Artesian Seeks to Kill Deal to Buy Cecil County Sewage Plants, due to Commissioners ‘Political Climate’

September 22, 2011

In a stunning blow to Cecil County economic development, Artesian Resources has notified the County Commissioners it wants to terminate its agreement to purchase most of the county’s wastewater treatment plants, due to the current political climate in which a majority of the County Commissioners has sought to derail the transaction at every turn, according to informed sources.

Artesian representatives met with the Commissioners in a closed door session late Wednesday and delivered their message that they were still willing to purchase the county’s water plants and related infrastructure but they were no longer interested in the four sewage treatment, or wastewater, plants that were part of the original contract, which was signed in 2008.

The sudden move by Artesian came as the long-stalled project seemed to be finally moving forward, with a step by the commissioners on Tuesday to allow the county’s outside bond counsel to begin paperwork for a $6 million bond restructuring that would have ultimately paid off the county’s wastewater plant bond obligations and transferred the debt to Artesian as part of the deal. But even that step was fraught with confusion among the commissioners and criticism of the sale by Commissioner Diana Broomell (R-4).

Broomell was responsible for the county falling into a legal breach of the contract, according to a letter from Artesian lawyers this summer, when she tried to delay a hearing on the Artesian sale before the state Public Service Commission, enlisted the help of Del. Michael Smigiel (R-36) to seek a delay, and she appeared personally before the PSC to oppose the sale.

Ironically, Broomell’s actions gave ammunition to Artesian in its dealings with the county, since—according to filings by Artesian with the federal Securities and Exchange Commission—the contract with Cecil County allowed the company to “terminate” the agreement “in the event of uncured breach by the other party.”

Sources said the termination will actually be cast in a face-saving public light when it is brought up at next Tuesday’s public worksession of the commissioners, and presented as a “proposal to mutually terminate wastewater asset purchase agreements.”

Despite the façade of mutual agreement, sources familiar with the process said that Artesian officials privately made no bones about their utter frustration with the handling of the matter by the ruling triumvirate of the current board of commissioners.

Broomell and Commissioners President James Mullin (R-1) have publicly stated they wanted to “re-negotiate” the wastewater portion of the accord but were willing to support the water plant sale. Commissioner Michael Dunn (R-3) hasn’t spoken out directly on the issue but he has voted with the other members of the trio on related issues.

All three concurred on the recent firing of the long-term legal counsel, Lawrence Haislip, who had represented the county on the Artesian contract. The firing came hours before the PSC hearing and Broomell claimed that the county should be given time to find new counsel. The PSC rejected her argument and those of her long-time allies in local groups opposing development especially in the northeastern area of the county near the Delaware line.

The PSC ruled in favor of Artesian and said the sale could proceed—just as the state’s highest court, the Court of Appeals, held this summer after a protracted, three-year litigation battle against the sale led by the Appleton Regional Community Alliance (ARCA). The ARCA lawsuit against the county cost local taxpayers over $203,000 in legal bills, according to county budget officials.

But the costs are just beginning, according to knowledgable business and public infrastructure officials. Because the sale has been pending for three years, the county has deferred maintenance on its wastewater facilities and they will need upgrades to comply with future state and federal environmental regulations.

Although the sewage plants are supposed to be supported by fees paid by users of the services, the county commissioners have been unwilling—as recently as Tuesday night—to raise user and connection fees for sewage plants to fully recover their costs. County public works officials warned commissioners that all taxpayers, even those who do not use the plants’ services, may end up having to pay the costs.

But an even greater cost may be the dashing of the economic development hopes of the county that have been stymied for decades by the lack of infrastructure in the designated Route 40-I95 growth corridor. Voters rejected a costly ‘pipeline’ plan to build infrastructure with public funds many years ago and the private Artesian firm, with extensive experience and access to water supplies in a multi-state region, was seen as the least costly to taxpayers way to create needed water and sewage services in the corridor. The contract included a franchise that would have allowed Artesian to expand services, at its own expense, in the corridor.

Commissioners and others were reluctant to speak on the record about the sudden collapse of the Artesian sale due to the private nature of the discussions. Joseph DiNunzio, executive Vice President and Secretary of Artesian Resources, told Cecil Times he could not comment on the matter at this time.

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8 Responses to Artesian Seeks to Kill Deal to Buy Cecil County Sewage Plants, due to Commissioners ‘Political Climate’

  1. Ron Lobos on September 23, 2011 at 8:23 am

    It’s not difficult to see, based on the decisions made thus far by Diana Broomall since becoming commissioner, that every time she spouts out the words “smart growth” what she really means and intends to promote through her personel agenda is “limited growth” or “no growth.” Apparently she never took a course in Economics 101 but rather chose to study Obama 101 economics. Sustained growth is necessary in the development of any economy. Unfortunately, Broomall has 3 1/2 years left in her term and before she’s out of there she’ll make the EPA look like a member of the Chamber of Commerce.

    I’ll be anxious to see what or who her wastewater treatment backup plan will include once she chases out Artesian.

  2. Ed Burke on September 23, 2011 at 8:35 am

    So Queen Broomell gets her way. She says she is pro-growth in the growth corridor and then kills the wastwater deal that would help get that underway. She and Mullin wanted to re-negotate a signed deal. Why would Artesian do that? Looks like she is killing “Responsible Growth” by irresponsible actions. The SMIPKIN 3 Amigo Team strikes again.

  3. Al Reasin on September 23, 2011 at 12:22 pm

    I can’t blame Artesian. The Artesian management can see the problems they will face in the next 3 1/2 years dealing with the three Amigos controlling the Cecil County Board of Commissioners. I get frustrated watching what happens each Tuesday. Why should Artesian take a risk with investors’ money and have their efforts stymied every which way?

    So a major problem at the national level, not enough confidence in government to justify investing, is now hitting home with a vengeance. Different political party, but the same problem and a similar result; the county getting hit by even more economic bad news due to incompetence in living up to contracts and having an ideology take precedence over properly serving the citizens of Cecil County.

  4. Tom Miles on September 23, 2011 at 7:36 pm

    Good riddance ! The Artesian deal was flawed from the get go. The previous commissioners sold valuable public property to a corporation for a pittance. Artesian would then be free to charge whatever rates they wanted, limited by only one person in Annapolis. Much of the public resistance to the deal came from the sleazy, back room nature of the negotiations. Public input was discouraged and much of the negotiations were secret. Even if the deal was not crooked, it appeared to be. Hopefully, the current commissioners will not try to shove a back room deal down their constituent’s throats.

    • Ed Burke on September 26, 2011 at 9:40 am

      Thanks for the recitation of ARCA talking points. This was discussed and resolved by the Circuit Court, Maryland Court of Appeals, and the state Public Service Commission. Wake up and smell the SMIPKIN / 3 Amigos Agenda.

      The appearance of secret, crooked backroom deals applies to them. What is your opinion of the unauthorized Broomell trip to the PSC, apparently orchestrated by Smigiel? What is your opinion of the 3 Amigos carrying out the SMIPKIN vendettas?

      • Tom Miles on September 26, 2011 at 5:23 pm

        I do not know a lot about ARCA. As I see it, public property was sold to Artesian for a song. The utility rates would then be determined by one person in Annapolis. Can you tell me when anyone in Annapolis gave a darn about Cecil County? Annapolis would only care if Cecil county stopped paying taxes or moved to secede. I saw the whole deal as a prelude to massive rate increases. That was why I argued against it. As far as the SMIPKINites, some days they disgust me and some days they please me, about the same as any politician. What do you expect from someone who basically slings “bravo sierra” for a living?

        • Ed Burke on September 27, 2011 at 2:16 pm

          Asset valuation for such properties is a complex procedure. I assume that the prior board acted responsibly. Rate increases are approved by the state Public Service Commission in Baltimore, not one person. The PSC has many experts on such issues and a ‘People’s Counsel” to represent the concerns and interests of the public. Again, a complex process requiring justification.

          I don’t believe that the county should be in the utility business for many reasons, including that elected officials don’t have the will to increase rates. The result of stagnant rates is that the rest of us subsidize the users of the system when the commissioners raid the general fund.

  5. Bob Gatchel on September 23, 2011 at 7:40 pm

    This is EXACTLY what happened at Bainbridge with the technology company that was looking to create a HUGE technology campus on the old Navy Site. I mean exactly the same, to a TEE!

    The politicos fail to realize that really, in the end, it is the potential CUSTOMER (or business in this case) who will make the final decision about a deal. So the “Three Amigos” think they are “all that and a bag of chips” and think they can push a vendor around and play games in their own little playground. They are failing to realize that they are “cheezing off” potential development and infrastructure vital to proper growth in this county.

    What amazes me is that [Commissioner James] Mullin slams [ousted economic development director Vernon]Thompson, blaming him for lack of BRAC business? Yet it was for situations JUST LIKE THIS STUFF GOING ON WITH THE COMMISSIONERS now that is causing yet another “vendor” to run with their hair on fire away from Cecil County!

    Hey Mullin and Broomell, look in the mirror the next time you whine about no business growth in Cecil County. Your actions right now with this vendor are proving that YOU are part of the problem and not part of the solution!

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