Wayne County, Michigan, will resume marketing its $280 million deal to help finance the $533 million construction of a new jail complex in Detroit after a federal judge denied attempts by a civic group to block the sale.
The county said in a statement Friday it plans to schedule investor meetings next week with the pricing of the bonds scheduled for Aug. 8, after those meetings are completed. The county posted roadshow and preliminary statement for the bond offering online through bond document publisher MuniOS late Thursday.
Plans to begin marketing of the bonds this week were derailed by the lawsuit that was filed July 18 in the U.S. District Court for the Eastern District of Michigan. The Detroit Justice Center filed the lawsuit arguing that the county failed to property notify residents of its intent to sell the bonds. The county contends its notifications in the local press met the legal requirement.
Judge Bernard Friedman denied the group’s request for a temporary restraining order and preliminary injunction that sought to block the sale as the lawsuit proceeds after oral arguments were held on Wednesday. The court concluded that the likelihood of success on the merits weighed in favor of the county, and the harm to the county as a result of granting the motion would have outweighed the harm to plaintiffs. The case will continue.
“We are pleased with the decision and the expedient fashion in which it came,” said Wayne County’s Corporation Counsel Zenna Elhasan. “We’ll continue to pursue dismissal of this case, but are glad that we can now take the bonds to market without further delay.”
As planned, the county will issue the bonds through the Michigan Finance Authority’s intercept program, which provides more security for investors by sending Michigan’s Distributable State Aid to a third-party trustee to service the debt.
Moody’s has assigned an Aa3 rating to both the County’s 2018 bonds and the state’s intercept program.Goldman Sachs is the senior manager. The co-senior manager is Siebert Cisneros Shank. Bank of America Merrill Lynch is co-manager.
“We think investor interest is going to be high,” said Wayne County Chief Financial Officer Henry Dachowitz, who anticipates the annual debt service to be about $16-$19 million. “We’ve got a strong financial case to make. These bonds are backed by state dollars through the intercept and the County’s overall financial outlook has continued on an upward trajectory. That’s going to make Wayne County an attractive investment.”
Dachowitz said the bonds will be issued with a 5% coupon.