Rudolph Clarke Attorneys Prevent Privatization of Sewer System


Rudolph Clarke Managing Partner Michael Clarke and attorney Lauren Gallagher worked to ensure that a Montgomery County sewer conveyance system remained under municipal ownership.

In guiding the Borough of Conshohocken Authority in its successful bid for the West Conshohocken sewer conveyance system, Mike and Lauren helped prevent significant increases in sewer rates, as is the case when public utilities become privately owned.

“Municipalities see the sale of a sewer system as a quick, easy fix,” Mike said. “No one thinks about it until the rates go up.”

Under Act 12, which was adopted by the state legislature in 2016, rates under a for-profit ownership structure could spiral out of control. Act 12 allows private companies to pay the purchase price equal to the fair market value of the asset and include the appraisal value in the rate base. Prior to Act 12 adoption, purchasers instead incorporated the depreciated cost in the rate.

Bidding wars among utility companies are a net effect of Act 12. In 2016, Aqua Pennsylvania bid 43 percent higher than the next highest bidder, Bucks County Water & Sewer Authority, to purchase the Limerick Township wastewater system for $75.1 million.

Mike and Lauren started in the fall of 2016 analyzing information and preparing qualifications. They worked closely with Russ McIntosh, a utility evaluation expert and Vice President of HRG, to arrive at the final sealed bid. Russ, an expert in the field for the last 40 years, analyzed how much the system is worth based on current customers and potential for future growth. Russ determined that the system could handle approximately 500 to 600 new customers.

Russ outlined a range of possible bid scenarios. Mike and Lauren advised Authority staff, the Finance Committee and the Board as bid documents were prepared and submitted.

Rudolph Clarke also collaborated with William J. Carlin Jr of Boenning & Scattergood, Authority engineer Fred Ebert of Ebert Engineering Inc. and bond counsel Dave Nasatir and Stephanie Sprenkle of Obermayer Rebmann Maxwell & Hippel LLP.

Mike and Lauren worked closely with the Authority’s Finance Committee, Carol Smith and Janene Reilly, as well as Borough of Conshohocken Authority Executive Director Stephen Clark and Finance Director Angela Madle-Long. The Authority’s Board of Directors, Chairman Felix Raimondo, Vice Chair Carol Smith and Board members Kyle Elliott, Anita Barton and Janene Reilly voted to grant unanimous approval for the purchase price.

Mike and Lauren have also assisted the Authority with its sale of assets and compiled deed transfers.

The Borough of Conshohocken Authority closed on the sale in June 2017.