Center City Project - 2020 Refunding of Limited Obligation Tax Increment Revenue Bonds
In October 2020, the officers of the Brownfield Redevelopment Authority of the City of East Lansing (BRA), as authorized through a resolution of the BRA, put out a Request for Proposals (RFP) for purchasers to consider a refunding of the $25.3 million bonds it issued in 2017 to finance the costs of certain public infrastructure improvements and a City parking structure, which was included as part of the overall Center City District redevelopment project. The bonds can only be serviced through the Tax Increment revenues created by the project, as approved in the related brownfield plan.
Although the RFP did not yield any results that were within the parameters acceptable to the BRA, the bond refunding team was able to negotiate a favorable refunding with the current bond owner along with an unrelated purchaser. This structure includes both taxable and non-taxable bonds, which has reduced the overall rate to 4.2 percent. Along with the accrued interest on the 2017 bonds and costs of issuance, the 2020 refunding bonds also included approximately $822,000 in additional costs for the parking garage and public infrastructure that the BRA was obligated to pay the developer and would have otherwise borne higher interest. Overall, through this refunding, the BRA is able to create approximately $2.35 million of Net Present Value savings, which represents approximately $366,000 of aggregate cash flow savings. The BRA was represented by Miller, Canfield, Paddock, and Stone as Bond Counsel, and PFM Financial Advisors LLC as Municipal Advisors.
Additional details can be found in the following documents: