The borough may soon have access to a “restricted asset fund” that has grown to about $8 million since the money was first deposited some time in the 1960s.
On Wednesday, councilman Dan Dunigan said borough council has to vote on removing the fund’s restrictions before the money could be placed in the general fund to be used for infrastructure and other capital improvement items.
Council first became aware of the money last fall during a review of the 2010 year-end report. But it wasn’t until around early 2011 that council quickened its pace and started investigating the fund.
While the information is still incomplete, according to Dunigan, he said the money originated in “an electrical bond sinking fund.”
“Basically, a previous administration in the 1960s set aside this money to pay off future debt,” he said. “The information is still incomplete, but they have been sitting there since the early 1960s, and now, some 40 plus years later, it has grown to $8 million.”
Since the funds are yield restricted, they must comply with arbitrage restrictions, according to Dunigan.
“As a municipality, we can’t earn more interest on a bond than what it’s paying out,” he explained.
Still, even with such a meager interest rate, the fund was able to grow to $8 million over the course of decades, he added.
The borough solicitor has been working with the bond counsel at the law firm of Pepper-Hamilton.
“The two of them helped develop a plan to lift the restriction and use the funds,” Dunigan said.
Borough Vice President Paul Clemente said council was diligent in accounting for the money.
“We took a lot of time and made sure we had all the information so that we can appropriate the funds,” he said.