Fighting City Hall From Within: An Ongoing Series VIII
Matt Shorraw, Mayor, City of Monessen
Part VIII
In Support of retaining a locally-controlled, public sewage authority
Currently, the Mon Valley Sewage Authority is a joint-authority with a board, comprised of members from Monessen and Donora, with Monessen controlling 60% and Donora controlling 40%. While it might seem beneficial to some for us to sell the Mon Valley Sewage Authority, in order to take the liability and workload from Monessen and Donora, the prospect is not all it may seem.
If the authority were sold, it could reap a one-time cash windfall of several million dollars for the city. That money could be put to work in town no doubt, but at what cost long-term to the residents? That is a one-time cash infusion, that would not help us in the long term.
In the event the Mon Valley Sewage Authority were sold, it would hurt Monessen and its residents. Effectively, a sale and the resulting costs that would rise would effectively be a tax increase for residents. While the Mon Valley Sewage Authority is owned, in part, by the city of Monessen, the ratepayers are technically the owners. We would be selling something that we don’t really own, and then sending the bill for the funds the city would receive upon the sale, back to the residents to pay — all while they have been paying for this asset for decades. Residents get no direct benefit.
The new entity that would purchase the Mon Valley Sewage Authority would probably offer a cash payment upfront and assume the current debt of the Mon Valley Sewage Authority. Unfortunately, they would control treatment and disband the Authority altogether; whereby, they would impose surcharges on Monessen, Donora, and Carroll Township (These municipalities are the existing owners of the pipe systems.) in order to continue treatment. They would probably make similar cash offers to the communities involved and assume control of the pipes — surcharging the owners (municipalities) of the pipes and forcing them to sell. It would get ugly, and it would dramatically hurt the pocketbooks of the residents.
If an entity was to purchase the Mon Valley Sewage Authority, it is very likely there would be job cuts, due to duplicity with whatever entity would purchase it. It would also mean, no camera or manpower for sewage problems. We would need to hire a third party at or around $2,000 per day, at minimum, for every occurrence. Lately, there have been numerous occurrences, involving the need for cameras in the sewer lines. We currently do not have to pay that type of fee for that work.
There is also the question of the line usage fee the city collects from sewage ratepayers. Currently, it is set at $12 per month for each sewage ratepayer. That money should be used to pay for repairs and sewer-related expenses. The line usage fee would likely increase in the future when major sewer replacement projects are undertaken; however, it would be very small compared to the rates that could be seen, following a sale. Upon a sale of the authority, the line usage fee could easily increase to $50 per ratepayer. Much of that money would not be invested back into our city’s infrastructure. The new sewage entity would need to raise Monessen’s rates by $X to cover the cash contribution and around $50/month (at minimum), in order to cover the $40M sewer rehabilitation project that will have to get completed regardless. In this case, though, there would be no grants, no financial aid, and no mercy to the residents, in regards to paying for such a major project that cannot be avoided for much longer. Forgoing all grants and poverty interest rates would be devastating.
The city would likely spend millions of dollars trying to get the Pennsylvania Public Utility Commission (PAPUC) to control rate increases because the city would probably lose residents due to high costs, with low outcomes.
A local, and fairly recent example is in Jeannette and Hempfield. Hempfield’s sewer bills doubled recently, in order to cover the money Jeannette got from selling their sewer lines. The rates will continue to go up in each municipality, as more are added to the mix.
As it stands, Monessen is entitled to poverty interest rates and maximum grants (including federal dollars) which will greatly reduce the end price. Any entity that buys the system is not entitled to these, and that cost (which will be very significant) will be passed on to the ratepayers.
It is short-sighted and suicidal to consider a sale. The plan that the City of Monessen is developing places great consideration on the monetary situation of the city. We need to fix the problems and get as much assistance as we are entitled to.
The state of Monessen Sewer Lines and their Future
As it stands now, it is no secret that Monessen’s sewer lines are in great need of repair. We share this and other infrastructure burdens with many municipalities across the country. The problems with Monessen’s pipes are well documented and common knowledge so any entity that purchases the authority will be forced to fix the pipes, but at a much higher cost to ratepayers.
In 2010, the DEP issued a consent decree mandating that Monessen begin to remedy the issues with its sewer and stormwater system. The City agreed to a Corrective Action Plan with the DEP in 2010, which was revised in 2017 to include the deteriorated pipes throughout the City. The first two phases were completed in 2011 and 2015 using a five million dollar grant from PennVest. Right now, the plan is to address the main trunk lines in the sewer system in Monessen, that are in the worst condition — 3rd Street, 6th Street, 9th Street, and 12th Street. These are important because these lines handle much of the sewage and stormwater that is carried from all the other neighborhoods uphill in Monessen. Gravity helps to bring the matter downhill through the pipes so that it can be treated. Allowing these pipes to fail would be catastrophic. This is part of that plan.
This is a long term plan which will cost around $40M; however, we are eligible for funding, so that we do not place an extreme burden on the taxpayers. We have been working with the USDA in order to get the appropriate assistance for our situation. We are hoping to move quickly on this, in order to avoid a major failure that would cripple the city and its residents. There could be a difference in cost of $30M if grants, terms, and interest rates are not taken advantage of. The difference in that cost would ultimately be paid by the residents.
These sewer lines will need to be fixed sooner, rather than later — regardless if there is a sale of the current sewage authority or not. The difference will be, how big of a bill will the residents pay for the mandated project?
In Conclusion
When a sewage authority is sold, the purchasing entity has the chance of accruing a lot of debt — some continue to acquire Authorities, likely refinancing debt. Attorneys and bond Council make money every time this happens. It seems there are individuals who are seeking to get people jobs and get minimum rate increases but are also advocating for a sale. That sale would reap the opposite results — Job losses, service cost increases, and the maximum rate increases to residents — indefinitely.
Currently, the Mon Valley Sewage Authority gets grants. Right now, they need a working board, with members who have the ability to help write and acquire grant funding. Would that grant-acquiring ability continue, after the sale of the Mon Valley Sewage Authority? Would the grant money benefit the people in the system? Would a new entity spread it throughout their empire of sewage systems? Would it go directly to the ratepayers in some form or would it get tangled up in legal fees and transfer fees, too? It sounds like board members want certain people to work for the Mon Valley Sewage Authority — Laborers, lawyers and such. Could everyone be made happy without selling the future for a few dollars that will be gone all too soon? There are already people out there who break their prescription pills in half just to pay their bills. How much farther will we go?
MS
