John K. Manna
New Castle News
NEW CASTLE —
The city of New Castle has netted $17,328,000 from the sale of its sanitary sewers.
City officials had set $16.5 million as the minimum figure they wanted from the sale of the system to the New Castle Sanitation Authority.
“The interest rates went their way,” investment banker Joseph Muscatello explained as the reason for the city receiving more than the minimum.
City council approved the transfer of the sewer system to the authority in May. The authority issued bonds on June 17 and the closing occurred Thursday. That is when the city learned the exact amount it would receive after all costs were determined.
Mayor Anthony Mastrangelo said $14 million of the proceeds will be used to reduce debt, $2 million will go toward the paving of streets and the balance will go into a reserve fund for capital improvements.
Mastrangelo said about 35 streets were identified by the city’s engineer and public works director as among the worst. However, only 15 of them will be paved this year.
He noted the Pennsylvania American Water Co. and Columbia Gas Co. of Pennsylvania said those are streets they will not be working on this year.
“It would be a waste of our money” to pave the streets and then have them torn up, Mastrangelo said. The city plans to pave the balance of the streets next year.
The sale of the sewers allows the city to reduce its bond payments over the next eight years, which Muscatello called the city’s toughest period.
Annual bond payments beginning this year and running through 2018 will be $2,950,000, he said. Without the sale, this year’s payment would have been $4,826,000. Annual payments through 2018 would have ranged from $4,987,000 to $4,132,000.
From 2019 through 2024, the annual payments will be $2,950,000, which would have been the same amount without the sale, Muscatello said.
The bond issue also provides $260,000, which the sanitation authority will use to repair 3,100 feet of sewer line on Sampson Street. The line had been identified as in need of repair prior to the transfer of the sewer system.
