Highly Competitive Bids Reduce Manor Township Sewer Extension Costs To Homeowner by 60%

On April 9th, LASA opened construction bids on a sewer extension project that would serve the areas of Letort Manor and Perth Hills in Manor Township. The bidding was highly competitive. The lowest general construction bid from the 12 bids received came in nearly $3 million less than the pre-bid estimate of $7 million.

Because of the low construction bids, the total estimated project cost is now $5.4 million, or about 40% less than the pre-bid estimate of $9 million. The Special Purpose Fee is now projected to be $4,450 per customer, or about 60% less than the original estimate of $10,500 per customer. If a property owner chooses to pay all LASA project fees (including the Special Purpose Fee and the Tapping Fee) over 15 years, the total project cost per customer is now $38 per month, or about 50% less than the original estimate of $76 per month.

New customers in Letort Manor and Perth Hills will also pay the regular sewer rental fee paid by all LASA customers of $25 per month. The total monthly fee for customers who choose to finance the project costs with LASA will be $64 per month. A survey recently completed by the Pennsylvania Municipal Authorities Association shows that nearly 5% of the survey respondents charge more than $64 per month for just their regular sewer service.

The LASA sewer extension project began when Manor Township adopted its’ Act 537 Plan in July of 2006, requiring the extension of public sewer service to LeTort Manor and Perth Hills. The Plan was approved by the state Department of Environmental Protection in June of 2007. LASA held a public meeting in June of 2007, estimating the total cost of the project (including general and electrical construction, engineering, legal and land acquisition) to be about $9 million.

LASA agreed to pay 1/3 of the cost of the project, or $3 million, whichever was greater. LASA estimates it can recover $3 million over time through its sewer charges. The remaining cost of the project, or up to $6 million, would have been paid by the 571 current and future property owners served by the sewer extension project through a Special Purpose Fee of $10,500 for each property. LASA also offered the current property owners a no-interest financing plan to pay the $10,500 Special Purpose Fee and the $2,000 Tapping Fee required for the project, over a 10 to 15 year time period. In addition, LASA will finance the entire cost of the project, and will carry those costs at no interest through the project construction period. LASA will not collect any portion of the cost of construction from property owners until the system construction is completed, tested, and connections begin some time in 2010.

Beginning in June of 2007, LASA proceeded to design a public sewer system consistent with the Township-approved Act 537 Plan. During the same time, the Manor Township Supervisors considered other options including a decentralized sewer system, and discussed revising their Act 537 Plan to evaluate other options. LASA has asked the Township to either affirm or reject the sewer extension project by May 15th. If the Township rejects the project or fails to make a decision by May 15th, LASA will stop all work on the project and could reject the bids.

Manor Township has reported it is waiting for bid results and also for grant results to help make its decision to affirm or reject the project. Over the last 6 months LASA has been pursuing state and federal grants through Pennvest and the Commonwealth Financing Authority to offset the cost of the sewer project to the affected property owners in Manor Township.

At its meeting April 20th Pennvest rejected LASA’s request for funding. LASA is still waiting for the Commonwealth Financing Authority grant determination. However, the currently available cost savings of $3 million resulting from the low bids have the same impact as a $3 million grant. As a result, LASA is looking to Manor Township to make its decision on affirmation of the sewer project at the May 4 meeting of the Supervisors.