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Bond issuance sought by Fitzgerald stands to cost county $266K in fees

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Saturday, May 3, 2014, 12:01 a.m.
 

It could cost Allegheny County about $266,000 in payments to attorneys, financial advisers and rating agencies to issue $247 million in bonds that Executive Rich Fitzgerald is seeking, according to a breakdown of fees the county provided to the Tribune-Review.

County Council is set to vote on the deal at Tuesday's meeting. The money would be used to refinance old debt at a lower interest rate and pay for bridge repairs, road work and other projects.

Fitzgerald asked council to approve $165 million to refinance old debt and $82 million to go toward infrastructure projects in 2015 and 2016.

“These issuance costs, while minimal, are the cost to allow the county to reap significant benefits,” said county Manager William D. McKain.

Fitzgerald and Warren Finkel, county budget and finance director, have said refinancing bonds issued in 2004 could save the county $13 million in interest payments. The county will spread out the savings over five years, records show.

To issue the bonds, the county would pay an estimated $266,310 to attorneys, financial advisers, rating agencies and other companies, according to a fee schedule. Rating agencies Standard & Poor's and Moody's could receive $137,500, the largest single expense.

Attorneys Linda Hackett at Clark Hill Thorp Reed, Glenn Mahone at Reed Smith and Jason DiMartini at PNC Capital Markets would split $50,000 in legal fees, county officials said. Charles Goodwin of BNY Mellon Capital Markets would receive a $37,500 financial adviser fee.

Downtown law firm Thorp Reed & Armstrong, which merged with Detroit-based firm Clark Hill in March 2013, made donations of $10,000 to Fitzgerald's campaign in 2012 and 2013 for a total of $20,000, according to campaign finance reports.

A five-member professional services review committee, not Fitzgerald alone, reviewed the financial adviser proposals and made a recommendation, according to a statement from Fitzgerald spokeswoman Amie Downs.

The amount of new debt issued will equal the amount of debt retired, keeping the county's debt level the same, Finkel told the Budget & Finance Committee, which voted unanimously on Wednesday to send the bond request to the full council for a vote.

The actual amount of debt issued could be less than the $247 million asked for by Fitzgerald, Finkel said. The amount depends on the bond market. In 2013, council approved $49.8 million, but the county issued $37.95 million. In 2012, council approved $193.8 million, but the county issued $167.6 million, Finkel said.

Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986 or aaupperlee@tribweb.com.

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