Finance staff tells commission bonding is only viable way to fund $13.5M city hall project

Danielle, a city finance staff member, told the Mount Clemens City Commission at a work session that bonding is the only realistic way to finance the proposed $13.5 million purchase and renovation of the city hall building.

She said the commission has a five‑year forecast (2025–2031) showing an unaudited fund balance of about $13 million for 2025, and that paying the city‑hall project in cash would push the city into a deficit. "Clearly, we cannot pay that out of cash. It's just not possible. We'll go into a deficit. So bonding is the only option to do this," Danielle said.

The forecast assumes modest revenue growth (roughly 1–3% yearly in most lines) and 3% annual increases in many expenditures; capital outlay for other projects — including a fire truck and a DPW garage — remains in the plan. Danielle said the five‑year projection shows the city would be slightly under its fund‑balance policy by 2031 (about $20,000 below the policy threshold) largely because of an expected $2 million outlay for the Crocker Street Bridge, but that staff expects recovery in the following year.

Bond counsel Jeff Aronoff (Miller Canfield) described the likely legal route as a limited‑tax general obligation capital improvement bond that would pledge the city's existing taxes without authorizing any additional levy. He explained the statutory notice and referral process: after a published notice of intent there is a 45‑day window during which a petition signed by 10% of registered electors would force a referendum on the bond issue. "There's a publication in the paper. So while there's no election, the community still has a referendum right," Aronoff said.

Financial adviser Steven Haydock (Benzinski and Company) said the city's AA‑minus rating should help keep rates relatively low and that staff used a conservative 4.5% interest assumption for planning; he added that bonds sold at market on the sale date set the final interest rate. Staff estimated roughly $1 million in annual debt service under the illustrative 20‑year schedule and noted the proposed bond could package several projects: the $13.5 million general‑fund portion for city hall, plus about $5 million for water and $2 million for sewer, with issuance costs increasing the total par amount.

Next steps described by staff include deciding whether to authorize a notice of intent to begin the referendum clock and continuing design and timing work; staff indicated a bond sale could be targeted near the end of 2026 if the commission moves forward. The commission did not take a formal vote on bond authorization at the work session.

The city will return this item to a future meeting for any formal resolutions or authorizations required to proceed.