Stool for school: Mayor wants to lease sewers to fund scholarships
Plusquellic, during his State of the City address in February, proposed that the city lease its sewer and sewage treatment system to outside investors to fund scholarships that would send Akron public high school graduates to the University of Akron or a local trade school.
According to Plusquellic, long-term lease of Akron’s sewer system could generate more than $100 million in net revenues for the city, while providing major tax benefits to the investor.
“I’ve always wanted to see a scholarship program that would allow our high school seniors to know that they can get a college degree or vocational certificate without having to worry where the money is going to come from,” said Plusquellic, who was re-elected to his sixth term in November.
The scholarship program also could help reverse the trend of urban residents fleeing from cities to suburbs in hopes of higher-quality public school educations, Plusquellic added.
Plusquellic noted that other cities have set up communitywide scholarship programs—known as “Promise” programs—funded by philanthropists and local businesses. He also acknowledged that cities such as Chicago have successfully leased government assets to private companies to generate upfront cash.
“But I’m not aware of any other city that has used this device to finance a citywide scholarship program,” Plusquellic said.
The Akron plan would be a so-called “last-dollar” scholarship, meaning that students must apply for all available financial aid before they can become eligible for community funds.
Mayor forms advisory group
To work on the details of the plan, Plusquellic earlier this month formed an advisory group comprised of individuals with finance, legal and technical backgrounds.
Plusquellic said that the group will protect residents by helping the city establish specifications for rate stability, system maintenance and environmental concerns when marketing the proposal.
“The role of the advisory group will be to assist the city in finding the proper balance between ratepayer protection and maximized value in the transaction,” Plusquellic said. “We can do both: Set a new course for the future of Akron’s young people and protect the customers of our sewer system. These are not mutually exclusive goals.”
Plusquellic appointed longtime community leader Louise Gissendaner as chair of the advisory group. Gissendaner is president of the Cincinnati-based Fifth Third Bank Co.’s Akron market area and director of community development of the Northeastern Ohio segment. She also is a member of the Akron Planning Commission.
Plusquellic said he will appoint a second advisory group at a later time to recommend how a citywide scholarship program would be defined and implemented.
Activists: Mayor’s idea ‘stinks’
At least one group—Citizens to Save Our Sewers and Water (SOS)—doesn’t share the mayor’s excitement for the proposal to lease the city’s sewer system. The group is trying to amend the city’s charter to require voter approval before the city sells or leases its utilities.
The group has launched a petition drive to place the proposed charter amendment on the November ballot. A brochure aiming to drum up support for its petition drive claims that selling or leasing the city’s sewer system will increase sewer rates and will result in some public employees losing their jobs.
“This idea stinks!” the brochure declares.
In an article in the Akron Beacon Journal, SOS President Willie Smith asserted that the proposal to lease the city’s sewer system to a private company “is too large for some backroom decision-making.”
“Let’s have some democracy,” Smith told the Akron Beacon Journal. “Let us vote on it.”
Previously, Plusquellic has assured the American Federation of State, County and Municipal Employees union that represents Akron utility workers that the proposal will not cause the loss of a single job—as long as the union cooperates with the city to achieve a “successful transition in operations.”
“We will keep some control over future rates, environmental issues and service levels,” Plusquellic said. “Before we do anything final, we will have public meetings, and of course, City Council will need to approve any final plan.”