HONESDALE BOROUGH, PA — While Honesdale may face challenges in the present, the borough is keeping a closer eye on how it plans for the days yet to come. 

The borough is nearing completion on a Strategic Management Planning Program (STMP) plan that will provide guidance—and, potentially, funding—as it works to address internal issues. In addition, while council member Jim Hamill has raised questions about the cost to the borough of its interim borough manager, others have defended the cost as a worthy investment in the borough’s capabilities. 

What’s an STMP?

The STMP is offered by the Pennsylvania Department of Community and Economic Development. It supports municipalities that are experiencing financial difficulties, allowing them to develop short- and long-term financial plans. 

A team of consultants has been examining Honesdale’s finances for much of the past year, says Kevin Kundratic, Honesdale’s interim borough manager. “[They tell the borough,] ‘Oh, here’s how you were doing things; here’s how you should be doing things; you need a comprehensive plan for this.’”

As of the August borough council meeting, the plan was scheduled to be complete in September, with a presentation thereon at the borough council’s Monday, September 22 meeting. 

Some of Honesdale’s planning needs are obvious, even without an STMP. 

Honesdale currently does not have a capital budget, outlining what infrastructure the borough needs to work on over the next few years and how  to pay for it. Instead, the borough looks at the money in its accounts day-to-day and figures out what repairs it can pay for, said Kundratic. 

That short-term operating makes it harder for the borough to responsibly take care of its infrastructure needs, like fixing potholes or maintaining stormwater drains. 

Kundratic identified Honesdale as needing a capital plan, but held off on creating one until the STMP was completed, he said. 

The recommendations included in the STMP won’t just help advise the borough as it plans for the future. They’ll also help Honesdale find the money to pay for those plans. 

If the STMP identifies something as a need for Honesdale, that identification may open up grant funding to meet that need, said Kundratic. 

Take a borough manager, the position Kundratic occupies on an interim basis. If the STMP identifies that as a need, grant funding may be available to pay for that position in part—for example, said Kundratic, a grant could pay 75 percent of that position’s salary for the first year, 50 percent for the second and 25 percent for the third. 

The same could be true for a parks director. Kundratic said the borough could likely use a director to oversee its growing portfolio of parks, but that it does not have one in the budget at present. Were the STMP to identify that as a need, there may be some money available there as well. 

Kevin Kundratic

RR file photo by Liam Mayo

Financial status

The borough has a few financial millstones hanging about its neck. 

A recent court case required the borough to pay $2.6 million to those behind the Smith-Morris business, regarding a business deal 15 years ago. Kundratic said the borough is appealing that decision, but is preparing at the same time to have to pay. 

At the same time, the borough is preparing for several million dollars’ worth of needed stormwater repairs, from several years’ worth of damaging flooding, he said. 

“I have to try to take all this in and say, ‘OK, here’s how we run in the borough on a day to day basis.’ And now I have all these additional expenses,” Kundratic said. 

Despite the difficulties in the borough’s future, and its current financial situation, Kundratic says the overall outlook isn’t that bad. 

In Pennsylvania, the end of the road for a troubled municipality is an Act 47 filing—essentially, a municipality’s version of bankruptcy, where the state steps in to provide needed services. 

Honesdale isn’t heading down that path, Kundratic said. 

“The question has come up, and I’m asked it all the time, ‘When are we going to file Act 47?’ We’re not, and even if we wanted to, we most likely would not be eligible for it,” he said. 

The problems of politics

Kundratic said that some of the reason the borough is having difficulties is years of overlooking things that needed to be taken care of. 

Some of this came down to changing priorities from the borough’s committees, said Kundratic. According to him, the business of the borough used to go primarily through the various committees of the borough council, and that led to upheaval—one chair might have focused on repairing stormwater infrastructure along a specific street, but if the next chair didn’t have that project as a focus, it could fall by the wayside. 

As interim borough manager, Kundratic has tried to define roles, separating out what should be addressed by borough council and what should be managed by the borough’s administrative side. 

The majority of the borough council is committed to him as he does that work, according to Kundratic. However, those who aren’t make things “rocky” for him. 

Hamill, the borough councilor, raised objections to Kundratic at the February meeting of the borough council, and again in August. Hamill previously supported a different candidate, Justin Taylor, for borough manager; Taylor’s appointment failed in a 4-3 vote at the borough’s November meeting, and he was subsequently hired as the executive director of the Wayne Economic Development Corporation. 

Some of Hamill’s objections center around the cost of Kundratic’s services. 

Currently, the borough is paying consulting firm Keystone Municipal Services to retain Kundratic as interim borough manager. In a Facebook post, Hamill claimed the arrangement cost the borough $284,000 between August 2024 and July 2025. 

“If we want to be fiscally responsible (and I believe we do), then we need to quantify the cost/benefit of such an arrangement,” Hamill wrote. “I have worked hard for years to set the borough up for success, only to have four (four!) qualified borough manager candidates not work out, yet the consultant and the high cost remains.”

The borough council had prepared a $140,000 offer for Kundratic to become its permanent borough manager back in February, half of Hamill’s stated total for KMS’ services. Kundratic declined, citing “constant roadblocks and pushback.”

Kundratic told the River Reporter that, as a consultant, he has a certain level of insulation from the borough council that he would not have as an employee of the borough. However, “I’m committed to the borough,” he said. 

Speaking at an August meeting of the borough council, councilor James Cordaro defended Kundratic’s fee, saying the borough’s return on investment is more than what it’s paying.

KMS Executive Director Chad Saylor sent an email to the borough council on September 10 outlining what that return on investment has been. 

In addition to Kundratic’s services, KMS provided the borough with eight months of consulting for the department of public works and recruitment services for the DPW director position, Saylor said. 

Since April 2024, according to Saylor, Kundratic turned a $1.5 million budget deficit into a $187,000 surplus, secured over $310,000 in grant funding and increased parking meter revenue by 54 percent over budget, in addition to working to secure funding for emergency stormwater repairs. 

“The borough has improved the efficiency of its operations due to the experienced and capable leadership of Kevin Kundratic,” said Saylor. 

“It is prudent for council to keep a close eye on expenses when using a consultant, like KMS,” said Saylor. “However, it is equally important to understand the value of the services the consultant provides as well.”