Options outlined to deal with sewer fund's shortfall

Incoming members of the White Lake Township Board of Trustees will be faced with an estimated $1.5 million shortfall in the township’s Sewer Fund in 2013, Clerk Terry Lilley explained at a Tuesday, Sept. 25 special board meeting.

Lilley said that while the fund has sufficient money to cover planned expenditures through 2012, cost overages of about $785,257 incurred in previous years were paid for through loans from the township’s Improvement Revolving Fund and the Sewer Debt Fund.

“I didn’t see any evidence that the Improvement Revolving Fund has ever been reimbursed for the $400,000,” Lilley said. “The (additional) $385,257 from the Sewer Fund is an issue, as that was money collected to pay off the loan for the sewer construction. So not only did the project run over by $785,257, but $385,257 was taken away from the loan payment stream to cover a portion of the cost.”

Additionally, about $161,858 that was borrowed from the township General Fund to pay interest and principal on a loan from Oakland County to help pay for the first phase of construction hasn’t been repaid, Lilley said.

He recommended four options for the township board to consider during its upcoming term as ways to address issues involving the township Sewer Fund:

• No. 1, unscramble the current accounting situation and put debt where debt belongs. In this case, Phase No. 1 sewers would receive the full benefit of their indirect fees. Residents living on Pontiac Lake would have to be assessed for any and all deficiencies related to its project funding. This would mean holding reassessment hearings for all 432 parcels within a Pontiac Lake sewer district at $1,900 each.

• No. 2, allow the Pontiac Lake Sewer Fund to collect indirect fees to meet requirements for bond repayment. If there are any remaining funds after the debt is paid, those funds would be returned to Phase I, realizing the fact that the Phase I sewers will never benefit from whatever indirect fees it was shorted and creating a shortfall in customers and cash flow prior to bonds being fully paid in 2018.

• No. 3, “loan” the fund monies from the Improvement Revolving Fund to finance any potential shortfall that may occur to meet principal and interest demands on Phase I bonds each year through 2018.

• No. 4, increase debt service charges and connection fees to make up some of the potential deficit to create at least some cash flow, along with any connections made during the year and then loaning the balance to meet its demands.

Lilley said he wanted to give a presentation to dispel any rumors that the township “was going broke” because of a bad board decision.

“This is the way it really is,” Lilley said. “You can blame whoever you want to blame … now we are going to deal with the facts, and the facts are the facts.”