Commissioners delay action on Cassopolis fund requestPublished 8:41am Friday, April 2, 2010
By JOHN EBY
Dowagiac Daily News
CASSOPOLIS – Cassopolis Public Schools Superintendent Gregory Weatherspoon hoped the Board of Commissioners would assign $3,952,000 in Recovery Zone Economic Development Bonds awarded to Cass County to his district.
Cassopolis wants to apply these funds to its $16 million bond proposal district voters passed Feb. 23 to renovate and to expand Sam Adams Elementary School.
Building 57,000 new square feet, renovating 37,000 square feet and demolishing 34,000 square feet impacts 700 students.
Currently an elementary for grades three to six, when completed Sam Adams will house grades K-six. It will trim operating costs for the district by reducing two facilities to one.
“We are looking at various financing measures to make this project as least expensive for taxpayers and this financing will help us accomplish this goal,” Weatherspoon wrote to Chairman Robert Ziliak March 9.
In fact, Cassopolis Public Schools Business Manager Scott Thomas advised commissioners Thursday night that accelerating its building schedule could save architect, engineer and construction manager fees which could be plowed back into bricks and mortar and ultimately save taxpayers half a million dollars.
Plus, Commissioner Ed Goodman, R-Silver Creek Township, pointed out, such a gesture would bring jobs with it “and we need jobs. There are probably lots of places we could use the money, but none of them are ready like this one is to get the ball rolling.”
However, where there had been little interest expressed in the previous year in Recovery Zone Economic Development Bonds, suddenly other projects, from the Parks and Recreation Commission to the county’s own desire to renovate the 1899 courthouse or replace it with a more modern office building began clamoring for the stimulus.
Thomas introduced another variable.
Thanks to funding from another source, Cassopolis only needs $2.6 million, leaving $1.3 million for pet projects such as the parks.
Thomas said Cassopolis has a bond planning meeting April 13 to determine the feasibility of an accelerated project.
“We need to know what interest rate we’ll be paying,” Thomas said. “Recent changes that came out of legislation Congress passed last week gave us additional funding as part of the stimulus grant known as the qualified school construction bond. We actually would only be seeking to use $2.64 million.”
“If this doesn’t pass,” Thomas told Commissioner Debbie Johnson, D-Howard Township, “we would have to go out for traditional financing at a higher rate which, in the long run, will cost taxpayers more over the life of the bond and, potentially, not be able to accelerate the schedule, which would save about $500,000.”
Thirteen commissioners voted 7-6 to postpone indefinitely, with Johnson, Chairman Robert Ziliak, Goodman, Cathy Goodenough, David Taylor and Vice Chairman Ron Francis opposed to delay.
Bill Steele and Minnie Warren were absent.
Commissioners next meet at 7 p.m. April 15.
The Cassopolis school board meets April 19.
Commissioner Robert Wagel, R-Wayne Township, said the county completed a study 18 months ago dealing with renovation of the 1899 courthouse or constructing a new building.
“This building is not in compliance with ADA and the elevator is on its last legs. People have been stuck in the elevator. I don’t have anything against the Cassopolis schools, but we need to think about Cass County first. I remind the board that we are the Cass County Board of Commissioners – not the Cassopolis Board of Commissioners,” Wagel said.
Besides Cassopolis, Cass County has the Dowagiac, Edwardsburg and Marcellus school districts, plus it overlaps districts in Decatur, Niles, Constantine and White Pigeon.
“I don’t see how we can single out one school district,” Commissioner Gordon Bickel Sr., R-Porter Township, said.
Vice Chairman Ron Francis, R-Cassopolis, asked, “Would this topic be on the agenda tonight if Cassopolis had not asked for these funds? I don’t think so. These bonds have been known to us since February ’09, discussed at workshops and nobody did anything. Now, all of a sudden, because a school district wants to use them, some have got concerns about other schools, parks and a new administration building. Nobody has a plan, at this point, except Cass.”
“This is a bond, not a grant, and it has to repaid,” Thomas said. “Most schools are not able to do projects unless they have passed millages. Chances are, other districts can’t meet the deadline with tight times. They’re not going to take on bonding when they’re talking about laying off staff.”
“Cassopolis passed a bond issue,” Commissioner David Taylor, D-Edwardsburg, agreed. “Nobody else has, and I don’t think anybody else will, but at the same time I agree we should defer and give our parks commission some time.”
Federal stimulus, more formally known as ARRA, the American Recovery and Reinvestment Act of 2009, created two forms of economic development bonds, according to Sandy Gower, county grants and project manager.
They are Recovery Zone Economic Development Bonds (RZEDB) and Recovery Zone Economic Facility Bonds (RZFB).
Every county has been allocated each type of bond. A county has until Dec. 31 this year to obligate its bonds or they revert to the state for reallocation.
Gower said for both types of bonds, projects generally need to be in the $1.5 million to $2 million range.
Cass County’s Recovery Zone Economic Development Bond allocation of $3.952 million was at issue Thursday night.
These bonds can pay for public infrastructure improvements. They are taxable bonds with the federal government returning a 45-percent interest credit to the issuer.
The 45-percent reduction in interest costs would result in a bond issue that is less expensive than a tax-exempt bond. These bonds must be issued for new money public infrastructure improvements (no refinancing).
To access this allocation, the Board of Commissioners by resolution must assign the allocation to the public entity that will issue the bonds.
The amount assigned is up to the Board of Commissioners. Cassopolis Public Schools initially requested the full allocation. There have been no other local requests for these bonds.
Cass County was also allotted $5.928 million in Recovery Zone Economic Facility Bonds.
These are tax-exempt bonds issued to pay for private-sector capital projects. They are similar to economic development corporation bonds or industrial revenue bonds in that they are sold on the private company’s credit.
They may be used for any new money project for any industrial or commercial facility with the exception of residential housing.
These could be issued through the Cass County Economic Development Corp.
Gower has received an inquiry on the use of RZFB funds, but that project remains confidential and in the planning stage, with no formal request made.
Both types of bonds can only be used in an area that has been declared a Recovery Zone.
The Board of Commissioners declared a countywide Recovery Zone by resolution April 1.
A Recovery Zone is an area designated by the issuer as having “significant poverty, unemployment, rate of home foreclosures or general distress.”
Criteria used for declaring a Recovery Zone must be defensible to the U.S. Department of Treasury (IRS).
Gower also acknowledged Cass County received requests from both St. Joseph County and Kalamazoo County asking it to return its allocation to the state with a request it be reallocated to them.
St. Joseph County is interested in the RZFBs for a company it is recruiting.
Kalamazoo County is interested in both the RZFBs and the RZEDBs for a multi-purpose center to be located in downtown Kalamazoo.
Gower recommended the countywide Recovery Zone to “allow both Cassopolis Public Schools project to move forward and any private sector projects that may come forward to access the RZFBs.”
It was the second resolution assigning the RZEDB allocation of $3.952 million that the county board iced for now.
“I’m in favor of every dollar of that being spent in Cass County,” Commissioner Johnie Rodebush, D-Howard Township, said, “but I’m a little hesitant, so I’m going to move to postpone action on this … The parks department has a plan. I know some people here will say, ‘Where have you been?’ I didn’t realize until this week that it was possible for us to use some or all of this money, which will have to be paid back. It’s not a grant.
“The parks department respectfully requested that we postpone action on this and do more discussion and study because for 35 years or more I’ve been on the parks board, struggling to try to get anything to do anything because parks are a low budget priority. Saturday night (of 2,000 Eggs at Lawless Park) proved people are interested in the parks. We need to make the quality of life better. We need some time to get prices on a maintenance building with an assembly area with a tile floor for 150 people where they could teach kids about nature. That’s my dream – and I’ll probably be on the other side of the grass when the cement’s poured for it, if that ever happens,” Rodebush said.