Jun 1, 2018 9 min read

Three townships plan to file legal action against Canonsburg-Houston Joint Authority following notification of a rate increase that would more than double residents’ sewer bills.

Chartiers, North Strabane and Cecil townships – the only townships, along with Canonsburg and Houston boroughs, that use CHJA’s plant – have agreed to file the injunction to try to stop the rates from going into effect in July. While North Strabane is the largest user of the plant, the three townships do not have representation on CHJA’s board, which is made up of four appointed representatives from Canonsburg and one from Houston.

CHJA approved a resolution in April increasing rates for 2018 from a base charge of $5.38 per 1,000 gallons of water to $11.57. The $6.19 difference will go toward a debt service charge incorporated in the bill. Over the next three years, that base charge is expected to increase, as per a 2016 rate increase resolution. By 2021, the base charge will be at $6.59, and the $6.19 debt charge will take the total up to $12.78 per 1,000 gallons.

“I would expect people to complain when the rates increase that much,” said Matthew Marasco, manager for North Strabane’s Municipal Authority.

Expansion project the cause

The rate increase comes just after CHJA recently announced to the townships it is issuing an additional $20 million in bonds to complete the last phase of a treatment plant expansion project that began in 2009 and to make other upgrades to the system.

The expansion project is a point of tension with the three townships, which each agreed to the project nearly 10 years ago. The state Department of Environmental Protection had gathered population and development projections from each of the municipalities and mandated that CHJA upgrade its wastewater treatment plant to meet the expected growth in its service areas.

The DEP plan required the plant to increase flow capacity from 3 million to 8.4 million gallons per day. The expansion plan also includes provisions for the expansion of the wet-weather pump station from 2 million to 4 million gallons per day.

According to the 2009 agreement, which the five municipalities approved in resolutions, the project was supposed to cost almost $41.9 million and take five years to complete. The monthly user rates were not supposed to be increased until 2015, when the project was anticipated to be completed.

Tensions rise

The tension with the townships began in 2016, when CHJA borrowed $52 million in bonds for the project, for which construction had still not begun. Marasco said CHJA didn’t make it clear to the townships why the cost went up from $42 million to $52 million.

“We objected to it,” he said.

At the end of 2016, when CHJA issued the five-year rate increase, Marasco said he asked for justification and unsuccessfully “tried to get details on the project.”

Tensions again escalated at the end of January, when CHJA decided to change the design of the project from biotowers to sequencing batch reactors as a means of treating wastewater. The change was expected to “save $10 million,” according to Gary Matta, solicitor for CHJA.

According to CHJA board Chairman Robert Luksis, the initial design did not take into consideration the cost of replacing old equipment that is “past its life expectancy.” He said that if the board chose to continue with that original design plan, it would cost that additional $10 million.

“The plant is disintegrating,” Luksis said. “It wasn’t designed to last forever. We’re taking this dilapidated facility into the 21st century. It’s going to be state of the art and it’s going to be incredible.”

Luksis said when the facility was built, North Strabane had the option to participate in the CHJA board, but declined because at the time North Strabane was mostly farmland using septic tanks. They’ve since asked for representation. Luksis said the “only fair way to do that,” is to have North Strabane “buy-in” to the board.

“We’re open to those discussions,” Luksis said.

Another $20 million

Matta said the design change has to be approved by the municipalities, which were asked to sign off on it during an executive session meeting at the end of January. During that meeting, the municipal officials were also informed that there would be additional borrowing to cover cost overruns, which were beyond the $10 million that was hoped to be saved, according to township representatives.

“We were told it would be another small borrowing,” said Jodi Noble, Chartiers Township manager. “To me, 35 percent of the project cost is not a small borrowing.”

Marasco also said that during the meeting, the cost overruns were presented as a “small amount.” Shortly after that meeting, he discovered the overruns were about $20 million. Similarly and in a separate interview, Greg Gennuso, administrator for Cecil Township’s Municipal Authority, said the cost overruns were “downplayed” during the meeting.

“I thought they were just keeping us informed and that they ran over a little bit,” he said. “As it trickled down later, they said it’s going to be $20 million. That’s a surprise.”

Matta said in an interview that if the townships agree to the design change to save $10 million, the overall project cost will be about $59 million. He said the additional $20 million in bonds will cover the $9 million that wasn’t covered with the first bonds along with about $10 million in other updates to the system, like pump station upgrades and a flow storage facility.

Requesting information

Noble said she sent a letter to CHJA’s engineer and business manager asking for accounting on the project: How much of the $50 million had been spent and on what?

“We inquired informally to provide why those additional funds were needed,” she said.

She said the response she received was verbally communicated and that the “numbers didn’t add up.” Gennuso said he felt the same way after getting a verbal explanation of the accounting.

“It just didn’t add up,” he said. “We couldn’t put the numbers together in a way that covered all the money and that’s when we started thinking, ‘Hey these guys aren’t really telling us what’s going on.’ We don’t know what you’re doing because you’re not being transparent about it.”

Dan Slagle, engineer for North Strabane’s municipal authority, said he sent a letter to CHJA following that meeting, asking for a “detailed cost accounting of Phase 2 of the project, a complete accounting of engineering and legal costs to date, and estimated additional borrowing and projected rate increases above the original 537 plan.” He said he didn’t receive the information he asked for.

Noble sent CHJA a request under the state’s Right-to-Know Law on May 16 to get a detailed accounting of the project.

“Things happen in projects; I understand that, but that’s why we asked for an understanding of what’s been spent to date and what needs to be spent,” she said. “We just want to make sure this is the best approach because the rate payers in all of these communities will be paying for this.”

Matta said in an interview that he is unaware of any written requests for information, other than Noble’s recent RTK request.

“I don’t think we’ve ever not given information we’ve been asked for,” he said.

He said that about $22 million of the $50 million in bonds has been spent, and that anyone who wants an accounting on the project can go through the requisitions the board approves at its monthly meetings to find out how that money was spent. While he provided a reporter with a list of about 20 withdrawals on the $50 million in bonds, it didn’t include an explanation of what each of those withdrawals was spent on. Matta said that information could be found in the requisitions.

“I’m not going to waste my time or our business manager’s time to make it easier for them,” Matta said. “We have all the background on how that money was spent if they want to look through it.”

Matta and Luksis said CHJA is currently working on compiling that information to provide Noble as per her formal RTK request.

Time and money overruns

The cost overruns, Matta said, are the result of a poorly estimated cost in the original DEP plan, which was about $42 million and didn’t take into consideration aging equipment.

“I don’t think those original estimates were good estimates,” he said. “The plant’s 50 years old. It’s done. Some of it’s just worn out and needs to be replaced.”

He also attributed the overruns to the time delay. The project, which was supposed to be completed in five years, is now approaching 10 years. Other than design work, not much happened from 2009 to 2016, according to Luksis, the CHJA chairman.

Luksis said the board spent about a year interviewing engineers and bidding the design work, followed by two years of designing. He said in 2013 and 2014, not much was done because it was still being determined who would borrow the money. At that time, CHJA was still answering to Canonsburg Borough, but the borough didn’t want to back the bonds, Luksis said. CHJA then decided to become its own operating authority in 2015 before it took out the bonds, he said.

During CHJA’s meeting May 24, Luksis and CHJA board member Steve Lucas said the townships’ potential legal action could further delay the project.

“The reason for this expansion is so we can accommodate the growth from your communities,” Lucas said.

On May 8, Chartiers Township supervisors approved a resolution to file an injunction contingent upon North Strabane and Cecil townships’ participation. North Strabane supervisors followed with a similar resolution Tuesday, and the Cecil Township Municipal Authority is expected to vote on a similar resolution June 12. Their agreement includes the shared cost of hiring an independent engineer to review CHJA’s use of the bond money.

“We’re looking out for our residents,” Marasco said.

Gennuso said explaining the rate increase to residents won’t be easy come July.

“It’s not going to be an acceptable explanation, but we’ll have to tell residents that Canonsburg-Houston Joint Authority raised their rates to cover their borrowing. Our hands are kind of tied.”