By JOHN EBY
Dowagiac Daily News

CASSOPOLIS – Action taken by the Cass County Board of Commissioners Thursday night authorizing the sale of $10.5 million in bonds for the Diamond Lake and Donnell Lake water supply system affects Dowagiac.

Supervisor Richard Mickey said Penn Township last Monday resolved to give the Village of Cassopolis its required year notice to exit a 40-year contract and to pursue a memo of understanding that the Board of Public Works negotiate an agreement for Dowagiac to take over maintenance of the system with a useful life of not less than 40 years.

“The county BPW agreed with the memo of understanding last night,” Mickey said, “so now it’s a matter of working out a contract. That’s exactly where we’re at with the project.

“The Village of Cassopolis water system and the Penn water system are connected and they will remain connected, but as far as operation of the system, the village will not be maintaining our portion,” Mickey said.

According to Detroit bond attorney Joel Piell of Miller, Canfield, Paddock and Stone, the bonds are to be offered to Rural Development as Build America Bonds pursuant to the American Recovery and Reinvestment Act of 2009.

Build America Bonds carry with them certain requirements, including wages, Buy American and reporting.

The trade-off is a 35-percent subsidy which “would dramatically reduce the interest cost to the townships,” Piell wrote June 10 to Commissioner Robert Wagel, R-Wayne Township, who chairs the Board of Public Works.

The interest rate is not to exceed 3.25 percent.

According to the county commission’s Resolution 91 of 2010 authorizing the Cass County Water Supply System limited tax general obligation bonds for Diamond and Donnell lakes, the borrowed sum will be issued in two series, $9 million and $1.5 million, payable in principal installments on Nov. 1 each year from 2011 to 2050.