2018-04-26 / Local News

Property tax option nixed for sewer

Township bound by contract, state law
By Jen Murphy
of the Enterprise staff

Leelanau Township taxpayers will not be asked to fund a $800,000 shortfall in the bond payoff for the municipal sewer system.

“If we go ahead, we will have a lawsuit,” township supervisor Doug Scripps explained.

The Township Board has been discussing for several months floating a request to voters for a new property tax to pay the difference. The issue has been opposed by some residents, as most homes in the township are not hooked up to the sewer.

Also, Northport Village property owners would have been forced to pay the tax. Most already pay fees for sewer usage, and the village is already withdrawing $60,000 annually from its General Fund to make sewer payments.

But the proposed property tax of .25 mill won’t be on the ballot due at least partially to a years-old written agreement with the Northport Point Cottage Owners Association.

“We expect a legal challenge from a group, and for us to defend that, it will cost money,” Scripps said. “The group involved has engaged an attorney, and the attorney has contacted us. Our attorney, when he saw the papers, advised that the record of winning in a case like this is not a good one… it’s a tricky defense.”

The Leelanau Township Board last week voted to abandon a plan to pursue a 0.25-mill levy to fund its portion of debt service on the Northport/Leelanau Township sewer system after receiving a letter from the Northport Point Cottage Owners’ Association (NPCOA).

Scripps said that based advice from the township’s attorney, the board determined that pursuing a millage was not the next best step. A copy of Northport Point letter was requested by the Enterprise under the Freedom of Information Act, but was not received by press time.

NPCOA president Max Schwartz said the group opposes the millage because of its conflict with state law. It also would require the Northport Point homeowners, like others in the township, to pay for a sewer service they will not use.

“We didn’t think the way they were proposing to make up for the funding gap with a Township wide millage was the way to go about it,” Schwartz said. “The appropriate way, at this point in time, would be to go back to the sewer district itself to make up for the shortfall rather than broaden the taxpayer group.”

The tax concept may not be legal, he added.

“We thought that what was being proposed was not consistent with Michigan law. It seemed to us that the sewer district should be assessed. We were not benefiting from it because we already had our own system.”

When the NPCOA built its own community sewer system, the group was required to enter into an agreement with the Township, Schwartz explained. “As part of the terms of the agreement with Leelanau Township, they agreed that we would not be assessed again. It seems unless our group was excluded from the levy, it would violate the spirit of that agreement,” he said.

The homeowners association has taken no legal action. “We are hoping to resolve things amicably,” Schwartz said. “From my perspective, it’s done.”

As previously reported in the Enterprise, Leelanau Township pays about $154,766 per year toward the debt in two payments. Those payments have been made with the help of draining $60,000 per year from the township’s general fund.

The municipal sewer was financed in 2007 with the sale of $13.3 million in bonds. The bonds were backed by Leelanau County.

The township’s next steps are yet to be determined, Scripps said. But he added that the township is on schedule with its payments for now. Three or four options remain to lower payments that, based on Michigan law, are the responsibility of the 94 household users to make.

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