By Diane Madigan
Independent Special Writer
In 2018, Van Buren Township will likely be unable to make a payment on the bonds sold to help construct Visteon Village and, since the full faith and credit of the township is pledged on those bonds, taxpayers could end up paying for the bonds with a millage.
The total bonds issued were $25,789,656 and the total cost to VBT residents is $55,988,988. The unpaid total is $47,196,958.
During the period of April 1, 2014 to Oct. 1, 2018, the VBT LDFA will need to pay $9,112,706 on the Visteon bonds.
The township hired Clark Hill law firm a year ago to help solve the bond problem and word of any progress has not been released to township residents.
But at the Oct. 8 meeting of the Local Development Finance Authority, VBT Supervisor Linda Combs said the public has not intentionally been kept from receiving information on the status of the Visteon bonds dispute.
She said attorney Kaveh Kashef from Clark Hill law firm and township attorney Patrick McCauley are looking at litigation, so there are a lot of things that can’t be discussed.
However, the attorneys authorized Supervisor Combs to impart the following “talking points” to the public:
• “We’ve been working with counsel to analyze Visteon’s obligations to determine the best method of approaching Visteon.”
Clark Hill has sent a letter to Visteon’s president and CEO as well as its counsel asking Visteon to meet its obligations under the 2010 agreement between Visteon and the township at the bankruptcy trial.
• “Attached with the township’s demand was a copy of a report commissioned by the township by the PFM Group. The report indicates that, under several scenarios which estimate revenue growth as compared to bond obligations, a shortfall will likely occur sometime in 2018.”
• “Visteon is a strong corporate partner in this and we anticipate good-faith cooperation, however if they are unwilling to work with the township, we’ll prepare to take the necessary steps including the possibility of litigation to obtain their support.”
• “At this time we are expecting cooperation with them, which we expect with them sitting down and talking to us about the findings of the PFM report.”
LDFA member Doug Peters asked that the above statements be placed on the township web site. Supervisor Combs said she would have Executive Assistant Karin LaMothe summarize the statement, place it on the website, and release it to the press.
Combs said there is a possibility that the township could refinance part of the bonds in 2015, presuming the current conditions remain relatively the same.
“The experts say that would be the right time to do it,” Combs said of refinancing. “It will likely create a cash savings, but not likely alter the date of the cash shortfall.”
Peters, an attorney, recommended that the LDFA recommend to the VBT Board of Trustees to instruct Clark Hill to initiate legal action within 30 days, with no exceptions.
“If Visteon wants to talk, they can talk while the litigation proceeds,” Peters said. “For us to wait, loses the opportunity of memories, witnesses, availability.
“Visteon will not talk with us until they have to talk with us,” Peters stated.
LDFA chairman Michael Dodson asked if that motion would be in line with the township’s strategies so far.
Supervisor Combs said she thought it is, adding that this is a recommendation to the township board and she didn’t see why this body couldn’t make a recommendation at any given time to the board.
So, the LDFA voted unanimously to recommend to the VBT Board to instruct legal counsel to file a petition to reopen the Visteon bankruptcy and initiate other legal action by Nov. 30.
Supervisor Combs said it would be discussed at the Oct. 14 work/study session of the board, and it was, briefly.
Supervisor Combs also said that it’s up to the township board to decide if this request fits with the township’s strategy in negotiations with Visteon.
LDFA member Peters said he believes “Time is of the essence”. If the bankruptcy is opened soon, Visteon must include this in its annual report.
Combs said, “The best-case scenario is we would get Visteon to the table and they would agree to pay us a sum that we would be able to pay down the debt with. That, with the money coming in from the LDFA (approximately $504,000 for 2013) would be the best-case scenario. The worse-case would be we would need to get a millage. It may be an option but it’s not something we’re considering at the present time.”
VBT’s attorney at Clark Hill sent a letter to Visteon on Sept. 9 which included a report from the PFM Group on financial projections. The report indicated LDFA will likely run out of funds to make payments on Visteon bonds in 2018. The letter also asked Visteon to schedule a meeting with the township within the next 30 days. As of Oct. 8 there had been no response.
PFM is a financial management group that was hired by the LDFA in June 2012 for $2,573. At that time, PFM developed scenarios in dealing with refinancing the bonds in 2014 and dealing with a potential loss of personal property tax revenue.
Arthur Mullen, Director of Planning and Economic Development, asked if the commission wanted to have a closed session with the attorney prior to the recommendation.
“No, they work for us,” Peters replied. “We’re the client. We’ve diddled for a year. The basis for my motion is the last paragraph of the lawyer’s letter to Visteon, Sept. 9.” (Before the meeting started, Peters said, “Yeah, I read the last paragraph that says the ball is now in our court.”)
Representatives from Visteon have stated that Visteon intends to meet its obligations under the agreement, Peters said.
“We assume that intention remains and that Visteon will act in good faith and in fact meet its obligations under the agreement,” Peters said. “As a first step in that process, we would like to schedule an initial meeting within the next 30 days, which is a reasonable time for you to complete a review and analysis of the cash flow review.
“If Visteon ignores our requests or fails to negotiate in good faith, we have no other option but to seek relief through judicial means. If our lawyers’ letter and if our township is to have any credibility, we must act,” Peters said.
“It’s pretty cut and dried,” Supervisor Combs said. “You are right.
“As soon as the minutes get transcribed, I will make sure that the board members are notified of the recommendation of this board/committee and I will forward it to them in writing, so that they all have a heads-up before work/study,” Combs said.
Chairman Dodson said he would attend the work/study.
From the audience, Barbara Miller thanked Peters for “his astute observations.”
The Independent asked if the current LDFA budget item Debt Stabilization Reserve of $1.5 million will need to be spent to get the township to 2018. Mullen said he would check.
In a related item, Mullen gave a fiscal report with information of where the LDFA funds come from.
He said a fall bond payment of $412,945 was made on Sept. 30 and the next payment is due April 1, 2014.
Funds for payments on the Visteon Bonds came from Wayne County, $168,491 for the summer tax bill.
The winter estimate for Wayne County is another $21,523; Wayne County Jail Millage capture is $27,984; Huron Clinton Metropolitan Authority, $6,401; Wayne County Community College, $96,674; and the capture from DIA and Zoo will be $0.
From the township operating fund, the LDFA collects, $27,277; Public Safety capture is $119,322; Library Authority, $20,891; Wayne County Parks, $7,335, for an estimated winter total this year of $335,399.
Peters asked if Wayne County Jail would still collect the millage for the new jail that isn’t going to be built. Mullen said he didn’t know if the millage was for a new jail or for operating expenses. He said he would look into it.
In other business at the hour-long meeting on Oct. 8, the LDFA:
• Re-elected Michael Dodson as chairman and elected Chris Hayes as vice chairman and Leonard Armstrong as secretary, even though he was not in attendance;
• Heard a report by Mullen on the lawsuit that was filed to allow taxing jurisdictions to continue to capture portions of the Detroit Institute of Arts and Zoo millages. Although Wayne County Circuit Court ruled in favor of local taxing jurisdictions against the Treasurer, the case is now on appeal. If the County wins on appeal, Mullen said the LDFA probably would need to repay any money it previously captured. Since the court ruling, the Lt. Governor signed a law saying there is no authority to capture a portion of those two millages. The Independent asked if the Zoo was appealing back captured funds from their 2008 millage. Barbara Miller, an attorney who serves on the Wayne County DIA Authority Board, said the DIA is not appealing for back funds because their millage was for a short period of time. In Wayne County the figure was $50,000. However, the Zoo is appealing because the Zoo’s capture was $750,000;
• Heard Miller say after reviewing historical LDFA minutes, she found $200,000 was given to Visteon for development of a park and saw notes that it would be open for a walking trail. She said she called the VBT Recreation Department and they knew nothing about it. Mullen said it is posted as open to the public at the entrance to the parking lot at the woods. Supervisor Combs said she would make sure it is brought to the attention of the Recreation Department. Mullen said the township probably gave money for some on-site improvements to the campus, but it’s not owned by the township, but is on land now owned by Sovereign. Peters said the township doesn’t own it, but has some sort of easement or right of use. That would have been one of the bases for filing a lien against the property, he said. Miller asked where would a copy of the agreement be? Dodson asked Combs to find out if there is an agreement in place and check with the new owners to make sure that access will not be denied;
• Heard audience member Sandy Croswell, a neighbor to Visteon, say she was walking the trails and was stopped by security and told she was not allowed there and had to leave. She said later she received an email from Visteon saying she and her neighbors were allowed. Peters said this is evidence of a pre-existing agreement and it should be recorded in the County deeds as a recorded easement. Miller also said it should be recorded that neighbors that continually walk these trails are concerned about maintenance;
• Heard audience member John Delaney ask chairman Dodson to have the board develop a policy for attendance. He said he’s been keeping track and in the past 4.5 years, Armstrong has been at only four meetings and Covington has been to eight meeting. Delaney suggested three absences a year be allowed. Combs agreed and said they will check the bylaws for all committees and commissions. If they don’t already have an attendance clause in their bylaws, “We’ll make sure they get one”;
• Heard Miller ask what the board’s policy is for cancelling meetings for lack of agenda. There have been several LDFA meetings cancelled for lack of agenda. “How can there be a lack of agenda when you have this Visteon thing going on? Who cancels these meetings? This is a very import commission for the township,” Miller said. Combs said to cancel a meeting there is generally a consensus between Mullen, Dodson and herself.
Peters said one of the reasons some meetings were cancelled was because the lawyers didn’t want any discussion until they reviewed the documents.
“We understand and we completely agree with you,” said chairman Dodson. “This committee and the Visteon Action Item are detrimental to what could possibly happen in this township. We take this very seriously. I can assure you, we have these discussions every single month at length.”
Peters said a couple of the meetings were cancelled because they couldn’t make a quorum and that goes to the attendance issue.
“Just know that this board is being scrutinized by the public,” Miller said. “We want you to meet. We want you to get to the bottom of this Visteon thing.”
Delaney said there is always a printed agenda. There may be no New Business or Old Business to discuss, but there is always Correspondence, General Discussion, and Audience Non-Agenda. The audience in any meeting should not be kept from saying what is on their mind, he said.
By Diane Madigan