Northville Township will not begin demolition of the former Northville Psychiatric Hospital until it receives revenue from the development being built on the the corner of Seven Mile and Haggerty Roads. Revenue is not projected to come in for at least two years.
The township owns 349 acres of the Seven Mile Property, on which the psychiatric hospital stands. The township sold 82 acres of the property to REIS last year, and the company plans to develop a 100,000 square-foot University of Michigan ambulatory center and other structures on the site.
The majority of the buildings that are part of the psychiatric hospital are on the township's land, but a few of the buildings are on REIS' land.
Township Supervisor Bob Nix said the township plans to use the tax revenue generated from the REIS developments as its primary source of funding for the environmental clean up of the property and demolition of the hospital.
The township and REIS have already estimated that the cost of cleaning up the brownfield will be approximately $29 million—$12 million of which will be paid by the township and $13 million of which will be paid by the developer. The other $4 million was put in the estimate as contingency.
Nix said the township will likely start seeing tax revenue from the REIS development in 2015, which he projects will be about $1.6 million that year. He said revenue projections are projected to increase in years after that.
He told the board members that the township could collect and spend the money as it comes in each year, or it could create bonds and use the revenue to pay off the bonds over several years.
Nix said that bonding always has a risk, but that the township would use a bond council and other resources.
"You can be rest assured that the board members that you have here are going to be looking out for the best interest of the township. And whatever action we take, we are not going to take unless we feel very comfortable that it's the right thing to do," Nix said.
Nix added that he does not expect the bond would affect the township's bond rating.
He said that bonding would be the best way to go, since spending the money as it comes in could make the clean up process take 10 years or more.
Nix said that a lot of residents want to see this project improved immediately and would not want to wait a decade for it to be completed.
Trustee Marv Gans said that taking the money as it came in also might not allow the township to plan well, which bonding would allow them to do.
Trustee Fred Shadko also pointed out that residents would probably not like to see trucks rolling in and out of the site for 8-15 years if the board chose to take the money as it comes in.
Nix said the township would be able to issue a bond in 2015 at the soonest and maybe begin demolition by the end of 2015 or beginning of 2016 at the earliest.
The board did not decide on which way to pay for the demolition, but it will continue to discuss it at future meetings.
Nix said the board also plans to discuss ways to address environmental and security issues at the site before demolition can begin.