VBT LDFA approves agreement with VBT on bond payment loan

At its regular meeting July 9, the Van Buren Township Local Development Finance Authority unanimously approved a five-page agreement on the payment of the Visteon bond shortfall. The agreement now will go to the township board for approval.
“We knew this was necessary,” said LDFA chairman Michael Dotson. “We knew a shortfall was coming.”
The LDFA expects a shortfall of $639,157 on Oct. 1, 2019. This will be paid from the township’s long-term debt fund.
The funds the township uses to pay the shortfall on the Visteon bonds will be considered as a “advance” and will be reimbursed to the township by the LDFA from future available tax increment revenues from the Visteon Village Project. The LDFA agrees to pay interest on the township’s shortfall payments until they are reimbursed at an annual interest rate equal to the average interest rate that the township is earning on the investment of its general fund monies.
LDFA member Doug Peters said the citizens of Van Buren Township are paying Visteon’s obligation on the bond.
“With the understanding they will be paid back by taxes or the lawsuit,” said Supervisor Kevin McNamara. “This document has gone back and forth a dozen times.”
“This is to make sure the township residents are protected,” said Dotson.
A copy of the agreement was obtained by the Independent through a Freedom of Information Act request.
The document spells out the many steps that led to the Visteon Village Project’s tax increment revenues not being enough to cover the $28,199,656.35 in 2003 bonds VBT issued to help with the Visteon infrastructure.
Beginning Oct. 1, 2019 and running through the final term of the Authority Bonds in 2032 the township is responsible for the bond payments since the LDFA may be unable to cover them.
On May 12, 2015, the township filed a law suit against Visteon in the U.S. Bankruptcy Court for the District of Delaware for breach of contract and declaratory relief related to its claim that Visteon had failed to meet its obligation under the 2009 Settlement Agreement with the township when Visteon filed for bankruptcy.
Pursuant to an agreement between the parties, this lawsuit was dismissed and refiled in Wayne County Circuit Court.
On Feb. 18, 2016, the circuit court granted Visteon’s motion for summary disposition, deciding that the township’s claims against Visteon were not ripe for adjudication. On May 16, 2017, the Court of Appeals affirmed the circuit court’s ruling that the township’s claims were not ripe.
The township filed an application for an appeal before the Michigan Supreme Court and on March 8, 2019 that was denied.
The document states “the township shall be refiling its lawsuit against Visteon promptly after the date that the shortfall in tax increment revenues actually occurs.”
The document also states that it “sets forth the parties agreement to take the necessary and prudent steps to minimize the annual shortfall in tax increment revenues and to protect the township’s right to receive reimbursement from the Authority from future available tax increment revenues for amounts it is legally obligated to pay to cover the debt service shortfalls on the Authority Bonds.”
If the township isn’t completely reimbursed by the end of the Development Plan – Dec. 31, 2032 – the LDFA agrees to extend the plan to the maximum allowable term so the township can be paid in full.
The township and LDFA agree to aggressively promote new development in the Visteon Village Project.
“Any proceeds received by the township through litigation with Visteon, through judgment, verdict, settlement or otherwise shall, first, be reimbursed to the township to reimburse all advances made on the Authority’s behalf and interest, and second, to the Authority,” the agreement states.
After the LDFA approved the agreement, Supervisor McNamara said currently the LDFA was under the township’s economic development department.
“No longer,” he said. “We have a shortfall.” He said his executive assistant Dan Selman will be the new liaison to the LDFA for the next year or two.
He said there would be difficultly in hiring someone to replace Ron Akers, the current director of planning and economic development, whose last day with the township was July 10.
“We’re consolidated under the executive because of the high level of liability this township has taken on,” said Peters, an attorney. “We’ve got to stay focused on this…”
“I believe in growing and then you won’t have problems,” McNamara said.
“That’s what do and I’m happy that is the focus,” said David Schreiber, an LDFA member who is business development manager for Wayne County. “I like R&D and manufacturing.”
“Are we going to pay higher salaries?” Peters asked and McNamara said he offered Akers what could have made him stay, but the new job in Ypsilanti will give him a chance to expand. Akers will be Director of Public Services, including the DPW. After three years, he will be ready for a job as a city manager, and not a small city, either, McNamara said.
In other business at the 40-minute meeting on July 9, the LDFA:
• Heard LDFA member Scott Medlen of Sovereign Partners report that he has taken care of most of the problems with the nature trails on the Grace Lake property. He said he’s 95% satisfied with the repairs so far. A new tree is down and it will be removed. One or two more bridges need work, but things are better. “Thanks for letting me know,” he said to LDFA member John Delaney. “Anytime you see something, let me know,” he said. “We want to invite people out … when it’s ready,” Delaney said. “I’m battling with the contractor right now,” Medlen said. “They think they’re done. I don’t … Within the next month I’ll have it all wrapped up.” Delaney suggested inviting the Boy Scouts at St. Anthony’s to have a project, to help get the community in there;
• Unanimously recommended to the township board changes to the LDFA bylaws, including changing the titles of the officers. This changes the title of Vice-Chairperson to 1st Vice-Chairperson and the Corresponding Secretary title to 2nd Vice-Chairperson. Also, the general responsibilities are added for the three elected officers as well as a procedure for electing a temporary chairperson in the event of the absence of all three elected officers; and
• Was informed by Delaney that there is a going-away cake for Akers hidden under the coat on the side table in the meeting room. Members of the board expressed praise for Akers work. Delaney said, “He’s worked after hours, on weekends. Nobody know how many hours he worked.”