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Vandergrift accepts $11 million in state aid for sewer project

| Tuesday, May 14, 2013, 12:51 a.m.

Anticipating lower rate hikes than had been predicted, Vandergrift Council on Monday agreed to accept $11 million in state aid for the next phase of the borough's sewer-separation project.

The Pennsylvania Infrastructure and Investment Authority (PennVEST) last month offered Vandergrift a $2.7 million grant and an $8.2 million loan to pay for the second phase of the sewer project that will affect about 1,200 buildings.

Borough officials had hoped a greater portion of the project would receive funding through a grant, which wouldn't need to be repaid. The first phase of the sewer work, which is nearly complete, was fully covered by a $4.2 million state grant.

Officials' early calculations indicated customer bills could more than double to pay off the 30-year, low-interest loan.

But after further review, council now believes bills will need to climb from $30 per quarter to about $48, a 60 percent increase.

Councilwoman Christine Wilson and Borough Secretary Steve DelleDonne said the borough will pay off three existing loans by 2015. The $14,000 in monthly loan payments then can be redirected to the new PennVEST loan.

Michael Bove of the borough's engineering firm said the $8.2 million loan, with its 1 percent interest rate, will cost about $26,000 per month to repay.Council President Brian Carricato said that means ratepayers will need to make up the difference, about $12,000 per month, rather than assume the full loan cost.

Carricato estimated that will require customers to pay an extra $6 per month, or $18 per quarter.

“When we first looked at it, we thought it would be twice that amount,” DelleDonne said.

No residents spoke about the loan or the anticipated rate increase at Monday's council meeting.

DelleDonne said his office received a petition signed by 22 residents indicating they could afford a “reasonable” increase of $10 to $15 per bill.

In comparison to other PennVEST grant recipients in the latest funding round, DelleDonne said the borough was fortunate to receive as large of a grant as it did.

Vandergrift's $2.7 million amounts to more than one-third of the $7 million in grants awarded.

Bove said the borough also was lucky to get the 1 percent interest rate. He said PennVEST loans more commonly offer 1 percent in the first year and about 1.75 percent in subsequent years. He estimated that would have added another $2,500 per month to Vandergrift's loan payments.

Council members indicated they didn't think they could afford not to accept the PennVEST package.

“If DEP issues a consent decree and we turn this down, where are we going to get the money?” Wilson questioned.

“If we didn't (accept the funding), it could cost us a whole lot more later,” said Councilwoman Kathy Chvala.

Council accepted the funding in a 5-0-1 vote with Verne Sciullo absent and Wilson abstaining because she works for Bove Engineering.

Engineer Lucien Bove said he has a conference call with PennVEST scheduled for next week to work out the project timeline.

Liz Hayes is a staff writer for Trib Total Media. She can be reached at 724-226-4680 or lhayes@tribweb.com.

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