ARCA Lawsuits Cost County, Citizens Up to $1Million and Counting on Artesian Sale

June 14, 2011

An anti-growth community group has cost Cecil County government and local residents up to $1 million, and counting, in the past two years with a dragged-out lawsuit challenging the county’s sale of several water and wastewater plants to the private Artesian water company. And now the county is faced with a choice on how to try to contain those costs while still awaiting a final ruling by the state’s highest court.

The Appleton Regional Community Alliance (ARCA) has filed suit against Cecil County 13 times since 2004, according to Cecil County Circuit Court records, on various land use and policy decisions. ARCA has lost all its cases except for two actions, joined for the purposes of an appeal, which are still pending. The outstanding cases challenge the county’s 2008 decision to sell most of its water and wastewater-treatment facilities to Artesian, a Delaware-based private water and wastewater treatment facilities operator.

The county Commissioners decided, in an October, 2008 unanimous vote, to sell several county-owned water and wastewater-treatment facilities to Artesian for $13 million. The county owed $10 million in debt on the facilities, so the proceeds of the sale would have paid off that debt, given the county $3 million in cash, and relieved the county of ongoing operations and maintenance costs.

At the time, the commissioners called the decision a win-win, because it would have reduced county expenses and prevented the county from having to pay for costly upgrades needed at several of the aging facilities. In addition, the sale to Artesian meant that the private, professional operators could expand services into the county’s I-95-Route 40 growth corridor, where public water and sewer services have been lacking for years and have stymied attempts to bring business and economic development to the area.

But ARCA, an anti-growth organization based in the northeastern part of the county adjacent to the Delaware line, challenged the sale in 2008 and its lawyers contended that the county needed authority from the state General Assembly to sell such assets. However, a visiting judge sitting in the local Circuit Court ruled against ARCA in 2009, but ARCA appealed the decision.

Oral arguments in the appellate case were heard in Annapolis a year ago, but still no decision has been rendered by the state’s Court of Appeals.

In the interim, the sale has been put on hold and Cecil County has been forced to continue operating the facilities while trying to keep down costs pending a potential sale.

At Tuesday’s Cecil County Commissioners work session, Scot Flanigan, director of Public Works, outlined the dilemma now facing the county.

The county initially thought the sale to Artesian would be finalized by June 30, 2009, so vacant plant operator positions were not filled in the interim to avoid hiring people just to lay them off. The county entered into what was initially thought to be a few months interim agreement with Artesian to provide needed staffers and oversight, which would also have provided transitional expertise to ensure water and wastewater services were provided smoothly.

But as the ARCA legal fight dragged on, so did the interim management services agreement with Artesian. And now Artesian has notified the county it wants a 5 percent increase in the payments it receives as a contractor while the sale is still up in the air.

Flanigan said the interim services contract costs about $23,000 a month, or about $276,000 a year. He suggested to county commissioners that the county notify Artesian it wants out of that contract and instead hire independent contractor workers at a potential cost of about $123,000 a year.

He also suggested that if the county so notified Artesian, the firm might come back with a counter-offer that could lower its proposed costs and provide better services than going the independent contractor route. “Time will tell,” he said.

The commissioners made no decisions Tuesday and will consider how to proceed,

Meanwhile, the costs of the ARCA lawsuit mount. County budget director Craig Whiteford told Cecil Times Tuesday he did not have final calculations on the legal bills to the county but the initial Circuit Court actions cost at least $150,000. The county had to retain a Baltimore law firm to assist in its defense against ARCA and has incurred additional legal bills for the appellate case before the Court of Appeals.

[UPDATE: Whiteford has now compiled the expenses for the appeal and calculated the total legal bills incurred by the county in the case total $203,543.]

In addition, the county has written checks to Artesian for about $629,700 through May of this year, he said, largely for the interim services as described by Flanigan.

Furthermore, the county’s “enterprise fund” has had to continue to pay debt service on the $10 million in debt used to build the water and wastewater treatment facilities, while also continuing to pay for routine maintenance to keep the systems operating.

However, Flanigan said the county has had to defer long-term maintenance on the systems because there was no money to do so and it was hoped that the sale would proceed. He said that so far, Artesian has not tried to cut the proposed purchase price because the systems are now two years older and need more maintenance.

County officials were unable to provide a total, bottom-line calculation of the total costs to the county and local water/wastewater customers, but adding up the preliminary legal bills, the interim services contract with Artesian for two years, ongoing operations and maintenance and other costs, it appears to be nearly $1 million—and counting.

A leading member of ARCA, Owen Thorne, was appointed last week to the county Planning Commission, on a 3-2 vote by the County Commissioners. Commissioners Robert Hodge (R-5) and Tari Moore (R-2) opposed Thorne, saying that his role as an ARCA activist had cost the county hundreds of thousands of dollars in legal and related fees and he could not be impartial or fair in deciding planning and growth matters.

Thorne was nominated and endorsed by Commissioner Michael Dunn (R-3), who said he thought Thorne’s involvement in legal actions against the county by ARCA was “an asset.”

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2 Responses to ARCA Lawsuits Cost County, Citizens Up to $1Million and Counting on Artesian Sale

  1. TOO MUCH GOVERNMENT on June 15, 2011 at 6:52 pm

    Thorne the ARCA activist nominated and endorsed by the infamous 3 is laughable. Am I the only one that thinks that there is a conflict of interest in this appointment?

  2. P Harvey on June 16, 2011 at 8:22 am

    Dunn, Mullin, and Broomell are/were members of the 21st Century Republican Club which sponsored “land use forums” to oppose development. All three are/were heavily involved in ARCA and CLUA. So Dunn thinks suing the county is a good credential for the Planning Commission? Ethics? Waiting for the rest of the story.

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