Dearborn Heights council approves $1.5 million short‑term loan from water fund after debate over interest rate

The Dearborn Heights City Council approved a temporary $1.5 million loan from the water fund to the general fund to address a cash‑flow gap caused by delayed sales of city‑owned properties.

Councilman Saab moved the measure and the council debated the interest rate before voting. The administration's original motion set a 5% rate, but council members discussed alternatives ranging from 1% to 3.9%. After exchange and legal clarification that the rate should reflect a market-driven, objective return, the council amended the motion and approved the loan with an interest rate of 2% and a repayment deadline tied to property-sale receipts (to be repaid by June 30, 2027).

During the discussion, several council members and the mayor stressed the operational need for the funds. One speaker said selling properties quickly would relieve pressure, while others warned that borrowing from an enterprise fund may affect utility rate calculations. The city attorney noted that interest on interfund loans is customary and should be objective and defensible.

Finance details provided in council discussion: the loan is described as a cash‑flow measure, not a budgeted revenue item, and the administration indicated the city anticipates proceeds from property sales that will be applied to repay the loan. Council members requested additional follow‑up on appraisals and the schedule for property sales.

A roll-call vote recorded the motion as carried after the amendment. The council directed staff to provide follow-up details on the property appraisals and repayment plan.