Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Finance topic
No spam. Unsubscribe anytime.
City staff recommends bonding to fund $13.5 million city hall purchase; counsel outlines referendum rights
Summary
City finance staff told the commission that bonding is the only feasible way to pay for the proposed $13.5 million city hall purchase and renovation, citing an unaudited fund balance of about $13 million; bond counsel explained the 45‑day notice and 10% petition right that can force a public vote.
Danielle, the city's finance presenter, told the Mount Clemens City Commission that the city cannot pay for the proposed purchase and renovation of a building at the $13,500,000 figure discussed in prior sessions and recommended financing the project with a bond issue. "If the city was to approve the purchase of the building tonight and then renovate that building at the $13,500,000 ... the best way for the city to afford that is to actually bond out the project," Danielle said.
The recommendation comes after staff described an unaudited 2025 general fund balance of about $13,000,000 and a five‑year forecast projecting a year‑end fund balance near $11,700,000 in 2031 under the combined capital program. Staff noted that the forecast assumes modest revenue growth and typical expenditure escalators and that certain grant dollars are being rolled from fiscal 2025 into 2026 for presentation purposes.
Why it matters: city officials said cash would not cover the full cost without creating an immediate shortfall. The staff plan also bundles other planned capital borrowing to reduce issuance costs: presenters discussed a combined bond package including roughly $5,000,000 for water, $2,000,000 for sewer and $13,500,000 for the general fund, which they estimated at about $28.85 million in total.
Bond counsel Jeff Aronoff of Miller Canfield summarized the legal structure and public‑participation process for the proposed debt. "It would be what we call a limited tax general obligation capital improvement bond," Aronoff said, explaining that such a bond pledges existing city taxes and general funds but does not authorize the levying of any additional tax. He described the statutory referendum mechanism: publication of a notice of intent starts a 45‑day period in which a petition signed by 10% of registered electors can force the nonvoted bond issue onto the ballot.
Financial adviser Steven Haydock (Ben Sinski & Company) said he used a conservative 4.5% interest assumption for planning purposes; given the city's AA‑minus rating he said market rates at sale could be a bit lower. Staff estimated annual debt service of roughly $1,000,000 per year over a 20‑year amortization, based on the assumptions presented.
Questions from commissioners centered on timing and limits: staff said they would likely look at a bond sale toward the end of 2026 if the commission chooses to proceed, and counsel reiterated that authorizing a notice of intent does not itself authorize issuing bonds. Staff also reminded commissioners that the city's fund balance policy permits a one‑year dip below the minimum so long as the next budget year shows recovery.
Next steps: no ordinance or bond authorization was adopted at the work session. Staff said that if the commission chooses to proceed, a resolution to publish the notice of intent and follow‑up briefings would be presented; the notice triggers the statutory 45‑day referendum window and, absent a petition, would permit bonding steps to continue.
