News photo by Steve Schulwitz A water tower in Alpena stands on the shore of the Thunder Bay River in this November 2022 News file photo.

ALPENA — The plan to establish a water and sewer authority — which could have ended nearly a decade of litigation between Alpena Township and Alpena — is now off the table.

Mayor Matt Waligora announced the news in a letter to residents on Friday.

In 2014, the city sued the township for not paying a rate increase and Waligora says the only way the two municipalities can avoid going to court is if an authority can be formed, or a new service contract is agreed upon.

He also claims the township owes the city more than $20 million in unpaid water charges.

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Mayor Waligora's Letter by James Andersen on Scribd

In the letter, Waligora said besides being unable to find common ground for an authority, the township also balked at the idea of negotiating a new service contract to replace the one established in 1977, but which was allowed to expire in 2012.

City officials let that agreement expire to begin the process of reviewing rates for city customers and the township.

Waligora said it is a shame all of the time working toward a partnership has taken a turn for the worse.

“Not being able to make either happen is truly my biggest failure in the nearly 12 years I have served the city,” Waligora said. “Looking back, the last couple of years of biweekly meetings seem wasted, but the city spent very little and we will use the lessons learned as we move forward. I appreciate the trust and support I’ve been given, and I will continue to work for a long-term solution.”

Township Supervisor Nathan Skibbe responded to Waligora’s claims with a letter of his own on Friday afternoon. He said the city drawing a line in the sand and moving on from the authority concept is disappointing.

Skibbe said the city has a habit of walking away from bargaining whenever a deal gets close and it is always because of money.

“The mayor’s letter avoids crucial facts and glosses over the details of these negotiation sessions and the township’s effort to resolve this long standing dispute. The township and the city have worked on the formation of the water and sewer authority as a result of the city suing the township in 2014,” Skibbe said. “At that time, the city had walked away from negotiations with the township. The city similarly walked away from an agreed-upon resolution in 2017 to settle on fair and reasonable water and sewer rates for the community, causing costly and lengthy appeals. The township has not walked away from the table; instead, the city provided notice that it was unwilling to work through a move to either form an authority or settle on fair and reasonable water and sewer rates for the community.”

Waligora says the township is standing firm on allowing city staff to provide the scope of service for the life of an authority. He said the city has overseen its own operations for many years and a change is risky and may cost current employees their jobs.

Other water authorities in Michigan operate similarly as proposed to the township and have worked well, Waligora claims.

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Alpena Township response to Mayor Waligora by James Andersen on Scribd

Alpena has contracted out its water and sewer operations for many years, and currently, Veolia contracts with the city to handle the work.

Alpena Township contracts with Grand Rapids-based F&V Operations and Resource Management to oversee its water and sewer operations.

“These compensable and audited clerical, managerial, and engineering related services have been performed by city staff for many years and will continue to be whether there is an authority or not,” Waligora said. “The main template the authority work group proposed has been used by others in the state with no issues. We cannot compromise the integrity of these services or threaten the stability of these vital city staff positions. I made it clear to the township trustees that this was a deal-breaker over a year ago, but they recently decided not to agree to it, so the authority is currently off the table.”

Skibbe said having a contract that doesn’t expire or doesn’t include an opportunity for amendments probably isn’t the best option for residents of the township or city. He said having a shorter deal would allow flexibility and to be able to adjust on the fly if necessary.

“The city demanded that it have a “forever” contract to provide administrative services at a cost that was more than double what the joint-consultant hired by the city and township would support. Let me restate this: the city’s proposed costs were more than double what the expert advised was appropriate. The city was nevertheless adamant that the costs were necessary to support a full-time engineering department in addition to various salaries of the city’s administrative staff. A “forever” contract–a contract with no end, no need for renewal, and no basis for competitively evaluating the value of the services provided and the associated costs–would have eliminated the ability to monitor and control costs for both city and township residents.”

In 2014, the city sued after the township refused to pay a rate increase. Township officials believed the township should be considered a wholesale customer, entitled to lower fees because of the volume of water it purchases from the city for township residents.

In his letter, Waligora said the township has racked up a large past due balance because it continues to pay lower rates than what the city is charging it. He gave an example of how much money the township has underpaid the city recently and long term.

“For the quarter of March through May of 2023, the township was charged $795,490 for water and sewer they in turn sold to their residents,” Waligora said. “Their payment to the city was $430,905, $364,585 underpaid in just one quarter. Because this has been the pattern of payment for so long, the Township is past due $23,247,676 as of May of 2023.”

Skibbe said that amount is inaccurate because it is the township’s stance that the city’s rates are illegal and unreasonable.

Waligora said the city is barred by law from shutting off water to the township and added that the city wouldn’t want to do that anyway because it would be unfair to township customers who have paid their water bills to the township directly.

The two sides have been in litigation since 2014 and combined, nearly $2.5 million has been spent on attorney and consultant fees.

The idea of a water authority isn’t a new one. The city put the option on the table in 2014, but the township shot the proposal down.

Most of those on the Township Board of Trustees and department heads at the time have been replaced since then.

In 2017, the Alpena County Circuit Court ordered the two sides into mediation. That lasted only one day, however, as city officials didn’t see enough progress being made to continue.

A settlement appeared imminent early in 2018, however, when both governing boards voted to approve “principal terms” for an agreement. That vote wasn’t on a deal on rates, but on seeking a process for establishing rates that could end the dispute.

After continuing negotiations failed to yield a deal, the local court essentially ordered the two sides to adhere to the “principal terms” they’d reached earlier in the year.

Shortly afterward, however, the township appealed a portion of that ruling to the Michigan Court of Appeals, and the city filed a cross appeal. The appellate court also ordered mediation, which also yielded no agreement.

The appeals court ruled that the proposed agreement being considered earlier was non-binding, which the township appealed to the state Supreme Court, which declined to hear the case, and sent it back to circuit court in Alpena.

At this point it is unknown when or if the two municipalities will return to the bargaining table.