Sylvan Township settles lawsuit with developers but residents still could face 9-mill tax
Sylvan Township has settled a $2.4 million lawsuit brought against it by several developers, township attorney Pete Flintoft told about 50 residents Tuesday night.
“Norfolk Development Corporation and Magellan, these suits are settled for all intents and purposes,” he said, adding that he expects the third developer, Manchester Mortgage Company, to sign the settlement this week.
However, Flintoft warned residents that because the township doesn’t have the money, they could face up to a 9 mill tax levy next December to pay back the about $1.2 million it owes to Washtenaw County, which advanced the money for unpaid special assessments for the utilities when the developers stopped paying their bills, and an about $300,000 interest-only payment for the about $10.6 million the township owes in sewer and water bonds that were backed by the county.
“I expect to get a demand of an accounting of what money the township has on hand and then the county can bring suit,” he said, adding that he will not be the attorney for that suit.
An exact amount of the tax levy will be up to the courts.
“The treasurer could ask for the $1.2 million all at once, in one amount,” he said, adding that the township has about $183 million in taxable value and that’s projected to decline by 5 percent.
So, although the settlement means the township won’t have to pay developers the $2.4 million awarded by the courts, it does little to help the township pay off its considerable debt.
A plan to repay the debt over 20 years was rejected by township voters in November, when they turned down a 4.75 mill tax levy to repay the $5 million for a water system and a $7.5 million sewer system in addition to the $1.2 million the township owes Washtenaw County.
In April, 2012, the township will owe about $300,000 in interest-only payment for the bonds, Flintoft said, plus the $1.2 million to the county treasurer and it does not have enough money in its coffers to pay the debt, so township residents must foot the bill.
In 2014, the payment will increase to $969,000 when the principal payments kick in.
As for the developers’ lawsuit, the township fought the Circuit Court judgment to the Michigan Court of Appeals, and the higher court affirmed in part, vacated in part, reversed in part and remanded further proceedings back to the Washtenaw County Circuit Court.
Part of the judgment from the circuit court voided an $8 million special assessment district that was supposed to pay for the water plant and sewer connections and this was upheld by the appeals court.
Norfolk Development Corporation, Magellan Properties, LLC and now a new player, Manchester Mortgage Company, won a judgment against the township that alleged breach of contract when the township chose to connect to a sewer treatment plant rather than construct its own facility. The trial judge awarded the developers fees and costs associated with sewer and water service.
Preliminary site plans were approved for Norfolk Development Corporation’s residential housing development plan called Westchester Farms on 162 acres of property off Sibley Road in the north end of Sylvan Township that included 262 homes and 64 townhouse condominiums. The development has yet to break ground.
Among the settlement terms, Norfolk “is entitled to develop up to 330 single-family dwelling units,” which can be built in separate phases as a planned unit development. The homes will be served by public water and sewer and the roads may be private or public at the discretion of the developer. Norfolk will have 301 pre-paid sewer taps for future use and development of the property and has agreed to about $58,000 for water special assessments. The township will then revise the billings, Flintoft said, and is expected to pay about $20,000-$25,000 per year.
In addition, Flintoft said, the township has filed a suit 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 the first case evaluation on this suit is expected to take place May 12, 2012, Sylvan Township Supervisor Bob Lange said.
Lisa Allmendinger is a regional reporter for AnnArbor.com. She can be reached at lisaallmendinger@annarbor.com.
Comments
snapshot
Thu, Dec 8, 2011 : 4:10 a.m.
Ann Arbor is in danger of the same thing happening with that underground parking lot. City council in Ann Arbor does not know a thing about the financing and taxes that they collect, distribute, and redistribute. The DDA reneged on their obligation to collect and redistribute tax funds. They also did not account for it properly. The goo Mayor Heifjie is part of DDA and screwed the the citizens that he is supposed to represent. They lawyered up and somehow made it all legal, or so they say.
empedocles
Thu, Dec 8, 2011 : 2:55 a.m.
Sylvan Township was ill served by County Board, the prior Sylvan Boards and the attorneys and consultants that put this disaster together. The County carries significant responsibility for this matter as it was approved by the Board of Commissioners based upon their own professional consultants, think bond counsel and the municipal financial consultant. As a result the the Township has some defenses which could defray millions of costs to Sylvan residents over time. No voter in Sylvan should be thanking or even considering re-electing Rob Turner as County Commissioner since he would not admit any responsibility by the County and tried to put all the financial costs on Sylvan residents by pushing for a 4.75 mills tax for 20 years, if passed, and thankfully it wasn't, he would have let the County completely off the hook. C Commissioner Turner should have done his homework on how this matter developed and evolved. Who in the county government gave the OK to this flawed debt. Commissioner Turner should have argued for an apportionment of costs according to negligence of the parties. This debt is real and will not disappear but county cannot rubber stamp consultant reports, issue millions in debt, part of which was paid to county consultants in professional fees for creating this mess. Patrick Zieske has it right. The proposed millage would have required all Sylvan residents to pay for what is obviously a county/township boondoggle. Vigorously fighting for fairness and Sylvan will be less harmed. But don't count on turner and his County cohorts to help.
John Q
Wed, Dec 7, 2011 : 7:54 p.m.
Save this for the files when developers come making promises saying that development pays for itself. It's also a good counterpoint to the naysayers who attack the Greenbelt. Sylvan was more interested in chasing residential development than preserving farmland. Staying an AG community would have cost them a lot less in the end.
Patrick Zieske
Wed, Dec 7, 2011 : 2:07 p.m.
To all Sylan residents concerned about the 9 mills: Remember that if the November millage vote had passed, we would all by paying 4.75 mills right now, and another 4.75 mills next year. Instead, since the millage failed, we are paying 0 additional mills this year and approximately 9 mills next year (if the County pursues their advance repayment in a lump sum). We still come out ahead this way. But it means we can't take this year's 0 for granted. Please imagine that 4.75 on your tax bills this winter and set aside some money for next year's catch-up bill. Remember also that the $1.2 million payment to the County is a one-time issue. After next year, the millages were revert back to the amounts owed for debt repayment year by year -- still considerable amounts but smaller. As a fellow resident, I'm very sad to see this debt dumped on us for a public works projects that very few of us will ever use, or would even want to use. We need to continue to pursue whatever options we have to help ease the burden. For more detail information, please see the Repayment Schedules page on the freesylvan website: <a href="https://sites.google.com/site/freesylvantownship/repayment-schedules-new" rel='nofollow'>https://sites.google.com/site/freesylvantownship/repayment-schedules-new</a> There are a number of scenarios there, including the one mentioned by Peter Flintoft last night under the title "Repayment Schedule - Chargeback Lump Sum.pdf" Thank you.
snapshot
Thu, Dec 8, 2011 : 4:06 a.m.
Your Sylvan Township officials that got you into this mess should be paying the bill. This is a warning sign for citizens to demand that their representatives actually know and can explain every detail of financing they are voting for. These official sdid not do their due diligence and should be held accountable.
justcurious
Wed, Dec 7, 2011 : 12:54 p.m.
What a convoluted mess. And the poor guy who's just lived in the township for the last 50 years has to pay the bill for it.
motorcycleminer
Wed, Dec 7, 2011 : 12:36 p.m.
My sympathies to the taxpayers ..like the ones in Ann Arbor they take the hit for fiscal and governmental mismanagement..