Butler County will repay $14 million borrowed to fund a new 911 emergency system over 22 years.

Under the bond financing through PNC, the county will be charged an interest rate ranging between 2 percent and 5 percent depending on the year.

County Commissioner Kevin Boozel said the borrowing is a good deal.

“Nobody could argue the rates on this,” Boozel said.

Although the county technically borrowed $15 million, there is a $1 million premium. Consequently, the county only repays $14 million.

The repayment on the principal begins in 2018 with smaller amounts of $5,000 through 2023.

In 2024, $30,000 is due. The amount significantly increases to $635,000 in 2025 and $655,000 in 2026.

The bulk is to be repaid during the last three years: $4.6 million in 2027, $5.8 million in 2028 and $2.5 million in 2029.

Those last three payments correspond with the county’s previous debt being repaid. Under that older borrowing, the county makes a final $611,198 payment in 2027.

County Commissioner Kim Geyer explained the “wrap-around” structure of the new borrowing was purposely done so as not to create more of a financial burden.

“You have to talk about cash flow,” Geyer said.

Boozel agreed this repayment schedule works best.

“I see this borrowing as an overall strategy of investing in Butler County,” Boozel said.

County Controller Ben Holland criticized the repayment schedule, saying it could cause problems at the end of the schedule.

“I don’t think it makes financial sense,” Holland said.

Biannual payments on the interest begin this year. After making a $161,072 payment in July, the interest payments slowly descend from $276,125 to $249,500 through 2027.

The two payments due in 2028 will be $133,500 each. The final two in 2029 will be $44,450 each.

Holland stressed the county would pay $2.5 million more in interest by having balloon payments at the end instead of having even payment amounts throughout the schedule.

“You’re increasing interest by back-loading debt,” he said.

According to the repayment schedule on the series of bonds, a total of nearly $6 million would be paid through 2029.

County Commissioner Leslie Osche, board chairman, said another borrowing option presented to the board under a standard repayment schedule would have resulted in a total of $5.7 million in interest.

“It didn’t equal $2 million,” Osche said.

Holland said more of the new debt should be repaid rather than reserving the larger payments until the end, when the 911 equipment would be closer to needing replaced.

“This is very shortsighted,” he said.

Holland said he appreciates the commissioners’ concern about cash flow, but there is no way to know what the future holds.

“You don’t know what the financial landscape will be then,” he said. “Who has a crystal ball?”

Boozel disagreed.

“Paying off old debt is better,” he said.

Geyer said the repayment schedule was selected due to the overall fiscal picture.

“We’re looking at a much larger picture,” she said.

Osche agreed, stressing the importance of not paying debt down faster at the expense of operations and progress.

“You sacrifice service and growth,” she said. “You get zero return on zero investment.”

Boozel agreed, saying investing in technology results in improved efficiency.

Geyer said the new debt would be repaid before any equipment would need to be replaced.

According to Boozel, a possible change to wireless technology would mean all the equipment for the system wouldn’t need replaced.

He acknowledged Holland’s concerns were valid from a controller’s perspective.

“I understand his apprehension,” Boozel said.

Holland said the county should not be looking at borrowing with regard to existing debt, but rather in comparison to the assets being funded.

“You can’t look at your total debt service,” he said.

According to Holland, balloon payments and property tax hikes could be avoided if enough budget cuts were made.

He stressed a 911 system is a necessity.

“People put a priority on 911 services,” Holland said.

However, he said there are nonessential things that could be identified.

“We need to start cutting entitlements,” Holland said.

He questioned why the terms of the borrowing, which were finalized March 2, weren’t announced publicly.

County solicitor Mike English said the February authorization to borrow up to $15 million was sufficient, no other public action was necessary.

Holland said the legality should not be the only factor.

“Just because it’s legal doesn’t make it right,” he said.

Holland did not blame the commissioners for the repayment schedule, but rather accused the county’s consultant, PFM Financial Advisors of Harrisburg, of purposely choosing balloon payments at the end.

He said PFM was almost guaranteeing a refinancing of the borrowing down the road, which would net the firm more fees.

“They’re taking advantage of the taxpayers,” he said.

Scott Shearer, PFM managing director, could not be reached for comment.

Osche defended PFM, saying the consultant did not try to influence the commissioners.

“They showed us all the options,” she said.

Holland insisted there was a better option.

“The way to ensure you’re getting the best rate is to competitively bid those,” he said.

Holland did question why the commissioners excluded him from the process.

“I was not included in these discussions at all,” he said.

Geyer said the borrowing was not something done without notice.

“We started the process six months ago,” she said.

Geyer said Holland had the opportunity to attend meetings or ask for information.

Holland said he did not know the commissioners’ timeline to borrow.

According to Holland, he brought in a firm to relay information about online auctions for bonds.

“I would say I was making an effort,” he said.

Osche said Holland never inquired about how the borrowing would be done.

“He never spoke to me,” she said.