MVSD answers only some of judges’ questions about $5 million refund

By Ed Runyan


The Mahoning Valley Sanitary District has written a 26-page response to a memo and order from two common pleas court judges regarding the proposed refund of $5 million to Youngstown, Niles and McDonald.

The MVSD response is in anticipation of an Aug. 29 hearing on the matter in the Trumbull County Courthouse before Judges Lou D’Apolito of Mahoning County and Ronald Rice of Trumbull County.

The filing apparently doesn’t provide some of the information the judges sought but gives a point-by-point response to other issues.

But by today, the MVSD was to provide the judges with the names of each city, municipality, township, village or other entity to whom the MVSD and its member cities Youngstown and Niles and member village McDonald sell water.

The MVSD response does not list the communities, instead saying only that the MVSD sells water to Youngstown, Niles and McDonald. Those communities in turn sell water to other communities.

The judges also ordered that each community that buys MVSD water, “whether through MVSD directly or through its members,” receive notification of the hearing date. The MVSD response apparently doesn’t address that order. In various places in the response, however, the MVSD says it does not know the customers to whom Youngstown, Niles and McDonald sell water.

Matt Blair, MVSD director, said Friday he doesn’t know if the names of those other water users were provided, and doesn’t know if any of those communities were notified of the hearing.

When the judges first raised questions with the MVSD about its intent to refund $3.7 million to Youngstown, $1.2 million to Niles and $100,000 to McDonald and inquired why money was not being refunded to all of the customers who buy MVSD water, such as Poland and Austintown, Blair told The Vindicator the MVSD’s only customers are “member cities” Youngstown and Niles and member village McDonald.

When the judges asked Blair why the MVSD doesn’t ensure that the refund is shared with the communities that Youngstown, Niles and McDonald serve, he said the MVSD cannot order Youngstown, Niles and McDonald to share the refund with their customers.

Youngstown and Niles sell water to dozens of cities, villages and townships in Mahoning and Trumbull counties. McDonald sells water to Weathersfield Township and Girard.

The MVSD’s response did explain why the MVSD decided to refund $5 million in “excess” funds instead of retaining the money for upcoming capital improvements or lowering water rates.

The MVSD said its financial adviser, PFM Inc., did an analysis that showed the MVSD had a reserve balance above the recommended reserve levels.

Ohio law governing water-distribution systems such as MVSD says surplus funds can be used to retire debt, reduce water rates, or for accomplishing any other of the legitimate objectives of the district.

The filing says the MVSD told the judges in a July 11 phone hearing that it attempted to get a legal opinion from the Ohio Auditor’s Office, Ohio Attorney General’s Office and prosecutor’s offices in Mahoning and Trumbull counties as to whether the refund was legal, but none of those entities could provide such an opinion.

The MVSD filing also addresses whether there is any conflict of interest involved with any MVSD board member voting to provide a refund to Youngstown, Niles and McDonald. The MVSD board consists of representatives from Youngstown, Niles and McDonald.

“Given the oath taken by the board members and the clear and unambiguous language of [Ohio law], there is no conflict with any board member returning the identified available fund balance, the surplus, to the members,” the MVSD filing says.

There has never been a previous rate reduction in the MVSD’s history, the filing says, answering another question from the judges.

The district did waive a levy payment in 2015 of $1.3 million from Youngstown and $400,000 from Niles, however.

As to why the MVSD doesn’t ensure that the communities that buy water from Youngstown, Niles and McDonald get a part of the refund, the MVSD response says the MVSD “has no legal means by statute or court order to reduce the rates to any of the members’ consumers.”

As to whether the MVSD is overcharging for water, the district replied that it has agreed to keep its current rate in effect until at least 2020.

“Beyond [2020], the district does not know if an increase in rates charged for the purchase of water will be necessary,” the MVSD said.

As for why the MVSD doesn’t pay off its debt early instead of giving a refund, the MVSD said it has an Ohio Water Development Authority loan, but it cannot be paid off early, and the MVSD does not have any other debt.

It has bonds issued in 2010 that mature in 2018. Bonds can’t be repaid early, and the money for them is set aside, Blair said Friday.

For Niles, there are a lot of infrastructure needs, and the state auditors will make sure the city uses the refund only for water infrastructure needs, Blair said.

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