Aqua Ohio Offers $50M for Youngstown Water System
YOUNGSTOWN, Ohio — Aqua Ohio delivered a letter of interest Friday to Youngstown Mayor John McNally that indicates the company would consider buying the city’s water distribution system for $50 million.
The system is worth at least $50 million based upon publicly available information according Aqua Ohio’s president, Ed Kolodziej.
“We see the challenges facing the city and believe we can offer an attractive solution,” said Kolodziej. “We hope that this letter begins a dialogue that provides both the current and incoming administrations with a new option to address the city’s important priorities.”
In addition to providing a potential source of funds to the city, Aqua said its offer addresses the need for infrastructure investment and environmental compliance. Safe and reliable water and wastewater infrastructure is vital to residents and area businesses.
Mayor John McNally confirmed he received a letter from Aqua this morning, and there were no previous discussions with the water utility about any type of sale. “We approved a new rate structure for the city of Canfield last month,” the mayor noted. “Nothing about Aqua came up in those negotiations.”
McNally, who officially leaves office in January, said that any potential sale would be the responsibility of the next administration under mayor-elect Tito Brown. Brown could not be reached for comment as of this posting Friday afternoon.
But Finance Director David Bozanich said that selling the city’s water system would be a mistake. “I believe a public asset needs to remain a public asset,” he said. “The offer, on paper, is woefully low.”
Bozanich said that the water department revenues are in excess of $30 million per year, and that’s not including the hundreds of millions of dollars in investments made over the years. “I think it would be a mistake to sell it.”
In announcing the letter of interest, Aqua said it is working with municipalities throughout Ohio in an effort to address their local water and wastewater issues.
Anthony Mancari, Aqua Ohio’s director of business development said cities choose to partner with Aqua for a variety of reasons.
“Cities work with Aqua because we can help with eliminating the risk associated with operating a utility, providing fiscal resources to reinvest back into their communities, and assuring their customers will be taken care of by water and wastewater professionals,” Mancari said. “What better place to start the discussion than right here in the [Mahoning] Valley where Aqua has been a community partner for more than 100 years?”
The company noted that the American Society of Civil Engineers estimates that over $12 billion will be needed to replace aging water infrastructure across Ohio and more than $14 billion for the Buckeye state’s wastewater infrastructure in the next 20 years.
Aqua Ohio is investing $30 million to $40 million each year on water and wastewater infrastructure to improve service and reliability for its customers, according to Kolodziej.
“We will make more than $13 million of infrastructure improvements for the Mahoning Valley next year alone,” Kolodziej said. “It’s a significant commitment and Aqua is up to the task. My team looks forward to discussing possibilities with the city’s leadership to explore potential benefits for city residents and all of the water system’s customers.”
On Wednesday the company will “unwrap” the entrance to its operations center during a press event at its new $2.5 million building at 100 South Bridge St. in Struthers. At that time, Aqua’s press advisory says it will outline recent community investments and planned infrastructure improvements.
Aqua Ohio has set up a website where the Youngstown community can go for more information. The site features a letter from Kolodziej to water customers that lists the benefits of the company’s proposal.
The purchase “would provide the city with at least $50 million to help fund vital city priorities and avoid possible layoffs,” he writes. “Proceeds netted to the city from the sale of the water system can relieve outstanding debt associated with the water utility assets, can help address annual deficits, and provide funds that can be deployed to address other city priorities, including economic development and ensuring that all critical programs and services are fully funded. Youngstown City School District and other publicly funded services will also directly benefit as the recipients of well over $1 million in tax revenue, every year.”
Kolodziej adds that all city water department employees would be offered employment, “subject to the results of typical drug screening and background checks.”
Aqua Ohio is Ohio’s largest regulated drinking water and wastewater utility and serves about 500,000 people in 19 counties. It is a subsidiary of Aqua America, which serves three million people in eight states.
Copyright 2020 The Business Journal, Youngstown, Ohio.