SCRANTON — The Scranton Sewer Authority will ask the state auditor general to review the $195 million sewer system sale to Pennsylvania American Water — a major development that some officials have supported since 2017.
The authority board voted 3-0, with member Keleena McNichols absent, to request Auditor General Eugene DePasquale review the 2016 sale agreement and several million in proceeds held in escrow for sewer-line easement acquisition. Board member Michael Dempsey, the authority’s lone Dunmore representative, tried twice in 2017 to convince his colleagues to request the review.
Thursday’s vote followed a chorus of pleas from residents and officials of Scranton and Dunmore seeking the review. Dunmore Mayor Timothy Burke, Scranton city Councilman Bill Gaughan and others emphasized the importance of transparency amid lingering questions about millions of dollars in controversial legal fees surrounding the transaction. Millions more in easement-acquisition funds hang in the balance for both communities.
The auditor general’s office does not have the power to independently review a municipal authority, but can do so at the authority’s request.
Reached after the meeting, DePasquale said his office awaits the formal request and called the review “something that we’ll take very seriously.”
DePasquale said in early 2018 that the Scranton Sewer Authority would be the first municipal authority in the state that he’d audit if given that power.
Dempsey, a longtime advocate of the state reviewing the sale, argued such a review could clear up public confusion and misconceptions surrounding the transaction.
“I do think it’s important for transparency,” Dempsey said. “I do think there’s a lot of questions, a lot of misunderstandings that the public has.”
Authority Chairman Michael Parker and member Kevin Whelan, who voted down Dempsey’s May 2017 motion seeking a state audit of the sale, voted Thursday to request the review. Whelan offered no comment after the vote, but Parker said he “would like the public to have all the information” available.
Scranton ethics board Chairwoman Joan Hodowanitz also endorsed requesting the review prior to the vote, arguing it won’t cost anything and could unearth issues not revealed in the authority’s annual audits.
“All the annual audits that the city of Scranton had, none of them picked up the double pensions and a number of other issues like the bribery and fraud going on in this building,” she said. “You’ve got nothing to lose by bringing the auditor general in.”
It’s too early to determine a timeline for the sewer sale review, DePasquale said.
In other business, sewer authority solicitor Jason Shrive announced the authority and the water company have negotiated terms of a substantial extension of a confidential deadline for the authority to secure between 600 and 700 missing sewer-line easements. Those terms could be put in writing as early as today, he said.
Failure by the authority to secure the easements by the undisclosed deadline could jeopardize about $16.5 million in sale proceeds held in escrow. That includes $5 million for indemnity and about $11.5 million remaining of $12 million set aside for easement acquisition.
The authority is working to settle a class-action case over the missing easements before the deadline expires and the easement escrow money reverts to the water company.
If the authority meets the deadline and settles all other matters, the remaining escrow funds would go to Scranton and Dunmore on an 80/20 share basis, with Scranton receiving the larger share.
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