“Grave Concerns:” Municipal Authority retains law firm to investigate sale attempt

RAVEN RUN – The Municipal Authority of the Borough of Shenandoah voted today to retain a law firm to investigate the borough’s attempted sale of the authority.

The action was taken at a special meeting at the authority’s office in Raven Run, after authority and borough council member Leo Pietkiewicz was asked to recuse himself.

According to the retention motion, the authority has retained Elliott Greenleaf and Dean, Wilkes-Barre, to “research, investigate, and commence legal action if warranted against the Borough of Shenandoah… to stop the proposed sale of the Shenandoah water supply, treatment, and distribution system and any other authority assets because the authority has determined that said proposed sale is not in the best interests of the Authority or its customers.”

Only ten people were permitted in the meeting room per gathering restrictions set by state government. Additional members of the public listened in from the lobby of the offices.

All members of the authority board — Joe Anczarski, Brian Dillman, Gary Wood, John Szczyglak, and Pietkiewcz — were in attendance, either in person or by phone, as well as office supervisor Jennifer Hepler, and plant operator Dan Salvadore. Solicitor Joseph Nahas was present by phone as well.

Alleged Conflict of Interest

The first business item on the agenda was a request for Pietkiewicz, who formerly served as authority chair and council president, to voluntarily recuse himself from any matters regarding the sale because of an alleged conflict of interest resulting from his positions on both the Municipal Authority board and borough council.

Pietkiewicz asked Nahas if such a request was mandatory, which Nahas said it was not, but it could be considered unethical.

“You can’t sit on both sides of a contract, ethically, so it is my opinion that one should recuse,” Nahas said, “because one does not want the issue of impropriety and one cannot decide on both sides of the table.”

Nahas advised Pietkiewicz recuse himself on such a matter.

“It is certainly not mandatory,” Nahas said.

Pietkiewicz then asked if he could have input on the matter. Nahas said in such a case he would be treated as a member of the public. Pietkiewicz expressed concern that the public comment of the portion wasn’t set until the end of the meeting, after votes regarding the sale and retention of a law firm.

In response, the public portion was moved to follow the recusal request, which Pietkiewicz accepted.

Board, public left in the dark

Nahas explained during the public portion that the authority board has been largely unaware of any proceedings related to the potential sale.

“The board was not part of a vote to sell the authority, the board was not involved in any meetings,” Nahas said. “One of the issues that the board has is that the board members feel that they were not a part of the process, they aren’t comfortable with the way the process has proceeded up to date, and they want to retain a law firm to investigate whether or not the process was correct, how it’s being handled.”

“They wanted to obtain an objective law firm to see if the authority the borough has been executing is appropriate and in conformity with the [municipal authorities] act and that it is in the best interest of both its customers as well as its employees,” Nahas added.

According to Sentinel archives, the borough, by recommendation of the Pennsylvania Economy League, requested an appraisal of the authority in 2017.

Last May, the borough approved a similar recommendation from the PEL to distribute a request for proposals for the municipal authority, ressentially requesting bids to buy the authority.

“Receipt of proposals will not obligate the borough or MABS to accept any offer or proposal,” Pietkiewicz said in the motion at that time.

Last September, the deadline for buyers to submit bids was extended to October 30.

The board was not part of a vote to sell the authority, the board was not involved in any meetings.

Attorney Joseph Nahas, MABS Solicitor

“Basically, the board feels that it is not in the best interest of Shenandoah citizens or its employees to sell [the authority,]” said Nahas on behalf of the authority. “If the borough of Shenandoah were to be selling its assets in a way to obviously combat debt, what happens in the future when we have no assets to sell?”

Nahas also expressed concerns on behalf of the authority that a sale could trigger the municipal authority properties in Raven Run would revert to Girard Estate ownership.

Donna Kulpowicz, Shenandoah, asked the board why the public has heard very little of the potential sale.

“We’ve heard bits and pieces but there’s never any discussion of how far it’s progressing or where we’re at with it,” said Kulpowicz. “It certainly seems like there may be one or two individuals who are aware of what’s happening and I’d like to know who is negotiating with these companies.”

Nahas explained that the authority is in the same position.

“We don’t know either,” Nahas answered. “We have not negotiated as a board with anyone for the sale. We do not know where they’re at in regards to the proximity of completing the sale.”

“In other words, we don’t even know if it’s right,” Nahas added.

Nahas said the board as a whole hasn’t been kept abreast of the status of the potential sale at all, but he wasn’t certain he could speak for the entire board.

Tours given, no negotiations

In response, Kulpowicz asked Pietkiewicz if he, specifically, has met with anyone regarding the sale.

Piekiewicz said three proposals were received, and he met with two and Salvadore met with all three.

“I gave tours but I didn’t negotiate,” Salvadore said.

“There were no negotiations,” Pietkiewicz said. “What was done with the Pennsylvania Economy League is the borough council gave them directions to start a process to come back with a proposal. There have been no negotiations for a sale whatsoever.”

Kulpowicz then asked if he’d met with the PEL to discuss any proposals.

“Through emails. They’ve told me who was sending proposals in and potentially what will be in the proposals,” Pietkiewicz said.

Pietkiewicz added that “the understanding from the Pennsylvania Economy League was that public hearings would be held to inform the public of what the potential would be, then a final vote would be taken.”

“The reason we’re sitting here, none of us were informed”

Szczyglak shared some of Kulpowicz’s sentiments.

“The reason we’re sitting here, none of us were informed,” he explained. “That’s what we’re voting on, to stop this because none of us were informed. Speaking for myself personally, nobody told me it’s good to sell the plant, it’s not, we didn’t hear anything.”

Szczyglak explained the action today was to help the authority make an informed decision and better understand the situation.

“As a paying customer, I appreciate that the board is taking this stance to say we want to be informed on what’s happening,” said Kulpowicz. “I’m just hoping that you can move forward and make sure that you get that step to move forward.”

Salvadore explained that “I have a doubt in my mind that there isn’t someone somewhere who knows information about the selling of this authority only for this reason: I have given three tours to three private water companies. Someone, somewhere picked somebody to be the number one buyer. Who did that? Certainly it wasn’t this board or the union.”

“Was it the economy league? Was it the economy league’s lawyers? I gave three tours and from what we understand, and we don’t know a lot, two people bid on it,” Salvadore added. “Who has the bid? Somebody has that information.”

“Grave concerns” over sale to benefit borough

Tom Twardzik, Shenandoah Heights, owner of Ateeco, Inc, praised the board’s efforts at the meeting today, expressing “grave concerns” of the potential sale.

“I am here as I have grave concerns over what appear to be actions to attempt to sell the authorities assets for the interests of the Borough of Shenandoah and their questionable financial condition,” said Twardzik. “I support MABS action to retain counsel to protect the independent operation for its customers and opt for more transparency for a long term solution for water authority customers.”

“I am not blindly parochial that we should maintain independence in the face of insurmountable odds, but the process I see is severely damage and there doesn’t seem to be enough transparency for the fairness of the customers, so I applaud your action today,” Twardzik concluded.

The vote to retain counsel was 4-0 with Pietkiewicz recusing himself.

Chairman Anczarski then asked for a motion to cease sale of the authority, pending the outcome of the law firm’s investigation.

Szczyglak motioned, citing the lack of information. Wood seconded the motion, and the vote was approved 4-0 with Pietkiewicz recusing himself.

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