Judge orders Flint to cut water rates 35 percent in sweeping injunction

Attorney Val Washington speaks and holds up a folder containing documentation of all Flint residences that have had liens placed against their properties due to delinquent water and sewer bills after increased fees went into effect in 2011.

(This story has been updated with additional information.)

FLINT, MI -- Less than four months after the city's financial emergency ended, a judge's order has city officials talking about a potential bankruptcy all over again.

The city of Flint has been ordered to roll back water and sewer rates by 35 percent, to end a ready-to-service fee, to repay its water and sewer fund by more than $15 million, and to stop water disconnections and liens for past-due bills effective immediately.

Genesee Circuit Judge Archie Hayman issued an emergency injunction today, Aug. 7, a decision city officials said has the potential to bankrupt Flint, which just emerged from a financial emergency in April.

Hayman said the city wrongfully transferred $15.7 million in water and sewer funds in 2007 to help settle a lawsuit involving sewage overflows -- money that must be returned, but told attorneys for two Flint water customers and the city to negotiate the terms of that payback.

"I am mindful that this could be devastating to the city so the court is not going to at this point make a ruling that the $15.7 million has to be paid immediately ... but that money has to be replaced at some point," Hayman said.

The city issued a statement from City Attorney Peter Bade today, saying the ruling "is striking in terms of both its deviation from Michigan law, as well as the immediate financial harm it will cause the City of Flint.

"This will have a devastating financial impact," Bade's statement says. "The City will immediately seek a stay of this order and review by the Court of Appeals."

City spokesman Jason Lorenz said the city would have no further comment on the case today, but Mayor Dayne Walling released a statement, saying, "Flint needs a sustainable water system with affordable rates and that is my objective. There are numerous problems with the judge's ruling that will be addressed through further court action."

Anthony Chubb, deputy chief legal officer for the city, asked Hayman for a stay in enforcing his ruling as the city appeals it to the state Court of Appeals, but the judge denied that request.

Chubb argued in court today that the requested injunction amounted to "a good political show" and said the ruling -- if it stands -- "would likely result in bankruptcy" for the city.

In issuing the injunction -- part of a lawsuit filed by two Flint water customers -- Hayman also:

  • Told the city to eliminate a 35 percent increase in water and sewer rates enacted by Mayor Dayne Walling in 2011 because the hikes violated a city ordinance that required advance notice to customers and that requires such rate increases to be added over 12 months rather than immediately.

Hayman said the state Court of Appeals also concluded former emergency manager Mike Brown did not have the authority to ratify Walling's water and sewer rate increases when that court issued an opinion in a related lawsuit brought by City Councilman Scott Kincaid.

In June, the Court of Appeals reversed a decision by Genesee County Circuit Judge Richard Yuille, who dismissed the Kincaid lawsuit in 2013.

That case is still pending in Circuit Court.

  • Enjoined the city from collecting readiness-to-service fees until it complies with a city ordinance, requiring officials to justify those charges in writing.

Hayman said the fees -- which amount to a $57.38 fixed charge for a typical residential customer -- can be collected but not without the city taking that step.

City officials have said those fixed charges support maintenance of the water and sewer systems.

  • Enjoined the city from enforcement of water liens and water disconnections because of past-due bills.

Attorney attorney Val Washington said liens have been filed against more than 13,000 homes and businesses in Flint based on "illegal water rates."

  • Ordered attorneys for the city to negotiate with Washington on how to pay back $15.7 million that was "wrongfully taken" from water and sewer funds.

"There's no ordinance that allows for that," Hayman said. "State law does not allow for that. The mayor at the time did not have the authority to go in and invade the water supply account."

Flint's mayor at the time of the transfer was Don Williamson.

Hayman told attorneys to work toward a plan for payback of the $15.7 million to the water and sewer fund by the end of October -- before returning to court Nov. 13.

Washington said the city has been unwilling to negotiate a settlement of the lawsuit, which was filed by Flint residents Larry Shears and Margaret Fralick in 2014.

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