EASTON, Pa. – Northampton County may save more than $1.8 million in interest by taking advantage of low rates.
Northampton County Council approved a plan Thursday to sell about $67 million taxable bonds. Most of that money would go into a fund to pay the principal and interest on bonds sold in 2012. The county would make interest payments on the 2012 bonds until 2022, the earliest date those bonds can be “called” or paid off early instead of waiting until the 2030 maturity date.
Then in 2022, the remaining principal balance would be paid off from the fund set up from the proceeds of the new bonds.
The savings would come from cutting the rate. The 2012 bonds pay about 5% but current market rates could lower that 2% to 2.5% for the new debt.
"There's no new money at all," Scott Shearer of PFM Financial Advisors told the council.
The principal left on the 2012 bonds is about $61 million, but the additional money is needed to pay interest until the call date. After the sale of new bonds and the creation of the fund to pay off the old ones, Shearer said the 2012 series will be off the county's books.
Stephen Barron, Northampton County's director of fiscal affairs, said after the meeting that the potential savings amounts to about 3% of the principal left on the 2012 bond issue, after adjusting for the time value of money.
The council voted 6-1 in favor of the plan. President Ron Heckman and members Robert Werner, John Cusick, Kevin Lott, Matthew Dietz and Tara Zrinski were in favor. Margaret Ferraro voted no. William McGee and Lori Vargo Heffner were absent.
County Executive Lamont McClure said some headway is being made in the battle against "warehouse proliferation." He said the Lehigh Valley Planning Commission has listened to his requests for more scrutiny of proposals for new warehouses. He thanked Greg Zebrowski, a former council member who is now vice chairman of the LVPC, for raising the issue.
McClure also said that county council's focus on saving land has made a difference.
"You are changing the model of planning in the Lehigh Valley from being development first to being preservation first," with a focus on saving farmland, McClure told the council. The county recently celebrated the preservation of its 200th farm.
The council took its first look at plans to take land at 150 S. Union St. in Easton via eminent domain to build a handicapped-accessible parking lot, and a new schedule of fees for court costs. Those proposals will be considered at county council's Nov. 7 meeting.
A resolution in favor of the Lehigh Valley Health Network selling as much as $650 million in bonds was approved. The bond sale would be made through the Lehigh County General Purpose Authority and would not result in any obligation to Northampton County. LVHN would use the money for projects including a new campus off Route 33 in Upper Nazareth Township.
The council also accepted a $2,000 gift from the Friends of Gracedale Foundation. That money will be used for holiday gifts for the resident. Dietz thanked the foundation for its work in improving the lives of residents of the county nursing home.
After the council approved contracts for electrical and construction work at the Wolf Avenue parking lot in Easton, Cusick said the county needs to draw more bids on projects to generate competition.