ROCKLAND, Maine — An unprecedented request has come into Rockland and the city is working to figure out how to deal with it. A nonprofit retirement community wants to build a $7 million, 24-unit extension, but would like to borrow money at a better interest rate to pay for it, so it has asked the city for a municipal revenue bond.
Rockland has never been asked for such a bond before and isn’t sure how to respond to Bartlett Woods Retirement Community, which hasn’t submitted a formal application yet.
Municipal revenue bonds are supported directly by revenues from the projects they are used to finance. In this case, the bond likely would be paid back with the rental income from the 24 units.
The city wouldn’t be legally responsible for the debt — there is no way taxpayers would end up paying for the building, according to city attorney Kevin Beal. It’s not even like a co-signer where the city’s credit score is affected, he said. The city just puts its name on the revenue bond and the nonprofit goes through the Finance Authority of Maine and a bank to get the money, Beal said.
“The only real impact to the city is that it does apply to the city’s $10 million cap on a form of debt,” Beal said. “If we used $7 million, we’d only have $3 million left to bond for real city projects.”
According to Beal, the city has asked for legal advice about who can say yes or no to the nonprofit. State statute says that the city council can approve or reject the request, but the city’s own charter says any bond for more than $1 million requires voter approval.
The issue is not yet on any city council agendas, but likely will be discussed in January, Beal said.