City Council, Mayoral Panel Sparring Over Future Of PWSA

May 22, 2018

Pittsburgh City Council and a mayoral panel are in disagreement about how best to insulate the Pittsburgh Water and Sewer Authority from political influence.

Council recently amended a plan to change how PWSA board members are appointed, but members of a panel created to study PWSA restructuring say those changes fall short of what’s needed to ensure an effective, safe and accountable water utility. Meanwhile, members of city council are worried that the panel’s proposal could open the door to privatization.

“City Council’s version [of the cooperation agreement] removes some of the politics and some of the conflicts, but not all of them,” said panel member Jared Cohon. He was referring to an amendment that would retain a voting seat on PWSA’s board of directors for a city council member, an arrangement Cohon said is inherently conflicted.

“‘Who do I vote for? My constituents or the ratepayers of PWSA? Do I act in a way that’s best for PWSA in the long term? Or do I pay attention to the city’s current finances?’” Cohon said. “That’s not the way PWSA or any utility should work. They should have a board that’s wholly focused on the utility’s mission.”

The question is how much PWSA’s governance should depart from its current arrangement. Under state law, the mayor appoints all authority board members, which panel members consider a root cause of PWSA’s problems. They propose creating a five-member board called the Board of Nominators to select a nine-member Board of Directors. After appointing an initial Board of Nominators, the mayor would have no role in PWSA: the Board of Nominators would self-select in perpetuity.

Mayor Bill Peduto created the panel in 2017 to help create a plan to address PWSA’s problems, which include failing infrastructure and significant debt. While Peduto volunteered to cede his appointing power, the state Municipal Authorities Act and Pittsburgh’s Home Rule Charter would have to be amended to make that change permanent.

Councilman Corey O’Connor, who chairs the Committee on Intergovernmental Affairs, said he has no interest in changing state law.

“If [the panel members] really want it, they can go to Harrisburg and they can lobby,” he said.

Council accepted the idea of creating a Board of Nominators to select the Board of Directors, but proposed all appointments be subject to council approval. In addition, they want a member of council to sit on PWSA’s board. So no matter who the mayor is, City Council can hold PWSA accountable, said O’Connor, alleging that the panel’s motivation isn’t really about transparency at PWSA.

“How it was presented to us was we want no representation from city government at all. So let’s go change the Municipal Authorities Act so city council and your elected representatives are gone,” he said. “To me that’s a red flag that you’re going to privatize to a company that you’re working with.”

Council’s concerns about privatization are compounded by PWSA’s lease agreement with the city, which states that the authority can purchase the system’s physical assets — pipes, treatment plants, etc. — for $1 in 2025. Council’s proposed cooperation agreement with PWSA would remove that option.

“It’s not that we really are taking it away, we want to negotiate it,” said O’Connor.

Mayoral panel member Alex Thomson said there are other ways to deal with the fear of privatization.

“Removing the $1 purchase option is, we do not believe, the correct way to deal with this. Because it creates a significant possibility for unintended consequences,” he said. Thomson said he's concerned that if the city faces another financial crisis, it will try to monetize the water and sewer infrastructure, assets for which PWSA ratepayers have already paid.

Aly Shaw of the Our Water Campaign supports council’s amendments. She said her main concern is preventing privatization of PWSA, adding that while there may be some disagreement about how to do that, everyone is mostly on the same page.

“We all agree: council has stated their support for public control, the blue ribbon panel has stated their support for public control,” she said. “I think we just need to sit down and figure out how we can best do that.”

Cohon and Thomson worry council is not moving fast enough.

“This is our best chance to fix a structural problem that PWSA has had since it was created. If we don’t take this opportunity, I fear that it won’t happen for a long time to come,” said Cohon. “And if it doesn’t happen, I think PWSA is at great risk to go through another downcycle.”

O’Connor said council members have been talking among themselves, with constituents and with community organizations to determine what’s right for Pittsburgh. City Council expects to hold a post-agenda and public hearing on the amended cooperation agreement soon. Those meetings have yet to be scheduled.