Regional water authority OKs 3.7% water rate hike

Detroit — The Great Lakes Water Authority on Wednesday approved a 3.7% hike in wholesale water rates and a 2.4% increase in sewer rates for the 2023 fiscal year.

The six-member board's unanimous vote followed a public hearing on the proposal in which several Metro Detroit residents voiced concerns about the increases tied in part to $52 million in unpaid water and sewer bills from Highland Park.

Almost half or about 1.15% of the 2.4% sewage rate hike in 2023 owes to Highland Park's debt, officials said. The unpaid debts are passed on through rates to GLWA's remaining member communities. The rates go into effect July 1. 

Melvindale resident Laurel Smith argued to the board during public comment that she and her neighbors can't afford to pay more. 

"We have to live on budgets as well," said Smith, one of several Melvindale speakers Wednesday. "How do we have to recover Highland Park's bad debt? How is that fair to us?

"I can't tell you what a burden this water bill causes every time there's an increase," Smith added. "Why do we have to pay for water we're not using?"

Meeko Williams, chief director of Hydrate Detroit, a longtime water affordability activist in Detroit, also opposed the rate plan, telling the board: "Hell to the no. We do not have the money.

"You all may have to wait a year or two until this pandemic is over," Williams said.

Through 2027, the authority augurs that its revenue requirements will increase at least 3% per year on the water side and 2.5% per year on the sewer side.

More:Water authority plans Metro Detroit rate hikes of 3% or more over each of next five years

Wholesale water and sewer rates are passed on to GLWA's member communities. The final bill homeowners get reflects water rates set at the local level.

Melvindale Mayor Pro Tem Joseph Jackson spoke out twice Wednesday against the increase, telling the GLWA board that "Melvindale can't sustain these charges."

"We have a lot of low-to-middle income people here," Jackson said. "We can't get much more out of our citizens."

GLWA's Interim CEO Suzanne Coffey noted the authority is in litigation over the Highland Park matter. 

Last July, after an alleged nine years of non-payment dating back to 2012, GLWA sued both the state of Michigan and Highland Park for the unpaid bills.

GLWA alleges that Highland Park had not paid for what it received and argued the state forced the authority to take on Highland Park and has not covered the arrearage as bills mount, creating an unfunded mandate.

The lawsuit was delayed by the Michigan Court of Claims in December. 

"In April of 2021, Highland Park ceased making payments to us whatsoever," Coffey said. "Our expenses have to be recovered in our charges. There isn't any profit. There isn't any other way to do this."

Highland Park's debts break down to about $10.3 million in water bills, about $40 million in sewer fees and another $1.8 million in industrial waste control, Randal Brown, general counsel for GLWA, has said. 

If Highland Park's debts are left unpaid, they will grow to $62 million in another year, warned Brian Baker, who represents Macomb County on the board. 

Damon Garrett, director of Highland Park's water department, said "the dispute is debt versus overcharge," but declined further comment, citing the ongoing litigation and "the sensitivity of the matter."

In a Feb. 7 letter to Coffey, Garrett argued that Highland Park had been overcharged $14 million by GLWA, paying the authority nearly $18.5 million between 2016 and 2022, despite a 1996 consent judgment that would've capped maximum fees at less than $5 million.

Baker said the 1996 fees no longer apply.

"It really is a shame that Highland Park has put their residents in this position, possibly towards bankruptcy, believing that they can continue to pay in 1996 rates," Baker said at the meeting. "They're 25 years old. Everyone's rates have gone up, as we know." 

Cathy Square, the city administrator for Highland Park, said Wednesday "the city is owed an apology and GLWA needs to follow the law."

Square provided The News with a copy of a February 2021 Wayne County Circuit Court ruling vacating an April 2015 judgment against Highland Park for $19 million-plus in water debt.

Highland Park had countersued GLWA, arguing that it was overcharged.

In August 2020, a case evaluation panel reviewed the claims, according to the circuit court ruling. The panel awarded Highland Park $1 million, to be paid by Detroit, it notes. 

Square on Wednesday accused GLWA of ignoring court orders and "trying to use public opinion against the citizens of Highland Park to justify rate hikes."

 "The city is owed an apology and GLWA needs to follow the law," Square said.

Square argues the February 2021 ruling is "the law as it stands now."

"We won," Square said to The News via email. "They are dreaming that someday it will be overturned, by using the press and politics to beat up on Highland Park."

Board member Freman Hendrix, who along with Detroit Water and Sewerage Department Director Gary Brown represents Detroit, asked if a community's size or budget has any impact on what they are charged.

Coffey said it does not, as GLWA applies a "uniform charge methodology." GLWA notes 84 of its 88 member communities are charged the same wholesale rates. 

While he voted for the budget, Baker said the debt is unfair to all involved and he called on Michigan Gov. Gretchen Whitmer to force a resolution.

Baker repeatedly mentioned the possibility that the Wayne County community of 11,000 could end up in bankruptcy court.

"We need to stop the bleeding and resolve this issue before a community under the state's watch goes bankrupt," Baker said. "And before other communities decide to start withholding their own payments, which will cause even a larger issue to all of us."

jdickson@detroitnews.com