Frankford accepts Artesian’s $3.6 water million offer

FRANKFORD – After many decades, the town of Frankford is turning off the spigot as the supplier of water to town residents and businesses.

Town council Monday night accepted Artesian Water Company’s $3.6 million offer — an agreement that is forecast to modernize and upgrade the town’s water system and stock the town with future financial stability.

The vote was unanimous, 5-0.

“We are only doing this for the benefit of the town and the residents. It is a hard decision to make, to be honest with you,” said Frankford council president Joanne Bacon. “It’s one of the hardest decisions I’ve had to make since being on board. I feel a little funny right now. To me, this is an era that is going to end in the town of Frankford, owning our own water plant. We are going to have a lot of decisions to make after the sale. Just bear with us on that. Obviously, we want to protect the money we do receive and use it wisely.”

“I’ve asked everybody,” said councilman Skip Ash. “I asked people everywhere I went, and I got mixed reviews. They’d asked me questions and I’d give them the facts that we had. So, with that being said, I am just voting for what the people told me what they feel.”

As part of its water utility system purchase, Artesian plans to:

• expand its main renewal program to incorporate Frankford and expect to spend approximately $1 million on renewal projects in Frankford over the next five years;

• upgrade the communications systems at the Frankford water treatment plant and elevated tank to include a new SCADA (supervisory control and data acquisition) system at an estimated cost of $70,000; and

• replace all the water meters within Frankford at an estimated cost of $500,000.

The agreement puts Frankford and its approximate 350 water customers in Artesian’s expansion plans in southern Delaware. Artesian is in the process of constructing a 2 million gallon per day water treatment facility on Armory Road in Dagsboro, just north of Frankford.

This new facility will be integrated into Artesian’s Southern Sussex Regional System, which, when connected to the town, would consist of four treatment facilities and three water storage tanks. Artesian plans to invest an estimated $6 million in regional water mains.

“Artesian has got a big project in the area that we kind of fit into,” said Gregory Welch, Frankford council vice president.

“That is why they offered us $3.6 million for our water system. And the (town) system, as it stands alone, it would be hard to make a go of it financially. But being a part of what they have got scheduled to become, it made it possible for them to offer us the $3.6 million.”

While town officials do not have a definite time frame on when Artesian will become the water provider, the expectation is it will be sooner than later.

“They act like it will happen quick,” said Mr. Welch. “They have already pledged to do $1 million in infrastructure and distribution in the next five years. I’d like to see some problematic places fixed quicker.”

In January of 2016, Frankford lost its highest volume water consumer and upward of a third to one half of its annual water revenue when Mountaire put in operation a well it drilled at its feed mill site on Daisey Street.

In July 2018, Frankford Town Council approved a 48-percent increase in the town’s water rate, from $8.75 to $12.68 per 1,000 gallons.

Mr. Welch said rates under Artesian are going to be cheaper.

“Artesian will keep our rate structure for a year and then revert to their rate structure once they begin supplying us with their system,” he said. “Everybody is going to save money just on that, and get a better quality of water because – according to them – they’ve got a real good source of water in Dagsboro.”

Under the Artesian proposal, Frankford will use a portion of the purchase price to repay any secured debt or debt associated with the system and remove any liens from property and assets associated with this acquisition.

The town of Frankford still owes more than $400,000 in outstanding loan debt to the state of Delaware. For several years, the town has sought loan forgiveness from the Delaware Department of Natural Resources and Environmental Control, stemming from the town’s challenge of DNREC’s authorizing Mountaire to drill and operate a non-potable well for its feed mill operations at its Daisey Street plant.

Implementation of fluoride in the town water system was a linchpin in the loan forgiveness plan.

“The state required we had to put fluoride in the water, which we attempted to do but it didn’t come out safely,” said Ms. Bacon. “If Artesian buys it, Artesian has to put fluoride in. That shouldn’t be held against us. I think we’ve had issues with the water plant from day one even when we got the loan. So, we are still trying to get the loan forgiven. Hopefully, we will but we don’t know yet.”’

“We still owe some debt on the water system, which we need to pay off because they (Artesian) need a free and clear system. It’s about $450,000,” said Mr. Welch. “But we’ll benefit with a lot of capital from the sale of the system.”

The sale of Frankford’s water system to Artesian drew vocal support from AECOM, the town’s engineering consultant, and a member of the appointed request for proposal committee.

“We wrote the RFP and everything,” said Erik Hughes, a civil engineer with AECOM. “And just from my experience in doing projects like this, the engineering report we did about the water tank, there is an awful lot of cost that is going to be coming up real soon here. It would be our recommendation to sell the system … even though it probably will end up costing us (AECOM) some work with you guys. But just as my professional opinion, I would recommend the sale of the water system.”

“I went through the advantages and disadvantages as an individual homeowner,” said Valerie Dugdale, a town resident for five years who served on the committee that reviewed the RFP process.

“Considering the age of what we are dealing with — the current system that we have and they are piece-mealing things together — even though the water quality is good as it leaves the water tower, but as it gets pushed through, there is definitely something wrong. Only having 300-some people here to bear the cost to make it really good, our taxes would definitely go up along with the water cost. I know we are on a limited income and no one here is really rich to bear a major burden of not only a tax increase but a water bill increase.”

“So, looking at that, the conditions of our current meters where the town has to bear the burden of going and trying to find where the water meters are on the properties …,” said Ms. Dugdale. “Artesian intends to put in new meters, to read them remotely and put us in a position where in the long run – we’re not going to notice immediately – I personally think it’s an opportunity right now for us to improve as we move forward. And then we will be talking about, if we do accept the proposal, how the town should benefit as we move forward, to attract new businesses and new residents, considering the growth.”

In January, town leaders held separate public meetings on the proposal with businesses and residents.

“We have been as transparent as we possibly could have been regarding all of this – to let everybody know,” said Ms. Bacon. “We had great turnout for both. So, I am very pleased with that.”

According to Mr. Welch, the history book on Frankford’s water system unfortunately has some missing chapters. It’s his understanding the water tower was built in the 1980s, but the town may have gotten in the water business decades before.

“We don’t have any history. We don’t know what pipes are in the ground. Nobody kept a record or a chronicle of what happened,” Mr. Welch said. “The story was that a lot of town’s pipes were run during the Depression in 30s, and it was dug up from Rehoboth and reused. I don’t know if that was true but that’s what the old-timers would tell us.”