News

By Rich Pollack

Armed with a green light from voters last fall to spend up to $10 million for a new fire department, Highland Beach commissioners in March agreed to earmark up to $4 million in reserves for the project.
At the same time, town leaders are working with a consultant to lock in a favorable loan rate for the remainder of the expected expenses, hoping to benefit while interest rates remain low.
Town leaders say that the combination of using reserves and taking out a low-interest loan will work to the benefit of residents, who they project will not see a raise in property tax rates due to the creation of a new fire department.
“The cost of operating a fire department, including debt service, will not impact taxes,” Mayor Doug Hillman said. “The increase in the debt service costs will be less than the savings we’ll get from running our own fire department.”
Highland Beach has about $10 million in reserves, with $2 million set aside for disaster recovery, $2 million for budget stabilization and $6 million in unassigned reserves.
Using $4 million of the $6 million for the fire department would still leave the town with $2 million to use for unforeseen expenditures.
“We feel it’s important to have some cushion,” Hillman said.
Vice Mayor Natasha Moore, who recently conducted a study looking at the town’s reserve funds, said using $4 million for the new fire department makes financial sense.
“We’re making good use of taxpayer money,” she said. “This is money left over that’s not drawing interest, so we’re using it for fire rescue so we don’t have to borrow as much.”
State law limits how municipalities can invest leftover money to ensure funds are not in risky investments and have a degree of liquidity.
Moore said that using the money in reserves is one way to counter the negative impacts of inflation.
“Holding extra reserves costs residents money in the form of inflation,” she said.
“The real value of reserves is eroded by inflation.”
Hillman believes the town may be able to borrow money at a reasonable rate before interest rates rise, in part because it is financially stable and will still maintain $2 million in unassigned reserves.
“Because we’re in such good shape, we’re confident we’ll be able to borrow at a very favorable rate,” he said.
The town has built up its reserves in part thanks to $3.5 million from a 2013 sale of land it owned in Boca Raton that had been used as a water treatment facility.
While it is unlikely the town will have a large windfall again to build up reserves, Hillman said that the town has been able to replenish its reserve funds in the last few years.
“Over time we’ve been able to put money back in reserves,” he said.
Highland Beach leaders also hope to use $400,000 that could be coming from the state for the fire department. The appropriation was included in the budget approved by the Legislature that is awaiting the governor’s signature.
Last April, town commissioners voted to end Highland Beach’s contract with Delray Beach for fire service after more than 30 years, due in large part to what town leaders saw as excessive costs.
The town expects to have the new fire department up and running by May 2024.