MAWC earmarks millions to buy Jeannette sewer system

The Municipal Authority of Westmoreland County will use $17 million in cash from a bond issue floated two years ago for the purchase of the Jeannette sewer system.

Board members on Wednesday unanimously approved the $23 million deal for the county authority to acquire the city's system and its 5,500 customers.

“I think the acquisition of the sewer system will add to our dimension and gives us a base to expand further on down the road,” said board member Bruce Robinson.

The sale won't become final until all regulatory approvals from the state are granted. The deal also is subject to an independent legal review.

The authority's solicitor, Scott Avolio, serves as the lawyer for the city of Jeannette and the Jeannette sewer authority. Chris Kerr, manager for the county authority, said the board expects to hire outside counsel in March.

The purchase requires the county authority to pay $4 million in cash to the city and assume the sewer system's $18 million debt.

Kerr said no additional borrowing will be needed to facilitate the deal. The authority will use cash from a $141 million bond issue that was completed in 2013 to pay for upgrades to the water system through 2018.

The authority will use $17 million of that money to pay Jeannette and make good on all but $5 million of the sewer system's debt.

“It will eliminate us having to do two financings and allow us to consolidate the debt,” Kerr said.

The county authority will take over the city's sewer plant in Penn Borough and assume its nine workers this year.

Sewer rates for Jeannette customers will continue to reflect a rate structure that city officials approved last year, including annual rate hikes to pay for renovations at the treatment plant.

The purchase of Jeannette's sewer system will double the county authority's sewer business, which now has about 5,000 customers.

It sells water to more than 400,000 residents in Westmoreland, Allegheny, Fayette, Indiana and Armstrong counties.

“We hope to have opportunities for other acquisitions and to expand,” said authority board Chairman Randy Roadman.

Rich Cholodofsky is a staff writer for Trib Total Media. He can be reached at 724-830-6293.