Municipal Authority of Westmoreland County to borrow up to $220 million

Municipal Authority of Westmoreland County board members on Wednesday agreed to borrow up to $220 million, which includes a large amount earmarked to purchase up to three sewer systems in the next three months.

The loan will refinance $130 million in capital improvement programs and refinance $63 million in debt.

“We see this as an opportunity to continue to improve our infrastructure,” said board Chairman Randy Roadman.

The loan comes on the heels of $140 million in borrowing that the authority finalized in 2013 to pay for five years of improvement projects. Money from that loan is expected to dry up next year.

A 25 percent rate increase for authority water customers went into effect this month earmarked to pay back the latest loan. Additional 7 percent rate hikes for the 2017 and 2018 fiscal years also were authorized to cover the debt.

The authority has more than 120,000 water customers in five counties and more than 10,000 sewer customers.

Authority Manager Chris Kerr said talks are ongoing with three municipalities, which he declined to identify, to purchase their sewer systems. As much as $27 million could be borrowed to pay for those deals.

“We are currently talking with a number of municipalities,” Kerr said. “All or some may decide to have us acquire them.”

The deadline to finalize those deals is July to ensure the authority can borrow money to pay for the purchases, Kerr said.

In February, the authority purchased the Youngwood sewer system for $3.1 million.

Bruce Robinson, Ligonier Township Municipal Authority board member and supervisor, previously confirmed negotiations have taken place for the county authority to buy his township's sewer system. No deal has been finalized.

Roadman suggested more purchases could be forthcoming.

“We're always looking at opportunities to expand,” he said.

The loan will pay for the next five years of improvement projects, which includes a proposed $35.8 million plan to install transmission lines to allow officials to overlap service areas and deliver water to customers from its treatment plant along the Youghiogheny River near Connellsville and the Beaver Run Reservoir in Bell.

Officials said about $40 million will be used to upgrade the authority's three water and four sewer treatment plants.

The authority plans to allocate about $22 million to repair water lines throughout the system where leaks have been a recurring problem.

Kerr said refinancing of the previous debt at a lower interest rate is expected to save the authority about $9 million.

Rich Cholodofsky is a Tribune-Review staff writer. Reach him at 724-830-6293 or rcholodofsky@tribweb.com.