AGENDA #5c

Memorandum

TO:                  W. Calvin Horton, Town Manager

FROM:            Ralph Karpinos, Town Attorney

SUBJECT:       Town Open Space and Park Lands as Security for Loans

DATE:             February 16, 2005

This message responds to the question raised at the February 7 Budget Review Advisory Committee.  I have checked my files, reviewed the statutes and discussed this with Kay Johnson. I agree with the response you provided at the meeting to the question raised. 

Essentially, the Town would be able to borrow money and use Town open space as a security for that loan if the purpose of the borrowing were to make improvements to the property which is the security for the loan or to finance or refinance debt associated with the purchase of the property.  We could not borrow money, using the land as security, and use the loan funds for operational purposes or some other purposes.

If open space parcels were to be sold, the proceeds from the sale would need to be used to pay off any outstanding bonds associated with the acquisition of the property.  Once we have complied with the bond regulations governing reuse of the proceeds from the sale, any net proceeds would be legally available for other purposes.  There may be public expectations regarding the reuse of such funds that would need to be considered.