Guest Opinion: Nashua should stop abusing eminent domain threat

For more than two years, the city of Nashua and Pennichuck Corp. have been at odds over the city’s professed intention to acquire the company by eminent domain. The takeover was triggered by an announcement that the local water company planned to merge with Philadelphia Suburban, a large publicly traded water utility.

Pennichuck is a 150-year-old company that serves 21,000 residential, commercial and industrial customers in Nashua and 110,000 other customers in 36 communities throughout southern New Hampshire and northern Massachusetts.

The price tag on this eminent domain proceeding is sobering. Nashua’s mayor and aldermen have spent $600,000 in legal and consultant fees in their attempt to take over Pennichuck so far and will likely spend at least that much more over the coming year.

Conversely, it has cost the company $2 million to defend itself. Its stock price has been affected. Its business relationships have been clouded by uncertainty over who will ultimately operate its water business. Pennichuck estimates the harm to its business at $5 million and has sued the city to recover these damages.

The situation, to be blunt, is a mess. This is clearly a lose-lose situation for the taxpayers of Nashua and the employees and shareholders of Pennichuck Corp.

While the Business & Industry Association of New Hampshire does not routinely weigh in on local issues, there are times when one is so precedent-setting, or so egregious, that we feel compelled to speak out on behalf of the state’s business community. This is one of those instances.

The 5th Amendment of the U.S. Constitution has what is referred to as the “Eminent Domain Clause.” This provision gives governmental entities the right to take privately owned property, including land, and convert it to public use, subject to reasonable compensation. The key concepts are “public use” and “reasonable compensation.”

Eminent domain is a power that is normally reserved for use when a governmental entity needs property in order to perform an essential function, such as building a road, and occasionally for other beneficial purposes such as urban redevelopment.

Government’s power of eminent domain can be abused, however. And we believe that Nashua has clearly overreached its authority in this instance.

The city is not only attempting to take the company’s waterworks inside the boundaries of Nashua, but also laying claim to Pennichuck subsidiaries that provide water service outside of Nashua through systems that are entirely unconnected to the one serving the city.

In this instance, the power of eminent domain is not being used for any overriding public benefit, but to block a legitimate business decision made by Pennichuck’s board of directors to merge with another company. City leaders have essentially admitted as much.

Trying to take over Pennichuck is clearly bad public policy.

If the utility were poorly run, or did not adequately invest in infrastructure, or was in some way an impediment to the community’s economic vitality, or its rates were way out of line, then perhaps a legitimate case could be made that acquisition of the company for “public use” would be appropriate.

However, that is not the case. No one has accused Pennichuck of poor service, prices that are out of line or of delivering an inferior or unsafe product to its customers. In fact, even Nashua’s leaders concede that the company is doing a good job. The real issue is that some people in the city don’t like the idea of their water company being owned by an out-of-state interest. Of course, they overlook the fact that Pennichuck itself is already owned by a publicly traded holding company whose shareholders reside throughout the country.

Using Nashua’s logic, the mayor and aldermen in Manchester could threaten to acquire PSNH’s entire statewide assets by eminent domain, or those of any of New Hampshire’s gas companies for that matter. These companies are all owned by corporations whose headquarters are out of state.

Emotionally we may not like a change in ownership of our bank or our telephone company, but over time we build a relationship with the new company. Most of the time we don’t see much change in the product or service we receive as a customer. Often, the cost of providing service is held in check by such mergers. The name changes. Life goes on.

The prospect of Nashua taking all of the utility assets of a company that provides water service throughout the southern tier of the state and into central New Hampshire and the Seacoast is obviously ridiculous. Government seizure of private businesses isn’t viewed favorably in the USA.

We expect that the courts and the New Hampshire Public Utilities Commission will agree in Pennichuck’s case. Nashua’s efforts are nothing more than a hostile takeover bid trying to disguise itself as legitimate public policy.

John Crosier is president and chief executive officer of the Business & Industry Association of New Hampshire.