Cranberry Approves Refinancing, Will Save Close to $1 million

A decision to refinance two sets of township bonds has yielded better than expected results for Cranberry.

The township will save nearly $1 million after Cranberry’s board of supervisors on Thursday approved an ordinance to refinance more than $11 million worth of debt.

Included in that is a $9.9 million bond the township took out in 2008 for the construction of . The current interest rate for that loan is 3.87 percent. The other bond is a $1.1 million loan taken out in 2003 for expanding the public safety area inside the municipal building. The interest rate on that loan is 4.25 percent.

Refinancing will drop the loan interest rates to about 2.155 percent, township manager Jerry Andree said. This will yield a savings of about $932,000 for Cranberry.

When they began the refinancing process with PNC Capital Markets LLC and Dinsmore & Shohl LLP earlier in February, which would have saved about the township about $450,000.

Michael Zubasic, a bond advisor with PNC, has said refinancing will not change repayment terms for the bonds, which are due to be paid off by 2025.

Andree said the $932,000 would be funneled back into a capital improvements fund for the township, which includes future road improvements. He noted the township is required to use the savings for capital projects because that is what the original loans were taken out for. 

Cranberry is expected to close March 27 on the refinancing terms.

This isn’t the first time the township has saved money by taking advantage of low interest rates.

In September, the township . The bonds originally were used to expand the sewage treatment plant in 2001 and for construction of the in 2006.

The township typically looks at refinancing when there’s a chance of saving 2 percent or more on the debt amount. In this instance, the township saved about 10.4 percent.

Cranberry officials have credited the township’s strong bond rating --Moody’s Investor Services in August reconfirmed it at Aa2 -- with attracting bond investors. An Aa2 assignment allows the township to borrow money at the lowest possible interest rate.

Andree noted Cranberry is one of only 10 communities in the state to have an Aa2 rating.

“We’ve always been very fortunate with that,” he said.