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Skokie Sues Evanston in Federal Court Over Water Rates


 

On June 20, the Village of Skokie, three residents of Skokie, and a business in Skokie filed a complaint in federal court in Chicago against the City of Evanston, Stephen Hagerty, individually as Mayor, and the City’s nine aldermen, all individually (the Skokie Complaint).

The complaint alleges, “This action arises from Evanston’s and the Evanston Defendants’ calculated, oppressive and punitive actions to disadvantage the Skokie plaintiffs in their access to and use of safe water from Lake Michigan as evidenced by their adoption of Ordinance No. 95-0-17.”

Skokie is taking an unusual step by filing this action in federal court, while a previously filed lawsuit is pending between Evanston and Skokie concerning the same subject matter in State court.

The Skokie Complaint

The Skokie Complaint alleges that the ordinance increased water rates for Skokie residents so they are forced to pay “an exorbitant rate for Lake Michigan water sold by Evanston.” The ordinance allegedly “sets the rate for the Skokie Plaintiffs at an amount that is 264% - 307% more than the amount Evanston charges to similar Lake Michigan water users located in adjacent and neighboring communities.”

The complaint alleges that the City of Evanston has been operating its water treatment and delivery system as a profit-center, and that it has transferred more than $58 million from its water revenues during the past 20 years to its general fund for purposes unrelated to the maintenance and infrastructure of its water system. The complaint alleges that Evanston possesses “a unique and profound power by virtue of the location and configuration of legacy water supply infrastructure,” and that it is using its power to set rates for Skokie that yield “excessive returns” for Evanston. The complaint alleges that Evanston has “a growing 10 million dollar deficit, which it seeks to plug with its discriminatory wholesale water rates on the Skokie plaintiffs.”

The complaint alleges that the ordinance set the rate for Skokie at $2.06 for 1,000 gallons of water, while the rate is allegedly $.67 for NWC Municipalities, and $.78 for Niles and Morton Grove.

The Skokie Complaint contains 12 counts alleging that Plaintiffs were deprived of notice and an opportunity to be heard and deprived of substantive due process and equal protection of the laws, and it seeks a judgement declaring the ordinance is void and that Evanston must provide water to all of its customers at identical wholesale water rates, and a judgment for damages in an unspecified amount and attorneys’ fees.

Evanston’s Complaint

On Sept. 26, 2017, the City of Evanston filed a complaint against the Village of Skokie in State court, seeking a ruling that Evanston may charge Skokie $2.06 per 1,000 gallons of Lake Michigan water that Evanston treats and distributes to Skokie.

The Evanston Complaint alleges that Evanston operates a water treatment plant and that it has treated and distributed water from Lake Michigan to Skokie since 1944. Skokie in turn sells and distributes the water to its residents. A 20-year contract that governed the relationship expired on Dec. 31, 2016.

After that date, the complaint alleges that Evanston and Skokie attempted to negotiate a new long-term contract, but they reached an impasse in the negotiations. Evanston wants $2.06 per 1,000 gallons, and the complaint alleges that Skokie’s preferred rate is $0.70 per 1,000 gallons.

The Evanston Complaint alleges there is no written agreement between Evanston and Skokie, but says there is an implied agreement that Evanston will supply water to Skokie, and, in addition, under Illinois law, Evanston cannot stop providing water to Skokie unless and until Skokie secures an alternative water supply from another source.

Evanston is thus bound to provide water to Skokie, but the parties have been unable to agree on a rate.

On Sept. 25, Evanston’s City Council adopted Ordinance 96-0-17, establishing a new rate for water supplied to Skokie at $2.06 per 1,000 gallons of water, starting Oct. 1, 2017. A memorandum from David Stoneback, Evanston’s Public Works Agency Director, said the new rate is based on applicable ratemaking principles of the American Water Works Association M-1 Manual. In addition, the memorandum says the rate is reasonable when compared to rates charged by neighboring communities. As an example, Chicago charges other municipalities $3.38 per 1,000 gallons.

The Evanston Complaint also acknowledges, though, that Evanston has a contract to provide Morton Grove and Niles water at the rate of $0.78 per 1,000 gallons in 2018, but the Morton Grove Niles Water Commission is paying the cost of a new pumping station and the rate may increase over time.

The Evanston Complaint asks the court to find and declare that the rate of $2.06 per 1,000 gallons is a reasonable rate to charge Skokie for water.

Skokie has filed a motion to dismiss Evanston's Amended Complaint, which is set for hearing on July 18.

Evanston City Manager Wally Bobkiewitz and Mayor Hagerty each told the RoundTable they had no comment on Skokie’s lawsuit at the time this article was posted.  

Evanston Mayer Stephen Hagerty's Message to the Evanston Community

The following message was publiched at about at about 5 p.m. on June 22 by City of Evanston Stephen Hagerty:

Time for Skokie to Pay Its Fair Share for Water

Today, a front page article ran in the Chicago Tribune titled, "Skokie Sues Evanston, Claims City Trying to Gouge It by Hiking Cost of Lake Michigan Water." In a federal lawsuit filed Wednesday, Skokie asserts that Evanston’s “calculated, oppressive and punitive” actions [related to an increase in water rates] is an attempt to violate their constitutional rights to water.

In light of this lawsuit by Skokie and the respect I have for our Skokie neighbors, I wanted to assure you that Evanston continues to provide safe, fresh drinking water to Skokie today just as we have for more than 70 years. However, the time has come for Skokie to pay its fair share.

The fact is, over the last 70 years, Skokie’s water rate has not fully accounted for the significant infrastructure, maintenance and delivery costs required to provide the village with Evanston drinking water. Instead, Evanston taxpayers have borne that cost, a huge subsidy that is neither fair nor sustainable.

Skokie's most recent 20-year contract with Evanston expired on December 31, 2016. In the months and years leading up to that date, Evanston negotiated in good faith with Skokie to establish a new water rate that is fair to taxpayers of both of our communities. We are pricing our water using a standard methodology approved by the American Water Works Association, the same methodology we’ve adopted for other communities that purchase water from Evanston.

Naturally, Skokie would like their water rate to remain unchanged. But the fact is, Evanston families—including many who are struggling financially—have been subsidizing the delivery of water to Skokie for decades, and it's time for that to end. Evanston water rates remain among the most affordable in the Chicagoland area. Even with an increase over the current rate, Skokie residents will be well served. The recent Tribune analysis illustrates our point. We realize that there’s a market for water, and that Skokie has other options, including Chicago. But one option they no longer have is water subsidized by Evanston taxpayers.

In closing, we will not use divisive and dramatic language in this dispute, take other actions intended to intimidate or bully our neighbor, or litigate this dispute in the press. Instead, the City Council and I will insist that our City be fairly compensated for water, just as other customers are doing.

Once the courts have weighed in, I hope that Skokie will remain a valued customer of Evanston. In the meantime, we will continue to provide fresh, clean water to Skokie residents.

I encourage you to read this fact sheet for more information about Skokie water rates. Please share it with your networks. 

Sincerely,

Mayor Hagerty Signature

 

Stephen Hagerty
Mayor, City of Evanston
shagerty@cityofevanston.org

 




 

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