Meadville Tribune

February 27, 2013

Borrowing agreement modified after water projects under budget

By Mary Spicer
Meadville Tribune

MEADVILLE — When all was said and done and the add-ons and deducts were finally accounted for, Meadville Area Water Authority’s replacement of 100-year-old water lines on both North and Allegheny streets came in $122,531 under budget. As a result, the agenda for the authority’s recent monthly meeting included a modification of the borrowing agreement between the authority and Pennsylvania Infrastructure Investment Authority. The modification lowered the principal amount of the PENNVEST loan that financed both projects from $3.6 million to $3.4 million and dropping the authority’s annual repayment by almost $9,000.

With the authority gearing up for two more major projects, replacements of the 100-year-old clearwell at the authority’s Vernon Township well site and the 140-year-old Highland Reservoir in Meadville, the news — along with the accompanying motion to modify the debt obligation — was greeted with unanimous consent. Chairman Tim Groves, Vice Chairman Joe Stainbrook, Treasurer Hal Tubbs and member Marcia Findlay were present when the vote was taken; Secretary John Fulmer was absent and two seats on the seven-member board are vacant.

Assent didn’t come so quickly, however, on an agreement to repay the city for up to $20 million in bonds to be issued by the City of Meadville on behalf of MAWA to cover the cost of refinancing previous MAWA borrowings, including the PENNVEST loan, as well as construction of the new clearwell and tanks to replace the reservoir.

During council’s Feb. 20 monthly meeting, Groves, who also serves as the city’s finance director, told council it had been decided that the city would borrow the money and that MAWA would subsequently repay the city.

This is the same arrangement the city has with Meadville Area Sewer Authority to cover the cost of major capital projects, Groves told the Tribune Tuesday.

“We go out and check how much it would cost MAWA to go out by itself (to borrow the money),” Groves said. “If the city can save money (by handling the borrowing), they go out and do it.”

As for the cost to MAWA for the city’s assistance, “it isn’t really a fee,” Groves said, going on to explain that the total cost to MAWA would end up somewhere between what MAWA would have had to pay and what the city has to pay for the funding. “We try to make sure that it saves money for the authority and gives the city a share,” Groves said, describing it as a “win-win situation.”

Following a presentation to city council by bond underwriter John McShane of the Pittsburgh-based Boenning & Scattergood Inc. of Pittsburgh and bond counsel Patrick Healy of Cohen & Grigsby P.C., also of Pittsburgh, an ordinance was unanimously passed authorizing the issuance of the bonds. During the meeting, the city’s attorney, Gary Alizzeo, noted that the entire transaction is contingent on an agreement from MAWA to repay the city.

Groves assured council that that agreement would be put into place by MAWA during its upcoming monthly meeting.

During the MAWA meeting Monday night, however, Ted Watts, who serves as the authority’s attorney, announced that following a discussion with bond counsel, the decision had been made to postpone action until Healy and McShane can come to MAWA to present the plan to the entire authority.

At Watts’ request, authority members unanimously agreed to adjourn the meeting for one week, reconvening March 4 at 5:30 p.m.

“I thought we had (already) talked about it,” Groves told the Tribune Tuesday, noting that both McShane and Healy will be present “to talk about the bond issue and what it will mean to MAWA.” According to Groves, a vote on the repayment agreement will be on the agenda for the reconvened meeting.



Mary Spicer can be reached at 724-6370 or by email at mspicer@meadvilletribune.com.