A $100,000 loan from Larry Obrecht that will enable the Polly Ann Trailway Management Council (PATMC) to pay contractors and be reimbursed grant money from the state was accepted last week.
‘Thank you for your gracious offer,? said PATMC Chairman Geno Mallia, Jr. to Obrecht. ‘We do appreciate that, sir.?
On Nov. 21, the PATMC voted 5-2 to accept the $100,000 private loan from Obrecht at an interest rate of 5.99 percent to help pay contractors who resurfaced approximately 10 miles of trail earlier this fall and in turn get reimbursed with grant money from the Michigan Department of Natural Resources (DNR).
‘Obviously, I would like to do that as quickly as I possibly can,? said Obrecht, a former Oakland County Commissioner who lives in Orion and served as project manager for the trail surfacing and M-24 bridge construction. ‘There are people out there waiting for their money. They did their job. They did it well. They passed the final inspection. And they need to be paid. We should pay them.?
Currently employed as manager of Oakland County Animal Control, Obrecht plans to borrow $100,000 from his personal line of credit and loan it to the trail council.
‘I’ve been fortunate and I happen to have a line which I can draw on,? Obrecht explained.
The interest Obrecht is charging the PATMC is what he claims it will cost him to borrow the money.
‘I don’t draw down on a line for free,? he said. ‘It costs me money. The rate on that is 5.99 percent ? not very much.?
‘You will not beat that interest rate,? Obrecht noted.
Obrecht told council members he went to a bank to discuss a loan for the trail council, but he was told the group doesn’t have ‘standing? or ‘collateral,? so ‘the only opportunity? to do this was through a personal loan.
Oxford Township Supervisor Bill Dunn, who was sitting in on the council for Treasurer Joe Ferrari and voted against accepting Obrecht’s offer, asked how long this private loan would be for.
‘I would guess about 40 days,? Obrecht replied.
The $100,000 loan will be used to help pay the contractors who resurfaced the trail between Bordman Road in Addison and Indianwood Road in Orion because the original surface (with its large crushed stones) laid in 2005 was reported to have a rough, rocky-feeling that drew numerous complaints from trail users.
It cost approximately $330,000 to give the trail a finer, smoother stone sand surface suitable for all users.
To pay for this resurfacing, the trail council is using $114,664 leftover from the original project plus approximately $220,000 in grant money from the DNR.
But in order to obtain the grant money from the DNR, the trail council must first submit copies of the contractor invoices and the cancelled checks that paid them.
Since the trail council doesn’t have enough money to completely pay off the contractors, Obrecht has agreed to loan $100,000 of his own money to start the ball rolling.
The trail council will use Obrecht’s $100,000 plus $30,000 from one of its accounts to pay the contactors $130,000 for the trail resurfacing from the Addison Township line to Leonard Road and from Gerst Road to Bordman Road.
A copy of the paid invoice and cancelled check would then be sent to the DNR, so the trail council can be reimbursed $130,000 in grant money.
The same thing would be done with the $90,000 the council owes for resurfacing Indianwood to Drahner, Louck to the Lakeville easement and the Lakeville easement to the Addison line.
Once the DNR reimburses the trail council all the grant money, it would then repay Obrecht’s loan.
‘Obviously, I would expect to be paid,? Obrecht said.
The idea of a government entity borrowing money from a private individual did not sit well with PATMC member Sue Bellairs, a trustee for Oxford Township.
Bellairs indicated the Michigan Townships Association stated there are ‘strict guidelines? that must be followed in order for government to accept this type of loan. She stated for the record that she doesn’t believe the trail council is following the proper guidelines.
‘When you’re a public entity you can’t do things (according to) the way you wish you could do it. You have to do them in a legal manner,? she said.
PATMC member Matt Gibb, an attorney and Orion Township trustee said, ‘From a legal standpoint, I am 100 percent confident? the trail council can accept this loan.
‘There’s nothing that I know of that would prohibit us from doing what Larry is proposing,? he said.
Gibb was asked to research the legality of such a loan by Trail Manager Amy Murray.
After reviewing the interlocal agreement and other agreements which guide the council, Gibb said, ‘The council can accept funds for the purposes of carrying out council business. There’s nothing in our agreements that say those funds have to be donated funds or have to be gifts or contributions.?
While there’s nothing in the agreements that specifically says anything about loans, according to Gibb, he believes loans are permissible because the documents state ‘we can accept money to carry out our business.?
‘There’s nothing in the law that I’m aware of or I could find in my research that would prohibit our classification of entity from accepting a loan so to speak whether it be from an institution that is public, like a bank, or whether it be from a private individual,? he told the trail council.
‘The only restriction we would have is to account for that,? Gibb explained. ‘We couldn’t keep it off the books so to speak. We would have to account for it in our own audit.?
Regarding the legality of government taking a loan from a private individual, that point is not applicable because, according to officials, the PATMC is not a government body.
‘Under the law, it’s not (a government entity),? Gibb said.
‘We’re a non-profit entity,? Obrecht said.
‘We’re a 501(c)(3).?
The PATMC incorporated as a 501(c)(3) agency in 1997.
Despite its non-profit status, Bellairs maintained it’s still a government entity.
‘Who at this table does not work for a government entity??, she said ‘Every single one of us would not be sitting here if we did not work for a government entity.?
All the members of the PATMC are elected township and village officials with the exception of Oxford Village Manager Joe Young, who’s a paid public employee hired by the village council.
Not only do government people run the trail council, its funding is primarily derived from taxpayers.
‘This whole organization is funded with tax dollars,? Bellairs said. ‘All those (federal and DNR) grants are tax dollars too . . . Everything is funded through tax dollars (with the exception of the private donations).?
All the government entities which make up the trail council pay annual dues from their individual general funds to maintain the trail’s operating budget.
The PATMC website defines it as ‘a non-profit, intergovernmental entity.?
Rather than borrowing money from Obrecht, Dunn suggested each municipality loan the money to the trail council.
‘Wouldn’t it be much simpler if each township kicked in money out of their coffers at the going interest rate for 40 days?,? he said.
But other council members argued that would take too long to wait for each municipality’s next board meeting and obtain approval, of which there’s no guarantee.
‘It would be unfair to the contractors,? Gibb said. ‘They would have to wait.?
‘Everything depends on people being paid in a timely manner,? said PATMC member Pauline Blanka, a trustee on the Leonard Village Council. ‘If you finish the job, you should be paid. I don’t see any reason why we shouldn’t take Larry up on his offer . . . I don’t understand why there should be a problem with paying people for work done. That is the right thing to do.?