Harrisburg council authorizes up to $5.3 million to pursue early payoff of SRF loans

HARRISBURG — The Harrisburg City Council authorized staff to pursue the early payoff of certain State Revolving Fund (SRF) and related wastewater loans, approving preliminary authority to expend up to $5,300,000 from city reserves to begin the payoff process.

City staff presented the idea as a way to use a portion of the city’s cash reserves to reduce utility surcharges while keeping operating reserves within recommended levels. Amanda (staff member) told the council the city’s annual budget is about $12,000,000 and that Government Finance Officers Association guidance suggests keeping roughly three months’ operating cash — about $3,000,000 — in reserves. That leaves roughly $9,000,000 available, she said, and staff proposed using about $5.3 million of that amount to pay certain loans.

The move matters because the loans are pledged to specific debt sources that drive monthly wastewater surcharges. Toby Morris, a municipal finance consultant with Colliers, told the council he and staff identified a subset of loans where prepayment is feasible and could yield a measurable reduction in customer surcharges. Morris said the highest current surcharge item related to the treatment plant was about $39.41 and that, by targeting roughly $5.3 million in payoffs, the city could reduce that component to about $15.25 — a roughly 18–20% decrease for that line item.

Morris described the operational steps: once council gives preliminary authorization, Colliers will obtain payoff figures and confirm prepayment permission from the state and any private placement trustees or paying agents. He said he already has verbal permission from state SRF staff for some payoffs but must confirm formal payoff language and any requirements in the master trust documents held by US Bank (the trustee/paying agent). He estimated the aggregate payoff figure at about $5,349,000 and asked the council to authorize a not-to-exceed band (roughly $5.04–$5.5 million) so staff and the consultant could pursue specific payoffs and return with itemized approvals in April.

On timing, Morris said the city could implement reductions for customers as early as June, but he recommended aiming for mid-April to allow for payoff calculations, required notices and coordination with trustees. He recommended an annual November review with staff and engineers to monitor debt schedules and surcharge calculations going forward.

Councilmembers voted to authorize staff to pursue the payoffs and to spend up to $5,300,000 to begin the process. The vote called the ayes from Councilmember Wiesinski, Councilmember Maxwell, Councilmember Westermann and Councilmember Kent.

The action at this meeting was preliminary: Morris and staff said formal approval for each loan payoff will come back to the council as discrete items in April. They also warned the final implementation depends on written approvals from state SRF authorities, trustee/paying agent conditions in loan documents and the exact payoff amounts returned by lenders and trustees.

The council discussion and vote followed prior conversations the staff and consultant held with council and engineers earlier in the year; Morris said he had a preliminary agreement last spring and will resume formal payoff requests if the council authorizes proceeding.

Votes and next steps: council authorization allows staff and Colliers to obtain final payoff figures, secure any required lender/trustee permissions and return to council in April with individual payoff resolutions. Implementation for bill reductions could occur by June if all approvals and notice periods (including any 30-day notices required by bond documents) are satisfied.