Grand Traverse County commissioners reviewed several debt scenarios Wednesday as the county considers pursuing three major projects: the expansion of the LaFranier Road campus (called Project Alpha), a new jail/justice center, and either the renovation of the Governmental Center or construction of a new building to house county offices. Even though those projects could collectively total nearly $135 million, financial advisors said the various scenarios all showed a “manageable” debt burden for the county when spread across the coming decades.

CFA Steven Burke of Municipal Financial Consultants Inc. (MFCI) – a firm that has served as the county’s financial advisor and fiduciary for years, assisting with any projects that need bonding – reviewed scenarios with commissioners at their Wednesday study session. Four commissioners were absent, including Darryl Nelson, Penny Morris, Brian McAllister, and Rob Hentschel, though a quorum was still present with five commissioners attending.

The first of three county projects likely to be constructed is Project Alpha, the expansion of the county’s LaFranier Road campus to include a centralized storage facility for multiple departments and a combined emergency operations and 911/Central Dispatch center. That project – which is in the final stages of design and development – is estimated at $27-$30 million. Commissioners are expected to receive a final “not-to-exceed” estimate as soon as mid-October, at which point they’ll decide on advancing to construction. County Administrator Nate Alger says the project could break ground in early 2026.

Staff are recommending a significant down payment on Project Alpha rather than bonding out the full cost. That initial payment could be around $13 million, leaving about $17 million to bond. An annual $3 million payment is being built into the county budget to go toward debt service starting in 2026. Several other funding sources could make up the remaining down payment, according to Alger, ranging from the sale of the PACE North building to the county’s fund balance.

Two other potential major projects are on the horizon. Construction of a new justice center, a centralized law enforcement complex, would include a new jail and potentially the courts, prosecutor’s office, Grand Traverse Sheriff’s Office, Traverse City Police Department, Michigan State Police, and elected county officials reqiured to maintain offices in the City of Traverse City (the county seat). The most likely location for the facility is the Boardman/Washington campus. Burke’s debt scenarios listed a cost estimate for the project at about $76.2 million.

Commissioners last week approved using a request-for-proposals (RFP) process to hire a facilitator to gather community input on the new facility. The board is expected next week to vote on a separate RFP to hire a firm to lead preliminary design oversight. Because the Boardman/Washington campus has shared county-city buildings such as the Governmental Center, Alger is recommending bringing the city on board as both a participant and potential co-funder of that RFP process.

Prelimary design will not only confirm the location of the new center but examine how it fits into a larger picture of building needs. The third county project on the horizon is either renovating the Governmental Center or further expanding the LaFranier campus to build a municipal office center – estimated at 50,000 square feet – that could house various county departments. A new building is estimated at over $40.7 million. Deputy Administrator Chris Forsyth noted that renovating the Governmental Center is in the same neighborhood, with an estimated price range of $30-$38 million.

The three projects collectively total nearly $135 million in bonded debt. Burke outlined three debt scenarios, including a “baseline” or status quo scenario that contemplated county revenues remaining the same. That scenario showed the county coming up short about $2 million at the end of a 30-year period. The other scenarios showed the county allocating more revenues annually toward the projects – Burke used the county’s marijuana funds as a placeholder, estimated at $850,000 annually – either consistently across all three decades or heavily in the beginning and then tapering off. Those scenarios allowed the county to either end up with a healthy surplus or fully covering the debt with a positive balance.

Burke said all three scenarios represent “manageable debt burdens." The county would likely need to allocate additional revenues to make its fund balance stay positive, Burke said, but those numbers are a “pretty small percentage” of the county’s budget across a 30-year timeline. The county will also be paying off other debts in the coming years that will free up capacity, including pension bonds and Health Department building bonds. Alger said the debt scenarios all trend conservative and don’t reflect additional revenues that will likely be available. For example, if any tax increment financing (TIF) plans expire – such as brownfield plans or the TIF 97 plan in downtown Traverse City – additional revenues will be coming back to the county, Alger said.

In response to commission questions about the county’s debt capacity given its recent backing of bonds for a Cherry Capital Airport expansion, Burke said the county is not in danger of risking its bond rating. He projected the county could take on around $150 million in debt beyond the airport without any rating impacts. He also noted that debt is only a small percentage of the county’s bond rating overall. Things like growth, property values, and wealth metrics all affect that rating as well – factors he said Grand Traverse County was strong in.

Staff said the debt scenarios are intended to provide a high-level starting point for further planning and discussion. Numerous factors could affect the final numbers – from some projects changing in scope or not happening at all to additional revenues coming in. For instance, Alger noted that if the Sheriff’s Office and TCPD relocated, the county could potentially sell the Law Enforcement Center on Woodmere. The scenarios all show the county has “options” available to address its many building needs, Alger said.

Finance Director Dean Bott – known for his conservative approach to budgeting – agreed. Taking on any building debt means those payments will become a county priority – and may take “precedence over some other things we’re doing” – but is financially feasible, he said. “It’s going to require fiscal discipline, but…I’m confident that we’ll be able to build it into the budget,” he said.