An arbitrator has sided with the City of Allentown in a dispute with Lehigh County Authority and suburban municipal sewer signatories on an alleged overstated staffing claim dating from 2007-to-2012.
The city, LCA and suburban municipal sewer signatories are parties to a sewage collection and treatment agreement reached in 1981. LCA claimed the city breached the agreement. Its forensic accountant claimed the city overcharged the signatories in the range of nearly $5.2 million to approximately $5.675 million.
After listening to five recent days of testimony, in a one-page decision issued late yesterday, retired Lehigh County Judge William E. Ford “finds that the Claimants failed to prove by the required burden of proof the breach of contract and fraud claims stated in their Demand. The Arbitrator hereby denies and dismisses the Demand and all claims for relief.”
Closing Arguments were held on February 1. The city presented defenses, including the course of performance doctrine, no breach of the agreement and the bar of the statute of limitations.
In its response to the claim against the city, the city responded that “for more than 30 years, the City consistently billed the Signatories in accordance with the 1981 Agreement. Although the City budgets were readily available (including on the City’s web site) and the Signatories had every opportunity to question the yearly estimated Signatory User Charges, including the final determination of actual reasonable and necessary operating expenses, as well as the right to inspect the City’s books and records, and to inspect the Waste Water Treatment Plant. With knowledge of the facts, or access to that information, the Signatories voluntarily paid the bills.”
“We were very confident that we would prevail,” said Mayor Ray O’Connell. “We’ve been in a long-term regional partnership with LCA and the signatories in providing sewage treatment services. We have always conducted business in a professional manner and in conformance with existing agreements and expect to continue our relationship for the economic benefit of all our partners.”
In April 2013 Allentown City Council approved a 50-year concession lease of the city’s the Water and Sewer Utility System to Lehigh County Authority. The deal included a $211 million upfront payment. The money was used to reduce the city’s massive unfunded pension liability.
LCA began operating the city’s system on August 8, 2013