Questions arise about Upper Pottsgrove’s use of open space funding

Upper Pottsgrove Township Commissioner Cathy Paretti, front left, asks questions about the legality of transferring money from the open space fund to the general fund. (Image from video)

UPPER POTTSGROVE — Questions are being publicly raised about the township’s planned use of open-space tax revenues to reimburse the general fund for paying off a bond, answers to which may have an impact on the status of the Smola Farm property on which the township hopes to build its controversial township complex.

The plan to use that property has raised objections and fueled a lawsuit over the past year and the questions raised Monday by one of the plaintiffs in that lawsuit, and a township commissioner, have added another wrinkle to the issue.

At Monday night’s commissioner meeting, Commissioner Cathy Paretti asked Township Solicitor Eric Fry to investigate the legality of transferring more than $243,000 from the open-space fund to the general fund this year, and another similar payment laid out in the 2024 budget, which was unanimously adopted Monday night and will not raise taxes.

“I’ve been thinking about this for two months,” Paretti said, asking if another resolution or vote is required. She was referring to Resolution 747 adopted on July 18, 2022 and for which she voted. “I’d like you to look at that and make sure it’s legal.”

“I’ll look into it,” Fry replied.

The relevant passage in that resolution reads: “allocation of appropriate assets from the open-space fund to the general fund in accordance with the repayment of open-space fund debt structure in Fulton series 2013 bond.”

Resolution 747 was passed in regards to the township’s use of the proceeds of the sale of its sewer system to Pennsylvania American Water, which was completed in April of 2022.

The “Fulton series 2013 bond” refers to a re-financing of a 2008 bond which was used to purchase the Smola Farm, according to an Oct. 12 legal response filed by the township in the proceedings of the lawsuit seeking to stop the construction filed in February by residents Matt Murray and Nathaniel Guest.

“It does not appear that any funds from the Township’s Open Space Tax Ordinance were used to purchase Smola Farm,” attorney Andrew Bellwoar wrote on behalf of the township in the October filing. “Although a check from the Open Space Fund was presented during the purchase of Smola Farm, the purchase was largely funded by a bond in 2008 (and later refinanced by a 2013 bond). Finally, the sale of the sewer was used to pay off the 2013 bond. (See Resolution 747). Thus, Smola Farm was purchased substantially with the full faith and credit of the Township — the account the bond funds were routed through is irrelevant.”

But if the open-space fund is being used to refund the township general fund for paying off that bond, are open space funds ultimately financing the purchase of the Smola Farm property? Murray certainly thinks so, and said so during Monday’s meeting.

“You said paying off the open-space debt entitled you to use the (Smola) property as you wish,” Murray said. “The truth is you did not pay off the debt, you simply changed the lender from Fulton Bank to yourself.”

Should the court — which recently rejected requests from both sides to either dismiss the lawsuit or find in the plaintiffs’ favor — decide that open-space funds were in fact used to purchase the property, it will confirm a central tenant of the plaintiff’s contention that the township is violating state law if it builds the complex there.

Murray also pointed out that while a bond was taken out in 2008 to pay for the purchase of the Smola Farm as “permanently protected open space;”  as it is described in the township’s own Open Space Plan; from 2009 until the 2013 re-financing, it was revenues from the open space fund that were making those debt payments. And now, even the re-financing is ultimately being paid out of the open space fund if the township moves forward with this finance plan. “You can’t have it both ways,” Murray said.

“In actuality, when we paid off the entire proceeds of the debt we had, it was the 2013 bond,” said Commissioners Chairman Trace Slinkerd. “It was a little over $3 million total of what was borrowed, paid by the slow yearly payments.”

Of that bond re-payment, $1.7 million came from the general fund, he said “and under resolution 747, the board has the authority to determine how it wants that $1.7 million to be paid back to the general fund,” Slinkerd…