MABS files civil complaint against borough; borough plans to dissolve MABS
KAYLEE LINDENMUTH / SHENANDOAH SENTINEL - The entrance to the Municipal Authority of the Borough of Shenandoah property in Raven Run on Oct. 1, 2020.
SHENANDOAH – The Municipal Authority of the Borough of Shenandoah (MABS) took the fight for its life to court Tuesday, which may be its death knell following a borough council vote Thursday night.
Shenandoah Borough Solicitor Jim Amato told council Thursday that MABS had filed a preliminary injunction and a declaratory judgment action in Schuylkill County Court.
Schuylkill County’s Civil Case Inquiry online shows that a complaint in declaratory judgment was filed Tuesday afternoon by MABS against the borough.
“We have an ordinance that we discussed earlier [at the borough’s workshop] about the dissolution of MABS,” Amato said. He requested an executive session to discuss the matter and other personnel matters.
The executive session lasted about half an hour.
Following the executive session, councilman Leo Pietkiewicz motioned to approve advertising the ordinance to dissolve MABS, receiving a second from councilwoman Katie Catizone.
Council voted 5-1 to approve advertising the ordinance, with Pietkiewicz, Catizone, Vice President J.P. Dombrosky, and members William Selbi and John Thomas voting yes, and Eileen Burke voting no.
The borough would be able to enact the ordinance a week after it is advertised.
In November, the borough approved an ordinance authorizing the sale of the authority to Aqua Pennsylvania, one of the largest private water companies in the Commonwealth, for $12 Million, following a pair of public hearings and an online question-and-answer initiative.
Under the proposal, Aqua Pennsylvania would pay $12 Million + accounts receivable. The borough would then use $5.5 Million of the proceeds to pay off MABS’ debt.
The water system, including the plant, distribution system, towers, easements, and water sources would be transferred, as would costs and risks associated with regulatory compliance.
The existing windfarm and telecomms tower leases would be retained by the borough, generating about $112,000 annually.
The ordinance approved in November included a clause threatening to dissolve the authority in the absence of cooperation.
“It is the desire of the Borough that MABS cooperate with the Borough in connection with all aspects of the sale,” the ordinance read. “If MABS does not cooperate, the Borough intends contemporaneously to: 1. terminate the existence of MABS, 2. require MABS to convey by appropriate instruments all of the Water System Assets it has any right or title to pursuant to Section 5622(a) of the Municipality Authorities Act, 3. assume all of MABS’ obligations, 4. pay off or otherwise satisfy all debt and other obligations of MABS required to be satisfied under applicable law, and 5. consummate the Sale with Aqua.”
In March, the MABS board retained special counsel 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.”
Such a battle is not unusual for sales of this kind, especially those involving Aqua Pennsylvania.
In Delaware County, a legal battle has been ongoing since early 2020 between the county and its sewer authority, the Delaware County Regional Water Quality Control Authority (DELCORA), over the county’s proposed sale of DELCORA to Aqua for $276.5 million.
According to the Philadelphia Inquirer, DELCORA sued the county on May 14 to block the sale. The following Monday, the county voted to dissolve DELCORA. On June 4, the dissolution was blocked by an injunction, and a court battle has been ongoing ever since.
In Norristown, another similar issue is ongoing, according to the Norristown Times Herald.
In August of 2020, the Norristown Municipal Waste Authority tabled a resolution to proceed with the sale, and, shortly after, borough council moved to dissolve that authority, the Times Herald reported in October.
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