New Castle News
NEW CASTLE —
The Lawrence County commissioners are consolidating the county’s debts for more efficient and cost-effective operations.
At their meeting Tuesday, they agreed to borrow $7.57 million to refinance three bond loans from 2012. The transaction also includes the refinancing of the remaining balance of a 2003 bond issue of $3,470,000.
The new loan, through ESB Bank, will be repaid at an interest rate of 2.5 percent, according to John Salopek, an Aliquippa financial attorney the commissioners hired as a consultant. The new maturity rate will be in 2022.
“This will significantly reduce the amount of the debt service,” Salopek told the commissioners. “That’s the bottom line.”
County administrator James Gagliano explained the purpose of the transaction is to try to lower and smooth out the county’s debt service payments so the county is consistently paying in a narrow range.
That will lengthen the time of payback for the debt, but it will reduce the actual amount the county has to pay by $800,000 for 2014, he estimated, “and we’ll save $1.2 million in our debt service payment for 2015.”
The main reason is to try to deal with a flat revenue base so the county does not have to raise taxes,” Gagliano said. “We’re basically taking the extra money we’d pay in debt service and moving it into the general fund.”
The consolidation does not constitute much savings, he said, adding, “It’s pretty much a wash.”
He pointed out another reason for the move is anticipation of a possible bond issue for building a new 911 center.
“We had to open up some room to be able to get that bond floated without it having a major impact on our debt structure,” he said.
Gagliano explained the refinancing came about because ESB Bank, the holder of the county’s funds, was looking out for ways the county could improve its cash flow.
“It works out nicely that (ESB’s) corporate headquarters is in Lawrence County,” Commissioner Dan Vogler noted.