MAWC pauses refinancing plan amid concerns over economic downturn
Officials will consider reactivating the refinancing plan should economic conditions improve.
By RICH CHOLODOFSKY
TribLive
Municipal Authority of Westmoreland County will pause a plan to refinance more than $150 million in existing debt.
The authority board of directors have concerns that deteriorating economic conditions could result in a reduction in potential savings for the water and sewer agency.
Authority administrators and private financial advisers have since April worked on a plan they said would have created more than $10 million in savings through refinancing loans. The money was borrowed in 2016 to pay for upgrades of the water and sewer system.
As preparations for the refinancing continued over the last three months, implementation of federal tariffs and threats of additional surcharges of foreign goods, along with concerns of potentially rising interest rates, altered the economic atmosphere.
As of mid July, potential savings created through a refinancing decreased by more than $4 million and could be reduced further if economic conditions worsen, according to Joe Muscatello, the authority’s financial adviser.
“If the tariffs actually stick, you’ll see inflation and interest rates could go up,” Muscatello told authority board members during a public meeting this week. “If we do the (refinancing) today, we’ll save $6 million, but it couldn’t get done that quickly, not until August.”
Authority officials view the refinancing as a way to infuse additional cash into operations. Savings from the proposed plan would be used to reduce repayment of existing debt, freeing up money that can be directed toward operations and future capital improvements, said authority business manager Brian Hohman.
Nearly a quarter of the authority’s $129 million operating budget is directed to repay existing debt, officials said. Board members in January increased water rates 9.5% for the 2025-2026 fiscal year, following a similar increase a year earlier, citing rising costs to borrow money and inflation. The authority sells water to more than 123,000 homes and businesses in a five-county region that includes Westmoreland, Allegheny, Armstrong, Fayette and Indiana. It also has more than 30,000 sewer customers throughout the region.
Savings from the bond issue would have been applied to budgets over the next two or three years, Hohman said.
The authority earlier this year borrowed $75 million to pay for future system upgrades over the next five years. Officials will consider reactivating the refinancing plan should economic conditions improve.
“We’ll take a wait-andsee approach. Six million in savings is OK, but we’re not in a hurry and hoping to see more savings,” Hohman said.
