Allentown, Pa., has narrowed its short list to six companies for a 50-year concession lease agreement for its water and sewer systems.
Mayor Ed Pawlowski has said the public-private partnership could provide the 119,000-population city in Lehigh County up to $200 million in upfront money to replenish its police and fire pension system.
The remaining bidders are Aqua Pennsylvania, American Water, Lehigh County Authority, NDC Housing, United Water, and Allentown Forward. Access Capital and Macquarie withdrew, according to Pawlowski's communications director, Mike Moore.
The city told Allentown Forward in September that it was not qualified because it lacked an operator, but could be included if it secured an operator that city officials deemed satisfactory. It has since secured a satisfactory operator, said Moore.
"The city and six pre-qualified bidders are continuing to do their due diligence," said Moore.
Allentown will issue a request for bids, which it intends to publish on the city website. City Council approval is necessary. The council two weeks ago rejected a proposal to set a binding May referendum for the lease proposal. The measure would have required a referendum on sales or leases of city assets exceeding $10 million.
City officials have warned that in less than three years, Allentown's pension obligation will exceed $23 million annually, or about 25% of its general fund budget.
Other benefits to the water project, they say, include eliminating about $30 million of water and sewer debt and Allentown receiving ongoing revenue-sharing payments to offset costs now funded by the water fund. They also say the move would eliminate the earned-income tax imposed on residents and non-residents.
Opponents fear a sharp rise in water rates through the privatization.