Consultant outlines pooled bond plan for borough solar project; council authorizes ordinance advertising

A consultant representing Ravenston James told the borough council that the planned municipal solar project will be financed through a pooled bond program and that the borough will see the formal ordinance next month.

McKay, introduced to council as a Ravenston James representative, said the borough will borrow through a state pool that combines multiple municipalities’ borrowing to reduce costs. “Debt is debt,” McKay said, summarizing the filing requirement: any local borrowing must be disclosed through the state process and filed with the Department of Community Development (DCD). He said the borough is likely to borrow about $1,000,000 for the project but that DCD requires a not‑to‑exceed, or parameters, ordinance that will be larger — roughly $1.4 million — to allow flexibility during bond pricing and final structuring.

McKay described the timetable: the pooled bonds are expected to be sold in mid‑September, with the borough’s rate locked at sale and closing after that date. He said the proposed borrowing will be structured as a general‑obligation issue with fixed rates for the term; the presentation discussed a 25‑year financing horizon and projected rates in the low‑ to mid‑5% range. McKay also said the borough will be able to prepay or refinance without penalty after 10 years and that federal or state tax credits and rebate flows were being built into the transaction to reduce net cost.

Council members asked about why the ordinance will show a substantially higher not‑to‑exceed figure than the anticipated borrowing. McKay explained that under the local unit government debt rules there are three numeric tests — a not‑to‑exceed principal, an annual principal‑and‑interest cap, and an interest cap — and the ordinance must allow room to satisfy those tests if market factors change between filing and sale. “We have to build a box that’s big enough to fit all parameters,” he said, adding that the ordinance will include safeguards so the borough will actually borrow only the amount authorized in the final agreement.

After the presentation council voted to authorize Ravenston James to place the required legal advertisement under the Local Unit Government Debt Act and to bring back a formal ordinance for the council meeting on Aug. 19. The advertisement authorizes public review of the filing and is required before the ordinance is finalized and voted on.

The council did not take a final vote to adopt the ordinance at this meeting; members were given the opportunity to request additional analysis and said they expect to see the formal ordinance and final financing numbers before any bond sale is completed.