BUTLER TWP — The Butler Area Sewer Authority has received an offer of $231.5 million to purchase the system. The offer, from Pennsylvania American Water Co., would be the second-largest purchase the company has made statewide.

The offer was announced at the authority’s board of directors meeting Tuesday morning. The deal could close next fall if the process goes according to plan.

Pennsylvania American sweetened the deal for customers by also announcing a pilot program.

Under the program, the company would pay to repair or replace “lateral lines,” the pipes that carry sewage from customers’ homes or businesses to the public sewer line.

Currently, customers are responsible for their own lateral lines, which cost an average of $8,500 to replace.

BASA stated at the meeting that all 33 employees would be retained under their current salaries and longevity if the deal goes through, and they would enjoy benefits very similar to their current plans.

The operations center on Litman Road would be maintained for a minimum of 10 years.

A rate increase of $2.50 per month would be enacted upon the closing of the deal, followed by a one-year moratorium on rate increases.

Pennsylvania American bills on a monthly basis. BASA bills on a quarterly basis.

Monthly sewer rates under Pennsylvania American would be based on water usage for customers with public water service instead of a flat rate.

Three Butler Township commissioners and Butler Mayor Bob Dandoy attended the meeting.

Regarding the rate increases expected to occur after the moratorium, Dave Zarnick, president of the township commissioners, stressed that the increases would have happened even if BASA had continued to operate the sewer system.

He said the system’s aging infrastructure will require extensive investment in coming years, and Pennsylvania American is in a much better financial position to make those investments.

In addition, Zarnick pointed out that BASA can raise rates as it sees fit, while Pennsylvania American must have increases approved through the Pennsylvania Utilities Commission. That approval process includes opportunities for customers to share their input with the PUC.

As to construction and repair projects, Pennsylvania American would assume BASA’s current list of capital improvement projects and upgrades to the tune of more than $75 million.

Pennsylvania American also has committed to using Butler-area contractors for those projects.

After BASA’s $49 million in debt is paid, the proceeds from the sale likely would be split evenly between BASA’s two owners, Butler and Butler Township, Zarnick said.

“The City of Butler and Butler Township are proposing to use the proceeds of the sale to support essential services for residents, future financial obligations, and various other community improvements that the city and township deem necessary,” BASA stated in a news release Tuesday.

Zarnick also addressed whether officials from Center Township, East Butler and other municipalities with BASA customers should have a say in the decision to sell. He said those municipalities are viewed as containing customers only, not partners in the sale.

Thomas Wyatt, of Obermayer Rebmann Maxwell & Hippel in Philadelphia, the special counsel hired by BASA for the sale, said customers outside of the city and township will enjoy the one-year rate freeze, Pennsylvania American’s investments in the sewer system, the pilot program for laterals and other benefits of the sale.

Dandoy touted the sale as the best course of action for customers, especially since Pennsylvania American is positioned to more quickly repair and upgrade the aging system.

“It would take an extensive period of time (for BASA to complete projects),” Dandoy said. “(Pennsylvania American Water Co.) has the resources to do it in a more timely fashion.”

Wyatt said the authority board, township and city officials worked diligently since the confidentiality agreement was enacted in December to ensure the benefits to customers made the sale worthwhile.

Zarnick agreed that BASA’s rates are well below those of other sewer systems in the state and cannot support the upgrades the system needs.

“We kicked the can down the road far enough that we’re in this problem,” he said.

Wyatt said if Pennsylvania American fails to file sale documents with the PUC within the required period of time, BASA would receive a $3 million payment and the fair market value of the system would be determined.

Dandoy said the potential deal did not come easily.

“I want to assure everyone that we have really worked hard on this,” he said. “Our focus was on the customers and employees.”

Pennsylvania American has provided public water service to customers in Butler and surrounding municipalities for many years.