Kutztown wants Saucony Creek Regional Authority agreement to continue, or be compensated $5 million

Kutztown Borough countersued Maxatawny $5 million for pulling out of the Saucony Creek Regional Authority 2010 agreement.

“The Borough sincerely hopes that the Township of Maxatawny and Maxatawny Township Municipal Authority will reconsider this course of action and join the Borough in implementing the agreements between the parties,” according to a release prepared by Kutztown Borough Manager Gabriel Khalife and Borough Solicitor Tim Dietrich.

According to the release, Kutztown Borough and Kutztown Municipal Authority filed a counterclaim in Court of Common Pleas of Berks County, requesting the court require Maxatawny to follow through with their contractual obligation to create a joint sewer authority and transfer operation of the plant to the joint authority.

In the alternative, Kutztown Borough requested the court hold Maxatawny liable to Kutztown for $5 million to compensate Kutztown for the loss of land, capacity granted to the new sewage plan in pipes owned by Kutztown and Kutztown Municipal Authority, sewage treatment capacity which Kutztown was to have available and other assistance provided by the borough, according to the release.

Kutztown also demanded the release by an escrow agent of documents signed by MTMA returning the land and other rights to the borough because Maxatawny “defaulted and refused to proceed with the joint municipal authority. The Borough insisted upon this escrow of documents in 2010 to protect it against any subsequent refusal by the Township and MTMA to perform their contractual obligations,” according to Kutztown’s March 31 release.

“We’re looking at the borough’s interests in terms of the benefits we anticipated to get from agreeing with Maxatawny to develop SCRA as well as our time and investment to develop SCRA, our property that the building is built on, as well as our infrastructure that their flow is utilizing to get to the plant,” Khalife told The Patriot.

He said Kutztown officials want to see the development of SCRA, but if the joint authority is not created, then Kutztown wants compensation for use of their land and piping.

There were a lot of discussions prior to the 2010 agreement, said Khalife, “When both communities got together and signed the long-awaited partnership, I think both sides were equally excited.”

He said Kutztown entered into the SCRA 2010 agreement with the intention of both Kutztown and Maxatawny communities benefiting.

“We looked at all lengths to assist them to get them to where they had to be to develop their sewer plant, to get their loan, to get their funding. Once it was all accomplished, they approached us to not want to do everything we agreed upon that date in 2010, which kind of threw us a surprising curve,” said Khalife.

Litigation dates back to 2012.

Maxatawny Solicitor Jill Nagy said during a March 27 Maxatawny Municipal Authority meeting that Maxatawny was pulling out of SCRA and made an offer to Kutztown in a November 2012 letter, and received no response or counter. “In December 2013 we got a letter that the borough wanted to deed the plant over not to SCRA, but to the borough. At that time a declaratory action was filed saying, ‘Your time is up.’ There was a provision in the agreement saying, ‘You do not act within 90 days all claims are forever barred.”

Then, Kutztown Municipal Authority and Kutztown Borough countersued Maxatawny Township Municipal Authority and Maxatawny Township.

“We’re clearly interested in the purpose of SCRA which was for public benefit for both communities, public policy to join together and work together,” said Khalife.

An October 2010 Kutztown Borough release, according to a 2010 Patriot article, “Maxatawny and Kutztown sign sewage treatment agreement,” the purpose of the signed agreement was to provide for Maxatawny’s financing and construction of the sewage facility built on five acres provided by Kutztown Borough off Route 737. Upon completion, joint municipal authority Saucony Creek Regional Authority was to be formed by Maxatawny and Kutztown to own and operate the facility.

“We were excited in 2010 and now we’re just wondering why, because no real reason as to why, what we worked hard and long to get to on both parties, and agreed to from a cooperative effort, all of sudden, the closure of developing SCRA is not being done on their end,” said Khalife. “Our main interest is to bring SCRA to what it was originally formed to be.”

During a March 27 Maxatawny Municipal Authority meeting, Maxatawny Township Manager Justin Yaich said they would honor most everything in that agreement, except form another board and allow another group of people to control the facility.

About the Author

Lisa Mitchell

Lisa Mitchell is the editor of The Kutztown Patriot and Managing Editor of Berks-Mont Newspapers. Reach the author at lmitchell@berksmontnews.com or follow Lisa on Twitter: @kutztownpatriot.