BETHLEHEM, Pa. - A bond refinancing plan that was supposed to save Bethlehem about $980,000 netted the city about 30 percent more than anticipated.
Daryl Peck, of Concord Public Finance, told city council members the good news Tuesday night, before they voted 7-0 to approve the refinancing.
Peck said the $8.3 million bond sale that took place earlier in the day will save Bethlehem $1.3 million -- $740,000 this year and $560,000 in 2014. "Congratulations to the city," he said. "You were able to move forward at a favorable time."
Mayor John Callahan, who proposed the bond refinancing during budget deliberations in late December, was beaming at the news.
He quoted from a letter from Standard and Poors that reaffirmed Bethlehem's BBB rating and upgraded the city's outlook from stable to positive. "The outlook revision reflects the city's continued financial improvement," Callahan said as he thanked council members for their work with his administration.
Callahan called the Standard and Poors letter is "a third-party validation of our efforts," adding, the city's debt service is $90 million less than in 2004, when he took over as mayor.
Both Callahan and Peck said it is likely that Bethlehem's bond rating would improve in the near future, if the city continues to reduce its debt.
The $8.3 million is the principal remaining on bonds issued in 2001 to help with the sale of the city's former landfill, said city administrator Dennis Reichard. Even with the refinancing, the city will still pay off the bond by 2026, he added.
Peck said the interest rates the city would have to pay on the bonds before the refinancing was between 6.3 and 6.6 percent. With the refinancing, those rates will drop to between 1.5 and 4.65 percent, he said.
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