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Allegheny

Peduto says it would cost Pittsburgh $411M to replace lead water lines

Bob Bauder
| Friday, March 31, 2017, 11:48 p.m.
Pittsburgh officials are considering restructuring the Pittsburgh Water and Sewer Authority.
Bob Bauder | Tribune-Review
Pittsburgh officials are considering restructuring the Pittsburgh Water and Sewer Authority.

The price tag for fixing the Pittsburgh Water and Sewer Authority's outdated pipes and water treatment equipment is $4 billion to $5 billion, and that doesn't include lead water line replacement or paying off $750 million in debt, Mayor Bill Peduto said Friday.

Addressing a panel of experts he has assembled to help resolve PWSA's chronic problems, Peduto said it would cost the authority another $411 million to replace lead service lines and $1 billion more to pay off PWSA's $750 million debt.

“We are looking at over the next 20 years an investment needed to be able to provide safe drinking water of $4 billion to $5 billion on top of a $1 billion debt,” the mayor said. “We would be basically increasing rates on an average of double in order to be able to make that, possibly triple.”

Peduto appointed seven government, nonprofit, academic and business executives to a blue-ribbon panel that will oversee restructuring of PWSA. The panel held its first meeting in the City-County Building, Downtown, attended by more than 100 residents and clean-water activists.

Members interviewed four companies — Environmental Consulting and Technology Inc. of Michigan, Infrastructure Management Group Inc. of Maryland, HJA Strategies of New Jersey and PFM Financial Advisors LLC of Harrisburg — one of which will be selected to review PWSA operations and recommend improvement strategies. The panel did not select a company.

Kevin Acklin, Peduto's chief of staff, said that likely would happen next week, and the company would be subject to City Council and PWSA board approval.

Audience members who spoke after the interviews said they opposed any attempt to privatize PWSA. Peduto has suggested a private partner could help PWSA overcome financial problems, but he opposes privatization.

“We think it's wrong that partnering with a private company would make water more affordable,” said Aly Shaw, an organizer with the Our Water Campaign.

Peduto said PWSA was hamstrung by the city in 1995 with a $300 million lease agreement.

That's the amount he said the authority paid to lease operations of Pittsburgh's waterworks, 965 miles of water lines, five reservoirs, 11 water tanks and 1,200 miles of sewer lines.

“It was not a decision that was made about lead levels or the safety of water,” Peduto said. “It was made simply to pump $300 million into a city budget that was bankrupt.”

Debt escalated after that with risky bond swaps and variable-rate borrowing. It now accounts for 25 percent of PWSA's annual budget. It would take 40 years and $50 million annually to pay off, Peduto said.

“This has created a debt structure which does not allow us to be able to go back and borrow to be able to solve our problems,” he said. “That debt structure did not benefit people. That benefitted bankers. That benefitted lawyers. That benefitted bond issue people.”

It put PWSA in a position in which it had to address capital improvements only after something broke down. Peduto said major problems in any one of a half-dozen areas could shut off the city's water supply.

Panel members said they were optimistic about devising a fix.

“I am optimistic because the challenges we face are not complex, but they're hard,” said Alex Thomson, former PWSA board chairman who resigned last week. “Everybody wants clean, safe water, but they're not willing to pay for it. We are going to have to invest in that system. That requires hard decisions.”

Bob Bauder is a Tribune-Review staff writer. Reach him at 412-765-2312 or bbauder@tribweb.com.

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