VBT board wants to meet with LDFA to discuss Visteon strategy

At the work/study session of the Van Buren Township Board of Trustees o June 6 the board learned some information about Sovereign Partners, new owner of Grace Lake,that caused it to remove an item from an upcoming agenda.
The discussion also led the board to seek a special, closed door session with the Local Development Finance Authority and the township’s attorney on the Visteon law suit that had recently been dismissed by the court because it had not been filed in a timely manner.
The board was discussing the revisions to the LDFA bylaws that already had been approved by the LDFA and now were before the township board for consideration. It was due to be on the June 21 township meeting agenda for action.
Director of Planning and Economic Development Ron Akers presented the revisions, most of which were housekeeping measures to make it comply with state law.
One big change was to provide for teleconferencing, so members who were away could attend the meetings and help make decisions.
The teleconferencing was included because of the absence of one LDFA member who never had attended a meeting since he was appointed by Supervisor Linda Combs and approved by the board last year.
Danylo Dobriansky of Sovereign Partners has offices in New York City. Supervisor Combs said he flew out twice to attend LDFA meetings that were cancelled for lack of a quorum.
Trustee Brenda McClanahan said according to the LDFA bylaws with three unexcused absences the member is out. She was told they had a problem with what was “unexcused” and what wasn’t.
John Delaney, who serves on the LDFA, said 10 months ago the LDFA really had a problem with attendance and Dobriansky never showing up was a problem. He said the teleconferencing was being put in just for him.
Delaney said now they have found that Sovereign’s in-house counsel is the same as Visteon’s in-house counsel: Dickinson Wright.
He said if Dobriansky finally attends a meeting he would find out what the LDFA is going to do and he’ll tell Visteon.
“We should hold off on teleconferencing until we see how that works out,” said Supervisor Combs, who also sits on the LDFA.
Doug Peters, a member of the LDFA, said the issue is does Sovereign has a conflict of interest.
Trustee Jeff Jahr said the LDFA voted for these changes and sent it on to the board.
Delaney said that was before they learned about the in-house counsel. He said now the LDFA can get a quorum without a problem and it’s not a good idea to facilitate attendance for the Sovereign representative.
“Why do we need this appointment anyway?” asked Trustee Reggie Miller.
Supervisor Combs said it was made in the best interest of the owner of the property to help with development. She said they were going to develop the out lots at Grace Lake and it was thought it would be good to have them represented on the board.
“There’s been no development,” Miller stated. “What benefit is he on the board?”
Delaney said it looks like Sovereign is just a holding company and the primary goal is to sell the property. He said the LDFA has seven or eight questions to ask him and can’t do so.
Miller asked if there has been talk of selling and Akers said the assessing department got an inquiry on the taxes on the property. He said the township has no confirmation of a proposed sale.
Delaney said he believes Sovereign is a straw company for Visteon, buying the property and eventually giving it back to Visteon, past the 2019 deadline for VBT’s bond payment.
Peters said the bylaw changes were sent to the board before the LDFA knew about Dickinson Wright. Now there’s a rumor of a new sale and inquiry as to whether they would still pay the same tax rate.
Peters, an attorney, said there have been discrepancies on the value of the property. It was first set at $300 million and then the township claimed it at $30 million. Visteon sold the property to Sovereign for $65 million.
“If it’s a friendly purchase, it realizes it’s worth much more,” Peters said, noting it could charge Visteon a reduced lease price for space in the buildings and, “We have lost millions of dollars.”
Kaveh Kashef, tried to get a copy of the lease, Peters said, referring to the attorney handling the law suit against Visteon.
“When we looked into Sovereign, there was not much online,” Peters said.
He said the property is now leased at capacity. He said if the new purchaser is innocent, he may be committed to the lower lease rates.
He said $18 to $24 per square foot is fair, but there may be a substandard rate which would amount to fraud on the township.
“I tried to get Kaveh to get the lease, but Visteon never produced it in the litigation,” Peters said. “Why would Visteon hide those documents?”
Peters said there are “tax avoidance” structures used to cheat the taxing authority and are perfectly legal.
“An innocent buyer could be buying subject to keeping the lease. They could have a 24-year lease,” Peters said.
“It should go back to the LDFA in order to change their recommendation,” Combs said.
“Everyone involved needs to know what’s going on,” said Trustee Jahr, asking for a joint meeting.
“I just learned there’s an appeal,” Peters said. “Nothing in the bylaw changes interferes with operation of the LDFA,” he said, suggesting that they can take their time with it.
“The real issue is if this guy has a conflict of interest,” he said of Dobriansky.
“You can’t keep counting on this litigation being successful,” Trustee Jahr said, referring to the idea of kicking the can down the road.
“This board is shirking their responsibility by depending on the law suit,” he said. “I think Visteon should pay. They said they would make up the shortfall. What happens if we don’t win the litigation?”
Combs said she would call Kaveh to see if the two bodies can meet together in closed session with him and to ask, “Where we are with a conflict of interest?”
The revision of the bylaws was removed from the June 21 agenda and sent back to the LDFA for reconsideration.