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WILKES-BARRE — The city administration will make another try at restructuring old debt and paying for repairs to the Solomon Creek wall, this time with an urgent appeal from Mayor Tony George for city council to act and avoid additional costs from impending higher interest rates.

The mayor Friday issued a public letter describing the city “in dire straits financially” and the efforts of his administration as attempts to spare Wilkes-Barre the designation by the state as a “financially distressed municipality” under Act 47.

“The residents of Wilkes-Barre deserve a financially healthy city, during my administration and in future administrations,” he stated in the letter.

He also asked for outside help from state and federal lawmakers whose districts include the city to “expedite any resources that would help prevent” an Act 47 label that comes with strict financial oversight by the state.

The already shaky finances are being further strained by rising expenses from the debt and pensions and a $1 million to a $1.5 million deficit from last year, the mayor said.

He cited a Feb. 15 Time magazine article on the likelihood of higher interest rates this year as a reason for an expedited response to proposals presented to council on debt restructuring and issuing a $5.5 million bond to pay for the wall that has had to be repaired due to a collapse of a 40-foot section in December.

Council has before it proposals from PFM Financial Advisors LLC of Harrisburg, the city’s financial consultant. An ordinance on the bond issues is on the agenda for council’s work session Tuesday night and likely will be up for a vote at Thursday night’s public meeting.

The mayor has been pushing for a restructuring to lower the city’s debt service payments by $2 million starting next year. The aim is not to save money but to make it more affordable for the city to pay off the debt. The annual payments would drop to $5 million from over $7 million and the term would be extended three years to 2038. However, the deal comes with higher interest rates and additional debt, up to $43 million under the proposals by PFM.

“My administration is attempting to refinance the City’s current long-term debt, in order to provide financial stability on our debt service, and prepare for unexpected emergencies. My administration is seeking approval for initial long term debt-refinancing from City Council. As of yet, voting on the matter has been postponed and tabled,” the mayor said.

A call to council chairwoman Beth Gilbert was not immediately returned Friday.

Though he’s not been asked for input, city controller Darren Snyder urged the administration to proceed cautiously. The wall repairs should be funded, but the mayor should not commit to the restructuring and instead should look for ways to cut expenses and negotiate concessions from the four unions in light of the city’s financial situation, he said.

Snyder supported PFM’s proposal to issue the $5.5 million bond for the wall.

“That would be the best, least expensive option for the taxpayers,” he said.

The annual debt service would increase with the new money issued for the repairs to nearly $8 million in 2018 and stay above $7 million until 2027. It drops annually to $4.1 million in 2028 stays at $1.2 million until 2034 and plummets to $296,000 over the final two years. The overall deal adds $9 million to the debt service pushing it to $95 million from $86 million.

The city fares better under that scenario than any of the others, Snyder said.

“We see light at the end of the tunnel,” he said with decreasing payments. Imagine what the city could do with the millions it doesn’t have to allocate for the restructuring, he said.

Snyder, who has a background in real estate, said the city has been recording higher than budgeted amounts in tax revenues, especially from the sale of residential properties.

The city and the state split the 3.5 percent real estate transfer tax with 2.5 percent to the municipality and 1 percent to the state. Sales in the city were $15 million last year, compared to $9 million in 2013, he said.

“I think that’s a trend that has been occurring across the country that Wilkes-Barre is starting to see,” he said.

The tax revenue was $1.4 million last year and $1.1 million in 2015. The city budgeted a conservative $750,000 each year, he said.

He advocated that the city find ways to increase revenues and cut expenses rather than defaulting to a property tax hike to balance the budget as the mayor did this year. The $47.1 million balanced budget included a 19.7 mill tax hike. It’s budgeted to raise an additional $1.6 million in revenue.

A mill is a $1 tax on every $1,000 of assessed property value.

Snyder
https://www.timesleader.com/wp-content/uploads/2017/02/web1_DarrenSnydermug-2.jpg.optimal.jpgSnyder

Debt refinancing letter from Wilkes-Barre Mayor Tony George
https://www.timesleader.com/wp-content/uploads/2017/02/Wilkes-Barre-Debt-Refinancing-Letter-1.pdfDebt refinancing letter from Wilkes-Barre Mayor Tony George

George
https://www.timesleader.com/wp-content/uploads/2017/02/web1_TTL011517George1-1.jpg.optimal.jpgGeorge

By Jerry Lynott

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Reach Jerry Lynott at 570-991-6120 or on Twitter @TLJerryLynott