Shelby Awaits Macomb Vote on Cost-Splitting Agreement Key to Court Relocation
Shelby Township approved an interlocal agreement this week that negotiates how an estimated $8 million in unfunded legacy costs would be divided should the 41A District Court relocate to Macomb Township.
Shelby Township officials may have given their blessing this week for the 41A District Court's relocation to Macomb, but court personnel shouldn't start packing up their offices just yet.
While the board's 6-1 vote Tuesday to approve an interlocal agreement between Shelby Township and Macomb Township provides a step forward in the relocation process, it is far from a deed to the new property.
Macomb Township’s board of trustees must still approve the agreement and ultimately, court administrators will decide where the court sets up shop.
“We have had our input through attorneys to shape the interlocal agreement and (Shelby) has passed an agreement that we will probably be able to live with,” said Macomb Clerk Mike Koehs.
With copies of the agreement now in hand, Koehs said he expects his township's board to vote on it before the month is up. If approved, Macomb Township officials will begin working with court staff and personnel to determine the logistics of the move.
“It’s not quite as simple as ‘ Let’s move the court,’” Koehs said. “We’ll have to discuss a lot of items and that will start us down that road.”
The interlocal agreement was reportedly reached in January after more than three years of back-and-forth talks between Shelby and Macomb.
One of the chief barriers to relocation talks has been the division of long-term costs associated with the court, specifically retiree health care and pensions.
As the court's host community is financially responsible for legacy costs, Macomb Township was hesitant to welcome the institution with its estimated $8 million burden.
The current interlocal agreement addresses these and other financial concerns related to relocation.
In a PowerPoint presentation given during Tuesday's board meeting, John Kaczor, a financial consultant for Shelby Township, showed how the true cost of the court has been under-reported.
Where the court has taken in $1.4 million on a cash basis over the past seven years, it has a substantial unfunded liability which has actually used some $670,000 from Shelby Township's general fund during this same period.
"Eliminating the court gives us an annual surplus that we can use to pay down our debt," said Shelby Township Supervisor Rick Stathakis, referring to the estimated $200,000 to $300,000 a year the township would receive were it not the host community.
"There is no way that I want to create any more debt for Shelby Township," Stathakis added. "That’s why I believe the board voted the way it did. We do not want to create any more debt."
Although the terms of the agreement will be binding if approved, the agreement itself does not compel Macomb Township to build a new court, but rather "serves to outline the Shelby and Macomb obligations for court employee financial benefits and obligations in the event Macomb builds a new court."
- Shelby Township shall be responsible for retirement healthcare costs and life insurance for all employees hired before Nov. 1, 2010 who have retired prior to the opening (operation date) of a new court.
- Shelby will pay retirement healthcare costs and life insurance for some participants who retire after the new operation date. These cases are determined by a formula specified in the agreement.
- Macomb Township is responsible for any enhancement in health care plans or costs it negotiates.
- Shelby will verify that the defined contribution pension plan for current court employees is fully funded. The township will continue to fund this plan until the new operation date.
- Macomb will assume responsibility for court employees' defined contribution pension plans after the new operation date but Shelby will remain responsible for the pensions of retired employees accrued prior to the new date.
- Shelby will administer all issues related to employment agreements with court personnel prior to the new operation date, with Macomb taking over any new issues that arise after the new date. This same schedule will be followed for administering collective bargaining agreements.
- Shelby will be responsible for all costs and expenses to operate the court prior to the new operation date, with Macomb taking over all new costs.
- Both communities will be responsible for the acts of their own officials and employees as well as the costs associated with those acts and any resulting defense.
- Shelby and Macomb will share the cost of preparing an actuarial report, which outlines current conditions or future requirements of an insurer, self-insured or pension fund necessary to meet its obligations, every two years.
The 41A District Court serves Shelby and Macomb townships as well as Utica. Space limitations prompted talks of moving the building to Macomb Township in 2009. Early talks proposed the construction of a new court in Macomb Township's government center at 25 Mile and Broughton.