The Commerce Township Board of Trustees has granted approval to advance approximately $1.8 million to the Commerce Downtown Development Authority (DDA) in order for the DDA to meet its bond repayment obligations this year.
The DDA previously issued bonds to acquire and improve a number of developable parcels of land in the DDA district, along with constructing the Martin Parkway project — a four-lane boulevard extending Martin Road south from PGA Drive to meet M-5 at Pontiac Trail; building five lanes from PGA Drive north to a roundabout at Oakley Park Road; and building a large roundabout where M-5 meets Pontiac Trail and the new Martin Parkway.
The road project was initiated by the DDA to alleviate area road congestion and to help the DDA market and develop hundreds of acres of property between M-5 at Pontiac Trail and Martin and Oakley Park roads. At the same time, the sale and development of the DDA land is how the bond debt on the road project (approximately $80 million) is expected to be paid off.
However, with the current economic climate and deterioration of the real estate market, the ability to sell the DDA property has been hindered and, as such, has left the DDA unable to begin paying off its bond debt as planned.
Because the bonds were additionally backed by the limited tax general obligation and the full faith and credit of the township, the township had to advance money from its general fund to cover the initial DDA bond payments.
The board had anticipated this obstacle earlier and prepared for the situation accordingly, said township Supervisor Tom Zoner.
In February, the Board of Trustees and the DDA entered into a formal agreement assuring that the DDA will pay the township back for funds allocated for the repayment of bonds.
“Because of the bond issues, the township (is) loaning the DDA money until it gets back on its feet,” Zoner said. “The transfer of funds will not happen all at once but instead on an as-needed basis. This way the township can keep the funds in the fund balance bank account so we can still collect interest on the balance in the fund.”