Jeannette faces another hurdle in trying to generate cash
The City of Jeannette has run into a roadblock trying to refinance a bond issue to generate cash and may have to undertake another bond deal to pay some pressing liabilities and avoid falling under state oversight, said the city's lawyer.
Scott Avolio said Jeannette may have to look at alternatives to refinancing the 1998 bond.
“I can't say it hit a snag,” he said. “We're looking at alternatives of issuing another bond. We're a little bit behind schedule.”
The city issued $2.9 million in bonds and is seeking to refinance them so it can raise enough revenue through savings to pay a $235,000 judgment to a Jeannette businessman who won a lawsuit against the city and about $200,000 remaining on its 2012 contribution to the police pension fund, he said.
If a municipality or school district borrows money through the bond market when interest rates are high, it usually refinances when interest rates decline, allowing it to save money on interest payments. Raising cash, Avolio said, is critical to meeting the city's liabilities.
“At this point ... it's one of the necessary components to deal with unfunded liabilities,” he said. “Without it, we will remain under some kind of cloud.”
The bond issue matures in 2024. The city would like to extend the maturity date by three years but Avolio said that may not be possible.
Jeannette could borrow by issuing a general-obligation bond to take advantage of low-interest rates. A general-obligation bond is secured by a municipality's taxing power.
“If this restructuring doesn't go through, there's a limited number of options that the city is looking at and one of those options is Act 47,” Avolio said.
Council will discuss its options during a meeting Wednesday at 6 p.m. in city hall.
Act 47 is the Pennsylvania Distressed Municipalities Act. Financially ailing cities are placed under state oversight, which could last for years until the city is able to return to sound financial footing. Jeannette is being advised by a state consultant.
Jeannette faces a mandatory 2013 pension payment of about $547,000 and will have to repay a $350,000 loan it took out earlier this year to cover city expenses until real estate tax revenue started coming in.
The city has been scraping to raise additional revenue to meet its bills.
It briefly considered, then rejected, a plan to try to sell the city's municipal authority to Westmoreland County when members of the city authority balked at being disbanded.
It is planning to sell some assets and is more aggressive in going after deadbeat taxpayers and residents with garbage bills.
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at firstname.lastname@example.org.
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.
- Foes of South Huntingdon gas-fired plant fight approval
- Westmoreland Veterans’ Monument unveiled, rededicated in Greensburg
- Theft thwarted by employee at North Huntingdon Wal-Mart
- Acme man’s ephemeral sculptures appear to defy laws of physics
- Huge compressors to leave Jeannette in late-night parade on way to Texas
- Man taken to hospital after New Alexandria house burns
- Motorcyclist killed after striking pole in Penn Township
- Greensburg, Youngwood pools opening for the season May 30
- Westmoreland County Blind Association building brimming with activity
- Sewickley Township agrees to lease for land for playground
- Hempfield train crash search called off; no evidence found