A dispute between the University Area Joint Authority and State College Borough over sewage treatment billing rates has moved to court.
UAJA filed a complaint on Oct. 26 in Centre County Court of Common Pleas seeking a judgment for the $406,088 in service charges and late fees that the borough has withheld in 2022.
State College has its own sewage collection system and transports it to UAJA for conveyance, treatment and disposal. In November 2021, the UAJA board voted to revise the billing rates for wholesale conveyance and treatment rates, effective January 2022.
The borough, however, has made payments under the old rate. UAJA has billed State College for $1,098,900 each quarter, and the borough has paid $1,035,911 while accruing late fees and other charges.
After the first quarter billing cycle, an attorney from Salzmann Hughes, State College’s special counsel on the matter, wrote to UAJA’s attorney that “the borough has raised concerns over UAJA’s change in billing methodology several times,” and would make payments calculated using the the previous billing method.
“UAJA has yet to explain what increase in service it provides to justify the significant increase in the borough’s invoices,” attorney E. Lee Stinnett II wrote in April.
Attorney Thomas Archer, special counsel for UAJA, wrote in the complaint that customer challenges to rates set exclusively by the authority board must be done through the Court of Common Pleas. The borough’s “unilateral withholding” of payments is “unlawful and unauthorized” under the Municipal Authorities Act, Archer wrote.
UAJA is seeking payment of the outstanding charges and an injunction requiring the borough to make full payment on future invoices unless it “receives relief in an action before the Court of Common Pleas in respect to the validity of such rates.”
The UAJA board voted during its Oct. 19 meeting to direct its counsel to file the complaint in equity.
At that meeting, attorney Isaac Wakefield of Salzmann Hughes said his firm had sent a letter to UAJA counsel the previous day further outlining the borough’s concerns.
“The tone of that letter was, I would say, frustrated. I think, candidly, that’s just how the borough feels about how the negotiations to this point have shaken out,” Wakefield said. “Despite the authorization by the authority last month to negotiate with the borough, that hasn’t occurred. Each time that we’ve tried to set up meetings or discussions with staff or special counsel, we’ve sort of hit a brick wall.”
He added that the borough offered an interim agreement pay the outstanding amount, less penalties, “in exchange for good-faith negotiations toward a new rate.”
UAJA board Chair David Lapinski said the letter was received and discussed with counsel in executive session.
Board members Larry Miles and Tom Daubert voted against the motion to take legal action.
“I am very uncomfortable going to court,” Miles said. “I am very uncomfortable on this disagreement between two brother, interdependent organizations going to court unnecessarily and exposing all of us, both organizations, to the press. I cannot vote to go to court.”
UAJA Executive Director Cory Miller said during a board meeting in August that the missing payments were “starting to have a significant impact on UAJA’s finances… Through the bond indenture, if we don’t make our debt service coverage factor we are pretty much are compelled to have a rate increase…
“We’re running out of time. We have to get this resolved and get paid by December 31 or we will trigger a rate increase.”
Board member Dan Guss said in October that he also was uncomfortable with going to court over the issue but felt there was no other option.
“I wish there was another way to do it but it seems like we’re at a dead end and we need the money,” Guss said. “It’s going to start affecting our bonds and different other things.”
Added board member Wes Glebe, “I think we need legal intercession to establish that we’re not and haven’t been under the old agreement. They seem to think we are and I think we need some way of clearing that.”
