District Library learns about bonds, hires Spicer for preliminaries

By Rosemary K. Otzman
Independent Editor
Paul Stauder of Stauder Bausch of Ann Arbor gave a presentation to the Belleville Area District Library Board about bonds during its regular meeting Nov. 12.
His firm specializes in library bonds.
Then, it unanimously approved the recommendation by its architect Dan Whisler to hire Spicer Engineers of Belleville to provide a topographic and boundary survey of the DNR-owned lake site and adjacent Spencer property.
It was noted the cost will probably come out of the library’s fund balance.
These are the sites selected for construction of a new library and Whisler needs information before he can prepare architectural drawings that show where everything will be placed on the property.
Drawings are needed to show to the DNR which still owns the property, so it can approve the concept for fishing along the lake and join together in seeking grant money for the project.
Drawings also are needed to use in an informational campaign to influence voters to approve the funding to build it in the August 2014 election.
Whisler and Library Director Deb Green brought a drawing of a proposed library on this site to a Sumpter Township meeting at least six years ago, but now specifics are needed.
Whisler said he solicited proposals and three responded: Midwestern Consulting Inc. ($17,500) and SmithGroupJJR ($18,000), both of Ann Arbor, and Spicer ($10,350, hourly, not to exceed), which has an office at the Century 21 building on Main Street in Belleville.
Spicer said it could do the work in 4-5 weeks, but it omitted tree identification requested because it didn’t have a tree person on staff. It could hire someone to do the trees, however, for additional cost.
These are the trees 12” in diameter and greater at breast height. Clusters of trees of smaller diameter also should be entered.
Included in the survey will be curbs, utility poles and underground lines, gas and water lines, sanitary and storm sewers, catch basins and manholes, legal descriptions, zoning, regulations, curb cuts 100 feet in either direction, extend of watershed into property, location of flood plains from FEMA FIRM map, information by local municipality for site plan approvals, details of intersection of Belleville and quirk to design a signalized intersection, information on 12” existing sanitary sewer running east along Belleville Road from Lake Villa Drive, shoreline information for possible design of alternate sidewalk path along the shoreline, etc.
The go-ahead on the work was given to Spicer last week.
Board member John Juriga asked if it is common to spend money on land you don’t own yet and Whisler said it was.
Whisler said developers spend hundreds of thousands of dollars on proposed sites.
“Is it common? Absolutely,” Whisler said, adding, “It is doing your due diligence…”
Juriga asked if in the 30 years the DNR has had the property if it didn’t already have a topographical map.
Barbara Miller asked from the audience about the demands of the DNR and how far along are they in obtaining the property.
Library attorney John Day said they have the approval of the work committee to acquire the property, but they need a drawing. They have to come up with the topography and where to put things.
“We basically have land control with the commitment to sell,” Day said.
He said they have the letter and supplement communication from Rob Corbin with a price of $395,000 plus 10% transaction fee for the DNR property.
Treasurer Gutierrez said the board would like a report from attorney Day every month about what has occurred and not depend on people from the audience asking questions.
Day said he and the DNR agreed not to meet until they have a drawing. Right now they do not have a full design. He said they need to have decks within six feet of the water’s surface for fishing.
Gutierrez asked if the DNR will come back and say this is what they want for the agreement?
Day replied, “They are not going to design our waterfront for us.”
Whisler said there will be no physical possession of the property until the bond passes. He said he has an idea of what they want for fishing access, which is similar to what the Metroparks have.
“Do we have to come up with a design they approve?” asked board member Michael Boelter.
“The DNR will provide feedback on the drawings,” Whisler said. “We’re not likely to get grant funding for ideas and talk. The strategy with them is to partner to get a grant… We have enough to take a stab at it.”
“And to do that you need a topographical survey,” said board chairwoman Mary Jane Dawson.
Whisler said one long boardwalk six feet above the water would do it, but it’s probably better served to have fishing access in several locations.
Day said they are not going to share anything with the DNR that the library hasn’t seen.
“It’s your project,” he said.
Day said the bank is 10-13 feet above the water and there is significant work to be done to traverse that area with ramps.
Miller said, “The fisher folk were thrown off the causeways because they were so messy. Does the library clean their restrooms?”
Whisler said, “I think, yes. There are waste baskets to empty.”
“Someone still has to empty them,” Miller said.
Proposed Bond
Paul Stauder gave a long presentation at the beginning of the two-hour meeting on the various options the board has for bonds and millages to finance the bonds.
Stauder explained there is the District Library Financing Act #265 of 1988 that explains what can be done.
Kalamazoo went out for bonds on the back of an operating millage. Ann Arbor had two or three like that, saved the money and then built, he said.
“Some think a millage request is easier than a bond,” he said. “It is. But, if the tax suffers because of reduced property values you still have to pay the bonds.”
Stauder said he will assist in the structure of the bond and move it out to the market, schedule the bond sale, and assist in the preparation of initial bond language.
He also will assist in getting credit ratings for the bond, so the investors can decide. He said his firm uses Moody’s and Standard & Poor for an opinion on the credit rating of the issue. The agencies give an opinion of the risk, the ability to repay the bonds. They looks at trends (growth or decline), finances and the size of the community.
“As a library, you are a single-purpose entity, which they may view as non-essential,” he said. “This tends to affect the rating, as well…
“If you levy a tax, you can pay it,” he said.
Stauder said there are different ways to approach this, using simple terms:
• Vote a millage for operation and construction and make it adequate;
• Vote a bond for the building project and a separate millage with unlimited funding; and
• Ask for permission to issue bonds for the size of the project and a second question of shall the library millage be increased to have funds to pay for it?
Clarifying the situation, Stauder said limited millage is like a person borrowing money and paying for it out of his income.
Unlimited millage can increase your revenue to pay for bonds, which has a lower rate and is treated more favorably.
The board seemed in favor of an unlimited millage to pay the bonds.
Treasurer Elaine Gutierrez asked how the library pays him, as bond consultant.
Stauder said he is paid when and if the bond passes and he is compensated from the bond. He said the bond also will be the costs and other fees for the bond, including credit ratings and legal fees.
He said he will put together projections of the millage and repayment and if they need a half mill more to operate a new facility, they could put that in.
But it would be a limited term, up to 20 years, and the millage would have to be renewed, if not in perpetuity.
He gave some examples: for a 20 year, $17.5 million bond, one mill would be needed. For a 25-year, $17.5 million bond, .8 mill would be needed.
He said he used for the proposed interest rate for the bonds ½ or more than the market is paying now to allow for market fluctuations.
The bonds would require semi-annual payments and would be tax-exempt, so an investor doesn’t pay federal tax on the interest.
He said it would take six months to put the election together and vote after getting the cost of the project. After the vote it will take two months to market and offer the bonds and then two weeks to complete.
Green said the bond language needs to be to the county 84 days before the election.
Secretary Joy Cichewicz said the information for the ballot is needed by mid April, so the board should plan on approving it at its April 8 meeting, so it will be ready by the first of May.
“You’ll want real numbers available at that point to educate the public,” Stauder said.
“If we put the bond and operating questions on the same ballot and if one doesn’t pass… what do we do?” Cichewicz asked.
Stauder recommended they get a bond attorney to talk to them.
Whisler asked if the Detroit bankruptcy is impacting library bonds across the state and Stauder said, “Not currently. For six months it did, but now it’s settled down.”
Whisler also asked about taking into account the interest earned from the bond money. Stauder said it used to be a very significant amount, but now it is very nominal.
Whisler said the library will get the money two months after the election, but the major costs are a year and a half out, so they actually will earn money. But, if you earn too much, you have to give it back.
But, for an $18 million project, you could borrow only $17.1 milllion.
Stauder said if it is approved in the August election, the library will get the money in October. He said banks, mutual funds, and insurance companies usually invest in library bonds. He said libraries are his firm’s specialty.
Whisler said they have to work together to determine what amount this community is likely to support.
He said Stauder has a millage calculator a person use to plug in his home value, income, and other particulars to educate the public on how much they will pay.
In other business at the Nov. 12 meeting, the board:
• Agreed to contact Conrad Welsing of Belleville, a retired Detroit Library official who helped pass their millage and has volunteered to help pass the district library millage;
• Approved ordering name tags for board members to wear out in the community so people can ask them about the library. Cathy Steigerwald’s business makes the tags at $7.50 each; and
• Approved the job evaluation report on Director Green, as presented by Personnel Committee chairman Michael Boelter, who said only five of the seven board members participated. The evaluation was done by individual members doing scores on paper, with 6 being the top score, and Green getting an average score of about 5.4, with only the final results presented. They also extended her contract for one year. They offered a raise of 2.5%, which she declined, saying to put it in the building fund.