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Munhall gets stop-gap loan

| Thursday, Feb. 13, 2014, 4:36 a.m.

Munhall officials said they likely won't need to lay off any police or public works employees thanks largely to a private tax anticipation note loan from one of the borough's own.

Interim borough manager Harry Faulk said during a meeting on Wednesday evening that the finance committee opened sealed bids at a closed-door session on Monday and agreed to accept an offer submitted by a group led by Munhall resident Joe Leonello of Homestead-based Franjo Construction, his brother Frank and their associate Christian Stein of Arch Masonry Inc. The group offered a $500,000 loan at 5.25 percent interest.

The borough had been unsuccessful in obtaining a traditional tax anticipation note loan from a bank because its audits from 2011 and 2012 are missing.

Faulk said the borough received three other bids ranging from $400,000 to $600,000 and with interest rates as high as 26 percent.

“Without this TAN loan, we would be at negative $300,000 at the end of March,” he said, noting that the funds should be transferred to Munhall by Feb. 20. “But with the loan, we should have $421,000, and that will help incredibly.”

Although the terms of the deal are to be finalized on Thursday, finance chairman Rick Brennan said the loan would “absolutely” mean the borough would not have to lay off 10 police officers and six public works employees, as council had considered.

“This is really a good deal for us,” Brennan said. “And it's all thanks to a resident looking to help out his hometown.”

Police chief Pat Campbell played an integral role in bringing the offer to the table.

“Joe Leonello is a lifelong friend of mine,” Campbell said. “I knew several months ago that, if we couldn't get a tax anticipation loan, council would put it out to a private source. Knowing (Leonello) has the means to do that, I contacted him to ask if he'd be interested, and he was.”

Campbell said the plan solidified when looming layoffs threatened to hinder his department's ability to protect the borough.

“Last Friday, I told (Leonello) we were going to have to lay off 10 cops and, if he was still interested, it was rug-cutting time,” Campbell said. “Within half an hour, he was in my office and said, ‘Tell them I have the money and they'll be OK.'”

Leonello could not be reached for comment.

Residents at Wednesday's meeting asked if the borough would be able to pay off the loan.

“It's a bridge loan, not a long-term loan,” Councilman Bernie Shields replied. “We're not in a shortfall. It's only a temporary cash flow problem.”

Shields said Munhall should be able to pay off the loan when tax payments come in.

Faulk said the borough's offer of a 1 percent discount on property taxes paid by March 1 is yielding early returns.

“We got all 5,000 bills mailed out on Friday and there's already been lines out the door of people coming in and paying their taxes early,” he said.

Tax collector Donna Mercuri said more than 200 returns already have been paid.

“It was an overwhelming response,” Mercuri said. “They all wanted to come in and support the borough.”

Mayor Ray Bodnar said he is proud of the outpouring of help.

“Everybody wants to pay their taxes because they realize the situation we're in,” he said. “It goes to show you how conscientious and responsible these people are.”

Council is expected to officially accept the loan at its meeting next Wednesday.

Tim Karan is a staff writer for Trib Total Media. He can be reached at 412-664-9161 ext. 1970, or tkaran@tribweb.com.

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