Has this ever happened to you?
You receive an all-expense-paid invitation to spend two nights at a luxurious resort, subject to agreeing to sit for a presentation on the wonders of the resort’s timeshare opportunities. Skeptical but in need of two nights away, off you go to luxuriate and attend the sales meeting. Hooked after the delightful PowerPoint presentation, you ask about the one item oddly not addressed during the pitch: price. Oh, no, you are told. We are not here to discuss price. Why would we bid against ourselves?
The equivalent of the above happened to the 70 or so attendees of Housatonic Water Works Company’s (HWW’s) October 16 presentation to discuss Great Barrington’s potential acquisition of the utility. Every town household received the October 1 Zoom meeting invitation announcing that HWW was on the block, ready for a transaction. The letter was unlike a timeshare brochure, but its bottom line was the same: Come, let us show you how your life could be considerably improved. Timeshare brochures and HWW’s letter share an essential sales pitch: “This is a chance to make a lasting impact for generations to come.” Sure, tell us more.
For the HWW purchase, discussed previously, the 1897 charter creating the company sets forth a mechanism for a municipal acquisition. There is a pricing formula requiring various inputs from HWW’s balance sheet. It is just math. Sales-meeting attendees reasonably anticipated that Jim Mercer would walk through the charter’s formula to arrive at the suggested sales price, price being an essential term of the proposed transaction. While it is not unusual at a tag sale to haggle a bit, it is unheard of for a utility to put itself up for sale yet refuse to address a material term.
Has this ever happened to you?
You find a nice starter home on Zillow. It has everything you are looking for within your price range in a good school district (although the high school needs renovation) in a lovely town (although the town’s bridges need repair). On the home tour, the seller’s agent tells you not to consider the home as the two-bedroom, one-bath ranch before you; rather, consider its potential as a 10-bedroom B&B with generational income opportunities.
The equivalent of the above was suggested by Mr. Mercer during his October 16 sales presentation. Consider HWW, he suggested, not as a water utility with Long Pond as its lone water source, but one that will locate and drill deep water wells to avoid increased levels of manganese.
Wait, what?
In June 2023, HWW filed a petition with the Department of Public Utilities (DPU) seeking to double water-service rates premised on a multifaceted plan to improve the quality of water pumped from Long Pond through the use of a newly installed greensand filtration system. Public hearings and litigation ensued concerning HWW’s proposal and rate increase.
In July 2024, the DPU approved a modified version of a five-year plan to provide potable water pumped from Long Pond and filtered through the proposed equipment. As a result, customers’ rates will nearly double over five years.
Mr. Mercer’s October 16 sales presentation virtually ignored the rate case process, spinning a far different story. He mentioned the greensand filtration system approved by the DPU to correct the manganese problem, but that was yesterday’s news. Mr. Mercer was more enthusiastic about weaving a fairy tale about what HWW can become in the future; kiss this frog, he proposed, and you will end up with a prince. As you might imagine, the pitch was grimly received.
From a purchaser’s perspective, HWW’s sales presentation was ill considered. Let’s not discuss price, the potential buyers were told. Consider HWW not as it has been for decades but what it can be if wholly remade. Maybe that is the only play when trying to sell a fixer-upper, and HWW is the ultimate fixer-upper. Carrying a $40 million repair liability, HWW’s house is a teardown. All it can do is sell the dream.
Voters are unlikely to be swayed by the Mercers’ dream house. Among the most terrifying words in the English language are “we need to talk” and “please stay on the line, your call is important to us.” But for HWW’s owners, the most terrifying words are surely “subject to voter approval at Town Meeting.” Economists would be hard pressed to identify many processes quite as price depressing as the requirement that a matter go to Great Barrington’s Town Meeting for approval by two-thirds of the voters in attendance.
At my first Town Meeting, voters debated at length whether to replace long-expired firefighter turnout gear—the protective equipment for folks putting their lives on the line for us. Paying millions to the Mercers for HWW? Add an extra day or two to the schedule for that meeting.
We now know that HWW is about as accomplished at sales as it is at potable water distribution. Notably, HWW is skilled at defeating Great Barrington in proceedings before the DPU and in court, but it may simply be fortunate to have Great Barrington’s town counsel as its opponent. To HWW’s list of victories over the town, you can add the Superior Court’s October 21, 2024, Order, found here, granting the company a preliminary injunction (soon to be a permanent injunction) preventing enforcement of the Board of Health’s September 17 Order requiring that the company provide 1.5 gallons of water per day per household inhabitant or face crippling fines. HWW no doubt hopes Mr. Doneski will be in charge of the town’s efforts to buy the company as well.
Has this ever happened to you?
You anticipate writing a column dissecting HWW’s proposed sales price for the entity it is today, not the one it would like to become. That column is delayed but will assuredly come after the town receives its HWW appraisal later this month and long before HWW starts drilling wells, which is presumably never.
Astonishment concerning the October 16 Zoom meeting may be unfounded. HWW owners have long demonstrated an inability to effectively run the company. Why would any of us have reason to believe they would be any more effective at selling it?
Survey Monkey Question
Here is a link to the following Survey Monkey poll: “What do you consider to be Great Barrington’s most pressing need: (a) Monument Mountain renovation; (b) bridge repair; or (c) Housatonic Water Works Company purchase?”
Survey Monkey Results
Here is the result of the following recent survey question: “Would you only approve the purchase of Housatonic Water Works Company for an amount substantially less than its 1897 charter provides?”
One hundred percent of respondents answered “yes.”
Days Great Barrington has held Community Access Fees hostage: 234