The Van Buren Township Downtown Development Authority authorized the issuance of Tax Increment Revenue Bonds in the maximum amount of $4.9 million to finance the capital costs of the Ecorse/Belleville Road intersection work.
Bond attorney Robert Schwartz explained that 20-year bonds, at no more than 6% interest, will be secured only by the tax increment revenues collected by the DDA and there is no liability on the part of the DDA Board or personal liability to its members.
Also, the township has no responsibility whatsoever, he said.
The DDA also approved a Defeasance Resolution that reflects a budget implication of $3.7 million, that deposits existing DDA funds into an escrow account to pay off bonds originally issued in 2005.
Schwartz said the decision to do that is based purely on economics. The bonds are bearing 5% interest and the DDA has the ability to buy government securities and put them in escrow for about 2 years. At the end of 2 years, the DDA can pay off the 2005 bonds at a substantial savings to the DDA.
Schwartz noted that the underwriter, Fifth Third Securities, said it would behoove the DDA to borrow a reserve fund of up to 10% of the total amount to set aside in case the DDA’s tax increment revenue slides downwards.
“We would have this reserve fund to draw on to pay the bonds,” Schwartz said. He said the City of Troy DDA is currently in default. They had $26 million in bonds secured only in tax increment revenues.
Schwartz said assuming the reserve is not drawn on, at the final maturity that reserve is used to pay off the bonds.
Also, Schwartz is also looking at bond insurance.
In other business at the Oct. 23 meeting, the DDA:
• Set a special budget meeting for 4 p.m., Tuesday, Nov. 6, to discuss the effect of the Wayne County Zoo Millage on the budget;
• Heard an update on the Ecorse / Belleville Road Intersection Project, which is working toward a November winter shutdown. During the winter shutdown, Ecorse road traffic will flow in two lanes on the existing westbound lanes and Belleville Road will flow four lanes;
• Heard DDA Director Susan Ireland report that the DDA continues work to acquire easements from property owners on the east side of Belleville Road for a sidewalk project between Tyler and Ecorse roads;
• Discussed the work of Communications Associates, which is working on the DDA website and also is developing a DDA brochure promoting the DDA area as, “Not Just Your Typical Downtown”;
• Determined there are about 17 spots including 170 feet of curbs along Belleville Road that need repair and quotes will be obtained. Also, 18 trees need replacement and six need wound care from weed trimmer damage. Trees in front of Fifth Third Bank and Applebee’s may have been sprayed with Dupont’s Imprelis by the DDA landscaper, which killed the trees;
• Approved paying for the purchase by the Parks and Recreation Department of five portable scoreboards including covers and tripods, at a cost of $10,725. They will be housed and used at Quirk Park;
• Approved paying $24,750 to Axiom Construction Group to repair a construction glitch in the roof flashing of Fire Station #2. The Axiom bid came in $9,000 less than D.C. Beyers and includes a one-year warranty;
• Approved a proposal not to exceed $42,000 from McKenna Associates for landscape design services in the Ecorse/Belleville Road interchange; and
• Approved paying $900 for a full-page ad in the Belleville Area Chamber of Commerce Profile and Membership Directory for 2013.