House bills could give city more time to pay off debt
STANDISH — Five bills in the Michigan House may give the city of Standish more time to pay off its bonded debt, possibly saving residents from high rate increases and loss of services.
House Bills 5550 – 5554, according to a statement from Rep. Jeff Mayes’ office, would allow municipalities to restructure debt by extending repayment periods, issue new bonds to pay off existing ones and provide bond refinancing.
“Let’s say the original bond was to be repaid in 20 years, maybe you could extend that out to 25 years. … You’re not going to get an endless loan,” Mayes, a co-sponsor of HB 5550-5554, said. “It allows for these communities to, in a sense, refinance those bonds.
“Communities around Michigan are interested in the passage of these bills.”
Standish City Manager Mike Moran said he and Mayor Mark Winslow are scheduled to testify in Lansing on Dec. 17, in front of the House’s Banking and Finance Committee, on behalf of HB 5550 - 5554.
“We will be talking about the amount of bonds we have out there, particularly the bonds that we initiated because of the prison being built,” Moran said. “With the amount of bond debt we have, which exceeds $9 million … the amount we have to pay (in bi-annual payments), would go down.”
He added the majority of the city’s bonds are revenue bonds from the United States Department of Agriculture, received for water and sewer utilities and upgrades to that system. Revenue bonds are loans for projects that generate revenue for a municipality, and said revenue is also used to repay the bonding agency or bank.
Mayes said Standish, with several revenue bonds outstanding that were issued to extend water and sewer to the Standish Maximum Correctional Facility, closed Oct. 31, was in his mind when moving forward with the bills. He said the legislation is meant to help communities that lose major employers or that suffer greatly due to property taxes decreasing.
He said Standish residents and officials should have more options in paying back bonds.
“They were depending on the prison (Standish Maximum Correctional Facility) to help make payments on that bond. They’re no longer there,” Mayes said, adding that the increased water and sewer rates that have been discussed by city council are looming in Standish. “Now you have your families and your businesses left with those rates.”
He acknowledged that the bills may not altogether prevent a rate increase, but may cause it to be lower.
Moran said he wasn’t sure if the bills, if passed, would prevent a water and sewer rate increase.
Mayes also said that during the last session of the Michigan House of Representatives, bills similar to HB 5550 – 5554 were passed, but too late in the session to make it to the Michigan Senate.