(News)

City officials will consider refinancing up to $31 million in debt to close a $750,000 hole in the 2011 budget.

The move comes after the Municipal Authority of the City of McKeesport told administrators that it's unable to pay a so-called "host fee" for its sewage treatment plant in the 10th Ward, which would have left the $19.5 million spending plan unbalanced.

Council is expected to vote on the budget at tonight's meeting. The session --- at which state Sen. Jim Brewster is expected to formally tender his resignation as mayor --- is slated for 7 p.m. at the public safety building.

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Councilors are also expected to appoint an acting mayor to complete the remaining year of Brewster's term, though that action isn't on the preliminary agenda presented at Tuesday's council work session.

Although Council President Regis McLaughlin is believed to be the favorite, McKeesport's home-rule charter allows council to appoint any registered voter who has lived in the city for at least one year. If McLaughlin or another council member is appointed to the vacancy, the remaining members have 45 days to fill the vacant council seat.

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The bonds to be refinanced were first issued in 2005 to satisfy city pension obligations and replace old debts. But those bonds were issued when investors were flocking to the stock market, said Dennis Pittman, city administrator.

With the economy struggling, municipal bonds are more attractive, and because interest rates are lower, the city would save money and could balance next year's budget, he said.

"We don't know, specifically, the amount yet," Pittman said, "but there should be enough of a spread to make it worthwhile." Not all of the bonds need to be refinanced at the same time, he said.

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The bond refinancing is a one-time-only fix and doesn't address the city's declining revenues. Expenses have already been cut nearly a million dollars since 2008 (the 2009 budget was $20.3 million) in part through layoffs and early retirements, while delinquent payments and assets such as the city's sewerage system have been sold to balance previous budgets.

And any bonds touched next year couldn't be refinanced again for another five years, Pittman said, which puts the 2012 budget into question.

The preliminary spending plan holds real estate and wage taxes at their present rates, but increases the municipal service fee for garbage collection, street lighting and other services by $20 per year to $280. Senior citizens pay a discounted rate of $220 annually.

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In Other Business: Council is expected tonight to ratify a decision by the city Planning Commission that clears the way for a new supermarket at the corner of Eden Park Boulevard and Walnut Street.

The 18,000-square-foot market and a more than 100 car parking lot will replace the former S&S Taxi Co. garage and vacant Keystone Auto Parts, along with a machine shop and a fitness studio. The site also once held an Eat 'n Park drive-in restaurant and Paul Jones Dodge.

Demolition of the existing buildings is expected to begin early in 2011, said George Haberman, senior project manager at Civil and Environmental Consultants of Robinson Township, local engineers on the project.

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Although both the developer and the city remain under "non-disclosure agreements" and are unable to release the name of the tenant, Tube City Almanac on Nov. 18 reported the store is one of the first in a series of planned "Bottom Dollar" discount supermarkets. The chain is a recently created division of Salisbury, N.C.-based Food Lion.

Published reports in the Tribune-Review and Post-Gazette indicate Food Lion has also purchased a former Foodland location in Penn Hills, apparently for use as a Bottom Dollar store.

Haberman said Tuesday the developers are awaiting approval from the state Department of Transportation before construction can begin.