This past Monday night Tim Ethier’s motion to add elimination of the IIF  (Infrastructure Investment Fund) as a vote at Town Meeting was defeated 3-2.    The majority voted to wait for the results from a study on the investment yield of the IIF.   

Past use of the IIF

It is very important to remember that the IIF is funded by the taxpayers.     Since inception in 1993,  we have used the IIF to pay debt service on tax-exempt bonds issued by the Town of Holden for things like the Public Safety Building and pool.

 Three years ago the IRS said that we could not keep doing this, unless we can “guarantee that the investment yield on such amounts in the IIF does not exceed the yield on the applicable outstanding tax-exempt obligations”.     Since we did not know the  IIF investment yield, we had to stop paying the debt service from the IIF.    Since then we have paid the debt service on tax-exempt bonds that we were paying from the IIF out of the General Fund.

 This change did not cost the taxpayer one penny.   We simply used one taxpayer funded account (General Fund) to pay tax-exempt debt, versus two taxpayer funded accounts (General Fund and IIF)

 

The Study

The Selectmen have decided that we need conduct a study to determine the IIF investment yield that will cost us approximately $2,500.  There are two potential results from the study:

  1. the return from the IIF is “restrained”, less then the outstanding tax-exempt bonds
  2. not “restrained”,  more then the outstanding tax-exempt bonds.   

Current Balance in IIF equals  $1,344,766

 

Option 1:   “Restrained” return

If the proposed study says that the return from the IIF has been “restrained”, then we would be able to pay the debt service on tax-exempt bonds again from the IIF, but that leaves us 3 scenarios:

  1. We spend money from the IIF to pay tax-exempt debt and add no funds to the IIF, thus eventually depleting the IIF account.  
  2. We spend monies from the IIF to pay tax-exempt debt, but appropriate the same amount from the Tax Levy leaving the balance of the IIF unchanged.   
  3. We spend monies from the IIF to pay tax-exempt debt. but appropriate more then this amount from the Tax Levy actually building up the balance in the IIF Fund.   

Is the intent to deplete, remain unchanged or increase the IIF balances?

Option 2:   “Unrestrained” return

If the proposed study says the return from the IIF has not been “restrained”, then we could not use these monies to pay the debt service on tax-exempt bonds, but that also leaves us 3 scenarios.

  1. We end the IIF and move the monies in the fund to the General Stabilization Fund.
  2. Just let the fund balance sit there like we have for 3 years  (THIS IS WHAT WE HAVE BEEN DOING).
  3. We keep the IIF in force, although we can not use it to pay tax-exempt debt and deposit more monies from the Tax Levy to build the balance to fund future capital expenses. 

Is the intent to deplete, remain unchanged or increase the IIF balances?

Question

What is the position of the Board of Selectmen, do they want to deplete, remain unchanged or increase the IIF balances?  Answer is unknown.

What is the recommendation of the IIF Study Group?   Answer is unknown.

We know, however, what the members of the IIF want based on the fact the Finance Committee, of which 4 of the 7 members of the IIF have positions, approved a motion to add $1,400,000 to the Tax Levy to be added to the IIF two years ago.   This eventually never happened as we pointed out in last week’s column.    Then look at the minus of their last board meeting in June of  2014,  “ it is of paramount importance that the town continue to fund the IIF at a level whereby it has the funds to make meaningful contributions to future projects.”   It is clear the IIF wants to grow their fund balances beyond the current $1,344,766.   

Summary

Maybe we should know what the intent of the IIF is going forward, before we use taxpayer money to fund a study?

We do not need a study, however, and for the elimination of  the IIF for one very important reason.    It puts control of taxpayer monies into the hands of 7 unelected citizens and not the taxpayers who funded the IIF.      Literally the entire Town of Holden including the Town Manager, the Selectmen and those who attend attend meeting could all agree on a proposed use of balances in the IIF, but if 4 of 7 members of the IFF vote against it, the proposed use  never makes it to the Town Meeting floor and the monies stay in the IIF.    

The IIF should be eliminated and the $1,344,766 within the IIF should be moved to the General Stabilization Fund, which is controlled by the taxpayers.