The Brighton Township Board of Trustees approved a resolution to loan $140,000 from the township's general fund to its sewer capital reserve fund during a meeting Monday night.
The $140,000 loan will be made at 2 percent interest, which the township would pay annually until the fund sees positive cash flow, so the loan does not increase.
The loan is needed because the sewer fund should have approximately $700,000 to pay for large capital repairs in the sewer system and/or treatment plant, as recommended by township auditors and engineers when the system was built. Currently, the fund only has $334,417.
The sewer operations and maintenance fund was supposed to use money collected from sewer rates to deposit $70,000 per year into the capital reserve fund, but because of lengthy construction and getting people hooked up to the system, the township deferred the payments.
Brighton resident Mike Palmer disagreed with the board's action of loaning money from the general fund. Palmer said that people should know where the township is taking money and putting it, especially from the general fund into a specific fund that only benefits people on the sewer line.
"To me, it's a township asset - it's a township responsibility," Palmer said of the sewer.
"When will the loans be paid back - that question is still out there," Palmer said. "What is your intention on paying them back? Where is the revenue source to pay them back? All you're paying is the interest just to keep it from growing, but the loan is still going to be there."
During the March 5 Board of Trustees Meeting, board members voted to increase sewer rates from $70.50 to $80.50, but left the operations and maintenance the same, bringing the new rate to $170.50 per quarter for water and sewer customers. The rate increase will correct the sewer fund's projected negative cash balance of $322,000 by this September.
At that time, Trustee Mike Slaton provided the lone dissenting vote because he said he believed the township could use money from the general fund instead of raising taxes.
Township Manager Dan Bishop said that sewer and water fund is an enterprise fund and is required by state law to be self-sufficient.
"We can make a loan, and that loan is intended to be repaid," Bishop said. "Our current plan - worst case scenario - refinance the bond in 2015 and go from a 20-year bond to a 30-year bond, which means a smaller annual payment."
Under that plan, repayment to the general fund would not be possible until the township sees positive cash flow in the sewer operations and maintenance fund in 2018.
Bishop said once the sewer operations and maintenance fund can support its debt payment and has positive cash flow, the board would put together a repayment plan.