Ford City Delays Sewage Authority Loan Guarantee Request

Ford City Borough Municipal Sewage Disposal Authority President Terry Tokarek explains the reason the Authority needs Ford City Borough to guarantee $2 million in loans.

by David Croyle

Ford City Borough delayed for the second time a request by the Ford City Borough Municipal Sewage Disposal Authority to guarantee a loan that would provide funding for a sewage separation project.

The Sewage Authority has been approved to receive a loan for $1.5 million from the Pennsylvania Infrastructure Investment Authority (PENNVEST) and a $500,000 bridge loan from S&T Bank to separate storm from sanitary sewer lines at specific locations in the borough. However, as a condition of the loan, Ford City Borough must agree to guarantee the loan by creating the ordinance that stipulates fees being charged for sewage will be used to repay the loan.

The hold-up in gaining the Borough guarantee appears to be in the clarity of the documents, according to Borough Solicitor Frank Wolfe.

“When you do one of these, there are four exhibits that go along with it,” Wolfe explained at a special session of Council last night. “One is a guarantee agreement between PENNVEST and Ford City Borough. It will have placemarks on it that say ‘Government Unit’. It is in a (computer) format that will not allow me to alter them. There are also amortization schedules and a contract commitment letter. I have part of it, but not all of it. Some of it was missing. I emailed Mr. Pascal (Sewage Authority solicitor) and asked him to send them to me. He said he was trying to work with PENNVEST to get the documents typed out.”

“I could not even see what it was,” Council President John Lux said. “We will have to table this until we can see all the documentation. I want to sit down with Paul (Harmon) and look it over. We haven’t seen any loan documents. That is why we want to see the forms. It is a glitch with a program in the computer.”

Former Ford City Councilman Tom Shaffer was in the audience and asked several questions about the loan.

“The numbers do not go with what I have been told,” Shaffer said. “The Sewage Authority was saving money so it can be matched. Now, according to Sewage Authority, we do not have any money on hand pledged to the grant. There was $250,000 in a Certificate of Deposit, $200,000 in cash management, and $200,000 in a Revenue Fund. Why are we borrowing $1.5 million when there was money there? Where did money go? I have a letter from Sewage Board that says they have no money to match it.”

Sewage Authority President Terry Tokarek explained. “We did get $1.5 million loan from PENNVEST. An H20 grant guaranteed half of what we asked for. We have $500,000 sitting in bank earmarked for other projects. We are not asking for anything from Borough except to pass ordinance that would stipulate if something happened, income received from sewage bills would go to pay the loan. We do not need matching funds. We got the grant. This is a formality from PENNVEST and S&T Bank. There is no money hidden or put aside. We were never putting money back to match a grant.”

Councilman Lou Vergari, who also serves on the Sewage Authority, doesn’t anticipate needing the entire loan amount.

“If everything works out okay, we will not have to borrow the entire $1.5 million,” he told fellow Council members. “We got the loan before we got the grant. The $500,000 S&T loan is a bridge loan. We have to pay contractors before we get the money from PENNVEST. The S&T loan gives us the ability to do that. We then pay off S&T when PENNVEST gives us the loan installment.”

Wolfe said he will be working with Authority Solicitor Charles Pascal and PENNVEST to create proper documentation for review by Council. He anticipated action could be taken by the time Council meets again on March 8.