Several members of Luzerne County Council expressed concern last week over a county guarantee request for the loan needed to secure about $55 million for local infrastructure projects.
Under state legislation approved last year, the county’s redevelopment authority will execute the loan to secure the $55 million and will receive $3 million annually from the gaming-funded local sharing account. casino to repay the loan.
Because the redevelopment authority does not have the ability to impose taxes or other revenue-generating measures, it requires the county to guarantee loan repayments in the unexpected event that casino funding is insufficient.
Advisor Gregory Wolovich Jr. said casino revenue is not a sure thing in the future as online gambling has become a “huge thing”. He also considered the possibility of increased competition if the state ever decides to license casinos in more counties.
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“It’s basically taking a big bet on game money,” Wolovich said, referring to the county guarantee. “It’s a very scary proposition.”
Agreeing with Wolovich, Councilor Kevin Lescavage also noted the increase in online gambling and the possibility of something happening in the industry.
“We can never say never, and that’s what makes me nervous about all of this,” Lescavage said.
Lescavage said he would not consider a guarantee until the matter was reviewed by Randy Robertson, who is expected to begin work as the county’s new manager the week of June 13.
“He has a master’s degree in strategic planning. Maybe he can work together with you to look that far into the future,” Lescavage told officials.
Councilman Brian Thornton said he researched casinos and found many had closed across the country.
He did not initially realize that new state legislation required the redevelopment authority to undertake an initial loan in order to receive the $3 million in gambling revenue.
Before that clarification was provided, Thornton proposed waiting each year to see if the $3 million is paid out and, if so, allocating it to infrastructure projects within that cap. . This approach would eliminate borrowing costs and any risk, Thornton said.
Thornton said he would not provide security, which may require county ratepayer funding down the road.
“I’m not ready to do this,” he said.
He likened the borrowing approach to a kid in a candy store, saying he spent all the money in his pocket on candy when he was little because it was his parents’ money.
“We kind of seem to think it’s the best way to tackle these infrastructure projects by borrowing the money up front because we look forward to getting it every year with no interest and no fees.” , Thornton said.
The premise of the new legislation was that the initial borrowing would kick-start large-scale infrastructure projects that are needed but have been postponed by the county and municipalities due to a lack of funds, Sen. John Yudichak said. , I-Swoyersville. In some cases, the funding can be matched with new federal infrastructure funds to accelerate work that would normally take decades to materialize, he said.
Yudichak said he and many others were confident the $3 million was solid because casino credits for county projects averaged $12 million a year. The rest of the funds would continue to flow to municipalities for various community purposes, such as the purchase of municipal equipment and vehicles, officials said.
While the county’s local sharing account has met many pressing public needs, some have criticized its inability to meet more expensive regional projects as originally planned.
Councilman Stephen J. Urban criticized the format of the state legislation.
“I don’t think it’s fair to us and the taxpayers of the county to have us paid for 25 years up to $3 million a year,” Urban said.
It is unclear whether the proposal will be put to a vote at an upcoming board meeting.
A majority of the redevelopment authority’s board recently selected Fidelity Bank from among five financial entities that responded to a request for proposals to provide a loan. Fidelity Bank is partnering with FNCB for the proposed transaction.
Officials said other financial entities that responded to the proposal will also have a similar question about whether a county guarantee is provided.
A higher interest rate may be an option without a county guarantee, but it would reduce the amount of money that can be borrowed and allocated to infrastructure projects, officials said.
The board recently retained Penn’s Northeast to create an online portal that would accept applications for new funding. State legislation authorizing the creation of the county infrastructure fund also allows the money to be used for utility services and flood control projects, officials said.
In advocating a no-borrowing approach not permitted by legislation, Thornton also said he believed the annual $3 million should first be invested in paving all county-owned roads and bridges.
“We all know how bad our roads are in this county. It could go a long way,” Thornton said.
However, the legislation leaves the decision on which infrastructure projects to be funded to the Redevelopment Authority, with final approval of the award by the Commonwealth Finance Authority. This state entity already approves other County Local Sharing Account rewards.
The County Council appoints the five citizens to serve on the Redevelopment Authority’s board of directors, with the seats currently held by Nina DeCosmo, Scott Linde, John Pekarovsky, Stephen E. Phillips and Mark Rabo.