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Londonderry Township might borrow up to $3 million to help with capital project funding

By Laura Hayes

laurahayes@pressandjournal.com

717-944-4628
Posted 2/11/20

Londonderry Township supervisors unanimously approved an ordinance Feb. 3 to authorize a line of credit at a maximum of $3 million for its capital projects.

According to township manager Steve …

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Londonderry Township might borrow up to $3 million to help with capital project funding

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Londonderry Township supervisors unanimously approved an ordinance Feb. 3 to authorize a line of credit at a maximum of $3 million for its capital projects.

According to township manager Steve Letavic, the grants that Londonderry has been awarded for its projects require that the township front the money and then be reimbursed.

The credit line would go toward reimbursable grant funds, and over three years, the funds have to be withdrawn, spent and reimbursed to the line of credit, according to Letavic.

Letavic told the Press & Journal in an email that it would be used for projects to restore the Conewago Creek and build a trail at Sunset Park.

“The reason we’re here is the township has gotten quite a few grants in the past few years for work that needs to be done in the township,” Letavic said. “These grants have a reimbursement component. So we would have to front the money first and then get reimbursed. That would generally kill the cashflow in the general fund.”

There’s a six- to eight-week lag between when the township pays the bill for a project to when the township would be reimbursed by the state, Letavic said.

In an email, Letavic said the line of credit would alleviate cash flow issues and let projects be implemented while the township can carry on financially.

Londonderry is partnering with other agencies and Mount Joy Township to restore nearly a mile of the Conewago Creek from the bridge on Route 230 to Mill Road. In January, Gov. Tom Wolf announced that the project was one of nine to receive grant funds from the Department of Environmental Protection’s Growing Greener program. The project received $738,752 in funding.

The township also recently received grant funds to develop a trail through Sunset Park, the first part of which was recently completed.

Supervisor Mel Hershey said the township needed to monitor the fund and asked for the supervisors to get copies every month similar to the township’s check register.

“We need to do it because of course our capital reserve fund and our general fund can’t withstand all the projects that we have going on,” Hershey said.

Letavic told the supervisors it’s a three-year period because the township believes the projects should be completed within that time, but if Londonderry borrows money that hasn’t been reimbursed by the end of the three years, it can be converted to long-term debt.

“I am a little nervous, but it’s really the most inexpensive way for us to proceed with all the projects that we have going on,” Hershey said.

In an email, Letavic said the township did a similar financing when it refinanced its general obligation notes to take advantage of favorable interest and savings for residents.

He said Londonderry had an option to borrow additional funds for capital projects for up to $1 million, but he said the township didn’t exercise that option.