Alcosan mistakes cost $123K in penalties
By Bob Bauder
Published: Friday, Sept. 13, 2013, 11:18 p.m.
Mistakes by staff at the Allegheny County Sanitary Authority and its consultants cost customers more than $120,000 this year, an authority official confirmed Friday.
The state Department of Environmental Protection fined Alcosan $52,600 in January as the authority allowed a basic permit to lapse and waited 243 days to seek to renew it, according to DEP spokesman John Poister. Alcosan also paid the Internal Revenue Service $70,000 in penalties in May because of mistakes during a 2005 bond refinancing.
Alcosan spokeswoman Nancy Barylak said Executive Director Arletta Scott Williams, who is responsible for both mistakes, will explain in a report to the board. Barylak said Williams would not answer questions Friday because she wants to brief the board first.
Barylak, who called the DEP error a paperwork mistake, said the authority would recoup the entire $122,600. She did not say how.
The missteps do not bode well for an organization planning to spend $2.8 billion over 20 years to stop raw sewage from flowing into rivers, said Jennifer Kennedy, director of the grass-roots environmental advocacy group Clean Rivers Campaign.
“Just like all ratepayers, I hate to see my money go down the drain, especially when we're hearing about potential rates going up,” she said.
Alcosan board Chairman Harry Readshaw, a Democratic state representative from Carrick, said Thursday that the board plans to raise rates in 2014. He could not be reached Friday.
Calls to the authority's other four board members were not returned. County Executive Rich Fitzgerald and Mayor Luke Ravenstahl, who appoint members to the board, declined to comment.
Poister said Alcosan's discharge permit expired on May 31, 2012, but the authority did not apply to renew it until Jan. 29. Even without the permit, DEP could not prevent the agency from discharging treated water into the Ohio River because it provides a critical service, he said.
Barylak stressed the fine was not for violating DEP's pollution rules.
“To allow that permit to lapse is unacceptable. Someone was not watching the ball,” said George Jugovic Jr., president and CEO of the state environmental advocacy group Penn Future.
Alcosan's problems with the IRS stem from a 2005 bond refinancing. Barylak confirmed the agency paid the $70,000 in penalties but declined to provide further details. IRS spokeswoman Jennifer Jenkins said she could not comment.
Tim Davis, vice president and director of the Fixed Income and Municipal Bond Department for Hefren-Tillotson Inc., reviewed a report on the fines by the industry publication The Bond Buyer. He said the IRS limits the interest and savings that can be generated from a bond refinancing, and Alcosan apparently exceeded the limits. The authority's investment banker and bond attorney should have caught the mistake, he said.
“There was something that they missed,” Davis said. “There's no skullduggery going on here. It's just like making a mistake on your taxes.”
Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or email@example.com.
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