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Much of Luzerne County’s proposed $35.14 million borrowing — 65 percent of the principal — would be repaid a decade from now in 2029 and 2030, according to an estimated amortization schedule.
This schedule, which is part of a request seeking proposals from lenders, said the county would plan to pay $14.9 million in principal in 2029 and $8.055 million in 2030.
The figures are preliminary and don’t include the still-unknown additional interest costs to borrow, officials said. They also don’t show how existing debt repayments may be reduced by using some of the borrowed funds to refinance older debt at lower interest rates.
If the new schedule sticks, the county would extend the debt an additional year.
Under the current debt structure, the county would be out of debt in 2029 with a final payment of $11.1 million that year. Annual payments are around $26.1 million between 2020 and 2028.
County Manager C. David Pedri said he is not in a position to forecast annual payments with new borrowing until the lender proposals are submitted and digested. Banks must respond by Aug. 28.
Council must approve any borrowing and is set to discuss the matter Sept. 10.
The new schedule lists the following estimated principal payments dated Nov. 1 of each year in addition to the larger amounts listed for 2029 and 2030: 2020, $745,000; 2021, $320,000; 2022, $1.34 million; 2023, $2.48 million; 2024, $60,000; 2025, $2.425 million; 2026, $1.395 million; 2027, $3.415 million; and 2028, $5,000.
The county reserves the right to “resize all principal payments” before the settlement of borrowing, said a notation with the amortization schedule. Settlement is targeted on or around Nov. 26, and the bids submitted by lenders must be valid for 60 days, the request-for-proposals said.
The county administration is advancing the suggested borrowing package to generate $20.7 million for a 911 emergency radio upgrade project, $1.8 million toward new paper-trail voting machines and $12.1 million to possibly refinance existing high-interest debt from 2008 and 2009.
Borrowing is a touchy subject because the county has been in pay-down mode in recent years. With interest included, the debt ballooned to $466 million in 2010.
The county’s outstanding debt was down to $279 million at the end of 2018, and another $7 million was paid through June 30 toward this year’s $25 million budgeted obligation.
Posted on the purchasing section at www.luzernecounty.org, the new request for bank loans said lenders must clearly detail the interest rates, including the method of setting the rates and the maximum rate to be charged throughout repayment.
The county is seeking several options: a fixed rate throughout or a fixed rate for five, seven or 10 years followed by a variable one, it said.
“In no instance shall the interest rate ever exceed 5 percent,” the request said.
Pedri has said he is optimistic prospective lenders will pitch favorable interest rates because the county now has an investment-grade BBB- credit rating from Standard & Poor’s and a 2018 audit documenting the county came in under-budget four consecutive years.