Southwestern Pa. water issues bonds for treatment plant expansion

  • By Bob Niedbala November 17, 2012
Southwestern Pennsylvania Water Authority authorized the issuance of bonds to help finance the expansion of its plant on Tin Can Hollow Road in Cumberland Township. - Bob Niedbala / Observer-Reporter Order a Print

JEFFERSON – Southwestern Pennsylvania Water Authority approved a resolution Thursday authorizing the issuance of $9 million in bonds to fund the expansion of the authority’s water treatment plant.

The money will help the authority fund the first phase of the plant expansion project, which has been estimated to cost $17.1 million and will increase the plant’s capacity from 7 to 9.2 million gallons a day.

An $8.6 million low-interest loan the authority received from the Pennsylvania Infrastructure Investment Authority will cover the remaining amount needed for phase one of the project.

The authority earlier decided to issue bonds to raise money for the project that was not covered by the PENNVEST loan.

”It was a very opportune time to do this,” authority manager John Golding said, speaking of the low borrowing rates now being offered on tax-exempt bonds.

Michael McCaig of Janney Capital Markets, the bond underwriter, told the authority board interest rates on bonds recently have declined.

Current rates “are lower than any rates you have seen all through this process,” he said. McCaig said he expects rates for the authority’s bonds, which mature over 30 years, will range from about 0.6 to 3.5 percent.

A financial analysis prepared by Golding had indicated the authority will be able to cover payments on the PENNVEST loan and the bonds without affecting the authority’s existing reserves or requiring a rate increase for residential customers.

The authority recently paid off two PENNVEST loans which reduced authority debt payments by about $62,000 a month, Golding said.

The authority hopes to advertise bids for the plant expansion in January which could allow construction to begin in the spring, he said.

The second phase of the project will increase the plant’s capacity from 9.2 to 16.1 million gallons a day. Funding will later have to be arranged for the second phase of the project, which has been roughly estimated to cost about $7 million.

Bob Niedbala is a staff writer for the Observer-Reporter. He has worked as a general assignment reporter for the newspaper for 27 years in the Greene County bureau. He received a bachelor’s degree in English from the University of Pittsburgh.


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