The Tribune Democrat, Johnstown, PA

Local News

July 6, 2013

Counties at odds over CSA savings

JOHNSTOWN — Cambria and Somerset counties will save about a half-million dollars by agreeing to refinance $7.5 million in bonds that provided financing for Cambria Somerset Authority projects.

The two counties could save another half-million, but it would require Somerset to guarantee 100 percent of the authority’s restructured debt.

After voting 2-1 last week to refinance in partnership with Cambria, Somerset County commissioners Joe Betta and John Vatavuk each blamed the other for failing to pursue the greater savings.

Betta voted against the shared loan guarantee, which continues the current agreement.

“We have not sat down and hammered out what it would take for us to take on the guarantee,” Betta said.

“I have difficulty understanding why six educated men can’t sit down and figure out a way to save a half-million dollars.”

Betta confirmed he was referring to the six Cambria and Somerset county commissioners: him, Vatavuk and Pamela Tokar-Ickes from Somerset and Douglas Lengenfelder, Mark Wis­singer and Thomas Chernisky from Cambria.

Betta’s support came as a surprise to Vatavuk, who said he pushed for an agreement that would require Cambria to reimburse Somerset if there is a problem with repayment.

“I couldn’t get a second vote for that,” Vatavuk said. “Until he had a turnaround, there was not any point in doing anything.

“It is a big risk, but I was willing to at least look into it and find out what it would have taken.”

Like many government agencies, the Cambria Somerset Authority checked into potential savings by taking advantage of historically low interest rates.

The issue, Somerset County Solicitor Daniel Rullo said, is that Somerset is considered a better credit risk than Cambria.

Somerset County has an A-1 bond rating, Rullo said. Cambria has no published bond rating, and the most recent rating was BBB-minus, Rullo said.

Lengenfelder said Cambria commissioners were willing to negotiate an agreement that would protect Somerset and allow the additional savings.

“Cambria County was on board to do whatever to save taxpayers money at any level,” Lengenfelder said.

Lengenfelder confirmed there were negotiations on the bond refinancing but would not say why the greater savings option was nixed.

“Everybody was discussing in good faith how we could help the taxpayers,” Lengenfelder said. “People had honest concerns.

“Negotiations aren’t public for a reason,” he added.

He welcomes the joint agreement that will save an estimated $560,000, based on recent interest rates.

“This is a good news in saving taxpayer dollars,” Lengenfelder said.

Lengenfelder and Cambria Somerset Authority Chairman James Greco both stressed that the Somerset commissioners had the final say in accepting the increased risk.

“We presented the information to them,” Greco said.

“We stayed out of it. It was not our decision to make. It was their decision.”

The authority relies on allocations totalling $1 million a year from both counties to operate and repay debt, Greco said.

It owns and manages more than 5,000 acres in the two counties, including the Quemahoning, Wilmore and Hinkston Run reservoirs.

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