Issuing bond notes is a common practice for projects this far in development, East Lansing Mayor Vic Loomis said .
“Costs have been incurred by the city and the intent to bond is to roll the city costs to a more long-term plan,” he said. “It’s a very normal process and one of the final pieces to get the project finished.”

Avondale Square is a 30-home development located on the 600 block of Virginia Avenue. The development is intended to have single-family homes starting at about $150,000.

Tuesday’s work session is scheduled for 7 p.m. at City Hall, 410 Abbot Road.

In May 2007, the city issued an intent to purchase $5 million in bonds and instead pursued the $2.1 million in bond anticipation notes with a three-year time frame.

The $2.3 million in bonds is more than the city originally expected because of $400,000 in federal appropriations falling through. The city now will ask for the $2.3 million to allow for a long-term payment plan, likely about 25 years, Councilmember Roger Peters said.

“We’re going to use the long-term bonds to retire the three-year bonds,” he said.

City Manager Ted Staton said the long-term bonds will replace the short-term loans dollar for dollar, with an extra $200,000 for varied expenses, including the upkeep of unsold properties at the development.

“The biggest uncertainty is when the lots will sell,” Staton said. “We’ll need cash flow for those.”

A similar process using bond anticipation notes and bonds will be used in conjunction with the proposed City Center II parking ramp, Staton said. Staton said the city would issue bond anticipation notes, and once the project is ready to go, East Lansing would replace the notes with long-term bonds.

The proposed $2.3 million will be paid back from two components, Peters said. The first component is $1.5 million to be paid through tax increment financing generated by Brownfield developments during the 25-year term of the bonds. The remaining $800,000 will be paid off through future property sales, Peters said.