Heated discussion, tie council vote sinks Phoenixville water fee deals

Phoenixville

PHOENIXVILLE — Three deals to recoup money from a pair of business owners high on Phoenixville’s water, sewer and trash fee delinquency list failed to get borough council approval Tuesday night when Mayor Mike Speck declined to cast a deciding vote.

In the debate over the deals intended to chip away at the delinquency list totaling almost $1 million, it was revealed that two council members have fallen behind on their bills, each by approximately a month.

Dana Dugan, council vice president and head of the finance committee, asked Councilman Shai Perednik to recuse himself from the vote on the deals because he was behind by $593 on his bill by 22 days.

He declined.

During the course of discussion, Councilwoman Jen Mayo said another member of council was behind.

“I’m behind by 35 days. I don’t mind people knowing that,” said Jeremy Dalton.

Dalton said an account he was attached to is $235.69 behind, but that he’s been current up to the last month on all his bills and hasn’t been late ever before.

He said he believes the deals before council were the result of “complete neglect” by businesses, not the course of running a household like many others on the list.

The proposed deals involved Neil Phelan, the third highest debtor on the borough’s water, sewer and trash delinquency list, and Francesco Lopresti, who came in at number 12. The list was current through the end of 2013 and a new list was not yet ready from the borough.

Phelan, who partnered with Darren Dougherty on several properties and owns Phoenix Karate, was behind by $55,192.58 on his bills, according to borough documents. Lopresti, the owner of Franco Ristorante, next to Phoenix Karate on the 200 block of Bridge Street, is marked as having accumulated $11,499.64 in debt as of Dec. 31, 2013.

Documents for the proposed deals indicated Phelan’s total grew to $60,206.41 and Lopresti’s was up to $13,067.90 since the start of 2014.

Deals for both were presented and approved in finance committee last month.

Brought to council for approval, the deals sought to provide a payment plan on the delinquent fees over the next 18 to 23 months.

Monthly installments of varying large payments were proposed in addition to making interest payments. It was also stipulated that future utility payments must be on time and liens could still be filed by the borough, as necessary, according to the deal paperwork.

Perednik and Dalton took exception to Lopresti’s deal at least partially because they said he had a similar payment deal before, which he didn’t adhere to.

Borough Finance Director Stephen Nease couldn’t immediately confirm that Tuesday night.

Phelan requested two different deals, as one of the delinquencies involves his personal home and is not a business venture, Borough Manager Jean Krack said.

Perednik declined recusing himself from the vote because he said there is a difference between being behind with a business venture and behind personally.

“I didn’t know we were distinguishing between residents and businesses,” Councilman Mike Kuznar said. “Just because certain information came to light you’re going to separate those two?”

Earlier this month, several councilmen came out against providing deals for delinquents.

“Delinquency and negligence will no longer be tolerated while our neighbors pay their water bills,” Perednik wrote at the time. “Deals will not be made and policies will be followed. It’s time good-standing residents take a stance and not have to pick up the slack for others.”

After Tuesday’s meeting, Perednik said those sentiments still stand. He said he’s following procedures set up within the borough which any resident or business owner can apply for.

Krack clarified Wednesday what that policy constitutes.

“If, after reviewing the circumstances of the late payment, we determine that a payment plan is warranted, the finance director can authorize up to a 90-day payment plan,” Krack said.

Additionally, the borough manager has the authority to review a case and institute a 12-month payment plan.

“After that, it must go to council,” Krack said, which was the case for the deals before council Tuesday night.

“Most of the payment plans that we have reviewed and subsequently approved are the result of an extensive leak that was either not detected or repaired thereby incurring a significant water/sewer bill,” Krack elaborated.

Perednik said family emergencies, including medical issues, caused his lateness and he set up a 90-day payment plan.

“If I don’t follow through, then let the collections agency come after me, like everybody else,” he said.

Council voted last month for a request for proposal for an outside collection agency to try to recover the delinquent fees. Krack told council Tuesday that they received 10 responses to the request for proposal and have narrowed the field down to four firms.

Like Dalton, Perednik said timing also plays a role in delinquency.

“There’s a difference between being 22 days late and zeroing your balance before the next bill versus those [more than] 90 days past due and in a constant payment plan playing catch-up,” Perednik said.

He took issue with the proposed deals because they allowed for businesses to continue to profit while operating in debt, as opposed to a family which might fall on medical emergencies and need extra time to pay their bills.

Dugan contended that whether the delinquencies were the result of business deals or personal finances should not make a difference.

“Yes, they are businesses but they’re people running into the same problems, just on a bigger scale,” she said.

By putting the deals into place, it could bring the money back into the borough more quickly. If the businesses reneged on their deals, then the collection agency would collect on them all the same, she said, nothing would change.

“There’s no downside to this,” Dugan said.

Working through the deals would avoid paying a fee to a collection agency, Mayo said, which could run up to 20 percent per account.

In the case of Phelan’s accounts, that figure would mean roughly $12,000 less coming in to the borough.

Mayo said she based that percentage on the average of collection agency fees but that number is still up in the air due to the request for proposal still being out.

“I don’t like making deals. I don’t like that these businesses got this far behind,” Council President Jim Kovaleski said, but he felt the deals would help “clean up the mess” of delinquencies.

Still, a segment of council felt the deals were too advantageous for business owners who have fallen so far behind.

“We feel like a bank and I don’t ever remember going to a bank and successfully asking for a no interest loan,” said Councilman Christopher Bauers. “I’m all for going to the [collection agencies].”

“I don’t understand why we don’t even try,” Dugan said of the opposition.

Ultimately, the vote split 4-4, with Dugan, Kovaleski, Mayo, and Kuznar voting in favor of approving the deals and Perednik, Dalton, Jon Ichter Jr., and Bauers against.

As mayor, Speck is the tie vote on the matter. Saying he wanted a better idea on the details of the collection agency when it is brought in, Speck declined to cast a vote, meaning the proposed deals failed to gain council approval.

There was certainly no love lost between some council members because of the discussion before Tuesday’s vote.

Ichter took issue with calling out Perednik and Dalton.

“I think it’s unfortunate that this has come down to personal attacks,” he said not long before the vote was taken.

After the meeting, Dugan released a statement calling the failure of the deals “irresponsible and certainly hypocritical” while also blasting votes against it as “a short-sighted excruciatingly sophomoric strategy.”

“It’s also incredulous that our esteemed mayor, a former council member, who surely perceives the issue’s gravity, avoided breaking the deadlock,” Dugan continued. “Previous Councils, hardly this contentious, secured two years of 0 percent tax increases, a new borough hall, and an audit last evening that any [Pennsylvania] town would covet. Future success, however, is ominous given member grandstanding which cites totally spurious principles that ‘would rather make an example of you than work with you.’”

“Heads up to local businesses: beware an unforgiving council!” Dugan’s statement closed.

Follow Frank Otto on Twitter @fottojourno.