County Sued Over Pension Loan

The law suit filed in Baltimore County Circuit Court seeks to stop a loan to the county that would be used to build a recycling facility in Cockeysville.

  • By Bryan P. Sears
  • February 5, 2013

The union that represents Baltimore County Police is seeking to stop a $21 million loan from the pension system to the county for a new recycling facility.

The 10-page lawsuit filed late last week by the Fraternal Order of Police Lodge 4 alleges that the board of trustees for the Baltimore County Employees Retirement System failed to do its duty to protect the pension system including:

  • Failing to obtain adequate collateral to cover the loan.
  • Failure to seek advice on the potential legal and tax implications of making such a loan.
  • Entering in a loan agreement that jeopardizes the pension system’s tax exempt status.

“The county is using the employees pension plan to fund capital projects,” said Cole Weston, president of the police union. “To fund capital projects like this is very concerning.”

The loan will be used to pay for a new recycling facility in Cockeysville. It’s the same facility for which the Baltimore County Council approved $25 million in bond sales last November.

The pension board and the county signed a formal loan agreement in December and made the first disbursement of more than $3.7 million to the county on Dec. 31. A second disbursement of nearly $3.1 million was made to the county last week.

In all, the county will receive 10 additional payments over the next year for a total of more than $21 million, according to the law suit.

The suit seeks to have the court bar the county pension system from making additional scheduled loan disbursements to the county. The suit also asks the court to order the county repay nearly $7 million already received from the pension system.

Don Mohler, a county spokesman, said the county had not received a copy of the lawsuit and he could not comment on the specifics.

Mohler said the pension plan is guaranteed an interest rate in excess of the annual average rate of return expected for pension investments.

“Every step we have taken along the way has been to protect employee benefits and the taxpayer,” said Mohler.

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