NEWS

The Heights: Lansing Twp. finances drew state restrictions

Michigan Treasury officials have cited the township for noncompliance with municipal finance rules

Steven R. Reed
Lansing State Journal

Since 2003, Lansing Township has the worst record of complying with municipal finance law among the capital area’s 12 largest cities and townships and its three counties, state Treasury Department records show.

"For Lease" signs hang in the windows of an empty storefront at The Heights at Eastwood in early August in Lansing Township.

Treasury notified Lansing Township it was not in compliance for five things it did or failed to do in 2003, 2006, 2007 (two offenses) and 2012.

By comparison, Delhi Township, Delta Township, Mason, Williamston and Clinton County did not have any compliance issues, according to records posted by Treasury’s Local Audit and Finance Division.

Charlotte, DeWitt, East Lansing, Eaton County, Grand Ledge and St. Johns each received one non-compliance notification. Lansing had two while Meridian Township and Ingham County had three.

When Treasury determines a municipality is not following the requirements of the Municipal Finance Act, it prohibits the offender from issuing securities — general obligation bonds, typically — until compliance is achieved.

The LSJ’s research discovered Lansing Township misrepresented its position relative to the state debt ceiling in its 2010 and 2011 audits. Michigan municipalities and counties are restricted by statute and the Constitution, respectively, from issuing long-term debt greater than 10% of the state equalized value of property in their jurisdictions.

Lansing Township issued $22 million in general obligation bonds to finance construction of The Heights at Eastwood in November 2010. The bonds were backed by the "full faith and credit" of the township, meaning the township pledged to repay them if The Heights proeject didn't raise enough revenue to do so.

The 2010 audit released in May 2011 mistakenly claimed the township’s long-term debt was barely $4 million and that the township “remains well below its authorized legal debt limit.” A separate financial disclosure statement released a month later reported the township had exceeded the state debt limit by almost $1 million.

The 2011 audit released in June 2012 again asserted “the township remains well below its authorized legal debt limit” even though the township continued to be responsible for the 2010 bonds and others sold earlier. An annual disclosure required by the congressionally chartered Municipal Securities Rulemaking Board was released in June and showed the township was over the state debt limit by more than $3.2 million.

The LSJ brought the 2011 audit to the attention of Treasury officials this month after noting that in 2012 the department had found the township in compliance and authorized it to issue municipal securities “without further approval.”

Treasury officials informed the LSJ the township “should have been denied” authorization to issue new securities, which would have been the township’s sixth compliance offense.

Treasury did not notify the township it was out of compliance with state limits on issuing long-term debt until June 2013, which corresponded with the township’s admission in its 2012 audit that it was over the state debt ceiling.

In February 2013, when the township and its Downtown Development Authority needed $7.5 million to finish The Heights project, the DDA ended up selling high-risk, high-interest junk bonds to raise the money.

Treasury has sent “Not Qualified” letters to Lansing Township for four other issues, including:

  • Being repeatedly delinquent in transferring employee withholding taxes to the appropriate agency (2007)

  • Being non-compliant in consecutive years (2007)

  • Failing to meet the deadline in filing its annual audit report (2006)

  • Failing to file an audit report for the most recent fiscal year (2003)

Kathy Rodgers’ 20-year run as township treasurer ended in November 2012 when she replaced John Daher as supervisor upon his retirement. She was replaced as treasurer by her son, Leo Rodgers, who continues in that job. Kathy Rodgers retired on Feb. 29.

Neither of them responded to repeated requests for comment.

Contact Steven R. Reed at (517) 377-1015 or srreed@lsj.com. Follow him on Twitter @StevenReed_LSJ

Continue reading: 

The Heights: As Eastwood grew, Lansing Twp. debt spiraled

The Heights: A tale of logic vs. hope

Timeline of the Heights at Eastwood

INTERACTIVE: Eastwood Towne Center