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Rate Increase or Tax Increase for Washington Township?
Written by Mary Gibbs Kershner, Correspondent
2011-11-24

Residents wait to see who will pay for $12 million debt

        There will be no sewer rate increase in Washington Township this year. Next year, 2012, is another matter entirely. Chairman of the Washington Township Municipal Authority (WTMA), Michael Krestynick, announced at the sewer authority meeting on November 17th that a sewer rate increase is not guaranteed, but is dependent on whether the Washington Township board of supervisors decide to raise taxes enough to meet any anticipated shortfall of the sewer authority debt. The current indebtedness of the WTMA is approximately $12million dollars and is guaranteed by Washington Township. If the WTMA were unable to meet its financial obligations and default on its loans, Washington Township would be obligated for the $12 million dollar debt. To prevent a default by the WTMA, Washington Township’s board of supervisors has considered increasing taxes on all property owners, not just those who are connected to sewer. 
         John Wynne, a resident of Spring Valley Village, attended the sewer authority meeting and suggested the authority change its billing method from the end of the quarter to the beginning of the quarter. Wynn noted the change in billing would bring in onetime revenue of $170,000. He suggested many corporations, such as Comcast, bill for services in advance. Chairman Krestynick noted that a municipal authority is regulated by the state and might not be permitted to bill for services it has not rendered. 
        The WTMA has engaged the services of Bryan Tuk, a financial attorney, with the law firm of Fitzpatrick, Lentz, & Bubba to seek refinancing on its debt. The current interest rate is 6% on the sewer authority’s loan. If a lower rate can be negotiated, it would save the WTMA a great deal of money. 
                In a related matter, Chairman Krestynick announced Pennsylvania American Water, one of the largest utilities in the United States, inquired about purchasing the municipal authority. Krestynick noted, “If they buy the authority, they run the show.” WTMA board member, Amy Sutryn, wondered why Pennsylvania American Water would be interested in the sewer authority. Krestynick replied, “I assume they know the finances. People have to pay their sewer bills so there is a revenue flow”. WTMA Engineer, Stuart Rosenthal, P.E., remarked that a private utility is in the business to make money and   they will do their due diligence. Rosenthal observed, “Water is actually profitable. However, sewage is not.” Because Pennsylvania American Water is so large, if the utility sees an advantage in Washington Township’ sewer authority, the $12 million dollar debt would be spread over many customers.
        Krestynick noted the utility does all their own maintenance. He anticipates meeting with Pennsylvania American Water in December to discuss the matter.
 

 

 

 

 

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