Coatesville looks at ways to borrow $10 million

Coatesville council and the city redevelopment authority met in a joint session last night to determine how best to borrow $10 million needed to buy several properties critical to the city's downtown revitalization.

While the properties weren't identified, the city has made it known it is negotiating with ISG and G.O. Carlson for 50 acres, most of it located along E. Lincoln Highway between First Avenue and Church Street. Assistant City Manager Jean Krack said an agreement of sale has been delivered to G.O. Carlson's. He refused to identify the city's offer.

Recently, Bart Blatstein, of Tower Investment, doubled his proposed investment in the city to $290 million, based on the G.O. Carlson property becoming available. Blatstein wants to build a series of condominium towers along the so-called Flats and several restaurants along a proposed riverwalk.

Pat O'Donnell, solicitor for the Redevelopment Authority, said he expects the city will have an agreement of sale before it even takes possession of the properties. He said the plan is for the city to acquire the properties, clean them up using federal Brownfield grant funds, and then reselling them.

The short time span that the money is needed is one reason why Gary Pulcini, of Valco Capital Inc., recommended a traditional bank loan over the sale of municipal bonds. By taking out a $10 million line of credit, he said, the city is not paying interest on the money until it actually begins to withdraw the funds.

"It offers a great deal of flexibility without incurring a lot of debt," he said. "Technically, you're not borrowing the money until you draw on that line (of credit)."

Pulcini said if the city raised the $10 million through municipal bonds federal law requires it carry the debt for five years, 10 years if the amount exceeds $10 million.

Pulcini is the same financial consultant used by the Coatesville school district. He has been credited with almost single handily helping the cash-strapped district reduce its bond debt from $117 million to $87 million. Pulcini replaced Bob Bradbury, who is now facing federal fraud charges unrelated to the school district.

The city is hoping to acquire 15 to 18 acres from ISG in the area it has identified as the Shatter Zone, 7 acres along the so-called Flats adjacent the Brandywine Creek, and 14 acres were the 120 and 112 mills are located. The G.O. Carlson property represents an additional 17 acres.

You can write to Allen Davis at allen@chestercountyreporter.com