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Water Industry News

Authority raises sewer rates 20%

Friday, April 07, 2006
BY JEFF MCGAW
For The Patriot-News

DUNCANNON - Faced with mounting debt, the Penn Twp. Municipal Authority has voted to increase sewer and water rates, hire a financial adviser to explore debt restructuring and consider further rate increases if necessary in June.

The authority this week increased sewer rates by 20 percent for its more than 600 sewer customers.

Authority members hopes the financial adviser will devise strategies to eliminate, or at least mitigate, more rate increases. The authority will also likely hire an independent auditor to determine how the debt was formed and to fix the problem.

The rate increases mark a step toward a balanced budget. According to the authority's budget committee, a rate increase of 68 percent, from $125 to $210 per quarter, is needed to balance the authority's budget.

"I cannot vote to balance the budget with a 68 percent increase," said authority member Franklin Reidinger. "The people of Perdix can't afford it, and I have reservations about throwing this on the backs of Penn Manor and Sunshine Hills residents."

In addition to quarterly sewer bills, residents in areas served by public sewers pay a one-time tap-in fee of $2,650 to more than $3,000, and they must pay the cost of building lateral lines connecting their home to the new system. Construction can cost $3,000 or more.

Some in Perdix will face hundreds in additional costs to upgrade their electrical service to run the grinder pumps that are needed to push their sewage into the system.

The municipal authority provides water and sewer service to hundreds of residents living in the more densely populated portions of the township. Much of the authority's financial woes are tied to a $6.5 million sewer project in the Perdix and Cove areas.

The authority also has a $1.5 million interim financing loan from the First National Bank of Marysville. That loan comes due in October.

If the authority defaults on a loan, Penn Twp. residents would have to foot the bill.

Authority members blame some of their woes on the lack of financial help and grant money from county, state and federal sources. While debt is mounting, operating revenue has decreased. The authority collected $274,000 in sewer tap-in fees from customers in 2004, and only $84,000 last year according to authority member Lee Wright.

"If we don't balance the budget, where does the money come from [to repay loans]?" asked authority member Henry Holman III.

"At this point, I don't know," Reidinger said.

Board of supervisors Chairman Henry Holman II called for new leadership on the municipal authority.

"It's the leadership that directed us to where we are today," he said.

INCREASE

The authority increased sewer rates from $125 to $150 per quarter, and raised the base water rate by $10 per quarter to $45 for the first 5,000 gallons of water used by its 121 public water customers.