Steve Wolfinger, Board Liaison for the Muhlenberg Township Authority
Water and Sewer utilities are managed by the Muhlenberg Township Authority. This is a separate entity from Muhlenberg Township and as such you should direct all business and questions to the Authority.
Muhlenberg Township Authority
2840 Kutztown Road
Reading, PA 19605
Why is the Township and Authority entering into this lease agreement with the Authority?
The 2008 economic crash has and continues to present challenges for everyone including all levels of government from Federal down to your Township. In the short term the Township has been able to continue the same level of services expected by annually dipping into cash reserves when necessary to balance the budget. Long term the Township must find a way to equalize revenues and expenses by making cuts in service, reducing capital expenses like road repairs, increase revenues or a combination of all of these things in order to sustain operations. This proposed agreement with the MTA will help to meet this challenge.
Why pursue this arrangement instead of raising the property taxes?
The Township and the Authority are sensitive to the burden on our residents so they have closely compared the cost on the average homeowner to increase revenues by $500,000 using either method. The estimated added expense to households of the proposed lease with the Authority when the plan is fully implemented in 2018 is $29.60 per year over the current average residential bill of $139.44 annually. (Note: There will be no added cost in
2015 because payments don’t begin until 2016. The increase for 2016/2017 is $11.85).
In order to generate $500,000 by raising the property tax, the rate would need to be increased by 0.45 mills from the current 4.2 mills which equals an increase of $45.00 for a home with an assessed value of $100,000. (Note: The cost to compare for 2016/2017 is 1.8 mills or $18.00 for a home with an assessed value of $100,000)
Comparing the two methods (property tax increase vs. the MTA lease) the option of entering into a lease agreement with the Authority is clearly the least expensive option for our residents.
Are there other benefits from the arrangement over and above the annual cost?
Yes, if a property tax increase was adopted there is no opportunity for the property owner to have this annual expense lowered. By basing the added cost on water consumption the property owner has the opportunity to conserve water lowering the impact of any increase. Also homes with fewer people and businesses that do not consume a great amount of water will receive significant savings over an across the board tax increase.
Were other alternatives examined?
The Board of Commissioners is focused on how to provide good services at a reasonable cost to the community that can be sustained over time.
Communities across Pennsylvania have been looking at their assets to help find a method
to combat rising costs without eliminating services. The Township’s largest physical assets are the water, sewer and road systems like many communities.
In 2013 the Township engaged a financial consultant to examine what the MTA assets were worth if they were put out for bid on a 25 or 50 year lease. This is something that has been done by other PA communities most recently by the City of Allentown that resulted in a large amount of up-front money together will annual payments to help the City.
The valuation was completed and the process for the Township to move forward with the bid process described. This opportunity was discussed in-depth by your Commissioners
early this year and the decision was made not to lease the system but rather to examine alternative ways to work with the MTA (who are doing a good job) to help the Township. This agreement which was already approved by the Authority does just that.
What will the money be used for?
Both the Water Authority and your Board of Commissioners feel strongly that because the agreement calls for lease payments for the Authority’s use of Township Streets, that the monies resulting from the agreement should go back to help maintain the streets. The Township is responsible to maintain about 75 miles of local roads together with bridges and storm sewers. There is never enough money available in any year’s budget to address the current repair needs and in fact some years the Township has not been able to make any significant investments into our roads. The use of these lease payments annually for roads will help provide an ongoing source of funds for repairs and improvements.