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Lancaster council approves $15 million interim loan to keep Susquehanna water‑main project on schedule
Summary
Lancaster City Council voted to adopt an ordinance authorizing up to $15 million in interim financing to bridge delays in PENVEST funding for the Susquehanna large‑diameter transmission main; officials said bids and engineer estimates put the project near $67.1 million and the interim loan will mature Sept. 30, 2028.
Lancaster City Council voted to approve an ordinance authorizing a not‑to‑exceed $15,000,000 general‑obligation note to provide interim financing for design and construction of improvements to the city’s water system, including the Susquehanna large‑diameter transmission main.
Councilors completed the ordinance’s second reading on June 23 and approved an amendment that names 1st National Bank of Pennsylvania as the note purchaser and paying agent and sets the note’s interest rate. Finance adviser Daryl Peck said the project’s current cost is “about $67,100,000” based on actual bids and estimates and that the interim drawdown loan is needed while the city awaits supplemental PENVEST funding expected to be considered July 15.
Why it matters: City staff said the interim financing will let construction proceed on schedule rather than pause while the longer‑term PENVEST loan is finalized. Peck told council the interim loan is structured as a drawdown: the city will pay interest only on amounts it uses and plans to pay the interim loan off when permanent financing closes.
Details and fiscal terms: The ordinance authorizes a drawdown loan not to exceed $15 million, with the financing maturing Sept. 30, 2028. Peck said the most favorable proposal was from 1st National Bank of Pennsylvania and that the estimated interim interest expense to bridge to PENVEST is about $250,000. Bond counsel explained that statute requires council to show professional cost estimates supporting the borrowing amount; the city said those professional estimates and related documentation were provided in the meeting packet.
Council discussion and vote: Council members asked for confirmation that engineers’ estimates and bid information had been received and made available; bond counsel said professional estimates from the city’s engineers support the project cost figures. After discussion and the amendment, council voted in favor of final passage (the motion carried with all councilors present voting aye).
Next steps: If approved by the city, the loan documents will be executed and the city will continue coordination with PENVEST for permanent financing. The ordinance also authorizes related administrative actions required to close the interim financing and establishes procedural exhibits referenced in the ordinance.
