Sewer flows from SAD to MAD

Record-Eagle file photo A pedestrian crosses the street in Northport.

NORTHPORT — Northport resident Doreen Tyrell says she's tired of being triple-charged for the municipal sewer system that serves both the village and part of Leelanau Township.

Tyrell, like all village residents, is paying for the $13.3 million system via her quarterly sewer bill, her village tax dollars and her township tax dollars.

The sewer is scheduled to be paid off in 2028, but is facing a projected shortfall of estimated of $750,000 to $1 million.

Voting "yes" on the creation of a rarely-used Metropolitan Authority District (MAD) that could levy up to 1 mill in property taxes for the sewer debt could be the answer, according to village and township officials.

Doug Scripps, Leelanau Township supervisor, said a full mill would not be needed. A 0.33-mill tax will generate about $1.06 million over the next eight years and would be enough to pay off the debt, he said.

It would cost the owner of a home with a taxable value of $100,000 about $33 per year.

The MAD would encompass the entire township, which includes the village, but would exclude the Northport Point Cottage Owners Association, which operates its own sewer system under an agreement with the township that association members would not be taxed if the township were to build a sewer. The agreement was signed in 2003.

The association has threatened to sue the township if a voted millage is put into effect, Scripps said.

An election to put the MAD into place could take place in August. If approved by voters it would eliminate the $60,000 that has been paid out from both township and village coffers to make the sewer debt payment since the shortfall was brought to light about four years ago.

That $60,000 is money that should be spent on parks, the library or any number of township needs, Scripps said.

The Northport Village Council and Leelanau Township Board met in a joint session Tuesday, with both boards voting unanimously to move ahead in the creation of a MAD.

Tyrell has her doubts.

"I question why you would want to create another level of bureaucracy," Tyrell said during public comment.

The MAD would be different from the Sewer Assessment District, which encompasses nearly all of the village and part of the township. Under the MAD, those who are not sewer customers would also pay the new tax.

Township resident Rick Cross, who is not in the SAD, said he has always supported a millage to pay the sewer deficit, but the whole township should pay it. Cross has a septic system that he pays for and maintains and said the Northport Point residents should not be let off the hook.

"This is terribly unfair," Cross said. "I'd rather have them sue us than let them off the hook right from the jump."

Paul Rebori, who lives in the township, said he would encourage a sunset clause on the MAD, that when the sewer debt is paid off the district dissolves.

Those who live in the SAD were assessed a one-time hook-up fee of $16,000 starting in 2006. They could opt to pay them all at once or spread them out over 20 years, with most choosing to spread them out.

That fee is now capped at $18,126 for new connections.

Bonds were sold in 2008 to construct the $13.3 million sewer system with a 20-year repayment plan. The final bond payment is scheduled for 2028. Most sewer customers will have their assessments paid off in 2026 — leaving a two-year gap that has created the projected deficit.

Sewer customers are charged by the Residential Equivalency Unit, or REU, which is based upon the sewage flow generated from a single family residence. Businesses such as restaurants, hotels and bed and breakfasts are charged more, as are homes or businesses with an apartment.

The village charges for 506 REUs, while the township has 96. In addition to operation and maintenance fees, village customers pay $224 per year on the sewer debt, while township customers pay $220 per year.

The state's Metropolitan District Act of 1929 allows for any two or more cities, villages or townships to incorporate into a metropolitan district so that it may acquire, own, operate and maintain parks or public utilities, including sewer systems.

There are several steps that need to be taken in the process, with the ultimate say-so resting with voters. Officials are aiming for an August election and must submit ballot language and other documents to the state by late April.

Township resident Allan Dalzell thinks the township is going too fast.

"I want to caution you to not rush this to the April ballot because there is so much in (the act) that we don't know," Dalzell said.

Next steps include determining the exact amount needed to retire the debt, naming four members to a MAD board and drafting and adopting a charter — all of which must be in place before the question is put to voters.

Township Treasurer Denise Dunn told the roomful of people Tuesday that she has been working for years on a solution to paying off the sewer. She has worked to find grants that would help, but those are only given out for new sewers, not sewers that are in trouble.

"Nobody wants to pay any more money and I get that," Dunn said. "For me, this is my last ditch effort. I don't have anywhere else to go."

The township and village voted Tuesday to split 50/50 attorney fees of $6,500 to put the district into place.