Company News

Aqua Ohio Pursues Campbell’s Water System

YOUNGSTOWN, Ohio – Aqua Ohio Inc., which has proposed to buy the city of Youngstown’s water distribution system for $50 million, also wants to buy the city of Campbell’s water assets for $7 million.

The water utility initially made its offer to Campbell in an Aug. 4 letter to City Council President George Levendis. The letter cited several reasons a sale of the system was in the public interest, including environmental compliance, infrastructure investment needs and financial requirements.

Proceeds from a sale would not only relieve current debt but also could be used “for endeavors to spur economic development, reinvest in other priority projects or save for a rainy day,” Ed Kolodziej, Aqua Ohio’s president and chief operating officer, and Tony Mancari, director of development, said in their joint letter to Levendis.

Campbell’s system has “a very dated treatment plant” and equipment to keep up with environmental regulation is “reaching the end of its useful life,” Mayor Nick Phillips said. The system was last upgraded in the early 1990s and $1.2 million remains to be paid on the $5 million loan the city took out to finance the upgrade. The loan won’t be paid off until 2024, he said.

Even so, selling the plant would be “an absolute last resort,” Phillips said.

Campbell’s assets, if Aqua Ohio is successful in purchasing them, would likely be managed through its Struthers Division, said area manager Jennifer Johnson.

The division, which recently opened its new operations center in Castlo Industrial Park, serves Mahoning County customers in Struthers; the villages of Poland, Lowellville and New Middletown; and Boardman, Poland, Coitsville, Canfield and Springfield townships. It also serves communities in Trumbull and Columbiana counties.

Aqua Ohio’s offer is “not something we can entertain” without going through a bid process that would be open to other potential buyers, Phillips said. Campbell citizens own the plant, so residents would have to agree to a ballot issue to approve the sale.

The city tried to sell the system about a decade or so ago without the public’s knowledge “and people were at the gates with pitchforks and fire,” the mayor recalled.

“We’re doing everything above board,” he remarked. “That’s why we’re having town hall meetings with citizens,” he said.

The city is exploring other options, including going to voters for a levy to offset the cost of necessary upgrades, he said. Phillips also said he felt the $7 million offer was low for the system.

“I feel the plant is worth more than that,” he said, acknowledging that Aqua is in the water business and was going to come in the lowest price for the system.

“That is not an offer I feel comfortable with,” he added. “Nothing against Aqua – it’s just business.” He also said he believed the city could provide better, more personal service for residents.

“The $7 million offer is a starting point for discussion based on the information we have about the Campbell system,” Mancari said. “Once we sit down with elected officials, it could change based on the information they provide.”

If city officials decided they wanted to consider a sale, the city would put it out to bid and stipulate in its request for proposals what it wanted for the system and offers would be made, Johnson said.

There have been no discussions yet between Aqua officials and the city of Youngstown regarding the offer, spokesman Jeff La Rue said Friday.

Aqua officials “hope to get on [the] radar” of incoming Youngstown Mayor Jamael Tito Brown “sometime early … without being a distraction to the other things he needs to do,” Kolodziej said last month.

Among the issues the new mayor and Youngstown City Council face is a projected budget deficit of $2.5 million to $3 million. Employee buyouts and layoffs are being contemplated to address the shortfall.

“This potential offer gives him another source of money that he can use to address the city’s priorities,” Kolodziej said.

Under a sale, Aqua Ohio would still purchase treated water from the Mahoning Valley Sanitary District to sell to the Youngstown system’s customers.

The district sells treated water to its two member cities, Youngstown and Niles, which then sell it to customers through their distribution systems and derive revenue from those sales, Vern Richburg, chairman of the sanitary district’s board of directors, said.

However, the district wouldn’t be obligated to honor the rates under the present agreement with Youngstown, according to Harry Johnson, city water commissioner.

“The important thing is we want to have the dialogue with the city of Youngstown pertinent to the distribution assets,” Kolodziej said. “At this time, there would be no change to the source of supply. The MVSD would still continue to own and operate that treatment facility.”

In recent years, Youngstown has offered water grants to cover related costs to support economic development projects, an ability selling its water distribution likely would preclude.

La Rue noted Aqua’s role in extending water lines to a site Whirlpool wanted to do an expansion at in Marion. “Whirlpool talked to us and we were able to do that extra expansion without having any strain on the city’s general fund,” he said. “It’s through partnerships like that that we can help strengthen any package for economic development for any community.”

The money Aqua would pay for Youngstown’s system would also provide city officials with a “pool of funds and the resources to redeploy them in any way they see fit, whether it’s issuing grants or doing other things that ultimately benefit the entire community base,” Mancari said.

Published by The Business Journal, Youngstown, Ohio.