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LCCCA 2023 Bond Refinancing Proposal June 28, 2022

LCCCA bond financing background:

The current LCCCA Bond Financing has a 5-year Variable Rate term, which is due to be renewed with Bondholder (the bank), on or before March 2023.

The financial instruments the LCCCA choose in 2007 to secure LCCCA Bond financing included a SWAP, which was a common tool in the Bond Financing world prior to 2008, especially for entities without credit rating or surety guarantee.

The recession in 2018 turned the bond market literally upside down, and the SWAP became the hindrance from exiting this form of financing.

The bank was well aware of their leverage over the LCCCA financing, and used it to manage their interest rates to the detriment of the LCCCA.

In 2015, in an effort to find a solution to the LCCCA Financing, a Collaboration agreement was the origination of the agreements between Discover Lancaster, City of Lancaster, Lancaster County, and the LCCCA.

The interest rates the bank offered were at that time at market rate for that one transaction, and decreased the banks interest by $ 3 million dollars over three and a half years.

Discover Lancaster and LCCCA entered into an MOU in 2018 for a new 5-year term, to renew with the bank (bondholders), that took 11 months for the bank to respond to a request for a terms sheet.

That delay was to the detriment of the LCCCA, as the bank waited for market conditions to favor them, before issuing a terms sheet.    

With the volatility in the financial markets in 2022, the SWAP liability has decreased to its lowest level since September 28, 2013.

With financial market conditions as they are, there is the window of opportunity to improve the LCCCA’s financing and Discover Lancaster’s probability of receiving their 20% of the Hotel Room Revenue Tax.

The LCCCA’s objective for new Fixed Rate Bond Financing:

  1. Improve Discover Lancaster’s likelihood of receiving its 20% of the HRRT,
  2. Provide financial stability and budget certainty to the LCCCA
  3. Provide future funds (after 2032) to increase contributions to the LCCCA Capital project / Replacement fund.


A 35-year fixed rate bond issuance, with an MOU with Discover Lancaster, and a Lancaster County guarantee, on the open bonds market with underwriters Raymond James, RBC marketing the bonds, with the guidance of LCCCA Financial Advisor, Michael Vind of FSL Financial in Reading.

Click here for the LCCCA Bond 35-Year Model. This model is complete with footnotes to help clarify the associated revenues and expenses.

The draft MOU for 35 years was written using the 2018 MOU as a template, but removes the reference to the collaboration agreement references, as this new bond issuance retires the last obligation the County Guarantee of the 2014 Bonds.

The window of opportunity to exit current financing is small, the timing is June / July 2022.

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