VBT LDFA gets reports on Visteon, Zoo/DIA millage capture law suit

By Diane Madigan
Independent Special Writer
The Van Buren Township Local Development Finance Authority (LDFA) met Feb. 12 and spent most of its 40-minute meeting talking about the upcoming Visteon bond shortfall and the capture of millage funds meant for the Zoo and Detroit Institute of Arts.
VBT Supervisor Linda Combs first introduced Grosse Pointe resident Arthur Mullen as the new interim Director of Economic Development, replacing Terry Carroll who left Feb. 8.
She said Mullen is now the point person for all things building and planning and the LDFA, as well.
Supervisor Combs said she has signed authorizations for the Kilpatrick law firm attorneys and the financial firm (PFM) headed by Kari Blanchett to release all documents pertaining to the Visteon transaction to Clark Hill PLC.
She said it has been determined that no bond funds were used improperly in construction. Everything that was spent on the pylons and the infrastructure projects were allowable according to state law for the use of those funds, she said.
Combs said the audit was done at the state level and she has been assured that an official written opinion will be forthcoming and forwarded to the board.
Combs said Kaveh Kashef from Clark Hill is the lead attorney on the Visteon case and he has spoken with current and former employees and officials in relation to their knowledge on the issue.
He is continuing to interview all those persons who have a part in those original transactions so he can get a full history on it.
Combs said she was advised by the attorney on the confidentiality of this information because they like to play things as close to the vest as they can.
“We want our residents to know that we are doing something, but we are not at liberty to go into great detail at this point,” Combs said. “It’s important that we use care when talking to the citizens.”
Combs paraphrased Kashef’s letter: “He is targeting a letter to Visteon to begin the negotiation process by the end of this month. A closed-session presentation will be made to the township board as soon as possible.”
LDFA member and VBT resident Doug Peters, an attorney, asked, “Why is it taking so long? We asked that action be taken immediately in October. The letter should have been sent no later than November. We’re not even sure the letter will get out this month. The letter will take time to be responded to. We should start the litigation. Why not?”
Combs said Clark Hill told her they weren’t ready for litigation yet and are still gathering information.
“Are they going to send their lead attorney in to talk with the Board of Trustees?” Peters asked and Combs replied, “Yes.”
When asked when that would be, Combs said maybe Feb. 19, but they did not know if the attorney would be available then.
LDFA Chairman Michael Dotson thanked Combs for the update and asked them to move forward and keep the LDFA apprised.
“We are hoping that you move forward as quickly as possible, as was stated in our request to the board,” Dotson said.
Zoo Millage
At the last meeting, Chairman Dotson asked that the zoo millage capture be kept on the agenda until it was resolved so he asked Combs for an update.
Combs deferred to Mullen because, “As it turns out he is involved in this through his professional association.”
Mullen asked that Downtown Development Authority Executive Director Susan Ireland be involved in the discussion because she’s been involved with this through the township DDA.
Mullen said that in 2008 the zoo passed a millage to support operations. In Wayne County the taxing jurisdictions and the treasurers have been retaining funds from that millage as required under state law.
“There is an interpretation from the State Attorney General’s Office that we are not to collect,” Mullen said. “There are several other legal opinions that have been obtained from a lot of the TIF (tax increment financing) districts in Wayne County that contradict that.”
Mullen said he is on the Board of Michigan Downtown Association as its Legislative and Advocacy Committee Chair that is interested in following this issue.
Mullen said he believes there is only going to be a solution to this through a court opinion.
He commented on an article recently published in The Detroit News as being inflammatory and not a true report and, “We (the MDA) understand their interest in selling these papers.”
On behalf of the MDA, Mullen submitted a letter to the Detroit Free Press and The Detroit News about 2½ weeks earlier defending the capturing of the millage.
Ireland said a complaint seeking a speedy declaratory judgment was filed with the Wayne County Clerk on Feb. 1. The case was assigned to Circuit Court Judge Daniel Ryan and the attorneys were due to meet with the judge on Feb. 14 regarding future schedules.
Ireland said Romulus is spearheading the effort and is coordinating a meeting with those participating in the suit and legal counsel to determine the next step.
Ireland said the suit was filed by 18 entities from eight communities. Attorney for the suit is Thomas Moynihan.
So far, the VBT DDA has approved $3,000 to fight turning over captured millage to the zoo and DIA.
The county has said that at the time of settlement it will deduct the captured millage from the delinquent tax roll that is paid to the communities that are capturing the millage.
“I take it that the people that are filing suit do not want to turn the money over to the zoo?” asked Peters.
“That is correct,” Ireland replied. “The law states that the treasurer shall remit tax increment finances.”
“I think we have to be clearer on that response,” Dotson said. “The group has gotten together to bring this suit forward in order to get a clarification of the situation per the State law on collection of these taxes.
“There is no one that said we don’t think the zoo or any of the other entities deserve this money that the taxpayers intended. It’s simply a matter of clarification as to how they are to proceed,” Dotson said.
Ireland agreed, saying, “There is a non-binding Attorney General’s opinion which conflicts with our attorney’s definition. I am not an attorney, but as I read it, we are following the law by capturing the incremental tax increases. There is a provision in the law that allows for an opt-out.”
Peters addressed Mullen: “For clarification, Arthur, is that group that you’re involved with in favor of the suit or opposed to it?”
“We’re in favor of the suit because our concern is precedence will be established to have taxing jurisdictions be able to opt out of TIF,” Mullen replied.
“So, you have a paid conflict of interest, as you sit here, your group doesn’t want the money to go to the zoo,” Peters said. “So, you’ll be mindful that you do have that conflict and will not let it influence you and nor will the township contribute any money to that lawsuit. Is that our correct decision?”
Combs said the township itself is not involved in the lawsuit, but the DDA is.
Peters asked if the DDA is contributing to legal fees and Ireland said it was.
Dotson said the LDFA is not contributing to legal fees.
Ireland said the DDA and LDFA have been capturing since the beginning in 2008.
When asked, Ireland said Deputy Treasurer Sean Bellingham has been keeping track of what has been collected, but is not necessarily sequestering the funds.
Ireland said it’s about $7,700 for the DDA and about $2,400 for the LDFA.
“So we’ve contributed up to $3,000 to get $10,000?” Peters asked and Ireland replied that was correct.
“I’d like to talk to the township,” Peters continued. “I have some land that I’d like to sell. We’ll make a good deal, I promise.”
Mullen said the concern is that other existing taxing jurisdictions could also try to make an effort to opt out and that could significantly impact any TIF district.
“I’m clear in my opinion,” Peters said. “I still don’t understand why we’re spending our money on this. I think it’s a mistake. Go to it.”
Mullen said had the ballot language been written differently, this case would not be taking place.
“But, because the way the ballot language was written, we have no choice but to continue to capture those funds based on the current existing laws,” Dotson said.
“I think it’s right to capture them, but I think it should be paid to whoever it should be sent to,” Peters said.
After more discussion, David Tyler, who is the Wayne County Deputy Director for EDGE (Economic Development Growth Engine) added, “My understanding is that there is legislation that is pending. All of this may become moot very shortly relative to the corrections that assembly needs to happen to clarify the language.
“Assuming that it does take place, the direction that legislature is going, they will clarify that. In fact that zoo money that is captured goes to the zoo. That is clearly the intent of the legislature at this point.”
“It has nothing to do whether or not I like penguins and polar bears,” Ireland said. “Because I think they’re great.”
“I think the intent of the law is clear,” Peters said.