Cell Tower Funds Misdirected

HARWICH – The town has had a longstanding practice of using funds generated from leased property to Sprint Spectrum for cell tower use in East Harwich to support affordable housing programs.

But that practice has been altered under Finance Director Kathleen Barrette. Over the past two years the unexpended funds have been converted into free cash and have been spent for other town needs. The select board is working with town counsel to shape a fiscal policy that will return the funds to the intended use.

Voters approved an article in the 2004 annual town meeting to establish a housing trust fund under the control of the board of selectmen to be used to support future affordable housing programs. The article authorized the deposit of funds received from the lease agreement between the town and Sprint Spectrum for a cellular antenna on town-owned land on Route 137 into the trust fund.

Town Counsel John Giorgio told the select board at the time of the town meeting that there were no statutory provisions for establishing an affordable housing trust fund. Provisions for affordable housing trusts were promulgated six months after the town meeting vote. In 2005 the town adopted the state provision allowing the establishment of such a fund.

At that time, Giorgio said, the general rule of municipal finance was that revenues that were unexpended went to free cash. That would have included the cell tower revenue funds being converted to free cash, he said. In 2016 the Legislature approved the Municipal Modernization Act, allowing communities to place dedicated funds into specific stabilization funds, according to Giorgio.

“Recently, the finance director raised a question about whether the 2004 town meeting vote was effective in creating a continuing dedication of cell town revenue to the affordable housing trust,” Giorgio wrote in a memo to the select board.

According to Girogio’s memo, in his opinion, prior to 2016 the general law regarding treatment of municipal revenue applied to the cell tower revenue in question.

“That general rule, in my opinion, applied when Article 56 was adopted,” Giorgio wrote. “In my opinion, because the 2004 town meeting vote preceded the effective date of the new statute, the town did not have authority in 2004 to vote the dedication” of the cell tower funds to affordable housing.

Giorgio said the town has a couple of options to rectify the situation. A special act of the Legislature would be needed to automatically dedicate the cell tower revenue to the affordable housing trust, but he would not recommend that route because it would be time consuming and the legislature might not approve the act, given there are other options for the town.

The town can adopt the provisions of Chapter 40 Section 5B, approved in 2016, and dedicate all or a portion of the cell tower revenue to a separate fund, which then could be later appropriated to support affordable housing. A third option would be for the town to deposit the cell tower revenue into the general fund, and once it is available for appropriation as certified free cash, town meeting could vote to transfer that amount to the affordable housing trust.

Select Board member Donald Howell said he is extremely disappointed the finance director went right to town counsel with the issue without the full knowledge of the history. Howell said use of the funds was approved by four previous finance directors and dozens of selectmen on numerous housing programs. Howell also said the predecessor to Giorgio’s firm KP Law, Kopelman and Paige, was involved in setting up the initial article for the funds.

“It was disconcerting that the finance director came in and said there is no money,” he said. “It was directed to free cash, that was not the way it was operating for years and years.”

“I’ve worked with your finance director in two different communities and she is very meticulous and that’s a good thing overall. A good finance director keeps us very honest,” said Giorgio.

Howell said reimbursing the affordable housing trust fund nearly $160,000 out of next year’s free cash would have a major impact on the amount of free cash that would be available for expenditures in the coming year.

But Select Board member Michael MacAskill thought it was the best way to move forward. Board members also agreed a town meeting article should be prepared to adopt Chapter 40,Section 5B, allowing the dedication of the cell tower revenue to an affordable housing trust stabilization fund.