Township says auto supplier Visteon stiffing taxpayers for millions

Cindy Heflin | Free Press Special Writer

Van Buren Township claims its taxpayers are getting stiffed by Visteon as the small western Wayne County community tries to keep up with payments on $28 million in bonds it issued to help the automotive supplier build its world headquarters.

In a lawsuit filed last week, the township says Visteon has failed to honor an agreement to cover a shortfall in tax revenue as payments come due on the bonds the township issued in 2003. The company maintains it owes the township nothing.

The first shortfall, $618,736, occurred Oct. 1 of this year, the township alleges. The township’s attorney, Kaveh Kashef, a lawyer with Butzel Long, sent a letter to Visteon at that time requesting payment to the township for the shortfall. Visteon’s legal counsel wrote back, rejecting the demand for payment.

“We tried to responsibly manage financial responsibilities by bringing this shortfall to Visteon’s attention when we had certainty of the shortfall amount and the date of its occurrence,” township Supervisor Kevin McNamara said in a press release.

“For years, the township told Visteon the shortfall would occur in October 2019. For years, Visteon has been telling the township and the courts that the township’s projections are hypothetical or speculative. Well, it’s turned out exactly as we projected, and Visteon is still stonewalling us … .”

The township first sued Visteon in 2015 in anticipation of future tax revenue shortfall, but the lawsuit was dismissed with the court saying the township could not sue over shortfalls that had not yet occurred. The Michigan Court of Appeals and Michigan Supreme Court agreed.

A Visteon spokesman said the company does not comment on pending litigation, but in the Oct. 8 letter answering the township’s demand for payment, J. Benjamin Dolan, a Dickinson Wright attorney representing Visteon, wrote to the township’s lawyer that “under the language of the agreement, there is simply no money due from Visteon to the township.”

Dolan also alleged that the “township has at times acknowledged the weakness of its interpretation of the agreement” and that the township’s calculation did not appear to comply with the agreement.

In the lawsuit filed in Wayne County Circuit Court, the township is asking the court to order Visteon to pay the total amount of the current shortfalls and all other shortfalls as well as attorney fees and other costs. The township estimates future shortfalls will amount to $28 million.

“There will be continuous shortfalls every six months, said Kashef. “Every dollar that the township has to pay is a dollar that could be used to pay other liabilities such as pension liabilities or to pay for services.”

But he said the township will do everything it can to avoid increasing taxes or default on the bonds.

Back in 2002, Van Buren Township had high hopes for the Visteon property and surrounding land near Ecorse Road and I-275.The township created a local development finance authority to promote development of 714 acres of land that included Visteon’s 263 acres.

The township agreed to tax abatements and issued about $28 million in bonds to help Visteon develop its headquarters, at the time known as Visteon Village, on about 56 acres of the property. Visteon Village consisted of nine office buildings, parking and other improvements on roughly 7.5 acres of Visteon’s land and roads, utilities, storm water management, parking and open spaces on the remaining 49 acres. Visteon has since sold its campus but remains a tenant in the space.

The township hoped the Visteon development would spur other development in the LDFA and the captured tax revenue would allow the township to pay back the bonds issued to help finance Visteon Village. But the Great Recession of 2008 took a heavy toll on automakers and their suppliers. Visteon filed for bankruptcy protection in 2009.

As part of the bankruptcy proceedings, Visteon and the township signed a settlement agreement in which the township agreed to a taxable value of $30 million for the Visteon property, which the township says is a reduction of $105 million. The township received a $2.2 million payment from Visteon and Visteon agreed not to dispute the township’s unsecured claim of $9.8 million in the bankruptcy proceedings. The township sold the claim for $5.7 million in cash.

Visteon also agreed to negotiate with the township to determine the amount of any shortfall in tax revenue to make the bond payments and make a non-tax payment to the township to assist with the bond payments. It’s that part of the agreement that is in dispute.

Visteon, which calls itself “the only Tier 1 supplier devoted exclusively to cockpit electronics," reported net income of $164 million in 2018.