DALLAS -- Wayne County, Mich. said it expects a general fund operating budget surplus of $44 million, news the county hopes will bolster its fiscal position as it advances plans to complete its downtown jail project that will require $200 million of borrowing.
"Our recovery plan calls for creating surpluses through good fiscal management so that we can finish the jail and pay down our remaining unfunded liabilities, which are substantial," Wayne County Executive Warren Evans said in a press release. "The better the county sits financially when we finance the jail project, the less it'll cost us to borrow to complete it."
The announcement of the surplus estimates comes the same day that Moody's Investors Service upgraded the county's rating on general obligation limited tax bonds to Ba1 from Ba2, bringing it in line with its general obligation unlimited tax rating after completing a review based on its local government general obligation debt methodology published last December. The rating outlook is stable.
"The lack of notching reflects the full faith and credit nature of the county's GOLT pledge and the availability of all general operating revenue to pay debt service," said Moody's. The county is now one notch away from investment grade. Moody's also upgraded to Ba1 from Ba2 the rating on outstanding lease revenue bonds issued by the Wayne County Building Authority.
Wayne plans to issue bonds to complete an unfinished jail at the Gratiot site in downtown Detroit. Evans said last Friday that that the county would provide the design build request for proposal to the lone bidder, Walsh Construction, on Feb. 10.
"We'd expect a proposal from them four months or so after that, which would be June at the earliest," said county spokesman James Martinez. The bonds will be issued after that.
However there may be yet another twist as the County said that it remains open to considering moving the jail to another location to make way for a Major League Soccer stadium promoted by Quicken Loans founder and chairman Dan Gilbert, a major player in the downtown Detroit real estate market, but only if it didn't increase the cost for Wayne County taxpayers and didn't delay the timeline for completing the project.
In a joint bid with Detroit Piston owner Tom Gores, the duo submitted a formal bid on Monday to get a MLS expansion team in Detroit with plans to build on the unfinished site. The project would include a 500,000-square-foot soccer-specific stadium for up to $250 million and proposed development of three 18- to 28-story glass towers along with retail, bars and restaurants.
Separately, the head of Gilbert's Rock Ventures LLC Matt Cullen issued a statement Monday saying the company would submit its plan for using the jail site before Wayne County's Feb. 10 deadline.
Cullen had no further details to share on the proposal or if moving the jail to another site on Mound Road, east of downtown Detroit, would increase costs for the county.
Last May, Rock Ventures began working with Wayne County on a side-by-side cost comparison and economic analysis of building the jail on the existing Gratiot site and the cost of moving it to another site on Mound Road, east of downtown Detroit.
Wayne County said it remained open to considering alternatives as long as they are proposed before the Feb. 10 RFP deadline date.
The county government, which was released from state oversight in October, halted construction of the jail in 2013 after spending $151 million on construction, acquisition and design.
In June, Fitch Ratings raised the county four notches to BB-plus, one notch below investment grade, in recognition of its progress toward structurally balancing its books. Also in June, S&P Global Ratings revised its outlook on Wayne County's BB-plus rating to positive from negative. A one-notch upgrade would restore its investment grade.
