VBT Supervisor Combs explains Visteon bond finances to LDFA

Van Buren Township Supervisor Linda Combs handed out to members of the Local Development Finance Authority a folder containing an alternative proposal for what VBT would do if the law suit against Visteon doesn’t work.
This was at the July 21 LDFA meeting.
The LDFA is facing a $20 million shortfall in the second half of 2018 for funds necessary to pay for bonds sold to help Visteon build its world headquarters in 2003.
The full faith and credit of the township was pledged to pay off the bonds if the LDFA falls short.
The alternative proposal is from Standard and Poor’s and it outlines what the township can do if the money falls through, Supervisor Combs said.
She said Standard and Poor’s announced that the township has a A+ bond rating from them, which she said was a stable outlook rating, but is two steps lower than its previous rating.
The former rating was AA, she said. AA indicates a “very strong” capacity to meet financial commitments. An A rating is slightly lower and shows “strong” capacity and A+ is “strong” but “a susceptibility to long-term risks appears somewhat greater.”
Combs said the LDFA audit from Plante Moran had to show the projected shortfall.
“Our net position appears to be in the red because of the expected shortfall,” she said, adding that was expected in the second half of 2018.
She said in the other document she gave them it tells the township’s plan to go for a public safety millage increase to free up $2 million a year.
She said the township is asking the county and state to help develop the rest of the property at Grace Lake, the former Visteon Village.
She said there were 38 acres in that Office Technology zoning and Visteon Village took eight acres, so there are 30 acres left, with the pond.
Combs said the least desirable step would be to go to the people for a millage to pay the bonds and, “We’ll try everything else first.”
She said they had to wait for the rating from Standard and Poor’s before going out to refinance a portion of the Visteon bonds. She said she expects the bonds to be refinanced in mid-August, which should save $1.7 million in bond costs.
She said the plan is to put the increased public safety millage on the ballot in November, 2015.
Combs said State Rep. Erika Geiss, who represents a small part of VBT, connected the township with the Michigan Economic Development Corporation and with a state program to possibly help the township make bond payments.
She said MEDC is ready to help, the VBT Downtown Development Authority is marketing the DDA district and the township as a whole, and Vantage Port (aerotropolis) is ready to help.
When the land is developed there will be more tax money to pay the bonds.
In an aside, Combs said a new developmental services director has been hired for VBT. She said Ron Akers works for Genoa Township in Livingston County and will be able to start work the middle of August. He is Genoa’s Zoning Official.
LDFA member Chuck Covington asked if the bids have come in on the Ecorse property owned by the LDFA and Combs said she hasn’t seen one. She said her office was supposed to get the bids and she will check with the department of planning and economic development.
Diane Madigan asked if the DDA would opt out of capturing some of the new public safety millage.
Combs said if the voters pass a 2.5 mill increase in the public safety millage it will generate $2.4 million which would allow the township to give $2 million to the Visteon bonds.
Combs said she checked with the DDA and found the only way to opt out is if you are expanding the DDA or starting a new DDA.
When the LDFA got to the part of the meeting that would acknowledge the expected township board reappointment of Leonard Armstrong to the LDFA and the expected new appointment of Danylo Dobriansky to the LDFA, John Delaney spoke from the audience.
He wanted to speak about both candidates.
Combs said that Dobriansky works for Sovereign Partners, which now owns the former Visteon Village. She said he will fly in from New York for meetings.
“He was here last month when the meeting was cancelled and we didn’t let him know in time,” Combs said, noting that her executive assistant Lianne Clare took him around and showed him the township hall.
LDFA Chairman Dotson said the authority is thinking of amending the bylaws to allow conference calls and he asked Combs to look into that.
She said she had looked into the procedure and found there is nothing to prohibit that in the LDFA bylaws or state laws. She said the township has a telephone with a speaker that is put in the middle of the table. She said she will draft bylaw language and bring it back to the LDFA.
Delaney brought out some figures he had compiled on the attendance record of Leonard Armstrong, who was absent from that meeting and the LDFA’s last meeting, held in March.
Delaney said in the years 2010 to 2014 there were a total of 60 LDFA meetings and 35 were cancelled. Of the 25 left, Armstrong attended only 9.
He said Armstrong was the common denominator in meetings being cancelled for lack of a quorum.
Delaney said he had nothing against Armstrong and he knows he and his wife have health issues. If Armstrong can’t make these important meetings, he should not be on the authority, Delaney said.
“This is a shame,” Delaney said of the plan to rename him to the LDFA.
“When you want to be transparent, you say the schedule is this,” Delaney said referring to the annual calendar. He said, actually, the public never knows when the LDFA actually is going to meet.
He said Dobriansky leaves his office in New York and flies here just for a meeting that might be cancelled. There were 35 cancellations in five years, many for lack of a quorum.
“Nothing against Mr. Armstrong, but numbers don’t lie,” Delaney said. “My gills are raised…”
Dotson thanked Delaney for his “energy” and noted, “I will have a discussion with Mr. Armstrong personally.” He said this would be after the reappointment.
Delaney said he had been told that before when he spoke about absences. He said Armstrong should not be reappointed that day, referring to the agenda item on that evening’s township board meeting.
“I can take it off tonight’s agenda,” Combs said (and, she did).
“Why don’t we do that and let me talk to him,” Dotson said.
As to Dobriansky’s appointment, Dotson said, “It’s very important we have involvement of Sovereign Partners.”
Under Unfinished Business, Combs discussed the refinancing of some of the bonds that will save $1.7 million in interest payments.
She said the board also has a contingency plan, referring to the Plan B attorneys had asked the township to come up with regarding payment of the Visteon bonds, which would help with the refinancing.
She said the township has a fund balance of more than $9 million, a public safety millage is hoped to be raised by $2.5 million so $2 million now given to public safety can stay in the general fund, and the help of the MEDC and Vantage Port (aerotropolis) with development of the rest of Grace Lake so that there will be added tax capture to pay for the bonds.
She said, “The bottom line is the state could come in and assess the full balance due in one fell swoop. We are doing everything we can to avoid that.”
LDFA member Doug Peters asked if this plan of action has been seen outside the township and Combs said no.
“If we went into default, we would go before a judge,” Combs said.
“If it goes to a judge, it’s gone pretty far,” said Peters, a newly retired attorney. “Write to the MDEC and tell them what you are doing. In writing.”
Former Township Supervisor Paul White pointed out that the MDEC is just a group that deals with development. It is the State Department of the Treasury who evaluates the fiscal health of the township, he said.
He said the township would go to an emergency manager.
“We need to stiff Visteon for the horrible mistake in 2003,” White said.
“You are absolutely right,” Combs said to White. “The state decides our risk each year. We let them know. Our audit is sent to them.”
But, she said, the township cannot “stiff” Visteon because, “We are on the hook for these bonds. We pledged our full faith and credit.”
When Dotson asked Combs for a report on the Visteon litigation, she said she is planning a closed session with Clark Hill attorneys for the next meeting of the LDFA, Sept. 8.
But Dotson didn’t want to wait until September and asked if they couldn’t have a special meeting in August.
Peters said he would like to see the pleadings filed with the court.
Combs said Visteon wants a change of venue from Delaware to Wayne County, which she said would be good for VBT.
Combs said she would look into getting the meeting in August.
White had talked about the valuation of Visteon Village being set at $365 million in 2003 and now is $65 million.
Peters said that was a good point and it could be that the value was fraudulently expanded at the beginning to put VBT on the hook.
“That’s one reason I want to see the pleadings,” Peters said.
Later, Peters said, “Was that property ever worth $365 million? Was it done to make us rely on that one company? We had all our eggs in one basket: Visteon. That’s a key point. To go from $365 million down … that’s skullduggery. It came down to $65 million.”
In other business, the LDFA:
• Again, discussed the property it owns on Ecorse that got an appraisal and was supposed to be put out for bids several months ago, and wasn’t. Since it was already voted upon Dotson directed that the township follow through on the steps for the sale; and
• Heard Delaney tell about Huron Signs coming to the planning commission to put up a $100,000 LED digital sign on I-275 to alert the public that Grace Lake had space available for lease. Delaney said he was interested in working on the project, but the sign company walked away from the job because Sally Hodges of McKenna planning consultants said the sign couldn’t be erected as proposed. Delaney said if you are trying to market that property, somebody from the LDFA has to talk to Hodges. “That is something that should not happen…” Dotson said, noting anything related to the LDFA district should be copied to him. “That’s the past said Peters. “We could put up a sign… if they say that ship has left the port.” Dotson stressed, “The future priority of that property is vital to this community.”