Lansdale finance advisers recommend $12 million bond issue; parameters ordinance expected in March

Lansdale financial advisers and bond counsel outlined a plan to issue roughly $12 million in general-obligation bonds and urged borough council to consider a parameters ordinance at its March meeting to authorize the borrowing and start the rating and marketing process.

The advisers presented a multi-page analysis of interest-rate benchmarks, the borough’s existing debt schedule and a recommended “wrap” amortization that would keep aggregate annual debt service level or declining to comply with the Local Government Unit Debt Act. “This is a general obligation of the borough, meaning the borough can raise taxes to pay that debt service,” the presenter explained, noting the 20-year bond buyer index and the MMD yield as pricing references.

The presentation assumed the borough’s historical underlying credit rating of AA- (Standard & Poor’s) and showed how capitalized interest could be included in bond proceeds to avoid an immediate budgetary debt service hit. “We’re assuming capitalized interest covering the interest payments through 06/01/2026,” the presenter said, summarizing a financing option that front-loads bond proceeds to pay early interest and phases in borough payments beginning December 2026.

Why it matters: Council would need an authorizing ordinance before the sale can proceed; the parameters ordinance would be the legal authorization to incur the debt, trigger required advertising and start the Department of Community and Economic Development (DCED) approval and rating process. The advisers said the rating process usually precedes marketing and that the assigned rating will materially affect investor pricing.

Council members asked technical questions about amortization, refinancing of existing debt and whether the borough could reamortize to pay principal sooner to lower long‑term interest costs. The presenter said the wrap structure does not refinance existing debt but layers the new issue so aggregate debt service remains level or declines; a faster principal paydown would reduce interest expense but raise near‑term budgetary debt-service obligations.

Bond counsel Nicole Norcross (Obermeyer) said she had prepared a parameters ordinance draft for the March meeting and described the next steps: pre-enactment advertisement, filing the package with DCED and preparing an offering document for the rating agency and investors. The presenter and counsel also discussed administrative details such as original issue premium, issuance costs and the possibility — and cost — of purchasing bond insurance for a higher rating.

No final vote was taken. Council signaled that staff should proceed toward presenting the parameters ordinance in March so the rating process and pre-marketing can begin.

Provenance: The meeting presentation and the March parameters timeline were introduced during the finance/bond presentation and discussed in question-and-answer between the presenter, bond counsel and council members.