Shenandoah tables decision on Municipal Authority loan guarantee
By Kaylee Lindenmuth
SHENANDOAH – Brought up during Monday night’s meeting of Shenandoah borough council was a loan guarantee by the borough for the Municipal Authority.
The municipal authority is looking to restructure its debt, and its best case scenario requires the borough to serve as guarantor.
The municipal authority currently has $4 Million in debt, owed to Pennsylvania Infrastructure Investment Authority, or PENNVEST, and the USDA’s Rural Utilities Service, with monthly payments of $53,000 per month.
Under the municipal authority’s plan, the authority would restructure it’s current debt and add $2.5 Million for upgrades to equipment and infrastructure in the authority’s service area. The authority would pay on the debt for two decades. With the borough guarantee, the authority would have a monthly payment of $39,000, or $39,500 without the guarantee. The borough’s guarantee would also lock in a 3.88 interest rate for the entire term, and without the guarantee, the rate could change after seven years.
“We have one of three (options). We have to, number one, wait for council to make their decision, number two, don’t do anything, or number three, move forward. At this present time, whatever your decision is, we have to let you know we have to move forward,” said Donna Gawrylik, Authority chair, during the first public portion of the meeting. “We need equipment up at the plant, and that was our intentions. Also, we have to worry about our manufacturers. We have Mrs T’s. We have Lee’s. We have the two nursing homes. We have the High Rise. We have the apartment building on Coal Street. We have our School District, and of course we have our citizens. We have to make sure that they have drinking water.
“As of today, to my knowledge, we are in no violations whatsoever, everything is running proper,” Gawrylik continued.
In August of 2017, the borough requested an appraisal on the Municipal Authority and the sewer authority, as recommended by the Pennsylvania Economy League, according to Sentinel archives.
“We discussed it with our attorney, and he himself said in the paper, in order, whether you want to sell it or not, you have to upkeep it. It’s going to take time. If you let something deteriorate, you’re not going to get money for it,” Gawrylik concluded.
When the item came up on the agenda, Councilman Gordon Slater questioned Gawrylik.
“Right now, we have the PennVest loan, I believe it is, that gets paid off in four years,” Slater said.
“That’s going to be consolidated,” Gawrylik said.
“And that’s at a 1% interest. What you’re saying is you want to refinance that for another 20 years at a 3.88% interest,” said Slater.
“Yes. It’s very confusing when you look at it your way, yes. In three years, it will be paid off, I understand that, but, under the circumstances that all goes in… It was explained that everything together would help minimize and bring down the payment. Instead of us paying $53,000 a month, it would be brought down to $43,000. Then, at the end of the 12 months, we’d have x-amount of dollars benefiting the water authority. The rest of the money would go for the infrastructure that has to get done.” Gawrylik said.
“It also says (in the daily paper) that the rumor about defaulting on the loan’s not true,” Slater said.
“No, it isn’t,” said Gawrylik.
“Well, if I remember right, the outfit that is looking into refinancing for you, I could’ve sworn he sat right there and said that the loan was defaulted on, because we were arguing back and forth if we guarantee that loan, and the only reason we didn’t get notified was that loan, it’s payments were paid by a bond. So that loan was defaulted on, and a bond paid for that loan,” said Slater.
“No, that’s not true,” said Gawrylik. “If you want to refresh your memory here, when that was addressed, you (borough council) were all here, about it, there was a deferment made. The same way five years ago, the borough didn’t pay that one loan when we had it and they had to run and get a bank to make payment on the deferment that they had. Ours was paid, and the deferment was with PennVest. They worked with us for six months, and for six months, we paid them and we paid Pennvest, we paid the pump, and we paid all our bills and our employees.”
Gawrylik continued, “there was no such thing as a default. And another thing to refresh your memory, you people didn’t even realize that you signed for one of the loans, that there was a guarantee on one loan, am I right Leo?”
“We have not been able to find any history of us signing as a guarantee for the PennVest loan, that you are claiming we signed for,” said Council President Leo Pietkiewicz.
“It should be easy enough to ask Pennvest, or whoever guaranteed the loan,” said Councilwoman Katie Catizone. “That’s all I need is a paper that said that. But it’s not the borough’s loan, it’s MABS loan, so I need MABS to provide me with that paper. If we just signed for the paper, then MABS has the paper.”
“All that is on the computer,” said Gawrylik.
“Well send it to me,” said Catizone. “I’ll give you my email and you can send it to me afterwards.”
“We’ll table this for further investigation, we’re not going to take any formal actions,” said Pietkiewicz.
In other business, council approved consent to compromise taxes for the following properties in the borough:
- 1052 1/2 West Lloyd Street
- 505 West Centre Street
- 32 West Coal Street
- 313 West Coal Street
- 315 West Coal Street
- 204 East Washington Street
- 206 East Washington Street
- 202 East Washington Street
- 208 East Washington Street
- 237 North Bower Street
- 235 North Bower Street
- 233 North Bower Street
- 231 North Bower Street
- 219 East Penn Street
- 215 East Penn Street
- 211 East Penn Street
- 209 East Penn Street
A handicapped parking application was approved for 319 South Jardin Street, and tabled for 422 East Centre Street.
Council approved
- The use of Bicentennial Park for the 2018 462 Slugfest event, held by Shenandoah Little League
- A police escort for the Our Lady of Mount Carmel procession
- The closure of South West Street from Cherry to Poplar and West Cherry from West Street to the Annuciation rectory for the Divine Mercy Block Party on July 13th to the 15th
- Providing police for the 2018 Coal Cracker 10k on June 9.
- Rotary trash container sponsorship
- A police escort, a podium, and a $500 donation to the Combined Veterans for the Memorial Day ceremony
- A Can Collection for the Shenandoah Volunteer Group
- Approved a fireworks display for the 2018 Shenandoah Valley graduation.
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