News Photo by Steve Schulwitz A slide presentation outlining a study on the Alpena water and sewer system was played in court on Friday. Alpena and Alpena Township are still in litigation over water and sewer rates and have been unable to negotiate rates both believe are fair.

ALPENA — Testimony wrapped up on day two of a brief trial between Alpena and Alpena Township over water rates in the 26th Circuit Court on Friday.

The city is suing the township for not paying the full amount of their bills from 2014-18. The township counter sued the township claiming it should be recognized as a wholesale customer and pay less than others because of the volume of water it buys.

Judge Ed Black will wade through a mountain of data to determine how much of the city’s water system the township utilizes to get water from Alpena into the township and a fair rate of return for the city.

Black can not set rates but can approve rates that are proposed to him.

On Thursday, the city proposed water rates the township would pay for the years 2014-18 that ranged 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.

The township believed those rates were too high.

The township presented rates to the judge on Friday, but they were included on a document and the amount was not shared with those in the gallery.

Attorneys for each municipality have 28 days to file their final arguments and any trial briefs they want to send to the court. At 1:30 p.m. on Oct. 22, Black will listen to the oral arguments and likely rule on the metrics and rates he believes are best for everyone.

Whichever direction Black goes and what rates he approves, it is likely one of the municipalities will appeal, he said.

If that is the case, it will be the second time the Michigan Court of Appeals will hear the case.

After two days, including an 11-hour marathon hearing on Thursday, the city and township couldn’t agree on much. They worked hard to discredit witnesses, studies, and data. Black had to rule on many objections, as the city and township jockeyed to get the upper hand.

Black said Friday that court filings leading up to the proceedings indicated that he suspected that no matter how he rules, someone is going to take the case to the next level.

“Both of you have basically said in your briefs that you don’t want to be here and both sides have said you intend to appeal,” he said. “I’m nothing more than a conduit to that.”

Litigation began in 2014 and as the litigation moved forward, the two parties continued to bargain on the side but made little to no progress over the years.

The two sides have spent millions of dollars on attorney and consultant fees.

In 2017, the circuit court ordered the two sides into mediation. That lasted only one day, however, as city officials didn’t see enough progress to continue.

A settlement appeared likely early in 2018, however, both governing boards voted to approve “principle terms” for an agreement.

That vote wasn’t for 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 terms they’d reached earlier in the year.

Shortly after, 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 again yielded no agreement.

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

During the initial hearing in circuit court, then-judge Michael Mack ordered the opening of an escrow account in the name of both governments. Mack required the township to deposit into that account the difference between the old rates the township had paid and the higher rates the city set for all of its customers.

The township’s latest audit shows $3.6 million in that account as of March 31, 2023.

The audit says Alpena wants the township to pay about $13.5 million in late fees.

Over the last few years, the two municipalities have worked together toward establishing a new authority that would oversee water and sewer operations for both governments.

The two sides reached a draft agreement on a water and sewer authority early in 2022. However, that plan fell apart leaving the fate of the matter in the court’s hands.

Steve Schulwitz can be reached at 989-358-5689 or sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpenanews.com.