October 22, 2014

Bailing out Standish?

Legislators looking at helping city financially after state closes prison

By Tim Barnum|Staff writer
Email me
Follow me on Twitter
Posted

STANDISH — Since 45-percent of Standish’s water and sewer revenue will be lost due to the closure of the Standish Maximum Correctional Facility (SMF), Senator Jim Barcia (D – Bay City) and others in Lansing are attempting to help alleviate the city’s bonded debt, which is currently sitting at $9.4 million.

“We’ve got to convince our colleagues to come up with some assistance to the city of Standish,” Barcia said. “The county and the city bent over backwards to work with the state.

“They (Standish) should be relieved of some of their responsibility.”

According to Standish City Manager Mike Moran, the city pays approximately $380,000 per year in bonded debt, including $170,416 to the United States Department of Agriculture for Rural Development bonds that Standish used to provide SMF with water and sewer utilities.

The city currently owes on 10 different bonds to various banks, he says, adding due to the payment schedule of one, a capital improvement bond that paid for the renovations to Cedar Street, the city’s debt payment fluctuates in some years. For the Cedar Street bond, the city currently only pays interest until 2015, doling out approximately $68,000 per year.

But in 2015, principal payments kick in and the city will have to pay $603,040 in 2015 alone, Moran says.

Although that payment is down the road, it looms over city hall.

“We have to save for that payment,” he said. “Our idea is to start planning and to put away for that payment.”

Without the roughly $420,000 per year provided to the city from the state in water and sewer revenue, Barcia says the state should pitch in to help Standish before the onus of making up loss revenue falls on city residents.

“Now that they’re (Department of Corrections) not using water and sewer, guess who gets caught holding the bag? The taxpayers,” Barcia said. “If the prison is no longer a state facility, then the state should step up.”

If people are forced to leave the area due to a lost job or job transfer resulting from the prison closing, the consequences could be even greater for those remaining in the city, as the raised taxes and/or fees would fall on the shoulders of fewer people.

Some smaller bonds, like those that funded the purchase of two trucks and a city police car, are expected to be paid off within the next couple of fiscal years.

Copyright © 2014, Sunrise Publishing. Powered by: Creative Circle Advertising Solutions, Inc.