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Village may issue bonds to rebuild pothole hill

May 07, 2014 - If $500,000 in state funding doesn't come through to fix a badly-deteriorated stretch of W. Burdick St., commonly known as cemetery hill, the Oxford Village Council could decide to issue capital improvement bonds to pay for the project.

Village Manager Joe Young said he authorized the municipality's bond counsel to draft a resolution for council to potentially vote on at its 6:30 p.m. Tuesday, May 13 meeting.

Young is suggesting five-year bonds be issued for approximately $800,000 to pay for the W. Burdick St. reconstruction project and the construction of the proposed East/Edison Alley project, just east of M-24.

Oxford DPW workers have been doing their best to patch potholes along W. Burdick St. (click for larger version)
Between construction and construction engineering, the estimated cost to do the W. Burdick St. project is $575,358, according to village engineer Rob Lavoie, president of the Pontiac-based Nowak & Fraus. Of that total, $523,050 is the construction estimate.

The project includes reconstructing a 1,691-foot stretch of road from subbase to surface; installing concrete curb and gutter; and making drainage improvements to allow stormwater to flow off the roadway in a more effective manner.

Additionally, cemetery hill will be lowered by up to 2 feet in order to improve stopping sight distance for motorists per state standards and the road will be widened from 24 to 27 feet as measured from the backs of the new curbs.

The village is advertising for construction bids, which are due by 2 p.m. Monday, May 12.

The East/Edison Alley project calls for constructing a two-lane, 28-foot-wide road, just east of M-24, from Ensley St. to the Holy Cross Lutheran Church's parking lot. Another 16-foot-wide, one-lane road would then be constructed from the alley's southern end to M-24. Both roads would contain bicycle lanes.

The estimated project cost for the East/Edison Alley project is $270,000. The alley needs to be built this year because Genisys Credit Union plans to break ground on a new 3,300-square-foot facility on the lots located at 114, 118 and 120 S. Washington St. The site plan was approved in March and it includes traffic being able to access and exit the site via the alleyway.

Council had previously voted 3-2 to authorize Young to enter into preliminary negotiations with the township to borrow up to $500,000 for five years in order to reconstruct the pothole-ridden stretch of W. Burdick St. between Ashley Way and S. Waterstone Dr.

But village attorney Bob Davis issued a four-page April 24 opinion letter indicating the township can't legally loan the municipality the money.

"In order for the township to lend any money to the village, there needs to be statutory authorization allowing for the lending process. From our research, we cannot find any enabling statute which allows a township to lend such money to the village," Davis wrote.

The township previously received the same legal opinion from another attorney.

But just because Door Number One was a bust doesn't mean there aren't other doors with cash behind them.

"There are other options available to the village (under state law)," Davis wrote. "I would encourage the village to explore those options ASAP."

In his letter, the attorney explained to council that state law authorizes cities and villages to borrow money and issue bonds in anticipation of future payments from Michigan's motor vehicle highway (MVH) fund.

Council can do this via resolution as long as two-thirds of the five-member body approves.

According to Young, the village receives more than $200,000 annually in MVH funds. This money goes into the village's major and local street funds. "It's (used) for maintaining our roads," he said.

But Young argued issuing capital improvement bonds is a "simpler" process than what Davis suggested.

"It's just less involved and less costly, and the result is the same," he said. "You get the money at a lower interest rate. And it's less cost to issue the bonds."

Young said "hopefully," the interest rate will be under 2.5 percent.

Timing is another consideration.

Young said it's "quicker" to get through the capital improvement bond process than borrowing in anticipation of MVH funds.

"It's less complicated," he said.

The village is still hoping to receive $500,000 for the W. Burdick St. project from the state through the Roads and Risks Reserve Fund.

So far, the village hasn't had much luck receiving outside funding for this project.

In February, Oxford was turned down for federal funding for the fourth consecutive year. Last fall, it was rejected for state funding.

Young noted the village has $172,000 in its major street fund that's available for the project.

Because 516 feet of the project is located within the township, the village is expecting the township to share in the cost, however, there is no agreed-upon amount.

CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.
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