Friday, September 30, 2016

Time is running out ! DECISION for 173 = Retire Before 12/2/16 or lose Pension "Guarantee"

Has Bloomfield Township leadership really explained this pension change to the employees?  I spoke with someone the other day that had no clue about this provision change. 

With no preliminary budget presented by our Supervisor to date and no mention about who is doing the negotiations for the expiring employee contracts on March 31, 2017  how can the employees make an informed decision by December 2, 2016?

"Ignorance is bliss"  .. not what I think.   That's why I continue to write my blog.  See archived blogs.
$11 million class action lawsuit about water and sewer still to be litigated
Leadership continues the "no bid" practice of hiring vendors and contractors: friends/family/favors
Leadership continues to advance interests of developers over residents including changing zoning
Leadership continues to have undisclosed "conflict of interest" issues but vote anyway
Leadership continues to refund bonds/add new bonds and move money around to different accounts
Leadership does NOT  promote open and transparent government -  behind closed doors works here  
FBI has not come to Oakland County, yet

Original blog posted 9/30/16

Hi All,
Bloomfield Township still has 173 or so active employees in the Defined Benefit Pension Plan.  This DB Pension Plan was closed to new hires in 2005.

Since 2005, the newly hired employees are in a Defined Contribution Pension Plan 401(A).  Currently there are 91 active employees and 16 employees (that terminated employment) that have an ending balance.   The entire account balance as of 6/30/16 is: 

In 1961, this DB pension plan began with Connecticut General Insurance Company and the Guarantee obligation was taken over by Prudential in 2005.   The township offered to the retirees a certificate from Prudential with a guaranteed annuity to pay the pension.

Basically,  when an employee retired the township followed this procedure ( as I understand it)  to determine the pension.  First, take the average of the best 3 years of the last five of the annual salary BASE pay.   Then, depending on the union or the contract at the time,  there is a % factor number which is not the same for all employees that is then multiplied with the average base pay number.  A third factor is the number of years of service.  That is then multiplied to the new resulting number from base pay times the % factor #.   This new number is then divided by 12 months/ to arrive at the monthly pension figure.  Of course, there will be taxes and other costs deducted like always before the check is mailed.
Bloomfield Township notifies Prudential that there is a new retiree from the DB Pension plan and several determining factors such as the actuarial figures, the interest rates, the economy and the investments, etc.... the township makes a cash payment to Prudential for each new employee that retires and Prudential gives the retiree a guaranteed annuity certificate that will make the monthly payments to the retiree.    The range of that cash payment by Bl. Township at the retirement date can vary widely as the wages/years of service/ etc.  will play an important role.   From several hundred thousand to perhaps even a million dollars (don't know the actual figure... but think of Dave Payne as Supervisor with good pay and having 40 years employment at the township).

The part of the DB pension plan that gave the employees SECURITY....was the GUARANTEE from Prudential.... the insurance annuity for the retiree.  If for some reason, the township went bankrupt and was unable to make ARC  (annual required contributions) payments, the retirees would still receive their monthly pension from Prudential.  The insurance company is obligated to make the payments.

AND NOW.... at the Sept. 26, 2016  Board of Trustees meeting..... changes.... a new resolution:

 Well, after several closed session meetings over the past 3 Board of Trustees meeting, the Board came back to the table on 9/26/16  and made and passed  2 motions based on agenda #5 and # 6.

The Township E-News wrote this review 9/29/16:
Here's what happened at Monday's Board meeting:
Discussion was held on refunding UTGO Series 2007 Township Campus Bonds and LTGO 2008 A Water Bonds and 2008 B Sewer Bonds.
The Board adjourned into closed session to discuss Memorandum of Agreement for Bloomfield Township Fire Fighters Union, and in open session authorized the supervisor to sign Memorandum of Agreement for the Bloomfield Township Fire Fighters union. In closed session the Board discussed attorney/client opinion regarding the Defined Benefit Plan, and in open session the Board approved a resolution regarding guaranteed annuities for employees who retire after Dec. 2, 2016.

I find it incredible that the Township Board would take such action concerning THIS DB pension plan before the expiration of the current 6 year contract that ends 3/31/17.  I also find it incredible that the UNIONS  accepted the action plan.  However, there are employees at the township that are not represented by a union.  Will they now form a union?  

My best advice to my readers  is to view the very short presentation that is the audio/video recording of the  9/26/16  meeting of the Board of Trustees.  I would not want to misstate the action taken by the Board of Trustees.  Both motions passed unanimously.    You can drag the time line to 1:04:52 and then watch to end of video approx. 5 minutes

AS I UNDERSTAND what happened.....

Bloomfield Township is notifying Prudential that they are exercising the right to cancel w/ 30 day notice the contract that  GUARANTEES payment to any employee that retires and enters the Prudential Pension Plan AFTER December 2, 2016.

The township will continue to fund the Prudential fund for each township employee currently in the DB Pension Plan when they retire after Dec. 2, 2016  but Prudential will basically have a separate account... one that does not purchase a guaranteed annuity for  all those retirees after Dec. 2, 2016.   The balance in the Prudential DB Guarantee Pension account as of 6/30/16 is: 

I don't know what "song and dance"  Supervisor Savoie and others negotiated and promised in backdoor memorandums/ other means.   Perhaps the pension payout will simply operate as if nothing has happened.  However,  with the pension payments possibly lasting for decades per person/beneficiary,  no one knows how the township will be financially managed over those years and whether or not bankruptcy will ever happen to Bloomfield Township.  Those with the Guarantee will be paid by Prudential.  If the township goes bankrupt,  the "after Dec. 2, 2016 retires" will not be paid/ or  perhaps get something negotiated in bankruptcy proceedings.   On the positive note,  while the guaranteed retirees have the money in fixed safe investments at Prudential, the "after Dec. 2, 2016 retirees"  could have Prudential taking more risk with that money and thus have earnings increase....  or perhaps not.

WHAT IS PUZZLING.... is the behind closed door agreements with the Unions.

NOW.... if I were an employee in the Township ... and eligible to retire.... I would think long and hard about all the consequences of retiring on or before 12/2/16  vs staying employed.   Unless there is some secret deal,  this decision can not be changed after Dec. 2, 2016.   You need to accept and live with the deal you choose for yourself and your family.  Unfortunately,  you do not have a new contract yet.  The contract you are working under expires 3/31/17.   What will the new contract say?  Would the language and terms of the new contract sway you to stay?  You have a deadline to decide:   retire or work.

WHAT IS SCARY.... is the possible run on the retirement and many people choosing to accept the guarantee certificates on or before 12/2/16.   How many of the 173 are eligible to retire and how many will?   How much cash would need to be deposited into the Prudential Fund to satisfy the actuarial figures? What if 30 people choose to retire?  That could be a potential $15 million (more or less) that must be taken out of the DB Pension Equity Fund  (from the original $80 million in bonds) and sent to Prudential.    The $80 million that Savoie, et al,  promoted to fully fund the defined benefit pension plan several years ago is not functioning as planned.  More people have retired than expected at this point in time.  The money was partly invested in an equity fund with the goal of raising revenue.  However, each time an employee retires, funds must be withdrawn from the equity fund and deposited into the Prudential Fund.   The more that retire, the less cash in the equity fund to invest.  Thus having less chance of gaining significant revenue.  Last figure I found 6/30/16  for the balance in that Equity Fund for the DB Pensions is:
See financial statements in the August 8, 2016  Board of Trustees... Board Packet

On March 10, 2015 in the Bloomfield Township Board of Trustees BOARD PACKET for the study session ...... the current (as of above date) retired employees are listed (not by name) and their monthly pension amount.


WHEN are those BOND HOLDERS  from the $80 million bond sale due their invested money returned?  There is a limit to how much the citizens can afford to pay in taxes  without jeopardizing their own budgets and way of life.

  • Supervisor Savoie and Clerk Roncelli must deal with the Secretary of State and/or the Attorney General's office with the complaints filed against them. 
  • Clerk Roncelli will be busy with a general election on November 8, 2016.  
  • The township will have to accept whatever number of employees choose to retire and accept the guaranteed pension certificate on or before Dec. 2, 2016.   That could involve a huge cash withdrawal from the Pension Equity Fund current managed by Schwartz & Co.  to be deposited into the Prudential Pension Fund. 
  • The Departments will need to re-evaluate their staffing needs depending on the number of retirees before Dec. 2, 2016 deadline.   Will the budget be able to afford to replace /hire new people?  I think downsizing the number of employees should be good for the budget.
  • Where is a strategic plan for our community for the years going forward?   The last strategic plan ended with the final report given in February 2014.    Since that report, employees have received raises for the last 4 years.  What is the debt for the township now?  Are property values back to pre-recession figures?   What are the predictions for the future?  What is needed? Will we still be AAA rated?   What is the township doing to protect that rating?
  • Supervisor Savoie needs to present a preliminary balanced budget before the end of 2016/ and approved before April  1, 2017.
  • The township must negotiate contracts with the various unions/ and employee groups.  Current contracts expire 3/31/17.   WHO  is doing the negotiating for the taxpayers?  We need experienced negotiators and we need the Trustees to weigh in on what is and is not negotiable as far as protecting the interests of the taxpayers.   Has anything already been completed?  By whom?  When?   Egads.
  • The township must deal with a class action lawsuit @ $11 M possible payout concerning the Water and Sewer department.
  • Trustee Brian Kepes becomes Treasurer Kepes on November 21, 2016 for the next 4 years.  Is he prepared to do the work?   He does not have the same investing background and certificates/ degrees as current Treasurer Dan Devine.   Who will he and the township go to for advice?  Will there be competitive bids and companies to compare?  Will he do this job full time?  He wanted to make it a part time job with part time pay for Dan Devine.  What is his position now?  Will someone monitor his hours at his desk at the township?
  • Will the refunding of the $20 million plus Campus Construction Debt Bonds and the refunding of the $7- 8 million in Water and Sewer Bonds be transacted?  So far, Savoie and Kepes have suggested Fifth Third Bank as the Underwriters... with no bids from others... and they have not recused themselves because of conflicts of interest.   The other parties to the refunding of the bonds issue  are long term vendors... perhaps had a contract at some point... but in my opinion are NO BID vendors at this point.   Bendzinski & Co.,  Dickenson Wright, Fifth Third Bank and ?? others?    
  • For the past six years, the township was able to legally "opt out" of a state law concerning employee health care.   There has been NO STUDY SESSIONS to date that seem to be dealing with this issue or any of the other issues mentioned above.  Why not?  This year, with a new contract, the opportunity to "opt out" have ended.  The township must follow the law.  Who is advising them on this change?
  • The TRUSTEES should be involved to protect the interests of the taxpayers of this township.  Too many suspicious deals and hiring of consultants and legal firms by Savoie /others without Board approval.   Savoie claimed transparency in his re-election literature.  In my opinion, that is just one lie of many he made to get re-elected.   
  • Now,  the next six months will be critical to the future of this township.  This AAA rated township needs ethical leadership, a strategic plan, policies that are relevant and adhered to, transparency at all levels of doing business with competitive bidding,  and a Board of Trustees that the citizens can respect for their due diligence on all issues and their vote on all issues that are in the best interests of the township.
My blog... my opinions...

See the Board of Trustees BOARD PACKETS for related data
November 23, 2015 reg. meeting
March 10, 2015 study session packet    THIS one lists the retirees (not by name) and the monthly pension they receive ....among other data

See  archived blog for more data:

Thursday, September 29, 2016

Refinance Bonds? No documents=Problem

Hi All,
At the Monday, Sept. 26, 2016  Board of Trustees meeting,  the posted agenda :


There was absolutely NOTHING in the Board Packet with any details of the above agenda item.  Supervisor Savoie had asked Trustee Brian Kepes (not the current Treasurer Dan Devine) to investigate and present this item .  I'm worried because 17 year current Treasurer Dan Devine, will be replaced by Mr. Kepes in November as our Treasurer.    Trustee Kepes and the township municipal bond advisor, Bobby Bendzinski seemed unprepared,  the trustees had nothing to review, and  Mr. Bendzinski, Mr. Kepes and Supervisor Savoie suggested Fifth Third Bank to be part of the proposed "bond refinance deal"... that had no documentation.  Neither Savoie nor Kepes revealed their conflict of interest in dealing with Fifth Third Bank.  That is unacceptable.  More to come at the next Board of Trustees meeting.


Research that I could find:   2007 Campus Construction Debt Fund/  $ 26,000,000 in bonds

                                              Outstanding principal as of 3/31/16        $ 22,400,000

                                              Debt payment before 3/31/17                 $ 600,000 principal 

                                                                                                              $ 974,225 interest

As for the water and sewer:  2008  Series A -  WATER Phase 2        $ 4,750,000  in bonds

                                              Outstanding principal as of 3/31/16      $ 3,900,000

                                              Debt payment before 3/31/17               $ 200,000 principal
                                                 due May 1 and Nov. 1 fiscal yr
                                                  as semi-annual payments                  $ 138,200 interest


                                              2008  Series B -   SEWER                   $ 4,000,000  in bonds

                                             Outstanding principal as of 3/31/17     $ 3,400,000

                                             Debt payment before 3/31/17               $ 200,000 principal
                                               due May 1 and Nov. 1 fiscal yr
                                               as semi-annual payments                    $ 120,000 interest

What I heard at the 9/26/16 meeting: 

  • Want to refinance within 60-90 days if possible
  • our municipal bond advisor, Mr. Bobby Bendzinski  needs an"engagement" letter
  • Terry Donnelly @ Dickenson Wright would write a resolution for the Board
  • Fifth Third Bank would be the Underwriter
  • the deal would be negotiated vs competitive bid sale
  • supposedly, the refinance would provide a $2 million savings for the Campus bonds and $500,000 savings for the Water and Sewer bond refinancing.   NO documents to show that.
  • held in escrow.. the debt defeased ... 3rd party holding.... call date is May 1, 2018
  • guess-timated costs to those "friends and family and favors"  making the deal would be  $40,000 to Bendzinski & Co.; and $100,000 to Fifth Third Bank;  and no $$ mention to Dickenson Wright? but certain will be ; wonder..would the third party holding until May 1, 2018 also get money? ;  who else?     What will the ACTUAL numbers reveal?
  •  Savoie did not know how the payments were made. He assumed level principal payment. Not.
  • documents will be provided at the next meeting for the trustees and public to review.  MY comment/opinion:   assume the vote will take place at the next meeting.... prediction 5-2 vote/ because of the conflict of interest issue with Fifth Third Bank.
  • Mr. Kepes... trustee not treasurer at this point in time...  was "given" the opportunity to "save the community money"..... by Supervisor Savoie.   My comment/ opinion:  The treasurer, Dan Devine, was overlooked by Savoie... deliberately to present this issue.

But then again, 2 guys (Savoie and Kepes) with a conflict of interest with the same bank/underwriter (Fifth Third)  ... presenting the refinance issue ?  And Savoie and Kepes got voted in for 4 years... Supervisor and new Treasurer.   I'm not happy about that... my opinion.

Please  listen to the PUBLIC COMMENT about the conflict of interest.... at the 9/26/16 meeting ... at this link:

Please attend the Board of Trustees meetings.  Next scheduled :  October 10, 2016 @ 7 pm


Wednesday, September 28, 2016

Class Action lawsuit certified: $11M + Water and Sewer vs Bl. Twp., MI

Hi All,
BREAKING NEWS: ( I am not an attorney, so I hope I am representing this correctly)

According to court explorer website for circuit court: Judge Dan O'Brien granted class action certification on the water and sewer case today.

The water and sewer lawsuit filed by Kickham Hanley, PLLC law firm for one person has been accepted as a CLASS ACTION lawsuit against Bloomfield Township, MI. 

The monetary amount could be over $11 million.  Accepting the filing as a class action lawsuit, the court is basically saying that if the claims in the lawsuit could be/ or are proven true,  that there are numerous people that were/are impacted and therefore have standing in this lawsuit.

Kickham Hanley, PLLC law firm in Royal Oak (248-544-1500) had filed a lawsuit asking for it to be as a Class Action lawsuit in Oakland County Circuit Court (Case No. 2016-152613-CZ Judge Grant) against Bloomfield Township.  Below is just page 1 of 18 in that PDF :

That same law firm won a $2 million settlement from the City of Birmingham in a dispute over water and sewer billing practices.


While waiting for the courts to take action, two citizens kept water and sewer issues in front of the Board of Trustees trying to bring about doing/voting for the right outcome and to try to get an audit of the water and sewer department.   Not all of the citizens' water and sewer issues may be included in the lawsuit, but the actions of this administration are still a major concern and a problem.

Bill McMaster, State Chairman (Volunteer) of TAXPAYERS UNITED MICHIGAN FOUNDATION was insisting at many township board meetings that the actions being taken by the township were in violation of the Headlee Act.  You can contact him at:

One of McMaster's issues with the W & S  was the Upper Long Lake Estates $1.6 million Detroit Sewer project that was constructed without establishing an S.A.D.  for the less than 50 properties benefiting and without a majority voted approval of the 102 families of that subdivision.  The project was paid with money from the W&S funds.   This was done via no bid contract.  Included in the deal was a repaved road.

Other water and sewer issues that may or may not be in the lawsuit, but of concern to citizens:
  •  The RTS fees  (Ready to Serve) 
  • The transfer of @$ 2.7 million into a Retired Employee Health Trust 
  • Perhaps how many and which employees are actually assigned to this department as it is an "Enterprise fund" and those employees get wages/benefits/pensions  paid from your water bills not your property taxes 
  • Another issue could be the exemption of some businesses (restaurants) to not pay a special cost / grease/ etc.
  • Perhaps an issue is the charges of depreciation for both water and sewer
  • others?  most likely
David Thomas was instrumental in presenting a 200 person signed petition to the Board of Trustees prior to the election asking for a audit of the water and sewer department.  Thomas was an August 2, 2016 Primary Election Candidate for Supervisor of Bloomfield Township.  Thomas lost to current  Supervisor Savoie in that election by less than 500 votes with more than 8000 votes cast.
Supervisor Savoie and township attorney Bill Hampton and others continued to insist prior to the election that the Water and Sewer department was fine and that this lawsuit would go nowhere.   They even used time at Board of Trustees meetings  (listed as an agenda item) to present their opinions and to try to discredit the claims of Thomas and others  about this filed lawsuit.  Thomas and others were trying to inform the public about the W & S issues through their campaign literature. Many in the township wanted the W&S  audit... and perhaps now the fact finding and discovery that will come with the pending lawsuit may give the citizens some answers.

I recommend a review of the budget for the township... all debt listed on page 8 and budget for water and sewer on pages 97-99.

See my archived blogs found in the right side column... listed by year and month.... for more on water and sewer and other issues.