CHICAGO — The board of commissioners for Macomb County, Mich., approved a measure June 19 to issue up to $300 million of bonds to pay off its retiree health care costs.
The finance committee had already approved publishing notices of intent to issue the other post-employment liability bonds, as well as another roughly $100 million for various capital projects.
In early June, the full board approved a resolution authorizing the county executive to issue a request for proposals for bond counsel and a financial advisor.
The county, which is adjacent to Detroit in southeast Michigan, has an unfunded OPEB liability of roughly $270 million. Some county officials, including finance director Peter Provenzano, had warned that the liability could push the county into bankruptcy if nothing is done.
The plan calls for the county to issue $270 million bond and use another $70 million from other funds. The money would go into a trust with an assumed investment return of 7.5%, according to local reports. The interest rate on the bonds is expected to be around 4%. The county would use the 3.5% difference as part of its annual contribution to the OPEB.
The borrowing is allowed under a relatively new state law that lets certain Michigan governments issue long-term debt to pay off OPEB obligations. Only a handful of issuers, including nearby triple-A rated Oakland County, have taken advantage of the law.