Re-issuing 2002 Building Authority bonds in a 2011 limited tax general obligation series could save Cass County almost $230,000.
The Board of Commissioners set in motion Sept. 15 the refunding process which depends on further action by the Building Authority Sept. 26 to meet an Oct. 31 deadline for a Dec. 1 payoff.
Tom Enright of Leonard Capital Markets, a division of Leonard and Co., conferred with commissioners, advising that the source of funds were the $2.92 million par value of the bonds and $49,037 in transfers from prior issue debt service funds, or $2,969,037 total.
Fund uses, totaling the same $2,969,037 amount, is achieved by depositing $2,867,451 to the current refinancing fund, $67,525 in issuance costs, $29,200 in underwriter’s discount (based on 1 percent of the bond size) and $4,860.83 in “rounding.”
“That amount represents what’s already sitting in the fund to make payment on Dec. 1,” Enright explained. “IRS requires that if you have this cash, you have to put it into the transaction because the IRS always operates from the position of the fewest tax-exempt bonds possible. The biggest piece, obviously ($2,867,451), goes to pay off the old bonds.”
According to the debt service schedule through 2022, the principal is $2.92 million, plus $485,303 in interest, or $3,405,303 total.
“The new issue is no longer or shorter than the issue now,” Enright noted, calling the gross debt service comparison “the heart and soul of it. It shows the $229,443 pure dollar savings. ‘Net present value benefit’ is what that $230,000 is worth over the next 12 years,” $194,576.
”Your resolution says do not complete this transaction unless you can save 3 percent,” Enright said. “If you were in the market today, and this was reality, you’d be saving 6.9 percent. That’s why I impressed upon Charlie (Cleaver, county administrator, who was absent Sept. 15) and Linda (Irwin, county treasurer) the urgency of getting this thing at least positioned to sell.
“It has to close by the end of October because there has to be a 30-day notice to bond holders that their bonds are going to be paid off on Dec. 1.”
Prior bonds of $4.07 million were issued to pay costs associated with construction of the 2004 Law and Courts Building.
The law firm of Miller, Canfield, Paddock and Stone in Detroit is refunding bond counsel; Leonard and Co. Inc. of Grosse Pointe Farms is registered financial adviser; and Robert W. Baird and Co. is underwriter.
Commissioners thanked Irwin for her contribution.
In other business, the commission voted 11-4 for the Michigan State University Extension agreement discussed at the Sept. 1 meeting by which MSU is establishing framework for services provided through four educational institutes — agriculture and agribusiness, children and youth, natural and human assets and health and nutrition.
The agreement can be terminated by either party with 120 days notice.
The annual assessment fee is $46,688, plus $27,500 for a full-time 4-H position.
Commissioners Robert Wagel, R-Wayne Township; Robert Ziliak, R-Milton Township; Dale Lowe, R-Howard Township; and Gordon Bickel, R-Porter Township, voted no.
Commissioners voted unanimously to wish Dan Rajzer well in his retirement at the end of the fair and future endeavors.
Rajzer began in February 1994 as director and agriculture agent for the Cass County MSU Extension Office and was responsible for planning and conducting education programs in agriculture and natural resources and community and economic development.
Under MSU’s restructuring, field crop expertise will be available from Van Buren County’s Bruce MacKellar of Decatur, who lives near the county line.
Voting on three nominees submitted by each political party, commissioners named the two incumbents, Republican Tina Van Belle and Democrat Mae Knilans, to new four-year terms on the Board of Canvassers.