Traverse City Record-Eagle

Newsmakers 2011

December 21, 2011

Some second-guess decision on septage plant settlement

$725,000 used to cover facility's losses for 2010 and 2011

TRAVERSE CITY — Editor's note: Newsmakers 2011 recounts and updates stories that made headlines in the Grand Traverse region during the past year. Today: Grand Traverse County officials choose $725,000 settlement over suing designers of the septage treatment plant. To read this series in full as articles are published, visit record-eagle.com/newsmakers.

BY BRIAN McGILLIVARY

Some township officials continue to second-guess a decision to accept a $725,000 cash settlement from the people who oversaw the Grand Traverse County septage treatment plant's design and construction.

Local officials this year agreed to the settlement from plant engineering firm Gourdie-Fraser Inc. and project manager Michael Houlihan, which was used to cover plant losses for 2010 and 2011.

The plant faces anticipated losses as high as $460,000 in 2012, so the county Board of Public Works has begun preparations to levy a new tax on all county properties with septic tanks.

The settlement simply wasn't enough money to "compensate for the whole fiasco," said East Bay Township Supervisor Glen Lile.

East Bay is one of five local townships responsible for covering losses at the $7.8 million plant, and Lile voted against the settlement as a member of the county BPW.

"When I look at it I look at the residents of East Bay Township; they are on the hook for 30.75 percent of $7.8 million," Lile said.

Lile acknowledged the settlement saved East Bay taxpayers from chipping in $112,000 over the last two years to cover plant losses, but said that's not how he views the situation.

"What if we had gotten $2 million?" Lile said. "Would the residents have been better off financially? ... I think the answer is yes."

Should the plant lose as little as $400,000 in 2012, East Bay would face a bill from the county of up to $123,000.

For Garfield Township Supervisor Chuck Korn, going to trial in a lawsuit against those responsible for septage plant problems was too risky. Korn, as BPW chairman and head of a township responsible for 25 percent of the plant's losses, voted to accept the settlement.

"I'm fond of being bold, not stupid," Korn said. "It would be a sucker's bet."

The plant was built in 2005 for $7.8 million and partially collapsed shortly after it opened. An investigation found both design flaws and shoddy workmanship.

The design/build team of Gourdie-Fraser and The Christman Company made repairs and corrected flaws over the next several years, but it became apparent the plant was overbuilt. It brought in half the septic tank waste projected by Gourdie-Fraser and project manager Michael Houlihan, who also was the BPW attorney at the time.

The plant also cost almost twice as much to operate as projected. Another investigation alleged both Houlihan and Gourdie-Fraser were professionally negligent in their duties.

After months of mediation the BPW voted to accept the negotiated settlement offer instead of pursuing a larger settlement through litigation.

BPW attorney Scott Howard said he believes the county had a strong case, but advised officials to accept the settlement over the risk of losing a trial for professional malpractice.

"There were a number of reasons we might have simply lost, and after the additional legal fees ended up with nothing," Korn said.

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