Highland Park withholds $1M payment, blames GLWA for breaking water deal
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Highland Park officials signaled Friday that they are ready to pay $1 million to the Great Lakes Water Authority under an interim agreement, but said they are withholding the money until the water authority rescinds a $19.8 million judgment against the city.
The statement from Highland Park Mayor Glenda McDonald’s office means Highland Park is unlikely to meet Friday’s deadline to make a $1 million payment as part of an interim agreement that gives the city and GLWA more time to reach a final settlement of tens of millions of dollars in city water and sewer debt.
The city’s statement promises to throw another political complication into negotiations between the GLWA, which serves more than 80 communities in Southeast Michigan, and Highland Park, a city of 8,900 residents with a 41% poverty rate whose officials say they can’t afford to pay their water and sewer debt and want to declare bankruptcy.
Wayne County Circuit Court Judge Edward Joseph had 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 by Friday’s deadline as outlined in the negotiated interim 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.
But Highland Park attorney Calvin Grigsby opposed the reinstatement of the 2015 judgment in court earlier this week, saying it contradicted the city’s understanding that all litigation enforcement would be stayed or paused. McDonald’s office said Friday a $1 million check would be withheld until the 2015 judgment is stayed by the GLWA.
“…The City of Highland Park has the $1,000,000 check ready while the GLWA has failed to uphold the end of the deal by staying both cases in the form of an order from the court,” according to a statement from McDonald’s office. “In order for the City of Highland Park to move forward, GLWA needs to maintain their end of the agreement.”
GLWA General Counsel Randal Brown indicated in a Friday statement that Highland Park officials were misinterpreting the interim agreement and that the water authority has no control over a judge’s orders.
“On Tuesday and Wednesday, GLWA and Highland Park shared the Interim Agreement with the Courts in the two pending Wayne County Circuit Court cases and presented proposed orders staying the litigation to the Courts for their review and potential revision,” Brown said in a statement.
“The Courts will enter the orders that they deem appropriate at the time of their choosing. The entry and timing of orders by the Courts is out of the control of the parties. Under the Interim Agreement, the entry of the orders is not a requirement that has to be met before Highland Park makes the $1 million payment to GLWA.”
Judge Joseph indicated during Wednesday’s hearing that the reinstatement of the stayed 2015 judgment didn’t violate the interim agreement. A GLWA attorney said Wednesday 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.
Under the amended interim agreement approved by Joseph, there is no longer a deadline for the continuation of mediation talks to reach a final settlement on Highland Park payments to GLWA from the 2014 and 2020 litigation. 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 CEO Suzanne Coffey has called the Whitmer administration’s involvement in the mediation talks “key to any long-term solution. Highland Park attorney Grigsby said in court Wednesday that city officials consider the reinstatement of the 2015 judgment on the 2014 litigation an “act of extreme bad faith” and said he considered the mediation talks over.
Richard Kuhl, an assistant attorney general who represented the state of Michigan at Wednesday’s hearing, said the state hopes the mediation talks haven’t ended.
“I certainly hope it’s not over, and I’m sure that the people of Highland Park would hope that it’s not over. We’re dealing with a difficult situation here,” Kuhl said Wednesday. “There are significant interest issues here that implicates the state’s interest, and we should all be working to try to resolve.”
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.
Highland Park may owe as much as $58 million in water and sewer debt under the 2014 and 2020 litigation. City officials said they can’t afford the bills and want Whitmer to declare a financial emergency 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