ALPENA — Alpena and Alpena Township have reached a settlement over water rates for the years 2014, 2015, 2016, and 2017, but will need to continue to work on water rates deals for the years that followed.

In a joint press release Thursday, the two municipalities provided an update on where the dispute over water and sewer rates the city charges the township stands.

“The settlement between the City and Township resolves only the Circuit Court case that was filed in 2014,” the release said. “Therefore, the settlement that has been reached between the City and Township is limited to a full and final resolution on the dispute between them for only those years. The City’s pending 2024 lawsuit, which was filed this summer by the City, reserves its right to contest the payments made by the Township for water and sewer services it received between 2018 and 2024, remains pending and will be the subject of further negotiations in January.”

Under the terms of the settlement between the city and the township, the township has agreed to pay the City $525,000. The township is also paying the city 15% of the interest earned from the escrow account that was ordered by the court, which the parties estimate will be around $30,000. Finally, the township has agreed in good faith to continue to escrow $500,000, which will be invested and gain interest to ensure the best use of those funds for the betterment of residents in both communities.

In total, there is more than $4 million in escrow.

After the holidays, the city and township will begin to meet to iron out the remaining issues, but added they will not make any public comment on developments until a final deal is reached.

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.

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, city attorney Bill Pfeifer told The News last month. It is unknown how that money will be split between the two parties.

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

Steve Schulwitz can be reached at 989-358-5689 or sschulwitz@thealpenanews.com. Follow him on X @ss_alpenanews.com.