News Photo by Steve Schulwitz Officials from Alpena Township chat during a break in the action while at court on Tuesday. Alpena and Alpena Township are battling over water and sewer rates. The litigation has been ongoing for more than a decade.

ALPENA — Judge Ed Black, 26th Circuit Court judge, ruled on Tuesday that proposed water rates made to the court last month were unreasonable to Alpena Township.

The ruling was the latest step in a decade-old litigation over water and sewer rates between Alpena and Alpena Township.

Black also ruled that the proposed sewer rates were fair and will stand, pending an appeal from one party or the other.

The city will propose water rates to Black again on Nov. 22 during an evidentiary hearing, and the judge will rule on the fairness again.

An additional date is also set for Dec. 19, should it be needed, but Black said he hopes the matter can be resolved before that.

Black does not have the power to set rates, but only determine if they are fair and reasonable.

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.

The township called those rates too high and presented rates to the judge that township officials considered fairer. Those rates were included on a document and the amount was not shared with those in the courtroom gallery.

Black said the city’s proposed water rates were unfair because of how much they are and the high rate of return the city would have. He said both metrics were above what he thought was reasonable and ordered the city to try again to come up with rates that are fair to all.

Black said he has set a goal to have the matter settled locally before the new year begins, but added that he suspects either the city or township will challenge his rulings with the Michigan Court of Appeals.

“I believe, at this point, the attorney fees have exceeded the amount actually in controversy and I think in moving forward, this court wants to see the parties arrive at a reasonable rate,” Black said. “My intent is to get this case litigated and behind us.”

The decade-old litigation over water and sewer rates between Alpena and Alpena Township will drag on at least a little longer.

The two parties appeared in the 26th Circuit Court in Alpena on Tuesday for last-minute arguments which set the stage for Black to rule if either of the rates proposed by the two municipalities are fair and reasonable.

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 any longer 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.

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

That 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.

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 Twitter @ss_alpenanews.com.