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W. Pittston delays loans

Concerns over meeting its tax anticipation obligations gives borough council pause.

IAN CAMPBELL Times Leader Correspondent

WEST PITTSTON – Council held back Thursday on a proposal to take out bridging loans to cover unpaid bills stemming from the sewer project, even though it is obligated to pay various parts of the contract on a timely basis.

The problem with paying the bills related to the more than $6 million project comes from delays from the state in covering the bills submitted, council was told during discussion of the proposal.

PennVest pays the bills, but the state agency had been slow in making the remuneration, and borough officials were concerned that if they took out a bridging loan in the form of a revenue anticipation loan, they might find themselves unable to meet the repayment terms at the end of the year.

The borough already has a $215,000 tax anticipation note that needs to be repaid by Dec. 31, and with only $188,424.90 in the general fund, meeting that obligation will be a stretch.

The difference is expected to be met from tax payments and other revenue received between now and the end of the year, Borough Manager Savino Bonita noted after the meeting.

If the borough was to take out an added loan, due to the delays in receiving money from the state that it was already paying interest on, it was an unfair burden, council members said.

Added to which, the bank prepared to offer the loan would be charging $500 to process the paperwork, and the law firm that handles the borough’s financial affairs would levy another $2,500 as its fee for preparing the loan agreement, council was told.

Council President Brian Thornton noted the borough was aware the delay in payment would cause an inconvenience to both the engineer, Reilly and Associates, and the contractor, but given the delay in resolving the state budget this year, subsequent delays had to have been expected in some way.

But if the borough was unable to meet the bridging loan obligation at the end of the year, it would have impacted any chance of obtaining a favorable tax anticipation loan for 2010, he pointed out.