Highland Park must resume GLWA payments, Wayne County judge rules

Detroit — A Wayne County judge has ruled that the city of Highland Park must resume payments to the Great Lakes Water Authority in a $54 million debt dispute that has  inspired years of litigation.

Both the city and water authority officials declared victory after reviewing Wayne County Circuit Court Judge David Groner's decision.

The Great Lakes Water Authority hailed Groner's eight-page ruling as a "step forward," but cautioned "it is not a final ruling."

"While we continue our review, given its importance we want to express our pleasure at the depth and the clarity of the court’s reasoning," the authority said in a statement.

The city was also cautious about the GLWA lawsuit that was filed in September 2020.

"It's a mixed bag," said Highland Park City Administrator Cathy Square of the ruling. "What they're happy about is that we're paying again, and that we'll pay them the money we owe them for the last year. 

"We're gonna pay. But what we're paying will be based on revenues, not whatever bogus bill they decide to send us," Square added.

As Groner wrote: "The primary dispute in this case is one of contract interpretation."

Highland Park has long argued it was overcharged for GLWA water. The city should be charged at a rate based on a 1996 consent agreement for sewer service with the then-Detroit water system, the predecessor to the water authority, city officials contended. 

Brian Baker, who represents Macomb County on the GLWA board, has argued that the 1996 rate is inappropriate and unrealistic, nearly 30 years later.

Groner agreed, writing that 1996 rates were "simply not tenable" and the GLWA is "entitled" to a ruling that Highland Park's escrow obligations are not capped at 65% of revenues based on 1996 prices. Instead, Highland Park will escrow, or place in a trust, 65% of system revenues collected. 

Highland Park is an unmetered customer, so its bill is not based on usage, as in most other communities. Baker, of Macomb, has said Highland Park's bill would be lower if it were a contract customer, rather than being on an "emergency" hook-up to GLWA for the past decade.

But Groner wrote that the Great Lakes Water Authority has failed to rebut Highland Park's claims of being overcharged. 

"Thus, unless and until it dispels Highland Park's allegations of overcharges, GLWA is not entitled to a judgment for the full amount of damages it seeks," Groner wrote.

But the judge noted that GLWA, in this lawsuit, was not seeking the total arrearage, only the resumption of escrow payments, and payment for the last year. GLWA said Highland Park stopped making escrow payments in April 2021. 

"Highland Park's escrow obligations are not merely alleged but have been established by a final judgment," Groner wrote. "Thus, Highland Park cannot avoid its obligations in that regard by simply asserting that it is entitled to a set off for overcharges, at least, with not first obtaining a final judgment on its claim."

That had been Highland Park's argument for the last year of non-payment, that it was charging or invoicing the water authority for $13 million of past overpayments. Highland Park water director Damon Garrett made the same argument before a committee of the Wayne County Commission. 

Square said Groner's ruling is "fair," but also feels public sentiment factored in.

Groner's ruling cited "the necessity that the cost of operating the system be funded by the municipalities that utilize it," as well as GLWA's "inability to recoup shortfalls from other municipalities." The judge was apparently referencing the growing mutiny among GLWA communities, which have voted to no longer send the Highland Park debt portion of their water bills to the water authority, or have reserved the right to do so.

Communities in Wayne, Oakland and Macomb counties have passed resolutions to that effect.

More:Macomb County joins GLWA mutiny over disputed Highland Park debt

More:GLWA faces mutiny in western Wayne County over disputed Highland Park debt

More:Downriver joins GLWA mutiny over disputed Highland Park debt

Groner declined to issue sanctions against Highland Park, but said GLWA could move for them if the city does not comply with the escrow order within 21 days. 

"As we have maintained throughout this litigation, an examination of the merits of the case clearly indicates that Highland Park is obligated to pay and is deficient in paying for the water and sewer services it receives from GLWA," the water authority argued.

"In making this comment, we are not reflecting on the residents of Highland Park who pay their bills, but Highland Park’s administration who has chosen to use litigation to postpone these inevitable payment obligations," the water authority added.

GLWA vowed to "continue to pursue full recovery of amounts due from Highland Park and manage this case through its final resolution."

The parties are due back in court next week. 

"The bottom line is, the case continues," Square said.

jdickson@detroitnews.com