Millvale officials say borough government will be forced to shut down unless a court allows it to borrow up to $2 million.
In an emergency petition filed in Allegheny County Common Pleas Court, the borough says a 58% property tax increase council approved Dec. 30 will not give it enough money to pay its debts or cover current projects and unexpected expenses.
The only debt detailed in the petition is a $250,000 tax anticipation note the borough took from First National Bank in July 2024. Tax anticipation notes typically are short-term loans that local governments take out, usually at the beginning of a year, to cover expenses until property tax revenue comes in.
The note, at 5.6% interest, was to mature on Dec. 31, 2024. Under a forbearance agreement with the bank, the borough owes $251,158.35, which must be paid back in 2026, according to the petition.
“Based on the borough’s current financial position, the borough will not be able to repay the tax anticipation note without the requested relief and will likely need additional funding for 2026,” the borough says in the petition.
If the borough is forced to pay the loan without being allowed to borrow more money, “the borough will be forced to curtail municipal services to an extent endangering the health and safety of the public, to include shutting down all municipal services,” the petition states.
Millvale’s interim manager, Joe Kypta, referred questions to council President James Machajewski. Machajewski did not respond to requests for comment.
Borough Solicitor Jack Cambest said the fault was with former borough Manager Ed Figas, who resigned as part of a settlement agreement in April.
Figas was removed for not keeping council apprised of the debt that was accumulating, Cambest said, adding there were no accusations of any criminal conduct.
Figas could not be reached for comment.
Cambest said he did not know why the tax anticipation note was taken out in July 2024. According to Cambest, Figas believed it did not have to be paid back until July 2025, which Cambest said was incorrect.
“The previous manager had felt for whatever reason he would be able to pay it three months after it was due in December (2024),” Cambest said. “The revenue he was anticipating getting in did not come in, so they kept putting off these debts and using money that would be used for current debt. They couldn’t keep up with the prior debt that was accumulating.”
A hearing on Millvale’s petition is scheduled for 9:45 a.m. Jan. 15 before Judge John T. McVay in courtroom 703 at the Allegheny County City-County Building, 414 Grant St.
The borough also owes money to Alcosan, the Girty’s Run Sewer Authority and some bank loans, and needs matching funds for grants, Cambest said. Details on exactly how much is owed is being prepared for the hearing, he said.
If its petition is granted, Millvale Council is asking to have up to 10 years to repay a loan.
The borough’s petition says it would implement a dedicated tax for the repayment of the loan. Cambest said that would be done by putting money into a “safety fund” that could only be used for loan payments, intended to give security to the lending bank.
If the court rejects Millvale’s appeal, Cambest said the borough might have to consider applying for financially distressed status with the state.
Along with approving a $4.89 million budget for 2026, council approved increasing the property tax rate by 5.5 mills, from 9.5 mills to 15 mills.
For a property at Millvale’s median value of $37,900, that increases the annual borough property tax bill by about $208, from $360 to $568.
In a statement, council said it had to increase real estate taxes and make cuts “in order to keep our borough livable.”
“After a difficult period of simply making ends meet, seeing deficits grow and pushing some services and infrastructure to the back-burner, the decision is inevitable,” the statement says.
In addition to inflation and rising costs, the borough faults Allegheny County for not having reassessed properties, last done 13 years ago.
“While new investments are great, these properties are often still assessed as if they don’t have these investments,” the borough’s statement says. “The untimely county assessments result in unfairness to many of our long-standing homeowners who can’t afford such investments but are important members of our community’s strength.”
Officials have said a senior tax relief program will provide a 30% discount to protect “long-standing senior homeowners under certain income limits.” Details on the borough program, including specific qualifications, were not available.
Kypta said Millvale is trying to copy Allegheny County’s senior citizen tax relief program, which also offers a 30% discount on county real estate taxes for those who have owned their property for 10 years, are 60 or older and have a gross household income of $30,000 or less.
A 30% discount would lower the bill on a property at the $37,900 median value by about $170, to $398. That lowers the increase from about 58% to 11%.