“County Commissioner Fred Miller, a Mount Clemens Democrat, said the revitalization of downtown buildings would be a boost to his town, the county seat, and eliminating long-term liabilities in health care benefits would put the county on a sounder footing. “It’s the responsible thing to do. We’re stepping up to the plate and living up to the promises we made to retirees,” said Miller, who chairs the Board of Commissioners’ Finance Committee. “We’re talking about hundreds of millions of dollars. I would not say this is a gamble … but it is not without risk.”
BOND SALE WOULD FINANCE HALF-BILLION DOLLARS IN MACOMB COUNTY PROJECTS
The Macomb Daily
by Chad Seleweski 6/5/14
Macomb County officials Thursday took the first step toward approval of a massive project to eliminate long-term debts related to retiree health care benefits and to finance major upgrades to county buildings in downtown Mount Clemens and at other sites across the county.
The plan, which could come with a price tag of as much as a half billion dollars, would be financed mostly by a 25-year bond sale, though it would also require tapping into the county’s “rainy day” fund.
Some $340 million would eliminate staggering debts racked up by the Board of Commissioners for decades as it promised lifetime health care to its retirees without setting aside the necessary funds to pay for it. In the past, retirees’ spouses were also entitled to unrestricted health care.
Another $35 million would pay for improvements at the five county buildings that dominate the downtown Mount Clemens area. Yet another $57 million would finance a list of about two dozen long-needed repairs at other county facilities, including the jail, that consist of basic upgrades to roofing, plumbing, electrical units, and heating and cooling systems.
The sum total of all this is $432 million.
County Commissioner Fred Miller, a Mount Clemens Democrat, said the revitalization of downtown buildings would be a boost to his town, the county seat, and eliminating long-term liabilities in health care benefits would put the county on a sounder footing.
“It’s the responsible thing to do. We’re stepping up to the plate and living up to the promises we made to retirees,” said Miller, who chairs the Board of Commissioners’ Finance Committee. “We’re talking about hundreds of millions of dollars. I would not say this is a gamble … but it is not without risk.”
Because of the gravity situation, County Executive Mark Hackel was expected to make a rare appearance before the board – only his second since taking office in January 2010 – but the lengthy Finance Committee meeting that preceded the full board session caused a scheduling problem.
Macomb officials stopped funding their retiree health care system in 2004 when the county began to face tight budgets. Recently renewed payments cannot keep up with labor union contract requirements that call for annual payments of $30 million now and $35 million by 2023.
But yearly expenditures at that level could devastate basic county services or create quickly growing budget deficits.
The commissioners are following a complex, highly regarded solution put into place several years ago by neighboring Oakland County. A massive $557 million bond issue in 2007 laid the groundwork for the end of Oakland’s long-term unfunded liabilities associated with retiree health care.
As for the 5-year plan to upgrade buildings, that would tackle – though not eliminate — the huge backlog of county capital improvement projects that have been delayed over several years as tax revenues fell and budgets tightened.
In addition to bond money, the Downtown Revitalization Project calls for a cash infusion of up to $10 million in upcoming insurance settlement money derived from the 2013 electrical fire at the old County Building that has shut that 13-story facility for more than a year.
“We initially thought that $10 million was pretty conservative,” said county Finance Director Pete Provenzano. “We thought it should be up around $19 million. But now it looks like we should expect something between $5 million and $10 million. We’re hoping for about $8 million.”
The sprawling plan for the downtown facilities features several major moves: remodeling the entire shuttered County Building; substantial upgrades and the addition of new courtrooms in the Court Building; and the filling out of two floors that have been left vacant in the Administration Building since it was opened in 1998.
The projects would also lead to resettling some of the county’s busiest departments, including the Clerk’s Office, Circuit Court, Juvenile Court and Friend of the Court. The adjacent Clemens Center, plus the Talmer Bank administrative building, recently purchased by the county for $1 million, would also play roles in the reshuffling.
Overall, the proposed $340 million fund would initially consist of revenues from a $270 million bond sale, $40 million from the county’s “rainy day” account, and $30 million from a revolving fund that deals with delinquent property tax payers.
New labor agreements reached with employee unions last year took the first step toward plugging the financial hole by eliminating retiree health care for workers hired on or after Jan. 1, 2016.
The commissioners on Thursday also approved a motion to hire a bound counsel and a financial adviser. The board will vote June 19 on a variety of options, from limited capital improvements to all proposed building renovations and the full payoff of retiree liabilities.
If a bond sale is approved, that would take place in November.