Francis X. Dougherty Managing Director Office of the Mayor 610.437.7781 Fax 610.437.8730 [email protected]
TO: Julio Guridy, City Council President City Council
FROM: Francis X. Dougherty
SUBJECT: Councilwoman Eichenwald’s Information Request
DATE: December 21, 2012
The purpose of this memorandum is to provide a written response to Councilwoman Eichenwald’s request for information on Water and Sewer 46 account projects and their fiscal balances.
The investment of hiring the necessary expertise to protect the interests of our City should not be undervalued or discounted for any major project. The same best practice holds true for the proposed water/sewer lease. The magnitude and degree of complexity associated with forging an RFP, a concessionaire agreement and operating standards could never be achieved using solely City personnel. Outside expertise, however, does come at a price. It is a price however justified by a sound investment: that sound investment over the length of the proposed lease is at this time approximately $15,000 per year.
It is the Administration’s belief that we are partly faced with our significant pension liability because those in the past failed to invest the resources and hire the right experts to advise the government of the day of the incessant folly of the former Police and Fire pension plans.
The current Administration will not make the same mistake. While this Administration has demonstrated strong financial discipline and has managed taxpayers’ money wisely which has precluded raising property taxes, it also believes that the scale and complexity of addressing the City of Allentown’s long-term fiscal challenge requires and indeed necessitates the use of strategic spending for the proper expertise and advice.
The Fire Department came in $1 million under budget for 2012. Some of this $1 million has been used and will continue to pay for our experts on the water/sewer lease concession to address Fire and Police pension liabilities. Prior to the aforementioned savings, initial payments to the water/sewer lease consultants were paid from Water and Sewer 46 accounts. While the 2012 budget did not anticipate these costs, monies were identified in both 46 accounts without (1) jeopardizing any critical projects; (2) because of savings incurred by other 46 projects
City Hall 435 Hamilton Street Allentown, PA 18101-1699 An Equal Opportunity Employer Hearing Impaired - TTY 610.437.7551 Printed on Recycled Paper coming in under budget or were negotiated at lower costs; and (3) projects were deemed no longer necessary under new conditions.
The two accompanying spreadsheets detail projects that were included in both 46 accounts in the 2012 budget and their respective dispositions that have resulted in the $567,825 which was utilized to pay for consultants. Also accounting for the $567,825 savings are two transfers into the Water 46 account which a majority of City Council members approved through the standard transfer process. They included: the transfer of $100,000 from savings in chemical uses due to LCA’s expedited pipeline schedule; and $100,000 savings for not having to purchase extra materials (54 Account) in Water.
In summary, only two projects were either postponed or cancelled due to the emergency nature of using Water/Sewer 46 accounts to address the City’s $150 million pension liability: the planned aerial photography in Sewer 46 for $75,000 was deemed eligible for postponement because it was not critical for operational purposes. The second project was the $40,000 Water Cost of Service Study which was also cancelled because of the proposed lease itself.
Please let me know if you have any additional questions or concerns.
Attachments
City Hall 435 Hamilton Street Allentown, PA 18101-1699 An Equal Opportunity Employer Hearing Impaired - TTY 610.437.7551 Printed on Recycled Paper