Potential land purchase explored to help pay water debt
August 15, 2012
Oxford Township is exploring the possibility of purchasing six acres of undeveloped land from its water system customers to help pay their considerable debt.
The land adjoins, on the north side, the existing 27 acres which the township already owns along Dunlap Rd., north of Seymour Lake Rd. The 27 acres houses the township's office complex, a water treatment plant and an underground well field.
Years ago, the people who created the Waterstone development donated the six acres to the township's water customers, of which there are currently 2,456.
"It was payment for a well site they didn't give us," Dunn explained. "The Waterstone people were supposed to donate a well site to the township. They didn't do it, so this land was given to us to satisfy things."
That was long before the township built water system facilities on its 27 acres. With that infrastructure in place, the six acres is now "of absolutely no use" to the water customers, according to Dunn.
"They don't need it because they've got a treatment plant and well field 400 yards away," he said. "What are (the water customers) going to do? Build another treatment plant? No. It will never be used by them."
Dunn believes it's better for the township to purchase this land from them for two reasons.
One, it will help water customers pay some of the massive debt hanging over their heads that was incurred for necessary improvements to the system. Those improvements included building two water treatment plants and a 1-million gallon elevated storage tower on N. Oxford Rd.
Township water customers were initially facing a debt load of $17.9 million, which included $10.7 million in principal plus $7.2 million in interest. After five years worth of payments, they collectively still owe $13.26 million. The debt is scheduled to be paid off by October 2030.
Unfortunately new residential and commercial development within the township slowed to the point where, currently, officials are concerned there won't be enough new water customers to help pay off the debt as originally anticipated.
Buying this land will somewhat help the situation. "We're basically looking at taking money out of one pocket and putting it in another to help out the water customers," Dunn said. "If they don't pay it, guess what? The entire township, including the village, will be paying it."
The supervisor was referring to the fact that even though the debt is being paid by township water customers, if for some reason there ever wasn't enough money available in the water fund, the township as a whole would be responsible for payment.
That's because when the municipality incurred the debt it pledged the "full faith and credit" of the township, which means every resident – even those who are not part of the township water system, i.e. properties with private wells or those hooked up to the separate village system – could end up paying. If the township's water customers need help making debt payments, the money could come from the municipality's general fund, which every taxpayer contributes to.
Dunn believes the other reason to purchase this property is because at some point in the future, the township may be able to utilize it for the public good.
"If people ever wanted a senior center, they could put it there and create like a campus," he said. "I'm not saying we're going to build one today or tomorrow, but someday, when times are better, people may decide they want something like that. This way, the township doesn't have to go out and buy some land at a premium. Land's cheaper now than it will be in the future."
The township is in the process of getting an appraisal of this land. "We don't know what it's worth," Dunn said. "We don't want the township taxpayers to overpay, but we also don't want the water customers to get shortchanged either. We want to be fair to everybody."