Washtenaw County foots $350,000 bill during Sylvan Township default
Related story: Sylvan Township residents may get second vote on large debt millage
Washtenaw County has been forced to pay $350,000 this year after Sylvan Township defaulted on multimillion dollar bonds for major water and sewer improvements.
Interest-only payments on the bonds were due May 1. Sylvan Township officials had alerted county administrators that they wouldn’t be able to pay, said County Commissioner Rob Turner, R-Chelsea.
Because the county voted 11 years ago to give its full faith and credit to water and sewer projects destined for a promised development in the township that never came through, the county had to make a $175,000 payment Tuesday or risk a decreased bond rating.
“(Sylvan Township) reached the end of their contract by not making the payment (Tuesday),” said corporation counsel Curtis Hedger. “The township is obligated to pay, but the county has absolved it.”
The Washtenaw County Board of Commissioners spent a considerable amount of time voicing opinions and concerns on the issue during its regular meeting Wednesday night.
The county is pursuing litigation against the township for the default while pursuing a consent agreement for a tax to pay back what the township owes.
As of Wednesday, no consent agreement had been reached between the county and township officials.
Sylvan Township residents will either pay off the bonds through a voting to approve a tax on the August ballot or through a tax rate assigned by a judge in litigation if no agreement is reached.
“There’s no guarantee to what the voters will do at the polls when it comes to raising taxes,” said Commissioner Ronnie Peterson, D-Ypsilanti.
A plan to repay the debt over a 20-year period 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 in unpaid taxes the township owes Washtenaw County.
Sylvan Township officials now want to place the same measure on the August ballot for approval - but the tax would be based on a new report from the equalization department at a rate of 4.4 mills, Turner said. If approved by voters, the millage would appear on December taxes.
The millage would also be used to pay the county back for making the interest payments on the bonds during the township's period of default, Turner said.
“This could be paid back by people that live in the township that didn’t even live there when this was approved,” Turner said. “My heart breaks for the people of this township.”
Sylvan Township residents have to pay for developments that the majority of the township can’t even make use of, Turner said.
However, commissioners voiced concern that the township still needs to cover its debt.
“I think we’re asking the rest of the residents of this county to be very patient,” said Commissioner Alicia Ping, R-Saline.
“An obligation is an obligation,” Peterson said. “There is nothing to negotiate. The township should be coming to the county to fix the situation.”
Sylvan Township officials have not come before the commission regarding the matter this spring.
“An appearance by officials of the township before this body two weeks ago or a month ago would have been appreciated,” said Commissioner Dan Smith, R-Northfield Township. “I’m happy we were able to make the payment (Tuesday) to maintain our bond rating.”
Commissioner Peterson was adamant that the county commission should revisit its policy for co-signing loans - to which Commissioner Turner agreed.
“I feel for the citizens of this community,” Peterson said. “I would be highly upset as a citizen of this community if decisions like this were made and then I had to foot the bill.”
Amy Biolchini covers Washtenaw County, health and environmental issues for Ann Arbor.com. Reach her at (734) 623-2558, amybiolchini@annarbor.com, or on Twitter.
Comments
JimmyD
Thu, May 3, 2012 : 3:57 p.m.
Sorry for the obvious question: Did they ever build the utilities?
Patrick Zieske
Thu, May 3, 2012 : 2:55 p.m.
Yes, the County wants "their" money back from us in Sylvan Township... after repeatedly assuring us in the past that we would never have to pay. For example, see the document attached here, from 2003: http://www.freesylvan.org/washtenaw-sylvan There will be more. There is also an audio recording of the County meeting to substantiate this. We have been informed that the County has the upper hand legally, i.e. they have no legal responsibility despite assurances like the one above, despite it being the County that actually floated the bonds, and despite the fact that the voters in Sylvan have never approved by referendum any aspect of the project or the associated tax obligation -- in contravention of the intent of the Michigan Constitution Headlee Amendment. That's not to say that the Township government is clean on this either. Indeed, they have made some terrible mistakes along the way in this 12-year saga, which in hindsight (since apparently there was a lack of foresight) have only dug the hole deeper. Both the Township and the County government bungled this. They went in together, for the most part. Yes, as Commissioner Perterson anticipated, the citizens here are upset, and at a minimum, we will hold the governments officials accountable who got us into this mess. Looking further down the road, I mourn for the loss of the County's credit rating and possible limitations on the County's ability to borrow money... no, not really. Wasn't it excessive borrowing that put us where we are now?
Jeff Frank
Thu, May 3, 2012 : 4:08 p.m.
Really? You truly believe that someone's statement that there are legal avenues to prevent a worst-case scenario from occurring is binding? Do you really think that she expected the courts to rule the assessment district null and void? Pretty sure she was speaking in the context of the developer failing to pay, not that the courts would render the entire legal basis for collecting the funds to be invalid. No matter how hard you try to wish this away, it's real and it's coming down on the heads of those living in Sylvan, today and in the future. It's ugly, no doubt, but when elected officials screw up, it's the taxpayers who pay, not the officials. As a resident of Chelsea, I had to pony up for legal fees and refunds, plus interest, due to city officials not following their agreement with a developer that occurred prior to my moving into the area. I expect no less from the residents of Sylvan. Yep, 4-5 mills per year sucks, but $400-500/year on a $200K house/property isn't insurmountable for most.
dotdash
Thu, May 3, 2012 : 12:37 p.m.
Can we as a county now please use more discretion when making this full faith and credit assurance?
cinnabar7071
Thu, May 3, 2012 : 12:21 p.m.
This is nothing, wait until the state gets the bill for Detroit.
countrycat
Thu, May 3, 2012 : 10:58 a.m.
Sylvan Township cough it up! Washtenaw County just paid on YOUR unpaid interest payment and you still owe Washtenaw County $1.2 million in unpaid taxes!