A $425 million debt package will allow the Pittsburgh Water and Sewer Authority to fix its plant and pipes without raising rates, but raises questions about how the agency will address bigger reconstruction costs to come.

The authority board yesterday approved the package, which will refinance old debt and provide $100 million for improvements. It will boost the authority's bond debt to $680 million -- a level City Controller Michael Lamb said caused long-term concern.

Authority officials and financial advisers said interest rates are good, some borrowing costs were locked in a year ago and the deal provides needed capital while keeping debt payments at $42 million a year. It extends those payments by 11 years, to 2040.

"I don't anticipate a borrowing through 2012 that will impact the [water] rate," said authority Executive Director Michael Kenney. After that, the picture is hazy, because the authority faces hundreds of millions of dollars worth of work to comply with a state consent order. Borrowing to address that work could push debt payments and rates up.

The planned investments under the current issue include a $44 million update of the water treatment plant on the Allegheny River near Aspinwall. Most of the rest will pay for water and sewer lines at new developments and repairs to aging pumping stations and pipes.

"I think it's vital to make these improvements, particularly at our water plant," said authority board chairman and state Rep. Don Walko, D-North Side.

The authority's financial adviser, Jason DiMartini of PNC Capital Markets, said the package will feature fixed-rate and variable-rate debt, but payments will be capped through a contract with J.P. Morgan Chase and Merrill Lynch. The fees to be paid to those and other consultants haven't been finalized, he said.

The water authority raised rates by 19 percent in 2004, 17 percent in 2005 and 12.5 percent in two steps in 2006 and 2007. Those last increases were justified as an effort to reduce reliance on debt.

The authority's borrowing is not directly linked to the city of Pittsburgh's $764 million in debt. Mr. Lamb noted, though, that even as the city's debt has dipped by $100 million since 2003, the authority's has grown. After the new borrowing, the water authority will owe bondholders $135 million more than in 2003, he said -- and that's before big expenses anticipated next decade.

The water authority, the Allegheny County Sanitary Authority and other regional municipalities and authorities are under consent orders with the state Department of Environmental Protection and the federal Environmental Protection Agency to plan for near-elimination of sewage overflows into the rivers. The planning process is supposed to be done by 2012.

"That's when the majority of the work will start," said John Schombert, executive director of 3 Rivers Wet Weather, a nonprofit group formed to help address the sewer problems. Estimates of the cost to the water authority of improvements under the consent order are around $1 billion, but he said collaboration with other agencies could reduce the bill.

Authorities are increasingly important to the city's operations, contributing $6.6 million to its operating fund in 2006, $9.1 million last year, and an expected $13.1 million this year. The water authority's $7.8 million payment this year is $2.5 million more than it gave in recent years.

"Is this an attempt to transfer the costs of city government from taxpayers on to ratepayers?" Mr. Lamb asked.

City Finance Director Scott Kunka, who sits on the water authority's board, said the payments reflect services the city provides to the authorities.

Three other city-related agencies carry debt. The Parking Authority owes $104 million, the Urban Redevelopment Authority $170 million and the Stadium Authority $21 million.

Mr. Lamb said the debt doesn't seem to immediately threaten their payments to the city.