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Hatfield tapped $500,000 from reserves and Ginnie Mae holdings to cover a large principal payment
Summary
Facing a $495,000 principal payment in May, Hatfield Borough sold Ginnie Mae securities and withdrew $500,000 from capital and sewer cap reserves; council agreed to pursue a formal resolution to repay borough investments at roughly 4% interest.
Hatfield Borough officials told council members on June 19 they borrowed internally and sold investments to cover a sharply higher principal payment on the municipal building this year.
Borough management reported that the 2024 principal payment rose from $124,000 to $495,000 under the loan’s amortization schedule. To make the payment the borough sold some Ginnie Mae holdings and authorized withdrawals of $250,000 from the capital reserve and $250,000 from the sewer capital reserve, producing $500,000 to cover the obligation.
"Our principal payment in 2024 jumped from a $124,000 to $495,000," the borough manager said. The manager said the funds were budgeted but the timing created a cash‑flow shortfall because other large payments (notably sewer treatment costs) coincided with the May principal payment.
Budget, Finance and Labor members recommended continuing the borough’s prior practice of borrowing from its own investments in such circumstances and paying the funds back with interest rather than using bank financing. "Do you want to continue the practice of paying ourselves back?" the manager asked, noting the committee’s preference for a 4% repayment rate similar to past practice. The manager said the solicitor will prepare a resolution for the July meeting to document the commitment publicly.
Council members asked whether lower tax collections were seasonal (timing of discounts and payments) or evidence of a structural revenue problem; staff characterized the variance as timing‑related and emphasized that the borough expects to end the year with a balanced budget but will watch cash flow as part of five‑year planning.
The manager said the borough had previously borrowed from investments to fund capital projects and paid itself back; the draft resolution under consideration would formalize that repayment schedule so the practice is transparent to the public.
Council did not vote on the repayment resolution June 19; staff will present draft language at the July meeting.
