Highland Park makes $1M water payment to GLWA after threat to withhold it

Hannah Mackay
The Detroit News

The city of Highland Park on Friday paid $1 million to the Great Lakes Water Authority, GLWA, after city officials threatened to withhold the money in a dispute over language in an interim water debt agreement, authority officials confirmed.

The $1 million is considered a good faith down payment by the Wayne County community in an interim agreement that will extend mediation talks over two lawsuits involving up to $58 million in delinquent bills owed to the water authority, which provides water and sewer services to more than 80 communities in southeast Michigan.

Highland Park officials had signaled Friday morning they were ready to pay $1 million to the GLWA, but said they were withholding the money until the water authority rescinded a $19.8 million judgment against the city. Around 5 p.m., the city indicated it paid the $1 million because the pending lawsuits "including the tax levy have been stayed" and mediation will continue.

GLWA officials on Friday called the payment a "pivotal element of the interim agreement reached between the parties.” The suburban water authority plans to return the $1 million from Highland Park to eligible communities in the form of credits after the GLWA board of directors meets on June 28. The authority expects to issue credits in the first quarter of fiscal year 2024, beginning July 1.

“It is important for everyone to understand that GLWA will not directly benefit from the $1 million, rather it will be utilized to begin to reimburse those member partner communities who have absorbed portions of Highland Park’s bad debt expense,” GLWA Chief Executive Officer Suzanne Coffey said in a statement.

The GLWA will also continue to participate in court-ordered mediation with all parties, including the administration of Gov. Gretchen Whitmer, whose involvement in the talks is considered by the GLWA to be "key to any long-term solution."

The conflict over the payment had started at a Tuesday hearing when Joseph granted GLWA's request to reinstate a 2015 Michigan Court of Appeals judgment against Highland Park for unpaid sewer bills but said the judgment was paused pending the $1 million payment.

Highland Park Mayor Glenda McDonald said Friday the city won't make a $1 million payment as part of an interim water debt deal until the Great Lakes Water Authority meets its part of the agreement.

The judge amended the interim agreement in court so the 2015 judgment wouldn't be slapped on city taxpayers if Highland Park failed to make the $1 million payment, saying he would hold hearings on the subject if GLWA officials filed for action. Separate litigation from 2020 between GLWA and Highland Park was also stayed or paused.

A GLWA attorney said the authority agreed to the indefinite stay of the 2014 and 2020 litigation to allow for deadline-free talks. Originally, the interim agreement set deadlines of Oct. 1 on the 2014 litigation and Dec. 5 on the 2020 litigation to reach final agreements.

Highland Park owes as much as $24 million, which would include accrued interest, for failing to make sewer payments from 2014 onward as it argued the city was being overcharged for water and sewer services. But the Michigan Supreme Court upheld a lower appellate court ruling that found in favor of the GLWA and rejected the city's request for an appeal hearing.

A Democratic-controlled Michigan Senate committee has approved a $20.3 million appropriation for the city to use to pay off its debt. The administation of Gov. Gretchen Whitmer has expressed hope the mediation talks can continue and reach a final settlement.

GLWA interim CEO Suzanne Coffey speaks a GLWA press conference outlining improvements to regional system resiliency at the Freud pump station in Detroit on Apr. 5, 2022.

The state of Michigan's environmental department ordered Highland Park to shut down its water system in 2012 because of safety deficiencies and forced it to take water from the Detroit Water and Sewerage Department. In the wake of this decision, Highland Park officials started to complain that residents were being overcharged, leading to a stop in payments and the resulting litigation.

City officials said they can't afford to pay tens of millions of dollars in debt owed to GLWA and want Whitmer to declare a financial emergency in Highland Park and put the city through expedited bankruptcy proceedings in a bid to avoid making payments.

Some suburban officials have opposed bankruptcy, saying it would relieve Highland Park of its responsibility to pay its bills. Suburban communities have had to pay the GLWA to make up for Highland Park's missed payments, money the cities and townships want reimbursed.

Whitmer's administration has taken no action on the city's request for the declaration of a financial emergency and an expedited bankruptcy filing.

hmackay@detroitnews.com