officials have begun to explore how to get the largest return from
investments of the sale proceeds from Porter Memorial Hospital.
While the state
gives local governments many options to invest money from the sale of a
facility, Doug Long and Jerimi Ullom of Indianapolis consultant Hall Render
Killian Heath & Lyman suggest placing a portion of the roughly $159 million
sale proceeds into a charitable endowment fund of the county’s own. It could
also put the money into an endowment already established by a community
foundation or a hybrid of the two options.
During a joint
meeting on Wednesday of the County Council and Board of Commissioners, Long
said that the county could establish its own charitable nonprofit community
foundation, which would give it control over the investment income earned. A
board of directors for the foundation would have to be formed, however,
comprised of county officials or appointments.
nonprofit status would also need to be determined by the IRS, which Long
said could take six to 12 months. But the county could start investing
immediately, he added.
Income paid to the
county could go to fund items in its General Fund, currently in shortfall.
According to Treasurer Mike Bucko, the county is making just close to $1
million a year in interest from current bonds but Ullom said that an
endowment would have higher yields of about 5 percent interest. “That is the
key to this entire transaction because that’s what you’re trying to
What drew the most
reaction from officials was the issue of oversight given to the foundation’s
board of directors, because once the funds are transferred into the
nonprofit’s endowment, they would no longer be considered public funds, Long
President John Evans, R-North, said that the county’s “been sitting on these
funds for seven years” and has frequently heard that the sale proceeds
should be treated as public funds to work for the public’s betterment.
Long said that in
order to invest and grow the endowment, the funds cannot be considered
“public.” It’s also an open question, he added, whether meetings of the
endowment’s board of directors would be subject to the state’s Open Door
law. An opinion on that issue could be made by the Indiana Attorney General.
Council member Jim
Biggs, R-1st, asked Long and Ullom if the money would be irrevocably out of
reach once placed into a foundation. They replied that the money could be
returned on the condition that the community foundation violates any
condition of the endowment agreement or loses its status as a public
Council Member Bob
Poparad, D-at large, asked whether the county could get the money back if it
needed to, while Member Jim Polarek, R-4th, asked whether a major natural
disaster would justify its retrieval.
and Ullom answered that control of the money would all depend on the
agreement crafted by the council in the endowment agreement resolution. “The
difference is governance,” Long said.
If the council were
to make appointments, Biggs said, it would be accountable to those people.
He said the council would have to be confident in appointees’ character.
endowment, the county could also use the sale principal to bond for economic
development projects or to get the Indiana legislature to allow for equity
Dan Whitten, D-at large, said he would like to hear what existing community
foundations have to offer. Even though there is already a Porter County
Community Foundation nonprofit organization, he said there could be another
that could yield a higher return on investment.
approved for Hall Render to issue a request for proposals (RFP) seeking
information from other community foundations. Those will be received in time
for the councils’ next regular meeting on April 22.
Vice-President Karen Conover, R-3rd, said the council and commissioners
“have a lot to digest” before they can make a decision. “I implore all of us
to be open-minded. We all have to agree what’s best for our investments, our
money and our citizens.”
Bucko said that
over $52 million in liquid assets are ready to be invested as of now. That
sum will reach $80 million by the end of April and $117 million by the end
of this year.
Whether more funds
will be invested this year will be up to the County Board of Finance, Evans