Bethlehem proposes $22M four‑year capital plan paid from reserves and Act 42 receipts to avoid new debt

City finance staff presented a proposal to fund a four‑year, $22 million non‑utility capital plan without issuing new bonds, using a combination of reserves, recurring gaming host‑fee receipts and accumulated cash balances.

Troy Evans said the administration built a capital reserve escrow account (about $10.7 million) from a series of non‑recurring and modest recurring receipts since 2021, including quarterly Act 42 host‑fee ACH payments that have averaged about $1.5 million in recent years. Evans proposed using those Act 42 receipts in the operating budget and tapping the escrow plus cash on hand (about $11.3 million) so the city can fund 2026–2029 capital items without borrowing.

Evans walked council through alternatives, including a 20‑year bond at an illustrative 5% interest rate. He said borrowing $22 million would produce an additional annual debt service burden (illustrative figure in presentation: about $1.765 million/year) and about $13 million in interest over the life of the borrowing. By contrast, the proposed cash funding would reduce outstanding debt quickly and avoid long‑term interest costs.

Council discussion focused on the nature of the capital reserve account and the extent to which Act 42 receipts should be treated as recurring. Finance and controller staff said early payments and state guidance were initially unclear; after multiple years of receipts at the $1.5 million level the administration concluded the stream can be budgeted in the operating account and the escrow used to smooth capital funding as ARPA sources wind down.

Finance Director Evans emphasized this approach is a multi‑year plan: about $9.1 million of the $22 million would be activated in 2026 with the remainder released in subsequent years as projects are executed and budgeted. He and bond advisors noted maintaining prudent cash floors remains a priority to preserve the city's S&P double‑A rating and liquidity targets recommended by financial advisors.

Council did not vote on the funding plan during the hearing; members thanked staff for the detailed presentation and said they would continue review in committee.