a certainty.

That is the decision the Oil City Council made at its meeting Thursday in the City Building after a lengthy discussion that reiterated points that have been made by various council members concerning the potential sale of the system over the last year.

Councilman Michael Poff was the lone no vote in deciding to seek the bids stating what has been his consistent position – that he believes it is the city’s responsibility to own and maintain the wastewater system for its residents.

One of Poff’s main arguments against the sale of the system is that while the city may see a financial windfall at first, he believes the windfall will come at the expense of the ratepayer and that there will be a “sunset” on that windfall.

“There is a certain year where it stops becoming financially better,” Poff said. “It is a one-time payoff, a one-time profit (for the City). It (the financial benefit) will come to an end. It has a sunset date. When that date is, we don’t know.”

Poff also believes that an outside company that would buy the wastewater system has an obligation to turn a profit, which could hurt Oil City residents.

“They have a legal responsibility to make a profit,” Poff said.

Councilmen Isaiah Dunham and Dale Massie countered that voting to send the system out for formal bid wasn’t the same as selling the system and that the City wouldn’t know its exact worth without a formal bid – the city did a couple of unofficial proposals from Aqua Pennsylvania Wastewater, Inc., and Pennsylvania American Water, back in August that came in lower than what the City had been hoping for, but neither company was willing to put a firm number on the system in an informal bidding system.

“We are guessing,” Massie said about the system’s worth. “We should at least go through the process.”

Dunham believes the City Council has made a commitment to do everything it can to not raise taxes and therefore should at least investigate what the wastewater system would bring in.

“I don’t think we are doing our due diligence if we don’t investigate the next step,” Dunham said.

Councilman Ron Gustafson, who eventually voted to go forward with a formal bid, at first was hesitant to support even that step based on the preliminary figures of the system’s worth.

“I’m not in favor (of the sale) with the figures we have heard,” Gustafson said. “I don’t believe it would work out very well for us, and I feel we can handle the current issues the system has. There are too many unknowns at this time to even (put it out for bid). If (we fix the issues) in a few years we may be in a better position (to get more money).”

City Manager Mark Schroyer said the City isn’t in dire straights to sell the system that a lot of municipalities that have sold.

“We have a pretty good fund balance, and our rates are low,” Schroyer said. “We are not discussing this with a gun to our heads like some municipalities. Overall, I want to ensure our residents that the system is being run properly. It’s just that it is becoming more difficult to keep up with federal and state mandates. They are constantly increasing.”

Schroyer noted that the City currently has $9 million it can use on repairing and updating the system.

Mayor Bill Moon asked Schroyer how much it would cost the City to put together a bid package and Moon said that because a lot of the work was already done he though one might be able to be put together at a cost of $20,000 to $25,000.

Gustafson said he could live with that cost, and Moon likened the process to bidding out a road project.

“We are going out for bid like we do on paving,” Moon said. “But instead of taking the lowest bid, we would be taking the highest bid.”

Dunham asked if a rate schedule could be requested as part of the formal bid, and Schroyer said he believed it could but that he already knows that any sale would come with a four-year freeze in rate and after that, it might be difficult for the bidder to know what a rate schedule may look like.

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