County May Buy Properties

August 20, 2004
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GRAND RAPIDSKentCounty commissioners are expected to decide this week whether or not to authorize capital improvement bonds to finance the purchase of some downtown properties.

If commissioners give that authority, the county will issue tax-exempt bonds worth up to $10.5 million to buy parcels on Ottawa and Monroe avenues along with a five-story building on Ionia Avenue.

In May, the county announced it intended to issue bonds worth up to $16 million. But at that time Kent was looking at including land purchases for MillenniumPark. None of those parcels are part of this transaction, though.

"There are other capital acquisition projects that are being discussed," said Robert White, county fiscal services director.

One of the purchases is an office building at

82 Ionia Ave. NW
, just north of MonroeCenter. The county has been leasing 72,000 square feet of space in the structure since 1998 and has held a purchase option on the 113,000-square-foot building since then.

Kent would pay about $5.5 million to buy 82 Ionia from SIBSCO LLC, owned by the Peter Secchia family. The deal has a closing date set for Feb. 28.

Three vacant riverfront parcels on

Monroe Avenue
between Michigan and Trowbridge streets also are part of the package. The parcels, on the east bank of the Grand River, total 1.28 acres.

Frank Freund, CFO for American Physical Capital Inc. of East Lansing, is listed as the seller. Kent would pay slightly more than $2.4 million for the properties that may eventually become the site for a new county administration building.

The county also would pay nearly $3.3 million for two parcels on

Ottawa Avenue
at
Lyon Street
, site of the Kent County Courthouse. Commissioners ratified a settlement last month that was reached between the county and the properties' former owners through arbitration.

The three transactions total roughly $11.2 million, or $750,000 more than the maximum value of the bonds. But a portion of 82 Ionia is leased to tenants other than the county.

That part of the purchase price comes to $753,449 and the county plans to finance that share through its capital improvement fund. White said the county couldn't finance that portion of the acquisition with tax-exempt debt.

The bonds would be issued as serial or term bonds without coupons, and in denominations of $5,000 and multiples of that amount. Interest rates would not average more than 5 percent per annum. The bonds for the

Monroe Avenue
properties would have an eight-year term, while those for the other two projects would carry a 20-year debt service.

White said issuing bonds, rather than paying cash for the properties, would allow the county to keep its unreserved fund balance at nearly $26 million. With the uncertainty of future revenue sharing payments from the state, White thought bonding was the better choice.

County Chairman David Morren added that issuing a successful bond package would help keep Kent's rating high, which is usually triple-A. Bond payments will be made from the facilities management budget found in the county's general fund.

The county's Finance and Physical Resources Committee authorized the bond last Thursday. The full Board of Commissioners will vote on the proposal this Thursday, Aug. 26.    

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