The Daily Item, Sunbury, PA

The Danville News

April 22, 2014

$2.4 million proposal moves Valley Township closer to connection

DANVILLE — VALLEY TWP. — The Valley Township Municipal Authority approved a bond counsel and a bank for a $2.4 million loan to pay off a state loan and to finance a sewer connection to Danville’s system.

Authority members approved the proposal Monday night of Muncy Bank & Trust Co. at a 3.98 percent fixed interest rate for 30 years for the tax-exempt bonds.

They also approved Harrisburg Attorney Ben Ried to serve as bond counsel.

Authority solicitor Robert Buehner Jr. recommended Ried, saying he has done extensive work for municipal authorities and local governments for specialty bonds and loans.

Appointing a bond counsel is a requirement of the lender, Ried said.

Authority members taking the actions were Chairman Judi West and members Nancy Holmes, Chad Holmes and John Fenstemacher. Member Mary Ann Gray was absent.

The authority also adopted a resolution to extend the life of the authority 50 more years or through 2064. The authority was formed in 1980.

The Muncy bank also submitted a proposal for a 3.48 percent fixed interest rate for 10 years and a fixed interest rate of 2.98 for five years.

FNB Bank proposed a rate of 2.39 percent at a fixed rate for five years with a variable rate after that or a 2.89 percent rate for seven years and then a variable rate. First Keystone Community Bank submitted a proposal for 2.73 percent at a fixed rate for seven years and after that 85 percent of the prime rate or a 10-year fixed interest rate of 3.26 percent.

Buehner expected closing of the loan to occur in the next month or two. Engineer Paul Krizan anticipates bids to be advertised for the line to the Danville plant sometime in 2015 and the project to take about five months. If negotiations are successful with the Danville Municipal Authority, the line would run from the township plant to the Danville sewer plant.

Krizan said the township authority will pay off a $1.1 million PennVEST loan aimed at keeping sewer rates low. That loan was for previous sewer extensions.

The township still has a $1 million state grant it has been awarded to connect its system to the Danville system.

Nancy Holmes favored the 30-year fixed rate, saying it would protect users of the township sewer system. Authority Executive Director Steve Traub agreed as did other authority members.

“We have to do what has the least impact on ratepayers,” Fenstemacher said.

“You’re trading stability for volatility,” Buehner told authority members. The next step would be a guarantee of the loan by the township and then approval by the state Department of Community and Economic Development.

The bond counsel fee would not exceed $25,000 and is expected to come from the loan. Buehner said that amount was reasonable for the type of expertise required for the tax-exempt loan. He also reported the township authority and Danville authority have reached a breakthrough in negotiations. “We’re not ready to sign but we are incredibly close,” he said. He received a revised draft of an agreement last week with township authority representatives to meet with Danville authority officials May 5.

“I have a better feeling than I had three weeks ago,” he said of negotiations.

 Only part of Valley Township is connected to a municipal sewer service, including homes and businesses.

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