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Are Suez water rates out of line? Letter claims Middletown costs are three times the average in U.S.

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 2/7/18

Do Middletown residents pay more for water and sewer than most people in the United States?

The new owners of the Harborton Place mobile home park in Middletown say yes, in light of recent …

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Are Suez water rates out of line? Letter claims Middletown costs are three times the average in U.S.

Posted

Do Middletown residents pay more for water and sewer than most people in the United States?

The new owners of the Harborton Place mobile home park in Middletown say yes, in light of recent complaints residents of the trailer court have been making about their water and sewer bills.

One resident contacted the Press & Journal with his concerns recently, and multiple posts on the Middletown Residents United Facebook page — which since have been taken down — also made references to increased costs there.

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KEY LINKS

• What are possible reasons for higher Harborton Place water rates?

• Council President Suglia: Kodiak water letter might lead to court

• Here is the text of the letter sent to Harborton Place residents

A timeline of how Middletown and Suez entered water agreement

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The residents of Harborton Place, which is off Vine Street just south of the Pennsylvania Turnpike, received an unsigned letter dated Dec. 4, 2017, from Kodiak Property Management. That’s the company brought in to manage Harborton after the park was acquired in February 2017 by Crown Communities, a real estate syndicator based in Cheyenne, Wyoming.

“We are aware that there have been several complaints from residents regarding water and sewer billing at Harborton Estates. We would therefore like to try and set the record straight regarding several items,” the Dec. 4 letter from Kodiak begins.

The letter goes on to say: “Middletown has some of the most expensive water and sewer rates of any city or borough in the United States — over three times the national average, in fact. This is a consequence of the agreement that was made between Suez and the Borough when Suez took over the Middletown water and sewer system, and there is nothing that anyone living in Middletown can do about it, short of the Borough government taking action to negotiate better rates. Every residential customer in Middletown is being billed the same amount as you are, including the people living directly across the street.”

Alex Cabot, principal of Crown Communities, pointed to the company’s experience managing manufactured housing communities across the United States to back up Kodiak’s claim that water and sewer rates paid by Middletown residents are more than three times the national average.

“I am familiar with the water and sewer rates that are typically charged by municipalities,” Cabot told the Press & Journal in a Feb. 2 email. “The average that we have seen elsewhere for combined water and sewer service is approximately $7 per 1,000 gallons that flows through the park master meter. Middletown is charging approximately $22.50 per 1,000 gallons — in other words three times the rate we see elsewhere.”

In addition, “my observation has also been confirmed by numerous engineers and vendors we work with in the water and sewer space, who say that Middletown’s water and sewer rates are abnormally high,” Cabot said.

He attached the current rate schedule from Middletown, and from towns in Iowa, Michigan and in Ohio for comparison.

Cabot also provided a link to a Dec. 24, 2016 article in The New York Times about the experience of municipalities that turn over management of their water and sewer systems to private companies.

According to the article, water rates in Bayonne, New Jersey, have gone up 28 percent since 2012, when the city allowed its water system to be managed by Suez in partnership with global investment firm KKR in a 40-year deal.

The Times article makes a passing reference to Middletown, but does not dwell on the lease deal here.

Ghilianie Soto, northeast communications and community relations manager for Suez, in a Feb. 2 telephone interview with the Press & Journal did not dispute Kodiak’s claim that water and sewer rates here are more than three times the national average.

Instead, Soto gave a statement saying that Suez has not raised water and sewer rates in Middletown since the lease began in January 2015. Suez inherited the water and sewer rates that Middletown was charging at the time.

In June 2014, Middletown borough council approved increasing sewer rates for the average Middletown resident by 58 percent, from $43 per month to $68. Water bills went up by a smaller amount.

Mayor James H. Curry III vetoed the increase and called for exploring alternatives, such as phasing in rate hikes over time. Council overrode his veto.

Interestingly, the reference to Middletown in the New York Times article says only that the borough “raised its rates before striking a deal” with KKR and then-United Water in September 2014.

“We have not changed the billing rate since the agreement,” Soto of Suez said. “We have just continued the billing rates that the borough had set forth when we joined the contract in 2015.”

The Kodiak letter was also sent to Borough Manager Ken Klinepeter, who before the lease was in charge of the borough’s water and sewer systems as Middletown Public Works superintendent.

But Klinepeter retired from the borough in July 2014 and was not employed by Middletown when council approved the lease in September 2014.

Klinepeter returned to the borough in April 2016, when council hired him as the new borough manager.

Klinepeter in a Feb. 1 email to the Press & Journal said he believes the water rate Suez charges in Middletown is “competitive” with what the company charges to customers elsewhere.

The Middletown water rate is also competitive with the water rate charged by Capital Region Water to its customers elsewhere in the surrounding area, Klinepeter said.

However, “I believe our sewer rate is much higher than many in our surrounding area,” Klinepeter added.