Mount Penn Moves to Take Over Its Water Authority

The Borough of Mount Penn is moving to take control of the water system that has served the eastern edge of Reading since 1941, and it has sued the public authority that runs the system to clear the way. The outcome will decide who owns, operates, and sets the rates for a system that serves more than 3,500 homes in four communities: Mount Penn, Lower Alsace, St. Lawrence, and part of Exeter Township.

A municipal authority is a separate public agency a town sets up to run a service like water or sewer. It has its own board and its own budget, and it is not the same thing as the borough council. The Mount Penn Borough Municipal Authority has run the water system since 1941, paid for by water bills rather than taxes.

Most of the people who pay those bills do not live in Mount Penn. By the borough's own rate study, Lower Alsace makes up about 37 percent of the system, Mount Penn about 31 percent, and St. Lawrence about 23 percent, with the rest in Exeter and elsewhere. That split is at the center of the fight.

What the two sides were negotiating

For much of this year, the borough and the authority were negotiating a deal called a "conveyance-leaseback." In that arrangement the authority would give ownership of the water system to the borough, then lease it back so the authority keeps running it day to day. In exchange, the authority would pay the borough an annual lease payment.

The borough says the change would shore up its long-term finances, coordinate public works, and keep the system in public hands. On its website it promises the authority's employees would keep their jobs and move onto the borough's payroll, and that a binding ban on ever selling the system to a private company is "non-negotiable." The borough argues the lease payment is not a subsidy from other towns but rent for using infrastructure the borough legally owns, and warns that letting the borough's finances slide would raise taxes and strain services in ways that reach neighboring communities too.

The dollars come from a draft study the borough commissioned from PFM Financial Advisors in January. It estimated a lease payment to the borough of up to about $550,000 a year, with roughly $320,000 a year described as the more practical target. Under that scenario the study projected the average residential water bill rising from about $112 a quarter in 2026 to roughly $142 to $160 a quarter by 2036, and it noted the authority's current rates sit below market. The same study describes the authority as financially sound: an essentially balanced 2026 budget, a water fund reserve of about $3.7 million, and enough cash to run the system for roughly 769 days. The study is labeled a draft "for discussion purposes only."

On June 29, the mayor and the authority chairman said in a joint statement that the two sides had met and believed they had "the framework for an agreement, pending board and council approval."

Why the deal broke down

That framework did not hold. In a July 22 statement, the authority board said the June 29 meeting was the only time borough representatives sat down to discuss specifics, and that a second session set for July 9 was called off by the borough at the authority's July 8 meeting, where the board was given a deadline to approve a deal it had not received in writing until July 10. The borough then sued the authority in the Court of Common Pleas.

The authority has not rejected the conveyance-leaseback. It said it was prepared to go ahead effective Jan. 1, 2027, on two conditions: a binding agreement that the system can never be sold to a private company, and assurance that the deal would not jeopardize its low-interest loans from PennVest, the state's water-infrastructure lender. Its objection is to the money. The board wrote that using authority funds to help balance the borough's budget would be "the equivalent of St. Lawrence and Lower Alsace residents funding its borough and township operations." Because most customers live outside Mount Penn, a lease payment routed to the borough's general fund would draw on bills paid by residents of other towns. WFMZ 69 News has reported on how the proposal reaches Exeter Township ratepayers as well.

Where it stands now

Rather than keep negotiating the lease, the borough is now moving to end the authority altogether. In an Aug. 18 letter, the seven borough council members told the authority board the borough does "not plan to deviate" from its path. "That includes our filings with the Court of Common Pleas and moving forward with assumption of the Authority's liabilities, and the subsequent dissolution," the letter says. It asks the authority to have its actuary value the employee pension plans, prepare an ordinance to transfer the retirement plans, tally the unused time off employees would be paid for, and consent to transferring its PennVest loans, all by the end of August.

The authority, for its part, used a July 23 statement to push back on news coverage, saying it was the borough that sued the authority and that its board had voted unanimously to keep talking. Both governments are now spending public money on lawyers. Neither side wants the system sold to a private company. What they dispute is who should own and control it, and whether the borough can require a payment drawn in part from ratepayers in other towns. That is the question the court case will settle.

What happens next

Borough Council has scheduled a public hearing and business meeting for 6 p.m. on Sept. 2 at the Antietam High School auditorium. As of its Aug. 25 agenda, the borough had not posted the specific subject of that hearing; the agenda listed a question-and-answer session on the conveyance-leaseback and a discussion of the Sept. 2 hearing as two separate items, along with an executive session on the litigation. The authority's board meets next on Sept. 9 at 7 p.m.

Residents of all four communities are customers of the system and can attend and comment at either meeting. For how to find and follow a local government's meetings, see our guide on township and borough meeting schedules in Berks County. For where a municipal authority fits among the county, your town, and your school district, see how Berks County government works.

Sources

• Borough of Mount Penn letter to the authority board, Aug. 18, 2026 — the borough states it will not deviate from its Court of Common Pleas filings, assumption of the authority's liabilities, and dissolution, and lists the pension-valuation, retirement-transfer ordinance, time-off, and PennVest-consent steps it wants by the end of August. Signed by Council President Richard Lombardo Jr., Vice President Christine Dise, and members Thomas F. Baer Jr., Kelly Dudash, Troy Goodman, David Korinchock, and Michael Kindlick.
• Mount Penn Borough Municipal Authority statement, July 22, 2026 — the system's history (serving more than 3,500 homes in Mount Penn, Lower Alsace, St. Lawrence, and Exeter since 1941), the authority's willingness to convey and lease back the system effective Jan. 1, 2027 with a no-sale guarantee and PennVest protection, and its concern about out-of-borough ratepayers funding borough operations.
• Mount Penn Borough Municipal Authority statement, July 23, 2026 — the authority's correction that the borough sued it, and that its board voted to continue discussions.
• PFM Financial Advisors draft water rate and lease-payment projection study, Jan. 20, 2026 — the borough's consultant estimated a lease payment of up to about $550,000 a year (practical target about $320,000), residential quarterly bills rising from about $112 in 2026 to $142–$160 by 2036 under that scenario, a system of about 4,300 equivalent dwelling units split Lower Alsace 37% / Mount Penn 31% / St. Lawrence 23% / others 9%, and current rates below market. Marked a draft for discussion.
• Borough of Mount Penn Conveyance-Leaseback Proposal page and Conveyance-Leaseback FAQs, Jan. 12, 2026 — the borough's stated goals, the "non-negotiable" ban on privatization, its argument that the lease payment is rent rather than a subsidy, and that employees move to the borough.
• Joint progress statement, Mayor Ryan Maurer and Authority Chairman Joseph Boyle, June 30, 2026 — the two sides reported a framework for an agreement after the June 29 meeting.
• Mount Penn Borough Municipal Authority amended agenda, Aug. 12, 2026 — lists "Conveyance Leaseback" as an agenda item.
• Mount Penn Borough Council business meeting agenda, Aug. 25, 2026 — the conveyance-leaseback Q&A, the Sept. 2 public hearing at the Antietam High School auditorium (6 p.m.), the Sept. 9 water authority meeting, and the executive session on litigation.
• Mount Penn Borough Municipal Authority — confirms the system serves Mount Penn, Lower Alsace, St. Lawrence, and a portion of Exeter Township.
• WFMZ 69 News, Aug. 24, 2026 — reported on the leaseback proposal's effect on Exeter Township residents.

Mount Penn Borough Municipal Authority: 200 N. 25th Street, Reading, PA 19606; 610-779-4900. Borough of Mount Penn: 200 N. 25th Street, Reading, PA 19606; 610-779-5151.