Comments on: County EDC: Money to Loan, But No Deals

By: Stephen Lange Ranzini

Stephen Lange Ranzini — Thu, 18 Mar 2010 14:43:44 +0000

Dave Askins is correct, these bonds are private purpose project bonds NOT guaranteed by any unit of government. The taxpayers are at no risk if any of these bonds are issued. If anyone in the community has a project that would be an expansion, renovation or construction project, or a has a business that needs expansion capital, they should contact their bank and ask them to approve a letter of credit or to set aside from an existing approved undrawn line of credit the amount required for the letter of credit. The following local banks are able to offer this product (or not):
1) Ann Arbor State Bank – up to $2mm
2) Bank of Ann Arbor – up to $4mm
3) United Bank & Trust – not offering
4) University Bank – up to $1.37 million
5) Consortium of local banks (includes AASB & UBANK so far) – up to $3.37mm. As mentioned in the article we are working towards expanding the size of the consortium, so check with me at ranzini@university-bank.com for more information on the current status of the consortium’s maximum deal size.
The benefit to using this program as opposed to any other, say, SBA 7a or SBA 504, is that the borrower should be able to get a lower cost of funds because tax-free bond rates are much lower than lending rates, even taking into account the annual fee for the letter of credit that the bank has to issue.
Stephen Lange Ranzini, Vice Chairman, Washtenaw County EDC, President, Ann Arbor EDC & President, University Bank

By: Dave Askins

Dave Askins — Wed, 17 Mar 2010 19:26:37 +0000

Re: [4] “Would these bonds be backed by county or city tax revenues or is the only entity on the hook the private or non-profit entities who use the bond proceeds?”

At a committee meeting today, I asked Washtenaw County corporation counsel Curtis Hedger this question. He clarified that it was not the full faith and credit of the county that backs these bonds — the party on the hook is the private entity.

By: Mary Morgan

Mary Morgan — Wed, 17 Mar 2010 18:28:00 +0000

Re. #5: The article’s first sentence:

“On Monday, the EDC board met for just the second time since 2005.”

Monday’s meeting was the second time since 2005. The September 2009 meeting was the first time since 2005. They hadn’t met in the interim years because there weren’t any projects to discuss. They reconvened in 2009 because of the federal recovery zone bonds.

By: nancy kaplan

nancy kaplan — Wed, 17 Mar 2010 18:24:15 +0000

Please clarify — at the beginning the article states the board has not met since 2005, but later it is stated they met in 2009. How often does the EDC board meet and how often has it met?

By: Karen Sidney

Karen Sidney — Wed, 17 Mar 2010 16:04:37 +0000

Would these bonds be backed by county or city tax revenues or is the only entity on the hook the private or non-profit entities who use the bond proceeds?

By: Mary Morgan

Mary Morgan — Wed, 17 Mar 2010 15:09:29 +0000

Re. #2: In addition to new construction, projects can include major expansions and renovations – the Ottawa County project mentioned in the article is an example of that, converting a former auto parts plant into a milk-drying facility.

By: Janelle Baranowski

Janelle Baranowski — Wed, 17 Mar 2010 14:52:30 +0000

The article doesn’t mention what types of projects qualify for the bonds. Is it only land purchase or can it be used for the improvement of current facilities?

By: Bob Martel

Bob Martel — Wed, 17 Mar 2010 13:01:34 +0000

It would be a shame to lose this opportunity to fund a local business. Surely there must be at least one worthy project in our community?