Water authority in McKeesport told to pay $1 million a year

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McKeesport council voted last week to approve an ordinance that would impose a host fee on water treated within the city of McKeesport.

The vote passed, 5-1, with President Darryl Segina voting no and Councilman Dale McCall abstaining because he is a member of the Municipal Authority of the City of McKeesport.

The ordinance requires the authority to pay the $1 million fee annually. The fee will act like a payment in lieu of taxes, Mayor Mike Cherepko said, because the authority's properties are tax-exempt, the city provides police and fire service, and the authority's trucks damage the roads.

Mr. Segina opposed the ordinance because he said he's concerned the $1 million host fee will raise water and sewer rates. The authority serves 62,000 residents in McKeesport, White Oak, Port Vue, Liberty, East McKeesport, Elizabeth Township, Glassport, Versailles and North Versailles.

But Mr. Cherepko argued the host fee would be "cost neutral" and wouldn't be a burden on consumers.

He said the city needs the money to avoid entering into the state's Act 47 program for financially distressed municipalities and called the fee "a necessity for the city to survive."

In an interview Tuesday, authority Chairman Nick Shermenti said the authority currently has a small surplus and 2013 rates will not increase as a result of the host fee. He said if rates increase in the future, it will be because the authority spent $56 million to come into compliance with Act 537, which calls for municipal authorities to fix sewage disposal problems. Those projects will be completed by next summer, he said.

"I do not anticipate any rates going up at all for 2013," he said. "We may have to adjust the rates [in the future] because of the Act 537 mandates."

After last week's meeting, city Controller Ray Malinchak questioned how the fee will be "rate neutral."

"If we can get $1 million with no impact on the rate, why not ask for $2 million?" he asked.

Council also voted to create a $1.45 million "mayor's reserve fund" that would take money from an escrow fund to be used for needs in the city. The use of the funds will have to be approved by council before it is spent.

In other McKeesport news, after months of squabbling and legal wrangling, two economic organizations have vacated their office in McKeesport's City Hall.

In a May 3 letter to the organizations, the city's solicitor said "the last lease we have on file at the City of McKeesport expired Dec. 31, 2003."

But Dennis Pittman, head of the McKeesport Industrial Development Authority and the Mon-Yough Area Industrial Development Authority, said over the summer that the organizations intended to stay put, arguing that they had a valid lease.

Mr. Pittman said the organizations agreed to move after meeting with city officials and deciding it wasn't worth litigating whether the lease was valid.

As of Sept. 27, the organizations have a new address in Room 212 of McKeesport's Executive Building, 332 Fifth Ave.

"The angst and the bickering became burdensome," Mr. Pittman said.

Mr. Pittman is a former city administrator who was fired by Mr. Cherepko in January, and officials think his continued presence at City Hall as head of the authorities was disruptive to employee morale.

Mr. Pittman said the organizations looked at office space in Homestead and White Oak, but the space in the Executive Building "was the most reasonable economically."

"I'm hopeful that we will have another job-creating, tax-base-expanding opportunity somewhere in the valley by the end of the year," Mr. Pittman said.

neigh_east - neigh_south

Annie Siebert: asiebert@post-gazette.com or 412-263-1613. Twitter: @AnnieSiebert.


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