WILKES-BARRE — After years of whittling down inherited debt, Luzerne County government will borrow $7.5 million — an estimated $12.1 million with interest tacked on — for an energy project that will fix a series of capital problems and cut utility expenses.
The new borrowing will increase the county’s overall debt an estimated $3.5 million to a new total of $319.9 million through 2029, officials said.
The blow was lessened by wrapping the project into a debt refinancing project, also approved Tuesday.
A council majority approved the two-part package with a caveat that an energy saving contractor must be selected within four months of the date the bonds are issued, which is projected to occur in October.
It’s unclear how the administration plans to proceed with that selection.
At the start of Tuesday’s meeting, county Manager C. David Pedri withdrew his request for council approval authorizing him to execute a contract with Pennsylvania-based McClure Company, a county consultant that developed the proposed scope of the energy project.
The company wanted to be hired to complete the projects and provide a financial guarantee the county will meet specific energy reduction targets. Some council members had reservations about this approach because the county would not bid out the work on its own.
While the McClure contract was off the table, at least for now, Eugene Kelleher told his council colleagues he contacted several school districts and counties that have retained McClure. All reported they exceeded McClure’s projected energy reductions, he said.
The project here will include the addition of courthouse boilers for heat to end the building’s reliance on an aging and deteriorating underground steam pipe from the boiler plant near the Water Street prison. A new boiler at the plant, and water system and HVAC work at the prison also are proposed.
Only eight council members voted Tuesday because Harry Haas, Kathy Dobash and Edward Brominski were absent, resulting in 6-2 votes on the borrowing and refinancing. Councilman Stephen A. Urban and Eileen Sorokas opposed both.
Urban said the county had around $20 million in past-borrowed funds remaining for capital projects when it switched to a home rule government structure in 2012, and he believes the administration should have prioritized projects differently to ensure the money lasted.
“We have a fence across the street that looks nice, but is that needed or is a heating system needed?” Urban asked. He was referring to a fence installed around the River Street parking lot completed as a safety project to force pedestrians to use a marked crossing with flashing lights when heading to and from the courthouse.
Urban predicted the administration next will be asking council to borrow $20 million to fund an emergency 911 radio communications system overhaul that must be completed before equipment becomes obsolete in 2020. Officials have said it’s highly unlikely any state funding will help pay for the switch.
Pedri said additional borrowing may be needed, but he’s also pursuing grants and other options.
“You can really put a burden on the people of this county,” Urban said, saying he expects more proposed tax hikes in coming years.
The refinancing package will eliminate all variable rate debt and lock in lower interest rates, supporters stressed.
Council Chairwoman Linda McClosky Houck described the variable rate debt as “bad” and emphasized it all stemmed from extensive borrowing that predated home rule. The county was on the hook for $421 million when home rule started.
“All we’re doing today is trying to bring that debt under control so we can be debt-free in 2029,” she said.
In other business, council unanimously voted to keep Bethlehem-based Brown & Brown of Lehigh Valley as insurance broker for two more years.
The company has received $85,000 since 2013 to shop around for insurance providers and administer claims for county coverage. It will now be paid $60,000 annually. Four other companies submitted proposals, and the county’s risk manager recommended Brown & Brown.
Citizen Brian Shiner questioned why the companies were not identified before the vote, as they were in 2013. Chief Solicitor Romilda Crocamo maintained public disclosure is not required before a company is selected and said some companies had cited concerns about the release of proprietary information.