M-72 Recreational Storage Condominium Association
Final Report Water and Septic System Construction Project

September 2006

History of the project and costs:
The developer of the M-72 Recreational Storage Condominium project was Greg Shugart. Greg made a good faith effort to install water and septic systems as part of the development. Purchasers were told that water and septic service would be provided in each unit. Permits had been applied for and the developer expected easy approval for the septic system before the development was completed and all units sold.

Formation of the Association: In September 2004 an organizational meeting of the M-72 Storage Condominium Association was held in the offices of Granville Management in Traverse City. The purpose of this first meeting of the Association was to transition management of the condominium from the developer to a newly chartered Condominium Association as required by the Michigan Condominium Act.

Septic and water system project: At the conclusion of the organizational meeting, a special meeting was held to discuss the status of the developer's efforts to obtain approval for the condominium septic system. Attorney Charlie Meyer had been retained by the developer to brief the owners on the status of the Part 41 community septic treatment system permit application.

Due to a Michigan Court of Appeals decision in 2003, local governments were no longer required to be responsible for approving community septic systems. If the local authority declined participation, approval for these systems would in the future be done by the Michigan Department of Environmental Quality (MDEQ) in Lansing Michigan.

Approval by the MDEQ in Lansing MI would require steps not previously required for these systems. All engineering plans and cost estimates, the Master Deed, other condominium documents would have to be approved by the MDEQ. Also, a letter of credit was required to cover annual maintenance of the system and full replacement of the system if it should ever fail.

These new requirements placed the developer in a regulatory limbo. The original condominium documents were prepared for Long Lake Township, however, in March 2004 the township decided to not participate in the approval process. As a result, the developer would have to pursue the full MDEQ approval route. This required a complete revision of the existing condominium documents and 100 percent agreement by co-owners of record to the change in the documents. The developer advised the co-owners that he had already invested significant resources in the project and that he would fund preparation of the new documents; however, any further action needed to obtain the Part 41 permit would be the responsibility of the Association.

At the conclusion of the special meeting mentioned above, the newly elected board of directors decided to retain Mr. Meyer to revise the documents and to move forward with the Part 41 permit application. Before the documents could be revised, the board was required to obtain approval from all co-owners of record. This was completed in December 2004.

Summary of tasks to obtain Part 41 Septic system permit: 

• In January 2005 co-owners were advised that the board had received agreement from all co-owners to move forward with the project. A committee was formed to steer this project to conclusion.
  
• In March 2005 a special meeting of the septic/water construction committee met to outline the steps needed to complete the project. In short, the actions required were:  

Summary of project execution and milestones:

• September 2004: Formation of the M-72 Recreational Condominium Storage Association.
• December 2004: Approval by 100 percent of co-owners to amend and revise original Association Master Deed and By-Laws.
• March 2005: A special meeting of the Water & Septic committee was held to review the draft of the Amended documents prepared by Attorney Meyer. Comments were transmitted to Mr. Meyer and authorization to finalize the documents was provided.
• April 2005: Final versions of the amended and restated documents were provided to all co-owners. Wells Mansfield submitted them along with the revised engineering plans to the MDEQ in Lansing.
• September 2005: At the annual meeting of co-owners, project manager Wayne Seger advised that the MDEQ had responded to the Association's application for Part 41 approval of a community septic system. He stated that the MDEQ required additional engineering and legal work before they would provide approval. Based on initial estimates obtained by the developer in August 2005, the board determined that final cost per unit would be around $1200 plus cost of the escrow. The board decided to seek a $250 deposit from each participating co-owner to fund further development of the project. This would also give the board an idea of how many co-owners were still interested in proceeding with the project. Dave Howard advanced the Association $1330 necessary to establish the escrow with Irwin Union Bank. The loan would be repaid at conclusion of the project and the remaining amount of the escrow paid within two years from activation of the septic system.
• October 2005: The amended condominium documents required by the MDEQ were transmitted to the MDEQ Lansing office by Attorney Meyer.
• November 2005: All owners submitted their $250 deposits and indicated they intended to participate in the project. The Board of Directors authorized Mr. Seger to proceed with the engineering revisions. He was also authorized to obtain bids on the septic and well over the winter. Mr. Seger recommended the board delay final selection of contractors until the spring of 2006.
• November 2005: MDEQ Approved the amended and restated condominium documents, revised engineering plans and the project development agreement. MDEQ approval for our Part 41 wastewater system is permit no. 1002413, April 11, 2006.
• April 2006: The MDEQ issued a Part 41 permit for the Association’s community sewer and drain field. This approval was subject to minor changes. The special conditions in the permit included a requirement for proof of financial responsibility for the system.
• May 2006: Over the winter the board reviewed four septic and three well bids collected by Wells Mansfield. The low bidder on the well was about $950 over the August 2005 estimate. However, the lowest septic system bid was more than twice the initial estimate. This did not include money needed to connect the well to the unit waterlines. Based on a bid by D & W plumbing the Board estimated that about $5000 would be needed to connect the well to unit waterlines. Although cost estimates were soft at this point, the board decided to move forward with the project. The rational for this decision was that in addition to the significant investment by the developer, the Association had already spent over $4000 in legal and engineering costs. Also, the Part 41 permit was only good for two years, construction costs were expected to increase, and that the MDEQ continued to revise the ground rules for this type of system. The Board advised co-owners of its decision to press forward and requested an additional $1400 from each co-owner.
• August 2006:Construction on the septic and well begins. Another bid for connecting the waterlines to the well was obtained; however, it became apparent the Board had underestimated the difficulty of connecting unit waterlines to the well. The developer had planned for the well to connect to a main water line that ran into the interior of end units of buildings 5800 and 5802.  The main would then be connected to individual unit waterlines by a manifold which would route the water to each downstream unit. This design could work as intended, but if the manifolds were installed in the end units there would be a need to access the units from time to time, thus inconveniencing the co-owner and taking up space in the unit. Also, neither of these units was heated, so some sort of external heat would have to be applied during the winter. Finally, a pressure pump would have to be installed in unit #11, creating obvious problems associated with access and space requirements.

The Board considered other alternatives. Two main options were explored.   

• Option 1: Construction of a three-sided shed at the end of each unit and installation of the pump and manifolds in the shed. Although this first option was cheaper than the second option it was rejected because it would require heating the "lean to" during the winter, and that revised engineering drawings would to have to be filed with the township thus delaying the project further. 
• Option 2: Bury the pump and place the manifolds in a cistern below the frost line. Access would be through a ground level manhole.  This second option was more expensive than option one but was selected because it would place the manifolds and pump below ground, not require heat, and require no maintenance. Also, once the pump and manifold were buried they would not change the appearance of the buildings.

• Sept 2006: Project completion. Water and sewer is available on site. However the project was about 25 percent over initial estimates. MDEQ approval for Part 41 wastewater system (permit no. 1002413, April 11, 2006) well installation by Cluff Well Drilling (permit no. 33013, (Sept 25, 2006)).

Conclusion: The water and septic project completed. The installation is high quality, low maintenance, and will significantly increase the value and utility of co-owners investment.  

Cost Detail: