The Sylvan Township Board of Trustees voted 3-2 during a special meeting Monday, Oct. 22, to send a letter to the City of Chelsea requesting that the city pay a portion of the township’s $12.5 million debt bond payments for sewer and water.
Following a 20-minute closed meeting, the board came out of closed session and voted to send the letter drafted by its attorney to Chelsea City Manager John Hanifan requesting discussions about the payments.
However, Hanifan has yet to receive the letter, he said Tuesday.
“I got a courtesy call from Supervisor (Bob) Lange yesterday to let me know that the township wanted to talk about it.
Hanifan said, “It was a brief and cordial conversation, but he didn’t elaborate on anything.”
According to the letter from Warner Norcross, the firm that has been representing the township in this matter, after Sylvan secured the bonds, portions of township were incorporated into the new boundary of the City of Chelsea.
“Under Section 14 of the Home Rule City Act, “[w]henever a new city shall be incorporated, the personal property of the township from which it is taken shall be divided and its liabilities assumed between such city and the portion of the township remaining after such incorporation,” the letter states.
“Based on the assessment rolls from 2004, it appears that the City took 40.915% of the township’s assessed value (reducing the taxable value of the township by 43.5%),” the letter states. “And the city, correspondingly, assumed approximately 41 percent of the township’s general liability under the bond contracts.”
Tuesday night, after the letter was published on another news source, Hanifan called the township’s request “outlandish.”
“This letter is intended to invite further dialogue on this matter, which the township hopes will lead to a consensus as to the amount of contribution, and how it should be distributed, and perhaps even some creative solutions to this shared burden.”
Sylvan Township entered into “bond contracts” with Washtenaw County in July 2001, under Public Act No. 185 of 1957, for the purpose of financing sewer and water improvements.
In September of 2001, the county sold bonds worth $12.5 million to finance the sewer and water projects. Construction of the project was completed some time in the latter half of 2002.
Thus, by the time the city incorporated in 2004, the township was generally liable for any principal, interest, and other expenses on $12.5 million in bonds not paid through special assessments, according to the letter.
”The township has not requested any contribution from the City of Chelsea until now because this is the first year that the township has been unable to satisfy the bond obligations with revenue from special assessments,” the letter states.
Because of this shortfall, the township recently levied an additional 4.4 mills on all properties within the township, to make good on its pledge of the township’s full faith and credit.
By the same token, the City of Chelsea is now obligated to reimburse the township, or make its contribution directly to the county, in an amount approximating 41 cents of every dollar the township would otherwise have to pay the county from its millage, the letter states.
“The Township Board appreciates that this demand for contribution from the city is not welcomed news, particularly when both municipalities are struggling to recover from the recession and seeking a solution for the water treatment plant financed by the bonds at issue.”
But the township cannot, in all fairness, saddle its remaining property owners with a financial burden that was originally intended to be, and is legally required to be, borne by property now within the City of Chelsea.
“The board sincerely regrets any consternation this letter may cause, and hopes that the two parties may nonetheless find a mutually agreeable solution for reducing the burden of this debt on the city’s and the township’s residents,” the letter states.
“In light of the hardship the impending millage will soon visit upon the township’s residents later this fall, the township seeks a prompt response from the city, preferably within 21 days of the date of this letter.”
He said the city would respond within 21 days.
“It actually hasn’t been sent to me although it’s been sent to the press,” he said. “This isn’t like an invite to trick-or-treat … and it’s more of a trick than a treat.”
Council Member Frank Hammer said, “I still think we should continue to talk with them. I think this was pushed by the old board.”
The motion to send the letter was approved by a 3-2 vote with Trustee Reuben Lesser, Treasurer Arlene Grau and Clerk LuAnn Koch voting in favor of the motion and Supervisor Bob Lange and Trustee Scott Cooper voting against it.