County council refinances bonds, takes on new debt to fix bridges

Author: , WFMZ.com Reporter
Published: Jul 19 2013 12:09:21 AM EDT   Updated On: Jul 19 2013 06:59:41 AM EDT
EASTON, Pa. -

A financial advisor said Northampton County Council hit the baseball equivalent of a grand slam by waiting a couple of weeks to refinance a $9.9 million bond from 2006 and take on extra debt to fix several bridges badly in need to repair.

"Council hit a home run -- and the bases were loaded," said council financial adviser Gary A. Pulcini, reporting on the bond refinancing and the private negotiated sale of $11.4 million in new bonds Thursday night.

Council was as pleased as Pulcini about the refinancing and sale, which will be formally concluded on Aug. 27, and approved it on an 8-0 vote.

Council member Thomas Dietrich called the deal "good for us and good for the taxpayers."

Council president John Cusick said, tongue in cheek, "It's so good to see there's a governing body in Pennsylvania that can address transportation issues," taking a none-too-subtle swipe at the state Legislature.

Pulcini said the purchase price of the bonds is $21,627,606, and because they were sold at an overall interest rate of 2.75 percent, the county's debt service will rise only $311,000 next year, to $11,032,475.

By 2024, the debt service will drop to $8,194,837, the same amount it would be without the refinancing and added debt, he pointed out. "We have not handcuffed any future administrations with something that was politically expedient," Pulcini proclaimed.

The county will spend $7.1 million of the $11.4 million bond on the bridges , with $3.2 million earmarked for work at Gracedale, the county nursing home, including the replacement of an emergency generator and fixing the parking lot.

The county will spend $7.1 million of the $11.4 million bond on the bridges , with $3.2 million earmarked for work at Gracedale, the county nursing home, including the replacement of an emergency generator and fixing the parking lot.

The added debt will be used for work on 16 of the county's worst bridges and to buy new emergency generators for the Gracedale nursing home and the county court house as well as to repair the Gracedale parking lot.

Council was prepared to refinance the 2006 bond and take on the added debt two weeks ago, but held off when bond interest rates suddenly spiked and financial adviser Robert Fuller suggested a delay.

In other business, council approved an amendment to an ordinance governing how contracts are awarded, saying competitive sealed bids are to be used only when price is the sole consideration. The vote was 5-3, with Cusick, Scott Parsons and Robert Werner voting no.

Advocates of the measure said it will help prevent legal battles like the one involving county council and county executive John Stoffa over non-emergency transportation services at Gracedale.

Council voted to take Stoffa to court in April after the county executive tried to award the contract to Lifestar Response Corp. because it had submitted a substantially lower bid for the service than current provider Nazareth Ambulance. 

A majority of council had indicated on March 21 and last Oct. 4 that it wanted the contract to be given to the Nazareth corps, saying the county was contracting for professional services and that allowed more than just the cost of the service to be considered.

Council solicitor Philip Lauer said even if a judge finds in council's favor, the decision is not binding on future councils or county executives. He also announced that  Lifestar has filed an application to become a party to the suit, and that Nazareth is about to do the same thing. 

Parsons objected to the amendment because he said it would not fix the problem once and for all.

Council member Lamont McClure countered that while the amendment is "not a panacea, [it's] a good first step," and it "defends the prerogative of council" in having a say about contracts.

Council member Ken Kraft echoed McClure, saying, "It's a half step toward where we want to be."

Before the vote, county solicitor Daniel Spengler explained that the ordinance was adopted by council sometime during the last decade.

"This was a Ron Angle special," said Spengler, referring to the former county council member. "I was also county solicitor then. He [Angle] sat there and pounded his fist, right where Mr. Kraft is sitting. … He said there was some kind of collusion because the Colonial Healthcare's contract to manage the county's health insurance was extended for a year [by then-county executive Glenn Reibman]."

Spengler said the ordinance is flawed because it doesn't have a mechanism to resolve impasses between the county executive and council, adding, "Even when the skunk leaves, sometimes the stink remains."