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Holly residents still want answers about sewer and water bonds

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Written by Amy Mayhew   
Wednesday, August 24 2011

Larry Lilly is a common fixtur...
HOLLY, Michigan – In an attempt to bring Holly’s ailing water and sewer funds back into the black, elevated water and sewer rates went into effect on July 1. As a result, the cost increases have left many village residents hopping mad, struggling to pay bills, and questioning the details of the $18 million water and sewer bonds that began the village’s water woes in the first place.

During the Aug. 23 Village Council meeting, village resident Larry Lilly once again broached the topic, asking council to explain where the $18 million in sewer and water enterprise funds was spent.

In a public hearing held on May 17, Lilly posed the same question, alleging that village officials had somehow funneled some of the funds into the quest for cityhood and into developing the village’s then non-existent fire department.


Threatened by legal action on the part of council, Lilly was given 21-days to produce the documentation and/or evidence supporting his claim. Lilly complied, and after reviewing the information and performing an investigation into the matter, council later dismissed his allegations in June.

“My big problem here is the $18 million water and sewer debt,” Lilly said on Tuesday. “I want the facts where that $18 million water and sewer debt went – it was jammed down our throats,” he added. “Where did the $18 million go – can you tell me that now?”

Village President Jeff Miller said council was unable to answer the question because it was asked during the public comment segment of the meeting – a time when residents may speak while council is obliged to listen.

Resident Lee Krentzen said the new $48 base rate for water and sewer fees has caused her much financial hardship. “It just doesn’t seem fair for one person – me – to be paying the same base rate as a family of seven,” she said. Krentzen said as a result of the rate hikes, she has had to turn off other utilities like her telephone and cable service.  Like Lilly, she also questioned how the $18 million in water and sewer enterprise funds was spent.

Miller suggested that Krentzen take advantage of the Freedom of Information Act by visiting the village offices and allowing village staffers to provide her with the information.

Holly Bush Drive resident Norm Ward asked Miller why council was unable to answer the question. “These people here are the people who are concerned and should be able to get an answer – can we get an answer at a future meeting?” he asked. “You don’t know where the money went?”

“Like any other project sir, a building, construction, a lot of people being paid to do the work, again, the interest – as a start, as with anything else like building a school, a lot of money goes into it,” Miller said. While Miller said he didn’t have the exact figures at his fingertips, he said that the information could possibly be provided at a future meeting, or that Ward could contact the village offices in the same manner suggested to Krentzen.

Miller said he knew of a couple from Fenton who had recently moved to Holly for lower water and sewer rates. “It’s not just us,” he said.

Jeff Miller


Additionally, Miller said he had discussed the water and sewer rates with Village Manager Jerry Walker, Director for Holly’s Department of Public Works, Brian Klaussen, and others. “Back in the middle of the 2000s – the last decade – there were several years in a row where council did virtually nothing about adjusting water rates,” Miller said. “My question was had we adjusted the water rates every year no matter what, where would we be today, and the answer was pretty much where we are now,”  he said. “What has hurt is the slam dunk we had to do to lift things, because councils in the past did not look at it and we had to resolve it,” he added. “Unfortunately, several years’ worth came all at once.”

The topic would once again come to the forefront during the second chance for public comment. This time, resident George Kullis took the opportunity to set the record straight.

“I guess in defense of the council, and I’m having a hard time understanding it, especially with Mr. Lilly – they had a public hearing on this and we talked about it,” Kullis said referring to the May 17 meeting. “When they asked where the $18 million went, this was a bond issue – I wasn’t even living here at the time, but I know the answers to these questions, and I’m not quite sure why council hasn’t answered them tonight.”

Kullis said the bond money went toward the expansion of services for Pulte Homes scheduled to be built. “It’s my understanding that the mistake was at the time this agreement was made with Pulte Homes, we failed to get a surety bond against their performance,” he said. “The bottom line is the economy changed, they didn’t add the 700 homes – those lots are all sitting over there vacant, so we’re not colleting the money from the usage of that expansion.”

George Kullis


Kullis challenged Miller’s reasoning that it was the interest on the bonds that is costing village residents so much money. “The interest has been paid – the $18 million bond money was for the expansion of the system – the money was never collected because Pulte Homes did not complete their homes,” he explained. “It was the mistake of our council at that time, and perhaps through the attorney’s office – I don’t know all the details – but I know that if we had had a surety bond taken out against their performance, we wouldn’t be in this position.”

Acting village attorney Mike Gildner tried to shed some light onto why the surety bond was never obtained.

“Pulte wouldn’t agree to it,” he said. “I didn’t work on it – as many of you know, it was Dick Figura,” Gildner said of his colleague. “Dick Figura suggested it, but Pulte wouldn’t agree.”

Gildner said the deal was struck, and that the lack of surety bond was not an oversight on Figura’s part. “It certainly wasn’t an oversight on Dick Figura’s part because that’s a standard provision in something like this and all he can do is recommend it to the other side or not.”

Although Lilly was somewhat satisfied by Kullis’ and Gildner’s information, he still shouted from the audience. “Get the facts!” he said. “It’s always excuses.”

“I hear that people are moving out of Holly,” Miller said. “When I see the United States, where the hell are they not moving out of?” he asked. “They’re losing everything they’ve got – it may not be water, it may be a job.”

Miller blamed the banking system for the country’s struggling economy. “I wish that people would go to the banks into those interest only lines – those little Chihuahua mortgages in the last few years out of greed that has brought absolute catastrophe more than water and sewer,” he said. “The bottom line is – it is what it is. There is a cost and that’s all there is to it.”

Walker is expected to present an overview of the sewer and water bond issue during the Sept. 27 Village Council meeting.

Comments   

 
#1 Ryan Bladzik 2011-08-24 15:41
One question...If the attorney requested a surety bond from Pulte, and they refused, why did the Village Council approve the agreement? Who was in charge of that decision?
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#2 Peter Clemens 2011-08-24 19:31
Jeff Miller pushed this agreement every inch of the way.
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#3 Kelly 2011-08-24 22:13
I received my bill due next week and it is for July. Mine rose over 40%. This is definitely a hardship on my family.
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#4 silverwick 2011-08-25 02:01
My water bill doubled this month. I knew it was coming but was still shocked. $130 for four people! Rediculous! We have only lived in Holly for 2 years and absolutely love it here. We are currently looking to buy a house but this water thing is just out of control-we're buying in Milford instead! Milford is such an "upscale" village, I was pleasantly suprised that it'll be cheaper to live there than Holly!
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#5 Toddski 2011-08-25 06:39
I'm really sick of hearing Miller talking about people slandering him over the internet concerning the Pulte fiasco and that they are afraid to approach him face to face. Doesn't he realize that people don't want to embarrass him in public and are just expressing their frustration with the situation? Throughout my many years on this earth I've found out that if you make a mistake be man (or woman) enough to admit it and apologize to the person or persons it affects, then MOVE ON........
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#6 theoldhobo 2011-08-25 06:58
Again lets refinance these bonds to be due much later. The last time this was brought up the leaders said it would cause standard and poors to downgrade our credit from AAA to something lower. The usa has been downgraded,so why cant the village. being a minimum user my bill went from 45.00 to 95.00. i own a house in waterford and the water and sewer is 67.00 every 3 months. we must fix this rate mess. the pulte hookups will be used sometime in the future, lets refiance.
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#7 Lee 2011-08-25 09:51
Oldhobo..Obviously you have not attended meetings or public hearings on this matter, or you would know that to refinance would not reduce our monthly fee very much, and would extend the debt
many more years. Mr Walker is going to explain the situation again at the next council meeting; hopefully, you will be able to attend.
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#8 persianqueen 2011-08-25 10:37
I received my water bill a few weeks ago and was outraged that I am paying more for the "bond issues" then I did in my water/sewer combined. I am a senior on a fixed income and I can not afford paying almost 90.00 a month! We had no vote, no say on this matter. Complete control with the board. This has to STOP...what are you going to do with the people that CANNOT pay this bill?????? I am outraged after 32 years of living in this village and this happens.
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#9 Ryan Bladzik 2011-08-25 10:58
Isn't taking on debt in the hopes that something will be built to pay for it what got Holly into the situation to begin with?
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#10 Jason M Hughes 2011-08-25 12:10
Just to clarify something theoldhobo said... The lowering of the village's credit rating wasn't the only (or primary) concern council discussed regarding recasting the bonds. The main concern that has been discussed is that there isn't enough month-to-month savings to water and sewer customers to justify the additional $14 million in interest that the village would ultimately pay. Per the charts that have been provided, using 1000 gallons as the example, the bill would be approximately $61 a month if refinanced. Without refinancing it would be approximately $64 a month. The question; Is saving approximately $3 per month worth extending this debt and the bond payments until 2040; Or is it better to bill that approximately $3 a month and have the bonds paid off as scheduled (last one ends 2026)? While the credit rating is a concern, it wasn't the primary concern when considering how much refinancing would actually cost this community. It is also possible that some new homes are built and occupied in the "Pulte Sub" in the next 15 years (the term left on the bonds) but that is an assumption and not a guarantee. Part of what caused this mess to begin with was the assumption that Silverman would complete the development and there was no guarantee (surety bonds)...
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#11 Jason M Hughes 2011-08-25 12:31
It is also important to note that the billing rates can be adjusted. The attempt is to cover what we need to pay the bonds. If new homes are built or new customers are on the system, as theoldhobo mentioned, the rates can be adjusted down to reflect the increased number of tap-ins (and this can be done without refinancing bonds). It isn't a favorable situation to be in. It isn't an easy decision to have to make. And as a water and sewer customer myself, it is easy to get very frustrated about the entire predicament.
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#12 Dayne 2011-08-25 16:09
The village council president and the council members can borrow money against the property value in the village without a vote of the people. That can be cured with an admendment to the village charter with language that prevents borrowing without voter aprroval, in a general or special election.Miller and the coucil have raised the cost for residents for doing business with the village,and they are handing out raises?
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#13 Ryan Bladzik 2011-08-25 17:06
I understand the theory behind Dayne's idea, but I think for it to work, there would need to be some additional stipulations: such as allowing borrowing for non-existing capital projects without a vote.

Somewhere down the road, the Village will likely have to borrow to provide normal and expected maintenance and upgrades to the water system. When that time comes, do we want to leave a necessity like that up to political propaganda and voters of varying levels of knowledge and awareness?

Whether the voters or the council have the better judgement--that is a good question to ponder.
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#14 gerryf 2011-08-27 16:02
Lovely, Miller blames previous councils for todays water rates because they didn't raise them fast enough....and then he blames the banks for the struggling economy.

Who exactly was president when the Village agreed to a bad deal from Pulte? They don't call it Miller's Folly for nothing...
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#15 jburgee 2011-08-30 13:27
I would like the Village council to articulate clearly step by step the reasons why we have these draconian water bill rates. I was told a last year that the bill has additional charges for the bond. Now we're being told that there is another bond charge added.

Here is where I am with all this:
I have to pay Village property taxes PLUS County taxes. If I'm paying the Village property tax, why then are these bond dollars not coming from that? Why is it so hard to find money in the EXTRA property taxes that the village collects to pay for the bond? Why do I have to pay 1/2 my income to a village that in return gives MINIMAL services? I mean, yeah! we have a police department so that we have to wait 15 minutes for them to arrive instead of 20 minutes if we didn't have a dispatch. Why not let go of some of these elusive services and just dissolve the village and thrive. Look at Fenton or Milford, while I'm sure they have problems, they ACTUALLY have REAL commerce and business there. But I'm sure we'll continue down the road to Perdition until there is nothing left of Holly. I know that based on Village property tax and these CRIMINAL water bills I am earnestly looking to move somewhere else. I'm probably not the only one.
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#16 Ryan Bladzik 2011-08-30 14:02
jburgee, your questions have been asked of and answered by the Village Council and Village Administration at least a half-dozen times now, if not more.

In Michigan, water and sewer projects are enterprise funds--they may not operate through property or other taxes, only on the revenue that comes from water/sewer bills.

The Village took out bonds to pay for the expansion of the water system to the new Silverman/Pulte developments. When the economy faltered and the housing market bottomed out, ~700 homes that were expected to pay for those bonds were not built. The Village Council (then) approved that agreement even though there was no security to cover if those homes weren't built.

Today, the system doesn't have enough users to pay for its costs based on the previous rates, and the bond debt was rolled up into the usage fee--this means that as people conserved to lower their bills, less of the debt was paid off and the Village got behind. Recent village Councils also did not raise rates incrementally throughout the years, meaning the increase was a big, obvious hit.

So now, every water customer/meter shares equally in the debt cost (including bank-owned vacancies). Every customer also pays for the actual water/sewer based only on how much they use. This is fair to everyone.

The more customers we get back on the system, the greater the possibility of lower rates and debt paid off sooner.
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#17 Toddski 2011-08-31 08:14
It's really amusing that some people sit back for years and never think of going to a Council meeting to find out what's happening in their Community, and now that the "Something" has hit the "Something", they start screaming...Come to the next village council meeting on Sept 13th, and get the facts.
As far as our Police force, I think they're doing a good job. There are some areas that need improvement, and hopefully our new Chief is working to implement them.
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#18 jburgee 2011-08-31 20:38
Ryan, I get that. I understand HOW it works. As for the taxes and usage of that and enterprise funds. Interesting thing is that with a little legislation, that can change.

So.. it boils down to the folks who approved this bond without security. Very foolish. I have to pay for this water, which is hard water and, imho very poor since the calcium accumulates and ruins appliances and faucets etc.

So due to housing developments, we all have to pay extra for no better water and we get no better or additional service.

Also... Glad that I amuse you Toddski, however, when I expect my council to make prudent and wise decisions, therefore since I have a young family, I choose to spend it with them instead of hanging out at ever council meeting. Now, when something does come up, then yes we voice our opinion. I believe that's how it works.

But since you fine people are ready and willing to regale me with the facts, then why not do so. I don't have time to spend sitting at the village council meetings each time they have one, I have to be at my 2nd and 3rd jobs so I can pay my water bill and my rent to the government aka property tax.
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#19 Ryan Bladzik 2011-08-31 21:41
What kind of legislation do you propose, jburgee?
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#20 gerryf 2011-09-02 13:31
Ryan, I do not believe you are completely correct.

While the village has opted to use enterprise funds to pay for these projects, that does not limit other ways of funding...it simply precludes THESE funds from being used elsewhere.

There is no restriction that I am aware of says the general fund cannot contribute to these other funds.

There is a restriction on taking money FROM these enterprise funds and using them elsewhere. These laws were written to prevent communities from pulling a bait and switch on its residents.

Now, in fairness to the village, it's not like they have an extra pile of money sitting around doing nothing so it's a moot point, but that is the real reason--not that these things can only be paid with enterprise funds.

Furthermore, it is disturbing that the current meme is this huge increase is the immediately previous village council's fault because they did not hike water rates appropriately. They did. They may not have hiked them the way you would have, but the hikes were conservative in an attempt to keep the water rates down, perhaps hoping in vain that the economy would rebound.

This "problem" rightly lays at the feet of the current President Jeff Miller and his crowd, who were in charge when this fiasco was created. People were unhappy with them, tossed them out, then became unhappy with their successors and tossed them out, and now we are right back with the original crowd.
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#21 Toddski 2011-09-02 14:45
jburgess,I congratulate you on being a dedicated family man. I also can understand that you don't have time to attend all Council meetings. I don't attend all the meetings myself, but if you go on the Village website you can find the agenda for the up coming meeting then attend those that concern you and your family.
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#22 Ryan Bladzik 2011-09-03 12:19
gerryf, it seems like being able to use property taxes to subsidize a water/sewer system, of which there are non-taxpaying consumers on it, is as egregious as being able to use water/sewer funds to pad a general property tax fund.
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#23 Dayne 2011-09-06 10:57
i wonder who gives a thumbs down to restaining future councils ability to borrow millions without voter approval first? there clearly needs a more reasonable amount set on the amount of debt a minority (council) can force the majority(taxpayers) to be responsible for.
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#24 Ryan Bladzik 2011-09-06 14:43
Dayne, if citizens aren't willing to be engaged, do homework and research on current issues and relay their thoughts, opinions and influence on the seated Village Council, then what makes you think that a decision made by voters would be that much more sound in judgement?

As much as we decry politicians for acting as if they are the only ones uniquely capable of handling public affairs, many regular citizens tend to underestimate the size and complexity of some of these affairs as well. More efforts to communicate and understand on both sides is what will improve the political process.
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#25 Lee 2011-09-07 12:48
Ryan, ..Well said!!
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#26 Dayne 2011-09-08 09:19
$18 million bond passed without voter approval,how is that working out for you ryan? I do not agree with your comment about the village residents not willing to be engaged about current issues.
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#27 Ryan Bladzik 2011-09-08 09:55
Dayne, I'm not too fond of it at all.

Unfortunately, the Holly village voters elected as Village President the same individual who was President during that agreement process, as well reelecting as two other council members who were on the council at that time. The antics of this council over the past year are pretty well documented too.

Only ~1500 voters from the two Holly precincts voted in the last election, out of ~3600 registered voters. That's 36% turnout, and 25% of the overall population, during a gubernatorial election. The village council election of 2007, only ~350 people voted ENTIRELY.

How's the will of the voters working out for you?
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#28 Jason M Hughes 2011-09-08 11:30
In speaking to the idea stated by jburgee and gerryf:

IF there was an option to use tax money to pay down these bonds (by increasing taxes or decreasing current service levels), would you want to? I am asking very plainly just to solicit your views.

I will share a concern I have with the idea of using tax collected money to pay down the debt. The concern is that the village only collects taxes from village residents, but there are non-village residents on the water and sewer system. I am not in favor of leveraging village residents to fund a service that extends beyond the village. By doing this the cost is no longer shared equally among all of the customers.

Your thoughts?
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#29 Ryan Bladzik 2011-09-08 12:08
I had a typo in my last comment. There are about 4200 registered voters in the village. Our turnout was the lowest throughout the five nearest townships.
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#30 Ryan Bladzik 2011-09-08 13:16
Jason, I wouldn't support appropriating collected Village property tax revenue to subsidize the water system or pay down bonds, even if it was allowable and legal.

There is the "accounting" option of offering Village taxpayers with a water meter a property tax rebate of up to $579 per year to *offset* the bond debt base rate in the pockets of village water consumers. Of course, without an excessive fund balance, such rebates would be paid for at the cost of police officers, public works employees, mowed parks, legal services, building and code services, street repairs, etc.
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#31 Dayne 2011-09-09 07:59
if that bond issue had gone before the voters,I am confident the hard questions would have been asked,such as you want to pay for this with homes that are not built?how many permits have been issued? what is the back up plan failing that the homes were not built? etc.. even if it was only 300 people voting on the bond,better that then 4 council members making that call.
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#32 Ryan Bladzik 2011-09-09 20:19
I think it's always important to remember that for as much as people (including myself) criticize the Village Council, at the end of the day it's the voters who elect them to their office, and those voters' choices are limited to only those Village citizens who run for the office.

If the Village Council has exercised poor judgment, past or present, either the voters need to make better choices, or more competent candidates need to run. Likely, both.
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#33 mickeysmouse30 2012-09-05 12:58
i am new to holly and im ready to move with a 300 dollar water bill and no leaks like they say . come on gas is over 4 a gallon and now water is gold wow people need to stop the greed.
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#34 Dayne 2012-09-06 11:24
the village president at the time the bonds for the water/sewer were issued was jeff miller, without his 100% backing the bonds would not have been rammed down our throats. He denies responsibility, but his voting record proves his part was quite substantial.
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