Boro may co-sign sewer loan


Montrose Borough Council and the Montrose Municipal Authority butted heads last Tuesday (July 5) over  the MMA’s request for the borough to serve as cosigner for a loan to bring the sewer authority back into compliance with Department of Environmental Protection  standards.

By the end of the 3-hour meeting, it was grudgingly agreed that the council would have to agree to the MMA’s plea, but council members were doggedly insisting that the document would need to be re-written before they could sign the agreement.

A meeting to review the reworded loan document will be held on July 14 at 7 p.m.

Much of the Borough Council’s dilemma revolves around the loan document’s wording which asks the co-signer to guarantee funds or assets of $10 million, which the borough does not really possess.

Councilman Sean Granahan has previously spoken out against this part of the agreement, and has said that co-signing the loan would be fraudulent, and would place the borough in a dangerous position if the municipal authority defaulted on the loan payments.

Peter Carlucci, bond council for the MMA, and Patrick Daly, the MMA’s solicitor, attended the meeting, along with several representatives of the municipality.

Carlucci explained several changes that have recently taken place.  According to Carlucci, Fulton Bank is asking the borough to guarantee an interim loan of $10 million, and would “like to have the full faith taxing power of the borough if a workout may occur.”

USDA Rural Development has increased its financial commitment to the project, which it could retrieve and allocate to another project if deadlines are not met.

At this time, the Rural Development commitment  of $12.4 million has been increased by $630,000 to $13 million total at  two and seven eighths percent fixed interest for a 40-year period.

This will result in a rate for consumers of $55 a month per EDU, or $165 a quarter, which will double the cost for most subscribers.

Carlucci asked the borough why he has not received financial information from the borough.

The borough secretary  told him that the 2009 audit was just received, and the 2010 has not come in yet.

Granahan said that what would make the council members more comfortable would be the inclusion of elements of a recent email into the document.  “None of us are challenging the project, it is a valid project. We are just questioning whether (the MMA) can pay back the loan.”

The MMA representatives acknowledged that part of the problem is that the U.S. Environmental Protection Agency seems to be holding a gun to the DEP’s head, and that it is an unfunded mandate, with no grant money available for the project.

If the USDA funding falls through, the MMA could apply for a PennVest loan.

In other business, the council was introduced to Rodenberg
Diversified, LLC, a pipeline contracting firm based in Carrollton, Mo. Rodenberg is contracted with Laser Northeast Gathering Company for two
sections of 12-inch pipeline, each two miles in length, known as the
Hawley Lateral and The Fiondi Lateral. The company will employ 60 people on these projects, 16-20 of which will live in the Montrose area.

They will use four sub-contactors: Charp Welding, out of
Minnesota; Shaefer Enterprises, Deposit, N.Y.; Brainard Explosives, Kingsley; and LoneStar Directional Drilling, Clarkesville, Texas.

Billy Lambeth and Jim Rens attended the meeting.

The company will be
based in a building at 412 Grow Ave., Montrose, and will also be using a work trailer. They will be working in the area for at least two months.

The council approved a Labor and Industry permit for a job
trailer, and said that a sewage permit would be needed for the COG, and possibly a drainage pipe between buildings.

A peddlers permit was issued fro John William Maetsher, a college student selling academic textbooks on an internship.

St. Paul’s Episcopal Church notified the council about a planned National Night
Out Against Crime.

A request by Big Brothers Big Sisters to use the borough park also was approved.