News Photo by Steve Schulwitz Ed Black, 26th Circuit Court judge, left, discusses the ongoing water-sewer litigation between Alpena and Alpena Township with Alpena City Attorney Bill Pfeifer during a bench trial on Friday.

ALPENA — Alpena has one more chance to propose fair and reasonable water rates for Alpena Township to pay or 26th Circuit Court Judge Ed Black said Friday he will dismiss the decade-old case the city filed against the township.

If Black throws the case out, the city can appeal.

Black on Friday also ordered the two municipalities into mediation with Montmorency County Probate Judge Lora Greene before the next court date on Dec. 19.

Alpena Township has for decades bought water and sewer services for many of its residents from Alpena. The city sued the township in 2014, when the township refused to pay a rate hike, claiming the township is a wholesale customer and entitled to reduced rates.

The township continued to pay the lower rate it paid before the rate increase and city leaders hope to use the court battle to collect the difference between those two amounts.

Earlier this year, Black ruled the township is a wholesale customer and the struggle for the city and township to agree on rates began to heat up.

During a bench trial in the case on Friday, Alpena City Attorney Bill Pfeifer submitted a new water rates proposal from the city. Like the city’s last proposal in October, Black deemed the rates proposed Friday were unreasonable.

Shortly afterward, township attorney Eric Conn, of the Okemos firm Fahey, Schultz, Burzych, Rhodes, asked Black to dismiss the case, accusing the city of slow-rolling the process.

“I am denying the motion for dismissing the case, because I still believe there is an equitable basis on which to proceed,” Black said. “The next time we are here, in December, if we are here at that point in time for a trial, I can tell you, if there is not a reasonable rate established, the case will be dismissed.”

Black does not have the authority to set rates, only to determine if proposed rates are fair and reasonable based on testimony and evidence provided in court.

Conn, the township attorney, claimed the city’s proposed rates were crafted through faulty, unverified, and what seemed to be arbitrary methodology from one of the city’s ratemaking experts.

Black ultimately agreed.

Before issuing his ruling on Friday, Black asked both parties if they wanted to meet outside of the courtroom to try to hash out a last-minute deal.

Several city officials met in a side room and requested copies of the most recent proposal the township submitted, but the two sides reached no agreement, setting the stage for Black’s order for more mediation and the ruling against the city’s latest proposed water rates.

Since Alpena filed the suit against the township and 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 2018 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 now has about $4 million in escrow, Pfeifer, the city attorney, told The News on Wednesday.

Conn, the township attorney, said Friday that, if Black dismisses the case, he believes most of that money would divert back to the township.

“Our position is there would be nothing we would have to pay for, except on the new sewer rates the judge deemed reasonable last month,” Conn said. “I believe the township is entitled to the balance of what is left.”

The two municipalities had worked together toward establishing a water authority that would oversee water and sewer operations for both governments, reaching 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.