Traverse City Record-Eagle

Archive: Saturday

February 4, 2012

Taxpayers must cover septage plant losses

Long-term financial picture doesn't look encouraging

BY BRIAN McGILLIVARY bmcgillivary@record-eagle.com

TRAVERSE CITY — Taxpayers will have to kick in an estimated $102,000 to cover last year's losses at the Grand Traverse County septage treatment plant.

The long-term financial picture doesn't look any brighter.

Grand Traverse County picked up half the bill while Garfield, East Bay, Elmwood, Peninsula and Acme townships will get billed for the balance. The plant actually lost almost $400,000 in 2011, but the county offset part of that deficit with money left over from a $725,000 legal settlement with the plant's designers and builders.

"It wasn't terrible this year, but next year is going to be worse," said Bill Rokos, county treasurer.

The plant is expected to lose $400,000 or more in 2012. County and township officials acknowledge they have run out of short-term fixes.

"We've talked about every conceivable idea. We went through the lawsuit. There isn't any more money, and now comes the time to pay the fiddler," said Glen Lile, East Bay Township supervisor.

The plant opened in 2005 and partially collapsed a month later. It charges 12 cents a gallon to treat septage, but has never received enough revenue from treatment fees to cover operating costs and bond payments.

The county and Elmwood Township in Leelanau County produce only about half the septage originally projected by Gourdie-Fraser Inc. engineers and project manager Michael Houlihan, the former attorney for the county Board of Public Works.

The plant survived financially because CMS Energy sent millions of gallons of contaminated groundwater to the plant for treatment, until it found a cheaper solution. A settlement with Gourdie-Fraser, Houlihan and the construction firm The Christman Co. helped cover plant losses in 2010 and 2011.

"We've always had something that has gotten us through, but there's nothing on the horizon for 2012," Rokos said.

The five townships that guaranteed the bond payments want to consider refinancing the remaining $6 million owed for 20 more years, instead of paying it off in 2023. Some estimate that could reduce annual bond payments by as much as $175,000 a year beginning in 2013.

Neither Rokos nor county Finance Director Dean Bott recommend that plan because it would increase the total cost.

Jack Kelly, Elmwood Township supervisor, favors refinancing. His township can't afford an estimated $265,000 it may owe over the next six years to cover its share. Elmwood spent about $5,500 to have its attorney and an auditor see if it could buy its way out of septage plant bond obligations.

"Bottom line, it would not be in our best interest to do so," Kelly said. "Even if we pulled away, we would still be on the hook for the shortfalls and then we'd have no say for what happens in the future."

Support also waned for levying a special property tax assessment on septic tank owners to provide a revenue stream.

"I don't think there's the will to do it anymore, especially in an election year," Kelly said.

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