Westmoreland County may lose $8M as it ends controversial bond deal
By Rich Cholodofsky
Published: Friday, March 15, 2013, 12:01 a.m.
Updated: Friday, March 15, 2013
Westmoreland County commissioners said Thursday there are no plans to raise taxes to pay for a multimillion-dollar investment loss from a risky bond deal approved by a previous board five years ago.
Officials are expected to finalize a financing package next month that will terminate a controversial bond deal in which the county is expected to lose more than $8 million.
Commissioner Charles Anderson said cash from a new round of borrowing will cover the loss, refinance existing debt and infuse up to $10 million to pay for capital improvements.
“We don't anticipate any” tax increases, Anderson said.
Commissioners on Thursday hired Valco Capital LTD of Ligonier as its financial adviser to work on a package to refinance a $35 million bond deal completed in 2008.
The company will be paid up to $30,500 for its work. Dinsmore and Shohl LLP of Pittsburgh was hired at $24,000 to perform legal work on the deal.
In 2008, a previous board of commissioners entered into a “swaption” deal that essentially bet on interest rates. The higher the interest rate, the more money the county earned.
When the rates dropped drastically, the county lost money.
Sandy Flanders, the county director of financial administration, said the county now owes $8.5 million on the deal, which can be broken by June 1 to lessen future losses.
Flanders said the new deal would increase the county's debt to $114 million, a $10 million increase.
Yearly payments would jump to about $9.8 million, an increase of about $200,000, she said.
Commissioners said plans are being formulated to borrow up to $10 million to revamp office space, convert the closed-waste-to-energy plant in Hempfield to a new forensics center to house the coroner's office and renovate the courthouse. Commissioner Ted Kopas said he opposes a $500,000 proposal to build a new suite of offices for commissioners on the sixth floor of the courthouse office annex.
“I'll be scrutinizing very closely the projects. I am not as excited about taking out new debt,” Kopas said.
Commissioner Tyler Courtney defended the new borrowing, saying the money will be used to pay for projects that usually would have to be paid from the county's general fund.
Rich Cholodofsky is a staff writer for Trib Total Media.
- Suspect surrenders in foundry evacuation
- 3-day waiver allows military couple to finally be married
- Mayor’s defeat may spell end of ‘Monessen Rising’
- Murrysville contractor accused in $10,000 theft
- Thunderstorm knocks out power
- County schools among nation’s best
- Precincts fix omissions with paper ballots
- DeFazio’s win imperiled by lawsuit
- More than 100 Mt. Pleasant students to display art
- Jeannette mayor isn’t taking loss as mandate
- Democrats in close race for Greensburg Council nominations
You must be signed in to add comments
To comment, click the Sign in or sign up at the very top of this page.
Subscribe today! Click here for our subscription offers.