Performance Audit

PITTSBURGH WATER AND SEWER AUTHORITY

Report by the
Of?ce of City Controller

MICHAEL E. LAMB
CITY CONTROLLER

Douglas W. Anderson, Deputy Controller

Gloria Novak, Performance Audit Manager
Bette Ann Puharic, Assistant Performance Audit Manager
Bill Vanselow, Performance Auditor
Ashley Zajdel, Performance Auditor
Julie Hall, Performance Auditor
Emily Ferri, Performance Auditor

Nathan Donsen, Performance Auditor

February 2017

TABLE OF CONTENTS

Executive Summary i-xxvi
Introduction and Overview 1
Objectives 6
Scope 7
Methodology 8

FINDINGS AND RECOMMENDATIONS

The Pittsburgh Water and Sewer Authority (PWSA) 10
Veolia Interim Management Services Contract 10
Contracted Terms of Compensation 10
Continuing Payments to Veolia 11
Key Performance Indicators (KPI) 12
Recognized Cost Savings or Savings from ?Improvement Initiatives? 13
Effectiveness of the Veolia Contract 14
Changes in Leadership 15
ln-house Legal Counsel 16
General Solicitor 17

Water Treatment Plant Process 17
PWSA Water Treatment Regulations 18
Test Results for Contaminants at Treatment Plants 18

Customer Water Usage Tracking 19
Billing Issues 21

The Changes That Lead to Crisis 21

Billing System Change 21

TABLE OF CONTENTS 

Meter Reading Change 22
The Incompatibility Issues 23
MIU to MXU Conversion 23
Subcontractor Issues 24
Billing Problems and Mid?Sized Meters/Register 25
American Water (PAW) 25
PAW Sewage Charges 26
PWSA Customer Service 27
Customer Service Phone and Computer Software 29
PWSA Telephone Answering System 29
Customer Service Survey 30
Phone Menu Changes 31
Emergency Calls 31
New Telephone System Request for Proposal 32
Customer Service Email Correspondences 33
Email Correspondence Analysis 34
Current Personal Water Problems and Testimonials 35
A Homeowner?s Experience 35
A Contractor?s Experience 36
A Landlord?s Experience 36
A Tenant Experience 37
Types of Customer Payments 38
Electronic Bill Payment and Presentrnent (EBPP) 38
One-Time Bill Payment Via Phone or Online 39

Cash Payment at Local 7-Eleven or Family Dollar Stores 40

TABLE OF CONTENTS 

PWSA Customer Service Center 40
Zipcheck 41
Water Shut Off Process for Delinquent Accounts 41
Shut Off Notices 42
State Requirements for Utility Termination of Service 43
Delinquent Accounts 43
100 Delinquent Accounts in 2015 44
Abandoned/Vacant PrOperties 45
City?owned Properties Water Usage 46
City Payments to PWSA 47
Jordan Tax Service (JTS) 49
Jordan Tax Services Fees 50
Jordan Tax Service Distribution of Payments 51
Jordan Tax Services Delinquent Accounts 52
Jordan Tax Services Actual Collections 53
Jordan Tax Services Customer Case 53
90 Day Delinquent Accounts Test 54
Test Alternative 56
Water Exoneration Board 57
Lead and Copper in Drinking Water 58
Causes of Lead in Water 58
Lead Regulations 60

Corrosion Control Compliance Issues 61

TABLE OF CONTENTS 

Management Responsibility 62
PWSA Lead Testing Results for PA DEP 63
2013 Lead Test Result Comparison 63
PWSA Actions to Prevent Lead in Water 64
Customer Education Efforts and Free Lead Tests 64
Lead Testing Results by Neighborhoods 66
Status of the Free Lead Tests 66
Water Quality Initiative Program 67
PWSA Asset Management Problems 68
Negley Run Watershed and the Washington Boulevard Flooding 69
Washington Boulevard Flood Gates 72
Cost of Emergency vs. Contract Repairs 73
Cooperation with City Department of Public Works Permit Division 73
40-Year Plan 74
TABLES
Table 1: PWSA Payments Made to Veolia During Contract Years 2012?2015 11
Table 2: PWSA Pending Payments to Veolia for the Years 2015-2016 12
Table 3: Veolia Improvement Initiatives 13
Table 4: PWSA Operating Legal Costs in 2014 and 2015 16
Table 5: Causes of Billing or Usage Issues 22
Table 6: City of PGH. Water Subsidy to PAW for South End Customers 26
Table 7: PWSA Customer Service Telephone Survey 30

Table 8: 2015 Sample of PWSA E-mail Correspondence 34

TABLE OF CONTENTS 

Table 9: 2015 Summary of Accounts 42
Table 10: Breakdown of the Top 100 Delinquent Accounts in 2015 45
Table 11: 2015 City?s Controller?s Of?ce for City Property Billed by PWSA 47
Table 12: 2014 Jordan Tax Service Delinquent Accounts 52
Table 13: 2015 Jordan Tax Service Delinquent Accounts 53
Table 14: Sample of 200 Accounts over 90 Days Overdue 55
Table 15: July 2016 Lead Results in Homes 63
Table 16: Free Lead Test Kit Results in Homes 65
Table 17: Options of Alternatives to Mitigate Flooding of Washington Boulevard 2012 MS

Consultant?s Report 71
Table 18: 2011 Construction Costs to Replace PWSA Infrastructure 74

FIGURES
Figure 1: Transmission of Customer Water Usage 20
Figure 2: MXU Attached to Meter Register 20
Figure 3: Register on Top of Meter 20
Figure 4: Negley Run Water Shed 70
Figure 5: Flooded Washington Boulevard 70
FLOWCHARTS

Flowchart PWSA Flowchart 2
Flowchart Customer Service Organizational Flowchart 28
Flowchart PWSA Proposed Customer Service Organizational Flowchart 28

APPENDIX FOLLOWS

MICHAEL E. LAMB i735 CITY CONTROLLER

 

First Floor City-County Building 414 Grant Street Pittsburgh. 15219

February 16, 2017

To the Honorables: Mayor William Peduto and
Members of Pittsburgh City Council:

The Of?ce of City Controller is pleased to present this performance audit of the
Pittsburgh Water and Sewer Authority (PWSA) conducted pursuant to the Controller?s powers
under Section 404(0) of the Pittsburgh Home Rule Charter.

EXECUTIVE SUMMARY

The Pittsburgh Water and Sewer Authority is responsible for producing and 
water to a majority of the City of Pittsburgh residents along with maintaining and operating the
water and sewage infrastructure. The Authority also sells bulk water to Reserve Township, Fox
Chapel Borough and Aspinwall Borough.

This audit assesses the authority?s billing, delinquency and exoneration process and
procedures; evaluates customer service effectiveness; investigates and assesses the new wireless
meter interface unit installation; evaluates the computer software systems used for billing,
delinquency tracking, and infrastructure asset management; reviews overall ?nances, emergency
requests and cost of construction vs. emergency repairs. This audit also examines the concerns
about lead in PWSA drinking water, procedures for preventing lead in drinking water and the
cost savings and effectiveness of hiring private contractor Veolia in managing the Authority.

PWSA is governed by a seven-member Board of Directors appointed by the mayor for 5
year terms. As stated in the City?s Home Rule Charter, board members serve at the will of the
mayor.

Findings and Recommendations

The scheduling of this PWSA performance audit ran concurrently with widespread
problems with customer billing charges and usage readings. Complaints reached the members of
Pittsburgh City Council who requested immediate intervention. These problems occurred under
the hired water management services organization called Veolia Water North America 
Northeast, LLC (hereafter known as ?Veolia?).

PWSA contracted with Veolia to provide as per the contract ?executive management
services, general administration and management consulting services, and ?nancial and

412?255-2055 Fax 412-255-8990
michael.lamb@pittsburghpa.gov

infrastructure management consulting services to the authority?. board of directors
signed 3 contracts with Veolia over 3.5 years.

Contracted Terms of Compensation

The Veolia contract provided 3 areas where the contractor could receive compensation,
1) base salary, 2) key performance indicators (KPIs) and 3) recognized cost savings or
improvement initiatives. Each contract included a base salary. For the ?rst contract
year the base salary was $150,000. During the next 2 contracts, the amount varied
depending on successful appointment of an interim executive director, in 2012 appointing a
study manager, interim chief operating of?cer and in 2014 appointing an interim ?nance
director. The appointment of the interim employees was to be hired by Veolia, but paid by
PWSA.

Finding: PWSA board of directors paid Veolia over $11,000,000 during the 3.5 year contract.

Continuing Payments to Veolia

Veolia, as per the contract, should have received a percentage of all ?improvement
initiatives? savings until December 31, 2016. If all pending and expected charges are paid to
Veolia, PWSA will have paid a total of $15,619,975.

Key Performance Indicators (KPD

The contract states ?each KPI will have a well?de?ned and measureable objective against
which achievement may be measured. KPIs may be multi-focused, sliding scale, and/or
subdivided into more than one initiative?.

Finding: Veolia and PWSA developed KPIs that did not ful?ll the terms of the contract because
they were not measureable goals.

Recommendation: PWSA board of directors should insist that contract provisions are followed.
KPIs should be clear measurable goals, rather than an outline of a list of tasks to be completed by
a contractor.

 

Recognized Cost Savings or Savings from ?Improvement Initiatives?

Veolia was being paid a percentage of any cost savings. These cost savings were not
explained or outlined in the contract. Improvement initiatives were presented to the steering
committee for approval and if approved, then submitted to the board for approval, rejection or
modi?cation. Veolia was being paid 40% of recognized cost savings from ?improvement
initiatives?.

ii

Finding: A list with explanations of the improvement initiatives paid to Veolia is not available.
This is an example of the effects of disjointed leadership.

Effectiveness ofthe Veolia Contract

Initial impressions of the Veolia contract appeared to have good checks and balances.
The reality is that the board Of directors and the steering committee are only volunteers or
employees that Veolia hired serving part time on the steering committee. This makes it dif?cult
to monitor the impact of or improvement initiatives on a daily basis. Hiring an outside firm
to operate a $174,000,000 authority and paying them a percentage Of cost savings allows a
potential conflict Of interest.

Finding: The day to day operations are presented to the board of directors by the managers and
because of allegiance to Veolia, their representation can be skewed.

Recommendation: The PWSA board should avoid hiring companies to manage the authority
that require a percentage of cost savings. Agreements like this promote the company?s pro?ts
over the competent operation Of the authority. It would be in best interests to hire
employees whose allegiance is to PWSA and its efficient and effective Operations.

Changes in Leadership

PWSA experienced many leadership changes throughout the years, from key managers to
executive directors. Each change in leadership brings a learning curve. The staff must adjust to
a new personality and a new way Of doing things. This lack of consistency in an organization
can cause confusion and frustration among employees, customers and the organization as a
whole.

Finding: During the course Of this audit, 3 different interim executive directors were in charge
of the day to day Operations Of the authority. Frequent leadership changes make an organization
inef?cient and interfere with planning strategies to overcome daily problems.

Recommendation: The PWSA board Of directors should work diligently to find an executive
director with the knowledge and skills to manage PWSA Operations. Employee retention is
imperative and the chosen individual should be able to make a long term commitment. Included
in this process should be frequent oversight of the current interim executive director.

In?house legal Counsel

PWSA, sometime over the last 30 years, eliminated their attorney or solicitor position
and outside legal counsel was hired.



Finding: Attorney fees for general counsel in both 2014 and 2015 cost the authority over
$1,200,000 a year.

Recommendation: The authority needs to hire an in?house general counsel solicitor. This
person should offer support, protect the authority and be directed to handle most legal matters.

The authority hired an in-house chief counsel in September 2016 at a salary of $108,000
a year. The amount of cost savings is currently unknown because PWSA still retains Clark Hill
Thorp Reed as general counsel.

General solicitor

According to the new chief counsel, retaining the services of Clark Hill Thorp Reed is
necessary because of the volume and specialty nature of the work. An analysis of the work load
and what the general solicitor charges is beyond the scope of this audit.

Recommendation: The PWSA board of directors and management need to review legal costs
and work toward their reduction.

Water Treatment Plant Process

water treatment facility is located within the City boundaries along the
Allegheny River near Aspinwall. water source is the Allegheny River.

Currently, the average daily draw of water from the river is 70 million gallons with a 100
million gallons daily maximum. Once the water is pulled from the river, it takes three days to
process. This occurs in four separate stages: coagulation, sedimentation. ?ltration, and
disinfection. The water is then pumped to one of 3 main reservoirs in Pittsburgh before it is
distributed to customers.

The main regulatory body of PWSA is the Allegheny County Health Department
(ACHD) which reports to the Department of Environmental Protection (DEP).
The PA DEP and the Environmental Protection Agency (EPA) regulate the amount of certain
contaminants allowed in water provided by public water systems. PWSA tests and monitors all
water for contaminants 365 days a year during the treatment process as well as on ?nished water.

Test Resaltsfor Contaminants at Treatment Plants

In 2014 and 2015, PWSA tested for 100 different contaminants in their water. Results of
the tests are sent to the DEP and EPA and customers can access the results through 
?Annual Drinking Water Quality Reports? posted on the PWSA website.

iv

Finding: All the contaminants found at the two treatment plants were below federal and state
contaminant levels for 2014 and 2015.

Recommendation: PWSA should write on every customer?s bill that water quality reports can
be viewed online or a copy requested by customer service. If possible PWSA should inform
customers what treatment plant their water comes from so that the customer knows which quality
report pertains to them.

Customer Water Usage Tracking

A customer?s water usage begins with a water service line piped into the property from
main water line located in the street. The water line is connected to a water meter
inside the house/property. Each water meter has a register on top of it that ?registers? or tracks
water usage for that preperty address. This register is then connected via a wire outside the
house/property to a newly installed automatic meter reader device known as an MXU (meter
exchange units) box. This MXU box electronically transmits the water usage amounts to a
cellular control tower. This tower relays water usage information to data collector.

There are 4 data collector control towers located throughout the City. This data is then
transmitted to a remote network interface RN I transfers the water meter usage amounts to
a meter data management (MDM) company; The MDM Company conducts a ?data sync? or type
of validation to get the meter readings connected to the appropriate account number in 
billing system which is Cogsdale. Cogsdale gets the customer?s water usage and all billing
information and forwards it to a company called Level One who prints and mails all 
customers? water and sewage bills.

Finding: There are several companies involved with properly billing a PWSA water customer.
At each step there is the possibility of an equipment malfunction and/or billing problem.

Billing Issues

In May 2016, the billing department was directed to review customer?s billing
information before bills are mailed. They look for extremely high consumption rates and/or
extremely high water bills. If high water usage is found to be 20% or higher from the last bill,
the bill is pulled and investigated.

Recommendation: PWSA administration should continue the practice of reviewing bills for
discrepancies before being mailed. This is a practical solution to solving questionable water
consumption bills.

The Changes That Lead to Crisis

Three (3) main changes happened concurrently causing several problems for PWSA. The
1St was a change in their billing system from SAP to Cogsdale; the 2nd was a meter reading
change; and the 3rd was the multiplier of the mid-size meter change out.

PWSA decided that they would change the billing system from SAP to Cogsdale. Using
Cogsdale was cheaper than using SAP and provided PWSA with a more advanced billing
system; one that was more focused on the utility business. During the changeover it was found
that Cogsdale was not compatible with SAP and caused transition problems.

Originally the automatic meter readers and the AMI (advanced meter infrastructure) used
to read those units were produced by a company called Landis+Gyr. The Landis+Gyr contract
was to expire on September 1, 2014. PWSA wanted to change the terms of the Landis+Gyr
contract because the payments were costly, and the contract did not allow PWSA to
own their customer service data information. So PWSA signed a contract with Sensus.

After the Sensus contract was signed, PWSA learned that Landis+Gyr?s MIU boxes were
not compatible with the new Sensus software. Therefore, all of the old MIU units needed to be
switched to MXUS produced by Sensus. At midnight on September 1, 2014, Landis+Gyr went
of?ine and Sensus?s network took over with only half the City having the new meters installed.

Finding: If an account has not yet been transitioned to a MXU, any bills received would be
based on usage estimates.

Finding: PWSA (Veolia) did not thoroughly investigate for compatible equipment in the
Request for Proposal (RFP) that resulted in awarding Sensus the contract.

Finding: Prior to awarding Sensus the new contract PWSA (Veolia) did not require the
company to do a test run or pilot program to show equipment compatibility.

Recommendation: The PWSA administration should require all changes in equipment
contracts to run a test or pilot program. Such a test would prove the compatibility of the
equipment and eliminate any unforeseen problems and additional costs with the equipment.

Subcontractor Issues

The plan to switch MIUs to MXUs was a huge project and PWSA subcontracted with
Utility Metering Solutions (UMS) to help plumbers install the new MXUS. Newly
installed MXUs were not reading and transmitting water usage. In some instances the water
usage transmitted was excessively high. This resulted in a lot of unhappy customers. Until the
problem became apparent, no one from PWSA checked to see if the contractor was installing the
MXUs correctly. The solution was to have PWSA plumbers visit homes with inaccurate or no
readings and ?x the problem(s).

vi

Finding: PWSA had to pay twice for installation of once to the contractor and another
time to the PWSA plumbers who had to correct the problems.

Recommendation: PWSA administration in future installation contracts should include
inspections of completed work. No payment should be made to the contractor without
veri?cation that the work was completed accurately.

While improperly installed meters/registers contributed to billing problems, the greatest
issue causing bad reading problems was with the multiplier. Over the years PWSA has
purchased at least 5 varieties of meters. Each type of meter with a register records water usage
in a certain way with a multiplier. The multiplier associated with the register can read 1 to and
others registers read consumption in the power of 10, (1:10, 2:20, etc.). In order to get a
correct water usage number the reader needs to know how the register is reporting usage and
must be programed accordingly.

Finding: PWSA experienced multiple changes occurring at the same time to complicate billing
problems. Not only was the change from Landis+Gyr to Sensus (MXIs to MXUs) causing
problems with billing, PWSA switched billing software from SAP to Cogsdale. SAP was not
compatible with Cogsdale and caused transition problems. Also, mid-size meter change cuts
needed to be completed for compatibility with MXUs and the new system.

Finding: The timing of the decisions made by PWSA caused it to be a ?perfect storm? for major
billing and equipment issues. Essentially the myriad of problems associated with all the changes
happening at PWSA were not properly thought through. An experienced water management
company should have been familiar with the type of problems that could occur with meter reader
change over and think ahead to anticipate and correct any of these problems.

American Water (PAW)

Most of the City?s southern neighborhoods use American Water because
PWSA lines were never installed in these areas. But PAW charges more for water than PWSA.
When water was controlled by the City of Pittsburgh Water Department, it was decided that the
City would subsidize this extra cost to southern residents. Consequently, the City pays PAW the
difference between City and PAW rates. This practice continues today with PWSA paying PAW
about $2,000,000 a year in water subsidy.

Recommendation: PWSA needs to explore the possibility of eliminating this subsidy without
raising the rates of customers in Pittsburgh?s southern neighborhoods.

Vii

 American Water Sewage Charges

PWSA collects sewage treatment charges for PAW customers. However,
PAW uses the software SAP for its data retrieval which is now incompatible with 
Cogsdale billing system. Consequently, these customers have not received a sewage bill from
PWSA since December 2014. This was resolved by the end of June 2016 and bills have been set
up on payment plans.

Finding: PAW customers who are City residents were not billed by PWSA for sewage charges
from January 2016 until approximately August 2016, longer in some cases. These sewage bill
customers have been offered different payment plans depending on the amount due.

Recommendation: Offering PAW customers a payment plan for their sewage bill is a good
practice and should be continued. PWSA should make every effort to accommodate each
customer?s ability to pay. If this situation were to ever happen again, billing should not be
skipped; rather an average estimated charge based on the last 4 actual sewage bills should be
calculated and mailed to the resident. Then when actual charges are reported adjustments can be
made.

PWSA Customer Service

Customer Service has a total of 40 employees; 38 full time and 2 part-time. It is managed
by a senior manager who oversees 5 sub-divisions:

1) AMI (advanced metering infrastructure) Team: Ensures accuracy in meter reading
devices 

2) Billing Metering: Ensures accurate and timely delivery of bills;

3) General Customer Service Contact Center: Provides prompt courteous service;

4) Clerical/Collections: Provides timely and accurate correspondence;

5) Dispatch: Assists customer and internal staff with accurate information for repairs.

In the organization chart ?rst presented to the auditors the 5 subdivisions of customer
service were not directly under the senior manager as originally stated. Further conversation
yielded a revised organization chart. PWSA administration is revising the customer service
organizational structure.

Recommendation: The proposed customer service organization chart should be immediately
adopted. It explains management and employee responsibility in a concise way.



Customer Service Phone and Computer Software

The customer service contact center is staffed by 12 employees. The current telephone
software system is a basic Toshiba phone system using auto-attendant call trees with no analytic
or reporting software.

Finding: This basic Toshiba phone system does not have the software to provide any analytic
reporting of the call. For example, no customer information, concern, preperty address or
problem solution is tracked. However, calls are written in the individual customer record.

Recommendation: PWSA should upgrade its phone system to a system that can track customer
information and the reasons for their call.

PWSA Telephone Answering System

Long waits to speak to representatives were compounded by a cumbersome automated
telephone menu system.

Finding: PWSA automated customer system telephone system is not ef?cient.

Customer Service Survey

The auditors conducted a random survey during the period of March 7 through April 1,
2016 between the customer service hours of operation, 8:00 am through 6:00 pm Monday
through Friday. A total of 70 calls were made at different times during the day.

customer service performance goal in 2015 was to connect the customer to a
general customer service representative in 5 minutes or less. In 2016 this goal was increased to 7
minutes.

The telephone results reported the shortest call wait time before a PWSA representative
answered was one minute and 58 seconds two calls occurred within this time frame. The
two longest call wait times experienced were one at eighteen minutes and two seconds (18:02)
and the other call at seventeen minutes and seventeen seconds (17:17).

Finding: Twenty six (26) or 37% of calls in the survey did not meet 7 minute or under
goaL

ix

Phone Menu Changes

In July of 2016 the messages on the PWSA phone line were changed. The first 40
seconds are devoted to a welcoming message and then to sewage-only customers, explaining that
these customers should be receiving bills with no penalty or interest charges.

Finding: The new menu changes delay reporting emergencies and getting to customer service.

Emergency Calls

PWSA must have 24/7 phone coverage in case of an emergency. Currently to report an
emergency the main PWSA phone line is called and as the second option on the automated
message, one is connected in 53 seconds. An emergency by its very nature means that time is
critical.

Recommendation: When the PWSA phone number is called there should only be 2 options; 1
for emergencies and/or outages and 2 for all other calls. This would allow emergencies to be
identi?ed ?rst, then under number 2 the other areas of interest could be listed.

Recommendation: Emergency calls should go directly to a live person (dispatch) to answer
and take care of the problem immediately. If only one person is working the emergency line
then the system must connect to someone else who can address the problem.

New elepltone System Request for Proposal

According to a PWSA press release on September 21, 2016, PWSA upgraded its
telephone system on September 22, 2016. Customer service was closed from 2:30 PM until 6:00
PM. The email correspondence was still available as well as making payments in person at the
main of?ce with checks or money orders. A new number to handle emergencies during this time
period was included in the press release.

Customer Service Email CorreSpondences

PWSA allows customers to contact their customer service department by email with
questions or concerns. This email service and data tracking began in June of 2015.

Finding: The customer service department acknowledges that they did not always meet the goal
of responding to customer?s emails within 2 business days, but continues to make
improvements. (This information is documented in the excel database used to track email
correspondences. The date the issue is opened is included as well as the date the issue was
closed.)

Finding: The emails are not consistently labeled for categorization. For example, emails about
missing bills have fallen into several categories and include: ?billing delay?, ?billing issue?, bill
not received?, ?bill status?, etc.

Recommendation: Tracking emails (questions/concerns) is necessary for reporting and
research. However, PWSA administration should make sure a category key is used during this
tracking to ensure consistency and accurate reporting.

Email Correspondence Analysis

With over 1,500 different categories for approximately 5,025 email entries from June 1,
2015-December 315?, 2015, it was impossible for the auditors to sort all of the emails. Therefore,
the auditors, to the best of their ability, selected a sample of like categories; this was 2,619 or
52% of the emails

Finding: About 48% percent of the emails had categories that were too vague or were unable to
be sorted easily.

Recommendation: PWSA customer service needs to establish general categories for recording
emails and train personnel in using these categories. This will allow consistency of reporting.

Current Personal Water Problems and Testimonials
A Homeowner ?5 Experience

A homeowner told of interaction with PWSA that resulted in an incorrect analysis of his
sewer line after a PWSA plumber videoed his sewer line. response was that the
plumber was doing the homeowner a favor and shouldn?t have been videotaping the sewer in the
?rst place.

Recommendation: One of the cost saving initiatives by Veolia was for PWSA to own a video
camera truck. This truck and the resulting video should be made available to residents with
street sewer problems.

A Contractor ?5 Experience

A contractor tells of PWSA wrongly identifying water lines in the street causing him to
hit an unmarked water line. Water was gushing out and he had to call PWSA to report the
emergency so repairs could be made. He could not get through to talk to someone because no
one answered. Having the emergency line manned at all times is a previous recommendation.

xi

Recommendation: PWSA needs to document and map all water and sewer lines throughout the
City. It needs to obtain a complete asset management software program to accurately track
repairs and new installation of lines.

A Landlord ?5 Experience

A landlord tells of problems with the PWSA on line bill pay system; payments are not
immediately posted online and bills are often posted late. This makes the service
always behind. Water bills for July, August and September were missing on one property. After
numerous calls and an email to customer service, four bills were received all dated the same
October 10th date. The bills showed high consumption because of a leak that the tenant and
landlord were not aware of. The landlord wrote a letter to the exoneration board in November
2016 and explained the situation. She received a letter acknowledging receipt of her request and
that a hearing date would be scheduled. It has been 2.5 months and no hearing date has been set.

Recommendation: PWSA administration needs to investigate why bills were not being
posted online and why there was a delay in scheduling an exoneration hearing. Also the system
needs to acknowledge online bill payments in a more timely fashion.

A Tenant ?5 Experience

A tenant tells of a water break from Christmas Day to New Year?s Day. Water was
turned off and on without warning, 24 hours of the day. The tenant never received noti?cation
of this service interruption from PWSA. Also the entire street was closed for access, preventing
use of the street for driving and resident parking.

Finding: In this instance PWSA did not communicate to all residents when the water was being
disrupted.

Recommendation: PWSA needs to establish a protocol to notify all residents, including
tenants, in the surrounding area of a water main break. The street should have been posted with
signs explaining the disruption of service and notice of when PWSA expected the problem to be
?xed.

Types of Customer Payments

According to the PWSA webpage customers can pay their bills five (5) different ways:
1. Electronic Bill Payment and Presentment (EBPP), 2. OneaTime Remote Bill Pay via Phone or
Online, 3. Cash Payment at Any 7-Eleven or Family Dollar Location, 4. Zipcheck Payment or at
the 5. PWSA Customer Service Center.

xii

Electronic Bill Payment and Presentmerit (EBPP)

The EBPP is a free online bill paying service that allows customers to receive 
emailed bills and make payments online. This service is environmentally friendly as it prevents
wasted paper caused by bill printing and saves the cost of postage by sending/receiving
payments.

Finding: The customer is not able to log onto the website unless they have a pre-established
email and their account number handy to use this service.

Finding: Customers that receive emailed bills do not receive any noti?cation if their bills are
unusually high.

Recommendation: Customers enrolled in this automatic bill pay should receive an
email before the money is removed stating when it will be deducted and how much. This will
allow the customer to contact PWSA if there is an issue before the money is deducted. Auditors
found in their research that other utility and bill-pay services do this already.

Recommendation: PSWA should study offering an incentive to their customers to promote
going green. A joint promotion with a local bank or sporting goods store might be or
a discount could be offered to the online subscriber.

Recommendation: PWSA should allow an alternative identifier to create an account in lieu of
the account number if a customer does not have it readily available. Other utilities and
companies use other personal descriptors such as social security number, address, and zip code
or answer a security question in order to access account information. Some companies offer
more than one identi?er to choose from.

Orie~Time Bill Payment via Phone or Ortiirie
Finding: This option seems relatively easy but you are not told the amount of the fee for this

service. As a test, auditors went through the first three steps and reached the page asking for the
credit card number. At no time was the fee listed.

Recommendation: Customers should be told how much the fee is for the service prior to
entering their personal information.

PWSA Customer Service Center

Recommendation: PWSA should explain on their website and on customer?s bills that
payments can be dropped off in the lobby of the Penn Avenue of?ces.



Zipcheck

Zipcheck is an automated bill pay system that allows PWSA to automatically deduct your
bill amount from a designated account every month when your bill is due.

Finding: The website does not indicate how long it would take for this autopay process to be
complete after you have sent the check and application.

Water Shut Off Process for Delinquent Accounts

If a company or individual doesn?t pay their water bill, after a certain period of time
PWSA will shut off their water.

Finding: In section 209.0 Termination of Service, ?Customer Rights and Obligations?
has contacting customers by phone as a last effort not at the beginning of the process.

Recommendation: If contacting a delinquent customer initially by phone is a new part of the
termination of service collection process, then PWSA needs to update section 209.0 Termination
of service, ?Customer Rights and Obligations? on its webpage.

Shut Ojj? Notices

Finding: In 2015, there were 630 shut offs and 11,756 postings to properties warning of
possible shut offs if the bill was not paid in full. This represents 5% of posted properties that got
their water shut off due to delinquency.

State Requirements for Utility Termination of Service

Finding: In section 209.0, Termination of service, ?Customer Rights and Obligations?
there is no minimum outstanding balance owed before PWSA shuts off the water. A customer
can owe $10 or $300 and have their water shut off if no payment is made within 30 days. There
is no minimum dollar amount for termination of service in the State requirements.

Delinquent Accounts

Media reports have claimed that PWSA has millions of dollars owed to them in
delinquent accounts yet keep raising water rates. The 2014 PWSA report had 190,713 accounts
showing delinquencies totaling $34,090,266.39. For 2015, the report had 198,080 accounts
totaling $40,93 4,5 52. 1 8.

xiv

The auditors discovered that some delinquent accounts include City-owned properties
and also accounts that existed in the old PWSA software system that did not transfer properly
into the new system. PWSA reported that these properties are designated as ?Orphan? accounts
because they do not have good addresses, and most likely were demolished, vacated, changed
ownership and were not properly removed from the system.

Finding: There were 14,156 Orphan delinquent accounts totaling $1,581,472.88 in 2015.
Finding: There were 595 City-owned accounts totaling $2,146,752.12 in 2015.
Recommendation: PWSA needs to ?clean up? the orphan accounts and verify that these
pr0perties can be removed, since bills cannot be mailed for the various reasons mentioned.

Because of these accounts, PWSA outstanding bills data is skewed. If they are never going to be
paid, they should be removed.

Recommendation: PWSA should work with neighborhoods and initiate a ?neighborhood
report line? that would allow neighbors to be watchdogs and report the abandonment of buildings
in and around their neighborhoods.

Top 100 Delinquent Accounts in 2015
Finding: The majority of the top 100 delinquent accounts were nonresidential.

Finding: The top 100 delinquent accounts with the highest dollar amount owed totaled
$9,457,696.26 for 2015. This is 23% of all the money owed to PWSA in 2015.

Abandoned/ Vacant Properties

According to a February 9, 2016 Tribune Review article, $6.3 million was owed to
PWSA on 3,500 vacant lots. According to PWSA, these properties were billed continuously
because they were not informed that the prOperties were empty.

Finding: This delay in the water being turned off at these properties potentially wastes water,
and wastes paper generating bills. It also increases the number of unpaid accounts on record.

City-owned PrOpertz'eS Water Usage

In accordance with a 1995 agreement with PWSA, the City of Pittsburgh is allocated 600
million gallons of water per year at no charge. Conversations with PWSA administration
revealed that no one keeps track of the water used by the City and, in fact, many government
building are not metered so it is unknown how much water is actually being used.

XV

Finding: Not all City prOperty is metered making it impossible to know how much water is
being used by the City.

The auditors discovered that the City properties in the top 100 delinquent accounts
included City parks, swimming pools and senior centers. There were 8 City owned properties in
our top 100 delinquent properties that totaled $1,028,823.66.

Finding: The City?s unpaid accounts in?ate the amount of delinquent water bills on 
books.

Recommendation: The City-owned delinquent accounts should 119; be included in PWSAS
outstanding delinquent balance totals.

Recommendation: PWSA needs to make a decision on how to handle pr0perty owned by the
City and its water usage. The 1995 agreement between the City of Pittsburgh and PWSA gives
the City 600 million gallons of water a year at no charge. Currently, there is no means to
calculate City water usage because not all buildings are metered. The authority needs to explore-
the costs of metering every City-owned building.

City Payments to PWSA

The auditors discovered that the City?s Controller?s office pays some of the PWSA City
water bills that are for City owned properties. PWSA will mail these water bills to the
Department of Innovation Performance for review. Then will send the bills to the
City Controller?s office for payment. The City Controller?s of?ce will remit payment for the
current amount due on these bills.

Finding: The City Department authorized the City Controller?s of?ce to make payments on
the estimated bills for 7 City-owned accounts for the entire year of 2015 Without question. All of
these properties are vacant.

Conversations with employees in the City?s real estate department said that there is no
formal policy for communicating to PWSA to shut off the water when a property is acquired by
the City.

Recommendation: PWSA in conjunction with the City?s real estate department and/or the 
Department should go out and investigate these prOperties and get an actual meter reading.
There is a possibility that there has been no water usage at these properties for months or years.
If there is no reading the accounts should be deleted out of system.

Recommendation: The City Controller?s office should stop making water and sewage

payments on any estimated bill they receive from PWSA and until an actual meter reading is
provided. This should happen even if the Department of approves the bills for payment.

xvi

Jordan Tax Service (JTS)

The Pittsburgh Water and Sewer Authority contracted with TS to collect payment on
delinquent water and sewer services on September 12, 2008. All accounts more than 90 days
delinquent are to be turned over to Jordan Tax Service.

Finding: Auditors were told by PWSA staff that they still collect payments from accounts over
90 days delinquent.

Recommendation: PWSA customer service should stop collecting payments from delinquent
payers over 90 days old.

Jordan Tax Services Fees

The 1 TS contract states that any compensation charges shall not exceed the amount set
forth in the ordinance or resolution.

Finding: All resolutions were reviewed by auditors and no amount could be found. It is unclear
what the amount is to not be exceeded.

Recommendation: If the Jordan Tax Service contract is to have a ?not to be exceeded amount?,
then the PWSA Board should establish an amount and include it in the contract.

Jordan Tax Services Distribution of Payments

When payments are received in ?ill, everyone gets paid for what is due. When
delinquent claims are less than full payments or installments, Jordan distributes the payments in
order of priority with everyone else getting paid ?rst and PWSA getting paid last.

Finding: PWSA did not follow a past recommendation of the City Controller?s 2010 audit
regarding the Jordan Tax Service contract. This is despite agreeing to the recommendation.

Recommendation: PWSA needs to renegotiate the Jordan Contract around receiving money for
partial payments. The City of Pittsburgh does business with Jordan for the collection of real
estate taxes. When partial payments are made, the City always receives a percentage. PWSA
should be receiving the same.

Jordan Tax Services Delinquent Accounts
In 2014, there were 26,676 delinquent accounts totaling $3,238,895.40. In 2015, there

were 26,944 delinquent accounts totaling $2,623,217.43. Conversations with PWSA staff
indicated that most of the accounts given to Jordan are commercial accounts.

xvii

Finding: There was an increase of 268 delinquent accounts in 2015 from 2014, however, the
total amount due decreased by $615,667.97 or 19%.

Recommendation: PWSA needs to treat all past due accounts the same whether residential or
commercial. Broken payment agreements or non-payment of bills should have their water shut
off.

Jordan Tax Services Actual Collections

According to documentation provided to us by PWSA from Jordan Tax Services, TS
collected $1,778,059.23 from clients January 1, 2015-December 1, 2015. PWSA collections
totaled $1,556,100.50 and JTS services and fees totaled $221,958.73. This shows that
approximately 14% of the money collected by JTS went to TS as a result of fees, penalties,
interest, postage and expenses. All of which was paid by the customers. While this shows that
JTS is effective in the collection of delinquent payments, auditors questioned the ethics of their
collection process.

It is unethical to take advantage of people who are having a hard time paying their water
bill in the ?rst place. At the point when the account is turned over to Jordan their water should
already be shut off incurring a turn-on fee of $125.00. Then once turned over to Jordan all
collection costs are added on.

A Better Business Bureau customer complaint in 2014 about JTS tells of a
$145.50 bill increasing by $78.41.

Finding: The fees and expenses charged by JTS services are quite high. In the complaint,
the bill increase by 54% as a result of these fees. If a customer is unable to pay their bill, it
seems counterproductive to tack on fees that increase their bills by over 50%.

Recommendation: As recommend in the previous audit, PWSA should reevaluate their contract
with Jordan Tax Services. The fees assessed to delinquent accounts, as a result of Jordan Tax
Services, are excessive.

board of directors in October 2016 approved the Clean Water Assistance
Fund to help eligible residential customers pay their sewage bill. Dozens of social service
agencies that work with Dollar Energy throughout the region are now accepting applications.

Recommendation: The contract for Jordan Tax Service needs to be discontinued. The
strongest reason for an individual to pay their bill is not have it shut off. That is controlled by
PWSA.



Recommendation: PWSA administration should offer other alternatives for delinquent
collections that are more customer friendly and helpful. PWSA administration should work to be
included with ALCOSAN Clean Water Assistance Fund.

90 Day Delinquent Accounts Test

The sample of 200 accounts that were 90 days past due was sent to Jordan Tax Service
with a request as to what was the status of each account. In other words, the auditors wanted to
find out if the customer was on a payment plan, if the account was paid in full, or if the property
had been liened and/or up for Sherriff?s sale.

Finding: Jordan Tax Service would not provide any information about the status of delinquent
accounts to the auditors because of an ongoing lawsuit filed by customers in 2016.

Test Alternative

Because Jordan Tax Service would not provide delinquent account information, the
auditors had to ?nd another way to analyze the status of these past due accounts. A sample of 40
of these properties was chosen randomly to have their September through December 2015 billing
statements printed from PWSA for review. One account was now a City of Pittsburgh property
so it was eliminated from the sampleaccounts were shut off with only 1 account having their water service
reinstated during this time. The remaining 21 were on a payment plan with PWSA. When a
customer is on a payment plan the water remains on.

Finding: Almost half of the accounts in the sample did not enter into a payment plan and had
their water remain off.

Finding: Bills continue to be issued to terminated accounts for ALCOSAN sewage treatment
costs.

Recommendation: PWSA should not bill for sewage usage if the water is shut off; if water is
not being used then sewage is not being used.

According to the senior customer service manager, once PWSA turns an account over to
Jordan Tax Services, PWSA no longer follows the status of the past due account. Jordon Tax
submits the percentage of collections received to PWSA every 2 weeks.

Recommendation: PWSA should track the status of past due accounts with Jordan Tax
Services.

 

xix

Water Exoneration Board

Finding: Despite being revamped in December, as of August the Water Exoneration Board
does not have a full complement of members.

Finding: Property acquired by governmental agencies for the purposes of deve10pment may
have their charges exonerated.

Recommendation: PWSA should work more closely with City officials to deve10p a similar
system to deal with condemned properties. When a property is condemned and a contract
offered to have it razed, past due records at PWSA should be exonerated as well. This will
enable billing system records to more accurately re?ect past due accounts versus having
accounts on the books for properties that have not been in existence for many years.

Lead and Copper in Drinking Water
Causes of Lead in Water

Exposure to lead and copper in drinking water can cause serious health problems in
adults and children. PWSA water is lead-free when it leaves the treatment plant. The main
problem with lead in?ltration occurs when water travels through the main lines and the service
lines that branch off from the main line to the house.

The best way to prevent lead from leaching from water lines and home plumbing systems
is to remove lead lines completely and replace them with c0pper or plastic/PVC lines. In
Pittsburgh, the main lines under City streets and the service line to the homeowners curb st0p
box are owned by PWSA. The service line from the curb stop box to the house is owned by the
homeowner. It is the reSponsibility of each party to inspect and replace their plumbing in the
pipe distribution system.

Finding: PWSA does not have a complete inventory of all main or service lines that contain
lead.

Recommendation: Eliminating lead in PWSA lines should be a tOp priority of 
administration and board of directors. PWSA should devise a plan to inspect all lines they own
to see which ones are still containing lead. If lead lines are detected in the distribution system,
PWSA should plan to replace them as soon as possible.

On January 17, 2017, PWSA had an information meeting about lead in water for South
Side City customers. In the South Pittsburgh Reporter, the latest interim executive director and
the interim director of engineering and construction were quoted as assuring customers that the
City?s main water lines do not contain lead.

XX

Recommendation: If PWSA is going to make the assertion that the City?s main water lines are
free of lead, then proof has to be given. Each area of the City?s main should be tested for lead
and a report released to the public.

Recommendation: Households concerned about their water lead level should have their water
tested for lead and have their houses and outside service line running from the house to the curb
stop box inspected by a plumber for lead piping and replaced.

A less expensive alternative to having lead lines replaced is to have a water filter attached
to your main water drinking and cooking faucet. Another alternative is having a whole house
?lter. Either alternative can be expensive.

Recommendation: PWSA should work with a ?ltration company to offer discounted ?lters and
?ltration systems to its customers. An RFP could be awarded guaranteeing a certain amount of
purchases. Also, an RFP could be awarded to plumbing companies that are willing to offer City
water customers a discount in replacing a home service line. This way price guarantees could be
given to customers willing to spend money on removing lead from their lines.

Lead Regulations

In 1991, the Environmental Protection Agency established a corrosion control treatment
regulation called the Lead and C0pper Rule to deal with these health safety issues. This
regulation requires water systems to control their water?s corrosive level, to collect tap samples
from homes that might contain lead and establish a maximum safe level of permissible lead. All
plans for control corrosion must be approved by the Department of Environmental
Protection (PA DEP) so a permit can be issued.

The lead rule in Pittsburgh is enforced by the Allegheny County Health Department
(ACHD) who then reports all ?ndings to PA DEP. In the past the ACHD and PA DEP required
PWSA to test a sample of 50 homes for lead every three years.

Corrosion Control Compliance Issues

In July 1995, the PA DEP approved a treatment plant corrosion control plan made by
PWSA and issued them a permit requiring the use of soda ash for corrosion control. In April
2014, PWSA decided to switch from soda ash to caustic soda in the water treatment process
because of the higher cost of soda ash and an obsolete soda ash feeder. PWSA never notified the
PA DEP of the change.

Finding: PWSA violated the Safe Drinking Water Act by changing the type of corrosion
chemical used.

xxi

Finding: The PA DEP investigation is still in the preliminary stages and no fine has been issued
at this time. However, the violation requires PWSA to take additional steps regarding lead
issues.

Management Responsibitity

PWSA was under contract with Veolia management services during the time the switch
was made from soda ash to caustic soda. The change was one of Veolia recommendations to
save PWSA money. Veolia did not inform PA DEP of the change nor did they inform the board
of directors at PWSA.

Recommendation: Action should be taken against Veolia as they were responsible for the
change to caustic soda. This management error of switching corrosive chemicals without
informing PA DEP or PWSA board of directors should have never occurred. If a fine is assessed
to PWSA because of this PA DEP corrosion control permit violation, Veolia should be the one
held responsible to pay it, not PWSA.

With input and insistence from the City Controller, PWSA, on October 12, 2016, ?led an
arbitration law suit against Veolia. The Tribune Review reported that the lawsuit was for
?creating problems with faulty water meter, and a change in corrosive chemicals?.

WSA Lead Testing Results for PA DEP

As a result of the PA DEP corrosion control permit violation, PWSA was required to test
100 homes this round of testing. These tests were conducted by PWSA in July 2016.

Finding: PWSA failed the lead water test during the July 2016 PA DEP required water
sampling of 100 homes.

Finding: In actuality, in the July 2016 PA DEP sample, there were a total of 17 or 17% of
homes that had levels of lead higher than 15 ppb. Four (4) homes had extremely high levels
between 50-75 ppb.

2013 Lead Test Remit Comparison

Finding: Water samples taken in 2016 show that lead levels have increased since 2013. The
change in corrosive agent from April 2014 to January 2016 may be a cause.

xxii

PWSA Actions to Prevent Lead in Water

As stated previously a failed lead test is not a violation but requires PWSA to make
additional steps. PWSA is complying with the PA DEP requirements in several ways which
include: customer education efforts, free lead tests, and the Water Quality Initiative Program.

Customer Education E?orts

Beginning in early 2016, PWSA now sends a ?Facts About Lead? information sheet that
is included with all customers? bills. This information sheet gives facts about drinking
safe water, dangers of lead, and safety precautions customers can take if they are concerned
about their water lead level.

Free Lead Tests

free lead test number is located in both the lead information sheet included with
your bill and on website.

The results of the free lead test sample shows that more than half of the homes
tested had no trace of lead in their water. However, 12% of the homes tested had a reading at or
above 10 and 20 of the homes tested had a reading at or over 15 which is
considered dangerous and action should be taken.

Lead Testing Results by Neighborhoods

Every free test result in the database received by the auditors had the corresponding
address of the home that was tested. The auditors took the addresses and identi?ed which
neighborhood they were located in by using a City neighborhood map. The purpose was to see if
there was any relationship between the lead readings and the neighborhoods or streets they are
located on. After reviewing the data, the auditors found no correlation between high or low
readings and neighborhoods or streets.

Finding: The free lead test sample shows the complexity of PWSA solving the lead in the water
problem; numbers greatly vary on the same street and within the same neighborhood.

Status of the Free Lead Tests
Recommendation: PWSA needs a better approach at promoting the free lead tests and to
educate customers on the dangers of the lead in water. The only way to get an accurate picture of

the lead levels in Pittsburgh is to encourage every PWSA customer in the City to have their lines
tested.



Water Quality Initiative Program

In May 2016, PWSA outlined a water quality initiative program. The program consists
of 8 goals and each month an update on each goal is posted on their website.

PWSA Asset Management Problems

Currently, PWSA uses a Geographic Information System (GIS) mapping software to
document water and sewer line repairs/ replacements and their locations throughout the City. In
this GIS system, the data is only available beginning with 2011. Prior to 2011, large paper maps
were used to look up streets and track water and sewer lines.

PWSA approved the purchase of a business management system also known as
Enterprise Resource Planning (ERP) software from Cogsdale Corporation in February of 2010
costing upwards of $2.7 million.

The last discussion found by auditors about the ERP software was in 2013 by a PWSA
board member. According to this PWSA board member, ?The system is only partially online
three years after PWSA approved buying it?. This is due to inef?ciency in the system. One of
the inef?ciencies of the Cogsdale software is a lack of a Computerized Maintenance
Management System (CMMS).

Finding: As of the end of August 2016, the authority does not have a CMMS.

In 2011, the City and Allegheny County purchased a joint license for a JD Edwards
(JDE) ERP system. By the City being a co-licensee, the City?s component units (authorities)
would be able to join the City's system at a far lower cost than if the authority would purchase an

ERP system on their own. This option was presented to PWSA, however, they decided to go in
another direction, despite the cost savings from the already purchased software.

management is currently researching CMMS Options available. One option
being explored is a module in the COGSDALE system that is similar to a CMMS.

Recommendation: PWSA needs a CMMS to improve their asset management capabilities and
accuracy.

Negley Run Watershed and the Washington Boulevard Flooding

The Negley Run Watershed consists of approximately 3,550 acres of land in several
eastern neighborhoods in the City and surrounding towns that currently drains into two trunk

xxiv

sewer lines under Washington Boulevard. These combination sewers carry both sanitary and
storm water.

With the increase of development in the area and the elimination of impervious ground,
additional water is ?owing into the Washington Boulevard area during wet weather. The
capacity of the sewers are unable to handle it. The result is severe ?ash ?ooding which claimed
the lives of four people in August 2011. In 2012 PWSA hired MS Consultants to study various
options to address the ?ooding.

Washington Boulevard Flood Gates

installed a system of gates at Washington and Allegheny River boulevards,
Washington and Negley Run boulevards and Washington and Highland Drive in October 2011.
These gates were designed to drop and prevent cars from entering the area. The system cost
approximately $400,000 to install.

In July 2016 one of the gates was damaged and was not repaired. This resulted in two
cars being stranded in the water. The broken gate was not repaired as the ownership and
maintenance responsibilities had not been de?ned between the City and the State. The City of
Pittsburgh now agrees to maintain and repair the gates.

Finding: Despite Spending money on the MS Consulting report about suggestions to correct the
?ooding issue at Washington Boulevard, PWSA has no plans to act on its reconfiguration.

Cost of Emergency vs. Contract Repairs

Finding: PWSA is unable to supply documentation about the cost of emergency repairs vs
contracted repairs. While common sense dictates that preperly bid out repairs should cost less
than emergency repairs, data should be available to substantiate the claim.

Recommendation:

PWSA needs to establish a realistic comprehensive line replacement plan of action for
both water and sewer lines. A map needs to be made where the most recent emergency repairs
have been needed in order to determine a pattern of failure and with that determination plans for
future line replacements.

Cooperation with the City Department of Public Works Permit Division
Finding: In fact it was noted that a major construction job in Oakland took place and by the time

PWSA was asked to review the plans the job was already completed. In this particular instance
the water lines were located extremely close to new electrical lines. Despite this safety hazard

XXV

PWSA was helpless to make the contractor change the design because the City?s Department of
Public Works Permit Division had already approved the plans.

Recommendation:

PWSA and the City of Pittsburgh?s administration must work together to approve new
development projects. Between the PWSA board of directors and City council the process must
be changed to require input from engineers on all blueprints. PWSA might consider
scheduling an engineer to review new plans once or twice a week at the City?s permits counter.

40?Year Plan

This 40-Year Plan is a guide for the capital improvements that PWSA will need to
complete over the next 40 years along with estimates for the ?nancial resources needed to
complete the projects.

During a meeting with PWSA staff, the auditors were told that the 40-Year Plan does not
serve as an actual plan for decisions that are made by PWSA. The staff stated that the plan was
more like a ?wish list?.

Finding: The 40-Year Plan report is not being used by PWSA.

Finding: In order to replace entire infrastructure it will cost a minimum of 2.5 billion
dollars and much more at 2017 construction costs.

Finding: Some infrastructure work has been completed over the years but PWSA lacks
documentation to when, where and what has been fixed.
Recommendation:

As previously recommended, PWSA needs a Computerized Maintenance Management

System (CMMS) to improve their asset management capabilities and accuracy. PWSA
administration needs to make this a top priority.

Sincerely,

- .4 ?2
. 
Mil/?f?ml/?
Michael E. LW
City Controller

xxvi

INTRODUCTION

This performance audit of the Pittsburgh Water and Sewer Authority (PWSA) was
conducted pursuant to section 404(0) of the Pittsburgh Home Rule Charter. This audit
assesses the authority?s billing, delinquency and exoneration process and procedures;
evaluates customer service effectiveness; investigates and assesses the new wireless meter-
interface unit installation; evaluates the computer software systems used for billing,
delinquency tracking, and infrastructure asset management; reviews overall ?nances,
emergency requests and cost of construction vs. emergency repairs.

This audit also examines the concerns about lead in PWSA drinking water, procedures
for preventing lead in drinking water and the cost savings and effectiveness of hiring private
contractor Veolia in managing the authority.

A prior performance audit completed in 2006 examined the use of the City?s sewer
system by other municipalities without user fees or enforcement of existing sewer
maintenance agreements. In 2010, another performance audit examined the authority?s
procurement practices, delinquency and exoneration procedures, water treatment effectiveness
and customer service accessibility.

OVERVIEW

The Pittsburgh Water and Sewer Authority (PWSA) was created in 1984 under the
Municipality Authorities Act 0f1945. The authority?s primary purpose at that
time was to oversee a $200 million capital improvement project to refurbish the infrastructure
of the City?s entire water system, water treatment plant and distribution system. Covering the
City?s 3 reservoirs (2 at Highland Park 1 at Lanpher) was also required to meet the federal
and state Safe Drinking Water Acts.

Only 2 of the 3 reservoirs were covered because the Highland Park community
objected to their reservoir being covered. Reservoir 1 serves as a recreational focal point of
Highland Park. Consequently, at an additional expense to PWSA, the Highland Park filtration
plant had to have an additional membrane filter installed to treat the drinking water.

In 1995, the City?s Water Department was sold to PWSA for $96 million. A capital
lease/sale agreement arranged 3 installment payments from PWSA to the City due as follows:
$35 million in 1995, $40 million in 1996 and $21 million in 1997. All City Water Department
employees were transferred to PWSA. The authority became responsible for producing and
supplying water along with maintaining and operating the water and sewage infrastructure.

According to PWSA, the authority supplies water to approximately 83,000 customers
and services 113,000 sewage customers with sewer conveyance and billing. The Borough of
Millvale?s water system is part of the PWSA billing and servicing reSponsibility. However,
Millville?s sewage system is not.

The authority also sells bulk water to Reserve Township, Fox Chapel Borough and
Aspinwall Borough. When needed, PWSA has agreements to supply water to 
American Water, West View Water Company and the Borough of Sharpsburg. Expanding
water availability and service to outside communities is one of the future goals of PWSA.

The authority?s drinking water system consists of 3 reservoirs, 2 water treatment
plants, 11 pumping stations, and 11 storage tanks along with approximately 1,000 miles of
water lines. The sewer system comprises 4 booster pumping stations and approximately 1,200
miles of sewer lines.

Organizational Chart

PWSA is governed by a seven-member board of directors appointed by the mayor for
5 year terms. As stated in the City?s Home Rule Charter, board members serve at the will of
the Mayor.

The board meets to discuss policy and to vote on resolutions. These meetings
are open to the public. The board makes all policy decisions regarding ?nancial, operational
and administrative procedures. executive director is responsible for implementing
the board?s authorizations and overseeing the authority?s day-to-day operations. The
following ?owchart illustrates current organization.

Flowchart #1

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 organization chart includes communications, customer service, ?nance,
budget planning, sourcing/procurement, human resources, information technology,
management information systems, inventory control, business analytics, and the
Computerized Maintenance Management System (CMMS). These functions are under 6
major departments: Finance, Human Resources, Engineering, Field Services, Water Quality
and Production and Information Technology.

The Finance Department is responsible for developing the budget, procurement,
accounting and customer service. Customer service is responsible for all of billing
(water and sewer), the phone center and handling customer problems. Dispatch
responsibilities are under customer service; however it is not listed on the organization chart.

The Human Resource Department is responsible for managing all aspects of employee
personnel: hiring, ?ring, workers compensation, bene?ts and payroll.

According to the PWSA website, the Engineering Department is responsible for
administering the capital improvement program and support operations. This includes the
Combined Sewer Over?ow and Sanitary Sewer Over?ow directives enacted under federal,
state, and county health organizations and the Allegheny County Sanitary Authority?s
(ALCOSAN) Consent Decree. The department also offers assistance with the public?s sewer
tap-in applications and resolves emergency repairs to water lines due to acts of nature,
excavation accidents or aging pipes.

The above-referenced consent decree is an agreement between ALCOSAN, the United
States Environmental Protection Agency (EPA), the Department of
Environmental Protection (DEP), and the Allegheny County Health Department (ACHD). It
was enacted for ALCOSAN to achieve compliance with the Clean Water Act during periods
of wet weather.

The Field Services Department was recently modi?ed. It has an Above Ground Asset
Manager (AGAM) who supervises crews that repair work such as catch basins, plumbers
doing shut offs, meter problems and pump stations. An Underground Asset Manager
(UGAM) supervises crews that work on underground assets such as water lines and sewer
lines. There is an Operations Center Manager that falls under the UGAM.

The Water Quality and Production Department is located at the water treatment plant.
The water treatment plant is located on the Allegheny River near Aspinwall. The plant
supplies water to customers, maintains water quality, and provides waste water services.
Plant operations treat, analyze, store and deliver over 70 million gallons of water per day and
maintain and operate over 1,200 miles of water lines and 1,100 miles of sewer lines 24-hours
a day, 7 days a week.

According to the PWSA website, the authority is investing $156 million for
infrastructure improvements including environmental mandates to ensure clean, safe drinking
water. The board of directors approved a 4 year rate adjustment to fund these improvements.

As of January 1, 2014, the average residential customer saw an increase of 14 cents per day or
$4.32 per month.

The Information Technology Department includes a Management Information System
(MIS) manager who oversees the computer support operations, an Inventory Control
Supervisor, a Business Analytics Manager and a CMMS Manager. CMMS is a software
system that tracks and documents water and sewer line locations, repairs, and installations.
Currently, PWSA is without such a system but it is included in the organizational chart for
future use.

PWSA Personnel

policy requires all employees to be City of Pittsburgh residents. The
authority?s 246 employees are distributed within its organization as follows:

The water treatment plant has 35 employees plus 4 working in the lab. The
administrative of?ces on Penn Avenue has 40 Customer Service employees, 22 Engineering
Construction employees, 12 Administration employees, 8 MIS employees, 7
Finance/Procurement employees, and 5 Dispatch employees.

Individuals are also employed at satellite pump stations, storage facilities, plumbing
centers, and operation yards located throughout the City. These locations are the Brilliant
Yard located off of Washington with 57 employees; Howard Street in the Northside with
36 employees; Mission Yard on the Southside with 24 employees; and the Warehouse in the
Strip District with 4 employees.

According to 2012 Highlights, Mission Yard was a pilot operation conducted
by PWSA and involved the movement of two water crews from the Brilliant Yard to work
with the sewer division at the Mission Yard. Doing this improved response time in servicing
Southside customers with water and sewer problems. It also saves the authority money on
fuel and equipment.

Sewage Conveyance to ALCOSAN

PWSA is responsible for sewer conveyance throughout the City of Pittsburgh. The
sewer system is composed of 1,200 miles of sewers and more than 25,000 catch basins. The
sewer collection system is primarily a combined collection system. That is, wastewater ?ows
are generated not only from Pittsburgh, but from 24 neighboring municipal communities. All
parts of the PWSA collection system go to interceptor system for treatment.

PWSA bills on behalf of ALCOSAN for sewage treatment for all PWSA customers
and American Water customers who live in the City. Sewage charges are based
on water usage. ALCOSAN announced a 4-year rate structure to pay for upgrades to facilities

to meet demand and for compliance to environmental mandates. Effective January 1, 2014,
the sewage treatment rate rose 17%, increasing the average bill by $4.19.

It is responsibility to pay ALCOSAN for sewer usage whether or not the
customers pay their bill.

10.

ll.

12.

13.

OBJECTIVES

. To assess the billing, delinquency and exoneration process, procedures and

problems.
To evaluate customer service effectiveness.

To investigate and assess the new wireless meter-interface unit installation and
water usage tracking.

To examine the water treatment and delivery process.
To assess staf?ng changes especially in leadership and legal counsel.

To determine the cost and effectiveness of hiring Veolia, contract language and
contract incentives.

To document and identify asset management problems and procedures and to
gauge the status of the 40-Year Plan of 201 1.

To identify the status of delinquent City owned property water bills and the
payments made to PWSA.

To report the current and past procedures in place for examining lead levels in
Pittsburgh?s drinking water and prevention strategies.

To explain the current exoneration board status and process.

To explain water subsidy payments from PWSA to PA American Water (PAW)
and the authority?s role in collecting PAW sewage charges.

To explain the Negley Run Watershed and Washington Boulevard Flooding and
recommendation as per the consultant?s report.

To make recommendations for improvement.

SCOPE

The scope of this performance audit includes 2015 delinquent bills; meter installation
for years 2014?2016; lead content in water for years 2013?2016; Veolia contract from 2012 to
December 31, 2016; legal costs from 2014 and 2015; customer email correspondence from
June to December 2015; American Water subsidy from 2012 to 2015; City
payments to PWSA in 2015; Washington Boulevard 2012 consulting report; and 40-
Year Plan from 2011.

METHODOLOGY

The auditors met with the executive director, ?nance director and ?nancial analyst to
review Operations and discuss the authority?s various procedures, departments and issues.

A tour of all administrative of?ces located at 1900 Penn Avenue was conducted with
an overview of operations. The customer service call center was observed with procedures
and processes explained and clari?ed.

Auditors? interviewed the Senior Manager of Customer Service who oversees the
customer service contact center and billing operations. The Assistant Director of Collections
who manages the delinquency accounts was also interviewed and provided us with delinquent
account data.

The collection agency for delinquent accounts, Jordan Tax Service, was contacted and
interviewed over the telephone and information was communicated through email.

A customer service telephone survey was conducted from March 7~April 1, 2016.
Auditors made random telephone calls daily during customer service hours of 8:00 am
through 6:00 pm Monday through Friday. This was to determine wait time. A total of 70
calls were made.

Internet research was performed on the issues experienced by other water systems
related to automated meters and lead problems.

The auditors reviewed and analyzed the following documents: Jordan Tax contract,
payments collections for 2014 and 2015; agreement with American Water
Company; Request For Proposal (RFP) of new customer service telephone system; customer
service fourth quarter 2015 reports statistics; database of aging reports (delinquent
accounts) for 2014 and 2015; total customer database; Excel spreadsheet of PWSA billing
emails; Veolia contract payments; Dashboards or statistics on 
performance; key performance indicators Cooperation agreement between PWSA and
the City of Pittsburgh; Executive director?s reports for 2014 and 2015; and Interface
meter device contracts/agreements with Landis+Gyr and Sensus.

The City?s OnBase and JD Edwards programs were used to review accounts and
checks sent to PWSA by the Controller?s Of?ce.

The auditors conducted additional internet research and read and reviewed numerous
newspaper articles about PWSA billing problems, management issues and equipment failures.

Auditors toured the PWSA water treatment plant on March 16, 2016.

Auditors met with the Advanced Meter Infrastructure Project Manager who conducted
a presentation on the water usage compilation and data gathering process.

The 2016 results from the free homeowner lead test kits provided to City customers
were given to the auditors in an excel spreadsheet. All other information regarding exposure
to lead in water and lead testing were obtained online from the Department of Environmental
Protection, Environmental Protection Agency and PWSA websites as well as various
newspaper articles. Documents reviewed on website included: the Annual Drinking
Water Quality Reports from 2014 and 2015, the lead facts and testing information section,
board of director minutes, executive director?s reports, and the 2016 PADEP Administrative
Order. Also reviewed were water bill inserts sent to PWSA water customers.

Auditors met with the Director of Engineering, Field Services Director, Information
Technology Director and various other managers and personnel to explain operations, capital
improvement plans, and asset tracking procedures. These tracking procedures are used to
document new water and sewer lines throughout the City. An explanation of emergency
procedures was also presented.

Review of the 2012 MS Consulting, Inc. report titled Final Report for Negley Run
Watershed Washington Boulevard. Review of the City Code Chapter 330 and 
Rules and Regulations of the Pittsburgh Water and Sewer Authority, Customer Rights and
Obligations.

FINDINGS AND RECOMMENDATIONS
The Pittsburgh Water and Sewer Authority (PWSA)

The scheduling of this PWSA performance audit ran concurrently with widespread
problems with customer billing charges and usage readings. These problems resulted in a
public outcry and the authority being sued by some of its water customers. Complaints
reached the members of Pittsburgh City Council who requested immediate intervention.
These problems occurred under the hired water management services organization called
Veolia Water North America Northeast, LLC (hereafter known as ?Veolia?).

For a number of years prior to the hiring of Veolia, PWSA was having dif?culties.
According to a July 2013 article in the Pittsburgh Post-Gazette, PWSA problems included a
third of customer service calls not being answered; a con?ict of interest with the executive
director and the hiring of a utility insurance company; and ?ooding in the East End of the City
at Washington Boulevard. This situation resulted in high employee turnover including the
resignation of that executive director.

The PWSA board recognized the need for a long term management plan that would
provide stability and consistency for the authority. With that need in mind, the authority
advertised a Request for Proposal (RF P) looking for an established water management
company whose work and experience would provide PWSA with a long term management
plan. As a result the authority hired Veolia.

Veolia Interim Management Services Contract

PWSA contracted with Veolia to provide ?executive management services, general
administration and management consulting services, and ?nancial and infrastructure
management consulting services to the authority?. board of directors signed 3
contracts with Veolia over 3.5 years.

The ?rst contract was for a term of one year and was signed on July 12, 2012. The
second contract had a term from July 15, 2013 through December 31, 2014. The final
contract term began January 1, 2015 and ended December 31, 2015. The final contract
included two six month automatic extensions unless PWSA gave a ninety day termination
notice before the end of the term or additional term. At the end of December 2015, the Veolia
contract was not renewed.

Contracted Terms of Compensation

The Veolia contract provided 3 areas where the contractor could receive
compensation, 1) base salary, 2) key performance indicators (KPIs) and 3) recognized cost
savings or improvement initiatives. Each contract included a base salary. For the
first contract year the base salary was $150,000. During the next 2 contracts, the
amount varied but was never less than $100,000 a month. The amount varied depending on
successful appointment of an interim executive director, in 2012 appointing a study manager,

10

interim chief operating of?cer and in 2014 appointing an interim ?nance director. The
appointment of the interim employees was to be hired by Veolia, but paid by PWSA.

In addition to the base salary, Veolia received compensation for developing KPIs.
KPIs developed by Veolia were agreed upon by the PWSA board of directors and once
implemented and completed; these KPIs resulted in additional monies being paid to Veolia.

Finally, Veolia received 40% of recognized cost savings from ?improvement
initiatives?. [short for Operating Expense] in Table 1) As per the contract, ?Veolia
and the authority will work jointly to evaluate opportunities for ef?ciencies and where
potential improvements are identi?ed [?improvement initiatives?] they will submit business
case reports to the steering committee for approval?. In other words the improvement
initiatives were procedures that were established with board approval. Veolia is being paid
for ?improvement initiatives? through December 31, 2016.

This steering committee was formed by agreement between PWSA and Veolia.
PWSA designated three members while Veolia designated two. If a member of the committee
would be unable to ful?ll their duties, the party that designated that member would be allowed
to designate a replacement. The steering committee oversaw the services that Veolia agreed
to perform including Veolia management appointments within PWSA.

The total dollar amount of payments made to Veolia as of April 8, 2016 can be found
in Table 1.

TABLE 1
PWSA PAYMENTS MADE TO VEOLIA

DURING CONTRACT YEARS
2012-2015

    

 
   

     

 

 

 

 

 

 

 

 

 

 

. all 1
Management $949,003 $1,905,265 $1,620,000 $980,000 $5,454,268
Fees

KPIs $51,000 $399,000 $270,000 - $720,000
Opex - $756,469 $2,518,922 $1,565,095 $4,840,486
Other - $1,788 $(4,902) ,1 15) ($8,229)
TOTAL $1,000,003 $3,062,521 $4,404,020 $2,539,980 $11,006,525

 

 

Source: PWSA

Finding: PWSA board of directors paid Veolia over $11,000,000 during the 4 year contract.

Continuing Payments to Veolia

Veolia, as per the contract, should have received a percentage of all ?improvement
initiatives? savings until December 31, 2016. As of October 2016, PWSA had $1,307,851 in
pending payments and $3,305,599 in expected charges from Veolia. Table 2 below
summarizes these payments.

11

TABLE 2
PENDING PAY ENTS
T0 VEOLIA FOR TH YEARS

2015-2016
j,
. 

$1957.00 - 

  

'7 . a 


  
     

 

 

 

 

 

 

 

 

 

 

 

Management Fees

KPIs $240,000 - $240,000 -

Opex $788,073 $90,611 $878,684 $3,305,599*

Other $(8,333) - $(8,333) -

TOTAL $1,217,240 $90,611 $1,307,851 $3,305,599
Source: PWSA million is allocated for large meter replacement

Of the expected charges, $2,500,000 was meter replacement charges. If all pending
and expected charges are paid to Veolia, PWSA will have paid a total of $15,619,975.

When the Authority appointed Veolia employees to management positions, this
inherently allowed employees to maintain loyalty to Veolia.

Key Performance Indicators (KPI)

The contract states ?each KPI will have a well-de?ned and measureable objective
against which achievement may be measured. may be multi-focused, sliding scale,
and/or subdivided into more than one initiative?.

Examples of two measureable KPIs include: ?ush 10% of problematic areas (?ushing
of the dead end of water mains to maintain water quality) and exercise 25% of valves larger
than 12 inches (survey and operate gate valves on water mains for a preventative maintenance
program).

Many KPIs that were developed by Veolia did not have clear measurable outcomes but
rather deliverable tasks. Examples of deliverable KPIs include updating the organizational
structure, training employees for various tasks, developing standard operating procedures for
?eld activities, and training on asset management principles.

Finding: Veolia and PWSA developed KPIs that did not ful?ll the terms of the contract
because they were not measureable goals.
RECOMMENDATION NO. 1:

PWSA board of directors should insist that contract provisions are followed. KPIs

should be clear measurable goals, rather than an outline of a list of tasks to be completed by a
contractor.

12

Recognized Cost Savings or Savings from ?Improvement Initiatives?

The 3rd means of compensation for Veolia was being paid a percentage of any cost
savings. These cost savings were not explained or outlined in the contract. Improvement
initiatives were presented to the steering committee for approval and if approved, then
submitted to the board for approval, rejection or modi?cation. The idea was to share savings
in the authority?s cost structure from initiatives that Veolia identi?ed. According to the
current ?nance director, the intent changed from cost savings to any cash ?ow improvement
identi?ed by Veolia, including both cost savings and revenue enhancements.

The following is a list of improvement initiatives that Veolia negotiated and for which
they were paid. This list was supplied and explained by the PWSA director of ?nance.

TABLE 3
VEOLIA IMPROVEMENT INITIATIVES

      

Improvement Initiative Description
1. Fire Service Line The revenue increase resulting from billing ?re
service line accounts (Lines provided mainly to
non-residential customers to service their ?re
suppression systems. These systems are metered

 

 

 

 

 

 

 

 

 

separately).

2. Win Back Large Customer The revenue increase resulting from getting large
customers to resume water service from PWSA.

3. Reduce Filter backwash The cost savings from reducing the frequency of
?ushing the ?lters in the water treatment plant.

4. Increase Filter Run Time Not used

5. Membrane Plant Optimization The cost savings ?'om changes in staf?ng and
operation of the membrane plant.

6. Make vs Buy: CCTV The cost savings from purchasing a CCTV truck to
televise sewer lines. This service was previously
contracted.

7. Sourcing of Chemicals The cost savings from undertaking more
competitive bidding procedures to procure
chemicals

8. Laboratory Ef?ciency The cost savings from reduced staf?ng at the lab
and optimizing operations.

9. Large Meter Replacement The revenue increase from replacing old meters on

large accounts with new meters. (new meters are
more accurate)

 

 

 

 

10. Make vs Buy: PA l-call The cost savings from bringing l-call services in
house.

11. Warehousing An adequate description was not given

12. AMI Rebid Not used

13. PMIS Not used

 

 

 

 

l3

 
 
      

Improvement Initiative Description

 

14. Make vs Buy: The cost savings from tracking 
compliance in house.
15. Make vs Buy: MS4 Stormwater The cost savings from reporting MS4

compliance in house

 

16. Make vs Buy: Compliance Management The cost savings from monitoring and
ensuring regulatory compliance.

 

 

 

 

17. Make vs Buy: Back?ow prevention Not used

18. Make vs Buy: Back?ow prevention The cost savings from performing hydrant
tests in house.

19. Copper-free Algae Treatment The cost savings from switching copper-
based algaecides to copper-free algaecides.

20. Energy Load Curtailment The cost savings from managing energy

usage to minimize coincident load factors,
reducing power costs.

 

21. Sourcing of Uniforms Not used

 

 

22. Sourcing of MIU disposal The cost savings from of disposing of MIUs
that were replaced with newer MlUs.

 

 

 

Source: PWSA ?nance director

The auditors asked if Veolia needed DEP permission to reduce the frequency of
backwashing the membrane ?lter. The ?nance director stated that ?This is a question for our
plant operators and regulatory personnel. 1 will pass your question along.? The auditors also
asked if the DEP had to be noti?ed about the switch to copper-free algae treatment. The
?nance director stated will pass this along to those who know?.

To date no answers to the auditors question or details about the improvement
initiatives have been given to the auditors.

Also asked was the number of reduced staff for initiatives number 5 and 8. A $12,000
savings and the elimination of one position was mentioned.

Finding: A list with explanations of the improvement initiatives paid to Veolia is not
available. This is an example of the effects of disjointed leadership which will be discussed
later in this audit.

Effectiveness of the Veolia Contract

Initial impressions of the Veolia contract appeared to have good checks and balances.
The reality is that the board of directors and the steering committee are only volunteers or
employees that Veolia hired serving part time on the steering committee. This makes it
dif?cult to monitor the impact of KPIs or improvement initiatives on a daily basis. Hiring an
outside firm to operate a $174,000,000 authority and paying them a percentage of cost savings
allows a potential con?ict of interest.

14

Finding: The day to day operations are presented to the board of directors by the managers
and because of allegiance to Veolia, their representation can be skewed.

RECOMMENDATION NO. 2:

The PWSA board should avoid hiring companies to manage the authority that require
a percentage of cost savings. Agreements like this promote the company?s pro?ts over the
competent operation of the authority. It would be in best interests to hire employees
whose allegiance is to PWSA and its ef?cient and effective operations.

Changes in Leadership

PWSA experienced many leadership changes throughout the years, from key managers
to executive directors. The Veolia contract was not renewed for 2016 and the interim
executive director under Veolia was appointed as the PWSA executive director by the PWSA
board. That executive director resigned on March 3, 2016. Shortly following that resignation,
a 2nd interim executive director was hired for a 6?month period.

This 2nd interim director became aware of the lack of data transparency within the
authority and made changes to improve it. He stopped employees from changing computer
software; that software would solve one problem but create more problems. He also
implemented procedures requiring customer service staff to pull and investigate high
consumption bills.

The initial board-appointed interim executive director had to be replaced after 6-
months due to a prior commitment. The PWSA board of directors hired another interim
executive director for another 6 months on September 12, 2016. This current interim
executive director is an army retiree and an ex-Army Corps of Engineers? employee. The
PWSA Board?s long term plan is to appoint a permanent executive director and as of
September 1, 2016 the search is underway.

Each change in leadership brings a learning curve. The staff must adjust to a new
personality and a new way of doing things. This lack of consistency in an organization can
cause confusion and frustration among employees, customers and the organization as a whole.

Other positions within the authority have had numerous management changes as well.
The engineering director has been the acting interim with the authority as of December 2015.
Additionally, the ?eld services director has been af?liated with PWSA for over 20 years,
serving as a consultant before being hired full time. During his tenure there have been 12
different engineering directors and 13 different executive directors. These turnovers provide
inconsistent leadership, which leads to inefficient strategic planning in all areas of operation
throughout PWSA.

lS

Finding: During the course of this audit, 3 different people were in charge of the day to day
operations of the authority. Frequent leadership changes make an organization inefficient and
interfere with planning strategies to overcome daily problems.

RECOMMENDATION NO. 3:

The PWSA board of directors should work diligently to ?nd an executive director with
the knowledge and skills to manage PWSA operations. Employee retention is imperative and
the chosen individual should be able to make a long term commitment. Included in this
process should be frequent oversight of the current interim executive director.

In-house Legal Counsel

Thirty years ago, City controller auditors sat in on various authority and other public
meetings. This included the Pittsburgh Water Department. At that time, an in-house attorney
was present at meetings to provide explanation of any legal issues that may arise. PWSA,
sometime over the last 30 years, eliminated this attorney or solicitor position and outside legal
counsel was hired.

During the audit period, PWSA did not have a solicitor on staff. Most of the general
legal services were provided by Clark Hill Thorp Reed. The fees PWSA paid to these various
?rms as well as the type of cases each ?rm handled can be found in Table 4.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE 4
PWSA OPERATING LEGAL COSTS
IN 2014 AND 2015
LAW FIRM TYPE OF CASES 2014 2015
Clark Hill Thorp Reed General $1,238,490.58 $1,128,406.99
Caputo Caputo, P.C. Statutory appeals on $3,422.50 $22,281.23
exonerations; other
Thomas, Long, Nieson Kennard Professional Services $20,540.32 $0.00
Buchanan Ingersoll Rooney PC Professional Services $9,000.00 $8,896.00
Pepper Hamilton LLP $0.00 $0.00
Winston Strawn LLP $0.00 $0.00
Gaul Legal, LLC Professional Services $2,725.00 $0.00
Aqualaw Consent decree storm $0.00 $38,338.62
water management
Mcnees Wallace Nurick LLC Finance and bond $93,684.83
counsel
TOTALS $1,274,178.40 $1,291,607.67
Source: PWSA

16

 

Finding: Attorney fees for general counsel in both 2014 and 2015 cost the authority over
$1,200,000 a year.

RECOMMENDATION NO. 4:

The authority needs to hire an in-house general counsel solicitor. This person should
offer support, protect the authority and be directed to handle most legal matters.

When the 2nd interim executive director was hired he noticed the elimination of the
internal solicitor position from the PWSA budget. He made a recommendation to the PWSA
board to re-establish the position. The authority hired an chief counsel in September
2016 at a salary of $108,000 a year. The amount of cost savings is currently unknown
because PWSA still retains Clark Hill Thorp Reed as general counsel.

General Solicitor

According to the new chief counsel retaining the services of Clark Hill Thorp Reed is
necessary because of the volume and specialty nature of the work. Currently, the chief
counsel is working 10?12 hour days and believes that an entire PWSA law department would
be needed if the board wanted to eliminate the general solicitor. An analysis of the work load
and what the general solicitor charges is beyond the scOpe of this audit.

RECOMMENDATION NO. 5:

The PWSA board of directors and management need to review legal costs and work
toward their reduction.

Water Treatment Plant and Process

water treatment facility is located within the City boundaries along the
Allegheny River near Aspinwall. entire water source is drawn from the Allegheny
River. This is a great asset because the Allegheny River, 1 of the 3 rivers of Pittsburgh, offers
the cleanest water ?owing downhill.

Currently, the average daily draw of water from the river is 70 million gallons with a
100 million gallons daily maximum. Once the water is pulled from the river, it takes three
days to process. This occurs in four separate stages: coagulation. sedimentation. ?ltration,
and disinfection.

The ?rst stage of the treatment process is called coagulation. During this step,

chemicals are added to the water. Lime is added to adjust the water pH, potassium
permanganate is added to oxidize organics in the water and coagulants are added which

17

clumps together particles called The ?oc settles to the bottom of the treatment pools
and is removed by gravity. This is called sedimentation.

Once the ?oc has settled to the bottom of the pools, the clear water will pass through
the ?ltration stage. Here the water flows through a series of ?lters comprised of charcoal,
sand, and gravel in order to remove any dissolved particles and microorganisms, such as
bacteria and parasites. Finally, the water is disinfected with chlorine to remove any remaining
harmful microorganisms. Sodium carbonate (or soda ash) is added to adjust the pH of the
water, which helps to slow down the lead corrosion of water pipes and carbon is added to
sweeten the taste of water. Fluoride is also added for cavity prevention.

The water is then pumped to one of 3 main reservoirs in Pittsburgh before it is
distributed to customers. Two (2) of the reservoirs are located in Highland Park. They are
Highland Reservoir #1 and Reservoir Highland Reservoir #1 is an open-air reservoir
which requires the additional treatment of a micro?ltration plant. In an open-air reservoir, the
water must be retreated by membrane ?lters and chlorinated again to remove any impurities
that may have entered the water while being held in open storage. The third reservoir is called
Lanpher, located between the municipalities of Millvale and Etna.

PWSA Water Treatment Regulations

The main regulatory body of PWSA is the Allegheny County Health Department
(ACHD) which reports to the Department of Environmental Protection (DEP).
The DEP and the Environmental Protection Agency (EPA) regulate the amount of certain
contaminants allowed in water provided by public water systems. PWSA tests and monitors
all water 365 days a year for contaminants at the Aspinwall Treatment Plant and at the
Highland Park Membrane Filtration Plant (Reservoir Tests are done prior and during the
treatment process as well as on ?nished water.

Test Results for Contaminants at Treatment Plants

Until the high levels of lead were found in Flint, Michigan in 2016, concern about
acceptable levels of contaminants, such as lead in water, was of limited interest to water
customers. Water systems only have to report levels higher than the EPA limits. Since the
problem with Flint?s water, purity and lead content has become a major concern to customers.

In 2014 and 2015, PWSA tested for 100 different contaminants in their water. Results
of the tests are sent to the DEP and EPA and customers can access the results through
Annual Drinking Water Quality Reports posted on the PWSA website. A copy of
the report can also be requested from PWSA customer service.

According to 2014 Annual Drinking Water Quality Report, PWSA found 12

detectable levels of contaminants at the ASpinwall Treatment Plant and 6 at the Highland Park
Membrane Filtration Plant. In the 2015 Annual Drinking Water Quality Report, 12 detectable

18

levels of contaminants were also found at the Aspinwall Treatment Plant and 5 were detected
at the Highland Park Membrane Filtration Plant. All levels of contaminants were within the
allowed ranges by the federal and state governments.

Finding: All the contaminants found at the two treatment plants were below federal and state
contaminant levels for 2014 and 2015.

RECOMMENDATION NO. 6:

PWSA should write on every customer?s bill that water quality reports can be viewed
online or a copy requested by customer service. If possible PWSA should inform customers
what treatment plant their water comes from so that the customer knows which quality report
pertains to them.

Customer Water Usage Tracking

The auditors interviewed Advanced Metering Infrastructure Project Manager
to understand water distribution, tracking and the entire billing process. A customer?s water
usage begins with a water service line piped into the property from main water line
located in the street. The water line is connected to a water meter inside the house/property.
Each water meter has a register on top of it that ?registers? or tracks water usage for that
property address. This register is then connected via a wire outside the house/property to a
newly installed automatic meter reader device known as an MXU (meter exchange units) box.

This MXU box electronically transmits the water usage amounts to a cellular control
tower. This tower relays water usage information to data collector, a company
named Sensus. There are 4 data collector control towers located throughout the City:
Brashear, Squirrel Hill, Gar?eld and Allentown. This data is then transmitted to a remote
network interface (RNI), located at Sensus data centers in Illinois and North Carolina. RNI
transfers the water meter usage amounts to a meter data management (MDM) company
operated by Harris Meter Sense. The MDM Company conducts a ?data sync? or type of
validation to get the meter readings connected to the appropriate account number in 
billing system which is Cogsdale.

Cogsdale gets the customer?s water usage and all billing information and forwards it to
a company called Level One who prints and mails all customers? water and sewage
bills. Sensus, Harris Meter Sense, Cogsdale and Level One are companies under contract with
PWSA. Figures 1-3 show a visual illustration of the current billing process, a photo of a
meter and a photo of an MXU attached to a meter and register. An explanation of the Senses
contract can be found in the Appendix.

Finding: There are several companies involved with properly billing a PWSA water
customer. At each step there is the possibility of an equipment malfunction and/or billing
problem.

19

FIGURE 1
Transmission of customer water usage

mm

 

 

 

 

 

R- Register
M-Meter
FIGURE 2 FIGURE 3
MXU attached to Meter Register Register on top of Meter

 

 

 

 

 

 

 

20

Billing Issues

When 2nd interim executive director was hired billing issues were a major
problem. In May 2016, he directed billing department to begin reviewing
customer?s billing information before bills are mailed by Level One. The reviewers
look for extremely high consumption rates and/0r extremely high water bills. If high water
usage is found to be 20% or higher from the last bill, the bill is pulled and investigated. This
identi?es a potential billing error. This practice helps to ensure that no major mistakes
occurred before actual customers? bills are mailed out by Level One.

The review of bills before mailing is a common practice among utility companies. For
example, Peoples Gas Company follows this protocol for identifying potential high
consumption billing problems.

RECOMMENDATION NO. 7:

PWSA administration should continue the practice of reviewing bills for discrepancies
before being mailed. This is a practical solution to solving questionable water consumption
bills.

The Changes That Lead to Crisis

Three (3) main changes happened concurrently causing several problems for PWSA.
The was a change in their billing system from SAP to Cogsdale; the 2??1 was a meter
reading change; and the 3rd was the multiplier of the mid-size meter change out.

Billing System Change

Before Veolia was hired it was decided that PWSA would change the billing system
from SAP to Cogsdale. Using Cogsdale was cheaper than using SAP and provided PWSA
with a more advanced billing system; one that was more focused on the utility business.
During the changeover it was found that Cogsdale was not compatible with SAP and caused
transition problems.

A list of the cause and types of problems associated with the change in meter reading
equipment can be found in Table 5.

21

TABLE 5

A

 

 

Incorrect Reading or Discrepancy No Reading or Data
0 Water reading multiplier: different types of Damaged wire 01? disconnection
meters and registers are currently in use, prevent meter reading from reaching
resulting in inconsistencies with house the MXU t0 be transmitted Ollti can be
water usage is reported. A multiplier is caused by rodents, human action or
used to even out these inconsistencies; wear 0f wires.
however, the usage of an incorrect
multiplier can result in water bills that are I Compatibility issues between MXU
10, 100, or 1000 times the actual reading. and meters: this included 700-800.
These errors vary based on the customers midsized ARB meters that needed to
and must be addressed manually, be replaced to be used with MXUS.
0 Estimated bills: if a customer is 0 Damage or removal of MXU boxes
accustomed to an estimated bill for an from vandals.
extended period of time, once the new
MXU has been installed the new water bill 0 Physical obstructions, such as
may be signi?cantly higher than the buildings or large vehicles.
previously estimated usage for bills.
- Dropped data: due to the extended
0 Leaky or faulty plumbing: excessive water process of reading the meter to the
usage is occasionally attributed to the new creation of the bill, some data can be
MXUs lost during the process.

 

 

Source: Advanced Meter Infrastructure Project Manager
Meter Reading Change

Prior to MXUs, meter interface units (MIUs) were used as the automatic meter readers
and were produced by a company called Landis+Gyr. The contract signed with Landis+Gyr
included: the MIU units and the AMI (advanced meter infrastructure) used to read those units.
An AMI is meant to collect and transmit data from customer site, to the utility data towers and
to the data management system (MDM). An AMI is made up of digital hardware and
software which allows data measurements through remote communications; allows the
measurement of detailed and time based information transmission to various measurement and
collection systems.

The Landis+Gyr contract was to expire on September 1, 2014. PWSA wanted to
change the terms of the Landis+Gyr contract because the payments were costly, and
the contract did not allow PWSA to own their customer service data information. Whenever
PWSA required a water report, Landis+Gyr would charge extra.

Landis+Gyr was given the opportunity to lower the price, update equipment
and allow PWSA data ownership. Unfortunately, Landis+Gyr would not agree to any

22

 

contract changes, so their contract was not renewed. PWSA searched for another vendor and
the contract was awarded to a new company called Sensus.

The Incompatibility Issues

After the Sensus contract was signed, PWSA learned that Landis+Gyr?s MIU boxes
were not compatible with the new Sensus software. Therefore, all of the old MIU units
needed to be switched to MXUs produced by Sensus at a cost of $19.55 a unit. In preparation
for the contract change, PWSA began switching the meters to Sensus?s MXUS 6~months prior
to the September 1St deadline. When the MIUs were disabled and the MXUs were installed,
the reader went of?ine and an actual reading was no longer possible so homes were mailed
estimated readings.

At midnight on September 1, 2014, Landis+Gyr went of?ine and Sensus?s network
took over and the reverse happened. Homes with the MXUs now were transmitting water
usage readings and the homes with the older MIUs went of?ine. Actual readings were no
longer given and PWSA sent these homes estimated readings.

Finding: If an account has not yet been transitioned to a MXU, any bills received would be
based on usage estimates.

Finding: PWSA (Veolia) did not thoroughly investigate for compatible equipment in the
Request for Proposal (RFP) that resulted in awarding Sensus the contact.

Finding: Prior to awarding Sensus the new contract PWSA (Veolia) did not require the
company to do a test run or pilot program to show equipment compatibility.
RECOMMENDATION NO. 8:

The PWSA administration should require all changes in equipment contracts to run a
test or pilot program. Such a test would prove the compatibility of the equipment and
eliminate any unforeseen problems and additional costs with the equipment.

MIU to MXU Conversion

The plan to switch MIUs to MXUS was a huge project and PWSA subcontracted with

Utility Metering Solutions (UMS) to help plumbers install the new MXUs. The task

was to be completed in 3 phases based on meter sizes.

0 Phase I started with small meters (1 inch or less). These were residential, active
accounts. This was approximately 70,000 accounts.

23

0 Phase 2 involved commercial, industrial and smaller apartment buildings. These
accounts correspond to midsize meters (1.5 to 2 inch) and large meters (3 inches or
greater) for industrial and health and education facilities (hospitals/universities);
approximately 435 accounts. Because these meters are larger they are much harder to
change out. According to PWSA this phase is 

- Phase 3 was to deal with accounts that were shut off and/or inactive. As properties
were found to be razed, inactive, etc., the bills were removed from the system
following a ?catch as you go? approach. According to PWSA, this phase has not been
reached and these accounts will be removed as they are discovered.

Subcontractor Issues

For Phase 1, PWSA hired UMS to install the MXUs. This company had several
employees change out the MlUs and got the MXU up and running. According to PWSA
administration, the process was completed by June 2015, but it turned out that this company
did not properly install the equipment. Newly installed MXUS were not reading and
transmitting water usage. In some instances the water usage transmitted was excessively high.
This resulted in a lot of unhappy customers.

Until the problem became apparent, no one from PWSA checked to see if the
contractor was installing the MXUs correctly. After customer complaints, PWSA plumbers
went out to inspect the MXUs. PWSA plumbers found wires not attached or wired
incorrectly, bad units, and the units not hung correctly. If there is any damage or
disconnection of the wire to the MXU, the water reading will be inaccurate.

The solution was to have PWSA plumbers visit homes with inaccurate or no readings
and fix the problem(s). This was essentially a duplication of work, costing PWSA more
money. For improperly installing MXUs, PWSA is holding back $163,000 from the
contractor. PWSA needs this company for transmission of data and cannot sever ties
completely. They are hoping that withholding the money will help them negotiate a fair
settlement with the company for the duplication of work.

Finding: PWSA had to pay twice for installation of once to the contractor and
another time to the PWSA plumbers who had to correct the problems.
RECOMMENDATION NO. 9:

PWSA administration in future installation contracts should include inspections of

completed work. No payment should be made to the contractor without veri?cation that the
work was completed accurately.

24

Billing Problems and Mid-Sized Meters/Register

Billing issues occurred as a result of the switch from Landis+Gyr to Sensus. While
improperly installed meters/registers contributed to billing problems, the greatest issue
causing bad reading problems was with the multiplier. Over the years PWSA has purchased
at least 5 varieties of meters. This is because, as a public agency, contracts are awarded to the
lowest responsible bidder; so the type of meter purchased most likely will vary by vendor.

Each type of meter with a register records water usage in a certain way. Some of the
registers (the part on top of the meter) on the ?midsize? model did not communicate to
the MXU properly. This is because of the multiplier associated with the register; some
registers read 1 to and others registers read consumption in the power of 10, (1:10, 2:20,
etc.). In order to get a correct water usage number the reader needs to know how the register
is reporting usage and must be programed accordingly. When programed correctly a data
occurs to get the meter/register reading to Cogsdale.

Once again the solution was to have PWSA plumbers visit homes with inaccurate or
no readings and fix the problem(s). These meters/registers (ARB-S model) that are being
changed out are between 10-20 years old or older. As of March 2016, approximately 700-800
meters/registers still need to be changed.

Finding: PWSA experienced multiple changes occurring at the same time to complicate
billing problems. Not only was the change from Landis+Gyr to Sensus (MXIs to MXUs)
causing problems with billing, PWSA switched billing software from SAP t0 Cogsdale. SAP
was not compatible with Cogsdale and caused transition problems. Also, mid-size meter
change cuts needed to be completed for compatibility with and the new system.

Finding: The timing of the decisions made by PWSA caused it to be a ?perfect storm? for
major billing and equipment issues. Essentially the myriad of problems associated with all the
changes happening at PWSA were not prOperly thought through. An experienced water
management company should have been familiar with the type of problems that could occur
with meter reader changeover and think ahead to anticipate and correct any of these problems.

American Water (PAW)

Most of the City?s southern neighborhoods use American Water because
PWSA lines were never installed in these areas. But PAW charges more for water than
PWSA. When water was controlled by the City of Pittsburgh Water Department, it was
decided that the City would subsidize this extra cost to southern residents. Consequently, the
City pays PAW the difference between City and PAW rates.

This practice continues today with PWSA paying PAW about $2,000,000 a year in
water subsidy. Table 6 shows the total dollar amount paid over the last 4 years.

25

TABLE 6
CITY OF PITTSBURGH WATER SUBSIDY TO

AMERICAN WATER
FOR SOUTH END CUSTOMERS

 

 

 

 

 

 

 

 

 

 

YEAR TOTAL PAID TO 
AMERICAN WATER
2012 $2.19 million
2013 $2.04 million
2014 $2.90 million
2015 $1.80 million
4 year TOTAL $8.93 million
Source: PWSA

RECOMMENDATION NO. 10:

PWSA needs to explore the possibility of eliminating this subsidy without raising the
rates of customers in Pittsburgh?s southern neighborhoods.

PAW Sewage Charges

PWSA collects sewage treatment charges for PAW customers.
However, PAW uses the software SAP for its data retrieval which is now incompatible with
Cogsdale billing system. Consequently, these customers have not received a sewage
bill from PWSA since December 2014. This was resolved by the end of June 2016 and bills
have been set up on payment plans.

In hopes to inform the PAW sewage only customers about the billing delay, PWSA
sent each sewage-only customer a letter. This resulted in PWSA customer service being
inundated with telephone calls.

Two of the auditors are PAW water customers and received their past due sewage bills
the ?rst week of August 2016. The bills include different payment plans depending on the
amount due. For unbilled amounts between $50 and $200, sewage charges can be prorated
over 3 months with 1/3rd added to the bill. For unbilled amounts equal to or greater
than $200, the charges can be prorated over 6 months with l/6th added to the bill.
This payment plan is automatically added onto the regular bill for the customer.

PWSA also stOpped all automated payments from these accounts. This was to ensure
that the customer would have better control over their payments.

Finding: PAW customers who are City residents were not billed by PWSA for sewage
charges from January 2016 until approximately August 2016, longer in some cases. These

26

sewage bill customers have been offered different payment plans depending on the amount
due.

RECOMMENDATION NO. 11:

Offering PAW customers a payment plan for their sewage bill is a good practice and
should be continued. PWSA should make every effort to accommodate each customer?s
ability to pay. If this situation were to ever happen again, billing should not be skipped; rather
an average estimated charge based on the last 4 actual sewage bills should be calculated and
mailed to the resident. Then when actual charges are reported adjustments can be made.

PWSA Customer Service

Customer Service has a total of 40 employees; 38 full time and 2 part-time. It is
managed by a senior manager who oversees 5 sub-divisions:

1) AMI (advanced metering infrastructure) Team: Ensures accuracy in meter reading
devices 

2) Billing and Metering: Ensures accurate and timely delivery of bills;

3) General Customer Service Contact Center: Provides prompt and courteous
service;

4) Clerical/Collections: Provides timely and accurate correspondence;

5) Dispatch: Assists customer and internal staff with accurate information for repairs.

As the following ?owchart shows, an assistant manager oversees 4 out of the 5 sub-
divisions. The AMI coordinator and AMI team reports directly to the senior manager and a
senior supervisor for billing and metering, billing coordinator, client support analyst, and
billing representatives. A collections coordinator oversees the collections clerical staff
members.

In Flowchart #2 below, the 5 subdivisions of customer service are not directly under
the senior manager as the auditors were told. Further conversation yielded a revised
organization chart that can be found under Flowchart PWSA administration is revising
the customer service organizational structure.

RECOMMENDATION NO. 12:

The proposed customer service organization chart should be immediately adopted. It
explains management and employee responsibility in a concise way.

27

Flowchart #2
Customer Service Organizational Flowchart

.4. I

out:


 

CMMIT SONIC.

 

Flowchart #3
PWSA Proposed Customer Service Organizational Flowchart

 

   
 

 

Clerical (1 4)
Source: PWSA
Administration

28

Customer Service Phone and Computer Software

The customer service contact center is staffed by 12 employees. The current telephone
software system is a basic Toshiba phone system using auto-?attendant call trees with no
analytic or reporting software. Auto?attendant call trees can be described as a system that
allows callers to automatically be transferred to different phone lines/extensions, without the
need of an operator or receptionist.

When a PWSA customer calls the customer service number there is 55 seconds of talk
devoted to sewage-only customers, explaining recent billing issues and resolutions. Then the
following options are given: Press 1 for outages/emergencies, 2 for payments, 3 dye
testing/permits, 4 office address and location hours, 5 speak to a representative, 6 for an
employee directory and 7 to repeat the menu. It takes the caller 1 minute 58 seconds to hear
the number to press for customer service.

The calls are then directed into 5 main categories with a total of 68 lines. The 5 main
categories are:
1) Automated Meter Interface (AMI)
2) Billing
3) General
4) Collection
5) Dispatch repair

PWSA tracks the number of calls coming in, the time it took to answer each call and
the call abandonment rate (callers who hang-up).

Finding: This basic Toshiba phone system does not have the software to provide any analytic
reporting of the call. For example, no customer information, concern, property address or
problem solution is tracked. However, calls are written in the individual customer record.
RECOMMENDATION NO. 13:

PWSA should upgrade its phone system to a system that can track customer
information and the reasons for their call.
PWSA Telephone Answering System

Long waits to speak to representatives were compounded by a cumbersome automated
telephone menu system. As previously reported, the automated system ?rst provided a

number to press in case of an emergency. Then a customer has to listen to 4 different options
before option #5 is given to Speak to a customer representative.

29

 customer service performance goal in 2015 was to connect the customer to a
general customer service representative in 5 minutes or less. In 2016 this goal was increased
to 7 minutes.

Finding: PWSA automated customer system telephone system is not ef?cient.

Customer Service Survey

In 2015, there were substantial local news media reports of poor customer
service and billing problems. Many customers received outrageous water bills. According to
these reports, numerous customers experienced long waits and disconnections while
attempting to get through to talk to a PWSA customer service representative over the phone.

To evaluate the time it takes customer service to answer calls, the auditors
conducted a telephone assessment during the period of March 7 through April 1, 2016.
Auditors made daily random telephone calls between the customer service hours of operation,
8:00 am through 6:00 pm Monday through Friday. A total of 70 calls were made at different
times during the day. The auditors recorded the following: date of call, day of week call was
made, time of day, number of callers ahead, and how long it took operator to answer.

The telephone results reported the shortest call wait time before a PWSA
representative answered was one minute and 58 seconds two calls occurred within this
time frame. The two longest call wait times experienced were one at eighteen minutes and
two seconds (18:02) and the other call at seventeen minutes and seventeen seconds (17:17).
Table 7 shows the results of the telephone survey.

TABLE 7

WAIT TINIE
FOR CS REP TO OCCURRENCE PERCENTAGES
ANSWER CALL

0:00-2:00
2:01-3:00
3:01-4:00
4:01-5:00
5:01-6:00
6:01-7:00
7:01-8:00
8:01-9:00
9:01-10:00
10:01-11:00
11:01-12:00
12:01-13:r?A r?I 


NOLAOCJN

 

30

TABLE 7 continued

WAIT TIME
FOR CS REP T0 OCCURRENCE PERCENTAGES
ANSWER CALL
13:01-14:00 2%

14:01-15:00 0%
15:01-16:00 0%
16:01-17:00 0%
17:01-18:00 2%
18:01-19:00 2%
Disconnects 3%
TOTAL CALLS 70 100%

 

As Table 7 shows, 42 calls or 60% met goal of answering customer service
calls within the 7 minute window. Twenty-six (26) calls or 37% of the calls in the survey
took longer than 7 minutes to answer; 2 calls or 3% were disconnected. Ten (10) calls or 14%
took 10 minutes or longer to answer.

Finding: Twenty six (26) or 37% of calls in the survey did not meet 7 minute or
under goal.

Phone Menu Changes

In July of 2016 the messages on the PWSA phone line were changed. The ?rst 40
seconds are devoted to a welcoming message and then to sewage-only customers, explaining
that these customers should be receiving bills with no penalty or interest charges.
Then the following options are given: Press 1 for sewage only customers with delayed billing
questions, 2 for outages/emergencies, 3 for payments, 4 lead testing, 5 of?ce address and
hours of operation, 6 speak to a customer service representative, 7 dye testing/permits, 8 for
an employee directory and 9 to repeat the menu.

Finding: The new menu changes delay reporting emergencies and getting to customer
service.
Emergency Calls

Water is the same as all the other utilities, essential to life and easily disrupted by

nature or accidents. PWSA must have 24/7 phone coverage in case of an emergency. Pipes
can burst because of cold weather; or contractors can accidentally hit a water line while

31

digging. (This is not always the contractors fault. The auditors know of instances where
marked water lines were not located correctly and were ruptured during digging.)

The auditors were informed that when Veolia was in charge of the Authority the 3rd
shift emergency was eliminated in order to save money. Emergency calls were routed to the
water treatment plant where 24 hour coverage is necessary. These employees would then
notify the appropriate person if an emergency occurred and help was needed.

Currently to report an emergency the main PWSA phone line is called and as the
second option on the automated message, one is connected in 53 seconds. An emergency by
its very nature means that time is critical. For example, if a contractor hits a water line and
water is pouring out, PWSA must be called. A plumber reported that his calls to the current
emergency line have been busy or he has been placed on hold or the phone just keeps ringing
and ringing.

RECOMMENDATION NO. 14:

When the PWSA phone number is called there should only be 2 options; 1 for
emergencies and/or outages and 2 for all other calls. This would allow emergencies to be
identi?ed ?rst, and then under number 2 the other areas of interest could be listed.

RECOMMENDATION NO. 15:

Emergency calls should go directly to a live person (Dispatch) to answer and take care
of the problem immediately. If only one person is working the emergency line then the
system must connect to someone else who can address the problem.

New Telephone System Request for Proposal

The auditors were told by PWSA administration that they were aware of the need for a
new phone system. in February 2016, PWSA issued a new Request for Proposals (RFP) for a
?Contact Center Software-as-a?Service Cloud Solution? that was due March 2, 2016. The
RFP included several important capabilities PWSA wanted the new software to include. These
functions consisted of:

1. Automated Call Distribution (ACD): multi-rnedia requests; Skills-Based routing;
multiple queues, intelligent priority handling, real?time and historical analysis and
reporting; transferring calls outside of the tracking and measuring agent
availability

2. Recording and Monitoring: supervisory monitoring of agent conversations; customer
surveys; recording and storage of agent conversation; key performance indicators

32

3. Call back messaging: caller wait~time announcement; ability to leave message and
remain in queue

4. Routing: skills-based and priority-based routing: dynamic changes; over?ow

5. Remote (Teleworker) Agents: support remote agents

6. Automated Attendant: layers of depth to menu; automatic greeting changes; option of
profession versus in-house recording of voice prompts; holding music and messaging

7. Soft Phone Capability: ability to transfer, conference, and speed dial without
issues; ability to answer ACD and direct dial calls; multimedia
displays viewable to agent

8. IVR: supports standard interfaces; can be administered remotely

9. Email: out-of-the-box functionality; auto-response functionality; real time re-routing

10. Web Chat: auto?response functionality; transfer options; transcripts; control of number
of media assigned to an agent

11. Reporting: standard reports, ad-hoc, exportable

12. Workforce Optimization: forecasting to plan staf?ng levels; what-if analysis; agent
skill-skills; agent scorecard.

According to a PWSA press release on September 21, 2016, PWSA upgraded its
telephone system on September 22, 2016. Customer service was closed from 2:30 PM until
6:00 PM. The e-mail correspondence was still available as well as making payments in
person at the main office with checks or money orders. A new number to handle emergencies
during this time period was included in the press release.

Customer Service Email Correspondences

PWSA allows customers to contact their customer service department by email with
questions or concerns. This email service and data tracking began in June of 2015. The
auditors requested a copy of the emails from June to December 2015. This data includes: the
date, address, account number, name of customer, issue, solution, date of the issue/concern
closed and follow?up information. Customer service?s goal is to respond to customer?s emails
within 2 business days.

Finding: The customer service department acknowledges that they did not always meet the
goal of responding to customer?s emails within 2 business days, but continues to make
improvements. (This information is documented in the excel database used to track email
correspondences. The date the issue is opened is included as well as the date the issue was
closed.)

Finding: The emails are not consistently labeled for categorization. For example, emails

about missing bills have fallen into several categories and include: ?billing delay?, ?billing
issue?, bill not received?, ?bill status?, etc.

33

RECOMMENDATION NO. 16:

Tracking emails (questions/concems) is necessary for reporting and research.
However, PWSA administration should make sure a category key is used during this tracking
to ensure consistency and accurate reporting

Email Correspondence Analysis

With over 1,500 different categories for approximately 5,025 email entries from June
1, 201 5-December 31?, 2015, it was impossible for the auditors to sort all of the emails.
Therefore, the auditors, to the best of their ability, selected a sample of like categories; this
was 2,619 or 52% ofthe emails.

Auditors reviewed the data and combined the most common call types into 8 categories.
The 8 categories were, Final Bills, Missing Bills, Service Related (Service Issues, Service
Orders, New Services, etc.), Appeals, Owner/Tenant Information, Account Info (Change of
Address, Name, etc.), Sewage Related Issue/Question, and Bills about High Consumption.
Table 8 shows the most common categories for calls, the number of calls received and what
percentage of calls that category represents.

TABLE 8
2015 SAMPLE OF

PWSA CORRESPONDENCE

 

 

 

 

 

 

 

 

 

 

 

 

MOST COMMON EMAIL NUMBER OF OF TOTAL

QUESTION OR CONCERNS EMAILS
Final Bill 666 13.25%
Missing Bills 489 9.73%
Service Related (Service Issues, Service
Orders, New Services, etc.) 375 7.46%
Appeals 339 6.75%
Tenant/Owner Info 262 5.21%
Account Info (Change of Address, Name,
etc.) 214 4.26%
Sewage Related Issue/Question 172 3.42%
High Consumption Bill 102 2.03%
TOTALS 2,619 52%
Other (Unable to sort-not in sample) 2,406 48%
TOTAL EMAILS 5,025 100%

 

 

 

 

 

*Numbers are approximate due to inconsistency in categorizing.
Source: PWSA Customer Service

The most frequently e-mailed question/concern in the sample time period (June 2015
through December 2015) was pertaining to ?Final Bills? with approximately 666 emails or

34

13.25%. The second most frequently e-mailed question/concern was in regards to ?Missing
Bills? with approximately 489 emails or 9.73%.

Finding: About 48% percent of the emails had categories that were too vague or were unable
to be sorted easily.

RECOMMENDATION NO. 17:

PWSA customer service needs to establish general categories for recording emails and
train personnel in using these categories. This will allow consistency of reporting.

Current Personal Water Problems and Testimonials
A Homeowner?s Experience

While the audit was being conducted, a few personal incidents occurred that were
reported to the auditors. One incident involved a City homeowner who noticed a sink hole in
front of his house in the street. His Shadyside neighborhood street was milled and was getting
ready to be newly paved. The City?s paving contractor contacted PWSA to report the sink
hole. PWSA came to the homeowner?s property and performed a dye test and recorded a
camera video inspection of the line. PWSA told the homeowner that he and his next door
neighbor shared a sewer lateral. Both owners contacted plumbers for estimates of repairing
the lateral sewer line. A number of requests were made to PWSA for a copy of the video
taken. PWSA did not return numerous phone calls. It took 3 weeks to get the video to the
homeowner.

In the meantime, a plumber was hired to correct the problem. PWSA told the plumber
that both homeowners would need a common lateral easement agreement to be added to each
preperty title. An attorney was hired to prepare the easement agreement at a cost of $600.

Upon inspection this plumber discovered that the two neighboring houses did NOT
share a sewer lateral. PWSA was noti?ed of their error and returned to the house to complete
a 2nd dye test. During this 2'?1 dye test, PWSA con?rmed that the two houses did NOT share a
lateral and that the lateral needing repaired was solely for the original homeowner. PWSA
also performed their own video camera of the main sewer line and conducted 4 more dye tests
to the properties in question. They con?rmed NO common lateral existed between the two
houses. As a result of error and lack of response, both homeowners wasted time and
money.

When the auditors brought this to attention the administration?s response was
that it PWSA should not have conducted a video inspection of the line. The administration
stated that the video guy was only trying to do the homeowner a favor but it really wasn?t
responsibility.

35

RECOMMENDATION NO. 18:

One of the cost saving initiatives by Veolia was for PWSA to own a video camera
truck. This truck and the resulting video should be made available to residents with street
sewer problems.

A Contractor?s Experience

Also in April 2015, a plumbing contractor was hired to dig up a sewer line in the
street. Proper procedure required contacting all utilities to mark the location of underground
lines. PWSA marked a water line in the street at one speci?c location.

When the plumber was excavating the street to repair the sewer line, he hit a water line
in the street that was not marked. Water was gushing out and he had to call PWSA to report
the emergency so repairs could be made to the water line. He could not get through to talk to
someone about the water line. He got the automated phone system and was placed on hold for
ten minutes. As recommended previously, emergency calls should be connected directly to a
live person. Finally, he got connected and PWSA came out to ?x the water line.

The contractor actually found a 3rd water line in that same street that was unmarked.
PWSA did not know about the other 2 water lines in the street since neither line was on
records so they could be properly marked.

RECOMMENDATION NO. 19:

PWSA needs to document and map all water and sewer lines throughout the City. It
needs to obtain a complete asset management software program to accurately track repairs and
new installation of lines.

A Landlord?s Experience

One of the auditors is a landlord and since 2010 this landlord strictly used the PWSA
web page to receive and pay PWSA bills. One of the problems with the PWSA on line bill
pay system is that payments are not immediately posted on line and bills are often
posted late. This makes the service always behind.

In July of 2016 one rental property stopped receiving water bills. The PWSA site was
regularly checked and there were no bills, and the payments made, were not posted. This
house was tenant occupied and the landlord had nothing to Show the tenant for water
reimbursement. The landlord contacted customer service about no bills on the internet; they
said that the payments had posted and that the bills would be posted soon.

36

Another month went by with another call to customer service; again a promise of
correction that did not happen. The tenants lease was up in October and the water bills for
July, August and September were missing. Finally the landlord emailed PWSA and then
followed up with a call. Four bills were received all dated the same October 10th date. All of
the bills showed high consumption because there was a leak in the basement that the tenant
and landlord were not aware of. The tenant was moving out and felt no responsibility to pay
the bills.

The landlord wrote a letter to the exoneration board in November 2016 and explained
the situation. She received a letter acknowledging receipt of the request and a hearing date
would be scheduled. It has been 2.5 months and no hearing date has been set.

RECOMMENDATION NO. 20:

PWSA administration needs to investigate why bills were not being posted
online and why there was a delay in scheduling an exoneration hearing. Also the system
needs to acknowledge online bill payments in a more timely fashion.

A Tenant Experience

The night of December 25, 2016 a water main break occurred in the neighborhood of
Regent Square. Water was not available to residents on multiple blocks for several days.
From Christmas Day to New Year?s Day, water was turned off and on without warning, 24
hours of the day. The tenant never received noti?cation of this service interruption from
PWSA. A phone call or any notification about the problem should have occurred.

In early January, PWSA realized that this was a huge inconvenience for residents and
tried to limit the water unavailability by only turning off the water from 10 PM to early
morning hours. When the water was on there were no restrictions in usage. Around January
15th the water was continually on.

Compounding this inconvenience was from the time this break occurred, the entire
street was closed for access, preventing use of the street for driving and resident parking.
There also was no notice that the street was closed for repairs. Residents had to park half a
block away. On February the street was ?nally fully repaired and opened for public
access. It took over a month for everything to be fixed.

Finding: In this instance PWSA did not communicate to all residents when the water was
being disrupted.

37

RECOMMENDATION NO. 21:

PWSA needs to establish a protocol to notify all residents, including tenants, in the
surrounding area of a water main break. The street should have been posted with signs
explaining the disruption of service and notice of when PWSA expected the problem to be
?xed.

Types of Customer Payments

According to the PWSA webpage customers can pay their bills ?ve (5) different ways:
1. Electronic Bill Payment and Presentment (EBPP), 2. One-Time Remote Bill Pay via Phone
or Online, 3. Cash Payment at Any 7?Eleven Location, 4. Zipcheck Payment or at the 5.
PWSA Customer Service Center.

1. Electronic Bill Payment and Presentment (EBPP)

The EBPP is a free online bill paying service that allows customers to receive 
emailed bills and make payments online. This service is environmentally friendly as it
prevents wasted paper caused by bill printing and saves the cost of postage by
sending/receiving payments. This option allows customers to also print and view invoices.
The website promises that this process is quick and easy and can be done in as little as 3 steps.
All a customer has to do is: have their account number and billing zip code, pick a user name
and password and enter their email address. The online system also provides for the customer
forgetting their username and/or password by prompting the individual to enter their email
address and account number.

Customers can make a one-time payment or sign up for automatic bill pay. The
automatic bill pay requires a valid credit card, checking or saving account he entered and kept
online as part of their record. When bills are generated the money is automatically deducted
from this pay source on the bills due date. Individuals sign up for this convenience so that the
bill is paid in a timely manner and to remove the hassle of paying a bill.

Customers receive an email that their PWSA bill is ready to be viewed online. The
email includes the account number, billing date, payment due date, and amount due. The
email does not include the property address for multiple property owners.

If there is a problem with a reading or if there is high consumption of water at the
property, it is not noted on the email. PWSA, over the last 4 to 5 years has sent a ?High
Consumption Notice? in the mail to the homeowner or the property having the problem.

Conversations with PWSA staff have indicated that they are disappointed that more
people do not use their online services.

38

Finding: The customer is not able to log onto the web site unless they have a pro-established
email and their account number handy to use this service.

Finding: Customers that receive emailed bills do not receive any noti?cation if their bills are
unusually high.

RECOMMENDATION NO. 22:

Customers enrolled in this automatic bill pay should receive an email before
the money is removed stating when it will be deducted and how much. This will allow the
customer to contact PWSA if there is an issue before the money is deducted. Auditors found
in their research that other utility and bill-pay services do this already.

RECOMMENDATION NO. 23:

PSWA should study offering an incentive to their customers to promote going green.
A joint promotion with a local bank or sporting goods store might be or a discount
could be offered to the online subscriber.

RECOMMENDATION NO. 24:

PWSA should allow an alternative identifier to create an account in lieu of the account
number if a customer does not have it readily available. Other utilities and companies use
other personal descriptors such as social security number, address, and zip code or answer a
security question in order to access account information. Some companies offer more than
one identi?er to choose from.

2. One-Time Bill Payment via Phone or Online

Residential and commercial customers can make a one-time bill payment online or by
phone. To make a one-time telephone payment, customers call 412255-2423 and
select menu option #3 and follow the directions. The PWSA website notes that, ?a service fee
will apply? but does not indicate a price. Auditors called to inquire about this fee but an
account number was needed to advance to a live person.

To make a one-time online payment the customer must clicked on ?One Time
Payment?, a red line appears at the top that states, ?Please note that Level One charges a
service fee for paying bills using this service?. An account number and billing zip code
must be entered. Additionally, an image veri?cation called a CAPTCHA (completely

39

automated public turing test) is required. (This is when you have to copy letters or numbers in
a box.) This method of fraud protection is pretty standard with most online bill pay systems.

The next page asks if you would like to use a bank account or debit/credit card. Once
you select one, the next page shows your account number and total at the top. You are asked
basic information such as your email, address of the card, the credit card number and
expiration date.

Finding: This option seems relatively easy but you are not told the amount of the fee for this
service. As a test, auditors went through the ?rst three steps and reached the page asking for
the credit card number. At no time was the fee listed.

RECOMMENDATION NO. 25:

Customers should be told how much the fee is for the service prior to entering their
personal information.

3. Cash Payment at local 7?Eleven or Family Dollar Stores

PWSA states that this method is quick and convenient and only requires that a
customer bring their bill stubs to any 7-Eleven or Family Dollar location. The customer must
have their bill because there is a pay code on the back that is entered when payment is made.
This noti?es PWSA that a payment was made on your account. The customer tells the cashier
how much they wish to pay and a cash payment is accepted.

A $1.49 processing fee is charged and a receipt is given to the customer as proof of
payment. The auditors were told by PWSA management that 50% of the fee goes to the
company that processes payments and 50% goes to 7-Eleven or Family Dollar.

4. PWSA Customer Service Center

Customers are able to go to Customer Service Center at 1200 Penn Ave,
Pittsburgh, PA 15222 to pay their bills. This building has other companies located in it. The
PWSA of?ce is open Monday through Friday from 8:00 AM to 6:00 PM. The of?ce accepts
money orders, cashier?s checks, credit card and debit card. They do not accept cash. In the
buildings foyer there is a receptionist and you are required to sign into the building marking
the time of entry and where you are going. When you leave you are also required to sign out
with the time.

The times the auditors visited the of?ce the receptionist was welcoming and helpful.
In the controller?s last performance audit this was not true and a recommendation was made to
improve the receptionist greetings. The controller?s recommendation to have a more helpful
and pleasant receptionists was followed.

40

The Customer Service Center is to the right of the reception desk. Three (3) windows
enclosed in partial glass are on a counter. The times when the auditors visited the premises,
there were 2 individuals working the counter. While it is helpful if the customer has a copy of
their bill it is not necessary, a copy will be printed at the counter.

Additionally, the building?s foyer has a locked deposit box for convenient bill drop
off. This box is emptied daily and eliminates the need for the customer having to sign~in and
go into the Customer Service Center.

RECOMMENDATION NO. 26:

PWSA should explain on their website and on customer?s bills that payments can be
dropped off in the lobby of the Penn Avenue offices.

5. Zipcheck

Zipcheck is an automated bill pay system that allows PWSA to automatically deduct
your bill amount from a designated account every month when your bill is due. The
customer?s ?nancial institution manages your payment and you will still receive a PWSA
bill 20 days before the due date.

This is a free service provided by PWSA. To sign up a PDF ?le is available to
download on the PWSA website. The form along with a voided check must be mailed to
PWSA. Payment is directly deducted from your account on your bills due date.

Finding: The website does not indicate how long it would take for this autopay process to be
complete after you have sent the check and application.

Water Shut Off Process for Delinquent Accounts

If a company or individual doesn?t pay their water bill, after a certain period of time
PWSA will shut off their water. The auditors asked the senior customer service manager for
an explanation of how PWSA Customer Service handles delinquent accounts leading to
shutting off a customer?s water.

A customer has 36 days to pay their bill. On the 37th day, your bill is considered late
and PWSA will make an automated collection call (robocall) asking for payment in full. In
addition, a 37th day letter is sent with a delivery con?rmation and customer?s required
signature. After 10 days or on the 47th day, a letter called the 10 day letter is sent.

If no payment is received, PWSA posts a notice on the prOperty address warning that
the water will be shut off if payment in full is not received. Within 24-48 hours of this

41

posting, PWSA will call the customer again to inform them that a shut off of the water will
occur. Payment in full is due within 24 hours. PWSA will shut off the water and assess a
$125 shut off fee to the customer?s account. This covers the cost of the plumbing staff to turn
off the water.

PWSA does supply ?Rules and Regulations of the Pittsburgh Water and Sewer
Authority? on its webpage. Chapter 2 covers ?Customer Rights And Obligations?. This
chapter explains how residents, businesses and tenants can apply for water and how and why
water can be terminated.

Finding: In section 209.0 Termination of service, ?Customer Rights and
Obligations? has contacting customers by phone as a last effort not at the beginning of the
process.

RECOMMENDATION NO. 27:

If contacting a delinquent customer initially by phone is a new part of the termination
of service collection process, then PWSA needs to update section 209.0 Termination of
service, ?Customer Rights and Obligations? on its webpage.

Shut Off Notices

Customer service gave the following information concerning the number of
termination notices sent and shut offs in 2015. Accounts that are delinquent or not paid after
90 days are to go to Jordan Tax Services for collection which will be explained later in the
audit.

Finding: In 2015, there were 630 shut offs and 11,756 postings to properties warning of
possible shut offs if the bill was not paid in full. This represents 5% of posted properties that
got their water shut off due to delinquency.

 

 

 

 

 

TABLE 9
2015
SUMMARY OF ACCOUNTS
NUMBER OF

STATUS ACCOUNTS
Received 10 Day Letter 45,541
Received 37 Day Letter 4,971
Property Posted concerning Shut 11,756
Off - 48 hour notice
Water Shut Off 630

 

 

 

 

Source: PWSA Bar Charts

42

The auditors were confused with these ?gures and reached out to PWSA for
clari?cation. However, phone calls and emails were not returned. Table 9 shows that less
than 1% of the households that received the 37 day shut off letter actually had their water shut
off. The threat of shutting off water is a very effective tool for getting people to pay their bill.

Once water service is terminated, all arrearages must be paid in full before water can
be turned on. No payment plan will be accepted. This has remained unchanged since the
Controller?s last Performance Audit.

State Requirements for Utility Termination of Service

The State Legislature, in 2014, renewed the ?Responsible Utility
Customer Protection Act,? Chapter 14 of the Public Utility Code for another 10 years. The
new law revised some Chapter 14 provisions. The following are utility termination
requirements for all PA residents for all utilities:

Your utility company can SHUT OFF your service if you FAIL to do the following:
0 Pay your bill

Follow through on payment arrangements

Pay a deposit, if required

Allow the company access to its equipment

Before your service is shutoff, your utility company will take the following steps:
0 Send you a 10-Day Notice. Once you get the notice, the utility company
has up to 60 days to shut off your service.
0 Attempt to contact you three days prior to your shut-off date.
0 During winter months (December 1 through March 31), if the utility
company cannot reach you at the time of termination, they will leave a 48-
hour notice at your residence.

PWSA gives more time than the State requirements for utility termination of service.

Finding: In section 209.0, Termination of Service, ?Customer Rights and Obligations? there

is no minimum outstanding balance owed before PWSA shuts off the water. A customer can

owe $10 or $300 and have their water shut off if no payment is made within 30 days. Neither
is there a minimum dollar values for termination of service in the State requirements.

Delinquent Accounts

Media reports have claimed that PWSA has millions of dollars owed to them in
delinquent accounts yet keep raising water rates. The auditors requested a copy of all the
delinquent accounts for 2014 and 2015. The information received included two separate
delinquency tiles for each year and a customer data base. These files were quite large and
required careful evaluation by the auditors. The 2014 PWSA report had 190,713 accounts

43

showing delinquencies totaling $34,090,266.39. For 2015, the report had 198,080 accounts
totaling $40,934,552.18.

The 2014 and 2015 report listed a location ID, Customer ID, and the delinquent
amounts by number of days overdue. For example, 0-30 days, 31-60 days, 61-90 days, 91-
120 days, 121-180 days and over 181days. These reports did not identify the property address
or customer name.

The customer data base was a separate file and identi?ed the property address or
customer name. This ?le contained ?elds such as location ID, service address, customer
name, customer ID, and billing address. The 2 files were merged with the yearly report to
obtain delinquency status and to identify account owners. Because of the massive amount of
data in both 2014 and 2015, the auditors, for this audit, focused only on the 2015 data of
delinquent accounts.

The auditors discovered that some delinquent accounts include City-owned properties
and also accounts that existed in the old PWSA software system that did not transfer properly
into the new system. PWSA reported that these properties are designated as ?Orphan?
accounts because they do not have good addresses, and most likely were demolished, vacated,
changed ownership and were not properly removed from the system.

Finding: There were 14,156 Orphan delinquent accounts totaling $1,581,472.88 in 2015.

Finding: There were 595 City-owned accounts totaling $2,146,752.12 in 2015.

RECOMMENDATION NO. 28:

PWSA needs to ?clean up? the orphan accounts and verify that these properties can be
removed, since bills cannot be mailed for the various reasons mentioned. Because of these
accounts, PWSA outstanding bills data is skewed. If they are never going to be paid, they
should be removed.

RECOMMENDATION NO. 29:

PWSA should work with neighborhoods and initiate a ?neighborhood report line? that
would allow neighbors to be watchdogs and report the abandonment of buildings in and
around their neighborhoods.

Top 100 Delinquent Accounts in 2015
The auditors chose to concentrate on the top 100 delinquent accounts with the highest

dollar amount owed for 2015. The auditors sorted the database by total amount owed in
descending order to get a list of the top 100 delinquent accounts.

44

 

Each account was researched to verify the ?type? of account it was. Using Allegheny

County?s real estate website, each property address was entered and the information used to

classify the property into 9 categories: residential, governmental, business, institutional, City

of Pittsburgh, abandoned, utility companies, condominium, or unknown.

A property was considered abandoned if county or city taxes were unpaid for a
number of years, and/or the building had already been razed. One property had a service
address that did not correspond with any address in the real estate website. This property is
shown in the table below separately as an unknown.

This top 100 list excludes the orphan accounts and abandoned/vacant properties
already identi?ed in data base. City-owned properties are included in this list.
These 9 categories are summarized in Table 10 below:

 

 

 

 

 

 

 

 

 

 

 

TABLE 10
BREAKDOWN THE
TOP 100 DELINQUENT ACCOUNTS IN 2015
Amount Amount Amount Amount Amount
Category of Amount Due Due Due Due Due Due TOTAL
Accounts 0-30 Days 31-60 91-120 121-180 Over 181
Days 61-90 Days Days Days Days
Business 29 $1,732,516.17 $157,301.71 $162,230.65 $289,850.88 $123,293.60 $349,411.01 $2,814,604.02
Governmental 12 $480,614.65 $5 54,104.26 $664,995.94 $49,352.07 $77,980.55 $659,526.77 $2,466,574.24
Institutions 30 $1,150,135.70 $124,479.62 $243,693 .91 $51,215.70 $16,185.39 $50,923.76 $1,636,634.08
City of 8 $3,613.46 $5,350.12 $385,514.34 $1 1,588.12 $58,165.54 $564,692.08 $1,028,923.66
Utilities 3 $40,288.51 $48,673.88 $41,691.40 $39,848.15 $83,449.21 $343,892.53 $597,843.68
Residential 5 $356,504.37 $17.06 $23.43 $36.18 $55.87 $130,416.30 $487,053.21
Abandoned 1 1 $136.05 $36.66 $36.39 $145.17 $15.70 $366,572.44 $366,942.41
Unknown 1 $17.22 0 0 0 0 $31,993.56 $32,010.78
Condo 1 $26,993 .90 $163.00 $0.00 $0.00 $0.00 $0.00 $27,156.90
TOTAL 100 $3,790,820.03 $890,126.31 $1,478,186.06 $442,036.27 $359,145.86 $2,497,428.45 $9,457,696.26

 

 

 

 

 

 

 

 

 

Source: Allegheny County Real Estate website and PWSA

Finding: The majority of the top 100 delinquent accounts were nonresidential.
Finding: The top 100 delinquent accounts with the highest dollar amount owed totaled
$9,457,696.26 for 2015. This is 23% of all the money owed to PWSA in 2015.
Abandoned/Vacant Properties

According to a February 9, 2016 Tribune Review article, $6.3 million was owed to

PWSA on 3,500 vacant lots. According to PWSA, these properties were billed continuously

because they were not informed that the properties were empty. It is not uncommon for

people to leave a property and not contact PWSA to shut off the water and/or report the move.

45

 

Finding: This delay in the water being turned off at these properties potentially wastes water,
and wastes paper generating bills. It also increases the number of unpaid accOunts on record.

City-owned Properties Water Usage

In accordance with a 1995 agreement with PWSA, the City of Pittsburgh is allocated
600 million gallons of water per year at no charge. Conversations with PWSA administration
revealed that no one keeps track of the water used by the City and, in fact, many government
building are not metered so it is unknown how much water is actually being used.

Finding: Not all City property is metered making it impossible to know how much water is
being used by the City.

The auditors discovered that the City properties in the top 100 delinquent accounts
included City parks, swimming pools and senior centers. There were 8 City-owned properties
in our top 100 delinquent properties that totaled $1,028,823.66.

State owned Point State Park has the largest delinquency amount owed with
$831,462.63. It is listed under the government category in Table 10. This is due to the 200 ft.
wide fountain that runs from April through the fall attracting many tourists to the region.

A Tribune Review article dated February 23, 2016 reported that the state is unwilling
to pay the bill because of disputed meter readings. The article did not speci?cally state what
is wrong with the meter readings.

Finding: The City?s unpaid accounts in?ate the amount of delinquent water bills on 
books.
RECOMMENDATION NO. 30:

The City-owned delinquent accounts should 113;; be included in PWSAs outstanding
delinquent balance totals.
RECOMMENDATION NO. 31:

PWSA needs to make a decision on how to handle property owned by the City and its
water usage. The 1995 agreement between the City of Pittsburgh and PWSA gives the City
600 million gallons of water a year at no charge. Currently, there is no means to calculate

City water usage because not all buildings are metered. The authority needs to explore the
costs of metering every City-owned building.

46

City Payments to PWSA

The auditors discovered that the City?s Controller?s of?ce pays some of the PWSA
City water bills that are for City-owned properties. PWSA will mail these water bills to the
Department of Innovation Performance for review. Then will send the bills to
the City Controller?s of?ce for payment. The City Controller?s of?ce will remit payment for
the current amount due on these bills. Any past due amounts shown on the current bills are
never paid unless documentation is provided from the bills that accrued these
charges. City Controller employees told the auditors that documentation for past due
amounts are usually never provided and paid.

The auditors used the City?s OnBase system to see what type of PWSA accounts the
City Controller?s of?ce was paying for and how much money was paid on each property. The
checks dated from 1/1/2015?12/3 1/2015 were researched. The type of property for each
account was veri?ed by visiting each address listed on the bill or typing in the address on the
internet and viewing them on Google?s street view option via satellite.

Table 11 shows the addresses of each account, what type of property the account was
for, number of payments made, amount paid in 2015, if the bill was an estimate or an actual
reading, and the outstanding balance still on the account according to last bill posted in 2015.

TABLE 11
2015 CITY OFFICE PAYMENTS
FOR CITY PROPERTY BILLED BY PWSA

     
    

 

 

 

 

 

 

 

OF AMOUNT OUTSTANDING
ADDRESS TYPE OF PAYMENTS PAID IN LAST BILL BALANCE 0N
PROPERTY PAID IN 2015 READING LAST BILL
2015 SENT
0-54th Duncan Duncan Park in 12 $46.55 Estimate $12.65
15201 Lawrenceville
0 Liberty Downtown 9 $2,518.93 Estimate $16.90
Ave/ Gateway Subway Station
Station 15222 Stop
930 Saw Mill Vacant DPW 13 $6,503.97 Estimate $4,070.67
Run Blvd. 15220 Building
1133/1203 Police 9 $1,602.35 Actual $2,029.30
Western Ave Headquarters
15223
5 Allegheny Senior Center 13 $3,064.43 Actual $748.70
Square 15212 and Hazlett
Theatre
830 Police 10 $1,144.76 Actual $1,857.02
Warrington Ave Department
15210 Zone 3

 

 

 

 

 

 

47

 

2015 CITY OFFICE PAYMENTS

 

FOR CITY PROPERTY BILLED BY PWSA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OF AMOUNT OUTSTANDING
ADDRESS TYPE OF PAYMENTS PAID IN LAST BILL BALANCE ON
PROPERTY PAID IN 2015 READING LAST BILL
2015 SENT

4748 Closed 6 $22.70 Estimate $102.63
Monongahela St. Hazelwood
15207 Library
3284 Central Ave Bureau of Fire 4 $261.45 Actual $309.64
15212 station 34
0 Schenley Plaza Park in Oakland 8 $9,645.85 Actual $6,531.40
15213
7513 Tioga St. Vacant private 1 $3.93 Estimate $506.48
15208 house
7106 Race St. Vacant private 1 $3.93 Estimate $1,526.92
15208 house
7326 Vacant lot 1 $3.93 Estimate $571.69
Susquehanna St.
15208
5520 2nd Ave Vacant private 1 $15.15 Actual $4,273.10
15207 house

TOTALS 88 $24,837.93 $22,557.10

 

Source: PWSA Bills and OnBase Research

After searching OnBase, the auditors found that in 2015 the City Controller?s of?ce
made 88 payments for 13 different water and sewage accounts, totaling $24,837.93. During
the entire year, 7 of these accounts had estimated meter readings and 6 had actual readings.
Eleven (11) of the accounts had ?sewage only? charges except the Senior Center and Hazlett
Theatre in the Northside and the Gateway Subway Station account located downtown. The
Gateway Subway Station had ?water consumption charges? and the Senior Center and Hazlett
Theatre had ?water and sewage charges.?

The 7 estimated accounts were visited or researched online to verify if these properties
could have any type of water or sewage consumption. Online research revealed the Tioga
Street and Race Street addresses were vacant private homes and the Susquehanna Street was a

vacant lot.

The auditors visited the last 4 estimated account addresses. The Saw Mill Run Road
account is a vacant Department of Public Works building that was used by the Redd Up
division until 2014. The estimated readings on this account were extremely high for a
property that has been vacant for over two years. The City never questioned the estimated
readings and paid $6,503.97 0n the Saw Mill Run Road account in 2015.

48

 

The Hazelwood Carnegie Library on Monongahela Street is a vacant building that has
been closed since 2004. The last two estimated accounts that were visited were Duncan Park
in Lawrenceville and the Gateway Subway Station stop located downtown. The auditors
found that these two locations had no evidence of possible water usage: no bathrooms,
water fountains, sinks, spray parks etc. The City never questioned the estimated readings
and paid $46.55 and $2,518.93 respectively in 2015.

Finding: The City Department authorized the City Controller?s office to make payments
on the estimated bills for 7 City-owned accounts for the entire year of 2015 without question.
All of these properties are vacant.

Conversations with employees in the City real estate department said that there is no
formal policy for communicating to PWSA to shut off the water when a property is acquired
by the City.

RECOMMENDATION NO. 32:

PWSA in conjunction with the City?s real estate department and/or the 
Department should go out and investigate these properties and get an actual meter reading.
There is a possibility that there has been no water usage at these properties for months or
years. If there is no reading the accounts should be deleted out of system.

RECOMMENDATION NO. 33:

The City Controller?s of?ce should stop making water and sewage payments on any
estimated bill they receive from PWSA and until an actual meter reading is provided.
This should happen even if the Department of approves the bills for payment.

Jordan Tax Service (JTS)

According to the Jordan Tax Services website, JTS was founded in 1932 by J. William
Jordan. It offers comprehensive revenue collection services to entities throughout
which include: school districts, municipalities, counties and authorities
(including tax and utility fee collection); delinquent tax and municipal claim collection;
courthouse record keeping; bankruptcy claim management; tax and utility bill printing; and
comprehensive data (which includes accounting, banking and reporting services). Jordan Tax
Services has customers in more than 85 boroughs, townships and authorities; 30 school
districts as well as Allegheny County, the City of Pittsburgh and the Pittsburgh Water and
Sewer Authority.

The Pittsburgh Water and Sewer Authority contracted with TS to collect payment on
delinquent water and sewer services on September 12, 2008. All accounts more than 90 days

49

delinquent are to be turned over to Jordan Tax Service. The initial term of the contract was
from October 1, 2008 to September 30, 2010. Sometime in 2010 there was an ?Addendum to
Agreement? dated September 12, 2008. This addendum states:

a The term of this agreement shall commence as of October 1, 2008 and unless
sooner terminated pursuant to Article Part hereof, shall expire on
December 31, 2011. If not terminated and absent the Parties' agreement to one or
more additional longer terms, this agreement shall automatically renew for an
additional term or terms of one hundred eighty (180) days subject to the right to
terminate as provided below.

0 Except as speci?cally modi?ed hereby, the parties do hereby ratify the
agreement September 12, 2008 and con?rm that all other terms and
conditions remain unchanged and the agreement remains in full force and effect.

The ITS contract is still in force having been renewed several times. To View the
whole JTS contract and the Addendum, can be found in the Appendix.

Under the ?Miscellaneous Provisions? of the contract with Jordan Tax Services, it
says: ?Jordan shall be the exclusive Collector and SLC shall be the exclusive SLC of
Delinquent Claims during the term of this Agreement. The municipality shall not accept any
payment of any Delinquent Claims or enter into an installment payment agreement with any
Delinquent Payer or any Delinquent Claim.?

Finding: Auditors were told by PWSA staff that they still collect payments from accounts
over 90 days delinquent.

RECOMMENDATION NO. 34:

PWSA customer service should stop collecting payments from delinquent payers over
90 days old.

Jordan Tax Services Fees

The Jordan Tax Service contract states that servicing expenses and attorney fees shall
be added to the delinquent claims and shall be recovered directly from the delinquent payer.
All expenses and fees are contingent upon collection from delinquent payer by Jordan Tax
Services. If Jordan Tax Services efforts do not result in payment, the municipality shall not
be obligated to pay for any expenses or attorney fees.

The TS contract also states that any compensation charges shall not exceed the
amount set forth in the ordinance or resolution.

50

Finding: All resolutions were reviewed by auditors and no amount could be found. It is
unclear what the amount is to not be exceeded.

RECOMMENDATION NO. 35:

If the Jordan Tax Service contract is to have a ?not to be exceeded amount?, then the
PWSA Board should establish an amount and include it in the contract.

Jordan Tax Services Distribution of Payments

When payments are received in full, everyone gets paid for what is due. When
delinquent claims are less than full payments or installments, Jordan distributes the payments
in order of priority to:

1. Special Legal Counsel (SLC) for all attorney fees and third party
expenses

2. Jordan Tax Services for servicing expenses, postage expenses and
out-of?pocket expenses

3. Courthouse for record costs, lien costs and expenses

4. PWSA for face, penalty, and interest of the delinquent claim (?The
earliest in lien having priority until the delinquent claim is paid in
full?).

Source: Jordan Tax Contract 2008

When Jordan Tax Services collects partial or installment payments, PWSA gets paid
last. This has not changed since the controller?s 2010 PWSA audit despite there being a
recommendation to renegotiate the payment terms when a partial payment was made.
The 2010 recommendation stated:
The PWSA should study the cost effectiveness of its contract with Jordan Tax
Service regarding partial payments on delinquent accounts. The PWSA should
determine if the legal fees and servicing expenses are excessive relative to the

amount of the delinquent claim and to the amount paid to PWSA.

Finding: PWSA did not follow a past recommendation of the City controller?s 2010 audit
regarding the Jordan Tax Service Contract. This is despite agreeing to the recommendation.

RECOMMENDATION NO. 36:

PWSA needs to renegotiate the Jordan Contract around receiving money for partial
payments. The City of Pittsburgh does business with Jordan for the collection of real estate

51

taxes. When partial payments are made they City always receives a percentage. PWSA
should be receiving the same.

Jordan Tax Services Delinquent Accounts

Tables 12 and 13 shows the delinquent accounts turned over to Jordan Tax
Service from June 2014 to December 2015. (PWSA was not tracking this information before
June 2014.) This information was provided to auditors by PWSA staff. In 2014, there were
26,676 delinquent accounts totaling $3,238,895.40. In 2015, there were 26,944 delinquent
accounts totaling $2,623,217.43.

Finding: There was an increase of 268 delinquent accounts in 2015 from 2014, however, the
total amount due decreased by $615,667.97 or 19%.

The amount of money sent to collection with Jordan Tax Service seems very high;
$3,238,895.40 in 2014. However, when averaging that total by the number of accounts
(26,767), the average delinquent account only totaled approximately $121.41 in 2014. In
2015, the average delinquent account dropped to $97.35.

Conversations with PWSA staff indicated that most of the accounts given to Jordan are
commercial accounts. The staff member stated that accounts either had a payment agreement
that wasn?t paid, had the water shut off or went bankrupt; usually these accounts are settled
for a lesser amount.

RECOMMENDATION NO. 37:

PWSA needs to treat all past due accounts the same whether residential or
commercial. Broken payment agreements or non-payment of bills should have their water
shut off.

TABLE 12

OF PLACED
MONTH ACCOUNTS AMOUNT
June 7 038 $1 609 812.73
Jul 3 486 $437 162.05

A 1 28 $147166.37
tember 5,953 $408 346.35
October 3,236 $272 159.62
November 1,739 $168,903.24
December 3 996 $195 345.04
TOTALS 26 676 $3 95.40
Source: PWSA

 

52

TABLE 13

OF PLACED

MONTH ACCOUNTS AMOUNT
Jan 3,155 $170 371.53
Feb 2,405 $138 558.81
March 3 19 $98,445.84
A ril 2,141 $62 55.56

Ma 1 02 $93,443.11
June 3 030 $878,143.17
Jul 2 557 $363,083.46
A 1 510 $270,201.21
tember 2 457 $165,834.87
October 2,535 $122 855.04
November 1,301 $174 087.59
December 1,332 $85 937.24
TOTALS 26 44 $2 623 17.43
Source: PWSA

 

Jordan Tax Services Actual Collections

According to documentation provided to us by PWSA from Jordan Tax Services, TS
collected $1,778,059.23 from clients January 1, 2015-December 1, 2015. PWSA collections
totaled $1,556,100.50 and JTS services and fees totaled $221,958.73. This shows that
approximately 14% of the money collected by TS went to JTS as a result of fees, penalties,
interest, postage and expenses. All of which was paid by the customers. While this shows that
JTS is effective in the collection of delinquent payments, auditors questioned the ethics of
their collection process.

It is unethical to take advantage of people who are having a hard time paying their
water bill in the ?rst place. At the point when the account is turned over to Jordan their water
should already be shut off incurring a tum-on fee of $125.00. Then once turned over to
Jordan all collection costs are added on. This includes attorney fees (which by State law,
Jordan is allowed to use paralegals to do the work yet charge the customer the amount an
attorney would charge) postage, collection fees and all other servicing expenses. The
following customer case is a good example of the costs of the collection process.

Jordan Tax Service Customer Case

One PWSA customer received a sewage bill from JTS 19 months after it was
due for the amount of $145.50. The customer was unaware of the missed payment and
received no other communications from PWSA regarding it. This was the customers

53

?rst missed payment in the 7 years of owning the property. When the error was
discovered, he/she attempted to pay the bill for $145.50. However, they were told that
there were additional fees, penalties, interest, postage and expenses they also needed to
pay, totaling $78.41.

(Source: Better Business Bureau Customer Complaint in 2014)

Finding: The fees and expenses charged by JTS services are quite high. In this particular
case, the bill increase by 54% as a result of these fees. If a customer is unable to pay their
bill, it seems counterproductive to tack on fees that increase their bills by over 50%.

RECOMMENDATION NO. 38:

As recommend in the previous audit, PWSA should reevaluate their contract with
Jordan Tax Services. The fees assessed to delinquent accounts, as a result of Jordan Tax
Services, are excessive.

board of directors in October 2016 approved the Clean Water Assistance
Fund to help eligible residential customers pay their sewage bill. Dozens of social service
agencies that work with Dollar Energy throughout the region are now accepting applications.

RECOMMENDATION NO. 39:

The contract for Jordan Tax Service needs to be discontinued. The strongest reason
for an individual to pay their bill is not have it shut off. That is controlled by PWSA.

RECOMMENDATION NO. 40:

PWSA administration should offer other alternatives for delinquent collections that are
more customer friendly and helpful. PWSA administration should work to be included with
ALCOSAN Clean Water Assistance Fund.

90 Day Delinquent Accounts Test

Of the over 110,000 active accounts in the 2015 PWSA billing system, there were
20,329 showing a past due amount that was greater than 90 days overdue, totaling $16.4
million dollars. It should be recognized while this represents a large number of accounts
greatly overdue; this is also re?ective of the substantial billing delays of recent times. These
accounts are also not just City of Pittsburgh residents? water and sewage charges, but

54

 American Water sewer customers, the Borough of Wilkinsburg, Millvale and
West View and ?at rate and transitional customers.

The auditors wanted to verify the status of these accounts with Jordan Tax Service
because according to the TS contract all these accounts should have been turned over to
Jordan.

A random sample of 200 active accounts was drawn from this data to represent nearly
1% of the over 90 day accounts. They were divided proportionate to customer type (44.8%
of PWSA customers are City of Pittsburgh water and sewage customers, so 44% (88) accounts
in the sample were Pittsburgh PWSA, etc.) was selected.

This sample of 200 totaled $176,590, with a mean of $882 and a median of $91. In an
effort to identify these properties, parcel numbers were gathered from the Allegheny County
Real Estate website and were then looked up in the Allegheny County Department of Court
Records to ascertain if liens had been ?led against the property owner. Parcel numbers were
not found for 13 of the properties of this sample. This may be due to the property being razed
years ago and the street number no longer existing, a data entry error in the service address in
database, or possibly an error in the real estate website.

The remaining 187 properties were sorted into seven categories. Owner-occupied
residential properties had both the service address and the billing address the same. Business
accounts maintained the same billing and service account in the business name. Abandoned
properties were properties which had been razed, or had unpaid tax liens for many years.
Residential and commercial rental properties have the PWSA bills in the name of a rental
company, or appear to house more than one residential unit when viewed in the real estate
website. A property was categorized as non?owner occupied residential when the billing and
services addresses were different but it could not be established if the property was abandoned
or being rented. The institutional property is a private school and a church.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE 14
SAMPLE OF 200 ACCOUNTS
OVER 90 DAYS OVERDUE
TYPE OF PROPERTY IN SAMPLE DOLLAR AMOUNT
OWED

Residential owner?occupied 77 $19,930.81
Abandoned 31 89,402.42
Residential non-owner occupied 45 $35,276.79
Business 5 $305.40
Landlord/Leasing company 29 11,298.33
Institution 2 $1,105.65
Unknown 13 $21,040.78

TOTALS 200 $176,590.39
Source: PWSA

55

The sample of 200 was sent to Jordan Tax Service with a request as to what was the
status of each account. In other words, the auditors wanted to find out if the customer was on
a payment plan, if the account was paid in full, or if the property had been liened and/0r up for
sheriff?s sale.

Jordon Tax Service would not divulge any information about these accounts. They
stated that this was because of an ongoing lawsuit ?led by customers in 2016. The lawsuit is
a class action suit ?led for wrongful billing mistakes.

Finding: Jordan Tax Service would not provide any information about the status of
delinquent accounts to the auditors because of an ongoing lawsuit filed by customers in 2016.

Test Alternative

Because Jordan Tax Service would not provide delinquent account information, the
auditors had to find another way to analyze the status of these past due accounts.

A sample of 40 of these properties was chosen randomly to have their September
through December 2015 billing statements printed from PWSA for review. The auditors
found 1 property was abandoned and had reverted to the City of Pittsburgh. This account was
dropped from the sample.

The auditors found that 28 of the 39 accounts in this sample had actual readings
leaving 11 with estimated readings. Of the 28 accounts with actual readings, 7 had water
service terminated as well as all the 11 estimated accounts. This totals 18 of the 39 in the
sample with water shut off. When water service is terminated, sewage charges
continue to accrue.

Of the 18 shut offs only 1 account had water service reinstated during this time. The
remaining 21 were on a payment plan with PWSA. When a customer is on a payment plan

the water remains on.

Finding: Almost half of the accounts in the sample did not enter into a payment plan and had
their water remain off.

Finding: Bills continue to be issued to terminated accounts for ALCOSAN sewage treatment
costs.
RECOMMENDATION NO. 41:

PWSA should not bill for sewage usage if the water is shut off; if water is not being
used then sewage is not being used.

56

According to the senior customer service manager, once PWSA turns an account over
to Jordan Tax Services, PWSA no longer follows the status of the past due account. Jordon
Tax submits the percentage of collections received to PWSA every 2 weeks.

RECOMMENDATION NO. 42:

PWSA should track the status of past due accounts with Jordan Tax Services.

Water Exoneration Board

Pittsburgh City Code Chapter 330 outlines the reSponsibilities of the Water
Exoneration Hearing Board. It was enacted in 1991 to . .hear consumer complaints
concerning water billing procedures. The board is authorized to make adjustments in bills or
offer exonerations should its ?ndings indicate the propriety of action.? It was originally
comprised of ??ve (5) quali?ed residents of the city: the director of the Department of
Water or their departmental designee; the City solicitor or their departmental designee; the
director of the Pittsburgh Water and Sewer Authority or their authority designee; one (1)
citizen appointed by the mayor; one (1) citizen appointed by the mayor from a list of not
less than three (3) or more than nine candidates submitted by council, neither of whom can
be a City government employee. Both candidates shall be con?rmed by council.?

However, in December of 2015 it was amended to read: ?The Water Exoneration
Hearing Board shall consist of ?ve (5) quali?ed residents of the City: The Pittsburgh Water
and Sewer Authority director of ?eld services, the Pittsburgh Water and Sewer Authority
senior customer service manager, and three (3) community representatives chosen by the
mayor, one (1) who is an engineer, one (1) who is a lawyer, and one (1) with mediation
experience. The community members shall be con?rmed by council.? The amendment was
enacted because of the Water Exoneration Board perceived as being solely run as an
offshoot of PWSA.

According to the City of Pittsburgh?s website, the three community representative
positions have yet to be ?lled. A councilperson is quoted as saying he does not recall a full
board being seated during his 12 years at city hall.

Finding: Despite being revamped in December, as of August the Water Exoneration
Hearing Board does not have a full complement of members.

According to Chapter 3 of the Rules and Regulations of the Pittsburgh Water and
Sewer Authority, when a property has been acquired ?by the Commonwealth of 
the City of Pittsburgh, the Urban RedeveIOpment Authority, the School District of the City of
Pittsburgh, or other government agency for street, school or other development purposes, the
Water Exoneration Hearing Board will recommend exoneration of 100 percent of the water
consumption, sewer system maintenance, and distribution infrastructure system charges for

57

such property under the following circumstances: The property is vacant, and the government
agency has certi?ed to the authority, in writing, that the property is vacant and scheduled for
demolition.? It is further noted that no exoneration will be made in the absence of the notice
and certi?cation to the authority.

Finding: Property acquired by governmental agencies for the purposes of development
may have their charges exonerated.

RECOMMENDATION NO. 43:

PWSA should work more closely with City of?cials to develop a similar system to
deal with condemned prOperties. When a property is condemned and a contract offered to
have it razed, past due records at PWSA should be exonerated as well. This will enable
billing system records to more accurately re?ect past due accounts versus having accounts
on the books for pr0perties that have not been in existence for many years.

Lead and Copper in Drinking Water

Exposure to lead and copper in drinking water can cause serious health problems. In
adults, exposure to lead can cause damage to the cardiovascular system, increased blood
pressure, hypertension, and decreased kidney ?lnction. Young children exposed to lead are
more at risk than adults. In children, even low levels of lead can cause damage to the central
and peripheral nervous system, behavioral and learning problems, slowed growth, and impair
hearing.

Causes of Lead in Water

PWSA water is lead-free when it leaves the treatment plant. The main problem with
lead in?ltration occurs when water travels through the main lines and the service lines that
branch off from the main line to the house. Other systems that can contain lead are home
plumbing systems, and ?xtures in the house that contain lead or lead solder. Lead and lead
solder can leach from old corroded lines and ?xtures thus contaminating the water supply
especially when the water has high acidity.

The best way to prevent lead from leaching from water lines and home plumbing
systems is to remove lead lines completely and replace them with copper or plastic/PVC lines.
In Pittsburgh, the main lines under City streets and the service line to the homeowners curb
stOp box are owned by PWSA. The service line from the curb stOp box to the house is owned
by the homeowner. It is the responsibility of each party to inspect and replace their plumbing
in the pipe distribution system.

58

PWSA does not know how many lines on either end of the distribution system are still
lead. PWSA informed the auditors that they have no systematic listing or map of where lead
lines exist in the city. PWSA said they did inherit some old paper work records from the City
but after they examined them there were a number of issues with clarity and accuracy.

Finding: PWSA does not have a complete record of all main or service lines that contain
lead.

A website called Keystone Crossroads posted an article from March 2016 titled
?Utilities don?t know where lead pipes are, and water testing offers limited safety assurances.?
The article mentioned that PWSA does not survey the materials in their distribution systems
and quoted the old executive director who said ?We don?t have the exact number and location
of lead lines. We?ve never actually surveyed that?.

RECOMMENDATION NO. 44:

Eliminating lead in PWSA lines should be a top priority of administration
and board of directors. PWSA should devise a plan to inspect all lines they own to see which
ones are still containing lead. If lead lines are detected in the distribution system, PWSA
should plan to replace them as soon as possible.

The auditors noticed on website under the ?Lead Facts? section that PWSA
never mentions that their main lines could be a cause of lead entering drinking water. They
only give examples of customer service lines and household interior piping and ?xtures as a
source of lead in the water. This is not what the auditors were told at the beginning of this
audit.

On January 17, 2017, PWSA had an information meeting about lead in water for South
Side City customers. In the South Pittsburgh Reporter, the latest interim executive director
and the interim director of engineering and construction were quoted as assuring customers
that the City?s main water lines do not contain lead.

Again this in not what the auditors were originally told. This change of facts is a very

disturbing occurrence with the new administration of PWSA. No proof of this change of
information was offered, either to the auditors or public.

RECOMMENDATION NO. 45:
If PWSA is going to make the assertion that the City?s main water lines are free of

lead, then proof has to be given. Each area of the City?s main should be tested for lead and a
report released to the public.

59

RECOMMENDATION NO. 46:

Households concerned about their water lead level should have their water tested for
lead and have their houses and outside service line running from the house to the curb stop
box inspected by a plumber for lead piping and replaced.

A less expensive alternative to having lead lines replaced is to have a water ?lter
attached to your main water drinking and cooking faucet. Another alternative is having a
whole house ?lter. Either alternative can be expensive.

RECOMMENDATION NO. 47:

PWSA should work with a filtration company to offer discounted ?lters and ?ltration
systems to its customers. An RFP could be awarded guaranteeing a certain amount of
purchases. Also, an RF could be awarded to plumbing companies that are willing to offer
City water customers a discount in replacing a home service line. This way price guarantees
could be given to customers willing to spend money on removing lead from their lines.

Lead Regulations

In 1991, the Environmental Protection Agency established a corrosion control
treatment regulation called the Lead and Copper Rule to deal with these health safety issues.
This regulation requires water systems to control their water?s corrosive level, to collect tap
samples from homes that might contain lead and establish a maximum safe level of
permissible lead. All plans for control corrosion must be approved by the 
Department of Environmental Protection (PA DEP) so a permit can be issued.

The lead rule in Pittsburgh is enforced by the Allegheny County Health Department
(ACHD) who then reports all findings to PA DEP. In the past the ACHD and PA DEP
required PWSA to test a sample of 50 homes for lead every three years.

According to EPA regulations if lead levels in the sample collected exceeds 15 parts
per billion it is considered dangerous and corrective action must be taken. An action level
exceedance is not a violation but requires PWSA to make additional steps including:

Using additional corrosion control;

Educating consumers about reducing exposure to lead;

Replace lead service lines which are owned by the 
Additional distribution system source water quality monitoring; and
Source water monitoring/treatment.



6O

The 50 homes PWSA selects for the lead sample have to meet certain criteria required
by the PA DEP. PWSA has to select the sample of homes by different tiers. Tier 1 homes are
selected ?rst; they are single family structures that contain lead pipes, copper pipes with lead
solder installed after 1982 or pipes served by lead service lines. If PWSA cannot ?nd 50
homes to meet these requirements then Tier 2 sites are selected. Tier 2 sites are buildings or
multifamily residences with the same pipe requirements as Tier 1 sites. Tier 3 sites are
selected last if the first two tiers cannot complete the sample. Tier 3 sites are single family
structures that contain copper pipes with lead solder installed before 1983.

Corrosion Control Compliance Issues

In July 1995, the PA DEP approved a treatment plant corrosion control plan made by
PWSA and issued them a permit requiring the use of soda ash for corrosion control.

In April 2014, PWSA decided to switch from soda ash to caustic soda in the water
treatment process because of the higher cost of soda ash and an obsolete soda ash feeder.
PWSA never noti?ed the PA DEP of the change.

According to the Safe Drinking Water Act, it is ?unlawful for any person to construct,
operate, and substantially modify a community water system without ?rst receiving a permit
from the department?. On February 18, 2016, PWSA received a violation notice from the PA
DEP for not notifying them of this change.

The change from soda ash to caustic soda was unnecessary. According to the PA
DEP, soda ash contains carbonate that coats water lines making it more effective at preventing
lead and copper from leaching into the water. Both chemicals increase the alkalinity of the
water but caustic soda does not contain carbonate to coat water lines and relies on the natural
carbonates in the Allegheny River.

In January 2016 PWSA switched back to sodium carbonate (soda ash) from sodium

hydroxide (caustic soda) to increase the alkalinity of the water. This was what the original PA
DEP permit permitted.

Finding: PWSA violated the Safe Drinking Water Act by changing the type of corrosion
chemical used.

Finding: The PA DEP investigation is still in the preliminary stages and no ?ne has been
issued at this time.

However, the violation requires PWSA to take additional steps regarding lead issues.
According to the PA DEP administrative order, the following requirements are listed:

61

 PWSA will be required to complete two rounds of 100 lead and c0pper tests samples
instead of 50 samples every 3 years from 100 Tier 1 sites throughout the authority?s
distribution area; with the ?rst set of tests to be completed by June 30, with results to
PA DEP by July 10; and the second set by December 31, with results to PA DEP by
January 10, 2017.

0 Provide any sampling data PWSA collected since June 1, 2013 which covers the time
when the change to caustic soda was implemented.

0 DeveIOp a plan to investigate lead levels within its system, the effect of changes to
treatment methods for corrosion control, and recommendations for appropriate
changes to assure the best possible corrosion control measures for the system.

0 Outline in subsequent customer notices details of water sampling and analysis, and
updates on investigation of treatment change impacts.

0 Provide initial notice to all 300,000 customers about its prior change in corrosion
control chemicals and the measures it is undertaking to evaluate impacts.

Management Responsibility

PWSA was under contract with Veolia management services during the time the
switch was made from soda ash to caustic soda. The change was one of Veolia
recommendations to save PWSA money. Veolia did not inform PA DEP of the change nor
did they inform the board of directors at PWSA.

Veolia sold itself as a company familiar with the rules and regulations needed to
manage a community water system. The fact that they did not contact the PA DEP when
planning to change the corrosive chemical indicates a lack of knowledge in managing a water
system.

RECOMMENDATION NO. 48:

Action should be taken against Veolia as they were responsible for the change to
caustic soda. This management error of switching corrosive chemicals without informing PA
DEP or PWSA board of directors should have never occurred. If a fine is assessed to PWSA
because of this PA DEP corrosion control permit violation, Veolia should be the one held
responsible to pay it, not PWSA.

With input and insistence from the City Controller, PWSA, on October 12, 2016, filed
an arbitration law suit against Veolia. The Tribune Review reported that the lawsuit was for
?creating problems with faulty water meter, and a change in corrosive chemicals?.

62

PWSA Lead Testing Results for PA DEP

As a result of the PA DEP corrosion control permit violation, PWSA was required to
test 100 homes this round of testing. These tests were conducted by PWSA in July 2016.

The PA DEP is concerned with the 90th percentile household level of lead in all tap
water samples. This shows whether 10% of the sample was above the action level of 15 parts
per billion (ppb). The following table shows the lead tests results for PWSAs testing sample
in 2016.

 

 

 

 

 

 

 

 

TABLE 15
LEAD RESULTS IN HOMES
113134115 PERCENTAGE 

(in ppb) TESTED (A) 
No Detection 96%
50-75 4 4% 100%

TOTALS 100 100%

 

 

 

 

 

 

Source: PA Department of Environmental Protection (PA DEP)

The 90th percentile level of lead reported by the Department of
Environmental Protection in 2016 was 22 ppb. This is 7 above the action level of 15ppb
which is considered dangerous. This is what concerns PA DEP.

Finding: PWSA failed the lead water test during the July 2016 PA DEP required water
sampling of 100 homes.

Finding: In actuality, in the July 2016 PA DEP sample, there were a total of 17 or 17% of
homes that had levels of lead higher than 15 ppb. Four (4) homes had extremely high levels
between 50?75 ppb.

2013 Lead Test Result Comparison
Prior to violation, the PA DEP lead testing requirement was to do testing
every 3 years. The auditors looked back at the previous sample test results in 2013 and

compared them to the current 2016 sample.

63

In 2013, PWSA only had to test the standard requirement of 50 homes for lead while
100 homes were tested in 2016. The results of the 2013 sample show that 52% of the homes
had no detection for lead or trace-lead amounts below .5 compared to 45% in 2016. In
2013, 70% of the sample had lead levels below 3 while 70% of the sample was at or
below 4.6 in 2016. The PA DEP 90th percentile lead reading in 2013 was 14.7 ppb, which
is only .3 away from action level. This was also 7.3 lower than the 90th percentile
lead reading in 2016. There were 5 homes in 2013 that were over 15 compared to
17 in 2016.

The PA Department of Environmental Protection sampled testing in 2013 and 2016
shows that homes in the City Of Pittsburgh contain levels of lead in their tap water over 15
which is considered dangerous and levels seems to be getting worse over time.

Finding: Water samples taken in 2016 show that lead levels have increased since 2013. The
change in corrosive agent from April 2014 to January 2016 may be a cause.

PWSA Actions to Prevent Lead in Water

As stated previously a failed lead test is not a violation but requires PWSA to make
additional steps. PWSA is complying with the PA DEP requirements in several ways which
include: customer education efforts, free lead tests, and the Water Quality Initiative Program.

Customer Education Efforts

Beginning in early 2016, PWSA now sends a ?Facts About Lead? information sheet
that is included with all customers? bills. This information sheet gives facts about
drinking safe water, dangers of lead, and safety precautions customers can take if they are
concerned about their water lead level. Some of these precautions include only using cold
water for cooking and baby formula (lead dissolves easy in hot water), remove and clean
aerator screens, and letting your tap water run 30-60 seconds ?rst to flush out any lead build
up in your water from pipes.

The information sheet gives a PWSA lab telephone number that customers can call to
request their water he tested for lead. PWSA will send the customer a free lead test kit. All
this information is also posted on website. The PWSA website also gives up to date
results of the free household lead testing kits, PADEP lead testing results, as well as 
annual drinking water quality reports and service line replacement numbers to call.

Free Lead Tests

free lead test number is located in both the lead information sheet included
with your bill and on website. Originally when a customer requested a free lead kit,

64

PWSA would drop off 2 empty bottles of water and a lead testing survey to ?ll out. The
customer is supposed to ?ll one sample bottle after water has remained stagnant for close to 8
hours. Letting the water remain stagnant for 8 hours should let any lead in the pipes leach into

the water.

The second sample should be taken 10 minutes later without turning off the water to
?ush out any lead contaminated water. PWSA would then pick up the sample when noti?ed
by the customer. All samples are sent to a private company named Environmental Services
Laboratory for testing so there is no con?ict of interest. Results are sent back to PWSA who
will then contact the customers and advise them on what options to take based on their homes
lead test results. The following table shows the results of the homeowners who participated in
the free lead tests from February 15 to June 6, 2016.

 

 

 

 

 

 

TABLE 16
FREE LEAD TEST KIT
RESULTS IN HOMES
LEAD LEVEL of CUMULATIVE
DETECTED HOMES PERCEXFAGE PERCENTAGE
(in ppb) TESTED 
No Detection 226 57% 57%

1 to 5 72 18% 75%
5.1-9.9 52 13% 88%
10?149 26 7% 95%

At or above 15 20 5% 100%
TOTALS 396 100.0%

 

 

 

 

 

 

Source: PWSA Excel Spreadsheet

The results of the free lead test sample shows that more than half of the homes
tested had no trace of lead in their water. However, 12% of the homes tested had a reading at
or above 10 and 20 of the homes tested had a reading at or over 15 which is
considered dangerous and action should be taken.

Fourteen (14) of the homes at this dangerous level had a reading that fell between 15-
25 ppb. The other six homes had extremely high traces of lead in their water. These Six
homes and corresponding neighborhoods were: Squirrel Hill 32.8 ppb, Perry North 37.8 ppb,
Brighton Heights 39 ppb, Highland Park 43ppb, Perry North 44ppb, and Southside 88ppb.

The current practice is to call they in turn will contact Environmental Services

Laboratory to mail the customer the bottles to collect the sample. The packet includes
directions on how to collect the sample and materials to mail the sample back to ESL.

65

Lead Testing Results by Neighborhoods

Every free test result in the database received by the auditors had the corresponding
address of the home that was tested. The auditors took the addresses and identi?ed which
neighborhood they were located in by using a City neighborhood map. The purpose was to
see if there was any relationship between the lead readings and the neighborhoods or streets
they are located on. After reviewing the data, the auditors found no correlation between
high or low readings and neighborhoods or streets. Some homes had no detection of lead
while homes on the same street, couple of streets over, or in the same area had a level of
detection.

For example, 3 homes located on McClure Avenue in the Brighton Heights section of
Pittsburgh had different lead readings. Two of the homes were almost right across the street
from each other. One home had a lead reading of 5.9ppb and the other 39ppb. The third home
a couple of blocks down had no detection for lead. Two other homes on nearby streets named
Shadeland Avenue and Cabronne Street had no detection for lead.

Finding: The free lead test sample shows the complexity of PWSA solving the lead in the
water problem; numbers greatly vary on the same street and within the same neighborhood.

Status of the Free Lead Tests

The free lead tests were originally supposed to expire after a few months but now
PWSA has extended the offer to their customers with no expiration date. PWSA currently has
680 more customers who have requested the free lead tests bring the total to 1,076 requests.
The results of these 680 homes have not been released.

The 1,076 total requests is a marginal number compared to the 70,470 residential
accounts PWSA has with city. Without more volunteers, it is hard to get an accurate picture
on how bad the lead problem is in the city. The auditors also found that 38% out of the 396
lead test results came from the neighborhoods of Squirrel Hill, Highland Park, and Point
Breeze. More customers from other neighborhoods should be requesting the lead test kits. A
home in South Side neighborhood had the highest reading in the sample at 88 but only 8
homes in South Side requested a free lead test kit.

RECOMMENDATION NO. 49:
PWSA needs a better approach at promoting the free lead tests and to educate
customers on the dangers of the lead in water. The only way to get an accurate picture of the

lead levels in Pittsburgh is to encourage every PWSA customer in the City to have their lines
tested.

66

It was reported in the Tribune Review article titled ?Pittsburgh Water Customers
Frustrated by Long Waits for Lead Tests? on February 7, 2017 that residents were not
receiving the free lead tests in a timely manner. According to the Tribune Review, customers
reported that months had gone by and the testing kits weren?t being received. PWSA
estimated that customers should receive results in 3 to 3.5 weeks? time after the lab receives
the sample. ?Of the 3,057 water samples that PWSA customers sent to be tested for lead last
year, more than half [1,612 samples] took longer than a month to get results, according to
authority data the Pittsburgh Tribune Review obtained through a right to know law request?,
according to the article.

Water Quality Initiative Program

In May 2016, PWSA outlined a Water Quality Initiative Program. The program
consists of 8 goals and each month an update on each goal is posted on their website. Some
of the objectives were already discussed early in the audit such as continuing to offer the free
lead testing kit program, customer education efforts, and complying with PA DEP lead testing
requirement of 100 household water tap lead samples twice in 2016.

The other 5 objectives are the following:

PWSA is developing a Water Quality Advisory Committee to advise them with their
water quality initiatives and lead focused policies. The committee will consist of
groups from ACHD, DEP, board representatives, plumbing and academic experts, etc.
Orientation for the board is in August 2016.

0 Performing pipe loop studies which is when chemicals are ?ushed through lead pipes
for a period of time to see which ones might be effective in distribution
system. This program was approved and will begin in September 2016.

0 Trying to determine lead service lines by having interns looking at old paper records
and maps inherited from the city.

0 Started a pilot program in Upper Lawrenceville to identify and replace lead service
lines. PWSA is digging up streets and replacing lines if they are identified as lead.
PWSA will notify customers if there end of pipe ownership is lead and give customers
the option to have it replaced by PWSA. Customer will have to pay for the service line
replacement but this alternative is a lot cheaper while trenches are already dug. PWSA
will also rebury the lines.

0 One senior manager was responsible for both water plant operations and water quality.
These 2 responsibilities are being Split into 2 different positions. Positions are posted
for recruitment as of August 2016 for a Deputy Director of Water Production and
Chief Water Quality Of?cer.

67

PWSA Asset Management Problems

Currently, PWSA uses a Geographic Information System (GIS) mapping software to
document water and sewer line repairs/ replacements and their locations throughout the City.
In this GIS system, the data is only available beginning with 2011. Prior to 2011, large paper
maps were used to look up streets and track water and sewer lines.

A Computerized Maintenance Management System (CMMS) is a software system that
tracks and documents water and sewer line repairs, new installations, locations within streets
and sidewalks and size of pipes installed. It keeps track of all the physical assets or
infrastructure, assists in planning and scheduling maintenance and evaluates the state of the
assets.

PWSA approved the purchase of a business management system also known as
Enterprise Resource Planning (ERP) software from Cogsdale Corporation in February of 2010
costing upwards of $2.7 million. The package purchased was expected to support ?nances,
administration, customer service, and sewer operations. According to an independent audit
conducted by Maher Duessel for the City of Pittsburgh, found that implementation of this
software from 2010-2013 was done in several steps:

0 January 2012- Financial Module went live
0 2012-2013- Customer Service Module (CSM) implementation was ongoing
and went live in 2014.

The last discussion found by auditors about the ERP software was in 2013 by a PWSA
board member. According to this PWSA board member, ?The system is only partially online
three years after PWSA approved buying it?. This is due to inef?ciency in the system. One of
the inef?ciencies of the Cogsdale software is a lack of a Computerized Maintenance
Management System (CMMS).

In 2011, the City and Allegheny County purchased a joint license for a JD Edwards
(J DE) ERP system. By the City being a co?licensee, the City's component units (authorities)
would be able to join the City's system at a far lower cost than if the authority would purchase
an ERP system on their own. This option was presented to PWSA, however, they decided to
go in another direction, despite the cost savings from the already purchased software.

PWSA administration stated that the business management system purchased through
Cogsdale is not compatible with the JD Edwards system shared by the City and Allegheny
County. Instead of all public works projects being coordinated under one system (CMMS),
two systems are being used, causing excess spending on licensing and information technology
assistance. Ideally, PWSA would like a CMMS that was compatible with the City and
County?s JD Edwards system, allowing the coordination of public works projects. For
example, if outdated water and sewer lines could be replaced before a street is repaved, that
would save the City time and money. A CMMS would allow DPW to do this with the
collaboration and coordination of these projects.

68

Finding: As of the end of August 2016, the authority does not have a CMMS.

It should be noted that PWSA awarded a $1 million contract for a CMMS in February
2016 (one month before the interim director arrived), but the new interim director and
managers concluded that insufficient planning work for its successful implementation
emerged. As a result, a notice to proceed to that vendor was not given.

management is currently researching CMMS options available. One option
being explored is a module in the COGSDALE system that is similar to a CMMS.

RECOMMENDATION NO. 50:

PWSA needs a CMMS to improve their asset management capabilities and accuracy.

Negley Run Watershed and the Washington Boulevard Flooding

A watershed is an area or ridge of land that separates waters ?owing to different
rivers, basins, or seas. The Negley Run Watershed consists of approximately 3,550 acres of
land in several eastern neighborhoods in the City and surrounding towns that currently drains
into two trunk sewer lines under Washington Boulevard. As combination type sewers, these
pipes carry both sanitary and storm water.

With the increase of development in the area that makes up the watershed and the
elimination of impervious ground, additional water is ?owing into the Washington Boulevard
area during wet weather. However, the capacity of the sewers under Washington Boulevard
have not been able to handle this amount of water, resulting in severe ?ash ?ooding which
resulted in the death of four people in August 201 1.

As a result of the ?ooding, in 2012 PWSA hired MS Consultants to study various
options to address the ?ooding on Washington Boulevard. The ?rst and second pictures are
from the MS Consulting ?Final Report for Negley Run Watershed/Washington Boulevard?.
The third picture is from WPXI in 201 1; it shows the ?ooding of Washington Boulevard.

Figure 4 on the following page shows the area the Watershed covers. It covers not
only Pittsburgh but parts of Penn Hills and Wilkinsburg.

69

Figure 4
Negley Run Watershed



PENN mus:
at.





owl-?l

PITTSBU - GH 

14
{45535.

 

Source: MS Consulting ?Final Report for Ne gley Run Watershed/Washington
Boulevard?
Figure 5 shows the water covering Washington Boulevard and cars.

Figure 5
Flooded Washington Boulevard

 

Source: WPXI

70

Options explored in the report by MS Consultants can be found in Table 13. These
options provide various levels of protection against ?ooding and related potential future
issues. The involvement of various agencies, including but not limited to ALCOSAN, US.
Army Corps of Engineers, PA Department of Environmental Protections, Allegheny County
Health Department, PA Department of Transportation, and the US. Coast Guard. MS
Consultants included recommendations for various combinations of these alternatives to

address the ?ooding issues.

TABLE 17
OPTIONS OF ALTERNATIVES TO MITIGATE FLOODING

OF WASHINGTON BOULEVARD

 

2012 MS REPORT

 

 

 

 

 

 

 

 

 

ALTERNATIVE TYPE OF IMPROVEMENT 
Raise Washington Boulevard 4 ft. Raise Washington Boulevard $1,841,712
Raise Washington Boulevard 6 ft Raise Washington Boulevard $2,262,124
Raise Washington Boulevard 8 ft Raise Washington Boulevard $2,780,502
Raise Washington Boulevard 10 ft Raise Washington Boulevard $3,367,139
Raise Washington Boulevard 12 ft Raise Washington Boulevard $4,014,776
Two direct outfall of sewer into Drainage system improvement by $2,153,971
Allegheny River, abandon existing outfall to Allegheny River
line
Two direct outfall of sewer into Drainage system improvement by $2,245,471
Allegheny River, maintain outfall to Allegheny River
existing line
One direct outfall to the Allegheny Drainage system improvement by $1,678,171

River upstream of dam

increasing hydraulic capacity

 

Parallel pipe with new outfall
of dam

Drainage system improvement by
increasing hydraulic capacity

$15,103,600

 

 

 

 

 

Direct discharge to Allegheny Drainage system improvement by direct $19,341,636
River by recreating historical discharge

culvert under Allegheny River



Pipe lining of Drainage system improvement by $3,180,052
Highland Ave of brick sewers and improving existing hydraulic

modifying gates and weirs characteristics

obstructions

Exchange 90 degree bends in Drainage system improvement by $2,403,095
pipes for 45 degree bends in improving existing hydraulic

existing system characteristics

Bending weirs at A-42 diversion Drainage system improvement by $5 66,750

structure to collapse above
over?ow elevation

 

improving existing hydraulic
characteristics

 

 

71

 

TABLE 17 (continued)
OPTIONS OF ALTERNATIVES TO MITIGATE FLOODING

OF WASHINGTON BOULEVARD
2012 MS REPORT

 

 

 

 

 

 

 

 

Alternative Type of Improvement Est?lzsatted
132? express sewer from Negley Drainage system improvement with $16,336,105
Run express sewer
Bioretention (rain garden) Watershed and basin improvements $10-$35 per
with runoff reduction square foot
Downspout disconnection from Watershed and basin improvements -
storm sewer system (can be with runoff reduction
improved with bioretention
system)
Emergency detention basin along Watershed and basin improvements $10,000 for
Washington through water detention above ground
facilities,
$3 00,00 for
below ground
Upstream surface storage of storm Watershed and basin improvements Variable
water through upstream storage
Upstream underground storage of Watershed and basin improvements Variable;
storm water through upstream storage greater than
surface cost

 

 

 

Source: MS Consulting?s Report

Washington Boulevard Flood Gates

After the death of four people as a result of ?ooding, installed a system of
gates at Washington and Allegheny River boulevards, Washington and Negley Run
boulevards and Washington and Highland Drive in October 2011. These gates were designed
to drop and prevent cars from entering the area once sensors detect standing water greater than
four inches. Warning signs were also installed in the area. The system cost approximately
$400,000 to install.

One of arms of the gates on Washington Boulevard was damaged in July 2016 after
being hit by a vehicle. This gate was not repaired or functioning during another severe storm
in August 2016, which again caused the area to ?ood and become dangerous to cars. Two
cars were temporarily stranded in the water. Police cars were dispatched to block the roads
after ?ooding became apparent.

The broken gate was not repaired as the ownership and maintenance responsibilities
had not been defined between the City and the State. The State intended to transfer ownership
and maintenance responsibility to the City in May 2013. However, the City did not

72

 

acknowledge the transfer at that time and gate repairs and malfunctions were not addressed.
After these issues became public in August 2016, the City stated their intention to take over
maintenance of the Washington Boulevard ?ood gates

Finding: Despite spending money on the MS Consulting report about suggestions to correct
the ?ooding issue at Washington Boulevard, PWSA has no plans to act on its recon?guration.

The City of Pittsburgh has agreed to maintain and repair gates that stop cars from
entering the under pass at Washington?s Boulevard.

Cost of Emergency vs. Contract Repairs

The auditors were told that emergency repairs cost a lot more than a prOperly bid out
schedule of repairs. A list of the last 2 years repairs, both contracted and emergency, and the
cost of the repair was requested from the interim director of engineering and construction.
While the interim director acknowledged that the information was available it never was
delivered to the auditors.

Finding: PWSA is unable to supply documentation about the cost of emergency repairs vs
contracted repairs. While common sense dictates that properly bid out repairs should cost less
than emergency repairs, data should be available to substantiate the claim.

RECOMMENDATION NO. 51:

PWSA needs to establish a realistic comprehensive line replacement plan of action for
both water and sewer lines. A map needs to be made where the most recent emergency
repairs have been needed in order to determine a pattern of failure and with that determination
plans for future line replacements.

Cooperation with the City Department of Public Works Permit Division

Conversations with PWSA administrators stated that PWSA is the last to be informed
of major street development and plans that get the approval of the City?s Department of Public
Works Permit Division.

Finding: In fact it was noted that a major construction job in Oakland took place and by the
time PWSA was asked to review the plans the job was already completed. In this particular
instance the water lines were located extremely close to new electrical lines. Despite this
safety hazard PWSA was helpless to make the contractor change the design because the City?s
Department of Public Works Permit Division had already approved the plans.

73

RECOMMENDATION NO. 52:

PWSA and the City of Pittsburgh?s administration must work together to approve new
development projects. Between the PWSA board of directors and City council the process
must be changed to require input from engineers on all blueprints. PWSA might
consider scheduling an engineer to review new plans once or twice a week at the City?s
Permits counter.

40-Year Plan

An RFP was released by PWSA in June 2010 for the creation of a ?40-Year Capital
Plan and Water and Sewer Master Plan?. The contract was awarded to Chester Engineers.
The plan was completed in 2011 and was revised in 2012. This plan is a guide for the capital
improvements that PWSA will need to complete over the next 40 years along with estimates
for the ?nancial resources needed to complete the projects.

The plan is comprised of smaller 5-year Capital Improvement Program plans that
address repair and replacement needs of both water and sewer lines. An inventory of PWSA
assets was compiled for the report and included the age, type, and general condition of PWSA
facilities.

The plan notes that ?a signi?cant percentage of the water mains in the PWSA system
are more than 70-years of age, a generally accepted estimate of the useful life for cast iron
mains?. In other words most of water lines are at the end of their useful life. Aging
infrastructure makes the system more susceptible to failures which increases repair costs.

Table 18 breaks down the costs to replace PWSA infrastructure. As per the 40-Year
Plan report, these costs are based on 2011 construction costs. A copy of these costs from
the report can be found in the Appendix.

TABLE 18

 

 

 

 

 

 

 

 

INFRASTRUCTURE REPLACEMENT
ITEM COST

Existing Waterlines $627,042,000
Fire Hydrants and valves $84,368,000
Water Treatment Pumping And $539,061,000
Storage Facilities

Sewer System $1,264,877,000
TOTAL $2,515,348,000

 

 

Source: PWSA 40-Year Plan

74

During a meeting with PWSA staff, the auditors were told that the 40-Year Plan does
not serve as an actual plan for decisions that are made by PWSA. The staff stated that the
plan was more like a ?wish list?.

Finding: The 40-Year Plan report is not being used by PWSA.

Finding: In order to replace entire infrastructure it will cost a minimum of 2.5
billion dollars and much more at 2017 construction costs.

It is no wonder the staff believes that the 40-Year Plan is a wish list. The thought of
raising over 2.5 billion dollars for infrastructure replacement is daunting. The reality is that
some of the work has already been completed because PWSA is always doing ?emergency
repairs?. Poor record keeping as to when and what is ?xed makes the overall picture hard to
gauge.

Finding: Some infrastructure work has been completed over the years but PWSA lacks
documentation to show when, where and what has been ?xed.

RECOMMENDATION NO. 53:

As stated in Recommendation No. 45, PWSA needs a Computerized Maintenance
Management System (CMMS) to improve their asset management capabilities and accuracy.
If the manpower and training is not available for this type of system then PWSA needs to
implement some form of comprehensive asset management system. PWSA administration
needs to make this a top priority.

75

Appendix A

Agreement for Interim Management Services between PWSA and Veolia Water

2014 Agreement between Veolia Water North America-Northeast, LLC and PWSA

AGREEMENT FOR INTERIM MANAGEMENT SERVICES

AGREEMENT FOR INTERIM MANAGEMENT SERVICES ("Agreement") is
made this 13 day of November, 2014 by and between The Pittsburgh Water and Sewer Authority, a
body corporate and politic organized and existing under the laws of the Commonwealth of 
having its principal place of business at Penn-Liberty Plaza 1, 1200 Penn Avenue, Pittsburgh,
15222 (the ?Authority?), and

Veolia Water North America?Northeast, LLC, a limited liability corporation organized and existing
under the laws of Delaware, having a place of business at 53 State Street, 14th Floor, Boston MA 02109
("Veolia").

REC ITALS 

A. The Authority and Veolia (collectively, the ?Parties") were parties to an
Agreement for Interim Management Services dated July 12, 2012, pursuant to which Veolia provided the
Authority with interim management and consulting services including executive management services,
general administration and management consulting services, and ?nancial and infrastructure management
consulting services (the ?2012 Agreement?).

B. During the term of the 2012 Agreement, Veolia pursued and the Authority
approved many of the early objectives and projects contemplated by the 2012 Agreement and, in order to
continue and expand upon those initiatives, the Parties entered into a second Agreement for interim
Management Services having a term from July 15, 2013, through December 31, 2014 (the "2013
Agreement").

C. As under the 2012 Agreement, under the 2013 Agreement, Veolia was to provide
and is providing executive management services, general administration and management consulting
services, and financial and infrastructure management consulting services to the Authority.

D. In addition to those services contemplated by the 2013 Agreement, the Authority
wishes Veolia to assist the Authority with the recruitment and hiring of management personnel, and to
assist with the training and deveIOpment of the new directors and managers so as to assure continuity and
stability of the Authority?s management upon the expiration of this Agreement.

The Authority desires to engage Veolia upon the terms and conditions hereinafter
set forth, and Veolia is willing to accept the engagement upon such terms and conditions.

NOW, THEREFORE, in consideration of the mutual premises set forth below and
intending to be legally bound hereby, the Parties agree as follows:

ARTICLE BETWEEN THE PARTIES

As of the Effective Date (defined below) of this Agreement, the 2013 Agreement is
terminated and, except as Speci?cally provided for herein, all obligations of the Parties thereunder shall
cease.

ARTICLE 2 -- SCOPE OF SERVICES

Operating. The Authority hereby engages Veolia as an independent contractor
to continue to perform the services set forth in its Technical Proposal dated May 4, 2012 (the ?Technical
Proposal"), which is incorporated herein by reference, inciuding those services outlined and described as
the Veolia Water Recommended Approach. The Parties understand that Veolia has completed the initial
evaluation, analysis, and planning services contemplated by the Technical Proposal, and agree that Veolia
shall continue to pursue and implement projects and processes identi?ed and/or approved during the term
of the 2013 Agreement and not yet fully implemented. Further, the Parties understand and agree that
Veolia shall continue to use the same collaborative approach in identifying, analyzing, developing, and
implementing other improvements to the Authority?s operations during the Term of this Agreement. Those
services contemplated by the Technical Proposal, as revised by this Section shall hereinafter be
referred to as the "Services." Veolia hereby agrees to perform the Services upon the temls and conditions
hereinafter set forth. Veolia shall furnish all necessary management, supervision, and personnel as may
be necessary to provide the Services. The Services shall include collaboration with and assistance to
Authority personnel, and shall include:

2.1.1 the services of a full time, on site, interim executive director, described as an
Interim Executive Manager in the Technical Proposal ("interim Executive Director"). The
responsibilities and authority of. the Interim Executive Director are more particulariy described on
Exhibit A attached hereto and incorporated herein;

2.1.2 the services of a full time, on site, interim ?nance director ("interim Finance
Director");

2.1.3 the services of a full time, on site, interim Chief Operating Officer (?Interim Chief
Operating Officer");

2.1.4 the consulting services described on Exhibit attached hereto and incorporated
herein as de?ned and described in the Technical Proposal; and .

2.1.5 the ef?cient and effective management of the Authority?s operations, including
but not limited to, surface restorations following repair or replacement of the Authority's water,
sewer, or stormwater facilities; and the cleaning and repair of the Authority?s catch basins and
other stormwater intakes.

2.i.6 In the event of any disparity between the Technical Proposal and the Exhibits, the
provisions of the Exhibits shall control.

2.2 Personnel.

2.2.1 The Parties agree that Jim Good has particular quali?cations to perform the
Services of Interim Executive Director and Joey Tolbert has particuiar qualifications to perform
the services of Interim Finance Director. Commencing as of the Effective Date and through the
transition following the hire of permanent employees, as provided in Section 2.3 below, Mr.
Good and Mr. Tolbert shall not be removed or reassigned without the prior written approval of
the Authority.

2.2.2 The Parties agree that the position of Interim Chief Operating Of?cer will be
filled by a Veolia empioyee reasonably satisfactory to the Authority. Subject to the Authority?s
approval, Veolia will exercise reasonable efforts to retain the same individual in the position of

Interim Chief Operating Of?cer from the Effective Date through the transition addressed in Section
2.3 below.

2.2.3 At the request ofthe Authority, acting reasonably, personnel supplied byVeolia deemed
bythe Authority to be unquali?ed orotherwise objectionable due to performance or other reasons shall be
excluded from performing the Services. Provided, however, that prior to any such request for
exclusion, the Authority shall seek to address any issues that it has with Veolia personnel pursuant to the


2.2.4 The Interim Executive Director may assign Authority personnel as necessary and
appropriate to assist in the evaluation and implementation Services described in the Technicai Proposal
and in Exhibit B. The Authority wiil support the involvement of its division directors and other staff in
workshops, for the supply of data, to integrate with Veolia personnel in identifying and
implementing initiatives, and to otherwise support the Services provided by Veolia.

2.3 Executive Recruitment and Transition Services. Commencing with the Effective
Date and continuing as necessary throughout the Term (de?ned below), Veolia shall provide the Authority
with executive recruitment and transition services, as follows:

2.3.1 Veolia shall recruit, research, assess, interview, and present to the Authority Board
for consideration candidates for the positions of Finance Director and Chief Operating Of?cer. With
the prior approvai of the Steering Committee and the Authority Board of Directors, the Authority 
retain one or more executive recruiting ?rms as necessary and appropriate to the search.

2.3.2 The Interim Finance Director and the interim Chief Operating Of?cer shall
provide services reiated to the orientation and training of his successor Finance Director and Chief
Operating Of?cer. Those services shall commence on the day the successor Finance Director or
Chief Operating Of?cercornmences employment and shail continue for 60 calendar days thereafter unless
the Parties mutuaily agree to aperiod of different duration.

2.3.3 Veolia shall provide such assistance as the Authority Board may reasonably request
in the recruitment of an Executive Director.

2.3.4 The Interim Executive Director shall provide services related to the orientation and
training of his successor Executive Director. The services shall commence on the day the successor
Executive Director commences employment and shall continue for ninety (90) days or the Parties may
mutuaily agree to aperiod of different duration.

2.4 Steering Committee. The Services shall be performed under the general
supervision of a Steering Committee, which shall meet or otherwise confer upon such frequency as the majority
of those serving on the Steering Committee may determine. The Authority shall have the right to appoint three (3)
representatives to the Steering Committee, who shall serve at the pleasure of the Authority. As of the Effective
Date, the Authority's designees to the Steering Committee are Alex W. Thomson, Paul Leger, and Caren
Giotfelty; and Veolia?s designees to the Steering Committee are Keavin Nelson and Rob Nicholas. Shouid any
member of the Steering Committee be unable to serve on the Committee for any reason, the Party designating
that person shall designate his or her replacement. Meetings of the Steering Committee may be in-person or
through electronic means such as teiephone or intemet conferencing.

2.5 Reporting. The Interim Executive Director shall maintain detailed records on
actions taken and planned on behalf of the Authority and shall submit reports to the Steering Committee
on a weekly basis, or on such other frequency as the Steering Committee shall reasonably determine.
The Interim Executive Director shall report to the Steering Committee on progress toward the Authority?s
objectives as established by the Steering Committee and the Authority?s Board. The Interim Executive
Director, the Interim Finance Director, other of Veolia?s representatives, and Authority staff as directed or
requested, shall attend such meetings of the Steering Committee or the Authority's Board as the Authority
may reasonably request.

2.6 Con?ict of Interest. Veolia represents that it presently has no con?icting
interest, agreements, or obligations and reasonably expects none to occur. During the Term of this
Agreement, Veolia agrees not to engage in any activities that may reasonably be expected to con?ict with
the Services to be provided hereunder without the Authority?s prior written consent.

2.7 Limitations on Scope of Services. Notwithstanding Veolia's agreement to
provide the services of an Interim Executive Director and other personnel as part of the Services, the
Authority will at all times be ultimately responsible for the operation and maintenance of its facilities,
including each of the following:

2.7.1 Ultimate- responsibility for compliance with all applicable pemlits,
authorizations, consent decrees, regulations, and all other applicable laws at the facilities,
including without limitation environmental, employment, health and safety, and other legal
requirements;

2.7.2 Operations, maintenance, and capital improvements related to the facilities;

2.7.3 Purchase of equipment, supplies, chemicals, utilities, and any other costs
associated with the operation, maintenance, or capital improvements of its facilities;

2.7.4 Ultimate for all PWSA employees and subcontractors and direct
management of union employees; and

2.7.5 Employment of all Operations and maintenance staff and other
employees at the Authority's facilities other than the Veolia employees, agents and
subcontractors.

2.8 Contract for Consulting Services. Prior to the end of the Term and any Additional
Term or Terms, the Authority and Veolia may negotiate a contract for on-going consulting services by
Veolia.

ARTICLES- TERM

This Agreement is effective as of January 1, 2015, and, unless earlier terminated in
accordance with the provisions hereof, shail continue in effect through December 31, 2015 (the Term?).
The Agreement shall be automatically extended for two (2) additional six (6) month temls ("Additional
unless the Authority terminates at the end of the then-current Term or Additional Term by
giving at least ninety (90) days' notice of termination to Veolia.

ARTICLE 4 COMPENSATION

4.1 Base Compensation. For the performance of the Services, the Authority will
pay Veolia a Base Compensation of 

4.1.1 One hundred twenty thousand dollars per month, which shall
include costs and expenses, for the months of January 2015 through June 2015.

4.1.2 In July 2015 and continuing through December 2015, this Base Compensation
shall be reduced to one hundred thousand dollars per month. Provided, however,
that if Veolia has presented the Authority with three (3) or more quali?ed candidates for the
positions of Finance Director and Chief Operating Of?cer and the Authority has declined to hire
these candidates, then Veolia?s Base Compensation shall continue at one~hundred twenty
per month untii a Finance Director and Chief Operating Of?cer are hired. The
Parties shall resolve any dispute about the quali?cations and suitability of candidates presented
by Veolia pursuant to the procedures set forth in Sections 21.1 through 21.3.

4.1.3 During the ?rst Additional Term, should there be one, Veolia?s Base
Compensation shall be seventy-?ve thousand doilars per month, which shall include
costs and expenses.

4.1.4 During the second Additional Term, should there be one, Veolia's Base
Compensation shalt be ?fty thousand dollars per month, which shall inciude costs
and expenses.

4.2 Performance Compensation. In addition to the Base Compensation, Veolia
may earn performance compensation, as follows:

4.2.1 Key Performance Indicators (KPis)

4.2.1.1 Veolia and the Authority will work together to develop
and to implement a maximum of four (4) acceptable to the Board. The will
be deveIOped through workshops and added as agreed by Veolia and the Authority.
Compensation for all implemented through the Term of this Agreement wili not exceed
four hundred thousand dollars and for each Additional Term, if any, shall not
exceed two hundred and ?fty thousand dollars.

4.2.1.2 Each KPI will have a well-de?ned and measurable
objective against which achievement may be measured. KPl?s may be multi~focused, sliding
scale, and/or subdivided into more than one initiative, as was the practice with those KPl's
approved and implemented during the term of the 2012 Agreement and the 2013 Agreement.

4.2.1.3 The Authority and Veolia will reach a ?nal decision on
the KPIs to be implemented and the objectives and milestones to be achieved no later than March
15, 2015.

4.2.2 Improvement Initiatives

4.2.2.1 Veolia and the Authority will work jointly to evaluate
opportunities for efficiencies, and where potential improvements are identi?ed they will submit
business case reports to the Steering Committee for approval on an ongoing basis (the
?Recommended Initiatives?). Each business case will outline how savings are measured for that
particular Recommended Initiative metering of utility usage, measurement of reduced
chemical consumption, etc.).

4.2.2.2 Those Recommended initiatives that are approved by the
Steering Committee will be presented to the Board for formal approval. Once presented, the
Board will consider each Recommended Initiative and will either approve, reject, or modify such
Recommended initiative within 30 days. For each Recommended Initiative that is approved,
Veolia will work with the Authority to implement it.

4.2.2.3 Subject to Section 4.2.2.5 below, Veolia and the
Authority will share equally in the savings achieved from Recommended Initiatives approved, or
identified and in the process of. approval, during the term of the 2012 Agreement and the 2013
Agreement, however and whenever implemented, during the Term of the 2012 Agreement and
tlrrough June 2016.

4.2.2.4 Savings achieved from Recommended Initiatives
identified and approved during the Term of this Agreement shall be paid sixty percent to
the Authority and folly percent to Veolia over a period to be determined, for each
Recommended Initiative, by the Steering Committee and approved by the Authority Board, not to
exceed two (2) years from the Effective Date of this Agreement.

4.2.2.5 Shared savings will be determined and paid in
accordance with the procedures set forth in Exhibit B. Provided, however, that Veolia's total
compensation attributable to approved Recommended Initiatives in 2015 shall not exceed three
million five hundred thousand dollars, and its total compensation attributable to
approved Recommended initiatives during 2016 shall not exceed two million ?ve hundred
thousand dollars. After January 1, 2017, all savings will inure solely to the bene?t
of the Authority During the time period in which Veolia is sharing in savings, in consideration for
the compensation received Veolia will at its own expense conduct an annual review of all
implemented Recommended initiatives to confimlthe savings and operational status of each.
Veolia will submit a report to the Authority Board of Directors summarizing the status of each
effort along with any recommendations that may be considered in order to ensure or enhance
the sustainability of each.

4.2.2.6 Though Veolia and the Authority may continue to identify
Recommended Initiatives throughout the Term and any Additional Tern or Terms, in January
2015 Veolia will present a consolidated report of Recommended initiatives that have been
presented, are at that time before the Board, or are in the process of being developed and
expected to come before the Board.

4.2.2.7 Both Veolia and the Authority agree that reorganization
or restructuring plans that affect headcount may be presented for Board consideration, but such
plans and the cost savings associated with the plans shall not be considered as Recommended
initiatives. However, Veolia and the Authority may elect to include the preparation of such
reorganization or restructuring plans as a KPI under Section 4.2.1.

4.3 Audit. Upon request, the Authority shall provide such access to its facilities and
books and records, and those of its subcontractors or subconsultants, as Veolia may require for inspection
and/0r audit purposes to substantiate savings from and other shared savings from improvements
implemented pursuant to this Agreement for a period of two (2) years following the expiration or
termination of this Agreement.

4.4 Additional Services. Should the Authority desire additional services, over and
above those Services detailed in Article 2 and the Exhibits to this Agreement, those additional services
shall be engaged and charged on a mutually agreeable and negotiated basis. No additional services shall
be undertaken by Veolia without a written agreement or amendment duly executed by the Authority.

4.5 No Withholding. All sums of money paid to Veolia pursuant to this Agreement
shall be paid without deduction or withholding of federal or state payroll or employment taxes of any kind
or nature including but not limited to, income taxes, social security taxes, unemployment insurance taxes,
disability insurance taxes and similar items, and shall be evidenced by one or more Forms i099 issued by
the Authority to Veolia in accordance with applicable law.

4.6 Invoicing and Payment.

4.6.1 Base Compensation and Related Charges

Veolia will prepare and submit an invoice for the Base Compensation and for any other
agreed charges payable by the Authority on a basis throughout the Term and any
Additional Term or Terms. Invoices shall be approved by the Steering Committee and paid by the
Authority on a net?30 basis.

4.6.2 Performance Compensation

4.6.2.1 Because the temporal sc0pe and the means of
determining success may vary with each KPI, compensation based on K.Pls shall be
calculated and paid on such a timetable and in such a manner as indicated in each
approved 

4.6.2.2 Compensation based on shared savings from
implementation of Recommended Initiatives shall be calculated and paid based on
actual net savings as data is available, and shall be subject to reconciliation on an annual
basis during the shared savings time period.

4.6.2.3 For the purposes of this Agreement, "net savings" shall
be determined as follows:

In any instance where the implementation of a
Recommended Initiative requires the creation of a capital asset, the net savings shall be
calculated as follows: gross savings minus debt service costs. Debt service costs shall be
calculated for the total project cost, including costs related to direct engineering,
procurement, and installation of the improvement (the "Project Cost"), of each capital
asset based on a level debt service assumption for a term equivalent to the period of
probable usefulness of the asset ?nanced.

in any instance where the implementation of a
Recommended Initiative requires the purchase of equipment that must be expensed as
such expense is incurred, net savings shall mean the gross savings minus the
equipment expense.

In any instance where the implementation of a
Recommended Initiative requires additional life-cycle or additional ongoing 
costs, net savings shall mean the gross savings minus the annual average of any
projected associated additional life-cycle or additional ongoing costs.

ARTICLE 5 RELATIONSHIP OF PARTIES

5.1 Independent Contractor. It is understood by the Parties that Veolia is an
independent contractor and is retained by the Authority only for the purposes and to the extent set forth in this
Agreement. Veolia is to be considered the agent of the Authority only as contemplated by the scope of
Services set forth in Exhibit A. Veolia is not authorized to bind the Authority in any manner or to incur
any obligation, expenditure or liability on behalf of or against the Authority, or to make any
representation or warranty on behalf of the Authority, without the prior authorization of the Steering
Committee and, where appropriate, the Authority's Board of Directors.

5.2 No Bene?ts. Veolia, its employees and agents, are not employees of the Authority.
The Authority will not provide employee bene?ts or entitlements of any kind or nature, including health
insurance bene?ts, paid vacation, or any other bene?ts for Veolia or its employees or agents. Neither
Veolia nor its employees or agents are eligible for unemployment or workers? compensation benefits fromthe
Authority.

ARTICLE 6 

6.1 Service Standards. Veolia shall perform the Services with due diligence in a
good and workmanlike manner in accordance with the standards, practices, and procedures that would be
reasonably expected from an experienced service provider in the industry or profession for the areas
anticipated by this Agreement. Veolia shall be responsible for the technical accuracy of its Services and
documents resulting therefrom, including those of any of its subcontractors or subconsultants, and the
Authority shall not be responsible for discovering their deficiencies.

6.2 Engineering Services. If the Services include professional engineering services, all
such Services shall conform to sound professional and state-of-the-art engineering, design, and drafting
practices and procedures, and shall be free from any and all errors, omissions, or defects. Because it is
not presently anticipated that Veolia?s scope of Services will include professional engineering services,
Veolia and the Authority will agree in writing with respect to any project that will include such within its
scepe.

6.3 Payment to Subcontractors. Veolia shall pay all of its subcontractors,
subconsultants, and other persons it engages to perform the Services. Should Veolia fail to do so, the
Authority may after notice to Veolia and a failure by Veolia to cure, retain out of any payment due Veolia an
amount sufficient to discharge the same.

6.4 Inspection, Audit. Upon request, Veolia shall provide such access to its facilities
and books and records, and those of its subcontractors or subconsultants, as the Authority may require for
inspection and/or audit purposes for a period of two (2) years following the termination or expiration of
this Agreement. For the purposes of clarity, this Section 6.4 shall not apply to the base Services provided
for in this Agreement but instead shall apply only to Services provided at a "cost? or "cost-plus" basis.

ARTICLE 7 INSURANCE

7.1 Coverages required?Veolia. Prior to beginning any Services under this Agreement,
Veolia shall deliver to the Authority certi?cates of insurance evidencing the following minimum coverages:

7.1.1 Workers compensation insurance at statutory limits and employer?s liability
insurance with limits of five hundred thousand dollars. Veolia will have attached to its
policy an alternate employer endorsement naming the Authority and will provide a waiver of subrogation in
favoroftheAuthority.

7. 12 Commercial general liability insurance with limits of two million
dollars each occurrence and five million dollars in the aggregate and
containing or endorsed to contain the following coverages: contractual liability; broad form property
damage; personal/advertising injury; an endorsement including the Authority as an additional
insured, waiver of subrogation to the bene?t of all additional insureds as respects any claims covered or
which should have been covered by valid and collectible insurance including any deductibles or self-
insurance maintained thereunder; no explosion, collapse or underground exclusion; and, for any claims
related to the Services, provision that Veolia's insurance shall be primary and non-contributory and any
insurance or self-insurance maintained by the Authority shall be excess of Veolia's insurance and not
contribute with it. Additional insured status shall he provided in favor of the Authority as respects
claims or liabilities to the extent caused Veolia's work, operations and completed operations, and only
to extent of liabilities assun led by Veolia underthe Agreement.

7.1.3 Automobile liability insurance with limits of one million ,000,000.00) dollars
per accident for bodily injury and property damage covering all owned, hired, and non~ owned vehicles.
The policy shall be endorsed to include the Authority as an additional insured and to include waiver of
subrogation to the bene?t of additional insureds as respects any claims covered or which should have
been covered by valid and collectible insurance including any deductibles or self?insurance maintained
thereunder.

7.1.4 Employee Dishonesty, Third Party Fidelity Bond, and Inside/Outside
Money and Securities coverages for Authority-owned property in Veolia's care, custody, or control
with limits of one million dollars.

7.1.5 If Veolia is performing any professional services for the Authority,
professional liability insurance with limits of two million dollars per claim or
occurrence and ?ve million dollars annual aggregate. "the policy shall be endorsed to include
awaiver of subrogation to the bene?t ofthe Authority as respects any claims covered or which should have
been covered by valid and collectible insurance including any deductibles or selflinsurance maintained
thereunder. lfcoverage is on a claims-made form, Veolia shall maintain continuous coverage or shall
exercise an extended discovery period for at least two (2) years following the expiration or other
terminationofthisAgreernent.

7.2 Coverages required-Authority. During the Term of this Agreement, the
Authority shall carry the following coverages:

7.2.1 Workers compensation insurance at statutory limits and employer's liability
insurance with limits of ?ve hundred thousand dollars, and will include a waiver of
subrogation to the bene?t ofVeolia.

7.2.2 Not?for?pro?t directors and of?cers liability insurance providing coverage to
insured persons and the organization, with limits of one million dollars per claim
and annual aggregate. The policy shall be endorsed to include a waiver of subrogation to the
bene?t of Veolia as respects any claims covered or which should have been covered by valid and
collectible insurance including any deductibles or self~insurance maintained thereunder, and will
include the Interim Executive Director and interim Chief Operating Of?cer as insured persons
under the policy. lfcoverage is on a claims-made form, the Authority shall maintain continuous
coverage or shall exercise an extended discovery period for at least two (2) years following the
expiration or other termination of this Agreement.

7.2.3 "All Risk" property insurance covering the Authority's facilities and physical
assets. The policy shall be endorsed to include a waiver ofsubrogation to the bene?t of Veolia as
respects any claims covered or which should have been covered by valid and collectible insurance
including any deductibles or self-insurance maintained thereunder.

7.3 Policy duration. Except where stated otherwise in Subsections 7.1 and 7.2 above,
the policies or coverages required bythis Section shall be maintained duringthe Term and any Additional
Term or Terms of this Agreement.

7.4 Ratings. All insurance coverages must be placed with insurance carriers having an
AM Best rating of A- or equivalent rating.

7.5 Notice to Authority. Veolia shall, within three (3) business days of receipt of
notice from any insurer with respect to a policy required by Section 7.1 that coverage will be suspended,
voided, cancelled, or certi?cate holder be deleted as an additional insured, provide written notice to the
Authority by certi?ed mail, return-receipt requested. During the Term of this Agreement, Veolia shall
provide the Authority with certi?cates for all renewal or replacement policies required by Section 7.1.
Notwithstanding the fact that it has been in compliance with this Section, nothing herein shall excuse Veolia
from carrying the required insurance under this Agreement and a faililre to do so shall constitute abreach.

7.6 Deductibles. All deductibles and self-insured retentions under policies required by
this Article 7 shall be the responsibility of the named insured.

7.7 Certi?cates oflnsurance. Upon either Party,s request at any time, the other Party
shall provide celli?cates of insurance evidencing coverage. The failure of either Party to pursue or obtain
any certi?cate of insurance or to point out any non?compliance of any certi?cate of insurance shall not
constitute awaiver of any ofthe insurance requirements ofthis Agreement or relieve either Party of any of
its obligations hereunder.

7.8 Self?insurance. Self?funded or other non-risk transfer insurance mechanisms are
not acceptabletothe Authority. If Veolia has such aprogram, full disclosure must bemadeto the Authority
priorto any consideration being given.

7.9 Distinct obligation. These insurance provisions are intended to be a separate and
distinct obligation on the part of each Party. The insurance submitted by a Party does not relieve or decrease
in any way the liability of that Party for performance under this Agreement.

ARTICLE 8 INDEMNITY

8.1 Ordinary negligence. Subject to Section 8.2 below, to the fullest extent
permitted by law, Veolia shali indemnify, defend, and hold harmless the Authority, its of?cers, directors, agents and
employees, from and against claims, damages, losses and expenses for bodily injury, death, or physical injury to
tangible property, or the loss of use thereof, caused or allegedly caused by or arising from the performance of
Veolia under this Agreement, but only to the extent caused or allegedly caused in part by the negligent acts or
omissions or intentional misconduct of Veolia, its employees, agents or persons for whose acts Veolia may be
liable.

8.2 Professional negligence. To the fullest extent permitted by law, Veolia shall
indemnify and hold harmless the Authority, its officers, directors, agents and employees, from and against claims,
damages, losses and expenses, including reasonable attorneys? fees and other costs of defense, arising out of or
resulting from the performance of the professional services of Veolia under this Agreement, but only to the
extent caused in whole or in part by the negligent acts or omissions of Veolia, its employees, agents or persons for
whose acts Veolia may be liable.

8.3 Violations of law. To the fullest extent permitted by law, Veolia shall indemnify, save
and hoid harmless, and defend the Authority, its of?cers, directors, agents and employees from all liens, charges,
claims, demands, losses, costs, judgments, liabilities and damages of every kind and nature whatsoever, including,
but not limited to, court costs and attorney?s fees arising from or based upon any violation by Veolia of any
applicable laws, regulations, ordinances or codes.

8.4 Actions exceeding authority. To the fullest extent permitted by law, Veolia shall
indemnify and hold harmless the Authority, its of?cers, directors, agents and employees from all claims, damages,
losses, and expenses, including reasonable attorneys? fees and other costs of defense, arising out of or resulting from
the acts of the Interim Executive Director that are outside the scepe of his authority as set forth on Exhibit A and
approved by the Steering Committee.

8.5 Waiver of workers' compensation bar. The defense and indemni?cation
obligations accepted by Veolia underthis Article 8 shall not be limited in any way by any limitation onthe amount or
type of damages, compensation or bene?ts payable by Veolia, or by Veolia?s subcontractors or permitted assigns,
pursuant to any applicable workers? compensation statute or disability benefit statute or any other employee benefit
law, rule, orregulation.

8.6 Mitigation. The Authority agrees to take reasonable efforts to mitigate or reduce any
losses that it may suffer or incur and forwhich it may seek indemni?cation from Veolia.

ARTICLE PROPERTY

9.1 Intellectual Property. Subject to Sections 9.2 through 9.4 below, the
Authority agrees that Veolia shall be entitled to ali right, title, and interest in and to all ideas, conceptions,
discoveries, inventions, improvements, designs, methods, techniques, processes, and software, whether or not
subject to patent or copyright protection, that are developed by Veolia alone, with the Authority or jointly with
others as part of the Services under the 2012 Agreement, the 2013 Agreement, or this Agreement (?Veolia
Inteliectual Property?). Veolia hereby grants to the Authority, upon the terms and conditions speci?ed in this
Article 9, a license inthe Veolia intellectual Property. The license granted hereunder is
irrevocable, coupled with an interest, perpetuai and, except as hereinafter provided, non-exclusive. Except as
speci?ed below, the Authority shall have the right, in its sole discretion, to use alloranyportion ofthe Veolia
Inteliectual Property on otherprojects, including projects submitted to other consultants. Inthe event of any such
use of any Veolia Intellectual Property by the

Authority, to the extent allowed by laws, the Authority shall defend, indemnify, and hold halmless
Veolia, its suhconsultants, agents and employees, from any and all claims, damages, losses, and expenses,
including reasonable attorneys? fees and other costs of defense, arising out of or in connection with, or
caused on account of, such re-use of any such Veolia Intellectual Property, but the foregoing indemnity
shall not extend to any liability of Veolia with respect to the initial preparation or creation of the Veolia
Intellectual Property.

9.2 Preprietary Works. The license granted by Veolia to the Authority under Section

9.1 above shall be exclusive with respect to those portions of the Veolia Intellectual Property that constitute
the Authority?s proprietary information (?Proprietary Works?). Proprietary Works refer to those portions of
the Veolia intellectual Property that contain information or data re?ecting or relating to: geographic,
operational, or technical information with respect to the water, sewer, or stormwater systems Operated by
the Authority, publication of which could jeepardize its operation or safety; inventions, discoveries,
patents, and applications for patents, copyrightable work, and related trade secrets of the Authority as of
the date of this Agreement; project deliverables and other data reviewed or developed during the
performance of the Services; information related to the Authority's customers; and and other data
or infolmation unique to the Authority that is protected from disclosure under Right to
Know Act (collectively, the "Preprietary Information"). No part of the Preprietary Works shall be used
by Veolia on any other project unless, and only to the extent, such Pr0prietary Works have subsequently,
pursuant to applicable laws and not to the act or neglect of Veolia, become available in the public domain
by acts of the Authority. Except for the foregoing, Veolia shall keep confidential, as a trade or business
secret, all PrOprietary Works.

9.3 Veolia intellectual Property-Patent or Copyright. Notwithstanding the grant
of license hereunder, Veolia shall retain any copyright or similar claim in the Veolia Intellectual Property
to the extent actually produced by Veolia and its subconsultants, agents, and employees, or any of them,
but shall have no claim to any portion of the Preprietary Works, such claims being reserved exclusively
by the Authority. Veolia, its subconsultants, agents and employees, their successors and assigns, shall
have no right to compensation, royalties or other fees from the Authority, its successors and assigns, due
to any claimed proprietary interest in the Veolia Intellectual Property.

9.4 Authority Intellectual Property. Veolia agrees that the Authority shall be
entitled to all right, title, and interest in and to all ideas, conceptions, discoveries, inventions, improvements,
designs, methods, techniques, processes, and software, whether or not subject to patent or copyright
protection, that are developed by the Authority alone, without the participation of Veolia, during the Term
of the Agreement and thereafter ("Authority Intellectual Property?). The Authority hereby grants to Veolia
a license in, to, and for the use of. the Authority Intellectual Preperty developed during the terms of the 2012
Agreement and the 2013 Agreement and the Term and any Additional Terms of this Agreement without
compensation, royalties or other fees. Veolia's license to use the Authority Intellectual Property shall expire
or terminate upon the expiration or termination of this Agreement. Thereafter, the Parties may negotiate
reasonable and customary license fees if Veolia wishes to use Authority Intellectual Property.

9.5 Applications and assignment.

9.5.1 The Authority will execute, acknowledge, and deliver at the request of Veolia all
papers, including patent and copyright applications and related assignment, that may be required for
obtaining a patent, copyright or other protection of the Veolia Intellectual Property and for vesting
title in Veolia and, at Veolia's cost, shall do all other acts and things that may be reasonably
necessary to achieve that purpose.

9.5.2 Veolia will execute, acknowledge, and deliver at the request of the Authority all
papers, inciuding patent and copyright applications and related assignment, that may be required for
obtaining a patent, copyright or other protection of the Authority intellectual Property and for
vesting title in the Authority and, at the Authority's cost, shall do all other acts and things that may
be reasonably necessary to achieve that purpose.

9.6 Others? intellectual property. In performing the Services, Veolia shall
not include or provide to the Authority any matter subject to patent, copyright, or other intellectual
property protection unless Veolia obtains the written approval of the Steeling Committee and provides the
Authority with a license or other written permission of the owner of the inteliectual property for Veolia or
the Authority to use such protected matter.

9.7 Indemnity. To the fullest extent permitted by taw, Veolia shall indemnify,
defend, and hold harmless the Authority, its of?cers, agents, and employees from any infringement or
claim of infringement by the Services or any part of the Services, whether provided under the 2012
Agreement, the 2013 Agreement, or this Agreement, of any patent, copyright, trade secret or other third-
party intellectual preperty right. Veolia agrees to pay all royaities and license fees that may be due upon
the inclusion of any patented or otherwise infringing materials in the Services. At its sole option, the
Authority may be represented by and actively participate through its own counsel in any such
infringement suit or proceeding, and the costs of such representation shall be paid by Without in
any way limiting the Authority's rights and Veolia?s obligations, in the event that the Services or any part
of the Services is held to constitute infringement or its use is enjoined, Veolia shall, at the Authority?s
option and Veolia's sole expense, in a timely manner: procure for the Authority a license or other
right to continue using the affected Services; replace the affected Services with a substantially
equivalent non-infringing property or process; or modify the Services or part of the Services so it
becomes non-infringing but is substantially, functionally equivalent.

ARTICLE 10 CONFIDENTIALITY

10.1 PrOprietary Information. Veolia will not, either during or after performance of
the Services, except as required in the performance of the Services or with the prior written consent of the
Authority, communicate or divulge to, or use for the benefit of Veolia or any other person, ?rm,
association, or corporation, any Proprietary Information of the Authority. Veolia acknowledges and
agrees that the Proprietary Information may include information that Veolia develops as well as
information that Veolia learns from the Authority.

10.2 Veolia Confidential Information. The Authority will not, either during or after
performance of the Services, except with the written consent of Veolia, communicate or divulge to, or use
for the bene?t of any other person, ?rm, association, or corporation, any confidential or proprietary
information of Veolia, including technical information in respect to the products and services of Veolia,
its business methods, product design infomlation, market research and studies, future plans, business
affairs, pricing, margins, discounts and costs, or related trade secrets (the ?Veolia Confidential
Information?). The Authority acknowledges and agrees that the Veolia Con?dential Information may
include information that the Authority develops as well as information that the Authority learns from
Veolia.

l0.3 Advertising and publicity. Veolia may not use the Authority's name in
advertisements, news releases, publicity statements, web sites, interviews, articles, brochures, client
iistings or other advertising or marketing materials without the prior written consent of the Authority,
which consent shalt not be unreasonabiy withheld. Provided, however, that this Section i0.3 shall not

prevent Veolia from making reference to this engagement where such reference is limited to previously
disclosed public facts.

ARTICLE 1 OF LIABILITY

l1.l Limitation of liability. Beyond the cost of furnishing replacement Services, and
notwithstanding any other provision in this Agreement, Veolia's aggregate liability to the Authority for
any and all claims and losses whatsoever resulting from or in any way attributable to errors, omissions, or
other acts of Veolia, its subcontractors, agents, and employees, other than as covered by collectible
insurance, shall not exceed the amount received by Veolia under this Agreement.

11.2 Waiver of consequential damages. Except as covered by collectible insurance,
in no circumstance shall either Party or any of its of?cers, directors, agents, employees, subcontractors,
consultants or subconsultants be liable to the other or the other?s successors or assigns, for remote,
incidental, indirect, or consequential damages or Special loss or damage of any kind, whether or not
foreseeable, including, but not limited to, loss of pro?ts, increased expenses or costs in excess of
estimates. Any protection against liability for losses or damages afforded any individual or entity by these
terms shall apply whether the action in which recovery of damages sought is based on contract, tort
(including sole, concurrent or other negligence and strict liability of any protected individual or entity),
statute or on any other theory. To the extent permitted by law, any statutory remedies which are
inconsistent with these terms are waived.

ARTICLE 12-COMPLIANCE WITH LAWS

In the performance of the Services, Veolia shall comply with all applicable laws,
ordinances or regulations of any government authority or agency having jurisdiction ("Applicable Laws").

ARTICLE 

Veolia shall not discriminate in its employment on the basis of race, color, religion,
ancestry, national origin, place of birth, sex, age, disability, non-job related handicap or sexual orientation.
Veolia shall comply with the applicable provisions of the Pittsburgh Code, Title Six - Conduct, Article 
Discrimination, and any amendments thereto. Veolia shall also comply with the applicable provisions of
Title I and Title II of the Americans with Disabilities Act, any amendments thereto and any regulations
issued thereunder. Veolia shall incorporate in any subcontracts which may be permitted under the terms of
this Agreement a requirement that said subcontractors also comply with the provisions of this Section.

ARTICLE BUSINESS
ENTERPIUSES

It is the Authority's current goal to encourage increased minerity and women?s
participation in all Authority contracts. it is believed that it is reasonable to expect that minority
participation will constitute eighteen percent and women?s participation will constitute seven 
percent of the total dollar amount of Authority contracts. in entering into this Agreement with the
Authority, Veolia is agreeing to submit a final report, within thirty (30) calendar days of the expiration or
termination of the Agreement, detailing the actual levels of participation of minority and women's business
enterprises in the provision of the Services. The Authority recognizes that the majority of work provided for
in this Agreement is to be self-performed by Veolia or subcontracted to highly specialized service providers,
and therefore that the disadvantaged business participation goals may not be reasonably practicable to meet.
However, failure by Veolia to make a good faith effort to meet the Authority's goals or to submit the
required report may be considered a breach of the Agreement resulting in debarment from participating in
future Authority contracts.

ARTICLE 15-SUBCONTRACTING AND ASSIGNMENT

None of the Services covered by this Agreement shall be subcontracted or assigned without
the prior written approval of the Authority. Such approval or consent will not relieve Veolia of its
obligations under this Agreement. The Authority reserves the right, acting reasonably, to object and require
the replacement of any subconsultant who is hired or retained without the Authority's prior written consent.
The Authority specifically agrees to any subconsultants and to the scope of those subconsultants' services
identi?ed inthe Technical Proposal.

ARTICLE 16 -SITE AND
ACCESS

16.1 Offices and equipment. The Authority will provide, at no cost to Veolia, suitable
of?ce space forthe interim Executive Director, the Interim Finance Director, the Interim Chief Operating
Of?cer, and other Veolia employees and subcontractors present at the Authority's offices at 1200 Penn
Avenue, Pittsburgh, in the performance of the Services, including reasonable and customary office
furnishings, such as desks, chairs, conference equipment, copiers and facsimile devices, intemet network,
and telephones.

16.2 Computers and safety equipment. Veolia will be responsible for supplying
computers, cell phones, and related productivity equipment, as well as any personal protective equipment or
safety equipment that is customary for the work undertaken for its employees, agents, and subcontractors.

16.3 Site and data access. The Authority will ensure that the Veolia employees and
subcontractors performing the Services have, for the duration of this Agreement, such access to the
Authority's facilities, information technology systems and data as may be necessary and appropriate to the
perforn lance of the Services. Such access will include:

16.3.] "All-access" clearance at all reasonable times for each Veolia
employee, agent or subcontractor engaged in the Services, subject to compliance with the
Authority's policies for health and safety;

16.3.2 Access, in a manner reasonably equivalent to the Authority's
managers, to networks and data systems that gather, track, and report operational and cost
information, including but not limited to access to SCADA systems, asset management systems,
enterprise resource management or equivalent cost tracking systems, and existing benchmarking
documentation.

16.4 Facilitating communications. The Authority will facilitate Veolia's access to and
communication with departments of the City of Pittsburgh and other agencies and authorities where
necessary or appropriate to performance of the Services.

ARTICLE MAJEURE

No delay or failure of performance by either Party shall constitute default hereunder or
give rise to any claims for damage if, and to the extent, such delay or failure is caused by fire or other
casualty, labor dispute or transportation delay not caused in any way by the affected Party, or by
government or military action, inclement weather not reasonably anticipatable, act of God, act or omission
of the other Party or its other contractors, failure of any government authority to timely review or to approve
the services or to grant permits or approvals, or any other cause beyond the affected Party's reasonable
control.

ARTICLE 18 -EXCLUSIVITY

To the maximum extent permitted by law, the Authority will not purchase from any person
or entity other than an affiliate of consulting services substantially similar to the Services provided
by Veolia during the Term of this Agreement and any Additionai Term or Terms. Provided, however, that
if the Parties agree, the Authority may retain an executive recruiting firm for assistance in identifying and
researching candidates for Executive Director and, if requested by the Authority's Board, Finance DirectOr
and/or Chief Operating Officer.

ARTICLE 19 -
TERMINATION

19.1 For Convenience or Cause. The Authority shall have the right to terminate the
Services or any part thereof at any time, whether for convenience or cause, by prior written notice
whenever the Authority determines such termination or suSpension to be in its own best interest;
provided, however, that the Authority may not terminate for its convenience the Services at any time prior
to April l, 2015. In such event, the Authority shall pay for Services satisfactorily completed and
expenses incurred through the date of termination, along with any unavoidable expenses incurred or
committed prior to the termination, less the sums Veolia shail have already been paid on account of. the
Services performed. Should the Authority terminate for convenience, Veolia will be entitled to payment
of performance compensation as provided in Section 19.3 below. In the event of a default by Veolia, the
Authority may, in addition to termination, pursue any other rights or remedies it may have available under
the Agreement or the law.

19.2 Obligations on Termination. In the event of termination under Section l9.1
above, Veolia shall immediately cease performance except as may be authorized by the Authority. Veolia
shall assign and transfer to the Authority, as directed by the Authority, all subcontracts, orders,
and commitments that the Authority may request be transferred or assigned, and Veolia shall execute and
deliver the same and take all such action as the Authority may require to fully vest in the Authority the
right of Veolia in and to the same. in the alternative, the Authority may direct that Veolia cancel all
subcontracts, orders, and commitments.

193 Performance Compensation on Termination for Convenience. In the event
that the Authority terminates this Agreement prior to the end of the Term for the Authority's convenience,
the Authority will pay Veolia a one-time demobilization payment of $100,000 at the earlier of the end of
the Term or the last day of Veolia's provision of Services hereunder. shall be entitled to payment
pursuant to Sections 4.2.2.3 through 4.2.2.5, and shall further be entitied to payment of any KPl?s that
are either completed or at least seventy-five percent complete.

19.4 Exclusive Remedies. The rights and remedies set forth above are the sole and
exclusive remedies of Veolia in the event of a termination under Section 19.1, and the Authority shall
have no other liability to on account of or for any damages, including lost pro?ts, arising out of
such termination.

19.5 Survival. Notwithstanding the expiration or termination of this Agreement, the
rights and obligations that by their sense and context survive the termination or expiration of this Agreement
will so survive.

ARTICLE 20 -- NOTICES

Unless otherwise noti?ed in writing, each party shall send notices and other
communication to the other party at the address shown below:

To the Authority: Pittsburgh Water and Sewer Authority
Penn Liberty Plaza i
l200PennAvenue
Pittsburgh, PA 15222
Attention: Alex W. Thomson, Chairman

with a copy to: Mark F. Nowak, Esq.
Clark Hill PLC
One Oxford Centre, 14th Floor
301 Grant Street
Pittsburgh, PA 15219

To Veolia Water North America-Northeast, LLC
Attention: General Counsel
53 State Street, 14th Floor
Boston MA 02109

With a copy to: Veolia Water North America
Attention: PPS Manager
370 Seventh Avenue
New York, New York 10001

ARTICLE 21 -DISPUTES 0R
CONTROVERSIES

21.1 Amicable resolution. The Authority and agree to work together to
establish a culture of joint governance and to promote a culture of no fauit/no blame. The Authority and
Veolia will endeavor to resolve all disputes amicably.

21.2 Reference to senior management. In the event that a dispute cannot be amicably
resolved by the participants, it shall be referred to Veolia senior management and to the Authority
representatives to the Steering Committee for resolution.

21.3 Mediation. If the dispute cannot be resolved by Veolia senior management and
the Authority's representatives on the Steering Committee, either Party may request mediation that, unless
the Parties agree otherwise, shall be administered by the American Arbitration Association subject to their
Commercial Arbitration and Mediation Rules Rules?) in effect on the date of this Agreement. A
request for arbitration shall be made in writing and delivered to the other Party and ?led with the person or
entity administering the mediation. Mediation shall be a condition precedent to arbitration. Mediation shaii
take place in Pittsburgh, 

21.4 Arbitration.
21.4.1 Disputes not resolved through mediation shall be subject to binding arbitration in

accordance with the Rules in effect on the date of this Agreement. Arbitration shall take
place in Pittsburgh, 

21.4.2 All diSputes shall be initiated by the service of a written notice by one Party to
the other of the intent to arbitrate and ?ling of such notice with the administering organization
which, unless the Parties agree otherwise, shall be the American Arbitration Association
Each Party shall bear its own costs and expenses of arbitration and shall pay its pro
rata share of anyjoint fees, costs, and expenses of arbitration including, without limitation, the
costs and fees of the arbitrator and of the American Arbitration Association.

21.4.3 The Parties shalljointly designate a single, independent arbitrator or otherwise
have an arbitrator selected by the in accordance with the Rules.

21.4.4 The arbitration hearing must be conducted within four (4) months of the
date of ?ling of the intent to arbitrate with the The hearing shall be conducted in
accordance with the Federal Rules of Evidence then in effect. The decision of the arbitrator,
including any remedy or relief granted, including speci?c performance, shall be in writing and
shall be rendered no later than fourteen (14) days after the close of the hearing. The decision of.
the arbitrator shall be final, binding upon the Parties, and non-appealable, andjudgment thereon
may be entered by any court of competentjurisdiction.

21.4.5 Each Party in arbitration shall be entitled to discovery pursuant to the Rules
and the decisions of the arbitrator. However, all discovery shall be completed within sixty (60)
days of the date of the appointment of the arbitrator. Further, all discovery must be completed no
later than fifteen (15) days prior to the arbitration hearing. The time period for discovery may be
extended by the arbitrator for good cause, provided that the arbitrator is able to meet the schedule
Specified above in Subsection 21.4.4.

ARTICLE 22 -MISCELLANEOUS

22.1 Incorporation of recitals. The recitals appearing at the beginning of this
Agreement are incorporated herein by reference.

22.2 Entire agreement. This Agreement contains the entire understanding of the
Parties with respect to its subject matter and supersedes all prior negotiations. This Agreement shall not be
modified, amended, altered, or supplemented except by agreement in writing duly executed by both of the
Parties hereto.

22.3 Counterparts and Digitally-Transmitted Signature. This Agreement shall be
executed in two counterparts, each of which shall be deemed an original, and proof of execution may be
exchanged by digital means such as facsimile or electronically-mailed .pdf?les.

22.4 Applicable law. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of without reference to its conflicts?of-
Iaws principles.

22.5 No Private Business Use. This Agreement involves services rendered by a
person other than a governmental unit in connection with facilities of the Authority ?nanced, in whole or
in part, with proceeds of tax-exempt bonds, and therefore the "private business use" rules under Section
141 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereto by the United States Department of the Treasury (the "Regulations"), may apply. The Parties
further acknowledge that this Agreement may be a "management contract," as that term is defined in
Section l.14l?3 of the Regulations. Therefore, the Parties have used their best efforts to structure this
Agreement in accordance with Section 1.141 -3 and the guidance of the internal Revenue Service thereto.

22.6 No third~party bene?ciaries. This Agreement shall create no rights in any party
other than the Authority and Veolia and no other party is intended to be a third?party bene?ciary of this
Agreement, except as may be speci?cally indicated herein.

22.7 Headings. Section headings in this Agreement are for convenience of reference
only and shall not constitute a part of this Agreement for any purpose.

22.3 Severability. in the event that any of the provisions of this Agreement are found
to be invalid or unenforceable, the validity and enforceability of the remaining provisions shall not be
affected.

22.9 Authority. This agreement is entered into by the Authority pursuant to
Agenda Item 145 of 2014, adopted at a meeting of its Board held on 1 1/ 14, 2014.

Appendix 

Sensus Contract

Sensus Contract

PWSA ?rst entered into the Advanced Metering Infrastructure Agreement with Sensus
effective February 20, 2014. This agreement had been awarded by the Board of Directors on
December 13, 2013. The initial agreement totaled $7,445,050, broken into categories in Table
B-1.

 

 

 

TABLE B-l
INITIAL COSTS FROM ADVANCED METERING INFRASTRUCTURE (AMI)
AGREEMENT BETWEEN AND SENSUS
CATEGORY DESCRIPTION PRICE (S)
AMI Infrastructure Data collection units, drive by kits, 6,361,100
RF endpoints, programming devices
Software and Project Licenses System software, billing interface to 413,750

Cogsdale, customer portal interface,
other software

 

 

 

 

 

 

 

Additional Costs Project manager and engineer costs, 663,000
training costs
Optional System Leak Lift and shift permalog 7,200
Detection
TOTAL $7,445,050

 

The largest of these categories was the AMI infrastructure cost. A breakdown of these
costs can be found in Table B-2.

 

 

 

 

 

 

 

 

 

 

TABLE B-2
AMI INFRASTRUCTURE COSTS FROM THE INITIAL
ADVANCED MET .RING INFRASTI UCTURE AGREEMENT
DESCRIPTION QUANTITY UNIT PRICE (S) EXTENDED

PRICE 

Data Collection Unit/Gateway 7 12,000 84,000

Data Collection Unit 7 20,000 140,000

Installation/Pro
Drive-by Kit Plus Applicable 1 Included 0
Software for Interim use
RF endpoint (single port) wall 72,000 58.90 4,240,800
mount
RF endpoint (dual port) Pit 6,000 61.90 371,400
Mount

Wall Endpoint Installation 72,000 19.55 1,407,600

Pit Endpoint Installation 6,000 19.55 117,300

Endpoint handheld 6 Included 0
programming devices required
for installation

TOTAL $6,361,100

 

 

 

 

 

 

The agreement was amended on June 10, 2015. In this amendment, the optional
system leak detection system from the initial agreement was expanded to include Pennalo 
Integration to Metersense at $75,000 as well as the additional equipment of 80 Permalog units
at $670 each for $53,600 and 80 Pit Set 520 SmartPoints at $62 each for $4,960, for a total of
$133,560. The Permalog Integration in MeterSense was completed through the Sensus
subcontractor Harris Utilities.

This Permalog system was implemented to allow leak data details to be transmitted
and reported through Sensus. According to the contract, Harris Utilities was to accomplish
this through three steps: bringing sensor details into MeterSense to be included in the datasync
between CIS and bring the Permalog data into MeterSense from the AMI, including
leak, level, and spread; and enabling leak reporting including leak detection sensor maps, leak
event report, and a line graph report representing leaks and levels.

Appendix 

PWSA and Jordan Tax Service Agreement

PWSA Agreement with Jordan Tax Service

AGREEMENT

THIS AGREEMENT made this 12 day of September, 2008, by and between the
PITTSBURGH WATER AND SEWER AUTHORITY, a Municipal Authority,
having its principal place of business at Penn Liberty Plaza 1, 1200 Penn Avenue, Pittsburgh,
PA 15222, hereinafter referred to as the ?Municipality?

A


JORDAN TAX SERVICE, INC, a corporation, having its principal
of?ces at 102 Rahway Road, McMurray, PA 15317, hereinafter referred to as ?Jordan? or

?Collector?.



GOEHRING, RUTTER BOEHM, P.C., having its principal of?ces at 437 Grant
Street, 14th Floor, Frick Building, Pittsburgh, PA 15219, hereinafter referred to as ?Special
Legal Counsel? or 

WITNESSETH

WHEREAS, the Municipality is responsible for the collection of delinquent and liened
municipal claims for unpaid water and sewer charges (hereinafter "Delinquent Claims?); and

WHEREAS, Jordan and SLC have the necessary experience, expertise, and resources to

assist the Municipality as the Collector and Special Legal Counsel, respectively, for the

WHEREAS, Jordan and SLC are willing to serve as Collector and Special Legal
Counsel, respectively, in accordance with the terms and conditions set forth herein;

NOW, THEREFORE, the Municipality, Jordan, and SLC, in consideration of the mutual
promises and covenants herein, and intending to be legally bound hereby, agree as follows:
1. DEFINITIONS

A. Unless de?ned differently herein, the words that follow shall have the following meanings:

l. ?Attorney Fees? shall mean those charges for legal services imposed and
collected pursuant to a schedule of Attorney Fees adopted by the Municipality in an Ordinance,
Resolution, or any amendment thereto, in accordance with Act 1 of 1996 and Act 20 of 2003, 53
RS. ?7106 and any other applicable law, and shall include all Attorney Fees and Out-Of-Pocket
Expenses incurred in the collection of Delinquent Claims by the Municipality?s Special Legal
Counsel. Except as provided herein to the contrary, Attorney Fees are contingent upon

collection of Delinquent Claims.

2. ?Charges, Expenses, and Fees? shall mean all amounts, including Out-of-Pocket
expenses, paid by, charged to, or otherwise incurred by the Municipality in connection with the
collection of Delinquent Claims, Charges, Expenses, and Fees shall include, but are not limited
to, Servicing Expenses, Out~of~Pocket Expenses and Postage Expenses authorized by the
Ordinance, Resolution, or any amendment thereto, in accordance with Act 83 of 2004, 53 PS.
?7101, and any other applicable law. Except as provided herein to the contrary, Charges,
Expenses and Fees are contingent upon collection of Delinquent Claims. Water shutoffs are not
the reSponsibility of Collector or SLC and any recoverable costs and expenses relating to notices
and/or water shutoffs shall not be considered ?Charges, Expenses and Fees? unless such

amounts

are provided to Collector with the Municipality?s written direction to add such amounts to the

?Charges, Expenses and Fees? related to a Specific debt.
3. ?Collector? shall mean Jordan Tax Services, Inc. and its successors and assigns.

4. ?Delinquent Claim? or ?Delinquent Claims? shall include the Municipality?s

delinquent and liened municipal claims as de?ned in 53 RS. ?7101.
5. ?Delinquent Payor? shall mean any person or entity paying Delinquent Claims.

6. ?Face? or ?Face Amount? shall mean the original municipal claims amount
following the expiration of the early payment discount period or, in the case of municipal
claims, the original municipal assessment amount plus any applicable penalty pursuant to 53

P.S. ?7203.

7. ?Gross Collections? shall mean, for the purposes of calculating the Servicing
Expense, the total amount of the Face, Penalty, Interest, and Lien Cost for each Delinquent

Claim collected.

8. ?Interest? shall mean that amount accruing on the unpaid Face Amount at a rate
established by Municipality, not to exceed the statutory maximum rate, charged at 1/ 12th of the
statutory maximum annual rate on the first day of each month for the entire month, or any

portion thereof. There is no per diem rate of interest.

9. ?Lien Costs? are the sum of those Charges, Expenses, and Fees charged by the
County Department of Court Records and/or by Collector for the ?ling, revival, transfer,
amendment, and satisfaction of a Delinquent Claim. Lien Costs shall be in those amounts
authorized in accordance with the applicable Prothonotary Fee Act, Resolution/Ordinance, the

applicable Sheriffs Fee Act or by any other applicable law.

10. ?Ordinance? shall mean that Ordinance, or any amendment thereto, adopted by
the Municipality pursuant to and in accordance with Sections 1,2 and 3 of the Municipal Claim
and Tax Lien Act ofMay 16, 1923, PL. 207, as amended. 53 PS. ?7101, ?7103, and ?7106 (the
?Act?) respectively, including Act 1 of 1996, Act 20 of 2003 and Act 83 of 2004, adopting a
schedule of Charges and Expenses, Fees for Servicing, including a percentage of Gross
Collections (?Servicing Expenses?), Postage Expense and Out-of?Pocket Expenses and Attorney
Fees and Out-Of?Pocket Expenses to be charged and collected as part of the Municipality?s
Delinquent Claims by Jordan and SLC. If the Municipality is a municipal authority or school
district, then Ordinance, as de?ned herein, shall mean and be the same as Resolution also

de?ned herein.

11. ?Out-Of?Pocket Expenses? shall mean Charges, Expenses and Fees and shall
include any amount which is paid or incurred by the Municipality, Jordan or Special Legal
Counsel in the collection of Delinquent Claims and which are recoverable Charges, Expenses

and Fees pursuant to applicable law.

12. ?Penalty? shall mean that amount set by the Municipality not to exceed the
statutory maximum rate. In the case of municipal claims, penalty shall become part of the Face
Amount pursuant to 72 PS. ?7203. Penalty shall be not charged unless authorized by statute and
set by appropriate legislative action of the Municipality.

13. ?Postage Expenses? shall mean Charges, Expenses and Fees and shall include
those sums paid for mailings and other postal costs incurred in the collection of Delinquent
Claims pursuant to the Ordinance or Resolution.

14. "Record Costs? are the sum of those Charges, Expenses, and Fees relating to

enforcement proceedings initiated by Municipality through Special Legal Counsel to recover

Delinquent Claims. Record Costs do not include Lien Costs. Record Costs include, but are not
limited to, Sheriffs Fees, Department of Court Record?s Fees, court costs, recording fees and
advertising costs charged in connection with an enforcement proceeding.

15. ?Resolution? shall mean Ordinance, as de?ned herein, if the Municipality is a
municipal authority or school district.

16. ?Servicing? shall mean all of the speci?c Collector services provided to the
Municipality by Jordan as the Collector of Delinquent Claims as assisted by SLC, pursuant to

this Agreement.

17. ?Servicing Expenses? shall mean those Charges, Expenses, and Fees, including
Commissions, Out-Of?Pocket Expenses and Postage Expenses, set by the Ordinance,
Resolution, or any amendments thereto, which are added to Delinquent Claims for the expense
of Servicing rendered to the Municipality, by Collector, to collect Delinquent Claims. Servicing
Expenses accrue on the ?rst of the month, for the entire month, or portion thereof.

18. ?Special Legal Counsel? (or shall mean Goehring, Rutter Boehm, P.C.,
retained by Municipality to provide assistance to Jordan in Servicing and to represent
Municipality in enforced collection of Delinquent Claims and in bankruptcy matters, except as

may otherwise be provided herein.

II. SCOPE OF SERVICES

 

A. Gen?Brai-

1. The Municipality hereby engages the services of Jordan to act as Collector and
Goehring, Rutter Boehm, PC. to act as Special Legal Counsel and authorizes Jordan and
Special Legal Counsel to collect Delinquent Claims in accordance with the terms of this

Agreement, the Ordinance or Resolution and in accordance with any other applicable law.

and SLC are authorized to use all of the rights and employ all remedies available to the
Municipality on behalf of the Municipality and in the name of the Municipality, to collect
Delinquent Claims due the Municipality, including, but not limited to, those rights and
remedies available pursuant to the Act, the United States Bankruptcy Code, and all other
applicable state, federal, and local laws and regulations. Jordan and SLC shall charge and
collect, together with Delinquent Claims, all applicable Charges, Expenses and Fees and
Attorney Fees, Penalties, Interest, Lien Costs, Record Costs, Out~of?Pocket Expenses and
Postage Expenses, and any other amount due and payable in accordance with the Ordinance,
Resolution and any other applicable laws.

2. During the term of this Agreement, Jordan shall be the Municipality?s exclusive
Collector and provide Servicing, and SLC shall be the Municipality?s exclusive Special Legal
Counsel providing legal services to the Municipality for the collection of all unpaid Delinquent
Claims in accordance with the Agreement, the Ordinance, Resolution and all other applicable
laws. If a con?ict of interest should arise in which SLC cannot represent the Municipality in a
speci?c matter or matters, substitute legal counsel may be retained for such Speci?c matter or
matters. From time-to-time, as the need arises, SLC may direct one or more collection matters
to the Municipality?s Solicitor for processing. In these instances, the Solicitor shall be
considered substitute legal counsel. Compensation of any substitute legal counsel shall be in
accordance with this Agreement unless otherwise agreed to by the Municipality and substitute
legal counsel.

3. The Municipalitv shall continue to collect all current municipal claims.

B. Speci?c Collector Services 
1. Delinquent Claim Collection
a. Assemble Delinquent Claim information provided by the Municipality
and create, update and maintain an electronic record of all of the Municipality?s Delinquent
Claims.
b. Prepare and issue statements and certi?cations to prOperty owners,

Delinquent Payors and interested persons. Conduct mass mailings periodically.

c. Conduct necessary record reviews at appropriate County offices.

(1. Record and deposit on a timely basis all monies collected and disburse
funds to the Municipality.

e. Prepare, enter, revive and satisfy Delinquent Claims as municipal claims

in the appropriate dockets.

f. Installment Payment Plans. ?Installment Payment Plans? shall be
permitted for all delinquent taxpayers, unless otherwise provided herein. Installment Payment
Plans requested by Delinquent Payors, other than the delinquent taxpayer, shall be subject to the
review and approval of the Collector or Special Legal Counsel. If an Installment Payment Plan
is denied for any of the reasons contained herein, or for any other reason, a collection action
may be ?led as provided herein.

1. Installment Payment Plans shall be denied to any delinquent
taxpayer or Delinquent Payor who refuses to address all of the Municipality?s Delinquent
Claims in one Installment Payment Plan. Other reasons for denial of an Installment Payment
Plan shall include, but are not limited to: refusal to pay the Delinquent Claims Within the Term
Guidelines set forth herein by the Municipality; an uncured prior Installment Payment Plan

defmilt' Taxnavers with mnltinle Delinmient Pmnertiew Delinmient Taynavers

Owners of delinquent vacant land, unoccupied structures or income producing delinquent
properties.

2. Installment Payment Plan Guidelines. The following Installment
Payment Plan term guidelines are hereby established by the Municipality for all Installment
Payment Plans. Any delinquent taxpayer or Delinquent Payor refusing to comply with any of
the term guidelines shall be required to pay all of the Municipality?s Delinquent Claims in full
unless the Delinquent Taxpayer is granted a Hardship Payment Plan or, for good cause shown,
an exception is made by the Municipality, STS or SLC. Note, the Municipality?s written
Installment Payment Plan forms shall contain several additional provisions as required by
Collector and/or Special Legal Counsel.

a. Term Guidelines:

1. Owner Occupied Residential PrOperties. The term
of any negotiated Combined Installment Payment Plan shall be 24 months or less.

2. Tenant Occupied Residential, Occupied
Commercial, Occupied and Operating Industrial Properties. The term of any negotiated
Combined Installment Payment Plan shall be 181nonths or less.

3. Vacant land, unoccupied residential, commercial
and industrial properties and any other property type not specifically referenced in sub-
paragraphs 1 and 2, above. The term of any negotiated Combined Installment Payment Plan
shall be 12 months or less.

3. Judgment, Amicable Scire Facias or Consent Judgment: The entry
of judgment, whether by consent or by default, shall be a condition of any Combined
Installment Payment Plan requested following the ?ling of any collection action. An Amicable

Scire Pacias or Consent Judgment may he required. at the sole and absolute discretion of SLC.

where an Installment Payment Plan is requested prior to the ?ling of a Collection Action for any
delinquent property or delinquent taxpayer with combined Delinquent Claims totaling $1,500 or
more. A Delinquent Payor, other than a delinquent taxpayer, may be denied an Installment
Payment Plan where payment of Delinquent Claims is not secured by a judgment against the
Delinquent Property unless suitable substitute security, at the sole discretion of Special Legal
Counsel, is provided by the Delinquent Payer.
4. The parameters of Hardship Payment Plans shall be as determined

by the Municipality.

g. Forward pre?foreclosure notices to property owners in accordance with
Act 1 of 1996 and Act 20 of2003 or any other applicable law as a prerequisite to the initiation of
enforcement proceedings where Attorney Fees will be charged and recovered by SLC.

h. Monitor all Sheriffs Sale proceedings advertised in the Pittsburgh Legal
Journal, conduct short title and tax searches, if necessary, and file and update claims for
Delinquent Claims as well as the Municipality?s current claims with the Sheriffs Of?ce.
Collector shall file the Municipality?s current municipal claims at no expense to the
Municipality, even if there are no Delinquent Claims due the Municipality for the property
subject to Sheriffs Sale.

i. Monitor Bankruptcy proceedings of which Jordan has received notice
and submit proofs of claim for Delinquent Claims as well as the Municipality?s current claims
on behalf of the Municipality.

j. Advance all postage relating to the collection of Delinquent Claims and collect
such Postage Expenses from the Delinquent Payor.

k. Assist SLC in providing legal services to the Municipality in accordance with

the provisions of this Agreement and other applicable laws. Jordan maintains an in house

legal department consisting of paralegals and clerks who assist SLC, at the direction of SLC, in
the enforced collection of Delinquent Claims including, but not limited to: (I) investigations; (2)
research; (3) preparation and filing of pleadings, motions and petitions; (4) maintaining ?les;
(5) preparing correspondence; (6) telephone conversations with interested persons; (7)
negotiating amicable scire facias (?consent judgments?) and installment payment agreements;
and (8) concluding legal proceedings.

1. Maintain a separate bank account for the deposit of the Municipality?s
Delinquent Claims. Jordan shall be permitted to transfer ?nds from such account to the
Municipality, to SLC, to Jordan and to any third?parties retained to assist in the collection
process and entitled to reimbursement of Charges, Expenses and Fees recovered by Jordan from
the Delinquent Payor. Such third-parties may include, but are not necessarily limited to, title
searchers, process servers, investigators, appraisers and any party entitled to reimbursement or
refund of any amount collected.

In. Submit on a basis, or more frequently as funds are available, a
detailed report together with a check or wire transfer relating to collections from the preceding
month or payment period.

11. Include Municipality?s current balance due in any bankruptcy claim or Sheriffs
Sale claim ?led by Jordan or SLC on behalf of the Municipality.

0. Provide all collection notices and respond to customer inquiries via
trained customer service representatives.

p. Provide adequate staff and equipment necessary to provide Servicing in

accordance with the terms of this Agreement.

q. Provide any other service not speci?cally set forth herein which is deemed
necessary by Jordan to collect the Municipality?s Delinquent Claims in accordance with this
Agreement and any applicable laws.

r. During the initial term or any subsequent terms of this Agreement, Jordan shall
maintain an of?ce in Room 213B, Allegheny County Courthouse, Pittsburgh, PA 15219 or
other downtown Pittsburgh location chosen at Collector?s sole discretion.

2. Special Legal Counsel Services

a. During the term of this Agreement, Jordan and SLC shall collect the
Delinquent Claims on behalf of the Municipality and shall exercise all collection and
enforcement rights, duties and remedies on behalf of, in the name of, and available to the
Municipality, pursuant to the Act, 53 PS. 7101 et seq. and all other applicable laws, including
the right to seek a decree for Sheriffs Sale.

b. Pursuant to 53 PS. ?7106, Jordan shall, where applicable, provide Act 1
and/or Act 20 notices to preperty owners or other Delinquent Payer. If the noti?cation required
by 53 RS. ?7106 does not result in payment in foil or an installment payment arrangement with
the property owner or other Delinquent Payor, a praecipe for a writ of scirefacias may be ?led
against the delinquent property and, unless paid, a judgment will be sought in favor of the
Municipality for the unpaid Delinquent Claims. Such action will be pursued until the
Delinquent Claims are collected in full by voluntary payment or until the delinquent property is
listed and sold at Sheriffs Sale pursuant to the Act, 53 RS. 7101 et seq., the 
Rules of Civil Procedures and all other applicable laws.

0. SLC shall be permitted, at its sole discretion, to bring legal proceedings,
including but not limited to, In?Rem Scire Facias proceedings under the Act, assumpsit actions,

rent attachments carnishmentn the. sale. nfchattel and the. tilinor and nursnit of claims in

Bankruptcy Court, to enforce collection of Delinquent Claims. SLC shall be permitted to bring
any such action on behalf of and in the name of the Municipality. The SLC shall have authority
to discontinue any proceeding if it determines that collection of Delinquent Claims is unlikely or
that future collection efforts are not justi?ed. If SLC has determined not to bring a legal
proceeding against a speci?c property or against a speci?c delinquent account, SLC shall still
?le a legal action at the request of the Municipality against such property or account provided
that the Municipality shall reimburse SLC for Attorney Fees and Out~of~Pocket Expenses either
by advance or within 30 days of invoice. Any Attorney Fees and Out?of?Pocket Expenses
thereafter recovered in such action shall be reimbursed to the Municipality.

d. In Municipality initiated Sheriffs Sales, if the ?upset price? as de?ned in
53 RS. ?7279 of the Act, is not bid at the time of the Sheriffs Sale, SLC shall postpone the Sale
and shall automatically seek a Petition to Sell the property ?free and clear? of liens, claims,
mortgages, charges and estates (?Free and Clear Sale?) pursuant to 53 PS. ?7281 of the Act.
Unless a different minimum bid price is set by Collector and/or SLC, at any Free and Clear Sale
of a delinquent property, the minimum bid price shall be set at the Collector?s and 
Charges, Expenses, Fees and Attorney Fees, Out~of~Pocket Expenses and the Record Costs of
the proceeding. If no bids are received at a subsequent Sheriffs Sale, then the property shall
thereafter be subject to further sale, at the sole and absolute discretion of SLC, for an amount
less than the Collector?s and Charges, Expenses and Fees and Attorney Fees, Out-of-
Pocket Expenses and the Record Costs of such proceeding. Any eventual recovery shall be
diSpersed in accordance with this Agreement. At the time of any Sheriffs Sale following the
grant of a Free and Clear Petition by the Court, the Municipality may bid, but any Municipality
bid shall be no less than the Collector?s and Charges, Expenses and Fees, Attorney Fees

and Out-of- Pocket Expenses of such proceeding.

e. SLC and/0r Jordan shall negotiate and enter into installment payment
agreements and/or forbearance agreements for the payment of Delinquent Claims in one or more
future payments. If the installment or forbearance agreement is entered into prior to the
initiation of legal action, SLC and Jordan shall be permitted to require an amicable scire facias
or consent judgment to secure the repayment of the Delinquent Claims. If the installment or
forbearance agreement is sought following the initiation of a scire facias or assumpsit action,
then that legal action shall be reduced to judgment to secure repayment of the Delinquent
Claims due.

f. SLC shall assist Jordan in the preparation of Delinquent Claims for ?ling
as municipal claims and shall review and execute all municipal claims for ?ling in the
appropriate docket.

g. The ?ling of appropriate legal proceedings shall be at sole and
absolute discretion. The Municipality may set guidelines as to a minimum amount due before
legal action may be ?led.

CONSIDERATION

 

In consideration of the services to be performed by Jordan as Collector and by SLC, the
Municipality agrees to pay to Jordan and SLC as follows:
A, Compensation of Collector and SLC: Other Payments: Charges: All compensation
charged shall not exceed the amounts as set forth in the Ordinance or Resolution. Servicing
Expenses due Collector and Attorney Fees due SLC shall be added to the Delinquent Claims
and shall be recovered directly from the Delinquent Payor. All Servicing Expenses and Attorney
fees are contingent upon collection from the delinquent property, Delinquent Taxpayer or other

Delinquent Pavor. As a. result and except as provided in this Agreement to the contrarv. if

Municipality shall not be obligated to pay such Servicing Expenses to Collector or Attorney
Fees to Special Legal Counsel.
1. Contingent Fees
a. Collector

l. The Municipality agrees that Collector shall be paid a
commission based upon a percentage of Gross Collections as a Servicing Expense in accordance
with the Ordinance or Resolution for the collection of Delinquent Claims during the term of this
Agreement.

2. Certi?cation: A no lien letter fee for Delinquent Clairns provided
to any third-party requesting such information shall be $25.00 per no lien letter. This fee shall be
the responsibility of the third-party requesting such information.

b. Special Legal Counsel

1. The Municipality agrees that SLC shall be paid Attorney Fees for
enforced collection of Delinquent Claims in accordance with the Attorney Fee and Out?of-
Pocket Expense provisions of the Ordinance or Resolution.

2. Non-Contingent Fees

 

a. Special Legal Counsel and Jordan:

1. The Municipality shall be responsible for reimbursing SLC for any
Attorney Fees and Out-of?Pocket Expenses due and owing to SLC should the Municipality
direct SLC to begin or continue any action which does not result in payment of the Attorney
Fees from a Delinquent Payor or from the sale of the delinquent property, direct SLC to delay or
cease any collection proceeding, discontinue any action or withdraw from any proceeding. If the

Municipality collects any Delinquent Claim and does not include and immediately thereafter

 Attorney Fees and Out-of?Pocket Expenses, and Jordan?s Servicing Expenses, including
Out-of-Pocket Expenses and Postage Expenses, including any ?nancing, pledge, transfer, sale or
assignment of Delinquent Claims pursuant to 53 PS. 7147 or other applicable law, Jordan and
SLC shall be paid all amounts due and owing. If any of the above occurs, SLC and Jordan shall
be entitled to payment-in-full of Attorney Fees and Out-of-Pocket Expenses, and Jordan
shall be entitled to payment-in?full of Servicing Expenses, Out-of?Pocket Expenses and Postage
Expenses by Municipality Within thirty (30) days of written demand.

2. Should the Municipality terminate this agreement, the
Municipality shall reimburse SLC for any Attorney Fees and Out?of~Pocket Expenses due and
owing to SLC and Servicing Expenses, Out?of~Pocket Expenses and Postage Expenses due and
owing to Jordan on all Delinquent Claims within thirty (30) days of written demand from SLC
and/ or Jordan.

3. The Municipality may consult with SLC concerning the selection
of delinquent properties to be pursued by legal action for collections. SLC shall have the ?nal
decision concerning Whether or not to pursue collection against a specific property and SLC
shall have authority to discontinue proceedings if it determines that collection of Delinquent
Claims is unlikely or that further collection efforts are not justi?ed. SLC shall pursue delinquent
properties at the request of Municipality even if SLC would not independently agree to ?le an
enforcement action against such properties provided that the Municipality reimburses SLC for
Attorney Fees and Out-of?Pocket Expenses and Jordan for Servicing Expenses and Out-of-
Pocket Expenses not recovered in such proceeding. If the amounts due Jordan and SLC are not
redeemed by payment during the course of such proceeding or from a third-party bid received at
Sheriffs Sale, then the Municipality shall either bid an amount suf?cient to pay all amounts due

Jordan and SLC and take title to the property at Sheriffs Sale or direct SLC to step the

Expenses, Attorney Fees and Out-of?Pocket Expenses paid by the Municipality to Jordan and
SLC and thereafter recovered from a Delinquent Payor shall be reimbursed to the Municipality.

3. Detailed Records

SLC and Collector shall maintain detailed records of all Attorney Fees, Servicing
Expenses and Out-of?Pocket Expenses collected pursuant to this Agreement and shall keep a
separate account of such amounts for each delinquent account where any Attorney Fees,
Servicing Expenses or Out-of?Pocket Expenses are recovered. SLC shall comply with this
provision if such records are maintained by Collector or SLC. All Attorney Fees and Outnof~
Pocket Expenses shall be added to the Delinquent Claims for each property subject to a
proceeding initiated by SLC. Attorney Fees shall thereafter by collected by SLC or by Collector
on behalf of SLC as payment of legal services rendered to the Municipality by SLC. Servicing
Expenses and Out-of-Pocket Expenses due Collector shall be charged and collected by the
Collector and shall serve as compensation for services rendered to the Municipality by
Collector, except that liability for payment of such amounts shall not be contingent upon the
initiation of a legal proceeding.

4. Miscellaneous Provisions

 

a. Jordan shall be the exclusive Collector and SLC shall be the exclusive
SLC of Delinquent Claims during the term of this Agreement. The Municipality shall not accept
any payment of any Delinquent Claims or enter into an installment payment agreement with any
Delinquent Payor for any Delinquent Claims. Any Delinquent Claim payment received by the
Municipality, including proceeds from the sale, transfer and assignment of Delinquent Claim
liens or receivables, or from a ?nancing transaction shall be forwarded to Jordan for application
in accordance with the terms of this Agreement. If the Municipality fails to protect the Servicing

Expenses, Postage Expenses, Out-of?Pocket Expenses due Jordan and/or Attorney Fees and

of?Pocket Expenses due SLC as provided herein, Jordan shall be entitled to payment?in??ill of
the Servicing Expenses, Postage Expenses, and Out-of?Pocket Expenses due Jordan and Special
Legal Counsel shall be entitled to payment?in~full of any Attorney Fees and Out-of-Pocket
Expenses due SLC, which, if not deducted and paid by Jordan in accordance with Article IV,
shall be paid by the Municipality within thirty (30) of ordan?s and/or written demand for

payment.

b. To the extent that any portion of the Servicing Expenses, Postage
Expenses, Out-Of-Pocket Expenses or Attorney Fees charged and collected in accordance with
this Agreement are deemed by any court to be unlawful, the Municipality shall be solely
responsible for reimbursement or refund of any amount due to any Delinquent Payor entitled to
such refund. All Servicing Expenses, Postage Expenses, Out~Of?Pocket Expenses, and Attorney
Fees collected by Jordan and SLC, shall be retained by Jordan and SLC as compensation for
services rendered and reimbursement of Out-of-Pocket EXpenses and Postage Expenses
pursuant to the terms of this Agreement.

c. Jordan shall add all Record Costs, Lien Costs, Servicing Expenses,
Postage Expenses, Out-Of?Pocket Expenses and Attorney Fees due to each Delinquent Claim
due and shall collect such amounts, together with the Face, Penalty and Interest due and owing
for each Delinquent Claim, from the Delinquent Payor. Jordan shall provide a 
collection report to the Municipality detailing collections made in the preceding month.

d. The Municipality agrees that any and all Record Costs, Lien Costs,
Postage Expenses and Out~0f~Pocket Expenses advanced by Jordan or SLC are costs which are
the responsibility of the Municipality. The Municipality shall advance all Lien Costs. All
Record Costs, through judgment, shall be advanced by Jordan and/0r SLC subject to

reimbursement as nrnvided herein.

e. The Municipality shall create an execution cost and expense fund
(?Fund?) for the Record Costs and Out-of?Pocket Expenses, including but not limited to, fees
for title searches and the ?ling fee for any Sheriff Sales, for the execution or Sheriff?s Sale part
of any ?led enforcement action initiated by SLC. The Fund shall be suf?cient for at least
twenty- ?ve (25) executions per month. However, at the Municipality?s discretion, the fund
shall be larger, permitting Collector and SLC to ?le in excess of twenty?five (25) executions per
month. Recovered amounts paid from the Fund shall be forwarded to the Municipality and shall
be redeposited into the Fund for use in subsequent cases.

f. In the event that any Record Costs, Lien Costs, Postage Expenses and
Out- Of?Pocket Expenses are advanced but not recovered by Jordan or SLC in the Servicing
and/or in the enforced collection of Delinquent Claims, the Municipality agrees and shall make
payment to Jordan and/or SLC for any and all Record Costs, Lien Costs, Postage Expenses and
Out-Of? Pocket Expenses paid or incurred within thirty (30) days of Jordan?s written demand
for payment.

g. SLC shall not be responsible for advancing any Record Costs or Out-of-
Pocket Expenses. If such costs are ever advanced by SLC, SLC shall be reimbursed by
Municipality within thirty (30) days of written demand for payment.
IV. DISTRIBUTION OF DELINOUENT CLAIM COLLECTIONS

Jordan shall add all Record Costs, Lien Costs, Servicing Expenses, Postage Expenses,

Out-Of?Pocket Expenses and Attorney Fees due to each Delinquent Claim due and shall collect
such amounts, together with the Face, Penalty and Interest due and owing for each Delinquent

Claim. from the Delinquent Pavor.

A. Full Payment.

Upon receipt of full payment, Jordan shall, as funds are available, remit all Attorney
Fees and Out~0f~Pocket Expenses to Special Legal Counsel, (ii) the Servicing Expense, Postage
Expense and Out~Of-Pocket Expense due Jordan Record Costs, Lien Costs and Expenses,

and (iv) the Face, Penalty and Interest portion of the Delinquent Claims to the Municipality.

B. Less than Full Payment or Installment Payments.

Where a less than full payment of Delinquent Claims has been received, or when
Delinquent Claims are being paid in installments, Jordan shall distribute the amounts collected
to the SLC, Jordan, third~parties and to the Municipality in the following order of priority:

1. Reimbursement of Out~Of?Pocket Expenses and Attorney Fees.

2. Reimbursement of Jordan?s Out~Of-Pocket Expenses, Servicing Expenses and
Postage Expenses.

3. Reimbursement of Record Costs and third party expenses.

4. Delinquent Claim collections shall next be applied in the following order]:

a. Delinquent taxes, the earliest in lien having priority, until each tax year is
paid~in~full;
b. Municipal claims, the earliest in lien having priority, until each municipal

claim is paid-in?fullz;

1 Pursuant to applicable law, a Delinquent Payor is permitted to direct a payment towards a
speci?c debt. The Delinquent Payor is not permitted, however, to direct how the payment is to
be applied towards the Speci?c debt. Thus, the application of payment set forth in this
subparagraph 4 applies where no speci?c payment direction has been provided by the
Delinquent Payer. In addition, if there are multiple delinquent accounts with common
ownership, absent application of payment direction by the Delinquent Payor, the payment shall
be applied to a Speci?c account at the sole and absolute discretion of SLC and/or Jordan.

5. Partial payment of a Delinquent Claim not suf?cient to pay a Delinquent Claim
in full shall be applied in the following order:
Penalty;
Interest;
(0) Lien Costs;
Face;

6. Interest and Servicing Expenses shall continue to accrue on the Delinquent
Claim until the full amount necessary to satisfy a year?s Delinquent Claim is paid in full.
Interest and Servicing Expenses accumulate on the ?rst of the month for the entire month, or
part thereof, in which payment is received. There is 110 per diem rate of interest or per diem
Servicing Expense. Pursuant to 53 P.S. ?7203, the Penalty portion of any municipal assessment
shall be included in the amount for which the municipal claim is filed.

C. Delinquent Claim Reductionsi? Additions and Set?Offs.

1. From time-to-time a proceeding results in the payment of an amount less than the full
amount of the Delinquent Claims due and owing. This includes, but is not limited to,
Bankruptcy sales free and clear of liens, sales pursuant to Section 31 and Section 31.1 of the
Act, compromises, distributions in eminent domain proceedings and quiet title actions. In the
event of such sale, compromise, or reduction, the Delinquent Claims shall be distributed in
accordance with Article IV. B. of this Agreement.

2. If a Delinquent Claim previously paid to Jordan is reduced through a tax assessment
reduction or by any other decree occurring after the date of payment of such Delinquent Claim

bv Jordan to the Municipality. the Municioalitv shall be resnonsible for Davina anv refund due

2 The distribution of partial payment made in connection with voluntary installment payment of
Delinquent Claims may be altered by the provisions of an intergovernmental c00peration

directly to the Delinquent Payor. Jordan shall be responsible for refunding directly to the
Delinquent Payor that portion of the Servicing Expense relating to the amount of the Gross

Collections reduced by the reduction.

3. Collector and SLC are authorized to use the Municipality?s right to set off any claim
to a refund against any municipal obligation owed in accordance with the Act, 53 PS. 7231-

7235.

V. ADDITIONAL RESPONSIBILITIES
A- Mann

1. If any Municipality is required by law to provide notice to any tenants of occupied
property or other persons liable for Delinquent Claims with notice of any action with respect to
providing services to the property or with respect to any other matter, the Municipality shall be
responsible for providing such notice(s) at its expense and shall provide copies or a record of all
such notice(s) to the Collector or SLC. Water shutoffs are not the responsibility of Collector or
SLC and any recoverable costs and expenses relating to notices and/or water shutoffs shall not
be considered ?Charges, Expenses and Fees? unless such amounts are provided to Collector
with the Municipality's written direction to add such amounts to the ?Charges, Expenses and
Fees? related to a speci?c debt.
B. Records.

1. The Municipality shall provide Jordan with all Delinquent Claim information, which
includes detailed statements or records of Delinquent Claims due and owing for each prOperty
and/0r owing Delinquent Claims to the Municipality, in a form acceptable to Jordan at the sole

expense of the Municipality and provide Jordan with access to all relevant documents, records,

agreement. by and between the Municipality and one or more additional

facilities, and personnel necessary for Jordan and/or SLC to effectively provide services under
this Agreement. Neither Jordan nor SLC shall be responsible for the accuracy or correctness of
any of the Municipality?s records relating to any Delinquent Claim due prior to the date of this
Agreement. Jordan shall endeavor to assemble a uni?ed Delinquent Claim record of the
Municipality?s Delinquent Claims to the best of ordan?s ability. However, Jordan shall not be
responsible for the accuracy of any Delinquent Claim where the data provided to Jordan by the
Municipality is inaccurate or is insuf?cient to prepare a complete record for that Delinquent
Claim.

C. Miscellaneous.

1. The Municipality shall execute any and all necessary powers of attorney or other
documents or shall otherwise deputize or grant whatever authority is necessary, if any, in
addition to the authority provided in this Agreement, for Jordan and SLC to provide the services
required herein.

2. The Municipality shall provide to Jordan and/0r SLC all notices which
Municipality receives relating to any event or proceeding that may affect any Delinquent Claim,
delinquent person or delinquent property. Absent independent receipt of such notices by Jordan
or SLC, Jordan and SLC shall not be responsible for any Delinquent Claim affected by such

event or proceeding.

3. The Municipality shall provide Jordan and SLC with a list of any pending legal
proceedings, filed on behalf of or against the Municipality, including any pending bankruptcy
cases involving any Delinquent Claims. Jordan, SLC and the Municipality shall then determine
whether such pending legal proceedings will be concluded by SLC and Jordan or by
Municipality, through those persons or entities handling such matters on or before the date of

this Agreement. If it is determined that SLC shall represent the Municinalitv in anv such matter.

substitution of appearance shall be prepared by the Municipality?s prior legal counsel in such
matter or matters. If such matter or matters shall continue to be handled by someone other than
Jordan and SLC, any statement of the balance due for Delinquent Claims shall be obtained from
Jordan and payments made, unless otherwise agreed to, shall be made to Jordan and applied in

accordance with the provisions of this Agreement.

4. Beginning on the date of this Agreement, the Municipality shall not institute any
independent collection action or proceeding, whether administrative or judicial with reSpect to
any Delinquent Claim unless it is determined by the Municipality, Jordan and SLC that the
Delinquent Claims are not likely to be collected and that the Municipality will utilize an
administrative 01* judicial procedure to attempt to transfer title to the property subject to the
Delinquent Claims. No such action shall be ?led without consent if the preperty in
question is subject to a pending action ?led on behalf of Municipality by SLC unless all
Attorney Fees and Out-of-Pocket Expenses are paid by the Municipality. In a proceeding
initiated by the Municipality pursuant to this Paragraph, Jordan shall continue to act as
Collector and all payments received shall be forwarded to Jordan and shall thereafter be applied

pursuant to this Agreement.

5. The Municipality shall appoint a representative or representatives who shall be
the primary contact person(s) for all communications with Collector and Special Legal Counsel
for matters related to this Agreement or any related agreements.

VI. CONDITIONS PRECEDENT

1. Jordan shall have received a complete list of the Municipality?s unpaid Delinquent

Claims and had ample opportunity to create an appropriate database to be used in the collection

of such Delinquent Claims before Jordan and SLC shall be obligated to perform pursuant to the
terms of this Agreement.
2. The Municipality shall have complied with all of the representations and warranties
set forth in Article VII, below:
VII. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Municipality.
1. The Municipality hereby represents and warrants as of the date of this Agreement
that:

a. The Municipality is a Municipal Authority and is duly
organized and validly existing under the laws governing its creation. The Municipality has taken
all necessary action to authorize the execution, delivery, and performance of this Agreement;

b. The Municipality has adopted all appropriate ordinances, resolutions,
obtained any consent, approval, authorization, or order of any court or governmental agency or
body required for the execution, delivery, and performance by the Municipality of this
Agreement;

c. The Municipality has adopted an Ordinance or Resolution pursuant to
Sections 1,2, and 3 of the Act, as amended. 53 RS. ??7101, 7103, and 7106, respectively, as
amended by Act 1 of 1996, Act 20 of 2003 and Act 83 of 2004, allowing the Charges, Expenses,
and Fees of Servicing (?Servicing Expenses?) including a percentage of Gross Collections and
postage reimbursement (?Postage Expenses?) and Attorney Fees and 
Expenses to be collected as part of Delinquent Claims collected on behalf of the Municipality by
the Collector. This Agreement authorizes Jordan and SLC to act in reliance upon said Ordinance
or Resolution and any other relevant ordinances or resolutions for the purpose of collecting

amounts due for Delinquent Claims.

e. The Delinquent Claims subject to this Agreement have not been waived,
modified, altered, satis?ed, redeemed, or subordinated in any respect, or rescinded, and the
property subject to such Delinquent Claims have not been released from the lien evidenced by
the Delinquent Claim, in whole or in part.

f. The Face Amount of each Delinquent Claim, whether or not ?led as a
lien or municipal claim, is true and correct to the best of the Municipality?s information,
knowledge, and belief.

g. All Delinquent Claims ?led prior to the date of this Agreement have
been ?led in accordance with applicable law and are valid and collectible if any balance due
remains uncollected.

B. Representations and Warranties of Jordan and SLC.
1. Jordan hereby represents and warrants as of the date of this Agreement that:

a. Jordan is a corporation duly and validly existing, in good standing, under
the laws of the Commonwealth of Jordan has taken all necessary action to
authorize the execution, delivery, and performance of this Agreement; and

b. This Agreement and all of the obligations of Jordan hereunder are the
legal, valid, and binding obligations of Jordan, enforceable in accordance with the terms of this
Agreement, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium, or other laws relating to or affecting the rights of
creditors generally.

2. SLC hereby represents and warrants as of the date of this Agreement that:

a. SLC is a professional corporation duly and validly existing in good standing,

under the laws of the Commonwealth of SLC has taken all necessary action to

authorize the execution. delivery. and performance of this Agreement: and

b. This Agreement and all of the obligations of SLC hereunder are the legal,
valid, and binding obligations of SLC, enforceable in accordance with the terms of this
Agreement, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium, 01* other laws relating to or affecting the rights of
creditors generally.

CONTRACT TERM
A- lama

The term of this Agreement shall commence as of October 1, 2008 and unless sooner
terminated pursuant to Article Part hereof, shall expire on September 30, 2010. If not
terminated and absent the Parties? agreement to one or more additional longer Terms, this
Agreement shall automatically renew for an additional Term or Terms of one hundred eighty
(180) days subject to the right to terminate as provided below.
3. 

If a party to this Agreement fails to materially comply with any of the representations
and warranties made herein; or (ii) a party to this Agreement fails to materially comply with any
other material provision of this Agreement within thirty (30) days after written notice from the
non-defaulting party of such material noncompliance or within such reasonable but necessary
longer time needed to comply, provided that the alleged defaulting party is diligently making all
reasonable efforts to comply, such party shall be in default. Upon the occurrence of a default
hereunder, the defaulting party shall within thirty (30) days of receipt of such written notice of
default have thirty (30) days to correct the breach or material non compliance or such longer
time as reasonable necessary to comply. If the defaulting party does not cure the default within

the cure period, then the non?defaulting party may pursue any remedy at law or in equity to

may be entitled including bringing action to speci?cally enforce provisions of this Agreement
and/or collect any sums due hereunder.

Failure by the Municipality, Jordan or SLC to take timely action with respect to any
potential default or Violation by the Municipality, Jordan or SLC of any of the terms, conditions
covenants or representations and warranties of this Agreement shall not in any manner limit,
prejudice, diminish, or constitute a waiver of any right of the Municipality, Jordan or SLC to act
with respect to any subsequent violation or default including any violation or default which is

similar in nature to any prior violation or default that was not the subject of any action.
C. Termination?i

1. Termination by Parties for Material Breach. During any time of this Agreement,
this Agreement may be terminated by the parties only for an uncured material breach of its
terms after written notice and opportunity to cure. A material breach shall include any uncured
default as provided in Part above. If the material breach or incident is cured, this Agreement
shall remain in effect through the initial term or any subsequent term hereof. Termination for

material breach of one Party shall not be termination as to the other parties.

2. Termination for Non-Renewal. This Agreement shall terminate upon written
notice from the Municipality, received by Jordan and/or SLC ninety (90) days or more prior to
the expiration of any Term. Termination as to Collector or SLC shall not terminate the other.

3. Upon termination for default or non-renewal of this Agreement, Jordan shall
provide the Municipality with statements of Servicing Expenses, Postage Expenses, and Out-of-
Pocket Expenses due Jordan, and SLC and/or Jordan shall provide the Municipality with

statements of Attorney Fees due SLC which shall be paid to Jordan and SLC within thirty (30)

4. This Agreement shall terminate as to Jordan or SLC upon ninety (90) days prior
written notice to Municipality. Termination by one party shall not be termination by both.
D. No CowPartnershin or Agency.

It is understood and agreed that nothing herein contained is intended or shall be
construed in any respect to create a relationship of co-partners between Municipality, Jordan
and SLC. Jordan and SLC shall be considered to be independent contractors at all times under
this Agreement providing services to the Municipality as authorized herein and by applicable
law.

E. Notices.

1. All notices, reports, and documents required under this Agreement shall be given as
follows:
a. As to the Municipality:

Pittsburgh Water and Sewer

Authority Penn Liberty Plaza I 1200

Penn Avenue Pittsburgh, PA 15222

or such other place or person as the Municipality may designate in writing.

b. As to ordan'

 

William R. Linnert, Jr.,

President Jordan Tax Service,

Inc.

102 Rahway Road

McMurray, PA

15317

or such other place as Jordan may designate in writing.

c. As to Special Legal Counsel:

Michael G. McCabe, Esquire
Goehring, Rutter Boehm,
PC.

1424 Frick Building

437 Grant Street

Pittsburgh. PA

F. Legal Challenges.

1. Jordan and SLC: Except as otherwise provided speci?cally herein, Jordan and
SLC agree that they shall be responsible for the payment of their own attorney fees and costs of
defense in the event of any lawsuit filed alleging any improper act, error, or omission of Jordan
or SLC or by any agent, employee, licensee, contractor, or subcontractor of Jordan or SLC with
respect to the Servicing of the Delinquent Claims.

2. Municipality: The Municipality agrees that it shall be responsible for the
payment of its own attorney fees and costs of defense in the event of any lawsuit ?led by reason
of any act, error, or omission of the Municipality or of any agent, employee, licensee,
contractor, or subcontractor of the Municipality. In addition, the Municipality shall be
responsible for providing legal counsel at its sole cost and expense in any litigation brought
against Jordan or SLC challenging the legal authority of the Municipality, Jordan or SLC to
collect the Delinquent Claims, Lien Costs, Record Costs, Servicing Expenses, Attorney fees and
Out-of-Pocket Expenses pursuant to the terms of this Agreement.

G. Modification or Amendment.

 

This Agreement constitutes the entire agreement of the parties on the subject matter
hereof and may not be changed, modified, discharged, or extended except by written
amendment or change order duly executed by the parties. The Municipality shall not enter into
any Intergovernmental Cooperation Agreement which modi?es any of the provisions
of this Agreement, without the prior written consent of Jordan and SLC. In the event of an ICA,
all terms and conditions of this Agreement shall remain unaffected except for those provisions
modi?ed by the ICA. The ICA provision shall govern unless and until the ICA terminates or the

ICA provisions are deemed unlawful.

H. Applicable Law.

This Agreement shall be deemed to have been made in, and shall be construed in
accordance with the laws of the Commonwealth of 
I. Survival.

It is understood and agreed that the duties of Jordan, SLC and the Municipality
hereunder and the representations and warranties set forth herein shall survive the collection of
any Delinquent Claim by Jordan or SLC.

J. Authorization.

This Agreement is entered by the Municipality and was approved by the Municipality

via Resolution No. 102 oi2008 at a regular meeting of the Pittsburgh Water and Sewer

Authority held on September 12, 2008.

PAGE 

IN WITNESS WHEREOF this Agreement is duly executed on the day and year ?rst

above written by the parties hereto, intending themselves to be legally bound hereby.

ATTEST:

ATTEST:

if?:

ATTEST:

 

APPROVED AS TO FORM:

(warm

Solicitor, Pittsburgh Water and Sewer Authority

JORDAN TAX SERVICE, INC.
Federal ID #25~l319034

By

 

William R. Lh/n'rert, J12, Pfesident

GOEHRING, RUTTER AND
BOEHM, P.C.
Federal ID #>5-1291 13 5

By:

 

Michael MCCabe Shareholder

PITTSBURGH WATER AND
SEWER AUTHORITY

Chairman


I


By:

Michael Kenney, Executive Director

RESOLUTION NO. 102 OF 2008

Authorizing an Agreement with the Jordan Tax Service, Inc, and the law firm of Goehring Rutter Boehm,
PC. for the collection of Delinquent Claims

WHEREAS, the Pittsburgh Water and Sewer Authority (hereinafter "the is required from
time?to-time to enforce by various means the collection of unpaid taxes, tax claims, tax liens, municipal claims and
municipal liens, whether ?led or un?led (hereinafter referred to as ?Delinquent Claim? or ?Delinquent Claims?);
and

WHEREAS, the expense of such enforced collection, and of the recordkeeping and other services
related to the. collection, ?ling, satisfaction, assignment and revival of Delinquent Claims, when absorbed by the
PWSA constitutes a further demand on die PWSA's resources; and

WHEREAS, Act 1 of 1996 and Act 20 of 2003 amend, among other provisions, ?3 of the
Municipal Claim and Tax Lien Law (hereinafter the Act of May 16, 1923, PL 207, so that 
as amended. 53 RS. ?7l06 permitting the PWSA, as that term is de?ned in the Act, to recover reasonable attorney
fees in connection with die collection of Delinquent Claims from the persons and property owing such Delinquent
Claims; and WHEREAS, the PWSA desires to exercise all such legal authority granted to it under the Act in order
to encourage timely payment and collection of Delinquent Claims, and to reduce, if not eliminate, the expense
associated with servicing of its Delinquent Claims and with the enforced collection of the same; and

WHEREAS, Jordan Tax Service, Inc. (?Jordan?) is a corporation, having its
principal of?ces at 102 Railway Road, McMurray, PA 15317, hereinafter referred to as ?Jordan? or ?Collector?; and
WHEREAS, Goeliring, Rutter Boehm, P.C. is a law ?rm having its principal of?ces at 437 Grant
Street, 14th Floor, Frick Building, Pittsburgh, PA 15219, and

WHEREAS, Jordan and GRB have the necessary experience, expertise, and resources to assist the
PWSA as the Collector and Special Legal Counsel, respectively, for the collection of the Delinquent
Claims; and

WHEREAS, it is believed that the retention of Jordan and GRB would enable the PWSA to
ef?ciently collect its Delinquent Claims,

NOW, THEREFORE, BE lT RESOLVED by the Pittsburgh Water and Sewer Authority,
Allegheny County, as follows:

NOW, THEREFORE, BE l?l? RESOLVED that the proper of?cers of the Pittsburgh Water and
Sewer Authority, on behalf of. said Authority, are hereby authorized and directed to enter into a Delinquent Claims
Agreement with Jordan Tax Service, Inc. and Goehring, Rutter 8: Boehm, P.C. Said agreement to be in a form

approved by the Executive Director and the Solicitor.
DULY ADOPTED AT A REGULAR
MEETING OF THE PITTSBURGH
WATER AND SEWER AUTHORITY
HELD ON SEPTEMBER 12, 2008.

Appendix 

PWSA 40-Year Plan





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Estimated Replacement Cost for Fire Hydrants and Valves

Table D-2

Diameter Estimated Installed
Component {Inches} Quantity ll mt Cost 'l'otal Cost

Hydranm 7,558 2,500 $1 8,895,000

Valves 120 400 43 [100
609 785 473 [le
I4 722 I (150 364 (115 [full
2,363 I00 4 962
38 4,1140 153
545 5,975 761]
321 4110 3 980 400
139 I 4110 3 
[54 45 (1110 966 401]
51 982
3 125 1 004 [101]
166 400 30 400
2 INS 431 [101]
1 313,700 313,701]

Subtotal Valves 

Total Estimated Replacement Cost for Hydranls and Valves $34,363,001]
Source: PWSA 40-Year Plan

 

Estimated Replacement Costs for Water Treatment, Pumping, and Storage Facilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table D-3
Estimated
Category Facility Name Cost

Treatment Raw Water Intakes $3,500,000
Ross Pump Station 18,853,000

Clari?ers, Filters, and Chem. Feed {31,100,000

Sedimentation Basins 37,255,000

Clearwell 55,756,000

llighland Membrane Filtration Plant 15,791,000

Treatment Subtotal 262,255,000

Pumping Aspinwall Pump Station 1) 14,149,000
Bruecken Pump Station 1 1,726,000

llerron llill Pump Station 4,598,000

llerron llill Tank Pump Station 77,000

Highland Pump Station 1,495,000

Howard Pump Station 8,043,000

lnline Pump Station 219,000

Lincoln Pump Station 1,206,000

Mission Pump Station 6,626,000

Saline Pump Station 1,693,000

Pumping Subtotal 49,832,000

Storage llerron llill Reservoir 6,233,000
Highland No. Reservoir 62,594,000

Highland No. 2 Reservoir 65,210,000

Lanpher Reservoir 69,147,000

McNaugher Tank No. 1 2,280,000

MeNaugher Tank No. 2 400,000

Allentown Tank No. 1 1,510,000

Allentown Tank No. 2 1,510,000

Bedford Tank 1. 190,000

Brashear Tank No. 1 2,890,000

Brashear Tank No. 2 2,890,000

llerron llill Tank 1,360,000

Gar?eld Tank 5,850,000

Lincoln Tank 1,590,000

Spring Hill Tank No. 1 390,000

Spring Hill Tank No. 2 390,000

Squirrel Ilill Tank 1,540,000

Storage Subtotal 226,924,000

Total Estimated Cost for Treament, Pumping, and Storage Facilities $539,061,000

 

Source: PWSA 40-Year Plan

 

Estimated Replacement Cost for Sewer System

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table D4

Diameter Pipe Length Installed
Description (inches) Material {feet} Unit Cost (1) Total Cost
Sewers 4 PVC 1,892 $63 51 19,196
0 PVC 3,035 74 224,590
3 PVC 776,734 84 65,245,656
10 PVC 142,493 95 13,536,835
12 PVC 650,695 102 66,370,890
15 PVC 2,771,834 113 313,217,242
18 RCP 570,348 142 80,989,416
2] RCP 274,971 157 43,170,447
24 RCP 337,942 175 59,139,850
27 RCP 14,213 211 2,998,943
30 RCP 138,192 230 31,784,160
33 RC 24,999 249 6,224,751
36 RCP 186,1 13 268 49,378,284
39 RCP 15 ,633 291 4,565,208
42 RCP 79,174 3 14 24,860,636
45 RCP 6,319 338 2,135,822
48 RCP 92,183 361 33,278,063
54 RCP 55,723 406 22,623,538
60 RCP 52,652 452 23,798,704
66 RCP 38,486 522 20,039,692
72 RC 54,35 I 593 32,230,143
73 RCP 25,654 676 17,342,104
84 RC 16,849 760 12,805,240
90 RCP 1 1,001 839 9,229,839
96 RCP 20,958 919 19,260,402
102 PCCP 10,371 1,300 13,482,300
108 PCCP 9,410 1,631 15,318,210
120 PCCP 2,832 2,414 6,836,448
132 PCCP 3,062 2,651 8.1 17,362
144 PCC 6,125 2,890 17,701,250
168 FCC 1,023 3,373 3,467,444
Subtotal Sewers 6,395,327 1,020,543,000
Description Quantity Unit Cost Total Cost
Munholes (2) 29.084 5,650 164,325,000
Catch Basms (2) 24,143 2,825 68,204,000
Dwersmn Structures 1 3) 99 95,000 9,405,000
Pump Stations (3) 4 600,000 2,400,000
Subtotal Other Items 244,334,000
Total Estimated Replacement Cost for Sewer System 

 

 

 

Source: PWSA 40-Year Plan