Mayor Says Sewerage Authority Sale On Track, Value Up $6M

By Jason Togyer
The Tube City Almanac
June 08, 2017
Posted in: McKeesport and Region News

(Photo by Jeff Tomovcsik via Municipal Authority of the City of McKeesport website.)

The sale of the sewerage authority serving McKeesport and 11 other municipalities is "on track," city Mayor Mike Cherepko said, despite rumors to the country.

In fact, the appraised value of the system has gone up from $156 million to $162 million. City Council last night by 5-0 vote approved an amended sales agreement at the new, higher value, and extending by 180 days the deadline for the deal to be completed.

In September, Pennsylvania-American Water Co. announced plans to purchase the Municipal Authority of the City of McKeesport, which serves 22,000 customers in southeastern Allegheny County and operates sewage treatment plants in the city's lower 10th Ward, Duquesne and Dravosburg.

The purchase is one of the first in Pennsylvania to be affected by Act 12, a law passed by the state General Assembly in 2016, that governs the takeover of publicly owned utilities --- such as sewerage authorities --- by private utility companies regulated by the Pennsylvania Public Utility Commission.

"It's a longer process but so far, everything has been leaning heavily in our direction," Cherepko said. "I don't foresee any problems."

The agreement with PAWC, which supplies treated water to many Mon-Yough municipalities --- although not to the City of McKeesport --- was set to expire at the end of 2017.

"Our goal remains to close on the sale by the end of the year," Cherepko said, "but it will probably happen in February or March of next year."

The higher price was a result of the formal appraisal of the sewerage authority and its assets, which is mandated by Act 12.

"This is actually a good thing, not a bad thing," Cherepko said. "There is no question that PAWC has the wherewithal to make this deal happen, and I think it's a fair deal for both sides."

The mayor predicted that as wastewater regulations become more stringent, other municipalities will be looking to sell their sewerage authorities as well.

"These authorities are becoming a liability --- call it was it is," Cherepko said. "I think you're going to see other municipalities doing these same deals in the future. After all, why are we in the sewage business when we're not in the electricity business or the natural gas business?"

PAWC has made an advance payment of $5 million to McKeesport already, with another $2 million scheduled in November of this year.

Cherepko said the city has used some of the advance payment but has set the remainder aside as a reserve. "We have managed the money that was already given to us well, and I think we will be able to get through this year, even without closing" on the sale, he said.

Both the city and PAWC, Cherepko said, remain enthusiastic about the deal, and the negotiations have been amicable. "We are both sides excited about what this is going to mean not just for McKeesport but for the region," he said.

Originally published June 08, 2017.

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