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