Sussex Borough passes referendum to establish trust
Measure puts question on ballot to put extra money from utility sale in separate account
SUSSEX BOROUGH — Sussex Borough passed a second referendum, establishing a trust account of extra money from the potential sale of the Sussex Water and Sewer Utility to Aqua New Jersey, Inc., on July 29.
The referendum question passed 5-1 and will appear on the Nov. ballot.
Councilwoman Annette Stendor voted against the measure.
The public's proposed referendum question would allow the council to use 75 percent of interest accrued in the preceding year from the trust account, within the borough's operating budget. Using the interest would then provide tax relief for residents.
Borough Attorney Francis J. McGovern said Mayor Jonathan Rose could participate in the discussion regarding how to use future money in the borough. However, if the discussion turned again to the sale of the plant, Rose would recuse himself due to a potential conflict of interest with his business, Farious Net Solutions.
Rose said that “a referendum passed by the people carries much more weight because the governing body is a servant to the people.”
Councilman Bruce LaBar outlined capital projects which are desperately needed by the borough, including fire engines.
Potential AAA credit rating for Sussex Borough
Rose said the borough proposed to keep the lump sum in real dollars.
Conventional wisdom is that you should not borrow if one has the money on hand. However, borrowing money at .25 percent to .5 percent, which is less than the rate of inflation, and paying the loan back with the interest earned from the lump sum, would give the borough a AAA credit rating.
Thus, the Borough would actually make money by borrowing money, due to the low interest rates available for loans at this time.
Rose also said the lump sum would have to stay in the trust. Arbitrage is illegal because one cannot borrow and invest the same money.
"It's a strange turn of events to make money by borrowing while not touching the principal," Rose said.
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