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Budget Discussion Focuses on CPF Bond

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By Claire Walla

The first regularly scheduled public hearing on Southampton Town Supervisor Anna Throne-Holst’s tentative 2012 budget focused largely on the Community Preservation Fund (CPF).

Bob Anrig, chairman of the CPF advisory board, began discussions by firmly urging the board to approve a $125 million bond offering for the department.

“What I care about is the long-term interest of the town,” he said last Friday, October 28 at a special board meeting on the budget. “I believe that going forward this [bond offering] is good, smart government. The land is available, prices are the best they’ve been in a long time and the financing costs are at all-time lows.”

The benefit to the bond, Anrig further explained, would be to secure the money to preserve the lands now, at a relatively low interest rate, before property values in the town rise.

“We have been stalling on this,” Anrig continued. “My fear is that it’s become a political hot potato and we need to move forward on this now.”

Throne-Holst and Councilwoman Bridget Fleming are in support of the bond measure, while the board’s conservative majority members — Chris Nuzzi, Nancy Graboski and Jim Malone — expressed some concern with taking on more debt. If, for whatever reason, the CPF does not have enough money to continue paying back the bond, Nuzzi said his worry was that then the burden would fall to Southampton Town taxpayers.

Fleming, however, noted that the bond measure would take fluctuating costs into account. It’s a four-year pay-back plan that she insisted the town would be able to extricate itself from, should the town foresee the possibility of CPF revenues not remaining as strong as they are currently predicted to be.

Throne-Holst pointed out that even in the midst of the financial crisis, “CPF has remained robust.”

She doesn’t expect the fund to decrease so dramatically that it would be unable to pay for the bond, but if it should, she added, “The fact of the matter is that should it ever get to that dooms day scenario, we could then go to the state and say we may need to reverse one of these purchases. But the likelihood of that is so remote.”

Jim Malone echoed Nuzzi’s sentiments by reminding the board that in 2007 the fund was lower than it had been in years past.

“We saw an impact,” he stated. “The fund does move.”

Nuzzi also pointed out that without the additional bond, the CPF would still have roughly $20 million worth of funds to dedicate to the purchase of open space.

“I support the bond, and I think it’s completely right that it’s become a political hot potato,” Fleming said, harking back to Anrig’s previous statement. “I feel good that this is good, strong money management. It’s different than just taking on debt.”

Fleming urged Anrig — himself a banker and a local real estate agent — to further explain why the CPF advisory board is so adamant that the $125 bond be issued as soon as possible.

“The bond proposal has been written in extremely prudent terms,” said Anrig. “ We tried to ensure that even after all costs of the fund are considered that we have a debt service coverage ratio of projected revenues that’s at least one-and-a-half or one for the bond.”

“The opinion of the underwriters was that that was an extremely conservative set of assumptions and a conservative debt service coverage ratio,” he continued.

Anrig added that this bond would be completely funded by CPF revenues, so it would have no affect on the Southampton Town tax rate.

During the public portion of meeting, Linda Kabot, the former Southampton Town supervisor who is running a reelection campaign as a write-in candidate against Throne-Holst, used her time at the podium to weigh-in on the issue.

“I applaud [the fact] that the majority of you appear to be more fiscally conservative to scale that [bond proposal] back to address the risk,” she said.  “You’re talking about doubling our debt load. I do think that needs to be vetted further.”