State College Borough Council approves borrowing $6.25 million

Council approved several motions Monday that will provide funding projects within the borough, including borrowing several million for parking garage updates.

Council discussed the funding options last week, which includes structural and elevator improvements to the Fraser, Beaver and Pugh parking garages. A shuffling of block grant funds will also allow for street light and municipal building improvements.

According to borough financial adviser Chris Gibbons, of Concord Financial, the borough will be seeking a total borrowing amount of $6.25 million. This is an increase from the borough’s original borrowing estimate of $5.9 million as outlined in January.

Gibbons said the increase was attributed to issuance costs — costs associated with issuing debt such as fees and commissions — and the addition of capitalized interest to the loan — borrowing interest included in the loan amount to avoid an impact on debt service.

A general fund borrowing amount of $425,000 for sidewalk, streetscape and public space improvements is expected to increase the general fund debt service for 10 years while the loan is in repayment, he said. The remaining parking project loans of $5.8 million will be paid off over the next 15 years.

Should council members decide to move ahead, he said, a finance ordinance could be in front of the group by April 4, he said. Financing in the past has looked at both bank loan and bond issue financing — whichever is the lowest cost to the borough will be pursued.

The borough could have funds available by May 4, he said.

Council unanimously approved the motion to borrow. Councilwoman Janet Engeman was absent.

Council also unanimously approved a reimbursement resolution for pre-borrowing expenses. According to borough Manager Tom Fountaine, the resolution would allow for the reimbursement of project expenses before the closing for the borrowing occurs.

The resolution would not add any additional funds to the borrowing or change the scope of the project, he said.

According to Fountaine, the pre-borrowing could cover the costs of a new parking revenue control system, which will likely be approved prior to the borrowing authorization.

Funds generated through increases in parking rates will cover the repayment of the loan, he said.

Finally, council unanimously approved modifications to the 2016 budget in order to fund two different borough projects.

According to council discussions last week, council was asked to move $130,000 from the capital improvement plan originally proposed to fund street lights to a fund for video cameras in the Highlands neighborhood. These funds will then be transferred to the College Avenue street light replacement project and funds for municipal building improvements.

The movement of funds will add $65,000 to fund street light replacements along West College Avenue from South Atherton to Fraser Street, and $65,000 to fund federal Americans with Disabilities Act guideline improvements to the municipal building.

This story was originally published February 8, 2016 at 10:19 PM with the headline "State College Borough Council approves borrowing $6.25 million."