Luzerne County Courthouse
                                 File photo

Luzerne County Courthouse

File photo

Luzerne County’s financial advisor has convinced Webster Bank to charge the county a lower interest rate on approximately $33 million in outstanding debt.

The reduction from 2.174% to a new 1.98% interest rate will save the county a net $331,500 over the life of the loan, county financial advisor Scott Shearer, of Harrisburg-based Public Financial Management (PFM), told council during its work session last week.

Because this is a rate modification and not a traditional refinancing, it can be executed faster with less paperwork and lower fees, Shearer said. The total savings is approximately $409,000 before the $77,500 in issuance costs are factored in, he said.

County Councilman Tim McGinley said Webster Bank’s willingness to reduce its rate is a “credit to the people who served on council the that last 10 years.”

“When did you ever hear of a bank lowering their interest rates?” McGinley told his colleagues. “Here you’re seeing the financial institutions out there saying Luzerne County is doing a good job.”

Council Chairwoman Kendra Radle said she concurs.

If approved at a future meeting, the savings will be applied to the interest portion of the county’s debt and won’t extend the repayment schedule, emphasized Shearer and county Budget/Finance Division Head Brian Swetz.

According to the work session agenda, the interest savings would be at least $40,000 a year from 2022 to 2029 and less than $12,000 in 2030.

The county owes $218.36 million with interest through 2030, according to a summary released by Shearer.

County officials have held up debt reduction as a major achievement in recent years because outstanding debt had ballooned to $466 million in 2009, before the switch to home rule. The debt stemmed from years of borrowing to cover capital projects, deficits and other spending.

The PFM chart says the county must pay between $26.4 million and $26.7 million annually until 2030, when a final $6.2 million is owed.

Two borrowings have been approved since home rule’s 2012 implementation for specific projects — an energy savings initiative and the purchase of a 911 emergency communication upgrade and state-mandated, paper-trail voting system.

Tackling repairs and other building needs without additional borrowing will become more challenging in coming years because the county has used up most of its capital funding largely left over from past borrowing, records show.

In recent years, this capital fund has been tapped to cover millions of dollars in work, including courthouse restoration, the purchase of security cameras and new technology and roof and elevator repairs.

The county has only $295,864 in unencumbered funds remaining in the capital projects fund, officials said.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.