By Megan Kelley
Editor
mkelley@mihomepaper.com
INDEPENDENCE TWP. — At its meeting on July 23, the Independence Township Board of Trustees voted to repay the City of the Village of Clarkston in the amount of $96,220 to resolve the issue of overpayment on a 2010 contract for police and fire services. The Board voted 6-1 in favor of the motion. Trustee Sam Moraco cast the lone nay vote.
According to township officials, in 2010, the township and the City of the Village of Clarkston entered into an intergovernmental agreement for police and fire services. In the 14 years the contract has been in place, the city has overpaid in the amount of roughly $171,800 for the services.
Because the statute of limitations for a breach of contract claim is six years, the township negotiated with the city to pay back the excess from the last six years in the amount of $87,302 as well as the interest on that amount which is $8,918.
“The city of the village has been working with us and they found out that there was an error in some of the services that we provide to them – we help them out, we try to be a good neighbor. So, they overpaid for close to 10 years. They brought that to our attention and we worked with them. This contract was signed in 2010, so it was a while ago by previous administration,” said township Supervisor Jose Aliaga. “They found an error that they had been overpaying their property taxes so we charged something that we shouldn’t be charging. So, based on that they brought it to our attention and now we would like to pay them back what we owe from fire and police services for the last six years. The intention is good will and we try always to be a good neighbor.”
Independence Township Treasurer Paul Brown addressed why the mistake was made, noting that the issue was with the original contract from 2010.
“The original contract in 2010 had them paying millages on real property and not personal property. Personal property would be business related assets within the community and there are taxes on those. We have that here in the township, they have it in the millage. For some reason they decided to exclude those in applying the millage rates to collect money for police and fire services in the village,” Brown said. “My opinion is it shouldn’t have been that way because that means they’re paying at a lower rate than our residents do. Because our residents and taxpayers here pay the millage rate against both personal and real property. They excluded it in the contract and it is what it is. So, we did overcharge them because we were charging them based on both categories, not just the real property. That’s why there was a mistake.”
Brown went on to explain that the township was charging what the original contract should have been charging the city (millages on real and personal property) and added that he believed the contract needed to be fixed to include personal property as well as administrative services that went along with police and fire services. He also raised a concern with the potential precedent that it would set going further, worrying that it could be used against the township at some point.
“The contract never addressed that in addition to police and fire services, there are other departments paid for by the general fund that help do things for the police and fire – especially fire. We pay invoices, pay their bills, you have departments that support payroll and human resources. So, there really should be an administrative fee on top of the rate they pay. Which means they would pay a little bit more than our residents do for police and fire services, not significantly more, but it would be more fair because our residents are paying for the police and fire millage and also paying for the administrative services that support it. I think that makes sense and I think we need to discuss that with the village,” said Brown.
Trustee Moraco spoke stating that he felt the township should pay the city back in full but as a credit for future services.
“They overpaid us 14 years of payments. We’re not disputing that we took all their money and that we made interest on it. What I struggle with is why wouldn’t we give the money back that we overcharged them because they’re our neighbor. I don’t like the idea that we’re trying to find a loophole how to only pay them back half the money that they paid into us,” Moraco said. “They’re a struggling city, we’re not. That’s a lot of money to them. They could do a lot of infrastructure. I don’t do business that way. So, I would like to give them back all their money and we keep all the interest we made off of all their money, that can be our little nugget we get for our administration of it and then it’s about two quarters, if we were to pay them back everything that they overpaid us and we didn’t charge them for the next two quarters for police and fire we would be pretty much square with them.”
While Moraco felt they should reimburse the city in full, other board members did not agree, including Trustee Jim Tedder.
“My personal position on this is that we pay the city of the village the six years that they are entitled by statute and chalk this us as an error somewhere in the process on both sides,” Tedder said. “This isn’t Jim Tedder’s money. It’s the township’s money and I want to pay what we’re obliged to pay and I apologize that this happened but I don’t know that it’s the best use of township funds to just pay obligations beyond what we’re statutorily required to pay.”
City Manager Jonathan Smith also spoke at the meeting, stating that the city only knew they were being overcharged because a resident had brought it to the council at a meeting earlier this year. Smith showed the invoice that is given to the township that does not provide township millage rates.
“You’ve said several times, ‘the city screwed up here too, they missed this.’ No we didn’t. We didn’t have your millage rates. We didn’t know this. So, unless we came to the township and asked what are the millage rates you’re charging your township and then we go back – we could have done that, but this invoice comes from you,” Smith said.
Smith went on to implore that the township pay back the 14 years of overpayments in full.
“This is a huge amount for the city to overpay, I know it was over 14 years but $170,000 represents almost 20% of our annual budget. That’s huge for us. We’re scrambling to make the payments at the end of the year so $171,000 is a lot of money for us,” said Smith. “We have been neighbors and partners with the township. We ask that you do the right thing, put the statute of limitations aside, don’t use that as a shield, put that aside and do the right thing; reimburse the city for the full $171,800 overpayment. We contract through the township and we pay the quarterly invoices in good faith. We now ask you that you please reimburse us in that same good faith.”
Despite his plea, the board stood firm in its belief that while the city was overcharged per the original contract, they were charged what they would have been charged had the contract been done correctly in the first place.