The bond would pay, in part, for improvements to connect to Potstown's water treatment plant.

SANATOGA PA – Lower Pottsgrove (PA) Township’s Sewer Authority hopes to take advantage of historically low interest rates to borrow $13.76 million by issuing bonds next month (December 2010). The money would pay for $4.7 million in improvements for Lower Pottsgrove’s connection to the borough of Pottstown‘s water treatment plant, as well as refinance about $9 million in debt the authority already owes.

There was a hint from the township Board of Commissioners, however, that the bond could be even larger. Commissioners made no commitments when they reviewed authority plans late last month (Oct. 21), but asked if it were possible for the township itself to borrow additional money in the same bond sale. “Can be done,” they were told.

Commissioners are scheduled to gather tonight (Thursday, Nov. 4) at 7 p.m. in the municipal building, 2199 Buchert Rd., Pottstown PA, for their first of two November meetings. It is unknown if the bond issue will be again discussed.

• A meeting agenda was not available as of 6 a.m. today. If and when an agenda is posted it usually can be downloaded from the township website, here.

Gordon Walker of The PFM Group, the authority’s bond adviser, told commissioners both the weakened economy and Lower Pottsgrove’s top-notch credit rating – on which he acknowledged the authority will rely – will keep the cost of financing low. The loan’s average annual interest rate should be about 3.56 percent. “That’s incredibly good,” Walker noted.

For its part, the commission must guarantee the township will repay the debt if the authority cannot.

Sewer upgrades between Lower Pottsgrove and Pottstown serve both to solve problems with the township’s system cited by the state Department of Environmental Protection, and to expand sewer capacity commissioners anticipate will be needed for commercial growth surrounding the Sanatoga interchange of U.S. Route 422.

The township has applied for, but is uncertain if it will win, up to $1 million in grant money from Pennsylvania’s H2O capital fund to help pay for the work. It should know later this month if a grant will arive.

Remaining funds from the bond sale would pay off $5.2 million in debt borrowed by the authority during 2005, and another 3.5 million borrowed earlier. Both have higher interest rates, and the authority looks to save money by refinancing them.

As is now common, Walker said, the 20-year bonds will be sold in about 15 minutes to banks or other lenders who participate in an Internet-based auction. He described the process as “very efficient, and sometimes a lot of fun to watch” as competing lenders make strategic moves.

Commissioner James Phillips, a banker who is a member of the commissioners’ 2011 budget committee, was the first to inquire about the township’s ability to piggy-back on the authority’s bond sale. “I wanted to throw it out there, just in case,” he said to fellow board members as he looked around the conference room. “You never know what we might need,” Phillips added.

High on the commissioners’ wish list for several years is an expansion of the existing, or construction of a new, municipal building. Most township departments, and its police force in particular, now operate in tight quarters and need additional space. Cost estimates for a new township building run to several million dollars.

Related (to the Lower Pottsgrove Board of Commissioners’ meeting of Oct. 21):

• Township Sewer Authority Plans To Borrow $13.7M
• Caution! Children Busily At Work In Lower Pottsgrove
• Commissioners OK Italian Restaurant’s Plans, Without Alley
• Township Considers Using Area Law Firm For Delinquents
• It Could Be Awhile Before Sanatoga Pizza Oven Fires Up