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Thier view: Make your teen a millionaire this summer

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Terri Beam and Christopher Vrabel announce their engagement

<p>Luzerne County government has received a credit rating upgrade as officials are exploring a major debt restructuring proposal, according to records released Tuesday.</p><p>Standard &amp; Poor&#8217;s announced Friday it has increased the county&#8217;s rating from BB+ to BBB-, lifting the county out of speculative pool into an investment-grade position.</p><p>&#8220;The upgrade reflects improved operating performance and management conditions over the past year,&#8221; S&amp;P Global Ratings credit analyst Timothy Little said in a release.</p><p>Little cited the county&#8217;s improved budgeting practices and structural reforms since S&amp;P downgraded the county rating in November 2015, pointing to the hiring of C. David Pedri as county manager, council&#8217;s repeal of a homestead tax break that reduced the county&#8217;s real estate tax receipts and the adoption of a structurally-balanced 2017 budget.</p><p>&#8220;We no longer consider there to be political instability and gridlock weakening operations,&#8221; Little wrote.</p><p>A triple-B rating indicates an entity has adequate capacity to meet its financial commitments, though adverse economic conditions or changing circumstances are more likely to weaken its capacity, the rating agency says.</p><p>In comparison, ratings of A, AA and AAA &#8212; the highest &#8212; indicate strong capacity to meet financial commitments.</p><p>Little said the county&#8217;s stable outlook reflects the agency&#8217;s expectation that both budgetary flexibility and management conditions will remain weak next year.</p><p>The county has made strides reducing a deficit and adopting structural reforms over the last year, but the agency remains cautious about whether this progress will continue. As a result, the agency does not expect to increase the county&#8217;s rating within the next year, it said, while warning that a rating reduction also would be possible if the county backslides.</p><p>Pedri has scheduled a Monday afternoon media briefing with county council members at the courthouse rotunda in Wilkes-Barre to discuss the rating.</p><p>He has pointed to progress whittling down the deficit and the completion of on-time audits with a surplus two years in a row as evidence the county has shown marked improvement warranting a rating reconsideration.</p><p>The county audit released in June showed the county ended 2016 with a $1.375 surplus that was applied to reducing the general fund deficit from $9.35 million to approximately $8 million.</p><p>The county also has started implementing 2016 financial recovery recommendations from Harrisburg-based consultant Public Financial Management (PFM), including the purchase of a software based on aerial photography that pinpoints properties that may have been missed from the tax rolls, officials have said.</p><p>Pedri has said a more favorable rating would allow the county to refinance remaining variable-rate debt at fixed rates, and he submitted a thick debt-restructuring package to council on Friday for consideration at Tuesday&#8217;s meeting. The documents have been posted on the council agenda page at <a href="http://www.luzernecounty.org/uploads/images/assets/county/county_council_2016/Agenda2017/AGENDA%20and%20PACKET%208-8-17%20Voting.pdf" target="_blank">www.luzernecounty.org</a>.</p><p><strong>Proposed restructuring</strong></p><p>The administration is asking council to introduce two ordinances, which would require four of 11 council votes, to restructure two groups of debt from 2005, 2008 and 2009.</p><p>A portion of this refinancing would absorb the up-front cost of $7.9 million in proposed energy efficiency improvements and the resulting savings that are promised would than cover the expense, the documents say. The county&#8217;s consultant &#8212; the McClure Company, which has an office in Wilkes-Barre &#8212; has stated a<a href="http://www.luzernecounty.org/uploads/images/assets/county/county_council_2016/Agenda2017/AGENDA%20and%20PACKET%208-8-17%20Work.pdf" target="_blank"> guaranteed project savings</a> of $12.9 million over 20 years, according to its report posted on the work session agenda.</p><p>Both proposed restructuring packages would generate a savings or have no impact, depending on the credit rating, the administration maintains.</p><p>The first would involve $54 million, plus another up to $21.3 million in interest to be paid from this year through 2027, or a total $75.3 million.</p><p>After a $2.2 million payment for 2017, the county&#8217;s annual repayments would range from $6.15 million to $7.2 million from 2018 through 2025 before dropping to $4.8 million in 2026 and ballooning to $15.9 million in 2027.</p><p>The current payment schedule for both packages was not included in the meeting packet for comparison purposes, but Council Chairwoman Linda McClosky Houck said she requested that information Friday and will ensure it is presented at Tuesday&#8217;s meeting.</p><p>The second restructuring would involve $78 million in principal plus $30.46 million in interest, for a total debt of $106.46 million, to be paid through 2029.</p><p>The debt repayments would be $3.8 million in 2017 and $656,600 in 2028. Payments for the other years would range from a low of $7.7 million to a high of $12.2 million.</p><p>Another chart indicates the county&#8217;s overall debt would increase to $383.93 million through 2029 with both restructurings factored in. However, the county&#8217;s recent audit says the county owes $325.1 million, including interest.</p><p>McClosky Houck said she has asked PFM for an explanation on the difference, stressing she received the administration&#8217;s submission Friday along with other council members. A PFM representative is scheduled to attend Tuesday&#8217;s meeting to discuss the proposal.</p><p>The chairwoman said she was informed the restructuring was preliminarily estimated to save millions, and both council and the public also will have the opportunity to ask questions at a required public hearing tentatively planned for Aug. 22 if the ordinance is introduced.</p><p>&#8220;The manager brought this to us, and it&#8217;s always worthwhile to take a look at the possibility of refinancing and improving our financial position,&#8221; she said.</p><p><strong>Energy proposal</strong></p><p>The McClure Company was hired for $36,000 in 2015 to complete the study of cooling, heating, temperature control, air distribution, outdoor ventilation, water, electrical and lighting systems.</p><p>Its executive summary includes recommendations for lighting upgrades, &#8220;building envelope&#8221; improvements to windows and other exterior features for improved thermal comfort, mechanical insulation, plumbing upgrades and other work.</p><p>For example, the prison on Water Street in Wilkes-Barre needs hot-water-system and HVAC upgrades to replace &#8220;failing equipment at the end of useful life,&#8221; it said.</p><p>The project also proposes installing a new central heating system for the courthouse to allow abandonment of old and deteriorating underground piping that is part of a steam tunnel system between the prison and courthouse. Pipe ruptures in this system in recent years have been a warning, it said.</p><p>Its study includes photographs documenting air leaks through door gaps, inefficient lighting and evidence of energy loss under exterior door sweeps.</p><p>If the project proceeds, the county&#8217;s annual utility budget will remain the same, but the savings will fund improvements so there is no increased county debt, the study said.</p><style>
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<div class="metaInfo"><subheadMeta>Council to explore debt refinancing, plumbing/heating upgrades</subheadMeta></div><div class="metaInfo"><bylineMeta><p>By Jennifer Learn-Andes</p><p>jandes@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><factboxMeta><p>IF YOU GO</p><p>Luzerne County Council will discuss the proposed debt restructuring at its 6 p.m. meeting Tuesday at the county courthouse on River Street in Wilkes-Barre.</p></factboxMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.</p></shirttailMeta></div>

Luzerne County receives credit rating upgrade and explores debt refinancing