Richland officials explore township’s financial responsibility to Allegheny Valley Sanitary Authority project
Thursday, February 6, 2020 | 3:02 PM
The Richland Township board of supervisors began exploring the details of a bond issue to help fund the Allegheny Valley Sanitary Authority’s improvement project at its Feb. 5 meeting.
The total cost of the project is still unknown, but township officials believe they will be responsible for contributing $10 to $12 million.
“We don’t know the exact amount of money that we’re going to need to contribute toward that project but they’re moving along at an expedited clip and I think it’s important for us to put our key people in place so that we’re in a position to obtain financing in a timely manner so we can fulfill our responsibilities under the project,” township manager Dean Bastianini told the supervisors.
The board appointed PNC Capital Markets LLC as the underwriter and bond counsel for the issue. Alisha Reesh Henry, managing director of the group, gave a presentation to the board that included its debt service, current interest rates and possible scenarios for financing. The township has very attractive debt, Henry said, and with current interest rates so compressed they would only have to issue $9.6 million right now for a $12 million project. Henry also discussed the possibility of a wraparound, which the township has done in the past, as the most cost-effective way to issue new money. In the current environment the township’s debt would only extend to 2034, she said.
The total cost of the project at the authority’s Harmar treatment plant is expected to be between $50 and $60 million. The Environmental Protection Agency has ordered the upgrade in order to better manage and treat the plant’s discharge into the Allegheny River, and the work will upgrade the plant’s capacity from 5.5 million to 8 million gallons per day. Richland contributes about 20 percent of the flow to the facility, and is therefore responsible for about 20 percent of the cost. They will provide that in one lump sum.
The next major step will be for the authority’s engineer to certify the project cost, Bastianini said. Once they do that Richland will know its share and can move forward. He expects they’ll know that number by next month, at which point the board can decide how much it wants to borrow. With rates so low, he said, they may want to look into the possibility of borrowing above the cost of the treatment plant upgrade if there are additional projects in the township that need attention.