The state's largest private water company will present to the State College Borough Council on Feb. 21 its final offer to buy the State College Water Authority.

The Pennsylvania-American Water Company is prepared to offer $24.5 million to $26 million for the borough's water system, which serves 48,000 people, Water Authority Manager Paul Fisher said.

After paying the authority's $13 million debt, the borough would have a net gain of $17.6 million to $19.1 million, said Chuck Johnston, the company's assistant director of rates.

If the council sells the water authority, the borough would invest the money and use the interest for tax relief and the principal for area improvements such as more police and better roads, council president Jean McManis said. She said the council does not know yet how long the money from the sale would benefit the area.

The council and the water authority will discuss the company's offer during a work session on Feb. 17.

After the company makes its final offer, the borough will hold a public hearing to get citizen input. McManis said many residents have already voiced concerns to council members about privatization -- mainly that their rates will increase and service levels will decrease.

Although rates would increase during a 5-to-10-year period, which would be set during negotiations, Johnston said residents would save money overall because of the tax relief the interest would provide.

"You've got to look at the total cost to the customer -- taxes and water bills," Johnston said. "In total, I feel that customers would be better off."

A customer using 5,000 gallons of water a month now pays $17. The company that wants to buy the water authority has a standard rate of $27 for the same amount of water.

Johnston also said residents would receive quality service because the company, which now serves 1.2 million people, has more resources than the borough's water authority.

Amy Myers of 2052 Maryellen Lane said she favors privatization but sees problems with both options.

"I'm really leery of government," she said. "I would rather see the privatization of it, but I think there's a downside to both because both sides make money, but residents still pay more."

Other residents, such as Judy Fetzer of 444 Scenery Drive, think the borough should own its water supply.

"If you sell it, they're going to make money on the sale, but the residents will pay more in the future for their water," she said. "The town will get more money, but the rates will go up."

Fetzer also doubts the tax relief the borough plans to provide with the interest from the sale.

"Historically, when have you seen tax relief?" Fetzer asked.

The water authority is run by a five-member board appointed by the council, which has the power to sell the water system.

The company is waiting for the water authority to release its year-end report, which it will make public Feb. 16, before committing to a final offer, Johnston said. The company hopes to buy surrounding water systems and develop a regional network.