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 email@example.com.