2017-08-24 / Front Page

Does township pay more than its share?

By Patti Brandt Burgess
Of The Enterprise staff

Several residents of Leelanau Township are wondering why they are paying for 19.9 percent of the municipal sewer debt when they only have 15 percent of the sewer users.

The Village of Northport, on the other hand, is responsible for 80.1 percent of the sewer debt when it has about 85 percent of the sewer users.

Revenue from the sewer is determined by Residential Equivalent Units (REUs); the township bills for 92 REUs and the village bills for 505.5.

Single family homes are charged 1 REU; businesses with apartments, and restaurants are charged more.

David Canfield, a township resident who is not in the Sewer Assessment District (SAD), attended a recent township board meeting at which he heard about the 80/20 split.

“They don’t seem to know how they got to the 20 percent contract,” Canfield said. “There’s no paper trail. Consequently it would appear that our township is paying more than their fair share.”

The sewer cost $13 million to build and was financed by the sale of bonds. A document sent to the Enterprise by Northport Village administrative coordinator Barb Von Voigtlander on Wednesday includes the cost estimates based on bids received in May 2007 as split 80/20 between the village and township. The document was created by Bendzinski & Co., the financial advisors for the project.

Von Voigtlander also sent the Enterprise a copy of the Leelanau County Sewage Disposal System Contract that lays out the Local Unit Share for the village and township. The document is not signed or dated, but she said she has one that is.

The contract outlines a cost split between the two governments that for some reason is not based on usage.

Leelanau Township Treasurer Denise Dunn said both she and township Supervisor Doug Scripps have been searching for a contract in the township files outlining the cost-sharing.

“I can’t find anything in writing,” Dunn said. “And I’ve been working on this debt stuff since about 2009-2010.”

When the sewer went online residents in the SAD were charged a hookup or capacity fee of $15,950, Dunn said. Those fees could be paid up front or paid back over several years on their property tax bills.

Residents began paying that fee in 2006 while construction was going on; the sewer went online in 2008.

The problem, Dunn said, is that residents will have paid back their debt before the township has, with the last bond payment due in 2028. And that leaves a big hole for about the last five years of the bond debt.

Dunn collects funds for properties in the SAD for both the village and township. She then sends the township portion — 19.9 percent — to the county for the bond debt.

The rest — 80.1 percent — goes to the village.

“And I don’t know why,” Dunn said. “I don’t know where that split came from.”

The village’s total share of the debt was $10,645,290; the village currently owes $4,847,259 — less than half.

The township’s share was $2,644,710; the township currently owes $1,482,465 — more than half.

Township resident Rick Cross said there is no doubt that the sewer was needed. And even though he does not live in the SAD he said he benefits from the sewer by the lake not being polluted.

The question, he said, is how much the township should pay.

“The village got a much better deal and now the township has the responsibility of coming up with more money than it arguably should have if the deal was more favorable,” Cross said.

But the problem has existed for 10 years, he said.

“I’m just trying to say you have to come up with a plan,” he said. “We have to pay the money back and the method we’re using right now is not going to get us there because there’s not enough money in the pot.”

Cross said a tax increase is inevitable as the debt has to be paid. He’d like to know if voters have to approve that tax or if the state will just come in and levy it.

Both the township and village currently take $60,000 per year from their general funds to try and make up for the expected shortfall.

Canfield is concerned that the township may have to raise his property taxes to pay its share of the sewer debt. He’s frustrated because the township knew about the debt and yet they sought a millage increase for the fire and rescue department that was approved by voters. Township officials have also discussed asking for millage increases to pay for a larger library and a new township offices and hall.

“Where does it end, especially when bad decisions have been made?” Canfield asked.

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