Frankford council mulling Artesian’s purchase proposal

Frankford town council is considering Artesian Water Company’s $3.6 million offer to provide water service for Frankford through the purchase of the town’s plant and water system. Delaware State News/Glenn Rolfe

FRANKFORD — In Frankford, it’s not the $64,000 Question.

It’s more like $3.6 million.

Frankford town leaders are mulling Artesian Water Company’s offer to purchase the town’s water plant and water system in need of upgrade, a proposal which would provide upgrades in Artesian’s regional water supply initiative.

“We have a lot of thinking and a lot of talking to do to see if this is the best thing for the town,” said Frankford council president Joanne Bacon. “On the surface it probably does look like that, but ultimately the whole future of the town of Frankford will change.”

“We only had one offer. That is the offer we received, $3.6 million,” said Ms. Bacon.

“I think it’s a great opportunity for the town,” council vice president Gregory Welch said. “Our town has been trying to improve our water system. We’ve got a very small base of 350 people. So it’s really hard to capitalize like $1 million, putting it on 350 people. It makes it very expensive.”

Informative meetings have been held recently with businesses and residents. Council is expected to address the Artesian offer at its next monthly meeting on Feb. 3.

“I am just hoping it will be the right decision for the town,” said Ms. Bacon.

Artesian is proposing, as part of its water utility system purchase, 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.

Ms. Bacon said Artesian intends to do so much more with the town of Frankford, the water plant, the meters and water mains in town. “They suggested they would replace those,” said Ms. Bacon.

Under this proposal, Frankford would 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.

“There will be some debt that will have to be paid off regarding the water plant. Other than that, again, it is going to be another lengthy conversation about what we would do with the money,” said Ms. Bacon. “Obviously, the town can always use the money. But we have to make diligent, good reasons to use it, because I don’t want it to all be gone in one year, to be honest with you.”

Ms. Bacon added it is “quite a bit of money, but that money is going to have to last us for a long, long time — if we lose the water plant. It was a source of revenue, but it was not a profit-making business, to be honest, because it took so much money for the upkeep of the water plant. And if we decided to keep it there would be so much money that we would have to expend on the water plant to bring it where it needed to be.”

Artesian is in the process of constructing a new 2 million gallon per day water treatment facility on Armory Road, just north of Frankford. This 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,” said Mr. Welch, adding the town of Frankford would fit into Artesian’s “puzzle very well. It would be part of a bigger base and a bigger operation. It would save money by being on that.”

In May 2019, Dagsboro council approved preliminary site plans for Artesian’s new well system project that encompasses three new wells, a maintenance building and a one-million gallon elevated water tower on property off SR 20 (Armory Road) not far from the Vines Creek Road (SR 26) intersection.

A month later in June 2019, Dagsboro council approved an interconnect agreement with Artesian Water Company, which is undertaking a new well system in the immediate Dagsboro area.

Dagsboro presently receives its municipal water supply from the town of Millsboro in a binding 20-year agreement that runs through 2022. At the conclusion of its contract with Millsboro, Dagsboro’s plan is to consider switching water service from Millsboro to Artesian, which will have the connections set up for the town to come online.

With Frankford, Artesian would integrate Frankford’s water system with Artesian’s Southern Sussex Regional System to provide a single, integrated water system to the entire town. This would provide supplemental sources of supply and storage for Frankford, according to Artesian’s proposal.

Frankford’s water supply comes from a reliable and protected water source that includes high levels of iron and other natural compounds, which make treating the water difficult, Artesian noted in its proposal.

“Artesian’s Armory Road facility is being designed with the latest treatment technologies to meet the challenges ever increasing water quality standards and the high expectations of our customers. It is within 4,000 feet of Frankford and is engineered to operate at a hydraulic gradient of approximately 191 feet above mean sea level. The new system will have the ability to provide well over 1,400 gallons per minute,” Artesian stated in the proposal.

“We would greatly benefit by having their system, the quality of water improved with that system,” said Mr. Welch. “And our rates would be lower because we’d be on a bigger base.”

Several January meetings were well attended, Ms. Bacon said.

Frankford’s water issues have been in the news for several years.

In January 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.

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. Also increased was Frankford’s out-of-town water user fee from $20 to $50 every two-month billing cycle.

“We were told by Artesian, if they are successful in purchasing the water plant, that rate ($12.68) would stay in effect, I think they said for maybe a year, until they get things where they need to be,” said Ms. Bacon. “Then it would go according to what Artesian’s water rate is statewide, which I believe is a $7 figure or maybe a little bit more than that.”

Artesian is not proposing an annual franchise fee as part of the sale of the utility, as this fee would have an impact on the residents in Frankford — the cost would become part of the rate, as approved by the PSC )Public Service Commission).

Ms. Bacon said there is a great deal of interest from residents and businesses.