City plans to take out $3.3 million in loans to pay for parking lot, street repairs

Via Cadillac News
By Chris Lamphere

CADILLAC — Officials in Cadillac hope to fund several miles of street repairs and a parking lot improvement project by taking out $3.3 million in loans.

Following council approval of this plan on May 16, city staff last week ran notices in the Cadillac News of their intent to “issue municipal securities in one or more series, in an amount of not to exceed $3,300,000” over the course of 15 years.

In layman’s terms, this means city officials intend to solicit loans the city will pay back through multiple sources of revenue, including the street fund and Downtown Development Authority.

While this would cause the city to go into debt, Director of Finance Owen Roberts said this type of financing plan is “really good news for the city.”

Roberts said the issuance of these bonds will not result in additional taxes or costs for residents because the money that will be used to pay back the loans already has been budgeted.

“We couldn’t raise taxes without a vote of the people,” Roberts said. “The city is already able to cover this debt service. We’ve been planning for this for two or three years.”

Historically, the city has been very conservative in taking out loans of this type, Roberts said.

For instance, while the city is allowed by the state to take out up to $25 million in this type of debt, the $3.3 million would be the most owed by the city in more than a decade.

“The city hasn’t had debt financing of this type since 2004,” Roberts said.

Once the city receives bids on these bonds from financial institutions, council will be required to approve the eventual issuance of debt.

Roberts said this could happen as soon as July.

If approved by council, the $3.3 million in debt will equate to about $230,000 owed each year by the city over the next 15 years.

Out of the total $3.3 million, Roberts said about 2/3 will go toward a total of four miles in street repairs and the remaining amount will fund improvements to the parking lot near Elk Avenue as part of the The Plaza at Cadillac Commons project.

The street repairs include re-paving work on a number of roadways outlined in the city’s capital improvement plan over the next three years.

Streets slated for work include East Garfield, Simons, Selma, Marble and Crippen, to name a few.

As part of the process for soliciting loans, residents have the right to force the issue to a vote if at least 10 percent of the city population sign a petition to do so.

Roberts said anyone with questions about why the city is taking this action is welcomed to contact him directly at (231) 779-7333 or through email at oroberts@Cadillac-MI.net.