County financial advisors say projects are feasible but flag $3M short-term gap without new revenue

Grand Traverse County commissioners heard that three proposed capital projects could be financed within the county's current revenue footprint under conservative assumptions, but only if certain incremental revenues or policy choices are applied.

Steven Burke of MFCI, the county's financial adviser, told the board his firm ran three scenarios using 30-year amortizations and a conservative 4.75% interest-rate assumption. Under the baseline scenario, which assumes no additional cannabis revenue or TIF (tax increment financing) receipts, Burke said the county would face a shortfall of about $2,000,000 over the next decade. "I think the most important things here as we look at this are I think all of these projects can be completed within the existing revenue footprint," Burke said, while also noting the baseline scenario comes up short in early out years.

In scenario B, in which the county applies all existing cannabis revenue to debt service, the model shows a sustained positive balance. In scenario C, where a smaller, time-limited match of cannabis dollars is used for the earliest years, the cumulative fund balance remains positive for the modeled 30-year window. Burke described the differences as primarily timing mismatches driven by several known debt roll-offs in the 2030s (notably pension-related bonds and a health-department bond).

Commissioners pressed staff on several assumptions built into the modeling. One point of contention: the presentation modeled Project Alpha at a lower net bond amount than Cunningham-Limp's prior $27M'$31M estimate by assuming up to $13,000,000 in non-bond down payment sources, including a possible suspension of the fund-balance policy, proceeds from a PACE sale, and other identified funds. Administration said that approach was designed to reduce the amount that would need to be bonded but acknowledged the board must decide whether to suspend the fund-balance allocation.

Several commissioners said their willingness to rely on a recurring $3,000,000 transfer to a debt-service fund (included in the draft FY2026 budget) depends on whether that amount is sustainable without cutting services or understaffing critical functions. Finance staff said the draft 2026 budget builds the $3,000,000 into projected revenues and will be revisited after the 2025 audit; officials stressed sustaining that transfer will require ongoing fiscal discipline.

Burke noted assumptions are illustrative and market-dependent: "For these assumptions, we assumed a 4.75% rate," he said, adding rates could change materially and that sequencing projects differently would change the debt-service profile. Commissioners and staff agreed that a consultant to model sequencing, costs and alternative financing tools would be helpful before committing to a final project package.

The board did not take a formal vote on any capital authorization at the meeting; members asked staff to refine assumptions, provide further detail on down-payment sources, and proceed with a consultant procurement to analyze sequencing and funding options.