REYNOLDSVILLE — The Reynoldsville Borough Council has rescinded the resolution to disband the Reynoldsville Municipal Authority after hearing of the legal ramifications of that action from two authorities.
Attorney Jeff Gordon and Municipal Authority Engineer Jim Venture addressed the council regarding the decision made during a special meeting to terminate the Reynoldsville Water and Sewer authorities. Both brought to the council’s attention legal issues with the resolution.
Gordan began by saying the Municipal Authorities Act states a borough cannot take over an authority until the debt that authority has is resolved. The Reynoldsville authority has about $1.7 million in debt, and $500,000 in the bank.
Since the debt is greater than the assets, the borough’s only option is to refinance the debt, according to Gordon.
He added that many banks will require the borough to go through the lengthy process of the bank’s evaluating the borough financially for a loan to pay off the debt.
“Once you take on the debt of the authority… that hamstrings you guys in the future for taking on additional debt if anything else happens in the borough,” Gordon said. “...You have to take into consideration how that’s going to affect the borough in the future.”
Having authorities spreads debt, and allows boroughs to borrow more money than if it carried the debt of the authority.
Municipal Authority Engineer Jim Venture spoke to the engineering aspects of the municipal authority termination, focusing on the permits needed to run the authority.
“We probably have, I’m guessing, a dozen permits between both entities,” Venture said. “All those permits are in the name of the authority, so by extinguishing the authority what you have essentially done is you no longer have permits to operate the water and sewer plant… I technically don’t think the water system should be operational right now if there isn’t a water authority.”
He said if the council is taking responsibility for operating the plants, it would be operating it illegally and bringing liability onto itself.
Venture said transferring permits would likely take six months, and would lead to an inspection and further improvements requirements.
The authority is currently making plant upgrades based on negotiations made following the last inspection. All the contracts with the contractors are also through the authority.
“I think that all these issues can be worked out. You can do what you want to do, I just think it’s going to be more of a process than a specific event,” Venture said.
The council went into executive session for legal matters before giving committee reports. This session lasted about an hour, and when the public meeting continued, council rescinded the resolution terminating the Municipal Authority.