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Highland Park asks state for quick bankruptcy to pay off water debt

The Highland Park Ford Motor Company plant
Andrew Jameson
Wikimedia Commons

Highland Park needs to file for a quick bankruptcy to avoid having the city’s water shut off, according to city leaders.

Highland Park made that a formal request to the state on Monday. That’s after the city recently came out on the losing end of years-long litigation challenging supposed overpayments to the Great Lakes Water Authority.

Now, Highland Park is on the hook for a $19 million bill to the GLWA, plus interest. City leaders say that’s simply unaffordable for the tiny, low-income city.

They’ve already asked Governor Gretchen Whitmer for a state financial review. The state is currently considering that request.

But Highland Park officials say the state needs to act with more urgency. That’s why they’ve now requested an expedited bankruptcy so the city can discharge its debts.

“We want the state to step up, either allow us to file bankruptcy, or get rid of this debt,” Mayor Glenda McDonald toldThe Detroit News. She said if Highland Park doesn’t get an answer before a court date on May 20, the city risks having its water shut off.

GLWA CEO Suzanne Coffey denies that the agency is imminently considering shutting off Highland Park’s water.

“It has been reported to the Great Lakes Water Authority (GLWA) that a speculative statement has been made that the Authority wants to shut off water service to the City of Highland Park,” Coffey said in a statement. “That statement is untrue and counterproductive. GLWA hopes, for the entire region, that an amicable solution can be achieved in the near future.”

So far, Whitmer has said little about the issue, other than that the state is considering Highland Park’s request for a financial review. That could trigger a number of options, including potentially bankruptcy, if a financial emergency is declared.

Whitmer spokesman Bobby Leddy said this week that the state is “monitoring” the situation.

"The State of Michigan has invested $25 million to keep water rates down while this gets sorted out,” Leddy said. “Our hope was Highland Park and GLWA could resolve this issue between themselves and settle any outstanding debts. We will take a look at the letter and review options, but the city should continue to work with GLWA toward a solution that doesn’t impact surrounding communities or harm Highland Park residents."

Highland Park’s water debt has become a subject of regional contention. That’s because other GLWA customer communities had been picking up a share of Highland Park’s bills while litigation continued.

Macomb County Public Works Commissioner Candice Miller has been among the most vocal about it. She said in a statement Tuesday that instead of using the state money to pay off Highland Park’s debt, that money should be used to reimburse other communities.

“Of course Highland Park wants an expedited bankruptcy, so that they do not have to pay their debt — which is the wrong approach and not an act of good faith. Instead, they should drop all this litigation,” Miller said. “GLWA should take the $25 million the state gave them and apply that as reimbursement to the suburbs, and then the state should appoint an emergency manager to help Highland Park with this issue and all the financial challenges the city has. They need to come up with a plan for Highland Park to pay their water and sewer bills going forward.”

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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