Several members of Saline City Council expressed concern about a proposed deal to annex 117 acres of Saline Township into the City of Saline.
Council members spent Monday’s work meeting questioning the city attorney and developer about a draft of a 425 agreement between the city and Saline Township.
Saline Ventures, owned by Pinnacle Homes, wanted to develop Andelina Farms, a 276-unit with multi-family homes, single family homes and 20 acres of commercial. The parcel of land is between Michigan Avenue and Austin Road, immediately west of the city’s boundary.
The development appears conceptually in line with the master plans of both the city and township.
The annexation agreement would see the property become city jurisdiction, with the city providing almost all of its core municipal services. Residents would be City of Saline voters and be served by Saline Police. They would also pay city taxes (with 1.5 mills going back to Saline Township until at least 2033, when the deal expires. The land would remain city jurisdiction after the deal expires.
The major sticking point are the services the city won’t provide: water and sewer.
A city study, partially funded by Saline Ventures, pegged the cost of providing water and sewer at $3.6 million or $5.1 million to serve the development while building infrastructure to serve other developments west of town.
“As a result of the studies it was economically not feasible to extend the city services to this property,” said Alan Greene, of Dykema engineering.
So, the developers want to get their water and sewer from a private source – The River Ridge development just west of the city limits.
The proposal raised red flags with members of council. It’s a departure from past practice, which dictated the city only expand its borders to serve developments that received city water and sewer.
Despite several clauses in the contract designed to shield the city from any responsibility or liability should the River Ridge water and sewer system fail, council members expressed concern the city would be required to solve any such problems.
“Have we done research into how stable (The River Ridge) system is? Are we obligated (to research)?” Councillor Christen Mitchell asked. “Communities with private arrangements don’t always invest, leading to failure.”
City Attorney Scott Smith said the city expressly disclaims any duty to verify the utilities are suitable for anything. Smith said he assumed the city would want its legal team to verify information about the system with the Department of Environmental Quality.
Mitchell asked if there was a state regulation that would require a city to take on an adjacent development should the private system fail.
Smith said that’s not applicable if the property lies outside the city limits. Smith also said the city attorneys would make its position clear to the state before the DEQ gave any permits, “so they know we’re never going to undertake any obligation with water or sewer or take over that system.”
Councillor Dean Girbach said he was concerned about a state override, noting that Mooreville, now using Milan water and sewer, had an issue and they were forced to come up with a solution.
“There is that concern that the state can come in and force anything on us. I think we’re being naïve if we don’t make the assumption that the state will make the change if they have to,” Girbach said.
Girbach said whatever protections there are in the agreement, if the water and sewer system failed, city residents would come to the city for solutions.
“I’d hate to be the city in a situation where we have the property, we provide most of the services and then this private entity declares bankruptcy and can’t operate,” Girbach said. “Then (the residents) going to be looking at the city and asking why we’re not solving their problem when they pay taxes. That’s a big flag and I don’t know how that’s addressed in this agreement. Once the developers are gone.”
Smith agreed that it’s possible the city council could have tough meetings if residents from 120 households fill up the council chamber demanding a solution. But he said there are many privately owned utilities in the state and they are held to the same standards as public utilities.
Greene also reiterated his faith in the River Ridge system.
“River Ridge is built to the same public design standards as your system is built. They are no different. That regulatory requirements are the same,” Green said. “Because they are privately owned the MDEQ has stringent bonding. You have to literally put up enough money over time to replace the entire system. They want money in place so if there’s a failure, it’s there and available to take care of that.”
The Andelina Farms condominium association will have assessments to pay whatever monthly charges are required to pay for the system and capital improvements.
“Clearly the intent is (the City of Saline) would never have any responsibility for the system. The MDEQ has fairly elaborate processes in place in making sure that happens,” Greene said.
Girbach also questioned what using River Ridge water and sewer would do to any future growth for the city.
Since Saline Township has already approved the PUD plan for the parcel and it could go forward without the city, Councillor Linda TerHaar asked why Saline Township and the developers came to the city?
Greene explained that the township officials, noting the master plans of the city and township, encouraged the developer to consider annexation into the city.
“We were always proposing to get our utilities from River Ridge. But the township said to us two years ago, under our plan, you should be developed in the city. You should go to the city, get utilities there,” Greene said.
After the studies showed the expense of extending Saline water and sewer, the developers went back to the township. But Greene said Township Supervisor Jim Marion encouraged the developers to go back to the city one more time.
“Doing it this way, we’re really just doing what the communities want and makes sense. It makes sense the city wants to expand,” Greene said. “For us, it increases our tax base enormously. Normally a developer would do that to get utility service. Here we’re not going to get that and we still have to pay a substantial amount to get that from River Ridge.”
Answering another question from TerHaar, Greene said the developer was prepared to design a subdivision around public or private roads.
Some councillors also expressed concern about how far this process has gone without council’s direction.
“Who authorized this agree to proceed the way it did, because council didn’t, and I’d like to know that came about and how many hours have been spent on this agreement? Are we paying for this, at this point?” Girbach asked.
City Manager Todd Campbell said the city was approached by Saline Ventures with a draft 425 agreement. He said he reviewed it with Attorney Smith, City Engineer Gary Roubal and staff from the DPW and the water treatment plants. Campbell said that all legal work that’s been done has been paid under the retainer.
Attorney Smith said he met twice with the developers.
“There hasn’t been a lot of time spent and all of it is under the retainer,” Smith said.
But Girbach wasn’t satisfied.
“IF this is a policy matter it should probably have come before city council. We have a document that’s basically written for us now to consider and we may not have even wanted to go forward on that,” Girbach said. “From my perspective, if we would have had that discussion before a whole document was done it might have been beneficial to us and to the developer.”
Smith said his approach has been similar to what it has been with other economic development projects.
“We come to you with something that’s formulated so that you can wrap your head around it, or say yes or no, or form some policy on,” Smith said, recognizing, however, that the proposal for annexation with private sewer service is clearly a departure from past practice.
Councillor Dillon also commented on council being in the dark on the issues.
“I have no idea what their phases are, what their time frame is. Is this a 15-year project and a 15-year contract where we really don’t have benefit from it on the front side,” Dillon said. “This has been on the table for a long time and I feel like all of the sudden it’s jumping to us and we haven’t been part of the process to even think about whether we wanted to go down this road as a city. I feel like we’ve got this agreement and a lot of holes of information. It would have been more detail before coming this far.”
Mayor Brian Marl asked Dillon to send him questions via email.
Mayor Marl was mostly silent during the discussion. He said it was a complex, multi-faceted issue and he wanted city council to have a chance to ask questions and think about the issue before considering the issue as a discussion item Aug. 7.
Pinnacle Homes builds 200-250 homes a year, according to managing partner Howard Fingeroot.
Greene said Saline Ventures is ready to start.
“We’ve been ready to go for a long time,” Greene said.