Pink Section costs and financing
The Road Commission estimates that the cost of rebuilding the Pink Section roads will be about $3,250 annually, plus interest, over 15 years. That’s a total cost of about $48,750, plus interest. This post discusses the timing of payments if the Pink Section SAD is approved.
If the Pink Section SAD is approved, the plan is to start the project at the beginning of the 2024 construction season in April 2024. Once shovels go into the ground in April 2024, the Township will notify homeowners in the Pink Section of the total assessment for their homes, and give each homeowner an option to pay the full assessment amount up front to avoid interest, or finance it with interest over 15 years. For residents choosing to finance, the first installment will appear on the Winter 2024 property tax bill and will include 6 months of interest. That bill will be mailed to residents in December 2024, with payment due by February 2025. Each annual billing thereafter will appear on the winter tax bill and will include 12 months of interest. The interest rate will be the rate on the bonds sold by Bloomfield Township to finance the project, plus 1%.
As an example, if the final bids for the Pink Section project result in a cost of $3,250 per parcel, and the interest rate is 4.25% (about what it would be if the bonds were sold today), here’s how cash payments would be due from residents choosing to finance the assessment over 15 years:
A reminder about the cost of rebuilding the Pink Section roads: At this point, the Road Commission has provided an estimate of project costs. The estimate is based on the extensive planning process they undertook to develop detailed plans for rebuilding Pink Section roads, plus their experience in bidding and contracting road projects. It includes construction contingencies as well as an inflation factor to reflect that the construction will (hopefully) take place in 2024. And finally, it includes engineering costs, construction oversight and Township costs to administer the SAD. The total estimated cost of the Pink Section project reflected in the petitions now being circulated is $48,696 (we used rounded numbers in the calculation above).
If there is sufficient support for the Pink Section road rebuilding SAD, and we obtain signatures from more than 51% of Pink Section property owners, the Bloomfield Township Board of Trustees will hold a minimum of 2 public hearings on the proposed SAD. With Township approval to proceed after the first public hearing, the Road Commission will put the project out to bid, in accordance with their bidding policy/processes. Under Road Commssion policy, a contract is awarded to the lowest qualified bidder. If the winning bid comes in below the cost in the estimate, the lower bid cost will be reflected in the final assessment to Pink Section homeowners. If the winning bid comes in higher than the cost in the estimate, the next steps depend on how much higher the bid is:
Winning bid less than 10% above estimate: proceed to second public hearing. Winning bid cost would be reflected in the assessment, if the SAD is approved by Township Board of Trustees after the second public hearing.
Winning bid 10-15% above estimate: Township policy requires the Board to conduct a third public hearing.
Winning bid more than 15% above estimate: Township policy requires a 30-day waiting period, and a third public hearing.
In the second and third cases above (bid more than 10% above estimate), the Township Board of Trustees will evaluate the information gathered in the 3 public hearings, bid costs and other information as they deem necessary and may decide 1) to approve the SAD at the higher bid cost; or 2) require recirculation of the petition. If the Township Board requires recirculation of the petition, Pink Section residents will essentially have another chance to approve the Roads project for their section, but may also decide not to proceed.