Supervisors defease RCC bonds, removing debt from township

Move makes it possible for them to borrow more to build suspected $20 million fire station, and $10 million for municipal building upgrade

The Exeter Township Board of Supervisors passed a resolution defeasing all debt associated with the Reading Country Club. 

The action will remove all of the RCC debt from the township’s balance sheet, and is being taken under IRS regulations since the township will no longer own the property.  According to BOS Chair Jack Piho, “We must satisfy the bonds with the sale of the RCC, and we have a period of time, once we have the closing of the RCC, to settle the bonds.” When asked for more information on the action, Solicitor Chad Schnee was asked to explain it more thoroughly by Piho, said, 

“This is a motion, essentially to approve a resolution that would allow the township to pay off those bonds, because we will no longer have the Reading Country Club in our possession, hopefully by the end of the year with proceeds that the township has at its disposal, has cash at its disposal for paying off these bonds, to take the debt service obligation off of the backs of the taxpayers.” Schnee estimated the amount of debt to be $9.3 million, but asked not to be held to that number from memory. He asserted that this was being done under IRS regulations. 

When pressed for information of why previous boards lied to the public that the bonds couldn’t be paid early, Piho said, “We don't know.” 

Defeasing bonds is defined as “a bond that has been removed from the issuer's balance sheet and is considered risk-free because the issuer has set aside assets to cover future interest and principal payments.”

It is thought that the elimination of the debt will clear room for the township to borrow $20-$30 million for the planned fire station and upgrade to the municipal building. The just dispensed of debt was costing taxpayers roughly $750,000 per year, paid for by a .47 mil debt service tax. Borrowing of $20-$30 million at today’s rates would cost Exeter taxpayers  $2.5-$3.5 million per year.

What was at question was whether the .47 mil for debt service would be repealed, but Piho told me that it was “rolled into” next year’s budget.  Do we consider this a .25 mil hike, or a .72 mil hike, since the .47 wasn’t removed? I go with .72. 

The 2025 budget was approved for advertisement. Without giving the details, but speaking in generalities, as no documentation has been provided, we are able to glean that the 2025 budget will be between $15-$16 million, and include a $25,000 cut to library funding, putting off until late in the year of the replacement of a retiring policeman, as well as a postponing of a portion of a capital budget for the replacement of police body cams,  over $1 million taken from reserves, and a $68,000 plus hole that is filled by fund balance, and a .25 mil tax hike.  

A discussion between Piho and Bell over Piho’s attempt to get his fellow board members to contribute ideas to the budget was heated. Bell lambasted Piho for circulating a list of ideas that countered the official document slightly, allowing for $25,000 to be removed from the library, and leaving the capital money in the police budget in exchange for a .50 mil tax increase. Bell took exception, saying, “ I would tell you, though, that when the chairman comes in and sits down with staff, that's kind of a staff edict. The staff prepared the first version. We all saw the first version, and when you're sitting there, I look at that as you directing staff, Mr. Chairman, and we have a long standing informal rule, at the very least, that it requires three people to do that, to utilize staff time. And that is my biggest gripe. And because of that, it felt like a maneuver being done, and because of that, I don't support that, because when you also know some of the other things we're getting vision on, we know we're staring down the barrel of needing capital in a big way very soon.”

Hamm piled on Piho as well, taking issue with Piho’s meeting with staff members. “If everyone has came (sic) in here and told them, we're going to have a meeting with them. I mean, we drive them crazy. I mean, they only have so much time. I mean, I mean, he couldn't. Mo couldn't have came (sic) in. George couldn't have came (sic) in by himself. You couldn't have came (sic) in. If we would all do that, that would just be ready to shoot us.” Complaints about Supervisors taking up staff time from the guy who spent more than fifty hours of the first six months of his term in the township building annoying people fall flat. 

Piho struck back with, “Maybe I'm being naive, but to me, how do you understand, how do you go through all of this? How do you go through the entire budget? It's very extensive. How do you go through it and understand what's in there?” 

The BOS also got an update on 2024 spending at the three quarter point of the year.

In the Solicitor’s report, Schnee mentioned that he hoped to have good news concerning the Promenade by the next meeting. 

Public Works Director Larry Piersol updated the township on holiday themed festivities, with the Festival of Lights taking place at the Reading Country Club on December 7th at 5 PM, and the annual Santa Tour will take place from December 8th-12th from 5-9 PM.

The next BOS meeting will be on November 25th.