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News file Photo The water tower of the city of Alpena can be seen in this photo from August. Alpena Township and Alpena are locked in a lawsuit over water and sewer rates, and the township hopes to quickly end the decade-old lawsuit.
ALPENA – Alpena Township agrees with 26th Circuit Court Judge Ed Black’s ruling on proposed water and sewer rates and wants to hold a closed-door meeting with the Alpena City Council to try to strike a deal that could end to the decade-old lawsuit .
The municipality reported this in a press release sent on Monday evening.
Alpena Township and Alpena are involved in a lawsuit over the water and sewer rates the city charges the municipality.
In September, the city proposed water rates that the municipality would pay for the years 2014 through 2018, ranging from $3.80 per 1,000 gallons to $4.10 per 1,000 gallons. Sewer rates would range from $3.60 per 1,000 gallons to $3.75 per 1,000 gallons.
At a hearing last week, Black ruled that the water rates the city proposed to the court were not fair and reasonable and ordered the city to propose even lower rates at a Nov. 22 hearing. He also concluded that the proposed sewer rates were fair. which could close that chapter in the lawsuit.
Black said the rates should be calculated based on the percentage of the city’s water and sewer system that the municipality uses for service and because the municipality is a wholesale customer.
Black does not have the authority to set rates, but only to determine whether they are fair and reasonable for both parties.
“The Court declared that the City’s proposed water rate was unreasonable and determined that the City included figures in its rates that were too high given the City’s status as a wholesale customer,” the letter said.
The city agreed with Black’s ruling, saying the latest sewer rate appropriately charged the city for the percentage of the city’s system used and that the rates were reasonable.
Still, the city says there is still more work to do and hopes discussions with the Alpena City Council can help end the lawsuit before the next court hearing.
“Although the municipality is satisfied with the rulings made by the court, it continues to seek a reasonable solution from the city; one that will put an end to this lawsuit and prevent unnecessary future litigation,” the press release said. “In fact, the council prefers to meet in a joint closed session with the city before the November 22 trial to discuss a settlement that the council previously sent to the city. The city’s proposal would put an end to this lawsuit and bring about the necessary closure. The council is hopeful that the city will accept its offer to meet and discuss how the parties can move past this lawsuit.”
The city has not said what it is seeking in terms of a settlement.
The council has yet to discuss Black’s ruling, but is expected to do so in a closed session at its next meeting on Nov. 4. After that, more information should become available about the state of affairs of the city.
The city and municipality also reserve the right to appeal Zwart’s ruling.
The city purchases water from Alpena and for years the city used a formula in a 1977 contract to set rates. Starting in 2013, the city opted not to use the formula that said the deal was over, kicking off the more than decade-long dispute over water rates. The city claims the rates are too high because it does not use the city’s entire water and sewer system and because it is a wholesale customer.
At the end of the trial earlier this year, Black ruled that the municipality was indeed a wholesaler and that any rate imposed on it should be based not only on the amount of water it purchases, but also on the percentage of water and city sewer systems. the municipality uses applications to receive services from Alpena.
The lawsuit began in 2014 and as the dispute progressed, the two sides continued to negotiate but made little to no progress over the years.
In 2017, the court ordered the two parties to mediate. That only lasted one day, however, because city officials didn’t see enough progress to continue.
A settlement seemed likely in early 2018, when both boards voted to approve “terms in principle” for an agreement.
That vote was not for an agreement on rates, but on finding a rate-setting process that could end the dispute.
After ongoing negotiations failed to reach an agreement, the local court effectively ordered the two sides to adhere to the terms they reached earlier this year.
Shortly thereafter, the city appealed part of that ruling to the Michigan Court of Appeals, and the city filed a cross-appeal. The court also ordered mediation, which again failed to reach an agreement.
The appeals court subsequently ruled that the proposed agreement was non-binding, which the municipality appealed to the state Supreme Court. The state’s highest court declined to hear the case and sent it back to the trial court in Alpena.
During the first hearing in court, then-Judge Michael Mack ordered the opening of an escrow account in the names of both governments. Mack required the city to deposit the difference between the old rates the city had paid and the higher rates the city had set for all its customers into that account.
In recent years, the two municipalities have worked together to create a new authority that would oversee water and sewerage operations for both governments.
The two sides reached a draft agreement on a water and sewerage authority in early 2022.
However, that plan failed, leaving the fate of the case in the hands of the court.
The two sides have spent millions of dollars on attorneys’ and consultants’ fees since the lawsuit began.
Steve Schulwitz can be reached at 989-358-5689 or [email protected]. Follow him at X @ss_alpenanews.com.
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