When Trustee David Lohmeier reviewed a presentation prepared for the township board by Plante Moran, he noticed something interesting.
A slide refered to an Oct. 29 memo on funding the new Independence Township Hall, which Lohmeier hadn’t seen before.
Requesting the memo, he found it detailed how much water and sewer rates should increase to offset a transfer of funds to renovate the hall. It indicated rates would increase more if money was loaned to the township hall, despite claims to the contrary.
‘What we were led to believe was not true,” Lohmeier said. “That’s been made very clear, so now the supervisor has to find a way of preventing an unfair tax on the water and sewer customers.”
Supervisor Dave Wagner and Clerk Shelagh VanderVeen stand by the board’s decision to borrow $2.7 million from water and sewer for the new township hall, saying it has no effect on water and sewer rates.
‘This was a sound business decision, but the interpretation depends on how you view it,” Wagner said. “It can be interpreted a dozen different ways.?
VanderVeen believes the transfer had nothing to do with raising rates.
‘This building was a one-time capital expenditure,” she said. “That money is going to be transferred back to the water and sewer fund. It’s not like we went in and raided the kitty, so I disagree fundamentally.?
Plante Moran sent the memo this past October to Wagner, VanderVeen, and Finance Director Susan Hendricks. It said the current rate of $1.70 per hundred cubit feet, including a quarterly meter fee,wasn’t enough to maintain the fund.
According to the auditors, the fund would run out of money by 2011 without a rate increase or loan.
‘These events appear imminent even if the fund does not loan money to the general government,? the letter stated.
To keep funds at a level defined by management without the Township Hall loan, Plant Moran recommended raising rates 27-50 cents per unit, 100 cubic feet, which would result in an annual net increase of $32-$60. With the loan, cost per unit should go up by 31-66 cents, with annual net increase of $40-$79.
Wagner said they knew there would be a ‘substantial increase? in fees no matter what they did, but he also said the board does not have to raise fees as high as recommended by the auditors.
‘We have to figure out where we want to be at the maximum or the middle range,” he said. “That’s what the board has to decide on, where do we want to be??
VanderVeen said she has known for the past four years that they should have been raising fees incrementally.
‘The prior board talked about giving money back to the residents,? she said. ‘They would never even acknowledge that they needed to be raised.?
Trustee Larry Rosso said he never saw the Plante Moran memo, but had trusted the opinion given by township attorney Steve Joppich.
‘I don’t think we took the time to see the memo, we just put our faith in our attorney and our attorney said let’s go with it and we went with it,? Rosso said. ‘Hindsight is 20/20 and if I had to do it over again, I wouldn’t have done it based upon what we know right now. If Steven Joppich would have said ‘no,? I would have gone along with it.?
Wagner said every board member was given a copy of the memo.
‘These were all given to everybody, they requested the report,? he said. ‘Plante Moran came out with the report and every member of the board got it, along with the letter from Susan Hendricks.?
Hendricks signed a letter along with VanderVeen, dated Nov. 3, 2008, written by Joppich, that ‘the finance department had concluded after reviewing opinions and advice given in Plante Moran’s reports that transferring the loans from the operating revenues of Water and Sewer to the general fund? would not impair future operations or debt service payments, would not result in cash flow deficiencies, postpone normal maintenance within water and sewer systems, or result in a deficit within the water and sewer fund.?
Former Trustee Dan Kelly also said he didn’t see a copy of the memo, but that it was ‘contrary? to what they had been told.
‘There was never a representative of Plante Moran who came to the meeting and said ‘we’ve got some concerns there,? but I do remember Joppich coming and saying the opposite,? Kelly said, ‘that ‘this has been reviewed and approved by the auditors and yes, we may have to increase water rates, but this loan wasn’t going to affect how much we were increasing water rates.??
Trustee Mark Petterson wanted to know where the Plante Moran letter was while the loan was being discussed.
‘Why did it not’come to light until now, who knew about it, and why was it not brought up for public information,? Petterson asked. ‘Clearly, Trustee Dan Travis asked’the department director how the loan would effect the’department and the answer was there was no problem in the foreseeable future. I’m sure if the director had known about the letter, she would have been more critical of the foreseeable future.?
Department of Public Works Director Linda Richardson confirmed she had not seen the memo.
‘If I had seen it, I probably would have said ‘I just don’t think you can do this,?? she said.
Lohmeier said the ball is now in the supervisor’s court.
‘I’m not going to vote for any rate increase that penalizes them unfairly, and continuing to ignore the problem is not an option,? he said.