Oxford Village will borrow money from itself in order to fund the reconstruction of W. Burdick St. underway since June 11.
Last week, council voted 3-1 to pay for its portion of the project, which amounts to $467,152, by using $67,152 from the village’s major street fund and borrowing the remaining $400,000 from two internal funds at an annual interest rate of 1.5 percent.
The village will borrow $300,000 from its water fund restricted bond funds and $100,000 from its sewer fund investment account.
‘You can borrow from those funds, but the money has to be paid back,? said village attorney Bob Davis. ‘That is permitted and that’s very common.?
Interest-only payments will be made through 2020. Principal payments will begin in 2021 and conclude in 2023.
Extending from Ashley Way in the village to S. Waterstone Dr. in the township, the reconstruction project includes rebuilding the road from base to surface, making drainage improvements, lowering the hill by 2 feet and installing curb and gutter. The 1,691-foot stretch of road is expected to reopen July 26.
The only council member opposed to borrowing from internal funds was Sue Bossardet.
‘I think (the project) needed to be done, but I disagree with the financing,? she said. ‘I don’t think that we should be taking money out (of existing funds) . . . Down the road, if we need that money, what are we going to do? . . . I think that we should finance it some other way. And I said that before. I don’t think we should have taken the money out of our savings.?
‘We’ve looked at other ways and there really weren’t a whole lot of options,? responded Councilman Bryan Cloutier. ‘I agree with you and initially, I was moving in a different direction, too. But once we found out that we couldn’t go in that direction, we were kind of up against the wall.
‘We had to do it and this is the only viable, rational place to grab the money from. I didn’t want to go (the internal borrowing) route, either, but we’re kind of in a situation where we’re not given a lot of alternatives here.?
Council’s other funding option was to borrow the money from an external source.
For example, if the village had issued capital improvement bonds to finance the project, it would have been paying an estimated interest rate of 2.5 percent and been assessed bond issuance costs in the amount of $24,060.
‘I don’t think you want to take out a regular loan where you’re going to be paying high interest,? said Councilman Elgin Nichols. ‘I think (internal borrowing) is our option.?
Village officials were hoping to receive $500,000 in state funding, but their hopes were dashed on July 2 when the list of approved road projects was released and W. Burdick St. was not on it.
Instead of funding the W. Burdick St. fix, state officials allocated $600,000 for repairs along approximately 4 miles of M-24 between Harriet St. and Davison Lake Rd. in Oxford Township. The reasoning was there’s more traffic on M-24 than Burdick St.