Poletown tax dispute may soon be settled

By Charles Sercombe

Detroit is not exactly whipping out a checkbook yet, but there is a good chance that Hamtramck’s tax dispute with the city will be settled in the near future.

Hamtramck is suing Detroit for property tax revenue it shares from the GM Poletown plant, which straddles both cities. Detroit says it has overpaid Hamtramck $7 million over several years.

Both sides met last Thursday in Lansing under the eye of state Treasury Department officials, who are trying to mediate a settlement. Hamtramck is about to run out of money by mid-March if Detroit doesn’t begin making payments.

According to Hamtramck City Manager Bill Cooper, the meeting went well.

“We walked away with the feeling that something was going to work out here,” Cooper said.

Detroit officials are spending this week, Cooper said, crunching numbers to see what kind of settlement and future payment plan would work out. A rumor going through town is that the state will forgive a multi-million dollar debt Detroit owes in exchange for a settlement with Hamtramck.

Cooper said that’s not exactly right, but added that state officials conceded they will have to bring something to the table to get the deal done.

Normally, Hamtramck receives upwards of $2 million a year from Detroit. It’s not known how much Detroit will agree to Hamtramck. In the meantime, Hamtramck is racking up a $3 million deficit, largely due to these non-payments for the past two years from Detroit.

Cooper said that even if Detroit makes a payment soon, it’s likely the city will still need to take an emergency loan from the state to meet employee payrolls and pay contractors. The city is applying for a $2.6 million loan with an interest rate of less than 1 percent a year.

He said the city could immediately pay back the loan if Detroit comes through with a significant payment.

One Response to Poletown tax dispute may soon be settled

  1. Roger

    March 3, 2011 at 2:04 pm

    sounds like the state is in favor of us, thats good.

    however unless detroit drops $10 million in our lap, its not in our best interests financially to pay off the loan right away. that money can be better used to invest in making the city more profitable. when we get the loan, regardless of how much money detroit promises, stick with the payment plan on the loan. clear out any lawsuits, start selling holdings, improve cash flow, heck we can invest the money into other areas like low interest loans to businesses who want to improve. the interest from the loans will be more than the 1% the state is charging us and everyone wins!

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