PGJTA expects $600K savings
Published: November 29, 2012
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PINE GROVE - The Pine Grove Joint Treatment Authority (PGJTA) could realize more than the $600,000 savings it was almost guaranteed when its members agreed to refinanced its Rural Utility Services loans.
Stephen Flaherty, Municipal Finance Director of RBC Capital Markets, LLC, Lancaster, and Peter Edelman of Stevens & Lee, Reading, the authority's bond counsel for the JTA's original 40 year RUS loans, both attended the November 20 meeting to obtain authority for the next step in the refinancing process which began this past spring.
According to Flaherty, the current $11.2 million debt will be split with half sold in December, and the remainder in January 2013. This, he said, is done so that smaller financial institutions can buy. Results of the December sale will be available for the authority's December meeting.
"With things at the rate they are right now," said Flaherty, "the first sale should mean $300,000, and the second $450,000. (We) Should do better now than earlier." He added, however, that the savings could be less.
The refinancing includes three RUS loans made in 2003 and 2007 and will have the same maturities as the original loans.
Edelman presented a resolution for adoption which authorizes the issuance of both series of bonds, as well as authoring all official actions that are required for the sale. He reminded the members that they must decide how many years they wanted to have lower payments. (The current debt service is $740,000 per year.) Although he said most boards decide to take the savings in the first three or five years, it can be done longer. "Sometimes you have projects you don't have money for which this could pay," said Edelman adding also that there are no tax issues for whatever the board decides. "Taking it for the entire length of the loan would knock down the yearly pay back by $25,000," he concluded.
Board member John Stahl suggested 10 years since he said when you have it, you spend it. However, chairman Will Hanson said he would only agree to a maximum of five years since the authority would then have more control of the money. A motion by Hanson to spread out the savings over five years was unanimously approved.
With only days before the 2013 budget had to be approved to meet the December 1 deadline for submission to the USDA, Ken Miller informed the board that he had neglected to work on it, noting that former chairman Bernie Kulkaski had always done it. Since Miller's term expires the beginning of January and he is not seeking a re-appointment, he suggested, "Somebody has to look at it line item by line item. (I) think we'll have to dip into our reserve, though I don't like to do that because it'll be gone one day."
Stahl agreed. "We should retain one year's debt service. It's already lower than that." Business Manager Diane Tobin likewise agreed noting that the board has no choice.
Noting it (the budget) is only a planning tool, Hanson's motion to approve the budget was seconded by Stahl, and unanimously approved. Tobin, however, noted, "You will be looking at it."
Treatment Plant supervisor Nick Stark reported one of his employees, Terry Zimmerman, is retiring Nov 30 and was recommending a full time semi-skilled laborer be hired at the rate of $10 per hour. According to Stark, that would save approximately $14,000 per year and prepare the plant for future retirements.
Stark noted that Zimmerman was an excellent worker and would be missed. His duties, he said, would be distributed amongst the other employees, but, said Stark, if the authority is to continue taking septage, another person should be hired and trained. If septage is discontinued, three employees are enough. Hanson suggested the Compensation & Operations Committee discuss the situation and make recommendation.
Compensation & Operations Committee member Stahl reported he and fellow member Miller are offering some important changes. "The board," he said, "needs to meet in a workshop and discuss. The board needs to vote up or down." He noted that the recommendations involved the elimination of some things, like benefits, but when there are eliminations, the board needs to counter balance with something else. Stahl provided an example of the board spending $3,000 per year for cleaning uniforms. It was decided, he said, to buy a washer and dryer and do it themselves since the authority does not want employees to wear their work clothes home.
Miller suggested a special meeting be held to discuss the recommendations. A copy, he said, should be sent to each board member to review, as well as the ""Employee Manual". The workshop was set for December 4 at 7 p.m.
A request from Tobin to waive the $400 inspection fee for the eleven FEMA 'buy-out' homes was approved. According to Tobin, nothing can be built on the land after the houses are demolished. Her request, however, to collect the $100 inspection fee required for capped lines will remain in effect. This fee, she said, would be paid at the time of property settlement.
Tobin reported eight property owners had been sent sewer service disconnection notices. While six have agreed to make payments, two property owners have ignored the notice completely. Her request that solicitor Rick Wiest be given the authority to legally pursue action against those two was approved.
Rettew engineer Ron Madison reported a pre-construction meeting with Arthur "Pat" Aungst was held November 13 to discuss the relocation of sanitary sewer lines and a manhole required for the replacement of the Route 645 bridge. The relocation project is scheduled to begin December 3. He noted also that PennDOT will allow temporary restoration of the road and shoulder.
For several months the board has been discussing the possibility of selling nutrient credits and a nutrient credit certification had been received from the Department of Environmental Protection. According to Madison, a large number of Waste Water Treatment Plants have pursued the credits and this year's sellers have exceeded buyers. However, he said, new regulations are pending which may make the JTA credits more profitable in coming years.
According to Madison, the Environmental Protection Agency is squashing the idea of just buying credits instead of correcting problems, and some, he said, not making repairs, will have to. He added there were lots of changes with the new EPA regulations which is driven by what is happening in the Chesapeake Bay.
In other business,
- Madison, Stahl, and Stark visited a fully automatic septage receiving station at State College. According to Stahl, he had received a quote of $78,000 for a system.
- Wiest will discuss a problem with the borough's Code Enforcement Officer concerning sewer line inspections. Tobin noted she had spoken with a Kraft Code officer some time ago about authority requirements, but she understands there are other officers now.
- Tobin's report of delinquent accounts shows those over 60 days equal $9,212.36, while those over 90 days equal $83,901.52. The prior month balance was $104,454.50.
- Stark's Inflow and Infiltration (I&I) tracking for October shows 6.74 inches of rain and a 33% I&I rate. A total of 12.91 inches of rain was measured during the third quarter with a 6.6% I&I rate.