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After a weird little bit of web updating, almost all of the information regarding the Water Street project has vanished from the City of Ypsilanti’s web site. Gone are the frequently asked questions. Gone are the references to Biltmore Properties. Gone is absolutely everything that predates the involvement of Joseph Freed & Associates.In its place is a bland overview along with a worksheet for comments that everyone really should fill out and mail back to Joseph Freed & Associates.
Slipped in mysteriously as part of the consent agenda for Tuesday’s council meeting is a resolution approving a Brownfield Redevelopment Plan for the Water Street project. Once council approves the resolution, the plan will go to the Washtenaw Brownfield Redevelopment Authority and the Board of Commissioners for their approval.
The main purpose of the Brownfield Plan is to have collateral against which the City can issue up to an additional $12M in bonds. It should be noted that that approval of the plan does not obligate the City to issue said bonds, however, it is likely the bonds will be issued in order to pay for the completion of demolition and soil remediation of the current site. It was also pointed out to me the bonds could go towards infrastructure to support the Water Street Project.
After refinancing $13.1M in bonds back in April of this year, the City is now responsible for $15.74M in debt. According to the bond repayment schedule, the total amount the City will pay back on this investment is around $31.9M.
The City has also spent $8.99M in grants on the project with $2.5M of that coming in the form of loans.
Now the City is looking for collateral to float an additional $12M in bonds. From the Brownfield Redevelopment Plan, we see that the cost of this venture will be $23.2M over the life of the obligation.
Here’s where the nomenclature and mathematics get weird.
The total amount of present day debt will balloon to $36.73M as soon as the $12M in bonds are issued.
The total amount the City will pay back on all of this will be $64.09M.
When a person takes out a mortgage, they sign a document that says how much they will pay on the loan if they stick to the payment schedule. If you have a $100K mortgage, you are likely to repay more than $300K over the 30 year life of the debt (depending on the interest rate and assuming you don’t pay it off sooner). The thing is, no one says they have a $300K mortgage. They say they have a $100K mortgage.
The City of Ypsilanti doesn’t have a $64.09M debt. The City of Ypsilanti has a $36.73M debt.
Water Street apologists will be quick to point out that the City is only obligated to pay the $15.74M in bonds as well as the $2.5M loan or $18.2M. That’s absolutely true. The remaining $18.53M of present day debt will be paid for by grants and the Brownfield TIF capture.
Regardless, it’s still taxpayer money. It’s not found money.
The $23.2M in the Brownfield plan is funding we will be siphoning away from the schools. It’s a totally legal, totally ethical way of finding revenue to finance redevelopment projects such as Water Street, but it’s still taxpayer money. There still deserves to be some oversight on the project. At the very least, there should be some discussion on this issue rather than placing it in the consent agenda.
UPDATE: Okay. I blew it a little on this one. The School Debt portion of the TIF is replaced by the State, so no siphoning of school funds takes place. However, with the State’s revenue being finite, the school funding that is replaced by the State is siphoned from somewhere. Sorry for making this less complex and more than negative than you’re normally accustomed.
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