Highland Park, GLWA strike deal trying to buy time for final settlement

Highland Park and the Great Lakes Water Authority have reached an interim agreement with the help of the administration of Gov. Gretchen Whitmer that seeks to buy time to negotiate what the authority on Monday night called a “final, comprehensive solution” to up to $58 million in water and sewer debt owed by the Wayne County community.

Under the agreement announced Monday night, the city leaders of Highland Park have agreed to pay $1 million by Friday. In return, the Great Lakes Water Authority won’t seek further action for now in the 2014 litigation it won that found that Highland Park owes $24 million. The water authority also will back a pause in 2020 litigation that seeks tens of millions of dollars more in back payments.

GLWA Chief Executive Suzanne Coffey said in a statement that “I am pleased that we have been able to reach this interim agreement with the city of Highland Park."

Highland Park Mayor Glenda McDonald did not immediately respond to a request for comment Monday night on the deal.

A court hearing before Wayne County Circuit Court Judge Edward Joseph is scheduled for Tuesday. Joseph ordered the two sides into mediation in April.

The tentative deal comes as state lawmakers have attempted to provide bailout money. The Senate Appropriations Committee last month approved a $35.4 billion budget for the Michigan Department of Health and Human Services that includes $20.3 million for Highland Park to use to repay the estimated $24 million with interest it owes the Great Lakes Water Authority for years of unpaid drinking water bills.

The agreement appears to hinge on the involvement of the Whitmer administration, which "intends to file a position statement with the court" that will explain "why the State is involved and intends to participate in efforts to resolve this matter and reach a final, comprehensive solution to all issues," according to the GLWA statement.

A Whitmer spokesman did not immediately respond to a request for comment Monday night.

But Coffey said: "We appreciate the state of Michigan’s desire and intention to participate in the processmoving forward, as they are key to any long-term solution.”

The announcement came after the city and the water authority last week failed to meet a court-ordered deadline to set a payment plan for the $24 million that Highland Park owes to GLWA. The interim agreement is designed to give the parties until early December to try to resolve all of the issues.

"Moving forward, all parties involved will work in good faith toward a comprehensive solution," the authority said in a statement.

If Highland Park fails to make the $1 million payment by Friday, Highland Park's 8,900 residents are expected to face higher water and water bills. The litigation against the city would move forward, and the $24 million judgment would be required to be placed on the city's tax rolls, according to the GLWA.

Residents have expressed fear about seeing their water bill costs explode if they are forced to pay back the GLWA for the city’s prior failures to pay for the water debt.

The fear of rising water and sewer bills is a main topic at Shep’s Barber and Beauty Shop, where owner Dorothy "Dottie" Harris-Grigsby holds court.

"The immediate fear is that my water bill is going to go way up. That's what a lot of people are worried about," Harris-Grigsby told The Detroit News last month. "If that happens, I just can't … I really just can't pay any more. We may have to close."

But the GLWA's CEO expressed optimism Monday night that a comprehensive deal could be reached.

"I am confident the effort exhibited by all parties, which has allowed us to get to this interim step, will carry forward and move us toward a more comprehensive solution for our region," Coffey said.

Highland Park's estimated $24 million debt is two and a half times larger than the $9.6 million the city collects each year in property tax revenues.

City officials contend they cannot see a way to pay off the debt in a community with a per capita income of $19,401 and a 41% poverty rate.

The bill has sparked a political crisis in Highland Park, which is surrounded by Detroit. The city has sought a declaration of a financial emergency and an expedited bankruptcy from Whitmer, who has taken no action on the requests.

Democratic legislative leaders have responded by proposing a bailout that would be funded through the state's next budget.

“We’re trying to figure out the best approach to help that community out,” Senate Majority Leader Winnie Brinks, D-Grand Rapids, told The News in May.

All options for Highland Park are being studied, said House Speaker Joe Tate, D-Detroit.

“This is an issue we’re going to be taking very seriously," Tate told The News. "We have to look and see what all of the are scenarios right now.

GLWA officials contend the city has paid less than 1% of its water and sewer charges since 2012, and Highland Park's unpaid bill has meant additional fees for the more than 80 other communities in southeast Michigan the authority serves.

More than 90% of Highland Park residents and business owners pay their water and sewer bills, according to city officials. But the city's aging infrastructure, which includes some water mains made of wood, has numerous leaks that city leaders and regional officials want fixed.

The city also has plenty of absentee landowners of vacant properties, which may be in the hundreds, who tend not to pay their bills, officials said. City officials contend that GLWA has overcharged the city because the water authority relies on unmetered estimates of water use.

mhicks@detroitnews.com