Highland Park, water authority reach ‘good faith’ agreement on $24M debt

‘Tentative agreement’ will start with $1M payment from Highland Park by Friday; effect on bailout scenarios is unclear

The city of Highland Park and the Great Lakes Water Authority announced Monday a “tentative agreement” that would pause court proceedings as the city works to pay off a $24 million water bill arrearage that’s a decade in the making.

Gov. Gretchen Whitmer and her administration will be involved in negotiations on the debt, according to a statement from Great Lakes Water Authority. The suburbs of Metro Detroit, which are members of the water authority and for a time were forced to cover the Highland Park debt, have requested Whitmer’s involvement for more than a year. 

Related reading: Get ready to pay Highland Park’s water bill

“All parties involved have committed to work together in good faith toward a comprehensive solution,” the water authority said in a statement.

The member-covered debt was in effect a local bailout. Last year the suburbs revolted, expressing intent to no longer send the Highland Park portion of their bills to the water authority.

Since then, two different bailout concepts have been floated. One would have state taxpayers cover a portion of the debt. The other would have federal taxpayers clear it.

Last year, in a letter to Great Lakes Water Authority, Whitmer reminded the utility that it was given $25 million in federal stimulus funds. Applying that to the debt would be a federal bailout.

This year, Michigan lawmakers tucked a $20.3 million partial bailout in the Department Health and Human Services budget for 2024. This is the state bailout, and would clear 85% of the debt. This has already passed the Michigan Senate.

Under the agreement announced Monday, Highland Park faces a Friday deadline to pay $1 million of the debt. If that happens, court proceedings in two water authority cases against Highland Park will be stayed. The stay could last through October 1, allowing time for a larger deal to be made.

Interest will continue to add up during negotiations.

How much state and federal taxpayer money that deal will require is not yet clear. Michigan Capitol Confidential will be watching. 

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.