|By Scott Aiken, The Herald-Palladium, St.
Joseph, Mich.McClatchy-Tribune Regional News
June 11, 2010 -ST. JOSEPH -- A Wisconsin developer has asked for Berrien County's help in financing a $250 million resort in New Buffalo Township that would include a water park, indoor skiing and a convention center.
The 12-story resort would be built along Harbor Country Drive (M-239) just outside the New Buffalo city limits.
The developer, Resort 1080 New Buffalo LLC, of Madison, Wis., approached the county early this year to discuss the possibility of financing the project with taxable bonds issued by the county's Economic Development Corp.
County officials said Thursday that the financing could be arranged, and if built, the project would be the largest ever backed by the EDC.
But before the county agrees to move forward, the developer has been told to line up credit enhancements, either a letter of credit from a bank or bond insurance.
The enhancements reduce risk by providing assurance that investors who buy the bonds to finance the project would be compensated if the developer defaults.
The county would not lend full faith and credit for the private project, which means taxpayers would assume no liability.
New Buffalo Township Supervisor Roseanne Dudiak said two township officials met informally with the developers this week to discuss the project.
Dudiak said she likes the concept, but it's very early in the planning stage. The project has not been presented to the township Planning Commission, she said.
"I don't tend to get too excited about things until it's further in the process," Dudiak said in a telephone interview.
The developers claim the project would create 1,200 jobs during construction and 500 jobs related to the business, although some of those could be part time.
Dudiak said if the developers succeed in lining up financing, a number of building issues must be resolved.
One of those is the proposed building's height, far taller than any other structure in the township.
Dan Fette, community development director for the county, told county commissioners Thursday that the EDC stands ready to help, but the credit enhancements are a must.
Bonds to finance the project would be sold through EDC to investors, and the county would hold title to the property. The development company would make payments on the bonds, plus interest.
Fette said credit enhancements are needed because without them, there would be no money available to repay bondholders in the event of default.
If the project went under and no credit enhancements were in place, the county, as property title holder, could end up in a protracted bankruptcy action.
"It's easy to say the taxpayers are not at risk," Fette told the county board's Administration Committee. "But it becomes a county project."
Credit enhancements would not be required if the bonds were sold to a bank. A bank would hold a mortgage on the resort property and could foreclose if default occurred. But the developer prefers to sell the bonds to private investors, Fette said.
Resort 1080 submitted a proposal in May, but it does not state that the required credit enhancements are in place.
In a June 1 letter to the developer, Fette again spelled out the requirement for a letter of credit from a bank or AAA- rated bond insurance, unless the bonds are to be sold to a bank. The application for financing will not be processed until the condition is met.
Fette said the developer approached the county to finance the project by selling bonds because commercial bank loans are not available.
Resort 1080 is a group of several people who have experience in managing large resort properties but have never developed one, Fette said.
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