Concord Public Financial Advisors recommended rolling the dice, and kept the campaign coffers for for Reibman.
Peg Farraro, Ann McHale and Ron Angle all voted against this idea, and it failed in a 4-4 vote. But two weeks later, five Council members decided to gamble with your money in a bipartisan failure.
In 2009 alone, the swaption payoff grew from $10 to $14 million. From 2010 until the time that John Stoffa's budget was printed, it had risen to $23.4 million, due October 1, 2012. In the time between the printing of the budget and its release, it grew another $100,000, and now stands at a whopping $23.5 million.
This growing swaption could easily wipe out the County's $2.4 million proposed rainy day fund in the time it takes to adopt a budget. "It could go up that much in a week," stated Acting Finance Director Doran Hamman, not so reassuringly.
In December 2009, the swaption was "only" $10 million.
Contrary to what some think, it is illegal to pay this bill by refinancing debt. Cash talks, and cash only.
At a Council Finance Committee meeting in January, Council members were divided on what to do. Angle suggested it might be time to "cut our losses," but Bruce Gilbert thought interest rates might soon start going the County's way.
Council members are the unenviable position of playing in a high finance gamble with our money on a decision made by their predecessors in 2004. Whatever they do, or don't do, they'll be condemned.
Stoffa has received a proposal to hire a financial expert.
Did I mention that Concord just happens to be Bethlehem's financial advisor?
In Stoffa's blunt words, "[W]e face a devastating payment of an ill-advised swaption, callable on October 1, 2012."
The County faces another payment, too, $1.8 million for a proposed treatment center in West Easton. I'll tell you about that below.