Alpena Township agrees with ruling on water, sewer rates, looks to end litigation

News File Photo The City of Alpena water tower is seen in this photo from August.
ALPENA — Alpena Township agrees with the ruling of 26th Circuit Court Judge Ed Black on proposed water and sewer rates and wants to have a closed-session meeting with the Alpena Municipal Council to try to iron out a deal that could end the decade-old litigation.
That is what the township conveyed in a press release sent out Monday night.
Alpena Township and Alpena have been in litigation over the water and sewer rates the city charges the township.
In September, the city proposed water rates the township would pay for the years 2014 through 2018 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.
At a hearing last week, Black ruled the water rates the city proposed to the court were not fair and reasonable and ordered the city to propose even lower rates at a hearing on Nov. 22. He also concluded that the proposed sewer rates were fair, which could close that chapter in the litigation.
Black said the rates need to be crafted based on the percentage of the city’s water and sewer system the township utilizes for service and because the township is a wholesale customer.
Black does not have the authority to set rates, only determine if they are fair and reasonable to both parties.
“The Court declared that the City’s proposed water rate was unreasonable and determined that the City was including figures in its rates that were too high given the Township’s status as a wholesale customer,” the letter says.
The township agreed with Black’s ruling, saying the latest sewer rate appropriately charged the township for the percentage of the city’s system that is used and the rates were fair.
Still, the township says, there is more work to do and it hopes talks with the Alpena Municipal Council can begin to help put an end to the litigation before the next court appearance.
“While the Township is pleased with the rulings the court has made, it continues to seek a reasonable resolution with the City; one that will lay to rest this litigation and avoid unnecessary future litigation,” the press release says. “In fact, the Township’s preference is to meet in a joint closed session with the City before the Nov. 22, trial to discuss a settlement the Township previously sent to the City. The Township’s proposal would end this litigation and bring needed closure. The Township is hopeful that the City will accept its offer to meet and discuss how the parties can move past this litigation.”
The township did not say what it’s seeking in terms of a settlement.
The council has yet to discuss the ruling from Black, but is expected to do so during a closed session at its next meeting on Nov. 4. More information should be made available after that on where the city stands.
The city and township also reserve the right to appeal Black’s ruling.
The township purchases water from Alpena and for years the city used a formula in a contract from 1977 to set rates. Beginning in 2013, the city elected not to use the formula saying the deal had expired, which was the beginning of the more than decade-long disagreement over water rates. The township claims the rates are too high because it doesn’t utilize the entire city-owned water and sewer system and it was a wholesale customer.
At the end of the trial earlier this year, Black ruled that indeed, the township was a wholesaler and any rate imposed on it should be based on not only the amount of water it purchases but also on the percentage of the city’s water and sewer systems the township utilizes uses to receive services from Alpena.
Litigation began in 2014 and, as the dispute moved forward, the two parties continued to bargain on the side but made little to no progress over the years.
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 when 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.
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.
The two sides have spent millions of dollars on attorney and consultant fees since the litigation began.
Steve Schulwitz can be reached at 989-358-5689 or sschulwitz@thealpenanews.com. Follow him on X @ss_alpenanews.com.