By SUE SUCHYTA
Sunday Times Newspapers
LINCOLN PARK – The city needs to upgrade its credit rating before issuing approved bonds to repair city roads, City Manager Matt Coppler told city officials at the Dec. 3 council meeting.
Coppler said he recently met with the city’s bond counsel and its financial services company about the 2013 bond proposal to upgrade the roads which are the city’s responsibility, as opposed to state and county roads.
“One of the things that was preventing us from doing that was we do not have an investment grade rating from (Standard and Poor’s) credit rating agency, so you would not be able to go the traditional route to put your bonds out there,” Coppler said. “However, the market has changed a little bit, and our financial services person suggested that, like a couple other communities in the state of Michigan, we do private placement.”
Coppler said that means that instead of going through the traditional bond process, which requires a certain credit rating, and a portfolio of financial statements to go out into the market directly, they are able to negotiate directly with different companies that will buy the debt from them.
The city of River Rouge recently went this route, Coppler said, for road repairs, as had the city of Detroit.
“We’ve opened up the door for the potential for us to actually fulfill that citizen elector acknowledgment that looked to put $12 million into our road system and then pay it off over a period of 10 years,” Coppler said.
Coppler said it would be split up into three separate bond issuance through private placement, and he would bring experts in to a council study session to explain the process and implications to council members in more detail.
Coppler said the first year, during the 2019 construction season, would spend $1.7 million in the standard roads programs that the city does, but the 2019 road bond would spend an additional $2.3 million.
The second year, in 2020, would spend $4.5 million, which includes the city’s $1.5 million regular allocation for road repairs, Coppler said, adding that some state and federal road projects are scheduled for 2020 as well.
“2020 will be a very active year if we decide to do that,” Coppler said. “We would be issuing $6.7 to $6.9 million in bonds over the three-year period, for the three different issuance, in 2019, 2021 and 2023, and we are only issuing the bonds for the work that we can get done in a two- to three-year period.”
Coppler said one of the practical issues the city faces is the capacity to do a lot of projects.
“The way that we laid out the actual construction is probably the best that we are going to be able to do in the short amount of time, so to do much more, you really are going to be stretching that out much longer,” Coppler said. “We are going to do everything we can to get this done in a six year construction cycle.”
(Sue Suchyta can be reached at [email protected].)