Council eliminates reserve trust fund

Leftover money will be moved to general fund, invested in city

COATESVILLE >> A trust fund created from the sale of the Coatesville Water Authority, which has often been a contentious issue during budget season, will cease to exist in its current form.

City Council voted Monday night to essentially eliminate the City Reserve Trust Fund and move the remaining money – about $4.5 million – to the city’s general fund.

According to city Solicitor Anthony Verwey, of Gawthrop Greenwood, there were a number of issues with the ordinance that established the fund.

In a 6-0 vote, council approved the second reading and adoption of an ordinance to repeal the original ordinance that created the City Reserve Trust Fund, and direct the funds to be moved to the general fund of the city and invested in accordance with the Third Class City Code.

Councilman Ed Simpson was not present at the meeting.

Verwey said the original ordinance “attempted to limit and restrict future councils with regard to their governmental functions relating to the finances of the city. The adopting council did not have the power or authority to so limit future councils’ governmental functions.

“There does not appear to be any statutory authority for a Third Class City, like Coatesville, to create this type of fund.”

Council always had the legislative authority to repeal the ordinance creating the City Reserve Trust Fund, he added.

The trust fund was first established after the city sold the assets of the Coatesville Water Authority to Pennsylvania American Water for $36 million in 2001.

Over the years, council had withdrawn money from the trust fund to pay for deficits in the city’s annual budgets.

Council also held a public hearing on the city’s preliminary budget for 2019.

Just over $1 million left from the trust fund is set to be transferred toward the 2019 budget.

There are no proposed tax increases for the new budget.