Sewerage System Sale Finalized; City Taxpayers Receive $40M Payment

By Jason Togyer
The Tube City Almanac
December 18, 2017
Posted in: McKeesport and Region News

Above: Signing the paperwork completing the sale of McKeesport's sewerage authority are Jeffrey McIntyre, president of Pennsylvania American Water; McKeesport Mayor Michael Cherepko; and Dale McCall, chair of the Municipal Authority of the City of McKeesport. (Submitted photo)

Pennsylvania American Water Co. today completed its purchase of the assets of the Municipal Authority of the City of McKeesport.

The sale, valued at $159 million, includes wastewater treatment plants in the city's lower 10th Ward, Duquesne and Dravosburg, sewer lines and infrastructure serving 64,000 people in those three communities as well as East McKeesport, Elizabeth Twp., Glassport, Liberty, North Versailles Twp., Port Vue, Versailles and White Oak.

After all of the debts and obligations of the sewerage authority were satisfied, the city netted more than $40 million, officials said Monday. The money is already in a city account, though portions of it must be escrowed while the authority's remaining business is wound down.

What it means for consumers:

Continue to pay your MACM bill as scheduled. Pennsylvania American Water will begin sending bills Jan. 1.

Sewerage rates will not increase for at least one calendar year and rate changes will have to be approved by the state Public Utility Commission.

Customers who pay in person at the office in Christy Park may continue to do so. A collection box is also available at McKeesport City Hall.

The same phone numbers may continue to be used until customers are told otherwise. The MACM billing department may be reached at (412) 673-0850.

Cherepko said Pennsylvania American Water, which already provides treated water to customers in other parts of the Mon-Yough area, including Liberty and West Mifflin, will provide "consistent, regulated utility services" to people formerly served by the MACM.

More importantly for city taxpayers, Cherepko said, the transaction is "bringing financial stability" and saving McKeesport "from Act 47 municipal bankruptcy.”

The mayor has announced plans to use some of the proceeds of the sale to begin an aggressive program of demolishing blighted buildings and repairing the city's infrastructure under a program he has called "McKeesport Rising."

City council this month approved a plan to commit $2.3 million of the $40 million toward the infrastructure program. Council also authorized Cherepko and city administrators to identify safe investments for the remaining funds.

Based in Hershey, Pa., Pennsylvania American Water is a wholly owned subsidiary of American Water Works Company Inc., which is traded on the New York Stock Exchange and serves as a component of the Standard & Poor's 500 and the Dow Jones Utility Average.

With operations in 47 states, the company is the largest publicly traded water and wastewater treatment company.

The sale of the McKeesport authority is the first under Pennsylvania's Act 12 of 2016, which made it much easier for private utility companies --- which are regulated by the state Public Utility Commission --- to acquire public authorities, which are not regulated.

“As the first finalized sale under Pennsylvania’s Fair Market Value legislation, this acquisition establishes a strong example for other communities to consider,” Pennsylvania American Water President Jeffrey McIntyre said in a prepared release. “Prior to the passage of Act 12, the depreciated cost of this system might have prevented the City of McKeesport from the opportunity for financial stability.”

Wastewater customers in the McKeesport area who are on fixed or low incomes are now eligible to apply for assistance paying their bills through PAWC's H2O Help to Others Program, a company spokesman said.

In addition to the newly acquired McKeesport system, PAWC now operates sewerage systems in Adams, Beaver, Chester, Clarion, Cumberland, Lackawanna, Monroe, Northumberland, Pike, Washington and York counties.

The sale was reviewed by the U.S. Environmental Protection Agency, the state Department of Environmental Protection and the state PUC, which gave its unanimous approval on Oct. 26.

Under the purchase agreement, rates will not increase for at least one calendar year following the sale. Any future rate changes would have to be reviewed and approved by the PUC.

All MAWC operational employees have been offered jobs with Pennsylvania American Water, and a city spokesperson said MAWC employees remain on the job with PAWC at the lower 10th Ward plant and the business office on Walnut Street in Christy Park.

City Solicitor J. Jason Elash said earlier this month that although all of the assets of the sewerage authority are being acquired by PAWC, the authority itself does not automatically go out of business.

It will take several months "at least" to wind down the authority and dissolve it, he said.

Pennsylvania American Water also acquired any debts and liabilities incurred by the city municipal authority --- including outstanding bills.

A spokeswoman said Monday that MAWC customers should have received two bills in December --- one for their regular monthly statement and another marked "final bill."

Any outstanding bills due to MAWC should be paid, she said. PAWC will begin billing McKeesport customers after Jan. 1.

For the time being, bills will be processed at the McKeesport offices, she said. Bills can be paid in person at the Christy Park office or online at MAWC's website, and checks or money orders also may be deposited in the drop box at McKeesport City Hall, 500 Fifth Ave.

The city hall drop box is expected to remain in place for the foreseeable future, she said. A similar drop box also serves McKeesport-area water customers who get fresh water from the Municipal Authority of Westmoreland County --- which, although it has a similar-sounding name, is not part of the McKeesport sewerage transaction.

Originally published December 18, 2017.

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