Chesterton Tribune

 

 

Porter County reviews investment options for hospital proceeds

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By JEFF SCHULTZ

Porter County 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.

The foundation’s 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 accomplish here.”

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 said.

Commissioner 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 charity.

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.

Ultimately, Long 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.

Besides the 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 investments.

Council President 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.

The council 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.

Council 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 said.

 

 

 

Posted 3/13/2014