State steps in on hall plan
Trustees upset with information gap
January 12, 2011 - When township Supervisor Dave Wagner worked out a deal with the state to avoid a $500,000 penalty, trustees had no idea.
"None of us knew about any of that," said Trustee Mark Petterson. "They've been very good at keeping us (the four trustees) in the dark."
Trustee David Lohmeier found out about it after asking about a $6,5000 payment to auditors Plante Moran.
"I don't think we were ever going to find out about this unless we accidentally stumbled across it like we did," Lohmeier said. "He (Wagner) continues to not inform the board on things he should be informing the board about."
Wagner says there was no need to inform anyone else at the "particular time" about letters he exchanged with the state between last July and November.
"When these letters come in, we just simply handle them as part of the day-to-day operation," he said. "Until we have all the answers together, then we were going to inform the board as to what's going on."
Michigan Department of Treasury sent a letter to Independence Township regarding its decision to borrow $2.7 million from water and sewer funds for the new township hall.
The loan put funds in deficit, which is against state laws calling for balanced budgets. According to state law, the township has 90 days to file a "deficit elimination plan" with the state.
"Basically it's a plan the local unit develops to address the deficit, and they have up to five years to do it," said Terry Stanton, public information officer for the Michigan Department of Treasury. "The township has sent in some information and that is currently under review."
If no plan is submitted within 30 days, the state can withhold 25 percent of the township's state shared revenue. The township expects about $2 million from the state this year.
Stanton said withholding the state shared revenue is "always a possibility, but at this point doesn't appear to be necessary."
"I can't obviously rule that out at some point in the future," he said.
According to Wagner, the township's plan is to take out another loan to reimburse the water and sewer funds. The new loan would have a lower interest rate – they pay five percent back to water and sewer.
Working with township auditors, he estimates a savings of $160,000-$170,000.
"It will assist the general fund by doing this. We're trying to find ways to benefit the township," he said. "Here is another perfect way to benefit the township by a restructured loan. That's my job to look at all these things and see if there are any other avenues."
Finance Director Susan Hendricks said the township pays around $308,000 a year for the reimbursement, in principal and interest.
"It would be good if we were able to get our money back. I think it would kind of improve relations with residents because we get calls all the time thinking our rate increases are due to that, they're not really," said Director of Public Works Linda Richardson. "We're just trying to play catch up for doing so poorly on raising rates on a regular basis."
Wagner meets with auditors and bond council this week, and there will be further discussion at the board's Jan. 18 meeting.
"As far as individuals on the board saying they don't like the way the letters written. Are they auditors? The auditors are the ones that told us we could do this, so the auditors are the ones that are helping us with the situation," Wagner said. "They are our experts, not a trustee."
Lohmeier said he took "exception" to some of the things written in the Nov. 28 letter, including the "looming deadline, which is why the board couldn't go after bonds in the first place."
"There is nothing in the purchase agreement that indicates there were any deadlines that wouldn't allow us to do the normal course of financing, which would be bonding," he said. "He (Wagner) sent the letter to the state on behalf of the township on commitments that we would do and what our plans were and we haven't sent a plan in place to look at bonding in the building even if you can do it."
Petterson agreed and called it "disappointing."
"Letters sent like that states the whole township board, so to speak," he said. "It gives all of our views and that's not all of our views."
However, Petterson noted he won't make "prejudged misconceptions," until he knows all the facts.
Trustee Larry Rosso was surprised the letters were written without board knowledge as well, but he also felt they were "necessary."
"There wasn't anything else that could be done," he said.
Trevor graduated with degrees in English and communications from Rochester College. He wrote for his college and LA View newspapers before joining The Clarkston News in May 2007.