Bedford Township Board pondered whether to sell bonds

Subdivision road work reason for discussion

1/14/2013

TEMPERANCE — To sell bonds or not to sell bonds?

The Bedford Township Board discussed the question at last week’s meeting before members voted on the issuance of special assessment bonds to pay for road improvements in the Enchanted Forest and Canterbury Village subdivisions.

In the end, they voted 7-0 to authorize the bonds, but not before examining a query raised by Trustee Nancy Tienvieri: Was the township able to put up its own funds for the project, thereby saving the property owners the cost of going to the bond market to finance the improvements?

Patrick McGow, the township’s bond attorney from Miller, Canfield, Paddock, and Stone PLC in Detroit, put the issuance cost at $57,900, but said it could drop to $40,000. This cost, which included legal and financial adviser fees, would be included in the principal amount of the bonds, which is $1.23 million.

The proceeds from the tax-exempt bond sale will pay for the improvements at both subdivisions, and the debt will be serviced by special assessments charged to the homeowners over 15 years. Under the bond terms, debt service will be $40,000 in 2013 and $85,000 annually thereafter, until the debt is retired at the end of 2027.

At the request of a majority of homeowners in the subdivisions, the board in August approved the road special assessment districts. The road projects include new pavement and drainage improvements. Enchanted Forest is in Temperance east of Jackman Road between Sterns and Dean roads, and Canterbury Village, in Lambertville, is off of Sterns west of Monroe Road.

The Canterbury Village work is slated to be done in June, and the Enchanted Forest in August.

Ms. Tienvieri wondered if the township could pay for the road improvements up front from its fund balance, then be repaid by the special assessments, eliminating the underwriting cost.

Clerk Trudy Hershberger said the township’s finance director, David Manning, informed her that such an action would unduly deplete the township’s funds.

Treasurer Paul Francis noted that the township’s fund balance “doesn’t mean cash. It means cash and other assets on hand minus liabilities.” He said the township didn’t have cash for the projects.

Supervisor Greg Stewart agreed that the board should have a policy addressing the use of township money for such purposes.

Mr. McGow pointed out that Bedford had an investment grade A+ rating from Moody’s Investors Service, and that fund balances affected a community’s credit rating.