Debt is a big concern for all Americans. It’s an even bigger concern when someone else’s bad choices might cost you a lot of money.
That’s the situation here in Livingston County, where roughly half of our townships have piles of bad debt that was supposed to be repaid by special assessments. These special assessment debts (SAD) are so high that financial experts call them “toxic” to our community’s fiscal health.
Livingston County has the second-highest foreclosure rate in southeast Michigan; we are the “epicenter” of the state’s debt problem. Livingston’s debt has even attracted national attention: the Bloomberg News service recently reported on the county’s financial troubles.
How did we get in this mess?
Back in the days of the housing bubble, a number of townships decided to sell assessment-backed bonds to fund water, sewer and other infrastructure projects in hopes of attracting developers. The townships went to the county commission to authorize the assessments. Instead of saying no to speculating with taxpayer money, the commission said yes, agreeing to act as guarantor for the bonds.
Livingston’s townships sold assessment-backed bonds during the decade it was the state’s fastest-growing county, Livingston County’s treasurer Dianne Hardy told Bloomberg.
“As soon as they would fill one development they’d start another, and then one day it just stopped,” Hardy said. “Now the ground is not worth what it cost to put the infrastructure in.”
Fast-forward to today, when the real estate frenzy has screeched to a halt. Those special assessment districts are a toxic debt load for our county, and they pose a real threat to our economic recovery.
Despite $101 million in potential liability – two-and-a-half times the county’s annual budget — this problem hasn’t gotten much attention from the county commissioners.
They’ve tried to ignore it, giving it a single paragraph in annual financial reports. They’ve tried to blame it on the townships. And they still haven’t explained why they backed the township bonds even as the Michigan economy was shedding thousands of manufacturing jobs and the Detroit Three Automakers were bleeding red ink.
Also missing: an explanation of why all these fiscally responsible free-market Republicans thought it was a good idea to use public funds to finance private development in the first place.
State Reps Bill Rogers and Cindy Denby have co-sponsored a bill asking the state to set up a $5 million fund to help Livingston County. They also are asking for legislation allowing the Michigan Strategic Fund to set up special “renaissance zones” for these empty subdivisions, but there has been virtually no public explanation of what this would mean. While their efforts are appreciated (at least they’re trying to do something) the fact that Rep. Rogers chaired the Livingston County Commission during the townships’ spending spree, and Rep. Denby was the Handy Township Supervisor during that same period, it’s not clear that they’re the best choice to plan our way out of debt.
Local taxpayers are beginning to see the impact. In some townships, voters in the August primary were asked to approve millages for basic services such as police protection, because most of the township budget has to go toward paying off the debt.
County-wide, taxpayers may find themselves footing the bill for this burst real-estate bubble. The county’s 2010 budget book warns that “Livingston County may very well find itself in a position where it must fund the debt in order to preserve its credit rating.”
Judy Daubenmeier is chairperson of the Livingston County Democratic Party.
