Finance committee forwards $38.4 million bond ordinance to full council; water main financing to use PENNVEST or interim loan

Lancaster City’s Finance Committee voted to send an ordinance authorizing a 2025 general obligation bond—now estimated at approximately $38.4 million—to full council for a first reading on March 11.

Director Tina Campbell said the bond package, as presented to the committee on March 3, would fund projects across three funds: about $19 million for general-fund projects, roughly $10.3 million for sewer projects and about $9.1 million for water projects.

The bond matter matters because the financing would pay for a range of capital work the city expects to complete or substantially finish within about three years, including implementation of the parks master plan, active-transportation improvements, facility maintenance tied to facility-condition assessments, right-of-way upgrades, and multiple water and sewer projects. “This funding would mainly be spent over the next three years,” Director Tina Campbell said during the presentation.

The water portion of the package was reduced since the February briefing after staff decided to pursue PENNVEST (the Pennsylvania Infrastructure Investment Authority state revolving loan fund) for some large water projects that PENNVEST better subsidizes. Campbell said the 42-inch water transmission main replacement—a large project the city estimates at about $41 million total, with a $3 million grant already secured—was removed from the bond and will be pursued through PENNVEST or with short-term interim financing until PENNVEST loan terms are available. “We decided to pull that funding out completely from the bond and potentially pursue interim financing in the next couple of months,” Campbell said.

Daryl Peck, the city’s financial consultant, reviewed proposed loan terms and budget impacts. Peck said the committee’s approach was to tailor terms to project useful lives: general-fund projects over about 20 years, sewer projects over 30 years, and water projects over 25 years. He described projected near-term budget impacts: about $900,000 additional annual debt service for the general fund beginning in 2027 and a roughly $120,000 annual impact for the sewer fund beginning in 2026. Peck also said the water fund already faces a planned increase in 2026 and that the additional borrowing would add roughly $938,000 in 2028 under the financing shown to council.

Campbell and Peck emphasized timing. If the committee’s schedule holds, Campbell said the ordinance would receive its first reading at the March 11 meeting, the bond auction would follow, and the second reading or enactment would be targeted at the March 25 meeting, with closing and funds available in April. “If we make the schedule we’re talking about, we would have closing towards the April so you’d have the funds for the projects then,” Peck said.

Council members asked about debt totals, contingencies for federal regulation changes affecting construction materials, and how the city is balancing capital decisions with operations. Campbell said PENNVEST loans have lower interest costs and that interim financing would be used to reduce long-term interest expense; she also said the city has raised sewer rates previously and is planning a PUC rate case for outside-city water rates to help manage water-fund impacts.

The Finance Committee vote forwarded the ordinance to full council for first reading; committee members voiced approval and the chair moved the item to the March 11 agenda. The committee packet included a more detailed, itemized project list and borrower schedules that staff distributed at the meeting.

The committee’s vote does not appropriate funds or finalize financing; those decisions will await full council readings and the municipal bond auction process, and some projects (notably the large water transmission main) could be financed separately through PENNVEST or interim loans.

Key documents distributed at the committee meeting included the ordinance and a detailed project list and debt-service projections.