City Council’s OK of $95 million lease prepayment on Wednesday night gives Schember a mammoth sum to address debt, taxes.
Erie Mayor Joe Schember sounded giddy.
On Thursday, the day after Erie City Council approved a landmark lease deal that will send the city at least $95 million from Erie Water Works, Schember recounted how much council’s vote had thrilled him.
“I am so excited about City Council’s action last night,” Schember said at his weekly news conference at City Hall. “I didn’t get to sleep until about 2 o’clock and I woke up at 5 this morning and was ready to go again.”
Council’s 5-1 vote with one abstention will keep Schember and his staff busy. The approval, perhaps the biggest policy achievement in Schember’s two years and eight months as mayor, provides the city with an enormous lump sum to counter budget woes that have worsened for years.
Schember since November has pushed for the deal with the Water Works to raise a mammoth amount of cash to pay down the city’s long-term debt and to provide tax relief.
Erie Water Works since 1992 has leased the city’s water system from the city. Under the deal, the Water Works will give the city an upfront lease prepayment of $95 to $101.5 million in exchange for not having to make annual lease payments of $3.8 million to the city over the life of the lease, which council extended another 10 years, to 2060. The Water Works will also pay the city an additional $2.5 million to help close out the deal, officials said.
The city’s financial adviser, Public Financial Management, of Philadelphia, recommended the prepayment arrangement as PFM works with the city as part of the state’s Early Intervention Program for financially distressed municipalities.
City Council for months has stalled on approving the deal over concerns about the overall costs. As interest rates have dropped, the deal became more beneficial for the city, and council members decided to act on Wednesday night.
“I really thank them for making this vision a reality,” Schember said of City Council.
Erie Water Works’ nine-member board voted unanimously on Thursday afternoon to approve the deal, board member Richard Wagner said. The city is expected to get the money in six to eight weeks, Schember said.
Wagner said the Water Works made the prepayment offer in recognition of the city’s financial problems. The water system, he said, “offered to participate and turn the city around.”
City Council members Liz Allen, David Brennan, Michael Keys, Mel Witherspoon and Kathy Schaaf voted in favor of the resolution. Council President Jim Winarski does not favor the proposal and cast the lone vote against the agreement, while Councilman Ed Brzezinski abstained from voting.
Brzezinski said he abstained because he joined City Council in January, two months after the city and Erie Water Works in mid-November struck a tentative deal.
Keys, who also joined City Council in January after he and Brzezinski were elected as…