The City of Allentown and Lehigh County Authority have closed a concession 50-year lease agreement of the city's water and sewer utility system.

This is the first concession lease of public assets in the country to have been offered to both corporate and governmental bidding teams and to have then secured competitive final bids from both.

Lehigh County Authority made an upfront payment of just more than $211.3 million. The public company will create a special purpose entity will enter into a 50-year concession agreement with the City of Allentown for the exclusive right to operate, manage, maintain, improve, and collect revenues from their water and wastewater facilities.

The Lehigh County Authority was selected as the winning bidder in May 2013.

PFM Group advised the City of Allentown as Public-Private Partnership (P3) Advisor  in the deal. The PFM P3 team for Allentown included Scott Shearer of PFM's Harrisburg office, Managing Directors Tim Carden and Tom Morsch, Director John Frey, and Senior Managing Consultant Jason Brockman, among others.

The bonds issued in connection with the transaction are comprised of three separate tranches:

• Lehigh County Authority Water and Sewer Revenue Bonds (City of Allentown Concession) of approximately $245.6 million Water and Sewer Revenue Bonds,
• Series 2013A, $43.4 million in Water and Sewer Capital Appreciation Revenue Bonds, Series 2013B; and
• some $18.7 million in Water and Sewer Revenue Bonds, Series 2013C (Federally Taxable).

Goldman Sachs served as underwriter.

Source: Allentown City & PFM Group