Macomb Township, Shelby Township, Utica

Macomb Township sets $8 million price tag on court legacy costs

By Brad D. Bates and Robert Guttersohn
C & G Staff Writers

Macomb Township officials said it would cost Shelby Township $8 million for Macomb to take control of the 41-A District Court.

At a July 19 candidate forum at the Clinton-Macomb Public Library in Clinton Township, members of the current Macomb Township board stated that if their community were to host the court in a new building, Shelby Township would have to pay $8 million to cover what they call a “unfunded health care liability cost.”

“We have closed down our committee, and we are not looking at it at this point in time,” Macomb Township Clerk Michael Koehs said of moving the court to Macomb.

Shelby Township officials said they believed negotiations were ongoing with Macomb Township; there was never a formal offer made; and the $8 million figure was “a number being used for negotiations.”

“That was never formally put on the table,” Shelby Township Attorney Rob Huth said of the $8 million figure. “I’m not aware that anything formal was offered, and I don’t know how it could have been.”

“(Shelby Township) is still in negotiations with Macomb Township,” Shelby Township Supervisor Richard Stathakis said. “Shelby Township has received no word about their intentions to build or not to build a new building.”

Stathakis said he did not want to speculate on why Macomb officials would call the court a dead issue.

“There has not been a concrete offer by Macomb Township,” Stathakis added. “Our understanding is the negotiations are continuing.”

Talks to move the court to Macomb Township have been on and off for several years, but were tabled by Macomb Township because of inactivity on the part of Shelby Township. Shelby Township reopened talks with a resolution at its Sept. 6, 2011, meeting.

And the Shelby Township board unanimously voted May 1 to approve a resolution that allowed Macomb Township to study the court’s finances, revenues and financial commitments, and then bring a proposal to Shelby Township concerning how much it believes Shelby Township owes for legacy costs for current court employees.

“We said, ‘No way,’” Macomb Township Trustee Nancy Nevers said of taking the court after reviewing the finances. “We are not taking on that burden — end of issue.”

Stathakis said placing a flat amount, such as $8 million, on the legacy costs is misleading because of the many variables that come with legacy costs.

“The only numbers we can rely on are from an actuary,” Shelby Township Director of Financial Management Kathleen Moore said.

“It all depends on a number of variables, like employee age, and that just gives us a snapshot, which could easily change based on the employees.”

As of April 28, Moore said covering an actuary’s projected total for legacy costs would amount to an annual payment of $393,493, which stems from the current payout to former court employees and projected costs.

It would take more than 20 years of annual $393,493 payments to meet Macomb Township’s threshold of $8 million.

Koehs pointed to the legacy costs as why he believes Shelby Township wants to see the court move.

“Shelby does not want to get rid of it,” Koehs said of the court. “They want to get rid of the liability of their unfunded health care liability cost.”

The possible move stems from the desire of the 41-A District Court judges to build a new courthouse versus renovating the current facilities.

“It was the court itself that asked to relocate into the Macomb Township. Macomb Township did not seek that,” Koehs said. “They’re asking that because they are the equivalent of 10 pounds stuffed into a two-pound bag in Shelby.”

Stathakis said the cost of construction would make the court a drain on the township’s finances.

“Numbers in the past have been inflated because they never included the (legacy costs),” Stathakis said April 28 of forecasts that showed the court having an average $183,022 annual surplus from 2012 to 2015.

“The numbers in the (financial management department’s) packet reflect projections of a new building and maintenance costs. The numbers show, if Shelby Township built a new court, the general fund would have to fund it.”

The forecasted annual cost for a new $5 million court building breaks down to $127,124 in 2014 and $125,387 after a $500,000 payment from the court’s building reserve.

Over the course of a 20-year loan at three percent interest, the township projected it would pay $300,844 in annual debt on the project.

“From 2011 to 2015, our township would lose approximately $1.5 million,” Stathakis said of the cost to build a new court in Shelby Township.

That’s why the Shelby board has been reluctant to authorize construction of a new building and why the issue of building a new court and relocating to Macomb has continued to resurface.

And if the issue is to come to fruition, Stathakis said he would prefer an agreement that is fair to all sides.

“What we’re looking for is a cost-sharing agreement between the townships that is fair to everyone,” Stathakis said. “If we give them $8 million, it could easily cost them $10 million or $6 million. We want an agreement that is fair for everyone.”

You can reach C & G Staff Writer Brad D. Bates at bbates@candgnews.com or at (586)498-1029.

You can reach C & G Staff Writer Robert Guttersohn at rguttersohn@candgnews.com or at (586)218-5006.