In the middle of Clark’s Valley, between the ridges of Peters and Stony mountains, is a 6-billion-gallon lake that supplies Harrisburg with its drinking water. Known as the DeHart Reservoir, it was named for William T. DeHart, a city councilman who oversaw its creation in the late 1930s, and who died in 1947, in the last year of his third term. Four-and-a-half miles long, with a surface area of 650 acres, it releases between 8 and 9 million gallons of water to the city each day, roughly the quantity that would be needed to fill 13 Olympic-sized swimming pools.

On a recent Thursday morning, I stood with Dan Galbraith, the DeHart’s superintendent, on top of the stone-and-earth DeHart Dam and looked out over the reservoir. Galbraith wore a sky-blue T-shirt displaying the name of his employer—Capital Region Water, the city’s water and sewer authority. We were joined by Mike Deily, CRW’s director of operations, and Andrew Bliss, its community outreach manager. Underneath us, 90 feet below the surface of the lake, water was rushing through a steel-reinforced concrete pipe, beginning its downhill journey toward the city, over a distance of some 24 miles.

Galbraith has lived on the site for the past eight years, in a caretaker’s house just below the dam. I asked what it was like to live there. “Did you ever see ‘The Shining’?” he said. The remoteness has a lot to do with the reservoir’s pristine condition, which is why, during my visit, Deily and Galbraith went out of their way to emphasize the close watch kept on the facility. To our left was the spillway, a wide concrete chute that carries reservoir overflows to Clark’s Creek below. As we drove down from the dam, Galbraith pointed out a camera in the trees. “We already got you under surveillance,” he said. Deily, a biology major, noticed a cluster of butterflies fluttering around a trickle on the spillway floor. “Let me point out all the Lepidoptera species,” he said, and proceeded to identify each one.

Life at the DeHart has persisted, more or less unchanged, since its construction. The surveillance is new, and there are now Internet servers for transmitting flow data. The water treatment process has been upgraded, too—instead of getting a dose of chlorine just outside the reservoir, water from the DeHart is subjected to a battery of chemicals at a filtration plant downstream. But the basic function of the reservoir is the same. Water rushes out; some gets diverted to keep Clark’s Creek flowing, and the rest runs down to the city.

Capital Region Water, by contrast, has undergone a metamorphosis. In March, following a vote by City Council, its name was officially changed from the Harrisburg Authority—an entity best known for the nearly $400 million in debt related to the Harrisburg incinerator, which almost bankrupted the city and prompted an unprecedented state intervention.

In addition to the new name, Capital Region Water got a new logo: a pair of interlocking water droplets, which seem to reflect a much-simplified identity. As part of the state’s recovery plan for the city, it has shed the incinerator and the associated debt and refocused its mission on water and sewer services. At the same time, it has undertaken an ambitious project to map, through the use of robots, the condition of the city’s sewers. It has also absorbed two city bureaus, increasing its staff from nine to 86 people. And in April, two-and-a-half years after losing its credit rating, it reentered the capital markets with a refinancing that will save its ratepayers around $2 million per year.

The recovery plan contained many controversial provisions: the lease of the parking system and an accompanying increase in rates; a hike in local taxes and concessions from city unions; settlements with various creditors. The creation of Capital Region Water invited little public controversy, perhaps because, on the face of it, nothing fundamentally changed. A locally controlled water and sewer system remained under local control. And yet, without the efforts of a handful of people, it might have turned out very differently.

…

The home page of Capital Region Water’s new website, which launched at the end of June, includes a “community promise” from Shannon Williams, the company’s CEO. “Water is clear,” it begins. “And so should be our intentions.” To the left is a smiling portrait of Williams, who has signed off at the bottom of the pledge by invoking the company’s motto—“From raindrop to river.”

Williams grew up in Altoona, in Blair County, where her mother was a county commissioner for 28 years. She considered becoming a teacher or going into political science, but she liked her advanced physics course, and she wound up pursuing an engineering degree. After graduation, she took a full-time job at Herbert, Rowland & Grubic, eventually moving to their office in Harrisburg.

One day, she got a call about a City Council meeting. Council was interviewing new appointments to the Harrisburg Authority, and her firm, which was doing work for the Authority, asked if Williams would go observe. Not long after Williams’ visit to council, an engineer at the Authority retired, and Williams jumped at the opportunity. “It was right here,” Williams said. “We chose to live here, my husband and I, and we really love it.” She took the interim position, and in January of 2009, the Authority hired her full-time.

When Williams first arrived at the Authority, her primary project was to be contracts manager for the 85 outstanding contracts attached to the incinerator upgrade. But she was also quickly introduced to the Authority’s peculiar relationship with the city. Part of that relationship encompassed the water system, which the Authority still owned, but which the city’s bureau of water operated. Under the management agreement, the Authority was supposed to establish the annual water budget, including user rates. Yet the city effectively controlled the budget, which included large administrative fees.

Michele Torres, then the Authority’s executive director, assigned Williams to review the relationship. “My very first day here, she said, ‘Read through these documents. Find out what they say,’” Williams told me. “And it was often a theme of ours to talk about the ways things should be, the way the agreements say they are, and then the reality.” Initially, she saw herself as simply getting the lay of the land, but she soon developed a sense that the city wasn’t adhering to the letter of the agreements. She and Torres began to ask questions. What justified each line item in the city’s proposed budget? Where was the money going?

They weren’t the only ones trying to untangle the Authority’s complicated relationship with the city. In early 2007, amid mounting criticisms of the incinerator financings, a faction within City Council had tried to wrest control of the Authority from Mayor Stephen Reed, then in his seventh term. In February, they overrode a mayoral veto, granting themselves the power to appoint members to the Authority board. Reed challenged them in court, and lengthy litigation ensued.

The legal question concerned an interpretation of the city’s charter and the law governing municipal authorities. But documents filed in the case give a sense of larger issues. In one memorandum, council’s lawyers took aim at mayoral control under Reed, whom they accused of treating the Authority “as his own personal funding source for pet projects,” including his so-called “Wild West” museum. Another document, the sworn affidavit of the Reed-appointed board chairman, concerned Eric Papenfuse, an appointee of council’s who had been a vocal critic of such “pet projects” of Reed’s. Within a day of his appointment, according to the affidavit, Papenfuse went to Authority offices and “aggressively made demands” for various Authority records.

The more Williams and Torres studied the stipulated agreements, the more they sensed that something had gone seriously wrong with the Authority’s mission. She felt that, as owner of the water and sewer facilities, the Authority was accountable for how they were used, even if the city actually operated them. “At the end of the day, it comes back to the Authority,” she said. “So, we need to make sure things are done properly.”

 …

The Harrisburg Authority began its life in 1957, as the Harrisburg Sewerage Authority, a government agency created with the purpose of financing projects related to the city’s sewers. In forming the Sewerage Authority, the city relied on the state Municipalities Authorities Act, legislation first passed in 1935, and replaced in 1945, permitting the creation of municipal authorities as a means to secure public-project funding.

An authority’s primary financing vehicle was the revenue bond, a form of debt secured not by taxes but by charges to users. To borrow for the construction of a sewage treatment facility, the authority would pledge, in essence, a piece of the monthly bills of the facility’s future users. As outlined in a 2002 white paper by the state Department of Community and Economic Development, the reliance on user charges helped protect authority projects from the exigencies of city government. Where a tax increase might be politically impossible, user charges could achieve “a more equitable distribution of the burden of government” by tying rates to actual consumption. At the time, they also gave an authority access to debt that was unavailable to a local government under state law.

In 1987, Harrisburg amended the Sewerage Authority’s articles of incorporation, converting it to the Harrisburg Water and Sewer Authority. Its purpose was still broadly within the confines of the original authority: borrowing for public projects that now encompassed drinking water as well as sewage.

Then, in 1990, things started to become convoluted. That year, the city modified the authority again, changing it to a “general purpose” authority and rechristening it the Harrisburg Authority. Not long afterwards, in 1993, the Harrisburg Authority purchased the city incinerator, arranging for a series of bond issues to finance the acquisition.

On the surface, the debt was like the debt of the previous authority—it was in the form of revenue bonds, secured by charges to the incinerator’s users. But the debt was also only marginally related to the incinerator’s actual operations. In a $40 million bond issue that year, for example, $7.5 million went towards construction on the incinerator, while nearly $27 million went to the city itself, as a portion of the cost of purchase. The purchase price, in turn, went to refund the city for any number of expenses. In a May 22, 1995 letter to City Council, then-Mayor Reed provided a list of projects to be repaid by the “sale proceeds from the transfer of the Harrisburg Waste-to-Energy Facility.” The list included everything from playground renovations to laser printers to Sig Sauer pistols for police. It went on for 15 pages.

By these and similar maneuvers, the city converted the Harrisburg Authority to something much broader than a financer of public utilities. “General purpose authority,” in fact, was more apt than was perhaps intended. The Authority had become a kind of credit card for the general purposes of city government.

…

Capital Region Water’s “raindrop to river” motto skips over the steps in the water system that don’t make for pleasant slogans. On its way to the river, what enters homes as drinking water must leave those homes as waste.

The same day as my visit to the DeHart Dam, I toured the Advanced Wastewater Treatment Facility, a circuit of tanks and settling pools along the river, near the city’s southern edge. The AWTF’s superintendent is Jess Rosentel, who had prepared for our arrival by stashing glass jars of sewage at various stages of treatment throughout the plant, like Easter eggs.

A tour of the AWTF shows pretty quickly why, as a method of waste disposal, toilets are superior to, say, a hole in the ground. The average intake of the facility is 22 million gallons per day—most of which, whatever image the word “sewage” conjures, is water. “What you wash off with, it’s a little bit of dirt, but it’s not much,” Rosentel said. He held up a jar of cloudy water, floating with a few visible flecks. This was “primary influent,” sewage in the condition in which it reaches the plant, minus heavy grit like rocks and pebbles that washes into storm drains when it rains. The ratio of solid waste to water in primary influent is 100 parts per million.

In the 1950s, wastewater treatment was a physical process. The sewage was moved through pools slowly enough for solids to settle to the bottom. Treatment at the AWTF still begins this way. We passed along a catwalk between tanks of mostly clear water, where automated skimmers, like long windshield wipers, crept along the top and bottom, sweeping away sludge. In their path over the water’s surface, these skimmers catch floating solids, like grease, which the facility gets quite a bit of. At the end of a tank, I watched a skimmer come up against a cloud of grease and nudge it into a weir. Then the skimmer flipped under the surface, like a swimmer at the end of a pool, and headed back along the bottom.

Rosentel picked up another jar. The flecks were gone, but the water was still cloudy. In the 1950s, he said, the process would have stopped there: the cloudy water would be disinfected with chlorine and sent to the river. Then, starting in the 1970s, with environmentalists pushing for more stringent standards, the government began requiring the removal of dissolved pollutants, too.

The secondary treatment of wastewater is biological—what Rosentel referred to as “how Mother Nature removes solids.” Naturally occurring bacteria are added to the sewage, where they feed on pollutants like ammonia nitrogen and phosphorus and convert them to solids that can settle to the bottom. Normally, this process would require more space than the AWTF, hemmed in between the river and railroad tracks, possesses, so the facility produces high-purity oxygen in a tower on-site to help speed the activity of the bacteria.

Once the bacteria have digested the pollutants, the sewage is sent to enormous cylindrical clarifiers, where the mixture can settle while rotating vacuums suck sludge up from the bottom. Between the two rows of clarifiers, Rosentel held up a final jar. A cloud of brown solids had sunk to the bottom, and the top was almost crystal-clear.

 …

In late 2010, the Harrisburg Authority set in motion a series of events that would dramatically alter the course of the city’s recovery. That spring, the Supreme Court had finally issued its opinion on the question of board appointments, finding that the mayor had the power to appoint members with the advice and consent of council. The result was that existing board appointments, which had been made by council, were declared void. Linda Thompson, who had been on the council side of the complaint when it was filed, was now mayor—yet rather than simply repeat the appointments, she decided to revisit them.

In the ensuing squabble with council, two of the former board members got through: Bill Cluck, an environmental lawyer and activist, and Marc Kurowski, a civil engineer. As a two-member board, they were short of a quorum, and they spent most of the summer unable to do official business. On one occasion, they even had to file an emergency petition with the county for permission to renew an expiring insurance plan. Finally, in September, council consented to a third nominee: Westburn Majors, a government relations specialist at a downtown firm.

Of the three, Cluck had the deepest knowledge of the Authority’s history. A graduate of Penn State, with a law degree from Temple University, Cluck had moved to the city in 1991 to help open the Harrisburg office of Saul Ewing, a Philadelphia law firm. In the early 1990s, he and a colleague, Doug Schleicher, represented a York landfill in litigation over Dauphin County’s solid waste plan. In the course of the litigation, Schleicher took the deposition of Dan Lispi, a city employee who was project manager for the incinerator. “And my antennae went up,” Cluck told me. “I just made a mental note that something wasn’t kosher about this facility.” In 2000, he left Saul Ewing and started a private practice, in part to free himself up to be more active in the community, and to keep a closer watch on the incinerator.

In the fall of 2010, the three-man board solicited proposals for a forensic investigation of the incinerator financings. City Council and some members of the public had been calling for an investigation for some time, and the board was eager to obtain one, though its members had somewhat different motivations. “Bill had some opinions, because he had been pretty deeply entrenched in it, so he thought it might be going in a certain direction,” Kurowski told me. “To me, it was very important that it was a fair reporting, and wasn’t just, ‘Hey, this is a splashy headline, let’s go find somebody to hang by their ankles in the town square.’”

The team that was chosen included Doug Schleicher, Cluck’s former colleague, and Steve Goldfield, a financial advisor at Public Resources Advisory Group and, like both Schleicher and Cluck, a Saul Ewing alum. During the team’s presentation, Schleicher explained that Goldfield, an expert in public finance, would offer an “inside perspective” on the Authority’s bond issues, helping to “shed light on the kind of advice the Authority was entitled to” and “the protections and guidance it should have received.”

Their forensic audit wound up being a foundational document for the entire recovery process. By the time it was completed, in January 2012, the city had entered Act 47, the state program for distressed municipalities, and City Council had rejected financial recovery plans submitted by both the state-appointed coordinator and the mayor. As soon as the audit was finished, the board sent a copy to David Unkovic, who recently had been appointed the city’s first receiver.

The day he got the audit, Unkovic was holding a public forum to solicit input as he tried to draft a more palatable plan for recovery. As Cluck tells it, Unkovic went home that night to read the audit and couldn’t put it down. “It was like reading one of those mystery novels, up til 4:30 in the morning,” Cluck said.

The audit, Goldfield told me, confirmed for Unkovic the “complicity” of Dauphin County and the bond insurer, AGM, in the incinerator debt. “You couldn’t say this was the city’s problem, and the city needed to fix it,” he said. “This was a partnership going in, and it needs to be a partnership going out.” (Unkovic declined to comment about his tenure as receiver.)

The audit was foundational in another sense, too—the story it told about the incinerator debt laid the groundwork for subsequent investigations. When the state Senate held hearings on reforming the local government debt laws, Goldfield, with his summary of the audit’s findings, was the first to testify. He was also first out of the gate for the current grand jury investigation of the incinerator financings, for which he gave testimony lasting seven hours.

Whether the audit will contribute to any criminal or civil litigation, he said, remains to be seen—but there should be little doubt about why it exists. Numerous bodies had called for a forensic investigation. “But nobody did it,” Goldfield said. “It was the Harrisburg Authority that did it.”

…

Telling the story of the incinerator debt, and how the Authority’s ability to borrow had been abused, was only one half of the path toward its rehabilitation. The board and Authority officials also had to confront the question of what the agency would become.

One possibility, especially in the early stages of Act 47, included the privatization of water and sewer services. The looming debt had created a kind of fire-sale atmosphere; as Williams tells it, the initial attitude was “monetize everything and plug this hole.” Among the assets, the DeHart Dam, a pristine watershed surrounded by undeveloped woodland, would have been particularly valuable. But Williams and others were concerned about what a sale of public utilities might mean for customers.

“The level of investment that needs to be put into this system is so large that my concern was that, if it were sold to a private company, the rates would go through the roof,” she said. “They have to make a profit to give back to their investors.”

In January 2012, she gave a presentation to Unkovic and his team. Since before the city entered Act 47, Williams and others at the Authority had contemplated turning it into a “true operating authority”—an expert operator of the water and sewer systems, as opposed to a pass-through entity for city financing. In her presentation, Williams raised this possibility again. If the various components of the utilities could be combined, and the Authority could take over their operation, then a major burden could be lifted from the city while retaining local control.

Following the presentation, the receiver’s team began looking at the possibility of a long-term lease of water and sewer, along the lines of what would ultimately happen with city parking. There were two main objectives: ensure the efficient delivery of vital services, and, if possible, obtain some form of ongoing monetary benefit for the city. In February 2012, the receiver and the Authority issued an open-ended request for qualifications, explaining that the receiver’s goals were settling the city’s long-term debt as well as achieving long-term stability. Proposers, it said, were “strongly encouraged to provide creative solutions.”

Then, in late February, a major development took privatization off the table. Among the sewer system’s customers are six suburban municipalities, collectively producing about half of the wastewater flowing to Harrisburg’s treatment facility. In 2009, these municipalities, suspecting excessive charges by the city, hired legal counsel to investigate.

As it turned out, much as Williams and Torres had suspected with the water budget, the sewer budget had long included inexplicable fees. “The city would include line items in their budget, but when we looked, there were no supporting activities,” Scott Wyland, who represented the municipalities, told me. By law, whatever rates the city collected for sewer usage had to be used for sewer-related purposes. But an increasingly large portion of the city’s sewer budget—58 percent of it in 2009, Wyland said, up from 4 percent in the 1970s—was devoted to “administrative fees” and “other contracted services.” Alleging that the city had overcharged his clients by $25 million over a 10-year period, Wyland applied to intervene in the receivership proceedings in Commonwealth Court.

“That kind of completely hit the reset button,” Steve Goldfield, who was then the financial advisor to the receiver, told me. The receiver’s lawyers, concurring with Wyland’s analysis, determined that the type of lease they had in mind wouldn’t be permitted under the sewer-revenue laws. (Ultimately, the receiver reached a settlement with the suburban municipalities, which agreed to $11 million in offset credits distributed over the next seven years.)

Meanwhile, the receiver and his advisors were gaining confidence in Williams and the Authority board. The idea of converting to an operating authority, with an exclusive focus on water and sewer services, seemed like an increasingly viable option. Goldfield related a story about his local school board, which took a chance on a young principal who turned out to be a “superstar.” He and William Lynch, the receiver who replaced Unkovic after his resignation, held Williams in similar esteem. “Bill said to me before I said to him, ‘I think she could be a superstar,’” he said.

“I’ve always tried to do whatever I can to further the goals,” Williams told me. “As we were moving through everything, I just had that one singular goal, which was to get this as a true operating authority, and to improve those operations.” On Aug. 26, 2013, the receiver filed his recovery plan for the city, which was nicknamed the Harrisburg Strong Plan. Among its provisions was the creation of the new Authority—an operator of the water and sewer systems, free of the incinerator’s bad name and bad debt, under the control of a locally appointed board.

…

Once Harrisburg’s wastewater has been clarified, it can be returned to the river. But the sludge is only beginning its useful life. On their journey out of the plant, the bacteria are stored in a building where, for a time, they keep digesting, producing methane that the Advanced Wastewater Treatment Facility can capture and use to produce energy. In addition to powering two boilers, which heat the buildings on the complex in winter and keep the digesting room at 95 degrees, the methane powers a 400-kilowatt generator that sells electricity back to the power grid. Rosentel estimated the bacteria’s total energy production to be the equivalent of around 1,000 gallons of gasoline per day.

When digestion is finished, the water is removed, and two products remain. One is what Rosentel referred to as “cake”: spongy, black, virtually odorless clumps of sludge, which are collected and hauled away by farmers for use as fertilizer. Currently, the AWTF pays farmers to take the cake, though the facility is contemplating some additional treatment upgrades that could improve the fertilizer to a point where it can be sold. The other byproduct is ammonia-rich water, which is used to jump-start the growth of new bacteria.

A couple of weeks after my tour of the facilities, I met with Williams in the Capital Region Water offices, on Locust Street downtown. It had been a busy month: the week before, she had attended the American Water Works Association’s annual conference in Boston, where Capital Region Water had been given a 10-Year Director’s Award for consistently exceeding federal standards for drinking water quality. Harrisburg’s water also entered a taste-test competition, where it placed in the top five of 31 competing utilities.

We talked about the many things underway at the new authority. The updated website would be going live later that week, and it would include an interactive cartoon map tracing the water’s progress, per the company motto, from rain to river.

We talked about the upgrades to the sewage treatment plant. In 2009, the state Department of Environmental Protection imposed new caps on the pollutants that could enter the river in treated wastewater. An early achievement of Capital Region Water was securing financing for the necessary plant upgrades, which will cost an estimated $50 million.

We also talked about the recent refinancing of some of the outstanding debt. Williams pointed out, as I had noticed some days before, that water bills were now directed to a post-office box in Philadelphia. The address corresponded to a temporary lockbox for user payments while the city completed its transfer of billing services. As a condition of its refinancing of the debt, Amalgamated Bank had required an agreement that the revenues would circumvent city coffers.

I thought about something Mike Deily, the director of operations, had told me on our drive down from the reservoir, about the cuts he made to the sewer budget each year under prior administrations. “They put spending and revenue freezes on us because they were using our revenues to supplement the general fund revenues,” he said. He recalled the frustration of going to conferences, and seeing the technologies other utilities were using, and then coming back to Harrisburg and having no capacity to employ them.

Before I left, I asked Williams about something I’d wondered at the Advanced Wastewater Treatment Facility. If the treated wastewater is clean enough to enter the river, and the river is clean enough to be treated as drinking water, wasn’t it possible to treat the treated wastewater, and essentially drink our own sewage?

Williams nodded. Some places experiencing drought, like certain cities in California, were already contemplating just such a program, she said. But Harrisburg wouldn’t need anything like that in the foreseeable future—the DeHart could provide plenty of water, and much more efficiently.

“People have clean water, but they take it for granted,” she reflected. “It’s a cool profession. You can go anywhere in the world, and people will need clean water.

But,” she added, “there’s no place I’d rather be.”