State Auditor General Begins Audit Of PennVEST Nonpoint Source Project Funding Prompted By $51 Million Loan To Purchase Forest Land

Responding to a resolution authored more than three years ago by Rep. Martin Causer (R-Cameron), state Auditor General Tim DeFoor has launched an audit of nonpoint source management transactions authorized by the Pennsylvania Infrastructure Investment Authority. 

House Resolution 948 was introduced in 2018 in response to concerns raised about PennVEST’s approval of two low-interest loans totaling nearly $51 million for a New Hampshire-based company to purchase more than 60,000 acres of private forest land in Cameron, Clinton, Elk, Jefferson, McKean and Potter counties. 

“I commend Auditor General DeFoor for taking on this audit after his predecessor failed to do so. He recognizes we have a responsibility to make sure state dollars are spent appropriately and in accordance with the law,” Rep. Causer said. “PennVEST was created to help our municipalities pay for infrastructure maintenance or upgrades, which is vastly different from loaning funds to a private company to purchase land.” 

Rep. John Lawrence (R-Chester) was a vocal advocate of the resolution and now serves as vice chairman of the House Agriculture and Rural Affairs Committee. 

“I appreciate Auditor General DeFoor’s attention to this important matter,” Lawrence said. “The people of Pennsylvania deserve to know why a private equity company received a $51 million low-interest PennVEST loan to purchase forest land, when the clear mission of PennVEST is to fund municipal water and sewer projects.” 

Rep. Causer wrote the resolution seeking the audit in 2018, and it received unanimous approval in the House. Then-Auditor General Eugene DePasquale committed to conducting the audit but failed to do so during the two remaining years of his term. 

In a letter to Brion Johnson, PennVEST executive director, DeFoor stated his agency will evaluate PennVEST’s process for determining application/project eligibility and approval for loans and grants provided for Nonpoint Source Management Program Projects during the period of July 1, 2017, through June 30, 2018. 

It will also evaluate PennVEST’s monitoring activities to ensure compliance with the loan agreements made specifically with Lyme Timber. 

The Lyme Timber transactions were approved by PennVEST at meetings in late 2017 and early 2018, with the funding being loaned at an interest rate of just 1 percent. 

As part of the transactions, Lyme Timber is to complete a small acid mine drainage project on the property at a cost of about $700,000. The company also agreed to place approximately 9,400 acres of the land into a permanent working forest conservation easement. 

Related Articles:

-- House Adopts Resolution Asking Auditor General To Audit PennVEST Nonpoint Source Program As A Result Of Timber Loan

-- House Ag Committee: Is A $50M PennVEST Loan To Buy Forest Land The Best Use Of That Public Funding?

-- Lyme Timber Company Receives $25.4M PennVest Loan To Put 9,362 Acres In Working Conservation Easement, Create Jobs In 7 Counties

-- Lyme Timber, Three Rivers Forest Mgmt To Hold Public Meetings On Lyme’s Investment In Timber In Northcentral PA

[Posted: October 4, 2021]  PA Environment Digest