CCRC Gets OK for Construction Bond Issue

By DIANNE ALWARD-BIERY

Cleaver Senior Staff Writer

HARRISON – Some 50 years ago, the Clare County Road Commission underwent a huge construction project, which resulted in construction of the current CCRC 80- by 100-foot garage addition and new office building. Respectively, the two portions were projected to cost $76,700 and $89,000. That massive project was approved by the BOC on Feb. 4, 1974, and financed by a $150,000 20-year bond issue, along with monies then currently in the Building Fund. The final payment of $$10,000 on the existing garage facility was to be paid the following May.

But as the march of time always reveals, new was then and old is now. Dewayne Rogers, Clare County Road Commission managing director, along with staff and county road commissioners, have been working on a plan to correct the facility’s ever-mounting deficiencies through construction of a brand new facility.

Rogers approached the Clare County Board of Commissioners Oct. 16 to present a plan for a new facility, along with a process for funding it via municipal bonds. Rogers drew commissioners’ attention to a handout that noted the facility’s current deficiencies along with the benefits to be realized with a new structure. Deficiencies included: Structural integrity [foundation, rusting steel beams in garage, built in 1963 and updated in 1975]; ADA compliancy; Women’s locker room [current female drivers have to use office facilities]; Equipment storage; Fire suppression [smoke detectors, sprinkler system]; Testing lab [basically nonexistent]; Heating and cooling [boiler/piping issues]; Mechanic shop [ventilation, heavy equipment area, fabrication area].

Benefits included: Staging for emergencies [i.e., working with Emergency Management during a large weather event]; Parking garage [weather protection for all vehicles/longevity for equipment]; Board room large enough to accommodate large community service/trainings/informational meetings; Meeting code regulations; Future insurance savings; Energy efficiency; Same location [retaining current outbuildings, salt shed, enabling continuous service throughout the project]; and Adequate parking for both staff and the public.

Rogers also noted having done some exploration of financing options, which led to the realization that a municipal bond would be a better option than a private bond which would have higher interest (thus higher cost) or a USDA loan which would add time and cost by requiring the project be bid and pay prevailing wage costs. He was direct in his choice for cost.

“The municipal bond route is by far the best option for the Road Commission,” Rogers said.

In attendance was Gary Rae with F.E.D., which has been the CCRC’s construction management group, working on the design and overall plan for the facility. Rogers also was accompanied by two other gentlemen, whom he described as the experts who had been providing financial and legal advice on the project.

Eric McLaughlin, a partner with Dickinson Wright, informed of the municipal bond process which would include publication of a notice of intent to issue bonds that starts a 45-day referendum period. He said if no referendum is requested, the county will have at that point obtained the authority to proceed and issue bonds. He said the notice states the maximum principal amount, describes the project that can be financed with the proceeds of the bonds that are to be issued, and explains the right of referendum to the electorate of the county. McLaughlin noted the proposed resolution before the Board also satisfied the requirement under the federal tax code; the current plan was to issue tax-exempt bonds, and under the tax code the county would be able to reimburse any expenditures made before issuing the bonds by adoption of the resolution.

He further stated that adoption of the presented resolution did not require the county to issue bonds, or to issue bonds in any particular amount; that would be established in a next step in the process, to include establishing the parameters within which the bonds could be issued, to be followed by a sale of the bonds, closing documents and closing proceeds.

Following McLaughlin was Andy Campbell, a registered financial advisor with Bendzinski & Co., whose company was charged with providing independent financial advice to the County and the CCRC. His company’s part is to review all the various financial options available in terms of possible sale options, and advise independently on what is the best route to get the best financial terms for the County and the Road Commission. Campbell further elaborated on the financial options listed above, starting with the USDA, which he said is usually considered the lender of last resort, noting that option was quickly ruled out. He said the credit terms and overall process is expected to be more positive financially through a public bond issue. Campbell also said a private bond [generally sold to banks] was ruled out as a bank is unlikely to issue a bond in the project term length needed, coupled with banks having higher interest rates currently than the public market. He also explained that the municipal option would include a competitive sale for the process to get the best financial term.

Part of that process would be to obtain a bond rating for the county, accepting every bid possible by a specific date, and the best financial bid would win. He clarified for the Board and the public that there is no expectation of a new tax, as the bond payments would be structured into the current Road Commission budget. Campbell said the sale is anticipated to take place in early February and a conservative interest rate is being estimated at 4.36%.

Rogers informed that the estimated $10 million project cost would include a new office area, parking garage, and mechanic shop area.

“The idea is to build the new one,” Rogers said. “Stay functioning in the old one, so we never miss a beat, and move to the new one.”

BOC Chair Jeff Haskell then asked Rogers if his budget looked good, so he could afford the project.

“Yeah,” Rogers said. “I put a lot of thought into it; that’s how I function. I want what’s best for the community, the county, the road commission going forward. This is a long-term fix; I think we’re kind of in that area where it’s do it or figure out some other option. We’re certain we’ve got things figured out.”

The Board then moved on to passage of motions to adopt the resolution of intent to issue limited tax general obligation funds; approve the financial advisement contract with Bendzinski & Co.; and the agreement between Clare County and Dickinson Wright for legal representation to the County as Issuer of Bond.

With Haskell offering a wish of “Good luck to you,” the gentlemen stepped away – and the process had begun.

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