Money’s in the bank
The unspent revenue from the lease is in National Penn Bank, said Debi Bowman, the city’s deputy finance director. She said it is in an interest-bearing account that has earned about $25,000.
“That’s less than .1 percent interest,” said city resident Glenn Hunsicker. “That’s bad news, that’s very low.”
Pawlowski said the bank is charging the city no fees, adding the money is in a savings account. He said the city’s immediate goal is not to maximize investments with the money. “It’s a secure, guaranteed holding pattern for this money.”
Responded Hunsicker: “The administration should be trying to maximize their money, wherever it goes.” He noted the city has had the money from the lease for more than 70 days.
The council committee meeting, held in a fifth floor conference room in City Hall because renovations are being done in City Council chambers, was not well-attended.
“Ordinarily this type of meeting is so deadly dull that nobody wants to come,” said city resident David Maguire, who added it’s not council members that are deadly dull, only the subject matter.
Pawlowski said the $170 million allocated for the “pension fund contribution” will be used “to eliminate unfunded pension liability and dramatically reduce pension bond debt.”
The city is still in the process of deciding how to best use that money to do both.
Outstanding pension bonds total $30 million, according to the mayor, and the city has $155 million to $160 million in unfunded pension debt.
Schweyer noted paying off both would cost nearly $190 million.
“We’re trying to figure out the best way to pay off the pension costs,” said the mayor. He said the city may pay off more pension bonds and keep a small amount of unfunded pension liability or pay off all the liability and just some pension bonds.
“How we invest the money is critical. We’ll present that at a future date.”
Schweyer, who chairs council’s budget and finance committee, explained
$29.3 million of the $211.3 million immediately was used to pay off outstanding capital debts directly tied to the city’s now-leased water and sewer systems.
Shearer of PFM said the city faced no penalties for paying off those debts early.
Pawlowski said Allentown already has eliminated close to 38 percent of its total debt. He said it now has less than $100 million in debt, “which is pretty darn good for any city our size.”
Some of that $29.3 million also was used for related costs, including consulting fees for professionals hired to assist the city in developing the lease.
Bowman did not have a detailed list of those costs Thursday night. She promised to provide a breakdown explaining how the entire $29.3 million was spent at the next City Council meeting.
Hunsicker wants to know how much PFM was paid to prepare the lease.
Schweyer indicated that will be provided at the next meeting.
Eichenwald, who opposed the water/sewer lease as well as paying so many consultants to develop it, said city residents have a right to know that public information.
Pawlowski explained the $1.5 million going into a sewer reserve fund will be used to comply with administrative orders from the state Department of Environmental Protection and the federal Environmental Protection Agency.
“We’re not going to spend all that $1.5 million right off the bat,”
said the mayor. He said the environmental agencies now only are requiring that the city fix manhole covers, which will cost about $400,000. “There may be other things they want us to do.”