Westmoreland County may lose $8M as it ends controversial bond deal
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.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Excela center proposal worries residents of Hempfield neighborhood
- Ligonier Township planners offer suggested changes to zoning proposal
- Ligonier Valley YMCA expansion work to begin by end of March
- Court in the Classroom program provides insight for Norwin High School students
- Police claim woman stabbed husband at their Jeannette business
- Westmoreland County Courthouse, annex roofs will be given $665K fix
- Sale of former SCI Greensburg prison to advance despite lawmakers’ objections