‘The issue is solvency’

The Michigan Court of Appeals dismissed Lansing Township´s complaints about the cost and who pays it. A contractor is ready to begin moving dirt. As it has with similar projects, Ingham County is expected to pledge its full faith and credit to bond for the project. But some commissioners are uneasy about the county´s financial exposure and ultimate liability.

Lansing Township is responsible for about $6 million, roughly half of the total cost of the (trust me, I hesitate to used the snooze-inducing term) Groesbeck Drain project. Township officials plan to cover its share of the cost with an assessment on all residents — north, south, east and west in the disjointed community. Some municipalities cover their share of drain project assessments with general fund revenues, not additional tax levies. Drain project costs also require payments from homeowners and business within a drainage district´s boundaries. The Lansing Township approach could be challenged in court. The questions troubling some commissioners is Lansing Township´s ability to cover its $6 million obligation without the special assessment.

“We do have concerns, and I have to be delicate here. But the taxpayers are going to be on the hook for this project,” said Brian McGrain, chairman of the Ingham County Board of Commissioners, whose 10th District includes the township. “We have been seeking legal advice on this. It´s a larger project than we have usually done.”

McGrain said the board had a closeddoor meeting to receive a legal opinion regarding the drain, promising that it will be the last closed session on the matter. Questions dealt underwriting the bonds and repayment, he said.

“The issue is the solvency of Lansing Township,” said 12th District Commissioner Deb Nolan. “And the reason being when they extended themselves and put up a parking lot at Eastwood Town Center that has remained vacant, yet lit, for several years now they went ahead and acted as developers.”

Lansing Township Supervisor Kathy Rogers does not like how the cost of the drain project were apportioned. Nor does she like commissioners, as she put it, butting into the town financial affairs. And she defends the town´s finances and dismisses questions about it insolvency.

“Those are rumors out there,” Rogers said. “We hear them all the time.”

Perhaps it´s because the revenue, expense and debt reports that the Lansing Township uses on its website suggest serious financial issues.

Rogers acknowledged that it has no bonding capacity — that is, Lansing Township has borrowed so much money that until it pays some back, it can´t use the municipal bond market for long-term loans.

Long-term debt for the township soared to $35.7 million in 2011 compared with just $2.5 million in 2010, according to Munitrix, which complies financial data on public bodies. Unlike other area townships, which offer detailed budgeting and financial information on their websites, Lansing Township´s presentation is skimpy. It refers only to the Munitrix analysis, which shows the township´s debt levels measured against its ability to generate revenue is forecast at 10.8 percent - well above the preferred 6 percent threshold. By comparison, the City of Lansing´s debt as a percent of taxable value is 2.8 percent. In Delta Township, it is 0.7 percent.

Lansing Township´s short-term numbers aren´t particularly good either, although Rogers disputes them. Munitrix has increased the financial risk rating of Lansing Township twice since 2012. Four years ago it was a low risk 3. Based on forecast number for 2015, the risk level is a mid-range 5. The City of Lansing gets a risk rating of 4; Delta and Delhi get a 1.

The audited, budgeted and forecast revenues and expenses for years 2013 through 2015 show continued losses. The fund balance – money in the bank for unexpected expenses – has declined $718,671 in 2015. It was $1.5 million in 2011. Rogers said that more recent numbers show improvements and said the loss in 2014 reflected long-deferred maintenance issues that it has addressed. She said she has contacted Munitrix about inaccuracies in the township´s report.

Still, not a pretty picture, and a dilemma for skittish county commissioners who want to address the flooding hazard but are concerned about their fiduciary responsibility to all residents.

“It´s not an easy decision. How do we weight the cost and the benefits,” said 2nd District Commissioner Rebecca Bahar- Cook. “What happens if, God forbid, they do default?” First District Commissioner Vic Celentino, chairman of the County Services Committee, expects the board to resolve these issues in meetings scheduled this week. His committee had a hearing on the loan Tuesday night. “There is no indication that they can´t fulfill their financial obligation. But I know that some commissioners have questions. If we don´t pledge our full faith and credit to the project, it could make things worse,” he said.

The legal challenge mounted by the township against the Ingham County Drain Commissioner´s Office and head, Pat Lindemann, was bitter, with charges that its constitutional rights were violated, that the Drain Commission lacked jurisdiction, that the assessment was “excessive and improper.”

The Michigan Court of Appeals in December 2014 sided with the drain commissioner, rejecting the arguments brought by the township. The county wants to approve the project this month before a construction contract let two-and-a-half years expires, which could require new bids and even higher costs for the long-delayed project.