Cheboygan County road construction loan program
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EmailFirst county in Michigan to create newly authorized program to loan money to townships for road construction
Funding for local road construction in Michigan can be a complex puzzle. On April 12, 2016, Michigan Codified Laws section 46.11 (MCL 46.11) was amended to include a provision that allowed county governments to loan funds to townships for road construction funding. Public Act 77 of 2016, as it was also called, added this authority to the list of powers that county commissions have.
The language is very simple, allowing loans for road construction or to provide for matching funds for a joint road project between the county and township, and states that the loan term may not exceed 10 years.
Cheboygan County was the first, and is believed to be the only county so far to create such a loan fund. County Administrator Jeff Lawson, spoke to the Northern Michigan Counties Association recently about the program.
Cheboygan County developed a loan fund as an investment vehicle and economic development tool for funds declared surplus from their Tax Revolving Loan Fund, making up to $1.25 million available. The maximum loan amount for any specific project is $250,000. The interest rate is determined annually by the county board of commissioners, and is currently set at 3.5 percent.
The first loan was granted in 2017 for $200,000 for two projects in a single township, with a five year payback period. It is anticipated that interest and applications will increase in the near future as other townships see the success of the program.
There is an application process which includes financial information and scoring criteria. The scoring criteria include a description of the project, the Pavement Surface Evaluation and Rating (PASER) rating for the section of road to be included, and other sources of funding for the project. First time applicants receive additional points to encourage applications.
The PASER scale is a rating system for the condition of road pavement. It was developed by the University of Wisconsin-Madison Transportation Information Center, and relies on visual inspection.
The Cheboygan County Township Road Loan Program policy also includes financing policies that deal with interest rates, repayment, loan administration charge and term of loans.
Michigan State University Extension provides, through the Government and Public Policy Team and the Center for Local Government Finance and Policy, educational programs for local government officials and citizens regarding many aspects of local and tribal governments in Michigan. Please contact the author at amrhein@anr.msu.edu for more information.
