Trustees question arbitrage risk as LDFA earns interest on captures; finance director explains difference
A board member asked whether the LDFA faces federal arbitrage liability because invested captured receipts earn more than some historical borrowing rates; Finance Director Tom Eldridge said the captured tax receipts are new money (not unspent bond proceeds), a distinction that changes the arbitrage analysis.
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During board questions, a trustee raised concerns that the LDFA might face arbitrage risks when invested earnings on receipts exceed historic borrowing rates. The trustee referenced a prior large project where earnings exceeded borrowing costs and the municipality owed federal arbitrage penalties.
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