Apr 15, 2014 3 min read

Canonsburg and Houston boroughs are making strides toward creating an operating sewer authority, but the two municipalities continue to clash over which entity should float a $30 million bond for overdue upgrades to the sewer plant.

At Canonsburg Council’s Monday meeting, a PNC Bank representative gave a presentation – the second one since last November – on the financial implications of Canonsburg Borough floating the bond versus Canonsburg-Houston Joint Authority issuing the bond.

PNC Bank, which is Canonsburg’s depository, maintains it would be about $725,000 cheaper for Canonsburg Borough to float the bond and loan it back to the authority for its plant project. Expansions are needed to accommodate future growth in neighboring townships and comply with requirements of the state Department of Environmental Protection.

Nick Falgione of PNC said the borough would have a lower interest rate than the authority because of its taxing power.

Falgione said the borough would not need to open a debt service reserve fund, whereas the authority would need to come up with a hefty sum of money for the fund or “take (their) chances” on an insurance policy.

Alan Zofchak, vice chairman of the authority, disagreed with PNC’s financial analysis.

“We can borrow the money at the same rate and may be cheaper than what you’re saying,” Zofchak said.

Rich Russo, vice president of Canonsburg Council, told Zofchak, “You might be right,” but said a financial expert with an opposing view would need to attend the next meeting to inform council.

In a separate matter, council members from both boroughs agreed the authority ultimately should be converted into an operating authority independent of both municipalities.

If approved, plant workers would be directly employed by the authority rather than by Canonsburg Borough, and the authority would have the power to float bonds to pay off debt.

Houston Council approved a memorandum of understanding last week that would require an operating authority to be established no later than Jan. 1, 2016.

The borough also voted to extend the authority’s life and included a clause that distinguishes between the bond issue and creation of an operating authority.

“Basically, what we indicated was that we’re not tying the creation of an operating authority to the financing issue that’s currently going on,” said Josh Carroll, Houston’s solicitor.

Canonsburg Council did not vote on the matter at Monday’s meeting, citing the short period of time for review.

In order for the project to go forward, both Houston and Canonsburg councils need to extend the authority’s life for at least 30 years and extend a service agreement with North Strabane Township.

Construction bids for the plant project will expire April 27.