Chelsea City Council approves $2 million bond resolution to repay lawsuit over development
Chelsea City Council member Rod Anderson and Deputy Clerk Laura Kaiser at the meeting Tuesday.
Lisa Allmendinger | Ann Arbor.com
The Chelsea City Council approved a resolution Tuesday night to issue up to $2 million in general obligation bonds to fund part of the $3 million judgment the city must pay an investment group after it lost a lawsuit over a development on Dexter-Chelsea Road.
Chelsea Investment Group, LLC sued the city and former City Manager Mike Steklac in 2006 alleging breach of contract, among other things when problems with the city’s sewer and water system halted additional phases of the Heritage Pointe subdivision along Dexter-Chelsea Road.
Last month, the City Council voted to pay $1 million from the city’s electrical and general funds. The city plans to use $250,000 from the general fund cash reserves and $750,000 from the electric fund cash reserves.
Repayment of the $2 million in bonds will begin Nov. 1, and the city will pledge its “full faith and credit for prompt repayment of the bonds,” according to the resolution.
A view of the Heritage Pointe subdivision on Dexter-Chelsea Road.
Lisa Allmendinger | Ann Arbor.com
He told the City Council he’s hopeful that the interest rate will be about 4.5 percent on the 10-year notes, but the exact interest rate and the yearly payments won’t be known until the actual bond sale is made.
In both instances, Council member Rod Anderson was the lone no vote. He said he voted against the plan in part because no other alternatives were provided to the City Council for repayment.
In September, 2008, Circuit Court Judge David Swartz awarded the investment group about $2.8 million in damages plus interest and taxes. The city appealed the decision to the Michigan Court of Appeals claiming that the city didn’t breach its contact and contested the amount of damages.
The appeals court upheld a majority of the lower court decision, including damages, interest and taxes and the city appealed the case to the Supreme Court. On Dec. 20, 2010, the high court refused to hear the appeal.
View Heritage Pointe in a larger map
Lisa Allmendinger is a reporter for AnnArbor.com. She can be reached at lisaallmendinger@annarbor.com. For more Chelsea stories, visit our Chelsea page.
Comments
John Q
Thu, Feb 10, 2011 : 3:42 a.m.
Stupidity rules the judiciary. As for the previous comment, try learning something about the case before commenting.
braggslaw
Wed, Feb 9, 2011 : 9:17 p.m.
Does anybody else think this is ridiculous? Borrowing money to pay a judgement on a law suit. The leaders screwed up, they contractually obligated themselves when they should not have. The taxpayers now have to clean up their mess, they should all be removed.