One of the city water towers sits next to the Horace J. Bryant Jr. MUA building in Atlantic City where pipes are stored. Wednesday February 24 2016 Atlantic City Municipal Utilities Authority, (The Press of Atlantic City / Ben Fogletto)

Ben Fogletto / Staff Photographer

ATLANTIC CITY — The Municipal Utilities Authority recently took steps to explore leasing itself to a private company, resuming the ongoing saga over the resort’s water works.

The authority’s board passed a resolution in May hiring Acacia Financial Group for advisory services related to a concession agreement, in which a private company operates the water system while the authority maintains ownership.

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In June, the authority’s board amended a bond counsel contract with McManimon, Scotland & Baumann to include “privatization matters.”

MUA Executive Director Bruce Ward said Tuesday that the authority is exploring all options, but said a request for proposals hasn’t been issued.

“At this point it’s only an investigation of paths that we may take,” Ward said. “Everything is in an exploration stage.”

In March, Ward pitched a plan in which a private company would operate the water system for up to 40 years, pay the city $110 million and guarantee jobs for its employees.

Some city officials and activists have described such a deal as a privatization of the water works that could put residents at risk of rate hikes. 

The authority’s board also discussed reaching a deal with Atlantic County, according to transcripts from the May 17 meeting. The board directed Ward to begin discussions with the county, but County Executive Dennis Levinson said there’s “not much activity,” though the county remains interested.

Council President Marty Small said he’s aware of the authority’s recent actions and said it’s why he introduced ordinances in March to dissolve the authority and bring it under city control. City officials say that could generate $5 million a year for the financially strapped city.

Small pulled the ordinances on March 16 after some council members said they wanted more information before voting. Council hasn’t approved the ordinances in three tries.

“Mysteriously, after publicly professing support to bring the MUA under the city, some council members clearly had another agenda,” Small said. “Some council members are still searching for information, and I called them, I sent emails, I had conversations about setting up seminars, to no avail.”

Councilman Frank Gilliam, who supported dissolving the authority as council president in 2015, said in March he wanted more information before approving dissolution. Asked about Small’s emails, Gilliam said he’s not interested in a seminar but wants a report from the administration on the authority’s value and the pros and cons of possible options.

“I’m not opposed to looking at creative ways to leverage the asset,” Gilliam said. “But don’t expect me to support something without a report and information about something that’s so significant and has such an overall impact on the taxpayers.”

Mayor Don Guardian, who has supported making the MUA a city water department, said in a statement that officials must find the best way forward.

“We have to make sure (the MUA) is leveraged to its maximum to help the City of Atlantic City without losing the rights to our water and increasing rates on our residents,” Guardian said.

The water authority issue opened a rift between city and state officials and became a major talking point during the debate over a state takeover of the city.

The authority was mentioned in a 2015 draft memorandum of understanding between the city and state that would’ve let the state Division of Local Government Services dissolve the authority if the city failed to submit a report on monetizing its assets.

Former emergency manager Kevin Lavin said in his final report that the city and county should work together to dissolve, restructure and operate the MUA.

And leasing the MUA was one of the recommendations presented to Gov. Chris Christie in 2014 in the second Hanson Commission report, which also assessed the resort's financial situation

Christie signed a bill in May giving the city until Nov. 3 to draft a five-year fiscal plan or else face a takeover. The plan must include a 2017 balanced budget.

The city will have a $44 million budget deficit in 2017 unless the city receives more state aid. The city has $550 million in total debt, according to the state.

Lena Smith, regional organizer for Food & Water Watch, said the authority shouldn't be used as a cash cow for the city.

“Privatization of any form, as well as a concession agreement, would likely lead to a higher water rates, less public control and worse customer service,” Smith said.

Contact: 609-272-7215

Twitter @_Hetrick

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