Westmoreland County poised to OK $54 million financing package to get out of failed investment plan
Westmoreland County commissioners are poised to approve a $54 million financing package this week that will cover the costs of a failed investment five years ago and pay for new construction projects.
Commissioner Tyler Courtney said final details of the plan will be completed this week, with commissioners scheduled to vote on the proposed deal on Thursday.
Officials said the money will be used to get out of a risky financing deal approved in 2008 that lost money for the county and to refinance older bonds, including a $35 million debt initially secured in 2003.
Sandy Flanders, the county's director of financial administration, said that as of April 1, accountants believed it will cost $8.8 million to end the risky bond deal.
The previous board of commissioners used a controversial “swaption” investment that essentially bet on interest rates.
The higher interest rates rose, the more money the county stood to earn in the deal.
But when interest rates dramatically declined, the county was left with an investment loss. The losses can be stemmed by buying out of the deal before June 1, Flanders said.
Commissioners said the penalty to break the previous deal is necessary.
“Those types of products are extremely volatile and risky. By terminating it, it takes the volatility out of our future repayments,” Courtney said.
An additional $7.8 million will be borrowed to pay for a series of capital improvement projects.
The projects include $2 million for new buildings in county industrial parks, construction of two magisterial district judge offices, renovations at the courthouse, conversion of the former waste-to-energy plant in Hempfield to office space, and upgrades to ventilation systems in county buildings.
“These are all projects that are necessary for the county,” Courtney said. “We've been putting Band-Aids on our problems. This will provide long-standing improvements.”
The overall financial package will cost taxpayers an additional $10 million over the next decade, Flanders said.
The deal will increase annual debt repayments by nearly $300,000 a year, she said.
Rich Cholodofsky is a staff writer for Trib Total Media. He can be reached at 724-830-6293 or firstname.lastname@example.org.