LAWRENCE COUNTY Panel OKs refinancing if rate drops

The county can use the money only for new equipment or building improvements.
By LAURE CIOFFI
VINDICATOR NEW CASTLE BUREAU
NEW CASTLE, Pa. -- The promise of low interest rates has the Lawrence County commissioners ready to refinance an old loan.
Commissioners gave Atty. Wayne D. Gerhold permission to refinance an $11.2 million loan if interest rates dip low enough.
The county has been paying the original $11.74 million loan since taking it out through the sale of bonds in 1994. The money was used to build a new county jail.
Gerhold said interest rates were low enough last month that the county would have gotten about $225,000 back by refinancing, but the rates went up again by the time they were ready to process it and the county lost out on the extra cash.
Outlining parameters
On Thursday, county commissioners agreed to parameters to refinance the loan if interest rates drop again.
Gerhold explained that this move was necessary because interest rates rise and fall quickly and by the time county commissioners vote on and advertise refinancing, the interest rates often change.
He said that by setting parameters, the loan refinancing company can immediately move on refinancing when interest rates are low without requiring commissioners to vote or advertise it.
Gerhold added that the refinancing will be done only if the county can recoup at least $225,000 from the deal. For that to happen, the interest rate must dip at last two points below the current 5 percent interest rate on the loan.
What law says
He noted that state law requires that the county use the money only for capital improvements, such as building improvements or equipment purchases. It cannot be put into the general fund, he said.
Gerhold said the county's yearly loan payment will stay the same and the loan will be paid off in 2018.
"I hope it's clear we are doing this to reduce the burden on taxpayers. It's very similar to refinancing a home loan when interest rates are low," said Commissioner Ed Fosnaught.