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Tuesday, June 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

Michigan City Challenges Sewage-Fee Award

DETROIT (CN) — A Detroit suburb claims in a federal lawsuit that a $30 million judgment against it for sewage charges includes an increase of property taxes more than 16 times above state limits.

The City of Highland Park sued the Environmental Protection Agency, the Michigan Department of Environmental Quality and the Michigan Department of Transportation on Friday to invalidate the court award for unpaid sewer-treatment charges. The Great Lakes Water Authority, or GLWA, is also named as a defendant.

The lawsuit says a 250.69 millage increase obtained via the judgment would increase the typical household property tax in Highland Park from $837.85 yearly to $3,695.79. Highland Park's median household income averages around $18,000 a year compared to the state average of $48,000 a year, according to the complaint.

"The ad valorem taxes imposed for user charges by GLWA for Highland Park sewer services...for Highland Park's falsely alleged underpayment of its proportionate share of sewer treatment fees is 16.7 times that state constitutional limit," the lawsuit states.

As a basis to nullify the $30 million judgment, Highland Park says it has been disproportionally billed for sewage service usage for 20 years after it adhered to the terms of a federal consent agreement.

The city claims it paid $28 million from 2005 to 2015 under the terms of that agreement while GLWA, an entity formed after Detroit's bankruptcy settlement, overcharged the city's residents for services.

"Highland Park is being charged over three times more for sewer services than other similarly situated wholesale customers even though Highland Park has the lowest [median household income] of any of GLWA's comparative wholesale customers," the 51-page complaint states.

Highland Park also alleges that the Michigan Department of Transportation's "deadbeat use" of city drainage structures from 1984 to 2005 without the payment of usage fees was an attempt to avoid regulation under the Clean Water Act and pay less in sewer operation maintenance and treatment costs.

The city claims it is owed more than $10.7 million by the Department of Transportation for that usage of the city's infrastructure. Coupled with the alleged overcharge of $22.5 million by GLWA, the lawsuit claims that instead of owing a $30 million judgment, the city is owed $3 million.

Highland Park questions whether the Great Lakes Water Authority, or GLWA, should even have an operating permit from the Department of Environmental Quality, claiming in its complaint that the allegedly documented mismanagement of bond finances should be a disqualifier.

"[GLWA] has no major capital assets or improvements to show for a debt burden exceeding 30-40 percent of operating costs," the complaint states. "[GLWA] has wasted $700 million to $1 billion in bond debt being charged to wholesale customers as recovery of capital asset costs when there is nothing to show for this debt."

In addition to nullifying the $30 million judgment, the city's complaint also seeks an immediate reduction of water and sewage usage rates and a hold of EPA grant funds to the two state agencies until they "demonstrate legal, institutional, managerial, and financial capability to insure adequate...maintenance."

The city is represented by William Ford in Detroit and Calvin Grigsby in Danville, Calif.

GLWA did not immediately respond Monday to requests for comment sent via email and phone.

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