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Solicitor says PennVest loans would be guaranteed by city but excluded from debt limit; authority has revenue to cover payments
Summary
The Erie Water Authority solicitor told council two PennVest opportunities include an $8 million prophy loan and a $10 million lead‑pipe replacement project; the authority asked the city to guarantee loans but said the loans would be excluded from the city's debt limitations because the authority has its own revenue stream.
Council heard from the solicitor for the Erie City Water Authority about two PennVest financing opportunities and the city’s role as proposed guarantor.
Attorney Campbell, representing the water authority, described an $8,000,000, 30‑year prophy loan for renovation of the West 12th Street maintenance facility and a larger project to replace customer‑side galvanized and lead service lines with a total project value of $10,000,000. The financing structure presented included a loan of approximately $2,700,000 for the lead‑service project with the balance funded by a PennVest grant.
Campbell said the city was being asked to guarantee the loans, but that PennVest‑style guarantees for the authority are structured so the obligation is excluded from the city’s statutory debt limits because Erie Water Works has dedicated revenue to secure payments. “They’ll be excluded from the city's debt limitations as Erie Water Works has the revenue necessary to provide for that exemption,” Campbell said. She added that if the water authority’s security were to fail and payments ceased, only then would the city face exposure to make payments.
Councilors asked about the likelihood of that scenario and the city’s contingent liability; Campbell said the authority had not missed a payment historically and that the guarantee is intended as a backstop. Council did not take final action on the guarantee ordinances at this meeting beyond reading related ordinances on first reading; those guarantee measures were set for subsequent council consideration.
