Riverhead pays off $7.2M CPF debt five years early
After two decades of shouldering this financial burden, Riverhead’s CPF debts are all squared away.
With roughly $30.1 million total in the town’s Community Preservation Fund and its next annual $2.7 million payment due Aug. 1, the Riverhead Town Board voted to pay off its remaining $7.2 million in CPF debt five years ahead of schedule.
The move will save the town approximately $660,000 and leave more than $19 million in CPF reserves to purchase properties for preservation.
After the town collected about $7 million in CPF transfer-tax revenue last year, town financial administrator Jeanette DiPaola recommended at a June 25 work session that the Town Board settle the remaining debt before its 2030 maturity date.
“I’m not a fan of debt, so anytime we have the opportunity to pay our debt down I will obviously bring that forward,” Ms. DiPaola told the Town Board at the end of last month.
Money for the CPF comes from a 2% tax that buyers pay when purchasing East End properties. Local municipalities use this fund to purchase open space for preservation and fund water protection programs.
Since its inception in 1999, the Peconic Bay Community Preservation Fund has raised more than $2.26 billion for land preservation in the five East End towns.
In the early 2000s, Riverhead Town borrowed $72 million in bonds to fund an aggressive land-acquisition campaign under its Community Preservation Fund program. Town officials at the time feared that if they didn’t purchase open space and farmland development rights upfront, the land could be sold to developers before they could collect enough CPF revenue.
However, when the real estate market plummeted in 2008, so did CPF revenue. Riverhead ended up using CPF fund balance money to pay off the debt from CPF purchases and faced a $2 million-a-year deficit.
After a push from town officials, state legislation was passed in 2016 allowing the town to refinance existing CPF bonds, so farmland preservation could continue.
The town initially anticipated paying back its CPF debt between 2010 and 2020, but that timeline was later extended to 2030.
“We’ve achieved that goal, and it doesn’t make logical sense to continue to pay finances on it when we have the money readily available to do that,” Councilman Kenneth Rothwell said at the work session. “I think we’ve proven ourselves financially stable.”
An additional $92,000 from the town’s general fund balance will also be used to pay down the remaining principal. This payment is due in 2027.
