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Financial advisers outline refinancing opportunities that could save Harrisburg millions if municipal rates fall
Summary
Raymond James advisers told the board two callable bond issues (2014 and 2016 series) could be refunded to produce debt‑service savings; the advisers recommended the board adopt a parameters resolution so the team can move quickly if market rates fall, but no action was taken on Feb. 11.
Lou Verdeli and Ryan Brockman of the district's financial adviser team presented a detailed review of the district’s outstanding debt and possible refunding opportunities during the Feb. 11 Committee of the Whole meeting.
Verdeli said the district's 2020–21 refinancing work materially smoothed and lowered the district’s projected debt service. He described two near‑term opportunities: one for a 2014 series with about $8.6 million of principal outstanding and a later opportunity for a 2016 cluster that the firm estimated at roughly $81.7 million in principal outstanding. The 2014 issue’s call date had already passed Dec. 1, 2024, and the 2016 series becomes callable Dec. 1, 2026 (the team said a refinancing can be closed about 90 days before the call date per rules, meaning a potential closing around Sept. 1, 2026, for that series).
On savings, the advisers said the 2014 opportunity, priced at prevailing market rates the day of the presentation, produced only nominal net savings (about $22,000) and would not meet typical efficiency thresholds; the 2016‑era cluster, by contrast, could produce substantial savings if market rates decline, with an estimated $3.3 million of debt‑service reduction in a scenario run at then‑current interest assumptions. The advisers noted that Pennsylvania’s usual rule of thumb is that a refunding that yields 2% present value savings is considered efficient; their scenario for the 2016 series produced roughly a 4% savings for the refunded principal in the example shown.
Because market interest rates move, the advisers recommended the board consider adopting a parameters resolution that would authorize the financing team to proceed quickly if rates fall sufficiently and savings materialize. They said there is no cost to adopt parameters; the only up‑front administrative step is the public advertisement required under the state's Local Government Unit Debt Act before a debt resolution.
The presenters also reviewed the district’s net debt service after state reimbursement; they showed the state typically offsets roughly $3 million per year of gross debt service for the district’s reimbursable issues, lowering local net annual payments.
Ending
Board members asked detail questions about call dates, average coupon rates on older issues, how state reimbursement shares savings, and how any refunding savings could be applied to future budgets. No parameters resolution was adopted on Feb. 11; advisers asked the board to be prepared to act if market conditions change and recommended bringing a parameters resolution to a future meeting for formal consideration.
