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Jul 29, 2011 5:47 PMPublication: The Southampton Press

Southampton Town Board Considers $125 Million CPF Bond Recommended By Panel

Aug 2, 2011 6:43 PM

An advisory committee has recommended that Southampton Town adopt an aggressive plan to borrow and spend $125 million over the next four years to preserve as much as 2,000 acres of dwindling open space and farmland, using future Community Preservation Fund revenues.

At a work session on Friday, the Town Board appeared guardedly in favor of considering the proposal, though there were some concerns that the additional borrowing could adversely impact the town’s bond rating at a time when finances are expected to be tight. But both Tamara Wright, the town comptroller, who said she had discussed just such a scenario with officials from bond rating companies, and Bob Anrig, chairman of the town’s CPF advisory committee, assured the board members that the borrowing wasn’t likely to lower the town’s rating.

Mr. Anrig said a task force formed by the CPF advisory committee, both of which he headed, has created a “wish list” of properties scattered throughout both halves of the town, all high-priority properties that are important to preserve. The suggestion is that the town should take advantage of low interest rates and depressed real estate prices by borrowing to make the purchases immediately, then spread the cost of the purchases out over future years, using only CPF revenue to cover the debt service.

Should the town borrow the full $125 million, and combine it with cash on hand—the CPF will have a projected $46 million in cash by the end of the year, according to Ms. Wright—as well as partnerships with Suffolk County and other private entities, the committee believes some $200 million will be available to spend, and 70 percent of the 2,000 acres could be preserved, and possibly more. The board could borrow the entire $125 million at once, or—an option preferred by the advisory panel—borrow the money over a four-year period, starting this year.

John v.H. Halsey, president of the Peconic Land Trust and a member of the town’s CPF advisory committee, pointed out that spreading the borrowing over four years would give town officials the alternative to scale back or even eliminate borrowing should the economy take a serious downturn, or if other factors intervene. “I think that’s an important component,” he said of the plan, which was described as both “conservative” and “prudent.”

The Town Board has a detailed list of the properties identified as priorities, but the list was not made public. State law allows the town to keep confidential such information since it could lead to negotiations for purchase. Mr. Anrig said every parcel included on the list is “entirely justified for acquisition … either a significant piece, or adjacent to a significant piece” that had already been preserved. A map showing targeted areas identified points throughout both the western and eastern halves of the town.

At Mr. Anrig’s request, the board reached an unofficial consensus to move forward with a formal proposal, though councilmen Jim Malone and Chris Nuzzi were guarded about working out details before committing to the program. The committee was charged with coming up with a more specific proposal to bring back to the board for a vote.

Despite reassurances, board members were wary of the potential effect the borrowing could have on the town’s bond rating.

“I think the goal here is a good one, one that we should be working toward,” Mr. Nuzzi said. But he went on to say that the potential impact on the bond rating—especially at a time when the town is dealing with a failing economy and the impact of a newly imposed state tax cap—remains a big concern. Even though the CPF itself is outside the tax cap, he said, the town ultimately is responsible for the debts accumulated in the CPF fund, should it fail to meet those obligations.

Ms. Wright addressed the concerns, acknowledging that even though the CPF fund is separate from the town’s general fund, “certainly, this level of borrowing will trigger a discussion” with bond rating agencies. She added that while she cannot predict how the agencies would react, she has had “comforting” conversations with agency officials suggesting that they understand the borrowing involves dedicated future revenue, and is separate from any indebtedness the town might take on as part of the general fund. “They look at this differently,” she said.

In fact, she noted at the presentation that the preserved land has a stabilizing effect on other private land throughout the town: despite the downturn in the market, the total assessed value of the town has not declined. “They like that,” she said of the rating agencies.

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Borrow & spend, borrow & spend. Polly want a cracker w/ that? And when do these parrots decide the "economy has taken a serious downturn"?
By G (342), Southampton on Jul 29, 11 7:29 PM
Who gets the commission on the $125 M ? somebodies cousin on the town board? Isn't Mr. Anrig a Real Estate Broker? or his wife? or his cousin? or his brother in law? I am going to follow up on this fiasco, this folly, this rip-off. YOU GUYS BETTER DOT YOUR "I" s and cross your "T" s. EVERY ONE WILL BE WATCHING........
By rrc1049 (63), Bridgehampton on Jul 29, 11 10:09 PM
2 members liked this comment
and where exactly are these 2000 acres? Next to which politicians house? I'd like to see the wish list and why these properties are so urgently needed in a down economy with little building going on?
By jim (48), hampton bays on Jul 30, 11 12:09 AM
1 member liked this comment
Borrow away and please buy my land!
By rogerdog (4), southampton on Jul 30, 11 12:32 AM
As silly as it may seem in these difficult economic times, with low intrest rates and the poor real estate market this is the best time in 20 years to buy up the remaining open space land. I do not know who's cusion is the real estate broker but this clearly is the last chance for the Town to do any significant open space buying.
By gusbeme (33), southampton on Jul 30, 11 2:07 AM
You are correct Gusbeme, however just like everyone else in this economy the town overspent in the past and now that the opportunity is ripe they have to borrow the money.
By rrc1049 (63), Bridgehampton on Jul 30, 11 12:59 PM
$62,500 per acre-what a great investment.
By EastEnd68 (888), Westhampton on Jul 30, 11 9:01 PM
Sure take the land off the tax rolls. We can always borrow again. You cant fix stupid!
By Crankie (10), Southampton on Jul 31, 11 8:40 PM
As long as they can resell the land when they come up short and and can keep from imposing the burden of this purchase on the regular taxpayers and can stick to their commitments and maintain their other expenses and keep within their tax caps ....
By Toma Noku (616), uptown on Aug 1, 11 4:18 PM
This is what happens when you cannot get anyone with talent to run for government....These Board members can't balance their own checkbooks let alone run a town...
By The Real World (368), southampton on Aug 2, 11 8:34 AM

These guys never ever learn, are financial illiterates, whose first reaction is always that of an economic simpleton. Imagine yourself as a man with no money, constantly in trouble, just ran up many years of deficits and kept on borrowing money presenting false financial statements to get the loans.

Imagine this man finally gets exposed that instead of having a pile of money (or Fund Balances) he had really been cooking his financial statements with his accountant to hide massive ...more
By Obbservant (449), southampton on Aug 4, 11 7:56 AM