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Lower Pottsgrove approves plan to limit bond interest exposure and authorizes auction of decommissioned police SUV
Summary
The board adopted Resolution 1362-24 to address taxable arbitrage on Series 2021 bonds and approved auctioning a decommissioned 2019 Ford Explorer (Resolution 1363-24). Both votes were unanimous, 4-0.
Lower Pottsgrove commissioners voted Dec. 19 to adopt a measure aimed at reducing the township’s potential taxable arbitrage on its Series 2021 general obligation bonds and to authorize the sale of a decommissioned police vehicle.
Manager Edward C. Wagner told the board the township borrowed about $9 million in 2021 at an interest rate of 1.52%. With short-term interest rates having risen (Wagner cited roughly 4.5% for checking accounts), Internal Revenue Service rules treating positive arbitrage greater than 1.5% as taxable would require the township to remit roughly $300,000. Wagner said the township’s financial advisor, PFM, recommended placing funds in a Demand Deposit structure, which the township expects would reduce the taxable amount and could save about $122,000 while costing approximately $32,500 in fees for the year.
Commissioner Robert Mohollen moved to adopt Resolution 1362-24 (General Obligation Bonds, Series of 2021) and Commissioner William Keohane seconded; the resolution was approved 4-0.
Separately, the board authorized auction of a 2019 Ford Explorer via Municibid under Resolution 1363-24. Commissioner Keohane asked whether the sale should be delayed after a separate 2024 Ford Explorer was involved in an accident earlier that day. Wagner said the 2019 vehicle is already decommissioned, stripped of equipment, not inspected, and has a check-engine light. Commissioner Keohane moved to authorize the auction; Commissioner Earl E. Swavely seconded and the motion passed 4-0.
Both resolutions were adopted unanimously. The board did not discuss additional terms for auction or a timeline beyond authorizing sale via Municibid.
