News

March 2, 2010

Hazleton council exploring options for water system

Water authority members oppose a takeover and sale, claiming that rates would increase.

By Steve Mocarsky smocarsky@timesleader.com
Staff Writer
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HAZLETON – City council on Monday voted to hire – together with the city water authority board – an attorney to explore alternatives to the city taking over and selling off the local water system to a private company.

Council voted 4-0 to hire the Washington, D.C., law firm of Dewey & LeBoeuf, with attorney Michael D. Klein as the lead attorney. Councilman Jack Mundie, who acted as a liaison between Mayor Lou Barletta and the board of the Hazleton City Authority in the compromise, was absent.

At Barletta’s suggestion, the authority board approved the joint hire of the firm at a meeting on Feb. 18. Barletta said he presented the idea to Mundie, a former authority board member, who in turn took the proposal to the board.

According to the agreement, the city and the authority each will pay half the amount of Dewey & LeBoeuf’s legal bills, which will be $350 to $450 per hour. Either entity can terminate the agreement at any time.

The city will have the option to have sole representation from Dewey & LeBoeuf if council decides to proceed with a takeover of the water department, and the firm’s fee would then increase to $450 to $700 per hour, with the city paying the entire amount.

Attorney Conrad Falvello, whom the city hired on Feb. 3 to research the legality and requirements of a takeover and sale, said Klein is very experienced in such takeovers and sales, having represented both municipalities and authorities. If a takeover and sale was the final result, Falvello said it would make sense for Klein to handle the proceedings instead of him because Klein’s experience would mean less billable hours for the city.

If the city went ahead with a takeover and the authority opposed it in court, Falvello said he would litigate for the city.

Reached at home on Monday, authority chairman Phil Andras said he had expected council to approve the firm’s hire.

He said he had concerns when he heard Klein was involved when the city initially sought proposals from private water firms on sale terms for the water department, but he was optimistic Klein can find possible alternatives to a sale.

Barletta has said the only way to get the city out of debt, avoid a sizeable tax increase and supply the city with a reliable source of continuous revenue was to sell the water department to a private company, use part of the sale proceeds to pay off city debt, use another part to build a solar energy farm and put the rest in an interest-bearing account. The interest would supply a reliable annual revenue stream for the city, Barletta has said.

Most authority members oppose a takeover and sale, claiming that water rates would increase and the city would lose its most valuable asset. The board, after voting to hire Dewey & LeBoeuf, at the same meeting hired Joseph Friedman, of Thorp Reed & Armstrong, to investigate the authority’s options to resist a sale of the water department.

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