Several Nesquehoning residents came out Wednesday for a special meeting before council’s monthly meeting to discuss the future of the borough water authority.

During the hour-long discussion, a number of people spoke out about whether or not to dissolve the water authority when its charter ends on Dec. 31 and absorb it under the borough operations.

These comments were taken into consideration for two votes council took later in the evening regarding the authority’s future.

The result is that the borough will dissolve the authority in two years.

Finances

The water authority has been a separate entity within the borough for 50 years, created during a time when municipalities needed an alternate option in obtaining additional funding for projects.

Councilwoman Mary Fox led the discussion, filling in for Council President David Hawk, who sits on both boards.

““The borough tax money is put into the general fund,” she said. “Sewer charges are put into the sewer fund. They’re separate accounts. Sanitation charges are put into a sanitation account. None of those accounts can be taken one from the other. You can’t take sewer funds to pay the police. We can’t take sanitation funds to put in new sewer lines. All those accounts are separate and cannot be mingled unless they are borrowed and an agreement is drawn up for payback at a lower percentage rate.

“If the water authority were to be taken over by the borough, it would also be a separate account. ... So the water authority would strictly be paid from your water bill consumption.”

Councilman Bruce Nalesnik argued for consolidation to save money through shared equipment and labor.

“If we were to do this with the borough authority, initially it would result in a savings of $100,000 to $200,000 a year,” he said.

He said the authority lacks reserves for a major emergency, relying heavily on grants and payments from Panther Creek Cogeneration, which pays $270,000 annually for water use. The authority currently holds about $600,000 in its fund balance and CDs, with a debt of just under $500,000.

“That’s sort of a red flag to me,” Nalesnik said, noting the last major water line project was in 2008.

He said that if the water authority is brought under the borough, it would be able to borrow from the sewer department, which has an approximately $3 million fund balance, or another fund at a reduced interest rate than going to a bank for a loan. Right now, it cannot do that.”

Councilwoman Lois Kuba agreed, warning that if Panther Creek closed or drilled its own wells, the authority could face a deficit and major rate hikes.

“The borough authority would be faced with a major deficit, resulting in a massive increase of water rates,” she said. “This scenario needs to be corrected so the borough is not beholden to this entity.”

She echoed Nalesnik’s thoughts on being able to streamline services and funds.

“What we’re just trying to do is bring everybody under the same roof,” Kuba said. “We’re not trying to make hostility between the water authority and the borough.”

“The purpose of an authority is not to be a profit making enterprise,” Hawk said, noting that some of his colleagues’ thoughts cancel each other out. “Personally, I think the water authority, sewer department and the borough work well together. They help each other out. They share equipment and again, the authority’s opinion is that the authority is doing well and continues to provide a good service.”

Residents react

Resident Trajan Koerbler of Nesquehoning asked how streamlining equipment would work since it is simply selling it between departments; if personnel currently employed by the water authority would be cut and if seniority would be carried over.

Council said that they would look at everything and didn’t rule out staffing changes.

Former councilwoman Abbie Guardiani said, “This is a huge financial decision for the citizens.”

She asked, “Should there be something catastrophic, a break at the Fourth Hollow, ... my question is, if it remains as it is right now, where is the water authority getting the money to take of something catastrophic? Or, if the borough takes this on, where is the borough getting the money? The borough, I believe, is in a better financial situation than the water authority.”

Fox responded that the borough has no outstanding loans.

“The borough would be able to float the loan if need be, or we would be able to take money and borrow from the sewer department,” she said, pointing out that because of the healthy fund balance in the sewer funds, the borough was able to decrease the sewer bills for residents twice in the past eight years.

Hawk said the water authority would be able to take out a loan and said that the authority’s funds have been growing over the last few years.

Nalesnik told the residents the authority debt is just under $500,000.

Nalesnik said for 2024, the audit showed that the authority’s fund growth was only $29,000, but the newest union contract for water authority employees, would counter that.

“The authority is operating in the black,” Hawk said. “Income is still exceeding expense.”

Other residents asked about the advantage of having a separate water authority, how the dissolution will happen, if a third party independent study was completed, how union contracts will be negotiated and whether or not one council member, who is employed by the water authority, could continue to serve her term on council if she became a borough employee.

Bob Pilla, a borough worker and water authority board member, said that he believes the two entities do work together well now, however things can still be streamlined.

“Things need to be done. Decisions need to be made and this decision is not being made lightly,” Pilla said. “Change does need to happen. Change does hurt but if it’s best for the borough, then so be it.”

Decision

Council cast two 3-2 votes, with one abstention each time, to extend the authority’s charter for two years while beginning steps to dissolve it by Dec. 31, 2027.

Voting to extend the charter were Lisa Shubeck, Nalesnik, and Hawk, with Fox and Kuba opposed. On the motion to dissolve, Fox, Nalesnik, and Kuba voted in favor; Shubeck and Hawk voted no.

Councilwoman Sue Smith, employed by the authority, was absent. Councilman Paul Kattner, who sits on the authority board, abstained, despite state ethics clearance to vote since he is unpaid.