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ELBRA refunds bonds to reduce limited obligation debt service by $2.3 million

December 4, 2020
Downtown East Lansing on Nov. 20, 2020.
Downtown East Lansing on Nov. 20, 2020. —
Photo by Annie Barker | The State News

East Lansing Brownfield Redevelopment Authority (ELBRA) announced on Wednesday that they have reduced the limited obligation debt service by $2.3 million by refunding bonds issued in 2017 used to finance parking, public infrastructure related to the Center City Project.

“We are pleased that we were able to find a savings for this project while still protecting the ELBRA and City from any additional guarantees beyond the tax increment created by the project,” ELBRA Chairperson Peter Dewan said in the press release. “We appreciate the guidance of our legal and financial experts in making this happen.”

The project was completed in May of 2020 and replaced existing buildings on Grand River Avenue and a city surface lot with two-mixed-use buildings including retail, dining, apartments and a parking structure. The bonds are serviced through tax increment revenues created by the project only, and no other revenues or guarantees from ELBRA of the city of East Lansing.

"The limited obligation bonds are serviced only through the tax increment revenues created by the project," Director of Planning, Building and Development Tom Fehrenbach said. "The City has not pledged its full faith and credit or any other revenues towards the payment of these bonds."

The refunding of bonds will reduce the debt obligation of ELBRA by more than $2.3 million in net present value (NPV) savings, which is the industry standard in reflecting cashflow savings over the financing term. This also lowers the current 5% rate. The approximate $29.5 million issuance will be split between tax exempt and taxable bonds with a 4.2% blended rate. This bond term is 30 years, which is in alignment with the current brownfield plan.

"This refunding resulted in a lower rate, savings, and overall a better situation for the BRA and City," Fehrenbach said.

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