Washtenaw County foots $350,000 bill during Sylvan Township default
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, firstname.lastname@example.org, or on Twitter.