After much discussion at the work / study session on April 5 and the regular meeting on April 6, the Van Buren Township Board of Trustees voted unanimously to authorize the law firm of Kilpatrick and Associates to negotiate a sale of the township’s $9.8 million claim against Visteon Corp., which is in bankruptcy court.
Kilpatrick’s best offer will be brought back to the township and the three full time officials – supervisor, clerk, and treasurer – will have to unanimously agree whether or not to accept the offer, after checking with the four trustees.
Officials familiar with how fast offers are made and pulled off the table, agree that having to post a special meeting with the required 18-hour lead time under the Open Meetings Act would be too cumbersome.
At the workshop session, Director of Planning and Economic Development Dan Swallow explained the option available to the township, where a third party will buy the township’s claim for cash and take the risk of going forward.
He said if they left it up to the bankruptcy court, the township could get just a percentage of its claim and that could be in stock or property, instead of cash.
In January, an agreement with Visteon guaranteed the township $2.2 million in cash, but at no time was the $9.8 million owed guaranteed, said Clerk Leon Wright.
“Other claims on Visteon could dilute the funds,” Swallow said. “There is a time factor involved in this…”
Supervisor Paul White said he did not think it would be in the township’s best interest to hold stock, and Treasurer Sharry Budd said she believed it was not legal for the township to hold stock, anyway.
“The resolution is just to give Richardo Kilpatrick approval to negotiate and if he gets a good number to bring it back to us,” Budd said.
“There’s a very close window … If you blink, it could be gone,” said Administrative Assistant Susan Ireland.
“Two months ago we were looking at $2.2 million and now we’re looking at $9.8 million,” Swallow said.
Trustees Phil Hart and Jeff Jahr were reluctant to allow decisions to be made without the four trustees being involved, but when they were assured an attempt would be made to contact them once an offer was on the table, they relented.
Swallow said Visteon is trading much higher and that’s why the finances have turned into “a hot button now.”
At the regular meeting, Swallow said the advantage of negotiating a sale of what is owed to the township is that the township will get a certain settlement in cash and quickly. The disadvantage would be that the township might receive less than it would by waiting until the end of the bankruptcy.
He said the question was whether the board wants to negotiate a sale now or wait until the bankruptcy court decides later. He said Visteon’s bankruptcy is expected to end during the third quarter.
Supervisor White said a group of investors could offer 85 to 92% of the total owed or the township could wait and get 60% — or the full 100% from the bankruptcy judge.
“I believe we should negotiate a sale,” White said. “We can’t know the values of the claim unless we go out on the market.
“We can always turn it down and wait for the bankruptcy court,” White said, noting officials had spent all day April 6 discussing their options.
Trustee Jeff Jahr spoke at length both during the workshop and the regular meeting, spelling out his uneasiness about the situation, noting it is “unprecedented.”
Clerk Wright agreed the bankruptcy situation of Visteon is an unprecedented dilemma for the township. He said in January the board signed the contract that guaranteed $2.2 million from Visteon and now there is a chance to recoup more.
“We would do a disservice to the community if we don’t consider this,” Wright said. “It’s the right thing to do for our constituents.”
Trustee Phil Hart said he was pretty upset after the workshop session, so he did some investigation and found offers like this to buy debt is faced-paced and taken off the table fast.
White said $9.8 million is what Visteon would have paid to the township if officials hadn’t given it a tax abatement. Since Visteon didn’t meet the terms of the abatement, the abatement was void and Visteon owed the township the money.
The resolution passed by the board said the township’s general unsecured claim against Visteon is $9,831,427.66.
In August, the township hired Richardo I. Kilpatrick’s law firm to represent Van Buren Township before the bankruptcy court in Delaware to protect its interests in the Visteon bankruptcy proceedings.
When he was hired, Kilpatrick was introduced as being highly regarded and nationally known in his field. The township got a discounted fee of $255 per hour for law firm partners and $155 per hour for associates.
Dr. Don Houtakker, retired from teaching finance at Wayne State University, said it was worthwhile for the township to go forward to see what it could get as an offer.
Hart said the one making the offer would be a company that buys obligations and gambles it will get more than it paid. He said what it amounts to is the township is “selling our receivables.”
“The market value depends on the timing,” White said. “We have to put trust in our bankruptcy attorney, who is very highly regarded… A lot of different factors figure into this equation … The decision will not be made until an offer is made to purchase our claim.”
In other business at the April 6 meeting, the board:
* Accepted the low bid of Abraham’s Lawnscaping of Ypsilanti for $42,164 for township lawn mowing this season. Abraham’s has been in business for five years and has three crews that can be utilized. There were six bids, including second-place Michigan Lawn Management, now owned by Randy Brown of Van Buren Township. His bid was for $53,572 and Brown unsuccessfully tried to sway the board into giving the job to him — a township businessman — despite the $11,408 price difference. Third-place bidder was Gonczy’s Property maintenance, $62,965, which held the contract for last season. Pioneer bid $67,450, Salisbury $72,159.16, and United $103,265. The township has a policy of having the option to go with a higher bid if the local bidder is within 5% of the low bid;
* Approved the supervisor’s one-year reappointments to the Recreation Committee of Joy Ann Ferris, Ken Askew, Charles Coleman, Mark Duff and Harold Gant. Member Loretta Speaks has chosen to retire, so Ralph Nodwell was appointed for a year to fill that vacancy;
* Approved the billing rate schedule for the engineering services of Wade Trim. The rates will remain the same as the 2009 rates, which was lower than the 2008 rates;
* Postponed to the next meeting consideration of bids for Linda Vista water and sewer connection to Mission Pointe and Wade Trim’s $27,500 construction administration proposal for that project because the Water and Sewer Commission has not had a quorum yet this year so it could consider the work. The commission will hold a special meeting to consider the proposals so a recommendation can be made to the board. The construction bids, opened on March 2 and good for 60 days, are: Blade Action, $157,616.50; DiCosmo construction, $182,286.25 (+24,669.75 or 13.5% higher); Davenport Bros., $194,944 (+$37,327.50 or 19.2% higher), Absolute Quality, $233,693.05; Pamar Enterprises, $243,400.50; Verdeterre Contracting, $256,822.75;
* Heard a report of Police Officer Derek Perez’s stopping of a vehicle on March 31 and finding 561 grams of marijuana in the trunk. The township also received a letter of appreciation from the Michigan Sheriffs’ Association for the recent use of the VBT Honor Guard at graveside services in Canton for a police officer killed in the line of duty;
* Heard Supervisor White compliment Director of Public Safety Carl McClanahan for reducing overtime by 59.29% in 2010, over last year’s figures;
* Heard Supervisor White announce his State of the Township message will be put on line. He gave highlights of the message;
* Heard Trustee Denise Partridge read a tribute to George Heifner, who died on April 2, and was a former elected township trustee and elected township constable;
* Heard Treasurer Sharry Budd say the township will be signing an easement agreement with the City of Belleville for the streetscape in front of the museum on Main Street. She said the streetscape will feature an archway with a sign in front of the museum to match the archway with a sign across the street at the Fourth Street Square;
* Heard Trustee Jahr question why the township spent money to send Interim Public Safety Director Carl McClanahan to police chief school, when he is just temporary. Jahr referred to the $995 paid to the Michigan Association of Chiefs of Police for a five-day session in March. McClanahan said 70% of the cost is reimbursed by the state and 20% by the MMRMA insurance carrier, so the cost to the township is negligible. He said the information gained was very valuable for the township. White pointed out that in the first three months of this year, McClanahan saved $40,000 in police overtime. The audience applauded;
* Heard Larry Fix complain that a landscaper hired by the township was out edging and raking around an empty building in March and Swallow said the township hasn’t started ordinance enforcement cutting yet this year; and
* Heard Reg Ion say he is glad many people are trying to move forward as a township after the divisive recall attempt.
Lynette Jordan complains
At the end of the Van Buren Township board workshop session on April 5, Lynette Jordan, who is acting director of the senior center since Linda Combs resigned, got up to complain to board members about Supervisor White, who she said hasn’t offered her enough money to take the job full time.
She said she has been senior coordinator and acting senior director for the last three months and is paid less than $34,000 and can’t go on this way. (Combs took 90 days of medical leave before resigning.)
Supervisor White tried to explain that the procedure was for him to negotiate salary with employees and then bring a recommendation to the board. Other board members backed up White’s explanation, with Hart adding, “Lynette, I think this is the wrong forum,” referring to the open board meeting.
Jordan said she would accept the last director’s salary of $48,114, but Trustee Partridge pointed out that Combs earned that salary after 17 years of service to the township.
Jordan said Combs taught her everything she knows.
Supervisor White said Jordan had wanted $50,000 and he had offered $46,000, which was a $10,000 raise with full benefits.
Jordan wanted the board to overrule the supervisor, but board members were not interested in doing that.
“We have a problem with the figure,” White explained, and also that Jordan doesn’t want conditions attached, such as getting certification.
“We don’t negotiate with employees …” Trustee Jahr stated flatly, referring to the board members. Jahr said Supervisor White has been passing on information to the board.