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Finance committee hears plan to restructure $11.7 million of general-fund debt
Summary
City officials and their financial advisor presented a plan to restructure roughly $11.7 million of general-fund bonds to smooth annual debt service; the administration said the transaction would cost about $800,000 on a present-value basis and would be advanced via a parameters ordinance for council consideration in August. No committee vote was taken tonight.
The Bethlehem finance committee on Wednesday heard a presentation from city officials and their financial advisor on a proposal to restructure a portion of the city's outstanding general-fund debt.
Scott Shear of Public Financial Management told the committee the firm is targeting roughly $11,700,000 of bonds for restructuring and is proposing a stepped-down debt-service profile that would ease near-term budget pressure. "We're looking to issue about $11,700,000," Shear said, and he showed models projecting lower annual payments in the early years and modestly higher payments later.
Administration and its advisors said the transaction is intended to improve budget flexibility rather than to add new borrowing. City staff emphasized that the capital plan is funded through 2029 and that the proposal covers only a slice of the city's outstanding general-fund debt. "Reduction of debt has improved the city's financial position, and we're now interested in restructuring the remaining debt," the administration said during the presentation.
The advisors presented estimated costs and benefits in two ways: a future-value impact and a present-value calculation. The team showed an estimated present-value cost of roughly $800,000 to achieve the smoother payment schedule. Councilwoman Hillary Kwiatak pressed the advisors to clarify the difference between the higher future-value totals and the discounted present-value figure. "You took us down to this bottom line PV savings slash cost and said that ultimately, the net cost of this is $811,000," Kwiatak said; PFM explained that the $4,000,000 difference over time is a future-value figure that, when discounted to today's dollars, equates to about $811,000.
PFM and administration outlined next steps for a parameters ordinance: an initial council presentation and an intended first reading on Aug. 4 and second reading on Aug. 18, pricing in mid-September and settlement targeted for October 2026 pending state approvals and a routine credit review. Officials said they will continue legal and technical reviews with state bond counsel and IRS useful-life tests before bringing a final transaction to the council.
No vote was requested or taken at the committee level on the restructuring proposal. Administration said it will return with the parameters ordinance and final numbers for council consideration.
