Lower Makefield will deposit an additional $11 million into a trust managed by PNC Financial Services Group and consisting of net proceeds from the township's $53 million sale of its sewer system to Aqua Pennsylvania.
The decision to bolster the trust came via a 3-2 vote by the board of supervisors at its June 21 meeting. Money in the trust will now be $21 million after an initial deposit of $10 million was made on Feb. 22. Supervisors' Chairman Fredric Weiss and fellow board members James McCartney and Suzanne Blundi voted in favor of the additional deposit, with Daniel Grenier and John Lewis voting “no.”
Greiner and Lewis both said they were largely in favor of putting more money in the trust but wanted to wait until it was more certain the money would not be required for some of the township's many infrastructure and other needs.
"I don't think we've really mapped out our core capital and infrastructure needs and I don't know that this is the right time to do this," Lewis said. "There is not enough knowledge to make an informed decision."
Grenier added he would like to see a detailed presentation from township Manager David Kratzer and other administrators on all the township's upcoming needs and obligations before committing to putting more money in the trust. Both he and Lewis said it's better to wait in light of the fact that money in the trust can only be withdrawn under very special circumstances, and not at all until Jan. 1, 2025.
But the other three supervisors felt the township is in a good enough financial position to make the additional deposit safe. Weiss pointed out the township has $4 million on hand from a previous bond issue, a current $3.6 million general fund surplus and $10 million in a sewer fund from the time the township still owned the system. Some of that $10 million will have to be paid to the Morrisville Municipal Authority for services rendered prior to the sewer system sale, but the exact amount has not yet been determined, Kratzer explained.
"I'm worried that what is not in the trust will be lost over time," Weiss said. "It would be a mistake to expose that money. I would rather see that money protected. There are other ways to get money for capital projects."
After paying off sewer system debt, debt at the township-owned Makefield Highlands Golf Club and some other obligations, the township was left with a net of roughly $22.5 million from the $53 million sale to Aqua that closed in March 2022. After earmarking more than $1 million for some projects, the remaining $11 million in net proceeds will now be deposited in the trust.
Kratzer said net proceeds not in the trust have so far been sitting in a high-yield account at Penn Community Bank and have to date yielded $299,831 in interest. The $10 million in the trust deposited on Feb. 22 had through May 31 earned $73,699 in interest, he added. Kratzer did not want to predict how much annual interest the $21 million now in the trust will be earning, but township officials are hoping it's a healthy amount.
"With the money now being invested in the trust in 65 percent equities and 35 percent fixed income, it is difficult to estimate the annual income going to be realized as market values will fluctuate," Kratzer wrote in an email to the Herald.
In other actions from the meeting, the supervisors acknowledged and accepted an extension of time to act on a proposed 78-home development at the Torbert Farm through Aug. 1. In addition, board members voted to award a $429,964 contract to T. Schiefer Contractors, Inc. for construction of a pedestrian trail at the Regency at Yardley development at Big Oak and Oxford Valley roads. That money is not coming from the general taxpayer base but from fees paid by Regency residents and set aside by the developer for future safety improvements.
The supervisors also approved an $85,175 contract with General Recreation, Inc. for design and replacement of the Heacock Tot Lot Playground on Cardinal Drive. In addition, the board approved an ordinance to enter into an intergovernmental agreement for the purpose of joining the Pennsylvania Municipal Health Insurance Cooperative and to participate as a member of PMHIC. The move will mean a reduction of $572,000 in current employee health insurance costs, more than 21%, Kratzer said.
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