Unity municipal authority blames rate hike on past actions |

Unity municipal authority blames rate hike on past actions

Unity Township Municipal Authority distributed a 22-page document to about 20 residents attending the board’s Wednesday meeting to explain a rate hike planned for 2015.

The authority reviewed a timeline, including board records stretching back to 2004, to illustrate financial decisions of previous members that included a “swaption agreement” with PNC Bank that paid $2.6 million upfront on $34 million in bonds to fund plant, collection line and administration construction costs.

Authority board member Thomas Couch said the interest rates on the bonds were comparable to a variable-rate mortgage, which seemed like a risk worth taking until interest rates plummeted, starting in 2007.

“In a sense you’re betting that the interest rate is going to work in your favor,” he said.

Over time, the authority lost $8.1 million negotiating and renegotiating the bonds, according to the documents.

In December, the board began soliciting for advice to recall the 2004 bonds and refund them with fixed-rate bonds, approving the new terms in October.

Couch said the board considered expectations for interest rates and tried to refinance the bond on the board’s terms, expecting the bank to call the bonds at the end of the year.

“There is no indication interest rates are going to go any lower, so the earlier we act on this it’s going to help us secure a better rate,” he said. “We chose to be more proactive on that and get it done early.”

Operations manager Doug Pike highlighted a pie chart in the documents showing that 75 percent, or $8.57, of the $11.50 increase in residential customers’ base rate will go toward the cost of the bond refinancing.

About 10 percent, or $1.17, will go toward operations, maintenance and treatment costs. The remaining $1.76 is planned for contributions to long-term projects, including a proposed stormwater plan and sewage realignment in conjunction with a PennDOT project on Route 981.

Monthly rates will rise, depending on water usage, from about $39 to $50 for residential customers.

Supervisors Mike O’Barto and Tom Ulishney attended the meeting to voice their concern for seniors who live on fixed incomes.

“It just kind of adds insult to injury because the cost of everything is going up,” he said. “We’re telling them because of mistakes that were made financially, they have to pay more money in their sewage bills.”

Authority board chairman Ron Carey said the panel didn’t want to wait for the bank to call the bonds, which would have resulted in a bigger rate increase.

Stacey Federoff is a staff writer for Trib Total Media.

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.