Explanation of Debt Service


The Kiski Valley Water Pollution Control Authority (KVWPCA) plant initiated construction in 1972 and began receiving wastewater from thirteen (13) communities in 1975. These communities are: Borough of Apollo, Borough of Leechburg, Borough of North Apollo, Gilpin Township, Kiskiminetas Township and Parks Township in Armstrong County and Allegheny Township, Borough of East Vandergrift, Borough of Hyde Park, Borough of Oklahoma, Borough of Vandergrift, Borough of West Leechburg and Washington Township in Westmoreland County. The initial construction included installation of sewers for conveyance of wastewater and storm water from these communities to the treatment plant and included Combined Sewer Overflows (CSOs). The CSOs discharge untreated wastewater and storm water to the environment in the event that the flow volume from the combined streams exceeds the hydraulic capacity of the conveyance piping or treatment facility.       

The treatment facility, as originally constructed, has an average daily design hydraulic capacity of 7.0 Million Gallons per Day (MGD) with the capacity to accept and treat peak flows up to 19.1 MGD. The existing KVWPCA wastewater treatment facility provided preliminary, primary and secondary treatment along with disinfection prior to being discharged to the Kiskiminetas River under the terms of NPDES Permit Number PA0027626. This permit also identifies twenty nine (29) CSO outfalls and imposes specific requirements for the management and control of the CSOs.

One of the CSO control requirements specified in the NPDES Permit is submittal of a Long Term Control Plan (LTCP) for controlling CSOs to the Pennsylvania Department of Environmental Protection (PADEP) and implementation of the LTCP plan upon approval. According to Environmental Protection Agency (EPA) policy, development of a LTCP for controlling CSOs can utilize one of two approaches; a “demonstration approach” which shows that the plan is adequate to meet water quality standards in the surface water body receiving the CSOs, or a “presumption approach” which implements minimum levels of control which are presumed to meet water quality standards.

On August 9, 2004, the KVWPCA submitted an LTCP to the PADEP utilizing the “demonstration approach” in which an attempt was made to demonstrate that existing CSO discharges did not adversely affect water quality and did not cause water quality standards to be exceeded in the Kiskiminetas River. In a letter dated January 29, 2008, PADEP disapproved the submitted LTCP and suggested that KVWPCA use the “presumption approach” and demonstrate in a revised LTCP either that the CSO discharges were limited to four (4) untreated overflows per year, or that the Authority would commit to providing full biological treatment of at least eighty-five percent (85%) of all combined sewer annual wet weather flows. The DEP also required the revised LTCP to include a plan to adequately convey and appropriately treat the annual wet weather flow from the combined portions of the sewage collection system and fully treat all sanitary sewer flows from separate sewers (sanitary sewage and storm water conveyed in separate pipes) during wet weather events. The KVWPCA submitted a revised LTCP on April 7, 2008 and the PADEP provided approval of the plan in a May 22, 2008 letter which also included a schedule for implementation of the plan.

As required by the LTCP, comprehensive monitoring for twelve (12) municipalities (Washington Township conducted their own) was conducted from September 1, 2008 through February 28, 2009. The results of this study (including flow monitoring) were presented in a report (Flow Monitoring and Modeling Study – “Flow Study”) dated August 2009. The Flow Study identified the volumes of base flow (dry weather flow consisting of sanitary wastewater and ground water infiltration) and peak flow (wet weather flow including base flow and storm water inflow) contributed by each Municipality. The Flow Study concluded that the KVWPCA’s conveyance facilities are adequate to meet the EPA CSO Control Policy standard of treatment of at least eighty-five percent (85%) of all combined sewer annual wet weather flows and to meet the PADEP peak core flow design standard (100% of flow from separate sewer systems plus 350% of base flow from combined sewer systems). The Flow Study also concluded, however, that the KVWPCA’s sewage treatment plant did not have adequate capacity to meet PADEP peak core standards for treatment.

Upon review of the Flow Study, the KVWPCA Board of Directors authorized their Engineer to develop and evaluate options to upgrade the sewage treatment plant and to analyze the cost of the options to ensure compliance with PADEP sewage treatment standards. A Basis of Design Report was completed and presented to the Board in January 2010. The Design Report recommended installing new Sequencing Batch Reactors (SBRs) and related upgrades to provide for treatment of peak core flows, and to incorporate biological nutrient removal capabilities into the proposed upgrades to meet anticipated discharge limits for nitrogen and phosphorus. The upgraded sewage treatment plant would need a hydraulic capacity with a design average daily flow of 7.0 MGD and a peak instantaneous flow of 31.0 MGD. The Design Report provided a cost estimate of $27,850,000 for the plant upgrades.

To fund the sewage treatment plant and system upgrades necessary to comply with PADEP treatment standards, the KVWPCA issued $32,390,000 in bonds (Net Interest Rate = 4.172%; Yield = 4.097%) on September 28, 2010 to provide funds to pay off several loans, fund the Debt Service Reserve Fund, construct the sewage treatment plant upgrades and to pay the costs for issuing the bonds. KVWPCA revenues will be used to satisfy the payment obligations on the bonds.

At a special meeting of the KVWPCA Board on September 22, 2010, a rate increase was approved to finance the bond issue with nine (9) Municipalities voting for the rate increase and four (4) Municipalities voting against the increase. The rate adopted by the Board consisted of two parts: a non-flow based component and a flow-based component.

Three elements comprise the non-flow based component of the rate:

    A uniform flat rate of $1.55 per Equivalent Dwelling Unit (EDU) per month for payment of two existing loans from the Pennsylvania Infrastructure Investment Authority (PENNVEST).
    A uniform flat rate of $0.72 per EDU per month for payments of the three loans that are paid in full with the proceeds from the bond issue, and
    A uniform flat rate of $4.87 per EDU per month for the non-flow related costs of the sewage treatment plant upgrade.

Two elements comprised the flow based component of the rate:

    A flow volume credit for the existing surge capacity of the sewage treatment plant, and
    A flat rate per gallon of excess flow.

These Debt Service rates were utilized from 2010 through 2018 while municipalities corrected CSO issues and the new sewage treatment plant was constructed.  At the completion of these activities a new Flow Study was conducted (2017) to once again determine flows from each municipality and evaluate the effectiveness of CSO removal projects.  At the completion of this Study, it was determined that all municipalities would pay the same Debt Service fee per EDU, that rate being $13.24 per month ($39.72 quarterly).  This uniform Debt Service Rate became effective November 1, 2018.