AVON — The Interstate 90 interchange project at Nagel Road is expected to be paid for with long-term borrowing rather than a $9 million tax on area property owners.
The Monday night recommendation by Mayor Jim Smith to City Council members on the $27 million project is expected to be approved later this month. The city plans to sell $23.1 million in municipal bonds that would be paid off in 25 years.
Smith said he based his recommendation on Tax Incremented Financing revenue — business tax money dedicated to economic development — that has exceeded projections the last four years and is expected to remain strong.
“My recommendation to Council is a non-assessment,” Smith said to applause from the audience of about 130 people who turned out for the 90-minute presentation on the project. “We have the money to do it.”
Smith’s recommendation came after an extensive account by the city’s bond counsel, Matthew Stuczynski, of Avon’s financial status and the workings of the municipal bond market and bond rating agencies.
Stuczynski said Avon’s history of paying for infrastructure with a combination of cash and low interest bonds, as well as its strong and growing tax base, helped it gain an Aa1 bond rating from Moody’s Investors Service. The rating is the second highest a community can receive from Moody’s.
While Avon is slightly below average for its amount of long-term debt, Stuczynski said it is above average in revenue sources for repayment.
“The strengths outweigh the weaknesses,” he said. “The city’s in very elite status when it comes to its rating.”
After the meeting, Stuczynski, the head of Strongsville-based MAS Financial Advisory Services, said fears of a municipal bond market crash are “trumped up.” Concerns have been raised about bond market instability after talk in Congress of a federal law allowing states to declare bankruptcy.
The city is paying about two-thirds of the project — Smith said a portion of the bonding will go to related projects — with developer Richard E. Jacobs Group LLC paying the remainder. With the Cleveland Clinic as a magnet, city officials expect the project will attract other businesses causing property values to dramatically increase.
Avon — whose population has grown 85 percent over the last decade to about 21,265 — has a history of making investments and property purchases that paid off handsomely, Smith said. He cited development on Chester Road as well as property purchases for the Fire and Police departments and senior center.
Smith said discussion of assessments was a worst case scenario he needed to make to prevent blindsiding residents if it were needed.
“I would’ve been remiss by not saying a year ago that we would have assessments,” he said. “I apologize for scaring the hell out of people, but that’s my job.”
Contact Evan Goodenow at 329-7129 or email@example.com.