Sylvan Rejects Tax to Repay Washtenaw

In an outcome with implications for Washtenaw County government, Sylvan Township voters rejected a proposal to levy a 4.75 mill, 20-year tax, by a vote of 475 to 328. Proceeds from the millage were intended to help with payments on $12.5 million in bonds issued by the county in 2001 to build a water and wastewater treatment plant that was intended for future development. The township expected that connection fees from developers would cover the bond payments – under a contract with the county, the township is obligated to reimburse the county for the bond payments. But the development never materialized and the township has been struggling to make payments.

Now Sylvan Township – located west of Ann Arbor, near Chelsea – is not expected to be able to the payment in May 2012. Millage proceeds would have been used for those payments. The county had backed the bonds with its full faith and credit, and is ultimately responsible for making the payments, even if it isn’t reimbursed for those payments by the township.

Even if the millage had passed, proceeds alone would not have been sufficient to cover the entire cost of the bond payments, however – forcing the county to tap its capital reserves as well. The millage proceeds were also intended to repay the county to cover any amount used from the county’s capital reserves, as well as interest. The proceeds would also have been used to repay the county treasurer’s office, which advanced about $1.2 million to the township in 2007 and 2008 related to this project.

At its Oct. 19, 2011 meeting, the Washtenaw County board of commissioners gave final approval to a contract with Sylvan Township related to the township’s bond repayment schedule. However, the contract was contingent on voters passing the 4.75 mill tax, and will be nullified in the wake of Tuesday’s vote. A staff memo accompanying the contract resolution indicated that if the millage failed, the county could file suit against the township for breach of contract in failing to meet its debt repayment obligation. Such legal action could result in a court-ordered assessment on township residents. The county is expected to make the bond payments to avoid having its bond rating negatively affected.