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Township mortgages open space funds to pay for Greenway

Updated: Nov 7, 2022

Beginning in 2024, Kennett Township will be unable to fund new open space improvements for a decade.

With the posting of the proposed 2023 Kennett Township Budget, residents are learning that Kennett Township wants to hike taxes by 20% to pay for increased costs associated with the Chandler Mill Trail (CMT), police, and emergency services. The tax hike helps to cushion the blow of withdrawing more than $1.5M from general fund to pay for construction on CMT over the next two years, which requires that Kennett draw deeply from its reserves. But even these unprecedented transfers barely cover half of the anticipated construction costs : Kennett also proposes to draw an additional $1.5M from open space funding. (see p.39 of the proposed 2023 budget). The problem? Unless Kennett discovers a significant new source of funding or savings, this means that there will be no funds for open-space related improvements or new maintenance activities for almost a decade beginning in 2024.

Some background here.... Prior to 2015, the cost of maintaining open space (e.g., mowing, removing invasives, etc.) or improving (e.g., planting trees, building trails, etc.) had to be paid out of the general fund. Changes to the Open Space Act in 2015 allowed up to 25% of the amount raised through the total accumulated open space funding to defray the costs of maintaining or improving land protected through the Open Space Act. This especially relevant to the public preserves in Kennett. For example, the Township has proposed to use $480K of these funds to demolish and stabilize the buildings on Spar Hill in 2023. This will finally allow Spar Hill to be formally opened to the public almost 5 years after its acquisition.

The Act was amended last year to extend this use to all open space not technically acquired under the Open Space Act. For example, contributions to Kennett Area Park Authority intended to help pay for the maintenance of Anson B. Nixon Park can now be drawn from open space funds set aside for maintenance. These had previously come from the general fund.

Because of its exorbitant price tag, the 1.4 mile CMT - now projected to cost more than $6.5M, will also exhaust open space funding for maintenance for the next decade. How? The Township proposes to draw $550K from the fund over two years to pay for the construction of the 6' wide pedestrian path, leaving less then $100K in a fund that had slowly accumulated more than $1M over the past 12 years.

But even the $3.1M drawn from Open Space Maintenance and General Funds is not enough to construct CMT. So the Township has also proposed to "borrow" $1M from the loan originally secured in 2018 to acquire open space. Kennett claims that this can be repaid by future open space maintenance proceeds, though did not report how long this would take, So we ran the numbers, using figures presented in the draft 2023 budget (see pp.36-39).

  1. We started with the additional maintenance funding generated by projected 2023 open space revenue (about $260k)

  2. We added up the funds already earmarked for ongoing, annual maintenance (about $168K) and periodic equipment purchases (about $20-$30K every 4 years).

  3. We assumed that each would increase by 5% annually.

  4. We subtracted 2 from 1 to generate the remaining amount each year that could go towards paying back the "loan". This starts in 2024 with about $101K, increasing to $142K by 2032.

Our conclusions? The final payment occurring in 2032 will finally add $130K back into the coffers for new maintenance and improvement projects for the first time since 2022. While Township officials suggest that the loans might be paid off earlier, it is unclear what new sources of revenue they could draw on... other than increased taxes! And we expect that these projections are underestimates of the total costs. For example, they do not include the costs of debt service, nor the costs of maintaining the 400+ new trees and 16000 square feet of planted roadside buffer on CMT beginning in 2025 or 2026.

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