SANATOGA PA – The words “full faith and credit,” as they apply to a government’s ability to repay its debts, may have lost some luster within the past 30 days, but the Lower Pottsgrove (PA) Township Board of Commissioners is expected to prove tonight (Thursday, Aug. 18, 2011) the phrase still has value locally.

When board members meet at 7 p.m. in the township municipal building, 2199 Buchert Rd., Pottstown PA, they will consider pledging Lower Pottsgrove’s full faith and credit on behalf of its sewer authority and $1.74 million it intends to borrow from the Delaware Valley Regional Finance Authority.

The faith and credit of the federal government has been strained in recent weeks, as Congress and the president initially appeared unable to compromise on lowering the national deficit. That almost imperiled the country’s ability to repay its debt obligations, and although a default was avoided it ultimately led to a downgrade in America’s credit rating.

The township’s credit rating, on the other hand, is just fine, Manager Rodney Hawthorne happily proclaims. That’s because the municipality has a substantial fund balance (money in the bank) and also because, if it had to, it could raise taxes to repay debts. Both are good things for the sewer authority.

Back in 2005, it borrowed money from the Emmaus General Authority to pay for sewer improvements locally. Now, six years later, with loan interest rates at historically low levels, Lower Pottsgrove has shopped around and found it can get a better deal on borrowing money from the Delaware Valley authority.

Its plan, explained in an advertisement published Monday (Aug. 15) in The (Pottstown PA) Mercury newspaper – the township’s publication of record for legal notices – is to borrow from Delaware Valley to pay off Emmaus. To guarantee the new loan will be repaid, the sewer authority is asking the township to pledge its “full faith, credit, and taxing power” on the authority’s behalf.

Simply put, Lower Pottsgrove taxpayers become the loan co-signers. There’s nothing unusual in the arrangement, Hawthorne also explains; it happens regularly. A resolution containing the township’s promise to repay is on the board’s agenda tonight. The meeting is open to the public.

• A copy of the agenda is available online at Lower Pottsgrove’s website, and can be downloaded here.

Related (to the Lower Pottsgrove Board of Commissioners’ meeting of Aug. 18):

• Township May Put Money Where Authority’s Mouth Is