Two $5 million loans will allow Cambria County to pay its bills and remain current until 2014 property tax revenues start rolling in.
But a controversial long-term $10-million-plus refinancing package is still in the works, officials said.
County commissioners unanimously approved a $5 million tax-anticipation loan during a special meeting Monday.
The interest rate of 1.29 percent was lower than the rate for last year’s $10 million tax-anticipation loan, Douglas Lengenfelder, president commissioner, said before Monday’s vote.
The first $5 million of last year’s loan was paid off by July, he noted.
“We are planning to do that again this year,” Lengenfelder said. “If we could do that sooner, that would save the county more money, so we are looking to do that.”
Paperwork will be finalized on Thursday for another $5 million loan approved earlier this month, county Solicitor Thomas Leiden said.
“We will take that $5 million and pay off outstanding debt,” Leiden said.
The “outstanding debt,” county Controller Ed Cernic Jr. said, is the rest of last year’s
$10 million tax-anticipation loan. Terms for the first $5 million loan are 8 years at 4.3 percent.
Cernic called the interest rate “outrageous” for a tax-free government loan.
“Over the 8 year term, we are going to pay $973,000 in interest,” Cernic said in a phone interview. “That is one mill in property tax.”
Cernic did not attend Monday’s special meeting because he is visiting family out of the area.
Closing on the $5 million loan approved Monday won’t take as long, so that money will be available to meet cash flow needs in the early part of 2014, Leiden explained.
But Cernic said it may not be enough. Terms of the 8-year loan reduced the normal $10 million anticipation loan.
“The bank would not lend any more money than that ($5 million),” Cernic said. “I don’t know if $5 million is enough to get through until property tax season.”
Meanwhile, the county continues to look into a larger refinancing of long-term debt envisioned to reduce annual cash flow issues and save on interest costs.
Lengenfelder has pushed the idea, originally estimated at $19 million.
But on Monday, Leiden would only say the refinancing was “greater than $10 million.”
“We don’t have a final proposal from the bank yet,” Leiden said, explaining that the package would refinance bonds dating back to 1996.
Randy Griffith is a reporter for The Tribune-Democrat. Follow him on Twitter at twitter.com/photogriffer57.