Bond market fluctuations stall Northampton County bond refinancing
Northampton County Council adopted what one member called "a defensive strategy" and decided to hold off on a bond refinancing plan Tuesday night.
Council had planned to refinance a $9.9 million bond from 2006 and add the savings to an extra $11.4 million in debt, so 18 of the worst bridges in the county can be repaired and work can be done at Gracedale, the county nursing home.
But after financial adviser Robert Fuller laid out the numbers, council decided to follow his advice to "step aside" until July 18, when Fuller said the bond interest rates would be more settled.
Bond interest rates spiked "pretty smartly" last week, Fuller said, in reaction to Federal Reserve chairman Ben Bernanke‘s statements a few days earlier about winding down the central bank’s $85 billion-a-month bond-buying program.
"The rout lasted seven days, and we were scheduled to sell at the end of that period," Fuller told council. If the sale had gone through Tuesday as planned, it could have cost the county an additional $2 million over the life of the bond, Fuller added.
Fuller said he expects the interest rates will be coming back down over the next two weeks, and that the county will be able to refinance the bond at close to what council expected.
Council president John Cusick said after the meeting that council may decide against refinancing if interest rates continue to rise, but will likely go ahead and borrow the $11.4 million so the work on the bridges and at Gracedale can be done.
In other business, council tabled a plan that would funnel $500,000 of the county's share of the hotel room rental tax to the city of Bethlehem so the final two phases of the skate park project near the Sands casino in Bethlehem can be completed.
Cusick said Bethlehem Mayor John Callahan called him and asked for the delay last week, noting the mayor wanted council to wait until a feasibility study for a convention and exposition center at the old Bethlehem Steel site is completed.
Right now, the county is splitting its 12.5 percent share of the tax revenue equally with ArtsQuest and PBS Channel 39, until each receives $1 million.
Both organizations would be cut back from half to a third, with the final third going to the skate park project until the $500,000 mark is reached.
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