Presto! Township Debt Problem Disappears!

Livingston County must be home to some real magicians. They can make millions of dollars of debt just disappear.

Last month, the all-Republican Livingston County Commission set aside $2 million to create a fund to help townships pay off bonds for water and sewer systems in subdivisions that were never finished. The county backed the bonds for the townships, who paid for the projects for developers who walked away from the projects and left the townships holding the bag.

The county is left with egg on its face as it scrambles to figure out how to salvage its credit rating if townships stop making the payments. And it may face having to pay out $200,000 to $400,000 a year in payments for Handy Township because it can't make its bond payments starting as early as next year.

But just last week, the Livingston Press and Argus reported that everything is fine with the townships' special assessment debt. In some cases, township voters have approved millages to make up the shortfall. In other words, they raised taxes to cover up county and township officials' mistakes.

So what was the point of the $2 million loan fund? None of the township officials interviewed seems to have been asked if they will make use of the county's loan fund. Did the problem magically disappear in the month between when the loan fund was set up and the time the township officials were interviewed? Or does Handy Township at least expect to borrow money from the fund? What are the terms of the loan from the fund and can Handy Township meet them?

The article's emphasis was on whether or not the state would send in emergency managers to take over any townships, not the value of the county loan fund. And it turns out the state treasurer's office has met with local officials to discuss assessment debt. What happened in those discussions? Does the treasurer's office have a plan the people don't know about?

The two stories don't add up. The county commission sets up a loan fund for townships that have debt, and townships that have the debt don't even mention whether they will use it.

Denby and Rogers Getting Their Own Taxpayer-Funded Bailout

Livingston County taxpayers are about to bail out Republican Reps. Cindy Denby and Bill Rogers for decisions they made while holding local elected positions. Our tax dollars are going to go to cover up the multi-million-dollar mistakes made by this pair of "fiscal conservatives."

The taxpayer bailout amounts to $2 million, in the form of a special fund being set up by the all-Republican Livingston County Commission to loan money to townships that can't make the payments on sewer and water projects paid for by bonds backed by the county.

Handy Township is one of the townships in the most dire straits. It approved multiple new subdivisions, financed by bond issues backed by the county, when Denby was township supervisor. Rogers was chair of the commission when it decided to back the bonds for more subdivisions even though the Michigan economy was struggling, auto makers were losing money and laying off workers. Developers never finished the projects and walked away, leaving the townships and county holding the bag.

According to the Livingston Press and Argus, the county commission will take $1.6 million from money set aside for a new jail and $354,000 from the county's general fund to set up a fund to loan money to townships to make their bond payments. The same general fund that has had to be cut and cut, meaning fewer services for county residents paying the same amount of tax dollars.

So now, county taxpayers in townships like Hamburg and Putnam, which didn't participate in the risky overbuilding, are going to have their tax dollars going to bail out other parts of the county and paper over Denby and Rogers' mistakes.

Democrats running for county commission raised the issue of these toxic Special Assessment Districts during the 2010 county commission races but board Chair Maggie Jones insisted there was no problem at all. Everything was under control. Not to worry.

It worked until after the election, but Denby and Rogers' chickens are coming home to roost and pick the pockets of Livingston County taxpayers.

Cleaning Up Cindy Denby's Mess

Livingston County taxpayers have just made a $100,000 installment on a multi-million-dollar problem.

Their elected representatives -- the all-Republican Livingston County Commission -- has decided to give $100,000 to Handy Township for legal fees over an uncompleted sewer line. The line was part of an expansion the township was constructing for a private developer. The bonds were backed by the county, which puts all county taxpayers on the hook for paying them off. The first construction company failed to complete the sewer line and walked away in 2008. The second one hired to finish the job also gave up on it and its owner says the county failed to inform it of numerous difficulties with the project when the company bid on it. Now the matter is in the courts, and Handy Township needed money for legal fees.

Whose idea was this mess anyway?

Why, none other than Livingston County's own Rep. Cindy Denby. The so-called conservative Republican lawmaker was township supervisor when the project was initiated. She was in charge when the township, with a population of roughly 7,000, decided it needed not one, not two, but three more subdivisions in the township, (on top of another one in the village of Fowlerville.) Combined, they would have added thousands more households to the 2,500 in the townships. Even as the auto industry shed thousands of jobs in Michigan that decade, Denby listened to the snake oil sales pitch private developers were giving and decided to build sewer lines for the developers' pipe dreams without getting any financial guarantees from them. Denby's "conservative" Republican buddies on the Livingston County Commission aided and abetted the plan, giving county backing to the bonds. Now the township can't make its payments to the county for the bonds because the projects failed.

Now that the chickens have come home to roost, Denby has moved on. Voters rewarded her by electing her state representative in 2008 and then re-elected her in 2010.

Because she is "conservative."

Something to Watch from State of State

Livingston County should keep a close eye on one piece of legislation outlined in the State of the State message on Wednesday (Jan. 19, 2011). That's the proposal to let emergency financial managers intervene earlier in entites with severe financial problems.

How could that possibly affect Livingston County, one of the wealthiest counties in the state and with the often-bragged about lowest tax rate?

The fact is several townships may soon be unable to pay back their share of the $100 million the county has borrowed for them in order to build water and sewer systems for private developers, who later walked away from the projects and left taxpayers holding the bag. One of the worst affected is Handy Township, who got deeply in debt when Republican Rep. Cindy Denby was township supervisor and thought the world was going to move to Handy Township even as the Michigan economy shed jobs by the hundreds of thousands throughout the decade.

If Handy Township can't make it's debt payments, will a financial manager be needed? Will Denby and the other Republican lawmakers from the county slip something into this bill to help out Livingston County -- like that $5 million taxpayer bailout they proposed earlier?

Keep your eye on the ball.

So the County Commission DOES Have a Role in County Roads?

I'm confused, and readers of the Livingston Press and Argus must be, too.

When Democratic candidates for Livingston County Commission pointed out the poor condition of county roads and pledged to stop spending money on wasteful projects and fix the roads instead, the county commission insisted it had no role whatsoever in county road building. That was all up to the road commission and all the county commission did was appoint the commissioners and set their salaries and then totally ignore whatever they did. Even though the commission has an "infrastructure committee."

The Livingston Press and Argus backed them up on that during the campaign and again later, insisting in its year-end story wrapping up political highlights of the year that the county commission doesn't have anything to do with the roads.

So here we are on Friday (Jan. 14, 2010) and we read in the Livingston Press and Argus that the county commission plans to give $1.5 million to the Latson Road interchange project.

So the newspaper and the commissioners are admitting that the county commission DOES have a role in road construction in this county when it chooses to. And the conclusion is obvious that it has CHOSEN not to do a darn thing about the poor roads in the past.

The county commission didn't say where this $1.5 million for the Latson Road project is coming from and the reporter apparently didn't ask. My guess is it's coming from the deliquent tax revolving fund.

The article also is interesting because it draws a direct connection between county commission spending, or not spending, on roads and its foolish backing of sewer and water projects for private developers which have now gone belly-up and left the taxpayers holding the bag.

Commissioner Dave Domas didn't want to give the money to the road commission for the Latson Road interchange, only loan it to them. As the newspaper reported:

"Domas said the county must pay attention to several pressing financial issues, including accounting for township water and sewer special-assessment projects the county has backed with its credit rating. Several assessment projects have been built without expected development, which will leave the county responsible for paying them off if townships fail to."

In other words, Domas can see that county taxpayers are going to soon be getting a big bill for the county's borrowing to cover losses in these special assessment districts and he wants to have some money in reserve so that taxes don't have to be raised to pay off Wall Street.

Which is exactly what Democratic candidates were saying last fall.

Crystal Ball-Gazing for 2011

It's time to get out the crystal ball and project what's ahead for Michigan and Livingston County in 2011. (Hint: It's not pretty.)

10. With Republicans in control in Lansing, the GOP will go after poor and working people with a vengeance, wacking programs such as health care for the poor, pensions for teachers, salaries of prison guards, and so on.

9. Republicans will look for someone to blame for their problems in balancing the state budget while giving huge tax breaks. They will turn to scape-goating
immigrants, passing anti-immigrant measures like Arizona's which will never save the hundreds of millions of dollars they claim but will burden everyone with having to carry papers to prove our citizenship over and over again.

8. Michigan's economy will continue to improve as out-going Gov. Jennifer Granholm's priorities for diversifying the economy continue to take hold and the reborn auto industry sees on-going growth. Republican Rick Snyder will take credit for the upswing and the news media will let him get away with it.

7. Michigan's film industry tax credts will survive any Republican repeal effort, but lawmakers will impose new reporting requirements that they would claim were burdensome and job-stifling if Democrats had imposed them on any other industry. Nevertheless, the new reports will let the news media write hard-hitting stories on topics such as how much money was spent on George Clooney's make-up for "Up in the Air." Rep. Cindy Denby will faux express outrage at the expense.

6. Republicans will attempt to override the will of the people by passing legislation repealing voter-approved measures allowing stem-cell research and medical marijuana.

5. Republicans will do their best to gerry-mander legislative and congressional districts so that more safe Republican districts are created, diminishing real voter choice at the polls. But redistricting at the congressional level in a way that protects all GOP incumbents will prove harder than they anticipate and create GOP in-fighting.

4. Rick Snyder will turn out to be far more conservative than the news media portrayed him during the campaign as the Engler administration appointees he brings in and the ultra-right Republican Party dictate policy on key issues.

3. The Howell school district will be embroiled in a new controversy that involves the right of Christians to be mean to anybody they want to because that's what they say their religion means, but really boils down to the administration wanting to beat up on teachers.

2. Livingston County will continue to shovel county responsibilities, such as law enforcement and road maintenance, onto local townships, requiring them to raise taxes so that Republican county commissioners can crow about their low tax rates. Services will continue to deteriorate, as wait times for 911 response go up and road conditions go down.

1. Townships such as Handy in Livingston County will have difficulty making their payments to the county for the $100 million spent for water and sewer systems built for private developers. Some townships will begin exploring naming an emergency financial manager, but the development will be concealed from the public for months.

The Envelope, Please

We've been through the list of top political stories in Livingston County, counting down on Wednesday (Dec. 29, 2010) from Number 10 to Number 2. I've been feeling the suspense building the last 24 hours, and now it's time to reveal the top political story in Livingston County during 2010.

Drum roll, please. The top political story in Livingston County during 2010 was:

--The Livingston County Commission's debt management subcommittee was revealed to have failed to approve minutes of its meetings for ten of its meetings going back to August 2009.

The maneuver was discovered when a Freedom of Information Act request was filed for the minutes and the subcommittee had no actual minutes to release, only "drafts." At its next meeting, the debt management subcommittee suddenly decided to approve its back minutes.

The failure to approve minutes was an example of the way the all-Republican county commission tried to keep secret for months the depths of the problems that the county and many of its townships face from their decision to build water and sewer systems for developers without requiring adequate security, even as Michigan was losing jobs in its major industry throughout the decade.

The secrecy was destroyed when Bloomberg News singled out Livingston County as the center of the problem in Michigan.

County commissioners and former official, such as former chair Rep. Bill Rogers and former Handy Township Supervisor and now state Rep. Cindy Denby, continued to cover up their role in causing the crisis. They insisted there was no way to foresee slowing demand for housing in Livingston County, even as figures show Michigan lost jobs from 2001 on and even as they approved more and more subdivisions while others remained unfilled.

That's what passes for leadership in Livingston County.

Was the Michigan Economy Bad Early in Last Decade?

Democratic candidates for Livingston County Commission rightly made this county's $100 million debt for overbuilding subdivisions an issue in the last campaign. But defenders of the Republican regime insisted that the multiple special assessment districts that were approved by townships, and then backed by county taxpayers, were not foolish investments. Nobody could see economic problems coming in Michigan, taxpayers were told over and over, so it was perfectly logical to keep approving more and more subdivisions that remain unfilled.

But now, when it comes time to assess the performance of Gov. Jennifer Granholm, people have changed their tune. Turns out, the economy was lousy all through the last decade and Granholm should have recognized it.

According to a Livingston Press and Argus editorial on Sunday (Dec. 12, 2010):

"While Michigan's economy has long bounced up and down with the domestic auto industry, there was no reason to believe that was going to be the case with the slump that greeted Granholm. There was plenty of reason to think otherwise.

"Michigan, as Comerica Bank economist Dana Johnson said early in the decade, had the most to lose because it, by far, had the highest percentage of manufacturing jobs. The state was not enduring a cyclical fluctuation, but instead enduring a fundamental shift.

"Over the last decade, Michigan has been suffering greatly while the rest of the country was doing well or at least limping by. That all changed by the end of 2008, when the rest of the nation's fortunes crashed. But Michigan had been in those economic throes for up to eight years by then."

So, according to the editorial, Granholm should have recognized the state's fundamental economic problems earlier, but county leaders like Maggie Jones, Dave Domas, Carol Griffith, and Jack LaBelle, (and state Rep. Cindy Denby) could not be expected to have reached the same conclusions and stopped putting taxpayers on the hook for subdivisions that are near ghost towns.

Granholm should have seen it coming, but Republicans here in Livingston County shouldn't be held to the same standard.

That's a double standard if there ever was one.