Lawsuit could leave Sylvan Township residents with a whopping tax bill
Sylvan Township residents could face a one-time 18-mill tax bill as the result of lawsuits filed against the township by two developers.
Norfolk Development Corporation and Magellan Properties sued the township for breach of contract and were awarded $2.4 million by Washtenaw Circuit Court Judge Donald Shelton in September. In addition, the judge voided a special assessment the township had levied on the developers and ordered the township to repay Washtenaw County $1.2 million the county paid to cover the assessment when the developers didn't pay.
Sylvan Township has appealed the ruling, but it doesn't have the money to pay the judgments, so if the award is upheld, property owners will be stuck paying the bill, according to the appeal.
Township attorney Peter Flintoft said the township would have to levy an 18-mil tax to pay for the judgment, based on the value of taxable property in the township.
A motion for a stay of payment was filed on Nov. 9, while the township appeals the original judgment to the Court of Appeals, and that motion is expected to be heard after Jan. 1, Flintoft said.
In addition, he said, Sylvan Township filed suit Monday in Washtenaw County Circuit Court against Foster, Swift, Collins and Smith, P.C., the attorneys who represented the township in its agreements with the developers.
The suit alleges malpractice and township officials were advised by their attorney not to comment about the lawsuits or the situation.
The township currently levies 0.9474 mills. If the township levies 18 mills to pay the $2.4 million judgment plus $1.2 million to reimburse the county, the cost to the owner of a home with a taxable value of $100,000 would be $1,800.
The suit is a result of an agreement between a previous township administration and the developers in 2000, which established special assessment districts that were scheduled to collect $8 million to pay for new sewer and water systems for a planned development on 162 acres on Sibley Road, which was never started. Westchester Farms was to include 262 homes and 64 townhouse condominiums.
The township sold $12.5 million in bonds to finance the water and sewer systems. And although the township originally intended to construct its own sewer plant, instead it chose to connect to a sewer plant owned by Leoni Township in Jackson County. The cost of connecting ended up being significantly higher than the projected cost of building its own wastewater plant, according to the suit.
Both of the developers filed suit against the township for breach of contact and fraud in 2007. That led to the court judgment in September.
The developers' original lawsuit alleges that instead of paying $4 million for its own wastewater treatment plant, the township constructed and financed the “Grass Lake/Sylvan Township Interceptor” for $7.5 million. The township paid $5 million for the water system, which was an increase of about $1.3 million over the original cost estimate, the suit said.
The suit alleged that “the township failed and refused to properly adopt resolutions describing the scope of the new sewer project, establishing a special assessment district for same and confirming a new special assessment roll to cover the cost of the Grass Lake/ Sylvan Township Interceptor.”
The suit also alleged that the developers were being charged for more water and sewer taps than were needed for the development and that special assessment districts set up by the township are illegal.