As I have previously written, the city of Arnold is asking its residents to vote on November 4 to allow the sale of the city sewer system to Missouri American Water (MAW). This same issue was considered 2.5 years ago, when MAW offered the city $12 million for the system (the city owed $11 million on sewer bonds at the time). The city council voted unanimously on 2/2/2012 to reject the offer. Current city council members that participated in that vote were Phil Amato and Paul Freese.
In addition to the above terms, Utility Workers Union of America Local 355, which fought against the sale, stated that:
In its unsolicited bid to expand its empire by acquiring Arnold’s wastewater system, Missouri American Water demanded the City impose a nearly 20 percent hike in ratepayers’ sewer bills before the sale was completed. In addition, the company demanded agreement from the city that they would NOT oppose any future rate hikes requests before the Missouri Public Service Commission (PSC).
2012 Offer Rejected
Let’s look at the reasons Arnold gave for nixing the sale. Then and current mayor Ron Counts said in a press release:
Although American Water approached the city with a multi-million dollar offer, after careful evaluation of [the] matter, it was clear that not enough assurances could be provided to ensure the protection of the City’s residents or the City employees who were proposed to join American Water.
The city administrator at the time, Matt Unrein, gave a few additional reasons in a Leader article from Feb. 9:
It [the $1 million net proceeds] was not enough money to sacrifice local control.
This time around, the city will net $5.2 million in proceeds and then have access to the sewer reserve fund and its $4 million. From what I can tell from the 2012 city budget (p. 188), the sewer fund also had $4 million in it at the end of 2011, but nobody at the time seems to have mentioned adding the money to the net proceeds.
We want to make sure our (sewer department) employees are well taken care of, and as far as benefits, pay, and job security, we know we could take care of them best.
This time, MAW has agreed to hire the city’s seven sewer employees and “provide them with pay and benefits at least equal to what they have with the city.”
And here’s Unrein (who now works for the city of Ferguson) on the subject of rate increases:
With the Missouri Public Service Commission approving rate increases, there’s uncertainty there. With local control (of the system), we have the ability to run it as a break-even. They would have to make money. They’re publicly traded, and have stockholders.
Local 355 the point at the time that MAW had hiked the rates for the Cedar Hill sewer over 94% since 2007, and was asking for another hike.
But Unrein also said “rate increases are inevitable.” This turned out not to be true, at least in the short term. Arnold did not raise rates between then and now, and Unrein previewed the reason why: “The council is adamant it wants the cheapest rates we can have.” This failure to raise rates was short-sighted and politically motivated. Councilman Brian McArthur said on October 2 that “Everyone’s afraid to raise rates because they’re worried they will not get re-elected.”
This Time Around
This time, Arnold has threatened (in a bit of pre-election theater) to raise rates from $24.33 per month to $42.90 per month. Council member Mary Elizabeth Coleman seemed to agree about the intent of this hike when she said “It’s being done with the view to advance the sale,” according to the October 9 Leader. This hike was proposed but then tabled on October 2. MAW says its rate in 2016 will be “about $30.”
Here’s what Counts is saying this time around:
Arnold Mayor Counts said the sale looks better this time around because the city has tight finances right now and the sewer system is plagued with problems that will cost a lot to fix.
Those problems existed back then, too, though. He said in August that:
[T]he sale would benefit residents, too, because Missouri American is better equipped to fix and manage the aging sewer system.
Also, the company can operate the system more efficiently, which probably means lower sewer rates down the line.
However, the biggest differences between now and then seem to be that the city needs the money more now – as Counts indicated – and there is about $4 million more to be had, and the council can no longer avoid raising rates. Selling the sewer system brings in the money and relieves the council of the responsibility of raising rates.