Allentown will be repaying more than $2.1 million to surrounding municipalities that were over-charged for sewer fees by the city.
The city has reached a settlement agreement with Lower Macungie, Salisbury and South Whitehall townships as well as Lehigh County Authority, Coplay-Whitehall Sewer Authority and South Whitehall Authority.
All have been piping sewage to the city’s wastewater treatment plant for decades.
The “anticipated” settlement was announced Thursday night at the Lower Macungie commissioners meeting by Atty. Richard Somach, the township solicitor.
The township commissioners passed a resolution to approve the “amicable” agreement with the city.
Lower Macungie is getting the smallest amount of money back from the city: $53,552.
But it soon may get much more, as a share of nearly $939,000 LCA is getting in the settlement.
Some sewage from Lower Macungie flows through lines in South Whitehall to the city’s treatment plant. More of it flows through LCA’s lines, according to township officials.
In 2009, LCA discovered the city was charging more than the fees established in a 1981 agreement. When the issue could not be resolved, the municipalities hired a lawyer, Atty. Kevin Fogerty to negotiate a settlement.
“At that time, Allentown didn’t have the resources to pay us back,” Somach told the commissioners. He indicated an agreement was reached after the 50-year lease of the city’s water and sanitary sewer systems to LCA for $211.3 million last year.
Overpayment claims originally were made for the city’s charges in 2009 and 2010, according to documents made public by Somach. As the dispute continued, fees for 2011 and 2012 were paid under protest and the city put them into a separate escrow fund until the matter could be resolved.
Those challenging the city, referred to as the signatories, asserted that the city incorrectly billed them 1.6 percent of the city’s general fund rather than 1.4652 percent, as well as other fees.
The agreement states that all parties “deny any wrongdoing and any liability and state that they are entering into this settlement agreement solely to eliminate the uncertainties, burden and expense of potential litigation.”
The largest amount of money --$938,935 – is going to LCA, which will divvy it among the municipalities it serves. The lion’s share of that money will go to Upper Macungie Township, said William Erdman, Lower Macungie’s engineer.
But Lower Macungie officials anticipate their share of LCA money will be much more than the $53,552 they are getting directly from Allentown.
“That’s an undetermined amount as of right now,” Somach told township commissioners. “You’re getting somewhat of a windfall back.”
Contacted after Thursday night’s meeting, LCA spokeswoman Liesel Adam could not provide a disbursement breakdown of the $938,935 her authority is getting in the settlement.
After the township meeting, Ryan Conrad, president of the Lower Macungie commissioners, noted that, because it is a settlement, the signatories are not getting back all they maintain they were overcharged by the city. For Lower Macungie, for example, the protested amount totaled $60,143.
Said Conrad: “As with any settlement, all parties compromise to reach a fair and amicable solution, which this does.”
The total amount of all the protested overpayments was nearly $2.4 million.
Somach told commissioners several of the other signatories already have approved the agreement.
All four commissioners at the meeting voted to approve the agreement with no discussion. Commissioner Brian Higgins was absent.
Here are the amounts of money the other three signatories are getting directly from the city:
• Coplay-Whitehall Sewer Authority: $448,257
• Salisbury: $188,208