Lackawanna County commissioners move toward refinancing debt

Feb. 25--Lackawanna County commissioners took another step Wednesday toward refinancing about $72.28 million in debt, a move consultants estimate could save about $15 million on interest payments over the next two decades without extending the payment term.

Commissioners approved an ordinance to refinance nearly a third of the county's debt, although attorney John Appleton, representing Commissioner Jerry Notarianni, said the Democrat will need to see a detailed final accounting of all associated fees before the commissioner will give his final sign off.

The early estimate for fees that will go to a variety of experts and consultants to close the deal is $1,056,704, although the total cost and distribution of the fees won't be final until the county closes a deal in the bond market -- which Chief Financial Officer Thomas Durkin expects to happen by early April.

Without knowing the final breakdown, an early estimate includes $369,469 for the underwriters Boenning & Scattergood and PNC, $334,235 for bond insurance and $190,000 for adviser Financial Solutions as the top three expenses.

Other expected fees included $90,000 for bond counsel Stevens & Lee, $40,000 for Standard & Poor's to rate it, $15,000 for the underwriter's counsel and $6,000 for Fidelity Deposit and Discount Bank as the paying agent.

Aside from the bond insurance, some of the businesses providing services have yet to be selected. The estimate also includes $5,000 for the printer, $5,000 for a verification service and $2,000 for other miscellaneous expenses.

Commissioner Patrick O'Malley said county solicitors will not get any extra compensation for their role in the deal besides their regular wage for the job. When the Scranton School District recently paid $846,819 in fees and closing costs for a bond to avoid default, the district's solicitor John Minora received $50,000.

Mr. O'Malley said the fees -- which amount to roughly 1.5 percent of the refinanced debt -- compare favorably to past county bond transactions, such as $2.42 million for a $56.94 million in 2007 bonds -- about 4.3 percent of the bonds -- $2.15 million for a 2005 bond totaling $38.65 million -- about 5.6 percent -- and $3.49 million for $44.15 million in 2004 bonds -- or 7.9 percent.

Mr. O'Malley said the refinancing is part of the county's improving financial picture over the last several years and follows other recent developments, such as the county's upgraded bond rating.

"I think we should give a special thanks to the previous administration: Commissioner (Corey) O'Brien and Commissioner (Jim) Wansacz, along with Commissioner O'Malley," Mr. Notarianni said. "I think it's important we recognize it was their hard work that (helped make this possible) too."

Mr. Durkin went back one more administration, saying work during the tenure of Mr. O'Brien and Commissioner Mike Washo when the county's financial picture looked bleak helped put the county on a better path.

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