DETROIT – The Great Lakes Water Authority on Wednesday approved a term sheet for a proposed settlement deal with the city of Highland Park that could end their yearslong dispute over unpaid water and sewage bills.
The water authority’s board of directors on Wednesday, Oct. 25 approved a term sheet that outlines the terms and conditions under which both sides would enter a settlement agreement by January of next year. The tentative agreement for resolution was approved by the city last week.
Under the proposed settlement agreement, all of the litigation related to the 10-year battle between the city and the utility company would be dismissed, including a judgement that declared Highland Park responsible for owing $24 million to the company. Their dispute began in 2012 when the city decided to not pay GLWA for water or sewer services, claiming its payments to GLWA were capped by settlement agreements made in 1996.
In addition to dismissing court cases, the agreement would also require the state of Michigan to pay for and oversee the installation of water meters in Highland Park that will eventually be used to determine water and sewage rates for the city, the term sheet reads. GLWA CEO Suzanne Coffey said Wednesday that the meters will “create confidence that Highland Park is being billed equitably for their use of the regional system.”
The city will pay for its water and sewer services through Dec. 31. After that, when the settlement is expected to take effect, “GLWA will reduce [Highland Park’s] water charges based on reductions in usage volume due to documented repairs of leaks up to 25% of its current water usage ... GLWA will also provide a settlement credit of $60,000 per month to [Highland Park[ on its sewage charges until June 30, 2024,” the term sheet reads, in part.
Once the meters have been in place for one year, any service charges to Highland Park will be related to that data, under the deal.
“GLWA thanks Governor Whitmer, the state of Michigan and the city of Highland Park for moving us forward to this proposed agreement. While much work remains, all parties agree that this agreement represents a new and collaborative beginning to our working relationships,” Coffee said in a statement.
If Michigan Gov. Gretchen Whitmer and the state Legislature approve the agreement, it would take effect by Jan. 15, 2024, and would remain active through 2044. You can read the entire term sheet below.
Background on the issue
The state of Michigan stepped in 10 years ago and shut down Highland Park’s water treatment plant due to water quality issues, placing the city under GLWA’s service on an emergency basis. The water authority said last year that the city had paid less than 1% of its water bill and half of its sewer bill since 2012.
The lack of payment from Highland Park had caused other cities to pay more for their services to cover the debt, creating frustration among Metro Detroit residents. It is estimated that everyone living in the Metro Detroit area has likely paid between $75 and $100 each for Highland Park’s unpaid bills.
Enmeshed in legal battles for years, a Wayne County court last year ordered Highland Park to repay its water debt to the utility company. Under court order, the city currently owes $24 million to GLWA, and has so far paid $1 million of that debt after both parties reached an interim agreement in June this year.
However, if the latest deal is approved by all parties involved, the ongoing lawsuits would be dismissed entirely, including the $24 million judgement.
Several communities, including Macomb Township, voted last year to withhold funds from GLWA that are meant to cover Highland Park’s costs, and instead place that money into escrow. Officials said in April 2022 that Macomb Township had already paid $1.43 million because of Highland Park, and was expected to pay another $178,000 in the next fiscal year -- and the township was refusing to do it.
GLWA officials said in May 2022 that nearly half of their sewer rate increase approved months before was to help recover Highland Park’s sewer service debt. Highland Park asked the governor to approve municipal bankruptcy in April 2023, and declared a state of emergency over its $24 million water bill the following May.
Read the entire term sheet here
The details included in the term sheet below outline the terms and conditions under which the GLWA and Highland Park will enter into their settlement agreement.