PCMA Sewage Facilities Alternatives Analysis - Full Version
Prepared by Spotts, Stevens and McCoy, Engineers and Environmental Consulting
December 2017 Spotts, Stevens and McCoy

1.0 INTRODUCTION

The Plum Creek Municipal Authority (PCMA) owns and operates the sewage treatment plant which provides sanitary sewer service to the residents of the private Lake Wynonah community. The PCMA which originally was known as the Lake Wynonah Municipal Authority, was created by the Supervisors of Wayne Township and South Manheim Township in the early 1970's to provide sewerage service to the development of Lake Wynonah. A three phase plan was developed to provide public sewerage service, with the initial two phases consisting of hauling wastewater from individual holding tanks to a central sewage treatment plant. These two phases were implemented by the Authority; and the Authority constructed its own treatment plant, with a capacity of 32,500 gallons per day (gpd), to treat sewage hauled using its own tank truck. In addition to wastewater from holding tanks, the Authority's personnel also hauled and treated septage from septic tanks on lots in the Lake Wynonah community where conventional on-lot systems had been permitted through the Townships' sewage enforcement officers. No action was taken to implement the third phase of the original sewerage concept, which involved the construction of a community collection system and the expansion of the Authority's treatment plant.

In the 1970's, the PCMA also took over ownership and O&M responsibilities for the existing water system serving the same residents of the Lake Wynonah Community.

In the mid-1980's, it was decided by State regulatory personnel that the concept of using holding tanks and hauling all wastewater was no longer acceptable. Accordingly, the Townships were no longer able to issue permits for the installation of holding tanks. Also, property owners with existing holding tanks were permitted to construct "in-ground" systems, including sand mounds, and to convert their holding tanks to septic tanks where soil conditions were suitable under the applicable State on-lot disposal system regulations.

The effect on the Authority's operation was that the assumptions that served as the basis to proceed with the second phase of its original sewerage plan no longer were applicable. Instead, the Authority was faced with an essentially fixed customer base that never would expand. Meanwhile, the Authority still had the relatively fixed overhead costs of maintaining its treatment plant and hauling equipment. For the past twenty years, the plant has been operating at only approximately one-third to one-fourth of its hydraulic design capacity. This was due to the significantly reduced flow from customers with septic tanks, which only must be pumped once every three years, and the generally decreasing number and frequency of holding tank pumps.

For years, the revenue generated from the fees assessed for hauling and treating septic tank and holding tank wastewater has not come close to covering the associated sewer system O&M costs. The Authority Board essentially acknowledged this some years ago by discontinuing the preparation of separate water system and sewer system budgets for its facilities. Instead, a single joint budget for the PCMA's entire operation has been used, with the implicit understanding that revenue from water rentals "subsidizes" the operation of the sewage hauling and treatment operation.

It is noted that the existing treatment plant, constructed in 1976, never was intended to serve as a permanent solution for Lake Wynonah's sewage treatment needs; but it remains in service over forty years later.

Because of the age of the treatment plant, significant, costly repairs are required to maintain effective operation and treatment. While a grant might be available to cover a portion of the cost of the necessary work, the PCMA Board is concerned that the need for water rental revenue to cover the expense to operate and maintain the sewer system only will increase. This concern has led the Board to consider alternatives for providing sanitary sewer service in the Lake Wynonah community. It is understood that any significant change to the method of sewer service first will require amending the Sewage Facilities (Act 537) Plans for the two affected Townships, including approval by the Pennsylvania Department of Environmental Protection.

2.0 GENERAL DISCUSSION OF ALTERNATIVES

Following are the options that have been considered as part of this study:

A. Continue with the current method of providing sewer service, but establish sewer rates sufficient to generate revenue which will cover the cost of operating and maintaining the sewer system and treatment facilities without using water rental revenue.
B. Continue the current practice of the PCMA's pumping out septic and holding tanks, but haul sewage to other nearby plants for disposal and treatment. The PCMA's sewage treatment plant would be removed from service.
C. Discontinue the PCMA's use of its trucks for pumping and hauling, remove the PCMA's sewage treatment plant from service, and require each property owner to contract with a private hauling company to pump out tanks. The wastewater would be conveyed to the treatment plant(s) with which the private hauling company has a disposal agreement.
D. Construct a central sewage collection system, with treatment provided at a new PCMA plant or at an existing nearby wastewater treatment plant to which the sewage would have to be conveyed.
E. Sell the existing sewer system to another entity.
F. Continue with the current method of operation as described in Option A, but upgrade the existing septage receiving facilities with the intention of accepting septage from private haulers in order to generate a new source of revenue.
Again, it is emphasized that any significant change to the method of sewer service first will require amending the Sewage Facilities (Act 537) Plans for the two affected Townships, including approval by the Pennsylvania Department of Environmental Protection.

3.0 ALTERNATIVE ANALYSIS

A. Continue with the current operation, including adjusted sewer rates that generate revenue sufficient to cover the cost of sewer system expenses.

Included as an exhibit in Appendix A is a table containing the approximate total expenses for the PCMA for the year 2017 through September. The total expenses through September have been projected to arrive at an approximate annual total for the combined operation of the water and sewer systems. To arrive at an approximate apportionment of the projected annual expenses to the respective water system operations and sewer system operations, several of the line amounts were divided between the two systems. For example, under O&M expenses, one-third of the projected labor costs were assigned to the Water system while two-thirds were assigned to the Sewer system. This approximate apportionment was based on the greater labor time spent operating the trucks to pump and haul sewage. On the other hand, the Management Services expense was divided equally. Each of the line item costs was assigned on a similar reasonable estimate of the associated time or cost. Based on this apportionment of line item costs, the projected annual Sewer system expenses are approximately $423,500.

Over the past four years, the average annual number of holding tank pumps was approximately 560. It is noted that there are 166 holding tanks in the Lake Wynonah community. There also are approximately 1,040 homes in Lake Wynonah with conventional on-lot disposal systems, which are required by Township ordinance to have the septic tank pumped out once every three years. Therefore on an annual basis, there are approximately 350 septic tank pumps. The current PCMA rates for pumping out a holding tank and a septic tank are $160 and $265, respectively. Based on the above listed estimated number of pumpings by the PCMA, the annual projected revenue is approximately $182,000 (~~[560 x $160] + [350 x $265]) i.e., failing to generate even half of the estimated apportioned sewer system expenses. The Water system rates therefore have to be set to cover the approximate $240,000 shortfall for the Sewer system as well as the Water system's own related O&M expenses and debt service.

This shortfall is only projected to increase significantly because of needed repairs to the sewage treatment plant. An evaluation in 2016 of the plant resulted in a recommended list of work that would be needed to extend the life of the facilities and to ensure the effective treatment of the wastewater to meet State-mandated discharge standards. Repairs to the receiving facilities at the head of the waste stream also are required because of the hauled sewage aspect of the PCMA's operation. Included at Appendix B is a summary of the proposed repairs and improvements with the respective opinion of probable construction cost. The PCMA was unsuccessful earlier this year in obtaining a grant that would have reduced the total construction cost by almost $500,000. If the PCMA has to pay the entire estimated cost of the improvements, including the associated non-construction costs, it is estimated that the annual debt service, based on a ten-year bank loan with a fixed 3 1/2% interest rate, would be approximately $100,000. Added to the current $240,000 shortfall, this would require water rates to be set to generate $340,000 in additional revenue just to "subsidize" the operation of the sewer system.

Even if the PCMA were to re-apply for the State grant and receive close to the maximum $500,000 amount, debt service for the non-construction costs (which are not grant-eligible expenses) and the remaining construction costs would be close to $50,000 per year under the assumed borrowing terms.

Setting PCMA sewer rates to cover the entire projected sewer system's annual operating expenses plus an additional annual debt service of $50,000 for work at the treatment plant would require annual revenue of approximately $470,000. This is approximately 250% of the current "Sewer" revenue, so one approach would be to increase the current rates by 250%, resulting in septic tank pumps costing approximately $660 and holding tank pumps increasing to $400. Another option would be to charge the same rate regardless of the type of tank which is being pumped, or close to $500 per pump.

B. Continue PCMA's pumping of tanks, but haul sewage to another municipality's plant for disposal and treatment.

Under this option, the PCMA would cease operating its plant and discharging sewage. Staffing would be maintained at the current level, and all pumping trucks would continue in use. Based on the current number of PCMA pumping events, the projected daily flow that would have to be pumped, hauled and disposed elsewhere is approximately 7,000 to 8,000 gpd.

Representatives of several local treatment plant facilities were contacted to discuss their possibly accepting hauled wastewater. The Superintendent at the Schuylkill Haven Municipal Authority (SHMA) wastewater treatment plant has indicated that their facility is significantly under capacity during dry weather flows and definitely would be interested in accepting hauled in wastewater. Patrick Caulfield, Executive Director of the Schuylkill County Municipal Authority (SCMA), which owns and operates the Deer Lake sewage treatment plant, said its consultant is in the process of designing new septage receiving facilities at the Deer Lake plant to accommodate and accept septage and holding tank wastewater.

Without a treatment plant to operate and maintain, certain PCMA expenses listed in the summary at Appendix A could be reduced or eliminated. Those that would be eliminated include operating supplies, repairs and maintenance, chemicals, sludge removal, and facilities insurance. We have estimated that the apportionment of the management services and miscellaneous line item expenses would be adjusted to 80 (water): 20 (sewer) from the current equal division. In addition, no new debt service would be incurred for repairs to the treatment plant. Based on these changes, the Sewer system projected annual O&M expenses, including loan payments related to the pumping trucks, would be approximately $270,000.

In addition to this annual O&M expense, the PCMA would incur the disposal cost at the plant to which the wastewater is hauled. The SCMA is not far enough along with its Deer Lake project to provide a disposal cost, but the reported assessment at the SHMA facility is $0.06 per gallon.

There are many ways that the PCMA could generate the required revenue to break even on costs. One choice would be to: (a) increase the current rates by the ratio of the projected PCMA annual expenses ($270,000) to the current annual revenue ($182,000); and (b) add the disposal cost (assumed to be $0.06 per gallon). With this scenario, a customer with a septic tank from which 750 gallons were pumped would be charged approximately $440, while a resident with a holding tank from which 3,500 gallons are pumped would be billed approximately $450.

As with Option A, there would be numerous choices for the PCMA to establish the new rates to cover its own expenses (excluding disposal costs). Regardless of the choice, the new rates would have to be significantly greater than the current rates to avoid having to use water system revenue to subsidize the sewer system operation. It also is noted that not included in this discussion is the one-time cost to abandon and possibly demolish the existing PCMA treatment facilities.

C. Discontinue altogether the PCMA's involvement in pumping, hauling and treatment of wastewater.

This option would follow the pattern used by most municipalities that have an on-lot sewage disposal system management program, as is in effect in the Lake Wynonah community. Each resident would be responsible to contract with a private pumper/hauling company to have his tank emptied; and any applicable cost for this service would be handled directly between the property owner and company. Typically, the property owner only can enter into a contract with a company that has registered to conduct business in the municipality. Wastewater would be disposed at the treatment plant with which the private company has a disposal agreement. The only involvement the PCMA might have in this option would be one of administration i.e., to keep track of the records of when each property owner's tank is pumped to inform the applicable Township if enforcement of its ordinance might be required.

The PCMA staff contacted several companies to determine if there is interest in their providing direct service to property owners in Lake Wynonah; and approximately ten companies replied in the affirmative. As could be expected, there was a range of general pricing for providing pumping/hauling services from those companies that also sent rate schedule information to the PCMA. Those companies requested anonymity until a decision is made to use private companies in Lake Wynonah. But the approximate charge for pumping and disposing of wastewater from a septic tank with a volume less than 1,000 gallons was between $200 and $300. Additional charges might apply for specific circumstances, such as if it required more than a reasonable time to pump out the tank because of the location of the tank on the property owner's lot.

The pricing for pumping a holding tank appears to generally follow that for septic tanks, plus an additional "per gallon" charge for volume in excess of 1,000 gallons. The general supplemental rate varied from $0.10 per gallon to $0.15 per gallon. Therefore, if the hauler had to remove 3,500 gallons, the approximate cost would be in the range of $500 to $700.

D. Construct a central sewage collection system.

Constructing central sewage collection system is an idea that has been considered since the PCMA was created (as the Lake Wynonah Municipal Authority) to provide sewer service at Lake Wynonah. Because municipal officials never considered it to be feasible, it never was implemented.

A more detailed evaluation of the cost to construct a central sewer system last was prepared in 1993. Because the general layout of what a collection system might look like has not changed since that study, the cost of the collection system for this analysis was calculated by updating the previously calculated cost using the ENR (Engineering News Record) construction cost index, which is frequently for approximating cost increases over time. The calculated opinion of probable construction cost in 1993 was $8,200,000. Adding a 25% factor for non-construction costs and applying the ENR index ratio results in a current collection system project cost of approximately $20,000,000.

Added to the collection system cost would be the cost of a new sewage treatment facility. The size of the treatment plant would be approximately 400,000 gpd, based on an estimated 1,600 units at 250 gpd/unit. It is assumed that additional lots would be sold for construction if the areal restrictions for an on-lot disposal system were lifted. The PCMA's property on which the existing treatment plant is located probably would be too small for the much larger facility, so a new location would have to be identified and the required property acquired. A rule-of-thumb for estimating a project cost for a treatment plant under these circumstances is $15 per gpd, so the opinion of probable construction cost for the treatment facility is approximately $6,000,000.

The total project cost would be on the order of $26,000,000, or approximately $21,500 per current residence in Lake Wynonah. It is noted that, because of the topography and road-layout around the two lakes, numerous pump stations and individual residential grinder pumps would be required in the collection system, so O&M costs would be greater than for a more typical mostly gravity-flow collection system.

An alternative to constructing a new treatment would involve conveying the sewage to an existing wastewater treatment plant. The closest facility is the Schuylkill Haven Municipal Authority (SHMA) plant which has a capacity of 2.8 million gallons per day (MGD) but only current dry weather flows of 0.6 to 0.7 MGD. Therefore there is adequate capacity in the plant for the projected 400,000 gpd flow from Lake Wynonah. Disadvantages of conveying sewage to the SHMA system include the distance (approximately three miles), two ridges between Lake Wynonah and Schuylkill Haven (requiring two major pumping stations), and the tapping fee (currently $2,500 per residential unit) that would have to be paid to acquire capacity in the SHMA plant. The net result is that the estimated cost for pumping sewage to the SHMA system for treatment at its plant also is approximately $6,000,000.

One additional consideration relative to the construction of a central sewage collection system for which is difficult to assign a cost is the effect its installation would have on the existing water distribution system. As PCMA Board Members are aware, the pipe in the distribution system is under relatively high pressure in some areas; and it is of a brittle nature also. Numerous breaks of the existing pipes probably would be unavoidable, so the PCMA would have to be prepared to bear the likely additional cost of repairing water mains and services during a sewage collection system construction project.

E. Sell the sewer system to another party.

"Selling" the system might be too optimistic. In light of the work required to restore the treatment plant to proper operating condition, it is more likely that the conveyance of the sewer system would have to be accomplished with no financial gain for the PCMA. Representatives of the Schuylkill County Municipal Authority (SCMA) have considered acquiring the PCMA's water and sewer systems at Lake Wynonah. But the SCMA's Executive Director has indicated that the SCMA has no interest in taking ownership of the PCMA's sewage treatment plant, although written confirmation of this decision has not been delivered to the PCMA.

It is very unlikely that any other entity, be it municipal or private, has interest in acquiring the facilities in their current condition. And if some other party took ownership, with the intention of upgrading the treatment plant in order to extend its usable life, it is unconceivable how that work could be accomplished while still allowing the new owner to charge rates much lower than those projected in Section 3.0-A.

F. Continue with current operation, including upgrading the septage receiving facilities to accept outside haulers' wastewater.

This is a non-starter for the simple reason that the PCMA treatment plant is not capable of treating wastewater comprised mostly of concentrated waste from septic tanks, which is the primary type of residential wastewater hauled by private companies. The Superintendent of the Schuylkill Haven plant, with a flow rate approximately one hundred times that of the PCMA's plant, has commented that it's much less desirable for him to accept septage waste at the SHMA treatment facility. Other reasons that this option is not practical include: increased treatment costs to handle the stronger waste might offset the additional revenue; the treatment-rate could not be set to compete with larger capacity plants (e.g. $0.06 per 1,000 gallons at SHMA); and the additional cost to perform periodic monitoring of the "outside" septage to ensure nothing is received that would upset the PCMA's treatment process would further reduce the gain from the new revenue source.

4.0 ESTIMATED COST SUMMARY

Option Cost to Pump Septic Tank Cost to Pump Holding Tank Comments
Do nothing $265 $160 Revenue from water rentals is required to subsidize the operation of the sewer system. Potential "sewer" shortfall could reach $300,000 per year by 2019.
Continue current operation, but set sewer rates to generate revenue sufficient to cover sewer expenses $600
OR
$500
$400
OR
$500
These are only two examples of how the rates might be set to generate the required revenue. The rates also will depend on whether the PCMA is successful in obtaining a grant for repairs at the treatment plant.
PCMA staff continue pumping tanks using PCMA trucks, but sewage is hauled to outside plant for disposal and treatment $400 $450 This is only one example of how the rates might be set to generate the required revenue. They also will be set to generate revenue sufficient to cover PCMA sewer expenses.
Discontinue the PCMA's involvement with sewage management at Lake Wynonah $200 to $300 $500 to $700 Each property owner will be required to contract with an outside private hauler from a Township-approved list to have his tank pumped.
Construct a central sewage collection system with sewage treated at a new plant or conveyed to Schuylkill Haven for treatment at its plant - - A very preliminary total project cost is $26,000,000. The uniform cost per property owner will depend on type of funding. Potential collateral damage to the water distribution pipes.
Sell/convey the sewer system to another entity - - Extremely unlikely.
Continue current operation, but accept septage from outside haulers - - Not practical or feasible.

Appendix A - Projected 2017 Expenses (Approximate) - PRELIMINARY

Expenses Through
September
Projected Annual
Expenses
Expenses Associated
w/the Water System
Expenses Associated
w/the Sewer System
O & M Expenses
O&M Labor
Meters
$58,000
$4,000
$77,000
$5,000
$26,000
$5,000
$51,000
0
Operating Supplies
Equip. Rep./Maint.
$12,000
$105,000
$16,000
$140,000
$8,000
$70,000
$8,000
$70,000
Chemicals
Engineering
$21,000
$8,000
$28,000
$11,000
$21,000
$5,500
$7,000
$5,500
Water Testing
Fuel/Tires/Vehicle Insp.
$8,000
$14,000
$11,000
$19,000
$11,000
$4,000
$0
$15,000
Truck Rep./Maint.
Utilities
$33,000
$33,000
$44,000
$44,000
$9,000
$33,000
$35,000
$11,000
Sludge Removal
Leak Detection
$4,000
$8,000
$5,000
$11,000
$0
$11,000
$5,000
$0
Management Services $79,000 $105,000 $52,500 $52,500
Administrative Expenses
Legal & Accounting
Office Labor
$5,000
$76,000
$7,000
$101,000
$3,500
$50,500
$3,500
$50,500
Payroll Taxes
Group Insurance
$13,000
$26,000
$17,000
$35,000
$7,000
$15,000
$10,000
$20,000
Facilities Insurance
Office Expenses
$14,000
$28,000
$19,000
$37,000
$9,500
$18,500
$9,500
$18,500
Miscellaneous
Board Stipend
$32,000
$4,000
42,000
$5,000
$21,000
$2,500
$21,000
$2,500
Subtotal
Current Debt Service
Total
$585,000
$57,000
$642,000
$779,000
$76,000
$855,000
$383,500
$48,000
$431,500
$395,500
$28,000
$423,500

Appendix B Sewage Treatment Plant Repairs Improvements

SEWAGE TREATMENT PLANT REPAIRS/IMPROVEMENTS

Septage receiving station --- $204,000
Replace equalization tanks, including instrumentation --- 299,000
Replace return-activated sludge pipe and valves --- 5,000
Clean aeration tank --- 13,000
Repair effluent filter and valve --- 54,000
Electrical repairs --- 18,000
Structural repairs --- 111,000
Sub-Total (Oct 2016 cost opinion) --- 704,000
Price escalation until time of construction (~5%) --- 35,000
Contingency (~10%) --- 74,000
Total --- $813,000

Comments, questions, and suggestions are welcome! Please Email us and put SEWAGE STUDY in the subject line. Thanks much!
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