The City of Sterling Heights continues to proceed with its Complaint against the Macomb Interceptor Drain Drainage District (MIDDD).
The City continues to proceed with its Complaint against the MIDDD to compel it to seek recovery on behalf of all of the MIDDD communities that have been unfairly apportioned the assessed amount of $70 million for costs associated with the emergency repair of the 15 Mile Road interceptor. It is the City’s position that these costs should be borne by Macomb County for its agency’s clear breach of contract to repair and maintain the Interceptor System.
Since the December collapse, the third significant failure since the 1970s, the City has been investigating the degree to which MIDDD had been inspecting, maintaining, and repairing the interceptor. This investigation revealed the following:
• In 2010, MIDDD, in accordance with Section 471 of the Drain Code, contracted with an agency of Macomb County, the Macomb County Wastewater Disposal District (MCWDD), to operate, maintain and make improvements to the interceptor following its acquisition.
• Despite having material and competent evidence as to the poor condition of the interceptor at the time of acquisition and the risk for imminent failure, MCWDD, an agency of Macomb County responsible for maintenance and repairs to the interceptor, did nothing to abate the conditions that likely caused the December 2016 collapse.
• Public statements by MIDDD board members confirm that the county agency failed to inspect and exercise due care by effectuating repairs.
• MIDDD has failed to pursue recovery against Macomb County for the actions of its agent and instead has assessed Sterling Heights and other municipalities for the damages resulting from a breach of contract.
The City will continue its efforts to compel the MIDDD Board to fulfill its duty to pursue cost recovery against MCWDD and the County for the material breach of contract.
At an estimated repair cost of $70 million, Sterling Heights ratepayers could be responsible for over $22.2 million. After financing costs are applied, this number could increase to over $33 million. Major industrial property owners in Sterling Heights could be responsible for millions of the apportioned costs. Initial estimates show resident bills could go up by more than 3 percent for the next 25 years to cover Sterling Heights’ proportionate share, in addition to the expected double-digit County sewer rate increases in the coming years.
“It is fundamentally unfair to any of these 11 communities, their residents and businesses, to pay a disproportionate share of the County’s neglect, in light of the overwhelming evidence that has come to light in recent months,” said Sterling Heights Mayor Michael C. Taylor. “This is a County agency’s failure and therefore the County’s responsibility to ultimately pay for the repairs.”
Kevin Gleeson of Sullivan Ward Asher & Patton, P.C., the law firm retained by Sterling Heights to pursue its claims, agrees, “The current MIDDD Board has a legal responsibility to pursue complete cost recovery from the responsible entities and individuals. To date, the MIDDD Board has failed to make any demand on the County or its agency for payment of these costs, and for these reasons, Sterling Heights has no choice but to move forward on behalf of its rate payers,” Gleeson said.”
The MIDDD Board has announced that it will proceed with the bond sale now that the Circuit Court has dismissed the Count I of the City’s Complaint. As a result, the City is forced to pay the apportioned amount while it seeks recoupment under Count II, while still preserving all of its appeal rights under Count I if Count II is unsuccessful. The City’s financial advisor reviewing this matter has opined that the bond sale will not likely be impacted in any significant manner as a result of the City’s right to appeal the Court’s prior ruling, and that any increase (to the extent there is one) in costs for the bonds would be most likely attributable to the recent disclosure of a federal criminal investigation into the former Public Works Commissioner’s office and staff.
“We want to be clear that the City of Sterling Heights has no intent on delaying this project, and we commend the efforts of Commissioner Miller and her team.” Taylor said.
Media with questions can email Community Relations Director Bridget Kozlowski at bkoz@sterling-heights.net or call (630) 730-5087.