Township approves loan documents to correct prior DDA PILOT distributions; board votes to make taxing jurisdictions whole

The Township Board voted Jan. 13 to authorize township staff to prepare and execute interfund loan documents so the Downtown Development Authority (DDA) can make required distributions of payment‑in‑lieu‑of‑taxes (PILOT) receipts to other taxing jurisdictions for tax years 2018–2021, plus annual interest.

Township Finance Director Teresa told the board that an audit revealed PILOT payments associated with Island Woods senior housing had been captured by the DDA fund but, following a records review and consultation with township auditors and attorneys, the township determined the funds should have been distributed to the taxing jurisdictions (including local schools and Wayne County) under applicable state statutes referenced in the audit materials. The finance director said the shortfall and accrued interest through the current month total “a little over $70,000.”

Teresa said the DDA does not have the cash on hand to make the required lump sum payments without affecting operations and that the township’s revolving loan fund (interdepartmental loan account) can be used to remedy the situation immediately while spreading repayments over time. The finance director explained the revolving loan fund is accounted for separately but its cash appears in the general fund balance on audit and that revolving fund cash can be used to make the necessary distributions.

Board members asked about the DDA’s ability to repay and the effect on its budget and operations. Derek, the township manager, explained that the DDA has a fund balance and fixed assets of roughly $2 million on the balance sheet but an unassigned fund balance available for operations of just over $100,000; staff said the DDA’s future tax capture from the formerly‑PILOT property will increase and is roughly commensurate with the annual payment amounts. Teresa and Derek said the DDA will make monthly loan payments and adjust its budget to accommodate the repayment schedule.

Supervisor Joe Porcirilli asked for confirmation of legal requirements and the finance director cited state statutory references in the audit memorandum (references provided in the meeting packet). After discussion, the board voted to authorize the township manager to sign interfund loan documents prepared by the township attorney and to proceed with distributions to the affected taxing jurisdictions. The motion passed on voice vote.

The action item was presented as corrective action to remedy a federal/state audit finding and to comply with state law governing tax distributions for PILOT properties. Township staff said they will provide the board with the final loan documents and amortization schedule and incorporate any required adjustments in upcoming budget discussions.