Share This Page

Time runs short as Jeannette seeks to restructure debt

| Friday, Aug. 16, 2013, 12:01 a.m.

Jeannette is running out of time to obtain a loan to restructure its debts and could face another budget deficit by year's end, solicitor Scott Avolio said.

Jeannette has been trying to avoid protection through Act 47, which allows financially ailing cities to be managed by a state-appointed overseer.

City officials want to restructure debt through a general obligation bond after learning they will not be able to refinance a bond issue to raise money.

A general obligation bond is a common venue for local government to borrow money. The bonds are backed by a municipality's power to dedicate tax revenue or increase taxes to pay bondholders. Jeannette has reached the limit it can raise taxes under the Third Class City Code. Any future increases would require court approval.

The city faces other financial pressure in the form of a court-ordered judgment to pay Jeannette businessman Frank Trigona and his attorney, Robert Lightcap, $271,000 in damages and fees after losing a lawsuit. A county judge ordered the city to pay the award even if it requires raising taxes.

The city hasn't paid, and Lightcap may seek to hold the city in contempt of court, Avolio said.

“If we don't pay, the way to enforce it is to seek an order of contempt,” he said.

Avolio said if Lightcap seeks a contempt citation, Jeannette would have no recourse but to seek protection through municipal bankruptcy or Act 47. By filing for bankruptcy, an automatic stay is imposed, preventing creditors from seeking payment for debts.

Avolio said if Jeannette is forced to pay Trigona, it may not have money at year's end to meet the payroll or pay bills and likely would default again on mandatory contributions to the police pension fund.

Councilman Bill Bedont, who oversees the budget, said council planned to pay the remaining $164,000 pension payment for 2012 this month but will withhold the payment until the Trigona issue is settled.

The city is waiting for several “legal matters” to be resolved before paying Trigona, Bedont said, because a final figure hasn't been determined. But the city will be able to make the payment, he said.

“We still have the financial means to meet the (Trigona) obligation,” Bedont said. “I still fully expect to get (the bond restructured). I'm not hearing anything negative (regarding the bond).”

Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at rgazarik@tribweb.com.

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.