With interest rates at an all-time low, the Falls Township Supervisors took steps to save upwards of $250,000 a year through refinancing.
The board voted unanimously during its hybrid meeting on August 16th to guaranty the refinancing of a bond and a loan held by the Township of Falls Authority in an amount not to exceed $24,365,000. Christopher Gibbons, a financial advisor for the water and sewer authority, told the board that the Authority is expected to save approximately $250,000 annually by refinancing, adding that refinancing would present “significant savings to the Authority over time.”
Since Township of Falls Authority (TOFA) is a “component unit of Falls Township,” Falls is required to guaranty the loans. In essence, the township serves as a co-signer and would be responsible for repaying the debt if, for some reason, TOFA was unable to do so. Falls guaranteed two previous TOFA loans, officials said.
Considering that refinancing would dramatically reduce the amount of debt owed, Falls Township would limit its potential financial liability by supporting the refinancing effort.
“Even if other things come up, the township is already guaranteeing TOFA’s debt,” Gibbons said. “(With refinancing) the liability to the township is less” because the refinanced among is less debt service than is currently outstanding.
Gibbons stressed that TOFA is in a “very good financial position,” noting that the Authority has a net position of approximately $3.2 million – an amount that he said has grown over the last few years.