MAHANOY CITY — The Mahanoy City Sewer Authority amended a resolution adopted six months ago that consolidated more than $15 million in debt into one bond issue during its special meeting on Tuesday.
The action amended a resolution dated June 29, 2015, to which the authority authorized the issuance of a series of guaranteed sewer revenue bonds for authority projects of approximately $1.3 million.
Authority solicitor Michael A. O’Pake explained the purpose of the amended resolution before the vote.
“We’re going to amend the previous resolution to authorize the issuance of bonds,” O’Pake said. “We need to amend that resolution (of June 29) because we’re actually going to be paying off some of the additional debt. We’re going to include the PennVEST loan, the USDA loan and include the 2015 loan that we took out with the First National Bank of Minersville, which is now The Gratz Bank. We’re going to include all of those in there and put them into one. That means we’ll have only one outstanding obligation. It will be sizable, but nonetheless it will only be two biannual payments each year.”
Board Secretary Joseph “Rocky” Holland motioned to adopt, seconded by member Mary Brassington. The vote was 4-0, with board Chairman Peter W. Gutsie, Dorothy Lewis, Holland and Brassington voting in favor. Absent was Rose Kern.
The resolution also confirms the appointments of Stevens & Lee P.C., Reading, as bond counsel, O’Pake as authority solicitor, and Financial S&Lutions LLC as financial advisor in connection with the issuance of the bonds.
About an hour after the sewer authority meeting, the Mahanoy City Borough Council held a special meeting to adopt an ordinance related to the authority’s action.
“The borough is already acting as the guarantor on some bonds that were issued by the sewer authority,” O’Pake, who is also the borough’s solicitor, said. “The approximate amount of the outstanding bonds I believe is about $8 million. The sewer authority has some other debt that is going to be rolled into this new bond issue. This ordinance says that it will not exceed $15,090,000. That is the maximum amount. The borough is just acting as guarantor if the sewer authority can’t make the payments.”
Councilwoman Diane Rachuck asked O’Pake about the borough’s responsibility for the debt, which O’Pake said it would be in the case if the authority defaults.
“The only way the borough is going to be on the hook is if the sewer authority ceases to operate, and that is not going to happen,” O’Pake explained.
Councilwoman Robyn L. Sincavage asked O’Pake if upgrades are involved as part of the new bond.
“There are some upgrades. There is some new money, about $1.3 million, for the sewer authority,” O’Pake said. “Right now there are three projects that they’re working on. Two of them are going to be covered under that new money. The third one is years down the road so they’re not incurring additional debt for that third project yet.”